Yahoo Finance Nasdaq Inc (NDAQ) Q1 2024 Earnings Call Transcript Highlights: Robust Revenue Growth and ...
Net Revenue: $1.1 billion, up 7% year-over-year on a pro forma basis.
Solutions Revenue: $871 million, up 13% year-over-year.
Operating Margin: 53%, an increase of 1 percentage point year-over-year.
EBITDA Margin: 56%.
Diluted EPS: $0.63.
Annualized Recurring Revenue (ARR): $2.6 billion, up 7% year-over-year on a pro forma basis.
Free Cash Flow: $504 million for the quarter.
Index Business Revenue: Increased by 53%, or 38% excluding one-time benefits.
Financial Technology Division Revenue: $392 million, up 10%.
Market Services Revenue: $237 million, down 9% year-over-year.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you please add more color on the cross-sell campaigns to achieve your $100 million target? What is the plan for the rest of this year? Does it mainly cover the cross-sell within Adenza or between Adenza and Verafin or across the whole company? A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: The cross-sell campaigns cover across the fintech division, focusing on integrating Calypso's risk management capabilities with market operator clients, introducing AxiomSL capabilities to capital markets firms, and leveraging treasury management capabilities from Calypso for Verafin's client base, particularly Tier 3 banks. The strategy involves holistic client conversations, starting with one product and potentially adding more, enhancing the strategic relationship.
Q: Just a quick follow-up on Verafin. I think you didn't sign Tier 1 and Tier 2 banks this quarter, but the number was still pretty strong. Can you please talk about the pipeline for the rest of this year for Tier 1 and Tier 2 banks and also give us an update on the international expansion opportunity? A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: The pipeline for Tier 1 and Tier 2 banks remains robust, with ongoing proofs of concepts and contracting processes. Focus areas include fraud detection and a new check fraud capability. The international expansion is primarily targeting Canada and the U.K., with varying stages of engagement.
Q: So maybe starting with Adenza as well. Really strong year-over-year growth you pointed out, about 20%. And it sounds like a lot of it is coming on the Calypso side, so can you kind of help us bridge the sources of growth, particularly at Calypso and, as you think on the forward, how you see that opportunity unfold for Calypso specifically over the course of this year and into next? A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: The growth in Adenza, particularly Calypso, is driven by timing of renewals and strong demand for risk management solutions. The ARR growth reflects consistent demand, and the integration of data connectors between Calypso and AxiomSL is enhancing product appeal by reducing implementation time.
Q: I wanted to follow up on capital access. You talked about some pickup in listings but clearly still slower than we've seen previously in previous years, but curious about the revenue impacts. I think you mentioned still some flow-through of the delistings that occurred, so wondering how we should think about the revenue progression this year. And then also tying that to Workflow and Insights, it sounds like any rebound or recovery in that segment is also tied to a pickup in listings. So just curious about the outlook there and what really will get that business kind of accelerating growth. A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: The Data and Listings segment faces headwinds from previous delistings and the slow IPO environment, impacting revenue progression. The Corporate Solutions business within Workflow and Insights is similarly affected by fewer new companies to sell to, impacting growth. An improved IPO environment would positively influence both segments.
Q: We had a question on index options with NDX. How can you tap into the growing popularity with index options just given your strong brand with the Nasdaq-100 index? I think your share of index options is only about 1%, but the growth rates are high, and the revenue capture is very attractive in this business. A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: Nasdaq is leveraging its strong brand and the popularity of the Nasdaq-100 index to enhance its position in index options. Collaborative efforts between the index and options teams are driving increased trading volumes and institutional interest, which is expected to continue growing.
Q: Just following up on that last question from Craig, is there anything you can share about sort of the upcoming pipeline in 2024 in terms of on-prem versus cloud implementations? Just I know you're kind of guiding and talking about the business on an ARR basis, but just as we think about our models, is there anything specific we can think about quarter by quarter? A: Adena T. Friedman - Nasdaq, Inc. - CEO & Chairman: The transition from on-prem to cloud is ongoing, with approximately half of new bookings in cloud for AxiomSL and a focus on increasing cloud bookings for Calypso. Detailed quarterly guidance on this transition isn't provided, but the overall trend towards cloud is expected to stabilize revenue streams and enhance client value over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
