Nasdaq, Inc.

Good day and thank you for standing by. Welcome to NASDAQ's second quarter 2024 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To re-draw your question, please press star 11 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, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss NASDAQ's second quarter 2024 financial results. On the line are Adina Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our Investor Relations website. I would like to remind you that we will be making forward-looking statements on this call that involve risks. A summary of these risks is contained in our press release and a more complete description in our annual report on Form 10-K. Also, please note that we will discuss our financial results on a pro forma basis and with year-on-year growth rates, which means that we are showing results versus the prior year period as if we owned Calypso and Axiom SL for all of 2023 and excluding the impact of FX. References to organic growth exclude the impact of FX, acquisitions, and investitures. Reconciliations of U.S. GAAP to non-GAAP results can be found in our press release, as well as in a file located in the financial sections of our investor relations website at ir.nasdaq.com. I will now turn the call over to Adina.

Thank you, Otto, and good morning, everyone. Thank you for joining us. On the call this morning, I'll provide some perspective on the external environment, discuss our strong quarterly performance highlights, as well as our progress against our strategic priorities, and then I'll hand the call to Sarah to walk through the financial results in more detail. Turning to the economy in the US, we're continuing to see solid but slowing GDP growth, along with cooling inflation and slightly rising unemployment. These data points support the potential for easing monetary policy in the coming months as the Fed continues to strive for an economic soft landing. The general stability in the US economy and the potential for a lower cost of capital going forward is resulting in modest improvements in the IPO landscape as we've progressed through 2024, including solid activity this week. However, investors continue to contend with external uncertainties in the timing of monetary policy shifts, as well as that dynamic macro political environment. As a result, we continue to expect modestly improving IPO activity for the remainder of 2024, And our current US IPO pipeline indicates that stronger momentum is likely to manifest starting in the first half of 2025. We're also seeing stronger economic underpinnings in Europe, aided by the ECB's easing monetary policy, including improving economic prospects in the Nordics. The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing, particularly for 2025. As investors and industry participants navigate the dynamic market environment, we continue to see sustained, robust trading activity in the markets, as well as strong demand for mission-critical technology solutions from financial institutions globally. As a result, our markets continue to experience strong volumes, and client demand for our fintech solutions remains consistent with trends we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solution suites. Now let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles. We delivered a strong quarter with $1.2 billion in net revenues, an increase of 10% year over year, with solutions revenues at 13% growth. Our overall annualized recurring revenue, or ARR, grew 7% to $2.7 billion. I'm particularly pleased with the strength of the performance across our business which is a testament to the power of our platform. We're integrating the ADENZA acquisition ahead of schedule and are realizing the investment thesis that underpinned the transaction as we demonstrate its value for clients, shareholders, and employees. Our expenses for the quarter increased 7% year-over-year within our guidance. Our operating income grew approximately 14%, and importantly, our operating margin increased to 53%. representing over one percentage point of operating leverage, while we continue to invest to support growth in our business and deliver on synergies. Turning now to a discussion of the business highlights, starting with capital access platforms. While ARR growth in the division remained at 1%, our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%. In listings, we welcomed 31 operating company ITOs, maintaining our strong win rate of 72% based on NASDAQ-eligible listings. While the slower IPO environment remains a headwind, we're encouraged by signs of improvement as supported by our most recent IPO Pulse Index, which is at near a three-year high. Overall growth in data and listings continue to experience challenges as modest growth in market data and the slowly improving IPO environment were offset by the impact of prior year delistings. Growth in our analytics business benefited from continued demand across the investment community for actionable intelligence and increased efficiency. However, that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights. Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter, totaling $53 billion over the last 12 months. We also achieved another record in index ETP AUM, exiting the quarter at $569 billion. Turning next to financial technology, ARR growth across the division was 13%, including 25% in financial crime management technology, 14% in the combined Axiom SL and Calypso solutions, and 9% in the combined market technology and trade management services. The division had 69 new client signings, 96 upsells, and four cross-sells. We also saw continued cloud adoption, as 68% of Axiom SL and Calypso's combined bookings in the quarter were cloud-based, with a strong pipeline for future quarters. Turning to the specific subdivisions, financial crime management technology continued its strong momentum. We signed over 50 new clients in the SMB space, and we continue to make progress in the upmarket segment focused on Tier 1 and Tier 2 banks. In July, we signed a new international Tier 1 bank, which is also an exciting cross-sell. Going forward, we continue to maintain a strong sales pipeline within the core SMB segment, and we have a growing pipeline of new clients and upsells among Tier 1 and Tier 2 banks. Across regulatory technology, we see sustained demand across both existing and new clients, as financial institutions face increasingly dynamic regulatory environments including changes in regulation globally related to asset thresholds. Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel IV and preparing to implement Basel III Endgame. In capital markets technology, we continue to see strong demand for mission-critical technology as many of our clients focus on modernizing their infrastructure to enhance resilience and performance. For Calypso, we see robust new demand, especially in the treasury segment, in addition to cloud transformation of large-scale clients. In our market services division, we delivered revenue growth of 3%. We experienced healthy volumes across North America and Europe, and we achieved a sequential increase in North American options market share, as well as growth in NASDAQ U.S. equities on exchange market share and capture. Our U.S. index options achieved record revenues more than doubling versus last year due to higher capture and volumes. In our U.S. cash equities business, we executed successful Russell, MSCI, and S&P rebalances during the quarter, which showcased the strength and resiliency of our markets. During the Russell event, for instance, nearly 2.9 billion shares representing a record notional value of over $95 billion were executed in the closing process representing the largest liquidity event on the Nasdaq Stock Exchange or the Russell Reconstitution. In our European markets, the strength of our market ecosystem, as evidenced by the depth of book, breadth of participants, and product innovation, continues to drive market share gains. Overall, we're pleased to report a solid quarter of market services and remain focused on retaining our leading position across all of our markets. I now want to spend a few minutes updating you on how we're executing against our 2024 strategic priorities of integrate, innovate, and accelerate. Starting with integrate, we have actioned over 70% of the $80 million of net expense synergies, and our leverage ratio reached 3.9 times at quarter end, both ahead of plan. Both Axiom SL and Calypso are fully integrated into the financial technology division, and we've established strong leadership, a well-structured operating model, and a one NASDAQ go-to-market approach to ensure we're delivering for our clients with the highest level of efficiency and effectiveness. Our CRM's integration for the Calypso and Axiom solutions is now completed ahead of schedule, and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year. Importantly, across Axiom SL, Calypso, and Verifin, we've been highly focused on cultural integration into the broader NASDAQ enterprise. And internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients. We're also making strong progress advancing our innovate priority. We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity as well as driving our product roadmap. By the end of Q3, 100% of our developers will have access to AI co-pilot tools, and we recently had over 650 employees participate in several AI hackathons across NASDAQ. During the quarter, we continued to introduce new AI capabilities within our client-facing solutions. Consistent with other Gen AI capabilities recently launched in our Verifin and BoardVantage solutions, with an investment, we have deployed a new AI power feature for the Market Lens module called Pension Meeting Minute Summarization. The feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development and engagement priorities with top pension decision makers. We also have a strong pipeline of AI features scheduled to launch in the coming quarters, including in market surveillance and IR insight. And we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market. Specifically, Dynamic Mellow, the first SEC-approved AI order type, which we launched in April, is driving a 20% increase in both volumes for this order type and improvement in fill rates compared to the prior static version. Verifint's integrated GenAI feature, Entity Research Copilot, is now deployed at more than 250 clients, and we expect to complete our rollout in the third quarter. Client feedback has been positive, demonstrating that the integrated copilot functionality With the integrated co-pilot functionality, Verifin solutions can reduce alert research time by up to 90% compared to banks that do not use Verifin. Beyond AI, we continue to drive innovation towards key growth priorities. For example, in our index business, innovation is at the heart of our growth strategy as we extend the franchise to new markets globally, drive institutional adoption, and introduce new products beyond the NASDAQ 100. During the quarter, 50% of index product launches were outside of the United States, and we're quickly gaining traction in investor adoption. In total, we launched 18 new products with our partners, including 12 ETPs and three insurance annuity vehicles geared towards our institutional clients. Additionally, we're pleased that our AI-themed ETPs saw more than $1 billion of inflows over the last 12 months. Wrapping up with our accelerate priority. The addition of Axiom SL and Calypso has significantly elevated the dialogue we have with our clients as a strategic partner. There's no better evidence of that than the early traction we're seeing in our cross-sell efforts. Since closing the transaction, we have executed on 11 FinTech cross-sells. We had four this quarter, including two cross-sells of our Axiom SL solution to Calypso clients. This is a great start, but it's only the beginning on our journey to exceed $100 million in cross-sells by the end of 2027. Just eight months since the acquisition closed, 10% of the opportunities in our pipeline are cross-sells and we expect this to grow sequentially. The division has several strategic cross-sell campaigns underway, which are generating strong top-of-funnel interest and underpins our continued confidence in our ability to grow cross-sell bookings over the coming years. To wrap up, We're pleased to deliver a quarter of strong results driven by continued momentum and solutions and the power of our diversified platform to drive scalable, profitable, and durable growth. Importantly, we're delivering on the addenda acquisition thesis as our clients increasingly see Nasdaq as a strategic partner that can help solve their largest, most complex challenges. We look forward to leveraging this momentum to unlock our next phase of growth. And with that, I'll now turn the call over to Sarah to review the financial details.