Nasdaq Inc at Oppenheimer Technology, Internet & Communications Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : So as a starting point, Adena, why don't we talk about Nasdaq because the company has gone through a period of transformational pivot. How would you describe Nasdaq today?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So let's talk about one latest -- most recent event. In late July, Thoma Bravo, one of your largest shareholders, sold 42 million of your shares. You were probably being asked this question a million times before. I'm not saying that your largest shareholder selling your shares, it's a good thing for the stock, but the stock did go up after the pricing. So it looks like it removed a big overhang. How do you see that?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : So just a hypothetical scenario, some people may be interested to -- in the role of Holden going forward. So if, let's say, Thoma Bravo eventually sell all the shares, will he leave the Board? How should investors think about the arrangement going forward?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So let's switch gear to another hot topic, which is the IPO market. Could you please talk about the pipeline of the IPO market in the second half of this year and maybe going into 2025? Do you expect the IPO market can meaningfully improve from here? Do you have any numbers you can share?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So another theme is about election. How could the upcoming election potentially impact Nasdaq like different business unit? And which business could benefit more and which business could potentially face more headwinds?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So over the past few quarters, I would say the leverage and deleveraging has been one of the key kind of message from Nasdaq. And also, it's also a key theme for investors as well. I think at the end of the second quarter, your leverage had come down, like, below 4 times, I think 3.9 times, something like that. Could you please talk about your progress? And do you have any new commitment for deleverage? And given your level right now, it's below 4 times, any new target you can share?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So last month, we saw a buggy update on CrowdStrike, which caused a global IT outage. It impacted many industry, including an exchange in London. But it looks like Nasdaq and other US exchanges were fine. Could you please talk about what Nasdaq has done to avoid this kind of outage? And is that something that a company can actually do to minimize this kind of impact? I mean, it looks like a single point of failure can disrupt so many industry.

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So maybe we can move on to each of the individual business. So let's talk about financial technology, which is a big part of your transformational process. So Adenza has been part of Nasdaq for, I think, around nine months or so right now. Could you please give us an update on the integration process? What surprised you the most during this integration?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. Then how about the enterprise sales and go-to-market strategy? I remember when we talked about that, I think, a year ago, you talked about how good Adenza has on the enterprise, like going after like the whole unit. And I think you want to bring that to Nasdaq. Can you talk about that progress so far?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Yes. I talked to her as well. I think she's great. So maybe let's talk about the financial crime -- your Verafin financial crime management technology. Let's talk about some numbers. When I look at the slide, I think your medium-term growth outlook is still in the mid-20%. It implies around, and if I can convert that to the dollar terms, it implies around $80 million to $100 million incremental revenue every year for the next, at least, three to five years. So I think the question is, how can you maintain such a high growth rate in the near term, maybe in the near to medium term? And what does it imply for your, like, penetration rate in the bank and credit union space?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. You also mentioned that your growth -- at least the current growth is mainly driven by smaller banks like credit unions, but there's still a lot of attention on signing Tier 1 and Tier 2 banks for Verafin, right? You mentioned Tier 1 and Tier 2, it's half of the TAM, but the revenue could be very small right now. But larger TAM, it's still in the -- or larger revenue still come from smaller banks. I guess the question is, how do you balance the 2? Like do you put more resources to go after Tier 1 and Tier 2 because of larger banks but small revenue or you're still focused on smaller banks?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So you just touched on GenAI, maybe more on the Verafin side. But could you please give us an update on some of the key GenAI initiatives in Nasdaq? How can these initiatives create more like incremental revenue and incremental cost savings opportunity for Nasdaq?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : There's a lot going on -- exactly, that's what I want to say. There's a lot going on. I'm not sure how many of you like really appreciate that or actually understand the whole thing going on. But I appreciate your answer.

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Exactly. I mean, I look forward to hearing more from you going forward. So let's switch gear to another business unit, which is the Capital Access Platforms. Your medium growth outlook for Workflow and Insights, I think it's high single digit to low double digits. But this segment has been, like, running at mid-single digits or below the medium target. Could you please talk about like what does it take for this segment to go back to your medium-term target and the timing of it? Is it mainly relying on the IPO market or anything else you can talk about?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. And then the other component is the index business. I think it contributed about 15% of your revenue based on my math. I mean, sometimes I felt like this business is not like fully appreciated or somehow misunderstood by investors. Could you please talk about the strength and the pool of this like index business so that investors can appreciate more?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Got it. So I think we are almost time. But Adena, do you have any final words for us?

Question: Owen Lau - Oppenheimer & Co., Inc. - Analyst : Sounds great. Thank you for your time, Adena. Thank you, Nasdaq team, as well and hope you all have a good day.