Adenza Growth Drivers
Q: What is driving Adenza's strong growth, especially Calypso?
A: Adenza is experiencing mid-teens ARR growth for both Calypso and AxiomSL, reflecting strong demand for risk management, treasury, and capital risk solutions. Calypso's growth is driven by timing of renewals, with a good renewal quarter, particularly in on-premise deliveries, and consistent demand from Tier 2 and Tier 3 banks globally. AxiomSL benefits from new regulations, with ESG modules sold into G-SIBs and ongoing signings around Basel requirements. Overall, both products show consistent demand cycles and excite clients. -

Verafin Pipeline and Expansion
Q: What is the pipeline for Verafin with Tier 1 and 2 banks and international expansion?
A: Although no new Tier 1 or Tier 2 bank clients were signed this quarter, Verafin is implementing clients signed last year and has a strong pipeline, including proofs of concept and contracts in progress. The focus is on fraud detection and check fraud capabilities that offer clear ROI by reducing false positives and increasing fraud found. International expansion efforts are concentrated in Canada and the U.K., with progress in some areas and early conversations in others. -

Cross-Selling Initiatives
Q: How are cross-selling campaigns progressing towards the $100 million target?
A: Cross-sell campaigns across the fintech division involve introducing Calypso's risk management into market operators, bringing AxiomSL to capital markets firms, and offering Calypso's treasury management to Verafin's Tier 3 bank clients. Early conversations with clients are encouraging, with holistic discussions leading from one product to another, though it will take time to convert opportunities into contracts due to long banking sales cycles. - -

Market Technology Revenue Outlook
Q: What's the outlook for Market Technology revenue growth this year?
A: Market Technology is expected to achieve growth within the 3% to 5% range, with a muted second quarter but stronger growth back-end loaded in the fourth quarter. Delivery of some projects partway through the year will turn on license revenues, and a good pipeline of growth and new clients supports confidence in achieving these targets. - -

Capital Access and Listings Impact
Q: How do delistings and IPO environment affect revenues and growth?
A: The company faces headwinds from $10 million in delistings and downgrades from last year, impacting quarterly revenues. Additionally, the amortization of initial listing fees from prior years presents a headwind for the rest of the year. While an improved IPO environment would help, it's a slow process to offset these effects. The Corporate Solutions business also feels the impact, with fewer new customers in a tough environment, typically growing at low to mid-single digits in normal markets. - -

Index Business Growth and CME Tiering
Q: When might CME tiering occur, and how is the Index business performing?
A: Tiering with CME generally occurs in the second quarter. The Index business has a very strong start to the year, with expectations to exceed the annual outlook. Inflows are coming from both the Nasdaq-100 and innovative indexes like AI, cloud, and cyber, with consistent inflows regardless of market conditions, reflecting investor optimism about the economy's future. - -

ARR vs Revenue Dynamics
Q: How does transitioning to cloud affect ARR and revenue differences?
A: As the company moves towards cloud solutions, the delta between ARR and revenue should decrease over time, but it's a long transition. On-premise solutions like AxiomSL, Calypso, and Market Technology still show differences due to license and professional services revenues. Cloud-based businesses like financial crime management and SaaS offerings show ARR closer to total revenue. The focus on ARR provides a better reflection of underlying client demand. - -

Capital Priorities and Deleveraging
Q: Are there plans to restart buybacks amid deleveraging efforts?
A: The primary capital priority remains deleveraging, with a commitment to timelines given at Investor Day. Flexibility is maintained to consider share repurchases if it makes sense, particularly to offset employee issuance. Overall, the focus is on deleveraging due to attractive returns from repaying higher-cost debt and improving cash flow accretion. -

Verafin Growth and Copilot Impact
Q: How will the Copilot tool affect Verafin's revenue growth?
A: Verafin continues strong growth in the mid-20% range. The Copilot tool is introduced to small and medium bank clients as part of the platform, enhancing ROI and becoming part of renewal discussions but not sold separately. For Tier 1 and Tier 2 banks, Copilot adds value to anti-money laundering solutions by reducing investigative time, aiding sales, retention, and upselling efforts. -

Adenza's Competitive Advantages
Q: What are Adenza's strengths and areas for moat improvement?
A: AxiomSL's global reach, connecting to over 100 regulators in more than 50 countries, and its proactive regulatory expertise create a strong moat. Calypso excels in collateral management, clearing and trading risk management, and treasury tools for both brokerage and buy-side clients, unlocking liquidity and capital efficiency. Ongoing upgrades, new regulations like Basel III and IV, and data transfer capabilities between Calypso and AxiomSL strengthen their competitive positions. -