Nasdaq, Inc.

Good morning and welcome to NASDAQ third quarter 2023 results conference call. 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Atul Garrett, Senior Vice President and Investor Relations Officer. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today to discuss NASDAQ's third quarter 2023 financial results. On the line are Adina Friedman, our Chair and Chief Executive Officer, Ann Dennison, our Chief Financial Officer, John Zecca, our Chief Legal, Risk, and Regulatory Officer, and other members of the management team. After prepared remarks, we will open up the line to Q&A. The press release and earnings presentation are available on our website. We intend to use the website as a means of disclosing material, nonpublic information, and complying with the disclosure obligations under SEC Regulation FD. I would like to remind you that certain statements in this presentation and 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, Otto, and good morning, everyone. Thank you for joining us for NASDAQ's third quarter earnings call. Before I begin, I would like to offer brief comments on the situation in the Middle East. We were horrified by the acts of terrorist violence that occurred in Israel last week, and we were deeply saddened by the subsequent loss of innocent lives in Israel, Gaza, and the wider region. Our focus has been on supporting our people and our clients with connections in the region. We will continue to monitor the situation closely and stay engaged with them throughout this emerging crisis. Turning now to my remarks about the quarter, I will start by covering NASDAQ's performance and how our strategy is unfolding in the context of the current operating environment as well as provide key business highlights. I will then turn the call over to Anne for a detailed review of our financial results. I'm pleased to share that NASDAQ continues to make solid progress on our strategic objectives to capitalize on the key megatrends shaping the financial system. NASDAQ continues to execute against its strategic vision, become the trusted fabric of the global financial system, delivering broad-based growth across our businesses, including 6% overall net revenue growth, and 8% year-over-year organic revenue growth in our solutions businesses. I'm proud of the team's efforts to continue to serve our clients, and I'm pleased to see our revenue growth improving in the third quarter, aided by strong performance in our capital access platforms division, particularly in our index business. In addition, our anti-financial crime division continued to deliver strong results, with solid growth in our surveillance business and Verifint continuing to demonstrate strong new customer growth, as well as an expansion contract with a Tier 2 client. With respect to the market backdrop, during the quarter, we saw a variety of cross-currents, including increasing market volatility, fluctuating equity markets, and rising long-term interest rates. Nevertheless, we experienced modestly improving momentum in our listings business amid a gradual reemergence of the US IPO activity, with 35 operating companies choosing to list on NASDAQ during the quarter. Based on our client conversations and our growing IPO pipeline, We remain cautiously optimistic on the outlook for the upcoming year. Across the company, as we've discussed before, Nasdaq is well positioned to thrive by capitalizing on three key megatrends that are shaping the financial system, the modernization of markets, the development of the corporate and investor ecosystem for environmental sustainability, and the increasing need for integrity solutions across the financial system, including risk management, surveillance, regulatory compliance, and anti-financial crime technology. By aligning our business with these key megatrends, we're unlocking attractive opportunities for sustainable growth, and we're building a diversified business that's well positioned to succeed through economic cycles. In this regard, I'd like to provide a few highlights from the quarter that illustrate the progress we're making to capitalize on these growth opportunities. First, our focus on market modernization continues to deliver innovation that enhances the liquidity and underlying market infrastructure that powers the world's economies. A major driver of that innovation has been our ability to adopt and leverage technologies, including cloud and artificial intelligence, across our markets and in our products. In the third quarter, we are pleased to announce the approval by the SEC of the first exchange AI-powered order type, which we call Dynamic Midpoint Extended Life Order, or Dynamic MELO. For the last several years, we've offered an order type called the Midpoint Extended Life Order for clients seeking larger trade sizes at the midpoints. the order introduces a fixed holding period to gather order interest before execution. Through extensive testing and consultation, we determined that our clients' trade execution could be improved under certain market conditions by applying adaptable holding periods. This led to the creation of Dynamic MELO, which leverages AI to adjust the length of a holding period throughout the trading day on a stock-by-stock basis to improve fill rates and reduce market friction. We're very excited to roll out this enhanced order type to our clients in the coming months, and we see a significant opportunity ahead to drive the application of AI and other emerging technologies across our markets. Next, regarding the development of the environmental sustainable ecosystem, during the quarter, we were proud to launch two new offerings designed to help corporates and investors streamline their sustainability journeys. Following the acquisition of Metro last year, We have integrated NASDAQ's OneReport and METRIO sustainability reporting and workflow offerings into a single solution called NASDAQ METRIO, which was officially launched during the quarter. NASDAQ METRIO is a SaaS-based end-to-end solution that helps corporates better collect, measure, and report sustainability data on a single platform. In addition, in our investment intelligence business, we announced the launch of NASDAQ Investment ESG Analytics, which is designed to help asset managers better quantify and showcase the environmental, social, and or governance impact of our portfolio's position in the market. It enables asset managers to demonstrate their portfolio sustainability strategies to asset owners, including pension funds, sovereign wealth funds, and endowments. These two solutions underscore our role as a bridge between corporates and investors by creating market-based demand-driven solutions that help bring clarity to a rapidly evolving environment for sustainability reporting. Lastly, looking at the increasing need for integrity solutions, including risk management and anti-financial crime technology, we're developing innovations that make our clients' anti-money laundering, or AML, programs more efficient. Specifically, in October, we have launched the beta version of an AML workflow co-pilot tool that will leverage generative AI to automate portions of our clients' AML processes. We look forward to updating you on our progress with these opportunities in the quarters to come as we continue our journey to leverage technology to advance our clients' evolving needs. Turning next to our results, I'm pleased to report NASDAQ's continued solid financial performance in the third quarter of 2023. We achieved $940 million in net revenues, an increase of 6% compared to the prior year period, and an increase of 5% on an organic basis. Revenues across our solutions businesses were $694 million, up 9% from the prior year period and 8% on an organic basis. Our total ARR increased 6%, $2.1 billion. Annualized SAS revenues totaled $773 million in the third quarter, which represents an annual growth rate of 11%. Our SAS revenues now comprise 37% of total company ARR. In our capital access platforms division, we delivered $456 million in total revenue in the third quarter, an 8% increase from the prior year period. Our index revenues grew 15% from the prior year period. The performance in our index business reflects strong year-over-year market performance, $24 billion in net inflows over the past 12 months, including $5 billion in the third quarter, and strong futures capture partially offset by lower derivatives volumes. Our workflow and insights revenues grew 5% over the prior year period, reflecting sustained demand for project work in our ESG solutions and steady analytics solution sales to asset managers. While we continue to see elongated sales cycles for certain products in this business, we've not seen a material improvement or worsening of sales cycles from the second quarter of 2023. Our data and listing services revenues grew 5%. Our listings revenues was largely unchanged due to continued muted IPO activity and heightened delistings, while our data business delivered continued strong revenue growth driven by demand from international data clients. We maintained our track record for winning new operating company listings, ending the quarter with strong momentum from some of the year's biggest IPOs by proceeds raised. Year-to-date, NASDAQ welcomed 83 new operating company IPOs for an 84% win rate. As of the end of the third quarter, we have welcomed four of the five top IPOs by capital raised, and in the third quarter, we achieved an overall win rate of 95% and welcomed several marquee IPOs, including Arm Holdings and Instacart. This momentum was also bolstered by several notable listing switches to Nasdaq in the quarter, including DoorDash and Roper Technologies. Overall, 11 companies have transferred to Nasdaq year-to-date, representing a total market value of $184 billion. The September listing success coincides with the launch of our new IPO and broadcast center at the NASDAQ market site in Times Square, further establishing NASDAQ as the world's premier venue for listings. The reimagined space reflects our commitment to showcasing our clients and elevating their IPO experience and enables us to create more visibility for first trade celebrations through increased access to global media outlets. Looking ahead, we remain well-positioned to capture new listings activity. We have a strong pipeline of companies that have committed to NASDAQ and are in close contact with these companies as they evaluate their IPO timelines. Turning next to our market platforms division, we delivered $381 million in total revenues during the third quarter, a 1% increase over the prior year period. In our trading business, revenues declined 1% compared to the prior year with lower European revenue partially offset by modest growth in U.S. equities revenue due to higher revenue capture and a small FX benefit. In our marketplace technology business, revenue grew 4% with growth in both trade management services and market technology solutions. During the period, we completed delivery of a major CSD project for a Latin American central security suppository and signed a contract extension, including an upgrade to our next-gen trading system with one of the largest stock exchanges in Southeast Asia. Turning next to a brief update on EDENSA. We're progressing well towards the closing of the EDENSA transaction. We've completed the antitrust review, and Telmo Bravo is on track to obtain the remaining approvals from the Nordic and Baltic financial regulators to become a major shareholder in NASDAQ. Therefore, we expect to close the transaction in the fourth quarter of 2023. As previously disclosed, this business will be reported as part of the newly created financial technology division alongside our marketplace technology and anti-financial crime businesses. In the third quarter, Adenza continued its strong performance, delivering constant currency ARR growth in the high teens. Year to date through the third quarter, they added 17 new clients and three total cross-sells, which compares to seven new clients and three cross-sells over the same period last year. Additionally, Adenza maintains solid growth in net revenue retention at 97.4% and 113% respectively. We're also pleased with the momentum of Adenza's journey towards a cloud-based delivery of the solutions across both existing and new clients. Through the first three quarters of 2023, 55% of bookings have been for cloud delivery solutions versus 27% over the same period last year. Since the transaction was announced in June, we have held extensive integration and planning discussions with the leadership team at EDENSA, and we're very excited about the opportunities ahead. As a result of our early interactions together, we have developed a very clear path and process for integration that we intend to execute successfully starting on day one post-close. Finally, turning to our Anti-Financial Crime Division, we delivered $93 million in total revenue during the third quarter, a 21% increase in the prior year period. Nasdaq Verifin grew 29%, primarily driven by growth in the adoption of our fraud and anti-money laundering, or FRAML solutions, by small and medium-sized banks, as well as an expansion of wallet share among existing clients. We continue to expand client relationships with 47 new small and medium-sized financial institutions adopting our FRAML solutions. Additionally, we continue to have momentum in our move-up market. This quarter, we signed an expansion agreement with an existing Tier 2 bank client. Specifically, this is a bank client that signed on to our fraud detection and workflow solution in the first quarter of 2023 and has now expanded their relationship with us to include our complex investigation solution. We view this expansion as a strong proof point in our ability to land and expand our relationships with large bank clients. We continue to be actively engaged in contract negotiations and proofs of concepts with several Tier 1 and Tier 2 banks and remain on track with our plans to sign additional large banks in the coming quarters. Our surveillance business delivered 9% organic revenue growth with continued new customer growth, including Tier 3 banks and retail brokers, as we expand on our leadership position with large customers. And lastly, I'm pleased to announce that we've officially named Brendan Brothers Executive as President of our Anti-Financial Crime Division. As you may recall, Brendan was named to the role on an interim basis earlier this year, and we're thrilled to welcome him formally as a member of our leadership team, continuing to report directly to me. To wrap up, our third quarter results demonstrate the strength of our diversified business and reflect our strong position going into year end with the closing of the Addenda transaction view. And with that, I'll now turn the call over to Ann to review our financial details.