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Nasdaq, Inc.
CEO : Ms. Adena T. Friedman

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	7.8% YoY	2.0%	-5.8%	2023-01-25

Adena Friedman says,

Financial Performance

• Nasdaq achieved $906 million in net revenues in Q4 2022, a 2% increase compared to the prior year period and a 5% increase on an organic basis.
• Annualized recurring revenue, or ARR, ended the year at $2 billion, an increase of 8% year-over-year.
• Non-GAAP earnings per share of $2.66 increased 6% from 2021.

Capital Access Platforms Business

• Delivered $420 million in total revenue in Q4 2022, a 2% increase in organic growth.
• Maintained its position as the leading U.S. exchange for IPOs for the tenth consecutive year with 87 operating company listings for a 92% annual win rate.
• Annual listing fees and growth in proprietary data revenues driven by higher international demand, partially offset by a decrease in initial listing fee revenues.

Index Business

• Saw revenue decrease by 11% versus the prior year period, primarily due to lower average AUM and exchange-traded products linked to Nasdaq indices, partially offset by higher revenues related to futures trading linked to the NASDAQ 100 Index.
• Net inflows into exchange-traded products totaled $34 billion in 2022, and we saw demand grow for our new offerings with 44 ETPs tracking Nasdaq indexes.

Market Platforms Division

• Delivered $403 million in total revenues in Q4 2022, a 3% increase from the prior year period or 5% organic growth.
• Trading Services business delivered combined total revenue of $253 million for the fourth quarter, an increase of 4% organically from the prior year period.
• During the fourth quarter, we were incredibly pleased to announce the migration of Nasdaq MRX, 1 of our 6 U.S. options exchanges, to the cloud in partnership with Amazon Web Services.

Anti-Financial Crime Division

• Delivered $82 million in total revenue during the fourth quarter, a 21% organic increase from the prior year period.
• The revenue increase was driven by strong demand for our fraud detection and anti-money laundering solutions or what we call our FRAML solutions in addition to modest growth in our surveillance solutions.
• The business saw continued growth in new clients across small to medium banks with 98 new SMB clients signed during the quarter.

Ann Dennison says,

Revenue and Margin

• Reported net revenue increased by 2% to $906 million while organic growth was 5%. Trading Services’ organic growth totaled 4%.
• Non-GAAP operating margin decreased from 51% to 49% YoY.
• Full year 2022 non-GAAP operating margin totaled 52%, which is a decrease of 1 percentage point from 2021.
• Market Technology business delivered another quarter of organic growth, driven by higher SaaS revenues and strong order intake during the period.

Expenses and Guidance

• Non-GAAP operating expenses increased by $26 million to $460 million, primarily driven by higher compensation and benefits expense and general and administrative expense.
• Initiated a divisional alignment program with a focus on realizing the full potential of the new corporate structure. We expect to incur $115 million to $145 million in pretax charges.
• Initiated 2023 non-GAAP operating expense guidance to a range of $1.77 billion to $1.85 billion, reflecting an increase of just over 5%.
• 2023 non-GAAP tax rate is expected to be in the range of 24% to 26%.

ARR and SaaS Revenues

• ARR totaled $2 billion, an increase of 8% from the prior year period, while annualized SaaS revenues totaled $725 million, an increase of 13%.
• ARR for Capital Access Platforms totaled $1.19 billion, an increase of 7% compared to the prior year period.
• ARR for Anti-Financial Crime totaled $312 million, an increase of 16% compared to the prior year period.

Index Revenue

• Overall Index revenue declined by 11% compared to the fourth quarter of 2022. Asset-based licensing revenues declined 21% compared to the prior year period.
• Trading activity of instruments linked to our indexes achieved certain annual thresholds during the second quarter of ’22 that resulted in an increase in licensing economics during the remainder of the year. As we begin 2023, the economics of certain agreements reset for the new year. We estimate that this will lead to approximately $9 million of lower revenue in the first quarter of 2023 compared to the fourth quarter of 2022.

Debt, Dividends and Share Repurchase

• Debt increased by $27 million versus Q3 2022.
• Total debt to trailing 12 months non-GAAP EBITDA ratio remains at 2.7 times as compared to the third quarter of 2022.
• The company paid common stock dividends in the aggregate of $98 million during the fourth quarter of 2022.
• As of December 31, 2022, there was an aggregate $650 million remaining under the Board-authorized share repurchase program.

Q & A sessions,

Outlook for 2023

• Nasdaq expects strong client demand and progress against its strategy, particularly in its Anti-Financial Crime business, Corporate Solutions business, investment analytics capabilities, and Marketplace Technology business.
• ESG services and anti-financial crime technology showed double-digit growth.

Market Modernization Efforts

• Nasdaq’s market modernization efforts are having a positive effect on its engagement with market tech clients as they modernize their infrastructure.
• Listing revenues won’t grow as fast if listings don’t come out to the market, but Nasdaq has 200 companies on file looking to tap the NASDAQ.
• The growth of the Index business is subject to market beta with AUM, which dropped in the fourth quarter of 2022, but the company is leased off to a better start in 2023.

Anti-Financial Crime (AFC) Business

• Verafin capabilities show strong demand, especially with small and medium banks.
• Tier 2 banks have a 6 to 12-month sales cycle, and Tier 1 banks have a 9 to 18-month sales cycle.
• Nasdaq aims to convert Tier 1 banks this year and is confident it will show proof points as it goes through 2023.

Equities Tape Revenue and Expenses

• Nasdaq moved options and equities tapes into Market Platforms, not intentionally to recast targets but to align the products with the group that supports them.
• 1 percentage point of the 5% annual growth in expenses is the continued investment in Nasdaq’s digital assets business.

Medium to Long-Term Outlook

• Nasdaq’s medium to long-term growth outlook of 18% to 23% is well supported by sales opportunities, pipeline, and continued investment in its products.
• The FRAML solutions show more than 20% growth in the quarter and continue to have strong growth potential even as they scale.
• The trade surveillance business continues to have high single-digit, low double-digit growth by expanding the types of modules it offers and globalizing its clientele.
• The market surveillance business is the smallest part of the division with a low growth profile.