Nasdaq, Inc.

Good day, and thank you for standing by. Welcome to the NASDAQ first quarter 2021 results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ed Detmeyer, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss NASDAQ's first quarter 2021 financial results. On the line are Adina Friedman, our CEO, Ann Dennison, our CFF, John Zecca, our Chief Legal and Regulatory Officer, and other members of the management team. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material, non-public information, and complying with disclosure obligations under SEC regulation update. I'd like to remind you that certain statements in this presentation during Q&A may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I will now turn the call over to Adina.

Thank you, Ed. Good morning, everyone, and thank you for joining us. My remarks today will focus on NASDAQ's first quarter 2021 financial and business performance, as well as the progress we have made executing on our strategy. I would like to begin by acknowledging how deeply proud I am of the NASDAQ team's continued commitment to our clients during this period. A full year has now passed since our global workforce began working remotely, and I could not be more pleased with the first quarter results that our team has delivered to our stakeholders today. Our relentless client focus and NASDAQ's nimbleness allowed us to generate strong financial results for the first quarter of 2021. We also made important progress against our corporate strategy during the quarter with the completion of our acquisition of Verifin in February and the announced agreement to sell our U.S. fixed income business to trade web markets. Our performance during this period continues to underscore the resilience of NASDAQ's diversified product offering and business model, as well as our ability to address the needs of our clients in a rapidly changing environment. Now I will turn to our strong financial results for the first quarter of 2021. NASDAQ delivered net revenues of $851 million, an increase of $150 million, or 21% from the prior year period, driven by 17% organic growth in our solution segment businesses, and 17% organic growth in our market services business. The acquisition of Verifin and the changes in FX rates drove the remainder of the growth for the business in the quarter. Across our exchange businesses, the incredibly dynamic capital markets environment during the period, combined with our strong competitive positioning, resulted in record U.S. equity and options volumes and a record quarter for new listings. I'm also extremely proud of the progress we've made to continue to grow our annualized recurring revenue, or ARR, which is up 21% compared to the prior year period. This was driven by our continued focus on key secular growth opportunities that are powering our solution segments. We are seeing rising demand across our clientele for our solutions, including from institutional investors for analytics and workflow tools, from corporate clients for our ESG and IR solutions, and from financial institutions and marketplaces for technology that helps reduce financial crime. Our ARR growth was also boosted by the acquisition of Verifin. The strong operating leverage of our model was evident in the results. Our non-GAAP operating margins increased to 54%, up two percentage points compared to the prior year. As a result, we experienced a 25% increase in our non-GAAP operating income and a 31% increase in our non-GAAP diluted earnings per share in the period. Turning now to the specific highlights from the quarter, I will begin with our foundational marketplace in corporate businesses. Our market services segment saw net revenues of $338 million, a 20% increase from the prior year period, and a new quarterly revenue record for this business. This is primarily led by higher U.S. options and cash equities trading volumes. We're also seeing an increase in demand for trade management services connectivity solutions as clients adjust their capacity for a wider range of volume scenarios. NASDAQ's U.S. options market set a quarterly record of 892 million contracts traded during the period, an increase of 57%, while our U.S. equities market set a quarterly record of 153 million shares traded, an increase of 20% year-over-year. Additionally, during the period, we entered into a definitive agreement to sell our U.S. fixed income business, NFI, to an affiliate of TradeWeb Markets. The decision to sell NFI aligns with our strategy to maximize our potential as a major technology and analytics provider to the global capital markets. We expect the transaction to close later in 2021, subject to customary closing conditions. Next, our corporate platform segment delivered revenues of $155 million, a 21% increase, with robust contributions across each of the product areas in that business. The business was boosted by record levels of new listing activity, material contribution from NASDAQ private market following a record first quarter for private company transactions, and increased demand for our investor relations intelligence and ESG solutions. In our IR and ESG services business, we are seeing consistent and growing demand for our expanded suite of products, which has been carefully designed to help our clients measure, analyze, collaborate, and take positive action regarding their respective investor relations, governance, and sustainability programs. For example, in our IR intelligence unit, we saw six new client wins from our new expanded ESG advisory offering, a more in-depth solution that has lengthened and deepened our engagement with executive leadership teams as they seek to meet the demand from institutional investors and other stakeholders for greater clarity on their ESG strategies. And we are seeing this deeper client engagement result in continued sales momentum for our consultative IR advisory service and our NASDAQ IR insight workflow solution, which saw a combined 36% increase in sales during the quarter. In our listing segment, NASDAQ led U.S. exchanges for IPOs during the period, welcoming 275 IPOs that raised $74.4 billion, including 79 operating company IPOs and 196 SPAC IPOs. The NASDAQ stock market led U.S. exchanges with a 69% total win rate on IPOs, including a 77% win rate among operating companies and a 66% win rate amongst SPACs. Listing highlights from the first quarter include the IPOs of Bumble, Qualtrics, Affirm, Platica, and Petco. During the quarter, NASDAQ listed seven of the top 10 largest IPOs by capital raised. Companies have responded positively to our virtual IPO experience during the pandemic period, and we are excited and encouraged to see our iconic Bell Ceremony and IPO Day experience come to life again in Times Square, and in cities across the country through our unique remote bell ceremony. Highlights include going on the road during the quarter to Bumble in Texas and to Qualtrics in Utah. We look forward to welcoming our clients and capital markets partners safely to the NASDAQ market site for these milestone celebrations as we start to prepare for a post-pandemic period. Of course, I also want to acknowledge the strong start to the second quarter in listings, with in particular noting NASDAQ's successful direct listing of Coinbase, a global leader in infrastructure and technology for the crypto economy. The Coinbase listing represents the largest direct listing in history and was the largest ever initial public listing opening cross on NASDAQ. Now let me turn to our market technology and investment intelligence businesses. Our market technology segment delivered $100 million in revenues, including a partial period contribution from the Verifin acquisition, which we completed in February. Our annualized recurring revenue for the quarter was $416 million, a 62% increase year-over-year, including a 10% increase from our existing business, and an additional $134 million representing the annualized total of Verifin's first quarter subscription revenues, irrespective of the closing date or the temporary impact of the write-down of deferred revenues. To give you more transparency in how different parts of market technology are operating and progressing going forward, we have started to report our revenues from this segment of our business in two groups. The first is called Marketplace Infrastructure Technology, which will comprise our solutions for the full trade lifecycle to market infrastructure operators, banks and brokers, and non-financial market operators. And the second is called Anti-Financial Crime Technology, our offerings providing surveillance, risk management, and Verifint's anti-money laundering and fraud detection solutions. As we stated in previous investor calls, there are certain areas of our market technology business that have been inversely impacted by the pandemic-related factors, largely in the marketplace infrastructure technology business. And while the environment continues to be characterized by the logistical challenges to implementations and lengthened sales cycles, the actions we took last year to respond to those dynamics are resulting in stabilized but moderated revenue growth in the near term, albeit with short-term impact to segment profitability. More importantly, our longer-term vision for market technology remains on track, as demonstrated by the progress we've been delivering in new sales and revenues from SAS products and services, in particular, our anti-financial crime technology solutions. Excluding the impact of Verifin, SAS revenues within all of market technology increased 15% year over year. Turning to our investment intelligence segment, we delivered net revenues of $258 million, up $47 million, or 22% from the prior year period. Overall assets under management in ETP's benchmark to NASDAQ's indexes totaled $385 billion at the end of the quarter, an increase of 87% from the prior year period, and a new quarterly record. Additionally, trading of futures and options on futures contracts tracking NASDAQ indexes increased 31% year over year. I'm also pleased to see increasing adoption of some of our recent product innovations. In particular, AUM and the Invesco QQQ innovation suite, built on their strong debut in the fourth quarter of 2020, and now stands at approximately $2 billion in AUM in just five months after launch, making this one of the most successful new launches for NASDAQ's index business. Our analytics business delivered revenues of $48 million, an increase of $7 million, or 17% from the prior year period. Led by investment and Sylovis, this business experienced increased growth in the first quarter due to improvement in both new users and retention compared to the prior year period. On a sequential basis, new sales were up 23% from the fourth quarter of 2020, reflecting both a rebound in institutional investment industry demand following some temporary contraction in 2020, as well as increased realizations of the synergies between investment and Syllabus, as the combination helped drive 28 new accounts to Syllabus in the first quarter. These results underscore our strategy to create comprehensive workflow solutions for investment managers and institutional asset owners, from pre-commitment diligence to post-commitment portfolio tracking and secondary trades. Lastly, within investment intelligence, our market data revenues rose 11%, driven primarily by expanding international demand for our proprietary data products. As I wrap up, I would like to reiterate that NASDAQ remains diligently focused on serving the unique needs of our clients while we advance our strategic mission to capitalize on the opportunities that lie ahead of us. At our Investor Day in November, We articulated that our diversified business model was designed to provide us with the resiliency to drive disciplined growth across a variety of backdrops. Our recent success, especially in the first quarter, underscores the power of the NASDAQ platform and highlights that the strategy underpinning our repositioned franchise is resonating with our clients as we continue to reallocate capital to higher growth opportunities while maintaining leadership in our marketplace core. This focus has also resulted in many new instances of dynamic collaboration across our businesses, be it new product innovations or bringing advanced technology solutions to help our clients solve major industry challenges. For example, in our anti-financial crime technology segment, we're very excited about the work that we can do together with Verifin. This includes the potential for new client opportunities given our strong relationships with Tier 1 and Tier 2 banks, as the Verifin team continues to build out their solutions to increase confidence in the global financial system. Additionally, we're pleased to support their international expansion, especially into Europe, where Verifin has just landed its first client. Another great example is the intersection of our listings and index businesses. Listing the next generation of innovators, including many of the largest IPOs that have come to NASDAQ in the recent years, creates strong synergies to drive new product development in collaboration with our index business. For example, the strength and success of our flagship NASDAQ 100 index and our partnership with Invesco laid the groundwork for a recent launch of the Invesco Innovation Suite, including the Invesco NASDAQ Next Generation 100 ETF. Comprised of the 101st to the 200th largest non-financial companies listed on NASDAQ, the NASDAQ Next Gen 100 Index has been one of the fastest-growing ETFs that we've ever launched with a partner and includes companies such as Etsy and Roku, as well as many of the fastest-growing enterprise technology and healthcare companies listed on our market. As I look back at this quarter, I could not be prouder of the performance across the business. We officially celebrated NASDAQ's 50th anniversary in February, and given our rich history as a technology pioneer, I remain confident that we are moving NASDAQ in the right direction for many years to come. And with that, I will turn it over to Anne to review our financial results in greater detail.