Nasdaq, Inc.

Good day and thank you for standing by. Welcome to NASVAC third quarter 2025 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'd now like to hand the conference over to your first speaker, Atul Garrett, Senior Vice President and Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss NASDAQ's third quarter 2025 financial results. On the line are Dana Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After prepared remarks, we'll 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'll be making forward-looking statements in 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. We will discuss our financial performance on the non-GAAP basics, excluding the impact of a divestiture and the impact of changes in ethics. Adjusted and organic year-over-year changes reflect the $32 million revenue adjustment in the third quarter of 2024, but a change to the accounting treatment of revenues associated with Axiom SL on-premises subscription contracts, which are included in the financial technology segment. Definitions and reconciliations of U.S. GAAPs and non-GAAP plus adjustments 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. And with that, I will now turn the call over to Adina.

Thank you, Otto, and good morning, everyone. I will start with NASDAQ's third quarter results. and we'll then review the performance across our divisions before handing the call over to Sarah for a more detailed discussion of our financials. I'm pleased with NASDAQ's excellent overall financial performance in the quarter. We delivered $1.3 billion in net revenue, a year-over-year increase of 11%. Solutions quarterly revenues were over $1 billion for the first time in our history, a milestone truly reflective of our transformation to a leading technology platform, representing 10% year-over-year growth. Our overall annualized recurring revenue, or ARR, grew 9% to $3 billion. Expenses were $583 million, up 5% year-over-year. Operating income was $732 million, up 16%, and we delivered 19% diluted EPS growth. This quarter's results reflect the strength of our diversified platform and our ability to partner effectively with our clients on their evolving priorities. We're showing the value of being the trusted fabric of the financial system by empowering clients to leverage technology, data, and advanced analytics to help to capture opportunities, navigate risk, and strengthen resilience. We're reinforcing our leadership across the capital markets, deepening our competitive advantage as we drive innovation across the financial industry. As we look to the wider macroeconomic environment, the U.S. economy remains resilient, supported by solid fundamentals but economic signals are mixed. While some consumers have faced headwinds, overall consumer spending has picked up in recent months. Additionally, the services industry remains in expansion, and corporate investment in technology and AI continued, contributing to persistent economic growth. In Europe, although growth remains subdued, expectations for a recovery in demand and renewed investments point to a gradual outlook. We continue to see durable demand for technology that supports the modernization of the financial system and are increasingly supporting clients with AI-enabled solutions. As our investments in AI continue, we are deepening our competitive position and providing value to our clients through a combination of sophisticated solutions embedded with decades of expertise, our highly differentiated proprietary data, and the powerful network effects of our platforms across our clientele. Turning to our high-level financial performance within the divisions, Capital access platforms generated 8% revenue growth and 6% ARR growth. Financial technology delivered 13% revenue growth and 12% ARR growth. And market services delivered 13% net revenue growth. I'll now cover our business and operational highlights, beginning with capital access platforms, where I'll start with data and listings. We delivered a strong quarter in data and listings supported by our continued market leadership. In our U.S. listings franchise, we welcomed operating companies that raised $6 billion in proceeds in the quarter with over $14 billion raised year-to-date. The European listings business also delivered a solid third quarter, and we are pleased to welcome BearShore to the Stockholm market in October, the largest European IPO since 2022. Increasing IPO activity signals promising developments in the public markets. We see meaningful momentum. particularly among companies with strong fundamentals and compelling growth stories. From a macroeconomic perspective, continued global uncertainty is impacting certain sectors, resulting in some delays in IPOs. However, this dynamic is balanced by several trends, giving investors more confidence to invest in new issuances, including an expectation of lower cost of capital, the resilience of the U.S. economy, and the deregulatory agenda in Washington. Our IPO pipeline is robust, and we continue to expect a meaningful pickup in IPO activity in the quarters ahead. While we are experiencing some short-term delays from the government shutdown, a strengthening foundation is in place, and the market is showing signs of durable re-engagement. We are also encouraged by recent announcements from the SEC aimed at improving the public company experience. There has been meaningful progress on the policy priorities we outlined in our March white paper, particularly across scaled disclosure relief, smart regulation, and efforts to modernize the proxy process. We're pleased that the SEC recently approved the ability to file IPO documentation with mandatory arbitration as a condition, and we're encouraged by the administration's interest in reducing the frequency of SEC mandated disclosures. Moving to our data business, we delivered strong growth underpinned by robust sales and net retention, as well as active retail engagement in the markets, which continues to drive usage. This quarter, we signed five enterprise license agreements, including a leading U.S. financial advisory firm, showcasing our continuing momentum in this business. In our index franchise, we continue to deliver strong growth. We had a record $91 billion in net inflows over the last 12 months and $17 billion in net inflows in the quarter. We exited the quarter with ETP AUM of $829 billion in all-time high. We also continue to deliver on our three growth pillars of product innovation, international expansion, and institutional adoption. We launched 30 new index products in the quarter, including 18 international products and 13 in the institutional insurance annuity space. Within workflow and insights, our corporate solutions and analytics businesses benefited from new product innovations that are expanding the ways we add value to our clients. In corporate solutions, while the corporate buying environment in the business remains muted, our targeted investments in our product capabilities and client engagement are building on our foundation and resulting in improving growth and net retention. In analytics, we're focusing our efforts on enhancing investments capabilities and expanding our role across the broader investment management workflows through partnerships, setting the stage for meaningful and sustained growth. In Q3, we are pleased to sign an agreement with Juniper Square a fund operations partner to more than 2,000 private market GPs to distribute investment data through Juniper Square's fundraising platform. We're expanding the scale and reach of our unique data assets to meet the evolving needs of our clients and to enhance the value that we bring to asset owners and asset managers, including in the private market space. Since the beginning of 2025, we have nearly doubled the number of private funds covered within the investment to 60,000 funds supporting growth in new sales and upsells. Earlier this month, we completed the sale of Nasdaq Sylovis to Insight Partners. While Sylovis has valuable portfolio management capabilities to asset owners, we determined that its offerings were not a strategic fit within our portfolio and provided limited integrated value to the investment analytics platform. We believe Sylovis will be better positioned to grow and thrive under new ownership that is more closely aligned with its long-term direction. Turning next to financial technology, we delivered strong growth across all subdivisions. This was driven by sustained global demand for our mission-critical technologies and successful execution by our teams. Our sales execution remained robust as we signed 65 new clients, four cross-sells, and 97 upsells during the quarter. Turning now to a review of the subdivisions, starting with financial crime management technology, Nasdaq Verifin had another solid quarter of execution across its client base, which now totals more than 2,700 financial institutions, representing more than $11 trillion in collective assets. During the quarter, we signed Goldman Sachs as a new NASDAQ Barifin client. This cross-sell for our consortium-based payments fraud solution expands NASDAQ's relationship with the bank, demonstrating the strength of our One NASDAQ strategy. In regulatory technology, we continue to see strong momentum with six new clients, two cross-sells, and 31 upsells in surveillance and 22 upsells for AxiomSL. In the quarter, we are pleased to partner with the Commodity Futures Trading Commission, or the CFDC, to enhance its market surveillance and fraud detection capabilities by signing with us to deploy NASDAQ's industry-leading suite of surveillance technology. Additionally, early in the fourth quarter, we signed an AxiomSL cross-sell to a global Tier 1 bank for an enterprise cloud deployment. demonstrating how we are using both the scale of our solutions and the trust we've established across multiple products to reinforce our leading market position. Capital Markets Technology also delivered a solid quarter with strong sales momentum. We maintained robust client engagement in the third quarter and saw persistent demand for our technology solutions. Market Technology secured five upsells, and Calypso signed four new clients and 39 upsells. Now turning to market services. The division continues to deliver double-digit organic net revenue growth, reflecting broad-based strength across our U.S. and European markets. Growth resulted from elevated volumes in U.S. options and U.S. equities, as well as excellent growth in index options trading. We generated record revenues and volumes in the U.S. options in the third quarter, with the industry experiencing six of the top ten volume days in history measured by options contracts traded, with a subsequent record established in October. Within our U.S. options business, NASDAQ index options volumes also hit record levels in the third quarter with a subsequent record established in October. In U.S. equities, industry volumes remained robust during the summer months and have persisted into the fall. NASDAQ listed securities currently represent 53% of total industry volume, up from 49% a year ago. which demonstrates the strength of our platform as a trusted source to attract issuers and capital into the most liquid and transparent market in the world. In September, NASDAQ's closing cross set a daily notional value record. In summary, our strong third quarter performance reflects solid momentum across all three divisions. Driven by disciplined execution of our teams across our diversified businesses, including in continued progress on our strategic priorities of integrate, innovate, and accelerate. Within our integrate priority, we're extremely pleased that we surpassed our expanded net expense efficiency target with over $150 million actions as of the end of the quarter. We achieved a gross leverage ratio of 3.1 times at quarter end. In addition, S&P recognized our deleveraging progress with an upgrade of the company's senior unsecured debt rating from BBB to BBB Plus on August 12th, which results in both rating agencies having upgraded us back to our pre-Adenza acquisition levels. Within our innovate priority, we're pioneering the use of new technologies across the financial system and forming innovative partnerships to support our growth. This quarter, we submitted a filing to the U.S. Securities and Exchange Commission to leverage our existing resilient trading infrastructure that, if approved, will enable equity securities, and exchange-traded funds to be traded on the NASDAQ stock market in traditional and tokenized form. Our proposal is for the underlying security itself to be tokenized, preserving investors' rights and benefits of share ownership. Turning to AI implementation in our solutions, in corporate solutions, over 800 clients have opted into our AI-powered board summarization tools within BoardVantage. Our AI features with IR Insight drive efficiency in IR officer workflows, particularly related to deriving insights and connecting successfully with investors. In financial crime management technology, we're experiencing enthusiastic engagement with our clients in our rollout of NASDAQ Verifin's agentic AI workforce that we announced in Q3. The suite of digital workers is a new solution which we're offering to our existing client base to help address the resource-intensive pain points in daily compliance workflows. The first digital worker is our digital sanctions analyst, which we launched this month into production. Our next digital worker, a digital enhanced due diligence analyst, is on track for release by the end of the year. This quarter, NASDAQ Verifin also announced a strategic partnership with BioCatch, a leader in behavioral and device intelligence. In phase one of our partnership, where we've integrated BioCatch's alerts into the workflow of Verifin's anti-financial crime solution and launched a joint go-to-market campaign with Verifin's S&B segment, which is generating strong early engagement. Looking ahead, we plan to work with BioCash to accelerate our expansion into enterprise banks and international markets. Lastly, within our accelerate priority, our One Nasdaq strategy continues to deliver, driving four cross-sell wins across financial technology in the quarter, for a total of 30 cross-sells since the Venza acquisition closed. At the end of the quarter, cross-sells accounted for over 15% of financial technology sales pipeline, and we remain on track to surpass $100 million in run rate revenue from cross-sells by the end of 2027. We're also proud to see the impact of our transformation reinforced externally. NASDAQ made its first-ever appearance on Interbrand's Best Global Brands, an annual ranking of the top 100 most valuable brands, reflecting the critical role we play across the world's economies. Looking ahead to the remainder of 2025, NASDAQ remains well-positioned to continue to deliver for our clients and shareholders as we head into the final months of the year with strong momentum across our platform. With that, I'll now turn the call over to Sarah to provide more details on our financial results.

Thank you, Adina, and good morning, everyone. In the third quarter of 2025, NASDAQ delivered another strong quarter with 19% EPS growth. We surpassed the EPS acquisition milestone provided when we acquired Adenza, achieving our goal six months ahead of plan. Let's start with quarterly results on slide 11. We reported net revenue of $1.3 billion of 11% with solutions revenue of 10%. exceeding $1 billion for the first time. Operating expense was $583 million, up 5%, leading to an operating margin of 56% and EBITDA margin of 58%, both up 2 percentage points over the prior year quarter. This resulted in net income of $511 million and deleted EPS of 88 cents. Slide 12 shows the drivers of our 11% net revenue growth for the quarter. We generated eight percentage points of alpha driven by new and existing clients and product innovation. Beta factors contributed three percentage points of growth this quarter driven by elevated volumes in market services and higher valuation in NASDAQ indices. As shown on slide 13, We achieved a third consecutive quarter of 9% ARR growth, including 12% in FinTech, and ARR surpassed $3 billion for the first time. Total SAS revenue grew 12% for a second consecutive quarter, including 17% SAS growth in FinTech. SAS as a percentage of ARR increased one percentage point versus the prior year quarter, to 38%. Let's review division results starting on slide 14. In Capital Access Platforms, we delivered revenue of $546 million, up 8%, with ARR growth of 6%. Data and listings revenue was up 6%, with ARR up 7%. Data revenue growth was driven by new sales upsells, and usage. We also had improved listings revenue growth due to the increase in IPO activity. Growth from new listing and pricing was partially offset by delisting and lower amortization of prior period initial listing fees. This is consistent with our previous comments, and our previously stated expectations of these impacts in the fourth quarter remain unchanged. Index revenue was up 13% in the quarter, with 9 percentage points from alpha factors. Revenue growth was driven by a 35% increase in average ADP AUM, which reached a record $777 billion. The strong growth of AUM was partially offset by a year-over-year decline in derivatives contract volumes mixed shifts in asset-based products and derivatives, as well as a decline in revenue from discontinued advertising on nasdaq.com. Net inflows over the last 12 months reached a record $91 billion, including $17 billion in the third quarter. In workflow and insights, revenue was up 5% with AR growth of 4%. The revenue increase was driven primarily by analytics, mainly investment and data link, with continued demand from hedge funds, asset managers, asset owners, and consultants who value our differentiated data and continued product enhancements. Corporate solution revenue was essentially flat, but we saw improving new sales as well as better growth and net retention trends. Quarterly operating margin for the division was 60% of two percentage points versus the prior year quarter. Before we wrap up on cap, the impact of the October 16th Solovit sale will be approximately $7 to $8 million in quarterly revenue, with approximately $6 million in direct quarterly costs. Moving to financial technology on slide 15. Revenue was $457 million, up 13%, with AR growth of 12%. Our business continues to experience strong demand across all FinTech subdivisions and high levels of client engagement. The division signed 65 new clients, 97 upsells, and four cross-sells in the quarter. Poor sales continue to represent over 15% of the financial technology division pipeline, with strength across all three subdivisions. Financial client management technology revenue grew 22%, with AAL growth of 18%. We signed 55 new SME clients in the third quarter. Net revenue retention was 111%, reflecting strong client engagement supported by the increasing adoption of the GenAI Entity Research Copilot and Targeted Typology Analytics. We also had continued momentum with enterprise clients, including the CrossDoc to Goldman Sachs, which Adina mentioned earlier. With that, we are at six new enterprise client signings so far this year, which is more than triple the number of enterprise signings in 2024 and more than double the ACV. As the business continues to make strong progress in moving up market, we want to reiterate that sales cycle and time to value for Tier 1 and Tier 2 deals can take time to flow into subscription revenue run rate. We continue to expect the recent enterprise signings to translate into stronger revenue growth starting in the fourth quarter, consistent with our comments last quarter. Regulatory technology revenue grew 9%, with AR of 11% for the quarter, respecting the declining professional services revenue versus the prior year period, which we expected and communicated on the second quarter call. The subdivision signed six new clients, 53 up sales, and three cross sales. Revenue growth reflects solid performance, And we continue to expect professional services revenue to start to improve in the fourth quarter and early 2026. Capital markets technology revenue grew 12%, benefiting from strong performance in trade management services and a contribution from Calypso upfront revenue. ARR was up 10% for the quarter. The subdivision signed four new clients and 44 upsells. Financial technology operating margin was 45%, up 1.5 percentage points versus the prior year quarter. As we wrap up our solutions division, we continue to expect full-year 2025 revenue growth within the medium-term outlook for both capital access platforms and financial technology, with capital access platforms at or slightly above the high end of the range. coming from continuous trends in index growth and slightly better than expected performance in data and listings. Within FinTech, we have great business momentum in financial crime management technology. But based on the performance of the first three quarters of the year, we are expecting the business to end the year just below the range. Turning to market services on slide 16. We had net revenue of $303 million reflecting growth of 13%. Growth was primarily driven by elevated market-wide equities volumes, record U.S. option industry volumes, increased volumes and capture in index options, with index options revenue more than doubling versus the prior year period, and elevated capture in European derivatives. This was partially offset by lower share in U.S. options lower capture in U.S. equities, which our team is managing actively and effectively in a competitive landscape, and lower U.S. equine revenue versus the prior year quarter, which included a previously disclosed $3 million benefit, reflecting cumulative audit and other one-time benefits. Market services operating margin was 65% at 5 percentage points versus the prior year quarter due to higher revenue. Moving to expense on slide 17. We had operating expense of $583 million, up 5%, driven by employee compensation, strong investments in technology and people to support revenue and drive innovation and growth, and other increases largely due to inflation. This resulted in an operating margin and EBITDA margin both of two percentage points to 56 and 58% respectively. We are updating our organic expense expectations for the year to a range of $2.305 billion to $2.335 billion from the previous range of $2.295 billion to $2.335 billion. This update reflects our strong revenue growth throughout the year, continued investments in our technology and people, and the sale of Soloviz that just closed, which was mostly offset by effects. Lastly, on expense. We have surpassed our expending net expense efficiency program target of $140 million, with over $150 million in cost reduction action as of the end of the third quarter. on taxes, while we believe our previous 2025 non-GAAP tax rate guidance of 22.5% to 24.5% is an appropriate expected tax range, we are lowering our four-year tax guide to 22.5% to 23.5% due to some discrete items that were taxed in the third quarter. Turning to capital allocation on slide 18. NASDAQ generated free cash flow of $516 million in the third quarter and $2.1 billion in free cash flow over the last 12 months at a strong conversion ratio of 110%. This strong level of cash flow supports our dividend, deleveraging, and share repurchases. We paid a dividend of 27 cents per share, or $155 million in the quarter, representing a 33% annualized payout ratio. In our continued commitment towards deleveraging, we repurchased $69 million of debt and reached a gross leverage ratio of 3.1 times at the end of the quarter, which was an improvement of 0.1 times from the second quarter. We expect to reach 3.0 by the end of the year, excluding the effects of FX. We also repurchased a total of 1.2 million shares of our common stock for $115 million in the third quarter. In closing, NASDAQ delivered excellent results in a dynamic operating environment while demonstrating strong operating leverage. Our third quarter financial results, particularly the new records in quarterly solutions revenue and ARR, reflect a transformation into a leading technology platform. We remain confident in our ability to achieve our strategic objectives, deliver sustainable growth, and generate long-term shareholder value. With that, let's open the line to .

Thank you. As a reminder, to ask a question, you need to press star 11 on your telephone. To withdraw your question, please press star 11 again. We ask that you please limit your questions to no more than one, But feel free to go back into the queue, and if time permits, we will be happy to take your follow-up questions at that time. Please stand by while we compile the Q&A roster. And I show our first question. It comes from the line of Michael Cho from JPMorgan. Please go ahead.

Hi. Good morning. Thanks for taking my question. I just wanted to touch on digital assets here for my question. Someone's in surveillance today as well as the ongoing tokenization initiative, but there seems to be a growing presence of digital assets and crypto across NASDAQ's various businesses. Can you just talk through any particular areas where you think NASDAQ has a propensity to drive higher growth? And is there a broader approach to frame the opportunity you had for NASDAQ as the digital ecosystem continues to develop?

Great. Thank you, Michael. Yeah, well, We've been involved with the digital assets ecosystem now for many years as a technology provider, and we continue to grow and expand in that way. So we definitely see our fintech solutions being highly relevant as the digital asset ecosystem grows, expands, and more institutional interest in digital assets becomes more mainstream. So we're very excited about what we do in terms of supporting markets around the world with trading technology, surveillance technology. We now have trade surveillance. technology that is specific to crypto assets. And then we also provide, you know, we're working with a digital asset ecosystem on collateral management capabilities. We did a POC earlier this year with some digital asset players to help show that we can use blockchain-based technology to manage collateral. So we're doing a lot to support the trade infrastructure solutions as we think about the institutional adoption of digital assets. So Very excited in the fintech space. And then in the index space, we have investable products, index products that we've launched with crypto assets. And we also, of course, are the listing exchange to iBit and other crypto index ETFs. So we see ourselves as having kind of a broad-based opportunity across, frankly, our entire franchise. And then as a market operator, we're encouraged by the fact that the SEC and the CTC are cooperating together and thinking about the regulatory landscape for the crypto markets. And that, obviously, as we understand what that regulatory landscape is going to look like, and as we think about investor protection and the need for us to be able to provide resilient infrastructure, we also think that there could be an opportunity for us to expand there, but We really want to make sure that we understand the regulatory landscape and see where that's going first.

Thank you. And I show our next question in the queue. It comes from the line of Michael Cypress from Morgan Stanley. Please go ahead.

Hey, good morning. Thanks for taking the question. Maybe just along the same themes, just thinking a little bit on tokenization, if we could. You've announced a proposal to allow for tokenized securities to trade on your exchanges. I was hoping you could elaborate on how you envision that working. What are some of the key issues and hurdles that need to be resolved? And more broadly, how do you think about some of the use cases? What do you think is most compelling and who would be minting the token and how would that mechanically work?

Well, that probably requires a deeper conversation, but I'll give you a high-level overview. As we think about our tokenization filing, the way that we envision it and how we've discussed it with the SEC and with our clients is that on an order-by-order basis, an investor will be able to flag an order to say that I want these shares that I'm buying to be settled in a tokenized form and put into a digital wallet. So that flag would flow through our systems and into the post-trade systems. We're working collaboratively with DTCC to understand exactly how they would then have two different settlement paths. Think about it that way, is that there are two different settlement paths that they're developing, which would either settle it the normal way, or settle it into a digital wallet infrastructure. They have, I think that, you know, they're working with their clientele, but they're looking at a couple of different blockchains to be able to launch with. And then I think their hope would be to be able to offer more than one underlying blockchain technology that investors would be able to choose to settle in. And then basically that path would then drive it into a digital wallet. That digital wallet would then be available to those investors through their brokerage firm or through their investment management firm that gives them access to the securities in a way that might be, you know, more fungible and more usable within their overall investment portfolio that may include other digitized financial assets. So it's really a – Think about it this way. You know, our markets are the most liquid, efficient, affordable market for investors to trade in. And we're really proud of that. It's an incredible creation that the U.S. markets have here and the U.S. equities market. So the first thing is let's make sure we don't do anything that changes the nature of our markets and providing all those benefits. But the next thing is let's offer investors more choice. And the choice is that they want to have their securities available to them in digital form or tokenized form. And we're doing that with the underlying infrastructure providers. We're making it so that the underlying equity itself is tokenized and it's not a derivative of the equity. It's the actual equity itself. And we're also not changing the overall settlement cycles as we kind of walk into this. I think that's You know, there's going to, you've got to look at kind of a walk-run type of program here, and the overall timing of settlement will remain the same. But when we think longer term as to, like, why is tokenized, why would tokenized equities, you know, who benefits from that, and how does that become a benefit for the system? If you think about all assets, whether it's tokenized equities or treasuries or others being in a tokenized form, it allows for the mobility of collateral, right? So it allows us to look at collateral as much more mobile, Obviously, our Calypso platform helps with that collateral mobility over time. We also think that if you are able to change the settlement cycles over time, it does continue to reduce risk in the system. And then also, you know, it can also create capital efficiencies if you have a more seamless payment infrastructure to support global payments. So we are a supporter of it. We do believe our markets are, frankly, the best in the world, and we want to make sure we maintain that. while we bring the technology into them in a staged process.

Thank you. And I share our next question, and the cue comes from the line of Benjamin Budish from Barclays. Please go ahead.

Hi. Good morning, and thank you for taking the question. I know it's a little maybe early to talk about your 2026 outlook, but just curious on the OPEX side, you know, it looks like your full-year guidance implies much slower year-over-year growth in Q4. You know, in your prior medium-term guidance, you laid out this sort of, you know, three-percentage-point gap between your expected solutions growth and OPEX growth, you know, assuming that the OPEX will sort of flex up and down with solutions but creating some operating leverage there. There's a number of initiatives. You're talking about tokenized equities. You've talked in the past about upgrading to be able to operate exchanges 24-5. So just curious, given the revenue momentum, any early thoughts you can share on what the pace of spend looks like going into next year? Thank you.

Yeah, I would describe our trajectory as consistent. So what you're seeing is very much in line with the medium-term outlook that you just mentioned. We are experiencing, as you have seen over the last three quarters, this one included, that we have very strong revenue, very strong solutions revenues being double-digit for both of those for each of the three quarters. And not surprisingly, this is resulting in some volume-related expenses. And we are continuing to fuel the investments, all of the things that, as I just mentioned, are very much funded in the guidance that we have given you for the four years.

Now, as we think about, you know, ongoing investments, you know, what we want to make sure is we believe that we are a provider of solutions that help the entire financial ecosystem modernize. And those investments are embedded in what we've provided you in our guidance for this year. And as Sarah said, you know, we kind of think of ourselves as consistent in how we sponsor investments in our platform. We have very robust product roadmaps across our solutions, our technology solutions. The 24-5 trading is embedded in kind of the outlook that we've provided to you and as we think about that investment and going into 26. All of those things are incorporated into how we're thinking about the investment landscape within the business while also taking that efficiency program and factoring that in as well to help us fund these kind of H1, H2, what we call Horizon 1, Horizon 2 types of investments. We're trying to make sure we're driving as much efficiency into the core enterprise as we can.

Thank you.

And I share our next question. comes from the line of Alex Cram from UBS. Please go ahead.

Yes, hey, good morning, everyone. Sounds like the fin crime business is maybe the only business that's kind of lagging your expectations for the year a little bit. I know you gave a lot of detail already what's going on there, but maybe you can kind of flesh out a little bit more what exactly is driving the maybe slower than expected expectation and what gives you confidence to accelerate here in the fourth quarter. And maybe related to that, I think last quarter you talked about a proof of concept with a European bank. Any update on that one would be helpful as well. Thank you.

Great. Thanks, Alex. Yeah. So as we think about the overall anti-financial crime business with Verifin, we have, as you know, there's got three legs to our growth journey. One is in the S&B space, the small to medium banks, and we continue to see very robust sales Very strong engagement. We have new opportunities to grow and expand in that space with the BioCatch partnership and the kind of the way that we have structured that partnership to offer new capabilities to our clientele with integrated workflows to make it so it's a very seamless experience for them. And then also the new agentic AI capabilities will be a new module that we will offer and sell to them. So we have ways to continue to expand the growth there. And that's kind of, as you know, that's kind of the core of the business. It has been the core of the business. As you've gone into the enterprise space, we're going to see a little bit more variability quarter-over-quarter in ARR growth and growth because, first, we're implementing those solutions, so that creates some implementation revenue that may not be completely consistent quarter-over-quarter. Secondly, as you've seen, we've signed three times more enterprise clients this year than we did last year. so far, and so we definitely want to make sure that, you know, we're in the midst of implementing them, and they should come online and help drive more ARR growth in future quarters as we come online. And then we also then have our international expansion, and we're extremely early there. We are very encouraged by what we've seen from the proof of concept so far, and we are engaging with several clients across Europe. But it's going to take time for that pillar to come online because, you know, these sales cycles are not short. We're trying to, you know, we're wanting to make sure we prove ourselves to a whole new set of clientele in a different region of the world. And we actually do think over time also the BioCatch partnership will help with that whole program because they are very global in their clientele and they can help introduce us just as we're introducing them to ours. So there's a lot of reasons why we see a lot of momentum in the business. And we do think that it should show an improving trajectory, as we said earlier, as we go towards the end of the year and into next year.

Thank you. And I share our next question coming from the line of Dan Fannin from Jefferies. Please go ahead.

Great. Thanks. Good morning. I wanted to follow up on capital markets technology. You talked about trade management services in the quarter as well as some data center growth. So just curious a little bit more detail around the momentum in that business as we think about the fourth quarter. as well as into next year?

Sure. Well, as you know, Capital Markets Tech contains three key businesses. We have our Market Tech business, our Calypso business, and the Trade Management Services business, which includes the connectivity services for our markets in the U.S. and Europe. And what we've been seeing is really strong demand for connectivity services in our markets. As you've seen, the market volumes be very robust. I think that supports the the interest that our clients have in driving more connectivity capabilities and putting more technology in the data center to support that trading activity. We have increased the size of the data center, which has given us more room to support that growth, and we have a lot of engagement with clients there that's driven the growth this year. And then we also, within Calypso, we continue to see very robust demand for Calypso, And we're very pleased to see that we're, you know, that the clients are looking at us as a core, you know, partner across collateral management, treasury management, trading response. All of those solutions are being quite successful. I think that, you know, there's certain areas of the world also that we've seen nice growth with our Calypso services, particularly in Latin America has been an area of real growth for us there. And then in our market tech business, Latin America, again, is an area that we've done a nice job of expanding our presence there. And we have had some good, you know, good upsells to our clients this quarter. And overall, new sales for the year have remained nicely, you know, very nice. So we see, you know, just generally speaking, a healthy environment as we finish up the year and going into next year.

Thank you. And our next question comes from the line of Alex Blosin from Goldman Sachs. Please go ahead.

Hi. Good morning, everybody. Slightly bigger picture question for you on AI broadly. You know, in the last couple of months or quarters, the market continues to sort of contemplate various areas of potential disruption, whether it's in business services or other type of software businesses as well. So two-part question here. So I guess one curious how you sort of think about areas of risk when it comes to AI with respect to NASDAQ's revenue model and as an offset potentially incremental revenue opportunities as well as areas where the expenses could also be sort of pivoted and where you guys could extrapolate some efficiencies relative to the sort of 5% to 8% expense growth that you have over time. Thanks.

Great. Thanks, Alex. I think we feel very protected as a business in the way that kind of the core assets of our business, very protected from the potential risks that might come from AI. But we actually see it very much as just a big opportunity. So one is we have two programs within NASDAQ. One is focused on AI in the products, and the other is focused on AI on the business. So how are we changing our business operations to integrate this technology across key areas of workflow. We're focused first and foremost on product development because it's such a big part of our business. It's a large part of our organization. And what we're focused on there is how do we use as much automation as possible to drive efficiency in what we call 8-0 work, like the core like keep the lights on type of activities for our products, because that's generally the most repetitive activity. It's generally kind of the small things we have to do. It's a very nice opportunity for us to drive automation across the product development lifecycle. And that then frees up capital for us and frees up resources for us to focus on H1, Horizon 1 and Horizon 2 opportunities in the products and support those robust product roadmaps that I mentioned. And that, I think, is a big opportunity for us. And so we are really focused on that area. The second is on client experience and client implementations, where we're trying to drive as much automation in those areas as well because it just drives efficiency in how we serve our clients and improves the outcomes for our clients because our answers can be very consistent and how we interact with them can be very consistent. in addition to driving automation and client implementation. So those areas are where we're really focused on scaled implementation of AI on the business. And then in the products, you know, we have, first of all, a product suite that requires an enormous amount of expertise. These are very custom-tailored solutions to the needs of our clients that are very sophisticated, very complex. And I think that, first and foremost, is an important element of differentiation. The second, of course, is we have highly differentiated data. whether it's the consortia data lake within investment, within Verifin, obviously the data that comes off our markets. And as we have actually looked at other of our solutions and we've moved more of our solutions into cloud technology, it gives us a chance to have more data assets really aggregated to benefit and improve the products and provide differentiation in those products. So the data itself, I think, is a real differentiator. And then the last thing is that, you know, we've been so focused on making sure that we modernize our solutions and offer them and bring AI into the products themselves so that we can make workflows a lot more efficient. The Gentic AI that we've launched in Verifin, in some cases we've seen situations where it reduces the workflow time by 80%. So it is going to deliver a very strong ROI to our clients, and we think that that is a huge benefit. And we see those opportunities across anti-fin crime, surveillance, regulatory reporting in Axiom and in Calypso. So we think that there's a chance for us to really propagate that across our platforms and deliver real value to our clients. So we're excited about what we can do for our clients, and we are actively pursuing that as a core part of our strategy.

Thank you. And I'm sure our next question comes from the line of Brian Bedell from Deutsche Bank. Please go ahead.

Great. Thanks. Thanks. Good morning. Thanks for taking my question. Great. Thanks. Thanks. Good morning. Thanks for taking my question. Maybe just right along those lines, actually, the last question on the digital AI workers as well, as you talked about earlier, Adina, just maybe relaying that to the revenue synergy targets of exceeding 100 million before the end of 2027. Do you see the emergence of your AI solutions helping to advance that faster, and then if you can just remind us where you are currently on that revenue synergy target as we go into 2026.

Yeah, so as we've mentioned, we've been disclosing the number of clients that we've been able to achieve for our cross-sells, and that is we're up to 30 cross-sells so far since the closing of the agenda deal. And we also provide you a consistent statistic that says how much of our pipeline is underpinned by cross-sells. And that's about 15%. And that's been persistent, which we think is a strong indication of demand. So even as we're signing those cross-sells, we're replenishing the pipeline with more cross-sell opportunities. And so that consistency, I think, is very encouraging. In terms of the AI and how that can help, absolutely. I mean, I think the more we can deliver those advanced solutions that really – help clients change the way that they are doing their own workflows. And we can bring capabilities into these solutions, you know, with a very robust, you know, from a cybersecurity perspective, from an expertise perspective. And they know that, you know, we're a trusted provider and a trusted partner. We're a critical infrastructure provider ourselves, so we know how important it is to do these things the right way. I feel that our clients are really embracing us to provide those solutions to them. And I think that will, of course, continue to support our cross-sell efforts and give us, you know, and I think also, you know, we are seeing a lot of the upsells are because of the Gen AI capabilities that we're offering in our solutions. So it is definitely a catalyst, but, you know, it's just giving us increased confidence.

Thank you.

And our next question comes from the line of Eli Abboud from Bank of America. Please go ahead.

Good morning. Thanks for taking the question. To what extent is the BioCatch announcement a one-off partnership versus an adjustment in your strategy at Verifin? I know the AML fraud space is a lot of startup activity. I wonder if there are other firms in the ecosystem that would pay for access to the Verifin network. I mean, maybe said a little differently, like could Verifin become more of a platform provider than a vendor?

Yeah, so actually we see Verifin already. Certainly architecturally, Verifin is a platform. Like the way that it's architected, the platform layer, the ability to integrate through modern APIs, very much built for that to be a possibility. And so that integration of BioCatch's alerts into our workflows has been quite seamless, and it's an easy integration. But BioCatch itself actually is quite a scale business, I have to say. It's a global business. It's not a U.S.-based business, but it's a very scale business. It's growing very nicely, and it has a large client base outside the U.S. we are really pleased to have them as a partner. So just to give just like one second on BioCatch itself, and then I'll think about, you know, how do we also see this as a natural way to expand and extend what we do. You know, BioCatch focuses on pre-transaction signals. So they integrate into bank applications so that they can understand the behaviors within those applications. And when they see the potential for, let's say, an account takeover, or they see the potential for a client of the bank to be instructed by someone that is not them, or they see behavior in the actual app that's different than normal behavior by the client, they then send an alert to the bank. And the bank can then choose to stop the transaction before it occurs. It's really elegant. It's very advanced. And it's using the same kind of AI, algorithmic AI that we use post-transaction or at the transaction and after. So by integrating their pre-transaction analytics with our at and after transaction analytics, it really does create a complete solution for our bank clients to really take down the potential for fraud to occur within their systems. And so we're very excited to have that partnership because it's just a way for us to add even more value to the clients. And then the workflows themselves, by having their alerts in our workflow engine, it makes those small to medium banks, they have a you know, they have a limited client number of people who can support this. So it makes it much easier for them to manage their workflows. So it's a really great way to show that we can expand our capabilities for partnerships. And I would agree that, you know, this is the first, but we do see other opportunities going forward.

Thank you. And I see our next question comes from the line of Ashish Sabadra from RBC Capital Markets. Please go ahead.

Thanks for taking my question. I just wanted to focus on the REC Tech. You continue to see good momentum there, but just wanted to understand how are the conversations with the bank or your customers in general on the regulatory technology solutions? And then just maybe a follow-up on the CFTC partnership. How should we think about the benefit of the partnership outside of CFTC? Thanks.

Sure. Yeah, you know, it's really been great to see the momentum in both AximaCell and Surveillance. So, there are a few things. So, on AccuMSL, we've definitely had more engagement by our clients as we've gone through the year. The regulatory environment is becoming a little bit more clear. And so, that's helping clients make decisions and partner with us. And, you know, what we always say is, you know, deregulation is actually, you know, overall a good thing for the industry if we can do it a smart way. So, smart deregulation is what we support. And so, but at the same time, regulatory changes, and there still is regulation across the world. And there's so many different regulators and they're all kind of going in different directions that Axiom SL remains just an incredibly valuable capability for our clients. And as you mentioned, in early October, we signed another Global Tier 1 to our cloud-delivered solutions for Axiom SL, supporting them in new areas of regulatory reporting. Very, very excited about showing that expansion in addition to all the upsells we had in the quarter. So, XMSL, strong demand. And then within surveillance, that also has been a very persistent grower with new sales and upsells. And CFTC is a great example where if we can go in and we have more regulators around the world using market surveillance, then they kind of are the center. You know, if they're using it, then it kind of catalyzes the member firms to that regulator to say, oh, well, if they think this is the best technology, then maybe I should look at it as the best technology. And so it can drive sales conversations out into the trading firms that are tied to that regulator. We've seen that also in another example of that was in OROP, which was for Axiom SL, but a similar idea where If you provide regulatory reporting to the central regulator, and then they encourage the banks to use the same technology to drive their regulatory reporting into that regulator, it kind of creates that really nice network effect. And we see that across Calypso, Axiom of Sale, and surveillance as a good way to expand the business.

Thank you. And I show our next question comes from the line of Owen Lau from Clare Street. Please go ahead.

Hi, good morning. Thank you for taking my question. Sorry, I was on another call, so I'm not sure whether you have addressed the tokenization question. So NASDAQ filed with the SEC to trade tokenized equities. Could you please give us an updated view on using blockchain to trade an already very liquid market? How do you see the incremental opportunity here? Is this something that you want to keep this in your back pocket at this point, or you have already seen a good demand to trade tokenized equities for U.S. and non-U.S. investors? Thanks a lot.

Thanks, Owen. Yeah, we did actually cover that topic earlier, but the angle of your question is a little different. So I think we started the conversation by saying, The U.S. equities markets are the most liquid, the most efficient, effective, and affordable markets if you look at just overall trading costs in the world. I mean, they're just amazing. They're amazing markets. So the first thing we want to do is make sure we don't do anything that disrupts everything that we've created here. But what we do see as a natural expansion and expansion of the market opportunity is to create the choice for investors to be able to hold their shares in a tokenized form or in a traditional form. And that just gives them more ability to have flexibility as to how they manage their overall investment portfolio. And we are, you know, there is certainly an overall trend towards tokenization. It's just a great technology that creates streamlines, you know, that creates kind of a streamlined portfolio. payment infrastructure and the potential for more efficiency and post-trade processing. But the first stage of our program is to introduce certainization at the core equity level, security level, not as a derivative of the security, but at the security itself, keeping that all in the markets and the trading within the markets itself, and then also over time working with core infrastructure providers like DTC and others to create more efficiency in post-trade. But we are very well partnered with DTC as they're evaluating and implementing this as a first step.

Thank you. And I share a last question, and the cue comes from the line of Jeff Schmidt from William Blair. Please go ahead.

Hi. Good morning. On the Axiom to Calypso cross-selling opportunities, you know, I know Toma Bravo never really kind of fully monetized that avenue, but are you doing anything different than they did? And just, you know, are you seeing those opportunities pick up under your leadership?

Yeah, I mean, the first thing that actually they had done before we acquired the two businesses is they had created a data connector between Axiom and Calypso, so that if you were already a Calypso client using it for trade infrastructure, the data from Calypso could easily be sent over into Axiom SL which would help ease the implementation of Acumasel for the regulatory reporting off the back of that trade infrastructure. So that was something that they had implemented, and we were very excited about that because we could, I think we actually gave an example of that at our investor day with M&T Bank. So it was a really good way to kind of ease implementation and create more natural consistency. And we continue to find ways to create those connectors across the solutions. But also, as we think about, you know, engaging our clients, you know, the higher up in the clients you go, the more holistic the conversation becomes. You know, if you're the COO of a bank or the chief risk officer of a bank, you're going to be looking holistically at, how do I manage risk? How do I manage the regulators? How do I manage crime out of the systems, you know, out of the networks? And so, when we get to that level and we can have those holistic conversations, I think NASDAQ has been very successful at doing beyond the capabilities of Adenza it really changes the dialogue with the clients. You know, the best question that I get from the clients are, what are other banks taking that I'm not taking from you? I love that question because it creates a much more holistic conversation in terms of how we can support them holistically across the core risk management and trading, the regulatory risk management that they have, and then the bank risk management across the transactions. And then, of course, you know, we then can expand that conversation over into their wealth side with the data and the index capabilities that we offer. And it just kind of flows across the bank in terms of how we support them in everything we do across CAP and our markets and fintech.

Thank you. This concludes our Q&A. At this time, I'd like to turn the call back to Adina Friedman, President and CEO, for closing remarks.

Great. Thank you very much for joining the earnings call today, and I look forward to speaking to all of you again in January. Thanks very much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.