Nasdaq, Inc. (NDAQ) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong growth prospects in AI investments, IPO activity, and financial technology. The strategic partnership expansion and cost reduction achievements further support a positive outlook. While the Q&A revealed some uncertainties in fintech growth targets and tokenization benefits, the overall sentiment remains positive due to robust market engagement and strategic initiatives.
Key Financial Performance
Annual net revenue $5.2 billion, an increase of 12% year-over-year. Reasons for change: Strong organic growth, record index inflows, new IPOs, and strong bookings growth.
Solutions revenue $4 billion, an increase of 11% year-over-year. Reasons for change: Growth in Financial Technology and Financial Crime Management technology.
ARR (Annual Recurring Revenue) $3.1 billion, an increase of 10% year-over-year. Reasons for change: Growth in SaaS revenue and strong client engagement.
Operating income $2.9 billion, an increase of 16% year-over-year. Reasons for change: Cost reductions and strong revenue growth.
Diluted EPS (Earnings Per Share) 24% growth year-over-year. Reasons for change: Improved operating margins and revenue growth.
Fourth quarter net revenue $1.4 billion, an increase of 13% year-over-year. Reasons for change: Record revenues in U.S. equities and options, and strong performance in European markets.
Fourth quarter solutions revenue $1.1 billion, an increase of 12% year-over-year. Reasons for change: Growth in Financial Technology and Financial Crime Management technology.
Fourth quarter operating income $783 million, an increase of 16% year-over-year. Reasons for change: Cost reductions and strong revenue growth.
Fourth quarter diluted EPS 27% growth year-over-year. Reasons for change: Improved operating margins and revenue growth.
Expenses in the fourth quarter $609 million, an increase of 8% year-over-year. Reasons for change: Investments in people and technology to support revenue growth.
Index franchise AUM (Assets Under Management) $882 billion, an all-time high. Reasons for change: Record net inflows of $99 billion over the last 12 months and strong market performance.
Financial Crime Management technology revenue 22% growth year-over-year. Reasons for change: Strong sales execution and client growth.
Regulatory technology revenue 10% growth year-over-year. Reasons for change: Geographic expansion and strong sales execution.
Capital Markets technology revenue 9% growth year-over-year. Reasons for change: Demand for market modernization solutions.
Market Services annual net revenue $1.2 billion, an increase of 17% year-over-year. Reasons for change: Elevated volumes in U.S. equities and options, and strong performance in European markets.
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Operating Highlights
Agentic AI workforce: Launched new AI-enabled products, including the Agentic Sanctions Analyst and Agentic Enhanced Due Diligence Analyst, with plans for additional workers in 2026.
23/5 trading capability: Plans to launch 23/5 trading on the Nasdaq stock market in the second half of 2026, pending regulatory approval.
Index products: Introduced 122 new index products in 2025, including 60 international products and 32 in the institutional insurance annuity space.
IPO performance: Secured 3 of the 5 top IPOs of 2025, including Medline, the largest IPO of the year, and raised over $24 billion in proceeds.
Switch program: Achieved a record $1.2 trillion in listing transfers, including Walmart's historic transfer to Nasdaq.
Nordic market expansion: Welcomed 5 new ETP issuers who listed 84 new exchange-traded products across the Nordics.
Efficiency program: Achieved over $160 million in cost reductions, surpassing the net expense target.
Debt leverage: Reduced gross leverage to 2.9x, outperforming the target of 3x by year-end.
Cross-sell initiatives: Delivered 25 cross-sell wins in financial technology, contributing to a 12% net revenue growth.
AI integration: Embedded AI across the business, with strong client reception for new AI-enabled products.
Digital assets: Proposed a new approach to trade tokenized securities, emphasizing issuer choice, investor protection, and capital efficiency.
Global expansion: Expanded into new markets, including Saudi Arabia, India, and France, through regulatory technology and data agreements.
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Risk or Challenges
Volatile trading dynamics: The company operates in a complex environment characterized by volatile trading dynamics, which could impact financial performance and operational stability.
Geopolitical tensions: Sustained geopolitical tensions could disrupt market conditions and affect the company's global operations and revenue streams.
Regulatory landscape: An ever-changing regulatory landscape poses challenges to compliance and could delay initiatives like the 23/5 trading capability, which is subject to regulatory approval.
Delistings and listing standards: The company faces a $9 million quarterly revenue headwind in 2026 due to prior year delistings and new proposed changes to listing standards.
Professional services revenue variability: Revenue from professional services, particularly in Financial Technology, is subject to variability based on client implementation timing, which could impact financial predictability.
Options capture rate: Lower options capture rates in the fourth quarter of 2025, driven by regulatory fee recovery and volume mix shifts, could affect revenue in Market Services.
Implementation delays: Implementation delays related to client readiness in the Adenza business could impact revenue growth and client satisfaction.
Economic uncertainties: Economic uncertainties, including market performance and valuation changes, could affect revenue from index and data products.
Supply chain and operational risks: The company’s reliance on technology and cloud-based solutions introduces risks related to system reliability, cybersecurity, and vendor dependencies.
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Guidance & Outlook
2026 Capital Markets Activity: Nasdaq anticipates accelerating capital markets activity in 2026, supported by recent Federal Reserve interest rate cuts and a healthy pipeline of late-stage private companies. The company expects an active new issuance year.
AI-Enabled Product Expansion: Nasdaq plans to expand its AI-enabled product offerings in 2026, including additional Agentic AI workers to automate client workflows.
23/5 Trading Launch: Nasdaq aims to launch 23/5 trading on its stock market in the second half of 2026, pending regulatory approval.
Cross-Sell Revenue Target: Nasdaq remains on track to surpass $100 million in run rate revenue from cross-sells by the end of 2027.
Financial Technology Growth: Nasdaq projects continued growth in its Financial Technology division, supported by strong client engagement and cross-sell opportunities. The division achieved 11% revenue growth in 2025 and expects further expansion in 2026.
Index Revenue Growth: Nasdaq expects continued growth in its index franchise, driven by record net inflows and new product launches. The company achieved $99 billion in net inflows over the last 12 months and plans to sustain this momentum.
Operating Expense Guidance for 2026: Nasdaq has set its 2026 non-GAAP operating expense guidance at $2.455 billion to $2.535 billion, reflecting a 7% organic growth rate at the midpoint.
Tax Rate for 2026: Nasdaq expects a non-GAAP tax rate of 22.5% to 24.5% in 2026, due to the absence of one-time items and the expiration of certain benefits.
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Shareholder Return Plan
Dividend Payments: In 2025, Nasdaq paid dividends of $1.05 per share, totaling $601 million. Fourth quarter dividend payments were $153 million, representing $0.27 per share and a 31% annualized payout ratio.
Share Repurchase Program: In the fourth quarter of 2025, Nasdaq repurchased 3.2 million shares for $286 million, bringing full year repurchases to 7.2 million shares or $616 million.
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Key Q&A
Q:What are the expectations for the expanded options expirations in Mag 7 names and their impact on the options market?
A:Nasdaq is pleased with the launch and sees early uptick in usage. The expanded options provide clients with more precise risk management tools and are expected to drive market volumes and participation, particularly from institutional players. However, it is too early to fully understand the market impact as the launch is only a week old.
Q:What is driving the strong growth in equity options volumes despite tough comparisons and lower volatility?
A:The growth is driven by a broadening investor base, including retail and institutional investors, and a structural shift in interest in public equities. Additionally, there is increased activity in equity options on ETF overlays, which brings more institutional engagement. Nasdaq is also planning to launch 23/5 trading in 2026, pending SEC approval, to further expand the investor base.
Q:What is the outlook for the Data and Listings segment and new listings activity?
A:Momentum for new issuances built up in 2025 but was interrupted by the government shutdown, pushing some activity to 2026. There is strong investor interest in public markets, and Nasdaq is engaging with late-stage private companies. The environment favors liquidity, and Nasdaq continues to attract companies switching from other exchanges.
Q:What is the financial crime management outlook for 2026?
A:Momentum is building with 9 new deals, including 3 upsells, in 2025. Enterprise deals are back-weighted, and implementation takes time, affecting ARR recognition. Professional services fees may show variability due to SMB client implementations. The pipeline for 2026 is strong, and the team is excited about the opportunities.
Q:What are Nasdaq's views on owning an ATS and potential M&A in the off-exchange space?
A:Nasdaq is encouraged by the SEC's focus on innovation and is interested in having an ATS to offer holistic solutions to clients. They are engaging with the SEC to explore opportunities in the off-exchange space.
Q:What is Nasdaq's approach to capital allocation and M&A?
A:Nasdaq focuses on organic growth and progressive dividends. They are open to opportunistic bolt-on acquisitions but prioritize organic growth. Share repurchases and debt repurchases are also part of their capital allocation strategy.
Q:What is the outlook for fintech and medium-term growth targets?
A:Nasdaq is pleased with the momentum in fintech, driven by strong sales and client engagement. While the fourth quarter is typically strong for sales, the pipeline remains robust. Nasdaq is focused on innovation and client engagement but did not provide specific growth targets for 2026.
Q:What are Nasdaq's views on the proxy process and modernization?
A:Nasdaq is advocating for policy and regulatory reform to streamline the proxy process and reduce the burden on public companies. They are engaging with regulators and providers to modernize technology and improve the proxy voting experience. However, this is not seen as a business opportunity for Nasdaq.
Q:What is Nasdaq's proposal for tokenized equity securities and its potential impact?
A:Nasdaq aims to integrate tokenized equities into existing infrastructure, ensuring investor protection and issuer choice. They are engaging with DTCC and other providers to enable fungibility and interoperability. While tokenization could improve capital efficiency and collateral movement, the technology is not yet ready to support the scale of equity markets. Nasdaq is focused on creating a sustainable path for tokenization.
Q:What are Nasdaq's views on prediction markets?
A:Nasdaq prefers operating in regulated markets and is cautious about entering the prediction market space due to regulatory uncertainty. They are exploring event options within the options business and provide technology and data distribution to prediction markets.
Q:What are the risks and benefits of tokenized equities and blockchain-native tokens?
A:Nasdaq emphasizes the importance of maintaining liquidity, transparency, and investor protection. They are engaging with the SEC to ensure a sustainable framework for tokenized equities. Blockchain-native trading is not feasible at the scale of equity markets due to technological and capital efficiency challenges.
Q:What are the potential benefits of tokenization for Nasdaq in the next 5 years?
A:Tokenization could improve capital efficiency, particularly in collateral movement, and expand the addressable market through 24/5 trading. However, achieving these benefits requires addressing challenges in capital efficiency and regulatory frameworks. Nasdaq sees opportunities to provide fintech services to support institutional engagement.
Q:Review of Unclear Management Responses
A:Management avoided providing specific growth targets for fintech in 2026, citing the early stage of the year. They also did not provide a clear outlook on the potential benefits of tokenization for Nasdaq in the next 5 years, emphasizing the need for further development and regulatory clarity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI workforce
Agentic AI
Analytics
Chief
Corporate Solutions
Crime technology
Nordics
Saudi Arabia
agreement
approach
bank client
client enterprise
client relationship
cloud deployment
company market
effort
enterprise client
equity option
focus
history
index franchise
intelligence
legacy
market infrastructure
methodology
need
partnership
product client
protection
record inflow
record transfer
service offering
solution top
surveillance client
tool
trust
worker Agentic
NDAQ Transcript
Nasdaq, Inc. (NDAQ) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call indicates strong growth prospects in AI investments, IPO activity, and financial technology. The strategic partnership expansion and cost reduction achievements further support a positive outlook. While the Q&A revealed some uncertainties in fintech growth targets and tokenization benefits, the overall sentiment remains positive due to robust market engagement and strategic initiatives.
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Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
