NDAQ — Nasdaq, Inc.

Nasdaq Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Revenue: $1.5 billion, up 15% year-over-year.
• Solutions Revenue: $1.2 billion, up 17%.
• Annualized Recurring Revenue (ARR): Grew 12% year-over-year to $3.3 billion.
• Operating Expenses: $641 million, up 10%.
• Operating Margin: 57%, EBITDA margin at 60%, both up 2 percentage points year-over-year.
• Net Income: $605 million, with diluted EPS of $1.07, up 25%, marking the first time EPS exceeded $1.
• Free Cash Flow: $477 million for the quarter, with a 97% conversion ratio over the last 12 months.

2. Strategic Updates and Business Highlights

• Index Business: Surpassed $1 trillion in assets under management for the first time, with record net inflows of $51 billion in Q2 and $109 billion over the last 12 months.
• Capital Access Platforms: Strong IPO environment with notable listings including SpaceX, which raised $86 billion, the largest IPO in history.
• Financial Technology: Revenue growth of 15%, driven by strong client engagement and demand for market modernization solutions.
• Nasdaq Verafin: Revenue growth of 22%, with over 2,800 clients managing more than $13 trillion in assets.
• AI Integration: Continued focus on AI capabilities across products, with clients eager to adopt AI tools that enhance efficiency and reduce operational time.

3. Forward Guidance and Outlook

• Nasdaq remains optimistic about the IPO environment, expecting a robust pipeline in the second half of 2026 driven by diverse sectors including AI, healthcare, and defense.
• The company is on track for a projected launch of 23/5 trading by December 6, 2026, and has received SEC approval for event options, with a planned launch in Q4.
• Non-GAAP expense guidance for the year has been updated to $2.530 billion to $2.570 billion, reflecting increased employee compensation and marketing expenses.

4. Bad News, Challenges, or Points of Concern

• Expense Increases: Operating expenses rose due to higher employee compensation and increased marketing costs, which may pressure margins in the future.
• Tough Comparisons: Anticipated tougher comparisons in Capital Markets Technology due to prior year contributions from Calypso upfront revenue.
• Regulatory Environment: Ongoing discussions with regulators regarding market structure changes, including potential impacts from the evolving landscape of perpetual derivatives and the implications for Nasdaq’s business model.

5. Notable Q&A Insights

• AI Monetization: CEO Adena Friedman discussed a product-by-product approach to AI monetization, indicating that while some AI capabilities are integrated into core products, others may be offered as separate modules.
• IPO Pipeline: Friedman emphasized a broadening IPO pipeline beyond megadeals, highlighting strong interest across various sectors.
• Market Technology and DeFi: Nasdaq is focusing on interoperability with established markets rather than engaging directly in decentralized finance (DeFi) initiatives.
• Financial Crime Trends: There is increasing client concern regarding AI's role in financial crime, with Nasdaq leveraging AI to enhance its capabilities in detecting and preventing such activities.

Overall, Nasdaq's Q2 2026 results reflect strong growth across its divisions, driven by strategic initiatives and a favorable market environment, despite facing challenges related to rising expenses and regulatory changes. The company is well-positioned for future growth, particularly in AI and market modernization.