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NASDAQ, INC. (NDAQ)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered double‑digit net revenue and EPS growth: net revenue $1.306B (+13% YoY; +12% organic) and non‑GAAP diluted EPS $0.85 (+24% YoY), with record Market Services net revenue and strong Index inflows.
  • Results beat S&P Global consensus on EPS ($0.85 vs $0.813*) and on net revenue ($1.306B vs $1.281B*), aided by broad‑based Solutions growth and active markets; EBITDA margin reached 58% (vs consensus EBITDA $736M*).
  • Guidance: non‑GAAP operating expense range raised to $2.295–$2.335B due solely to FX (offset in net revenue); non‑GAAP tax rate maintained at 22.5%–24.5%. Dividend maintained at $0.27 per share.
  • Execution catalysts: record U.S. cash equities volumes and Russell rebalance capacity, record Index ETP AUM ($745B) and $20B quarterly net inflows, and continued deleveraging (gross leverage 3.2x, ahead of target).
  • Management emphasized AI initiatives (Agentic AI in Verafin), robust fintech pipelines, and sustained operating leverage—key narrative supporting estimate upward revisions and multiple expansion.

What Went Well and What Went Wrong

What Went Well

  • Record performance in Market Services: net revenue $306M (+22% YoY) with record U.S. cash equities and derivatives revenue; Russell reconstitution executed 2.5B shares in 0.871 seconds, $102.5B notional.
  • Index momentum: $20B quarterly net inflows; TTM net inflows at a record $88B; ETP AUM at an all‑time high $745B; CME exclusive license extended through 2039.
  • Fintech durability: Financial Technology revenue $464M (+10% YoY); 57 new clients, 130 upsells, 7 cross‑sells; Verafin signed 46 SMBs and enterprise wins; ARR growth +11%.
  • Quote: “Nasdaq delivered an excellent second quarter performance amid a dynamic market environment… well‑positioned to enhance value… through our One Nasdaq approach.” — Adena Friedman, CEO.

What Went Wrong

  • FX headwind lifted non‑GAAP opex guidance midpoint by $20M; organic expense trajectory unchanged, but raises investor sensitivity to currency.
  • Professional services growth low single‑digits and elongated implementations in RegTech given regulatory uncertainty; sales cycles briefly lengthened in March/April.
  • Listings headwinds persist from delistings and amortization of prior initial listing fees (noted across recent quarters), tempering Data & Listings growth despite improving IPO pipeline.

Financial Results

Core Financials vs Prior Periods and Estimates

MetricQ4 2024Q1 2025Q2 2025
Net Revenue ($USD Billions)$1.2 $1.237 $1.306
Non-GAAP Diluted EPS ($)$0.76 $0.79 $0.85
Non-GAAP Operating Margin (%)55% 55% 55%
EBITDA Margin (%)57% —58%
Estimates Comparison (S&P Global)Q4 2024Q1 2025Q2 2025
EPS Consensus Mean ($)0.750*0.771*0.813*
EPS Actual ($)0.76 0.79 0.85
Revenue Consensus Mean ($USD Billions)1.229*1.234*1.281*
Net Revenue Actual ($USD Billions)1.200 1.237 1.306
EBITDA Consensus Mean ($USD Billions)0.697*0.708*0.736*
EBITDA Actual ($USD Billions)——0.768*

*Values retrieved from S&P Global.

YoY Growth (Q2 2025 vs Q2 2024)

MetricYoY Change
Net Revenue+13%
Organic Net Revenue+12%
Solutions Revenue+10%
Market Services Net Revenue+22%
Index Revenue+17%
Non-GAAP Diluted EPS+24%
ARR ($)+10% (9% organic)

Segment Breakdown

Segment ($USD Millions)Q1 2025Q2 2025
Data & Listing Services192 198
Index193 196
Workflow & Insights130 133
Capital Access Platforms Total515 527
Financial Crime Mgmt Tech77 81
Regulatory Technology101 104
Capital Markets Technology254 279
Financial Technology Total432 464
Market Services Revenues1,134 1,090
Transaction Rebates(579) (629)
Brokerage/Clearance/Exchange Fees(274) (155)
Market Services Net Revenue281 306
Other Revenues9 9
Net Revenue (Revenues less transaction-based expenses)1,237 1,306

KPIs

KPIQ1 2025Q2 2025
Index: Period-end ETP AUM ($USD Billions)622 745
Index: Avg ETP AUM ($USD Billions)662 663
Index: TTM Net Inflows ($USD Billions)86 88
U.S. Listed Securities: Industry ADV (Billions of Shares)15.7 18.4
Total U.S. Market Share (incl. TRF) (%)62.7% 61.6%
ARR ($USD Millions)2,831 2,931
SaaS as % of ARR37% 37%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP Operating Expenses ($USD Billions)FY 20252.265–2.325 2.295–2.335 Raised (FX-driven)
Non-GAAP Tax Rate (%)FY 202522.5–24.5 22.5–24.5 Maintained
Dividend per Share ($)Quarterly$0.27 (declared Apr 24, 2025) $0.27 (declared Jul 24, 2025) Maintained
Leverage Target (Gross)Milestone3.3x by plan Achieved 3.2x in Q2 Surpassed target

Management noted the expense range increase stems entirely from FX, with offsetting positive impact on net revenue—no change to operating income outlook.

Earnings Call Themes & Trends

TopicQ4 2024 (Prior Q-2)Q1 2025 (Prior Q-1)Q2 2025 (Current)Trend
AI/Technology InitiativesEmbedded GenAI in products; internal AI efficiency push; strong client adoption across divisions. Continued AI features roll‑out; Verafin Co‑Pilot usage +20% sequential; AWS partnership expanded. Launched Agentic AI digital workers (beta) in Verafin; >80% workload reduction in sanctions triage; expanding AML analytics. Scaling and broadening across products; clear ROI narrative
Regulatory/MacroBusiness‑friendly U.S. policy optimism; regulatory burden relief for public companies advocated. Regulatory uncertainty elongating some RegTech PS revenue; medium‑term ARR outlook intact. Clarifying U.S. guidance (e.g., SLR) improving pipeline certainty; PS revenue expected to recover into Q4/2025–2026. From uncertainty to improving clarity
Index/ETP FlowsRecord growth; Avg AUM $632B; strong net inflows. $27B quarterly net inflows; adjusted Index growth strong. $20B quarterly inflows; TTM $88B; AUM record $745B; CME license extended to 2039. Sustained strength; product innovation and institutional expansion
Listings/Private MarketsListings leadership; transfers momentum; corporate solutions modest growth; private markets strategy developing. Highest first‑half listings since 2021 expected in 2025; Tape D private market data distribution. 38 U.S. IPOs in Q2; win rate 79%; exclusive Tape D distribution; optimism on H2 IPOs. Improving issuance; pipeline building
Deleveraging/Capital AllocationExpanded efficiency program to $140M; deleveraging path outlined. Ongoing deleveraging; cash flow supports debt paydown and buybacks. Paid down $400M bonds; gross leverage 3.2x; $155M dividends, $100M buybacks. Ahead of plan; flexibility increasing
Digital Assets/TokenizationInstitutional infrastructure focus; crypto integrations across solutions. Partnerships and cloud modernization supporting infrastructure. Stablecoin and tokenization seen as efficiency drivers; Calypso POC for on‑chain collateral management; target launch early‑mid 2026. Regulatory tailwinds; productization underway

Management Commentary

  • “Operating margin of 55% and EBITDA margin of 58%… underscoring the durability of the model and the consistency of our execution.” — Sarah Youngwood, CFO.
  • “We achieved a gross leverage ratio of 3.2x at quarter‑end… 16 months ahead of schedule.” — Adena Friedman, CEO.
  • “Agentic AI… reduces alert review workload requiring human intervention by more than 80%.” — Adena Friedman, CEO.
  • “Cross‑sells accounted for over 15% of Financial Technology sales pipeline… on track to surpass $100M run‑rate by end of 2027.” — Adena Friedman, CEO.

Q&A Highlights

  • AI impact: Management detailed product‑embedded AI and internal AI programs, with Agentic AI in Verafin cutting compliance workload >80%; expanding to AxiomSL and surveillance.
  • Fintech pipeline and timing: March–April sales cycles elongated briefly; normalized in May–June; enterprise Verafin signings doubled YTD vs 2024, expected to contribute more from Q4 onward.
  • Index durability: Growth driven by product innovation, institutional annuity exposure, and strong inflows; 33 products launched in Q2, seven in insurance annuity space.
  • Digital assets: Stablecoin and tokenization seen as structural efficiency gains; Calypso on‑chain collateral POC; regulatory engagement ongoing.
  • Market structure: Ready for potential changes to Rule 611; confident operating with or without order protection rule; emphasis on broader Reg NMS considerations.
  • Capital allocation/M&A: Strong FCF ($467M in Q2) enables deleveraging and buybacks; organic investments prioritized; opportunistic repurchases continue.

Estimates Context

  • EPS beat: Q2 EPS $0.85 vs $0.813 consensus*; Q1 $0.79 vs $0.771*.
  • Net revenue beat: Q2 net revenue $1.306B vs $1.281B consensus*; Q1 $1.237B vs $1.234B*.
  • EBITDA: Q2 actual ~$0.768B* vs $0.736B consensus*; margin 58% cited by CFO.
  • Estimate inputs: EPS estimates based on 16 contributors; revenue based on 11 contributors*.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad‑based strength and operating leverage: Double‑digit net revenue and EPS growth with 55% non‑GAAP operating margin and 58% EBITDA margin support upward EPS revisions and valuation resilience.
  • High‑quality beats: EPS and net revenue both exceeded consensus, driven by Index inflows, Market Services volumes, and fintech ARR growth—positive for near‑term sentiment.
  • Durable secular drivers: Index AUM records and inflows, market modernization demand (Calypso/Market Tech), and AI‑driven product enhancements underpin medium‑term growth.
  • FX‑only opex raise: Guidance change is currency‑driven and offset in revenue; operating income unchanged—limit negative read‑through.
  • Deleveraging ahead of plan: Gross leverage 3.2x, $400M debt repaid; continued buybacks and dividends provide capital return optionality.
  • Trading implications: Index/Market Services strength and EPS beat are positive catalysts; watch FX, regulatory timing on RegTech implementations, and listings amortization headwinds for tactical positioning.
  • Medium‑term thesis: One Nasdaq cross‑sell motion (>15% of pipeline), Agentic AI adoption, and institutional expansion in Index and digital assets position NDAQ for sustained mid‑teens EPS CAGR potential through cycle.