Nasdaq, Inc. Common Stock 2026 Q3 Earnings Call

Please go ahead. Good morning, everyone, and thank you for joining us today to discuss Nasdaq's third quarter 2026 financial results.

On the line are Adena Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After our prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on the Investor Relations website. I would like to remind you that certain statements we make on this call, including statements about our outlook, expectations, plans and strategies, are forward-looking statements. These statements involve risks and uncertainties, and our actual results could differ materially from those expressed or implied in these statements. A summary of the risks is contained in our press release, and on a more complete description in our annual report on Form 10-K.

These statements speak only as of today, and we undertake no obligation to update them. We will discuss our financial performance on a non-GAAP basis, excluding the impact of acquisitions and divestitures, and the impact of changes in FX. Definitions and reconciliations of our non-GAAP measures to the most directly comparable US GAAP measures can be found in our earnings presentation, as well as in a file located in the Financial section of our investor relations website at ir.nasdaq.com. With that, I will now turn the call over to Adena.

Thank you, Ato, and good morning, everyone. Today, I will start with a review of our third quarter financial results, and will then review the operating performance across our divisions. I will then hand the call over to Sarah to walk through the financial results in more detail. In the third quarter, Nasdaq delivered strong results across each of our divisions, building on the outstanding momentum from the first half of the year and reinforcing our position as a trusted transformation partner to our clients. Nasdaq is positioned to lead some of the most significant and enduring trends reshaping the financial system, many of which are still in the early stages of their impact. The investing landscape is undergoing significant change, from the continued growth of passive investing to expanding levels of direct retail ownership, creating opportunities that reinforce Nasdaq's role at the center of the capital markets.

The shift towards more connected and always-on markets is gaining momentum, and Nasdaq is shaping the next generation of market infrastructure. At the same time, artificial intelligence is becoming increasingly foundational to how institutions make decisions, manage risk, and allocate capital, and Nasdaq is extending its leadership through solutions embedded across our platform. The economic environment remains constructive for the progression of these key trends. The U.S. economy continues to demonstrate resilience while managing through inflation and elevated interest rates, and is supported by strong corporate earnings, healthy consumer spending, and continued investment in AI and digital infrastructure. Now I'd like to turn to our results. In the third quarter, we delivered $1.5 billion in net revenue, up 14% year-over-year, and solutions revenue of $1.2 billion, up 18%. Our overall annualized recurring revenue, or ARR, grew 14% year-over-year to $3.4 billion.

Expenses were $638 million, up 12%. We delivered 19% diluted EPS growth, driven by 16% growth in operating income and the benefit of our share repurchase program. Within our divisions, Capital Access Platforms generated 20% revenue growth and 8% ARR growth. Financial Technology delivered 16% revenue growth and 18% ARR growth, and Market Services delivered 2% net revenue growth. Now turning to the divisional results, I will start with Capital Access Platforms, where I will first discuss data and listings. Our listings franchise continued its strong momentum from the first half of the year. We welcomed 15 new operating companies, raising $32 billion in proceeds, including eight of the top 10 largest IPOs in the quarter, contributing to a 79% win rate. On a year-to-date basis, we have a 74% win rate, including 56 new operating company listings, raising a total of $144 billion in proceeds.

We look forward to welcoming Hilton to Nasdaq in early November, following its announcement on October 20th that it plans to transfer its listing of common stock to the Nasdaq stock market. Our European listings business continued to drive growth in the Nordics, where we welcomed eight new operating companies, including IQM Quantum Computers, which was the largest European listing by market capitalization in the quarter. While we have seen a modest softening in the IPO environment in recent weeks, with some companies in certain sectors reevaluating the timing of their IPOs, our listings pipeline remains robust, and we are well positioned to support the diverse group of companies preparing to enter the public markets across a wide range of sectors. Our data business achieved double-digit growth driven by the strong client demand for our gold standard data, powering AI solutions and the transition to always-on markets.

During the quarter, we delivered a 34% year-over-year increase in the number of enterprise licenses across various client types and multiple geographies. Our index franchise achieved a record $141 billion in net inflows over the last 12 months and $49 billion in the quarter, driven by product innovation, global expansion, and growing investor demand for our products. We launched 32 new products in the quarter, including 10 insurance product launches, bringing total year-to-date launches to 97 products, ahead of our pace at this point last year. 50% of all products launched during the quarter were introduced outside the United States. Product innovation continues to generate significant growth for our index business, with 35% of the trailing 12 months net inflows driven by products launched over the last five years. We continue to experience early momentum from our partnerships with BlackRock and State Street, with combined AUM exceeding $1 billion.

We also continue to grow our long-standing partnership with Invesco, expanding the Invesco QQQ Innovation Suite through the launch of the Invesco Nasdaq International Innovators 100 ETF. Turning to workflow and insights, our growth was driven by analytics, with double-digit revenue growth in both eVestment and DataLink. This was supported by strong bookings growth and expanding client adoption. The rising demand for AI-enabled solutions continues to fuel growth within eVestment. Year to date, 25% of eVestment bookings were related to AI use cases. We expanded the coverage of eVestment's data assets to more than 95,000 private funds, a 19% increase from the end of 2025, strengthening our position as a trusted provider of institutional investment intelligence. We also expanded eVestment's reach through a new partnership with Juniper Square, launching Capital Intelligence, which embeds Nasdaq eVestment data directly into Juniper Square's workflows for their private markets clients.

In DataLink, we continue to expand distribution as clients develop AI-native workflows. For example, we recently entered a partnership with Robinhood to embed a new proprietary data set into its agentic trading platform. This gives investors access to sophisticated market sentiment and institutional-grade investor insights to power agentic decision-making. Turning to financial technology, we achieved another excellent quarter, delivering revenue growth of 16% and record ARR growth of 18%. Clients continue to choose our solutions to modernize and transform their organizations, driving resilient demand for our mission-critical technology, with sales cycles, contract term lengths, and bookings mix remaining consistent. In the quarter, we signed 54 new clients, five cross-sells, and 135 up-sells. Our long-standing investments in our cloud capabilities continue to underpin our performance. This quarter, 85% of bookings across our fintech portfolio were for cloud-based solutions.

Nasdaq achieved its highest-ever ranking in Chartis RiskTech100 this quarter, placing number 2 globally and earning 14 category awards across risk management, financial crime prevention, trade surveillance, and corporate governance. This achievement is a testament to our One Nasdaq strategy in action, building integrated capabilities that help clients solve their most pressing challenges. In financial crime management technology, Nasdaq Verafin delivered 23% revenue growth, with ARR growth increasing 2 percentage points sequentially to 19%. During the quarter, we signed 45 new SMB clients and three enterprise deals, bringing the total enterprise signings to 12 year to date, exceeding the nine enterprise signings we delivered in the entirety of last year. Nasdaq Verafin continues to accelerate AI innovation across both its products and operations, with more than 850 clients using our agentic AI workforce.

Expanding those capabilities, we moved two new agentic workers into production in the quarter, the Agentic AML Analyst for structuring, and our first fraud-focused worker, the Agentic Fraud Analyst for ACH. Regulatory technology delivered a sustained growth, driven by a client demand for Nasdaq solutions that support modernization initiatives across cloud, AI, and digital assets. Overall, we signed 10 new clients, including two cross-sells and 86 up-sells. In AxiomSL, we delivered higher subscription revenue, driven by strong client engagement and up-sells. We continued to build momentum internationally, expanding geographic coverage with one of the largest private banks in Switzerland and adding a lead Brazilian bank as a client. We continue to see strong engagement from a wide range of banks across both size and geography as they prepare for the evolving regulatory landscape. For instance, we signed a G-SIB to a Basel III implementation this quarter.

We also deepened our relationship with a super-regional U.S. bank, which expanded its use of our cloud-based solutions to modernize its operations. In surveillance, we saw strong demand as markets moved towards always-on operations, including client wins with Kraken, Kalshi, and APAC. These engagements highlight our role in helping emerging market operators safeguard market integrity and investor confidence at scale. We also expanded client adoption of our AI capabilities, signing new clients for Calibration Copilot and GenAI News Copilot, while building a growing sales pipeline for our broader AI solutions. Capital Markets Tech continued its strong momentum, driven by robust growth in trade management services, as well as new client wins and up-sells in our software solutions. Across the business, we signed 2 new clients, including one cross-sell and 48 up-sells.