Q4 2024 Earnings Summary
- Strong growth in the Financial Crime Management Technology business, with 211 new clients signed in 2024, including another Tier 1 bank in Q4, bringing the total to 5 Tier 1 banks. The company has a healthy pipeline of Tier 1 and Tier 2 banks and is expanding globally with a move into Europe, where several banks are lining up for POCs in 2025. This expansion taps into the 50% of the serviceable addressable market represented by Tier 1 and Tier 2 banks, offering significant growth opportunities.
- Proprietary Index Options business revenues doubled during the year, leveraging Nasdaq's exchange franchise efficiently. The company is expanding proprietary index products onto major retail investing platforms, including Robinhood, and is driving institutional adoption by integrating products into data tools used for investment decisions. This creates a virtuous cycle driving growth in the NDX franchise and enabling new product offerings.
- Strong client engagement and trends in the Financial Technology division, with excellent client engagement carrying into 2025. Despite Q4 being the seasonal high sales quarter, the company is seeing strong trends beyond seasonal patterns, indicating potential for continued growth in ARR into 2026.
- The Financial Crime Management Technology business is expected to come in at the low end of their outlook range in 2025 due to being in the early stages of expanding into Tier 1 and Tier 2 banks and entering European markets, indicating potential slower-than-anticipated growth.
- The Corporate Solutions segment has been affected by a slower IPO and delisting environment, which may persist and continue to impact growth in the Workflow and Insights division, making it challenging to achieve target growth rates in the near future.
- Professional services revenues experienced downward pressure in 2024 due to non-repeating large implementations and lower sales in certain solutions like AxiomSL, suggesting potential revenue volatility and dependence on large deals that may not recur consistently.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +23% | Total Revenue rose to $2,029 million in Q4 2024 from $1,647 million in Q4 2023. This growth reflects enhanced revenue contributions from key segments—likely including continued benefits from recent acquisitions such as Adenza and stronger performance in areas like Index and Financial Technology—building on momentum seen in earlier periods. |
Operating Income (EBIT) | +46% | Operating Income increased from $353 million in Q4 2023 to $517 million in Q4 2024. The substantial jump suggests that improved revenue generation coupled with greater operating leverage and potential cost synergies (as compared to the modest gains in prior periods) have significantly boosted efficiency and profitability. |
Net Income | +79% | Net Income climbed from $198 million in Q4 2023 to $355 million in Q4 2024. This marked improvement reflects not only strong revenue increases but also better control of expenses and a more favorable tax provision, building upon previously observed performance trends and enhanced margins from operational and strategic initiatives. |
Basic EPS | +82% | Basic EPS increased from $0.34 in Q4 2023 to $0.62 in Q4 2024. The nearly doubling of EPS is driven by the strong net income growth along with potential improvements in the share count metrics, reflecting effective capital deployment and earnings power that build on prior periods’ financial results. |
Cash Flow | Significant outflow (-$789 million) | The net change in cash in Q4 2024 was a $789 million outflow. Despite strong operating results, this negative cash flow is likely due to sizable investments in capital expenditures and aggressive shareholder returns (via dividends and repurchases) that contrast with earlier periods where financing activities had contributed positively to cash balances. |
Balance Sheet Strength | Robust (Equity at $11,191 million) | Shareholders’ Equity stood at $11,191 million in Q4 2024. This robust balance sheet reflects accumulated retained earnings and strategic debt management—including reductions in liabilities achieved through repayments and capital returns—that build on the improved liquidity and working capital seen in previous reporting periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Non-GAAP expense | FY 2025 | no prior guidance | $2.245B to $2.325B | no prior guidance |
Organic expense growth | FY 2025 | no prior guidance | 6% at the midpoint | no prior guidance |
Expense growth reduction | FY 2025 | no prior guidance | Expanded efficiency program reducing growth by 2 pts | no prior guidance |
Non-GAAP tax rate | FY 2025 | no prior guidance | 22.5% to 24.5% | no prior guidance |
Financial Technology division growth | FY 2025 | no prior guidance | 10% to 14% | no prior guidance |
Financial Crime Management Technology | FY 2025 | no prior guidance | Low end of mid-20s | no prior guidance |
Regulatory Technology | FY 2025 | no prior guidance | High single to low double digits | no prior guidance |
Capital Markets Technology | FY 2025 | no prior guidance | High single to low double digits | no prior guidance |
Capital Access Platforms division growth | FY 2025 | no prior guidance | 5% to 8% | no prior guidance |
Data and Listings | FY 2025 | no prior guidance | Low single digits | no prior guidance |
Index revenue | FY 2025 | no prior guidance | Above mid- to high single digits | no prior guidance |
ARR growth | FY 2025 | no prior guidance | Continued ARR growth expected | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Capital Access Platforms | Q4 2024 | "Expected to exceed the medium-term growth outlook range" | 511 | Beat |
Index | Q4 2024 | "Expected to come in above its range" | 189 | Beat |
Data | Q4 2024 | "Essentially flat year-on-year".(Q4 2023 was 188) | 191 | Met |
Workflow & Insights | Q4 2024 | "Expected to come in below its range".(Q4 2023 was 127) | 131 | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Financial Crime Management Technology (Verafin) | Consistently reported ARR growth in the low- to mid-20% range with new client wins each quarter. Tier 1 bank signings began in Q3 2024. AI-based enhancements in Q2 and Q1 improved efficiency and supported upmarket traction. | Serves over 2,600 financial institutions, nearly $10T in assets, including 5 Tier 1 banks. Achieved 23% ARR growth and completed a new cross-sell with a Tier 1 bank. Growth for 2025 expected at the low end of mid-20% as Tier 1/2 adoption and global expansion ramp up. | Consistent double-digit growth with increasing upmarket penetration and a strong pipeline. |
Adenza (AxiomSL and Calypso) | Delivered mid-teens ARR growth in Q3 and Q2, driven by expansions in France, India, and the Philippines, and 14–15% ARR growth noted in Q1. Cross-sell deals with Calypso and AxiomSL have been recurring themes. | Upsell wins with Societe Generale, 13% annual growth for 2024, 2% in Q4. Maintains 20th central bank client and 12% ARR growth. Continues to see international opportunities. | Steady global expansion, particularly among large banks and central banks. |
Cross-Selling | Noted 7 cross-sells in Q3, 4 in Q2, and 6 overall by Q1. Focused on bundling Verafin, AxiomSL, and Calypso solutions, aiming to exceed $100M in cross-sell revenue by 2027. | Secured 11 cross-sells in 2024, including Tier 1 deals. Emphasized synergy across FinTech solutions. | Increasing momentum as cross-sell campaigns mature and the pipeline grows. |
Corporate Solutions | Repeatedly faced a challenging IPO and listing environment in Q3, Q2, and Q1. Flat or low single-digit growth mentioned, with elongated sales cycles. AI enhancements introduced to improve retention. | Continued headwinds from slower issuance and delistings. Focused on product innovation to be well positioned when IPO environment recovers. | Under pressure, with potential to rebound once market conditions improve. |
Index Options | Record revenue in Q3 and Q2, often doubling year-over-year; significant demand for Nasdaq-100 index products. Named as a high-growth product throughout Q1–Q3. | Strong quarterly net revenue in Market Services, boosted by record volumes and robust index options growth. | Continued strong performance with both institutional and retail interest. |
Basel III/IV Regulations | Highlighted as a key driver of AxiomSL’s revenue in Q1 and Q2, but no explicit mention in Q3. | Demand for AxiomSL solutions remains high, with 69% of revenue coming from non-U.S. banks. Possible U.S. regulation changes have not dampened interest. | Consistently important for global compliance, sustaining product demand. |
Entity Research Copilot | Rolled out to 2,000+ U.S. institutions by Q3, with 50% adoption; shown to reduce alert review time by up to 90% in Q2 and Q1. | Part of Verafin’s anti-financial crime strategy. Contributes to strong engagement; not specifically broken out with new adoption data in Q4. | High adoption and efficiency gains, enhancing Verafin’s value proposition. |
European Expansion for Financial Crime Management | Not specifically mentioned in Q3. Q2 and Q1 mostly focused on North America and initial U.K. expansion [N/A for Q3, 15]. | Officially launched Verafin in Europe, engaging banks and targeting mid-double-digit growth for 2025. | New emphasis on Europe, expected to grow in the mid-term. |
Index Options on Retail Platforms | Q3 mentioned expanding index options to retail, Q2 focused on momentum but not explicitly retail-driven, Q1 saw strong NDX volumes from institutional investors. | Index options now offered on major retail platforms like Robinhood, aiming to attract both retail and institutional buyers. | Growing retail availability, broadening the investor base for index options. |
Professional Services Revenue Variability | Fluctuated in Q3, Q2, and Q1 because of large client projects, conversions to ARR, and timing differences. Often offset by rising subscription revenue. | Experienced downward pressure in 2024 due to completion of major 2023 implementations; expected to rebound in 2025. | Volatile but stabilizing as more deals convert to recurring revenue models. |
Tier 1/Tier 2 Bank Penetration | Gained first Tier 1 client in Q3 with continued upsells, new Tier 1 signings in Q2. In Q1, focus was on building a pipeline. | Now serving 5 Tier 1 banks in Verafin with a strong pipeline. Deals with large banks take time to translate into revenue. | Steady progression upmarket, though revenue impact lags due to long implementation cycles. |
Global Expansion | Noted expansions in France, India, and the Philippines (Q2/Q3 for AxiomSL), and early moves in Canada/U.K. for Verafin (Q1). | Expanded Capital Markets Technology in Brazil, Mexico, and Colombia. Verafin’s European launch underscores worldwide outreach. | Consistent international growth with new signings spanning multiple regions. |
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Regulatory Changes Impact on RegTech Growth
Q: How would deregulation affect Axiom's client demand and RegTech growth?
A: AxiomSL is a global business serving banks worldwide, with 69% of revenue from non-U.S. banks. We see strong demand for our products despite regulatory changes. We expect our Regulatory Technology subdivision to be at the high end of our range in 2025. Banks deploying more capital drives liquidity and demand for our technology. -
Decline in Capital Markets Tech ARR
Q: What caused Cap Markets Tech ARR to decline from 12% to 9%, and how will you reaccelerate ARR in 2025?
A: The decline was due to year-over-year comps, as Q4 2023 was a very strong sales quarter for Calypso. Timing of deal signings affects ARR, and ARR upon signing doesn't include contract ramps. We expect AxiomSL and Calypso combined ARR growth to be within the mid-teens outlook. Overall, we have strong growth opportunities despite this quarter's downward pressure. -
Professional Service Fees Outlook
Q: What's the outlook for professional service fees in Fintech for 2025?
A: While we don't break out professional service fees specifically, they are about 20% of Adenza revenue and over 10% of overall Fintech revenues. In 2024, we had downward pressure due to non-repeating large implementations in 2023. For 2025, with 9 new commitments in Market Tech and strong sales in AxiomSL, we see an upward trajectory in professional services supporting our revenue outlook. -
Proprietary Index Options Growth Plans
Q: With revenues doubling, what are your plans for the Proprietary Index Options business?
A: This business efficiently leverages our exchange franchise. We're focused on building new products, enhancing capabilities, and growing the ecosystem. Our prop index products are now on major retail platforms like Robinhood, and we're driving institutional adoption by integrating into investment decision tools. As our Index business expands among institutional clients, it boosts demand for options trading. -
AI Advancements and Initiatives
Q: How are AI advancements impacting your business, and what steps are you taking with generative AI in 2025?
A: We've developed a platform using multiple AI models, both proprietary and open source. We test models for best solutions and cost efficiency, with AI costs decreasing dramatically. We're embedding generative AI into product roadmaps, including in Anti-Financial Crime (Copilot), surveillance, and AxiomSL's auto-generation of regulatory reports. These enhancements improve product value and client ROI, increasing retention. Internally, we're using AI to improve efficiency in development and client success. -
Financial Crime Management Growth Outlook
Q: Given your outlook, where will the FinTech segment's growth fall, and what are drivers for Financial Crime Management's lower-end growth?
A: In Financial Crime Management, we added 211 new clients in 2024 and signed another Tier 1 bank in Q4. Growth is driven by small to medium banks, expansion into Tier 1 and Tier 2 banks (now have 5 clients), and global expansion into Europe. We expect Financial Crime Management to come in at the low end of our outlook range in 2025. FinTech overall is expected to grow within the 10% to 14% range. -
Workflow and Insights Growth Outlook
Q: How will you return Workflow and Insights to target growth levels?
A: The Corporate Solutions business has been affected by a slower issuance and delisting environment. We are innovating within our suite and expect growth as buying behavior normalizes. The IPO environment and moderation of delistings will help drive sales. In Analytics, our Invest product is growing at high single digits, and we expect it to continue contributing to division growth. -
Reducing Regulatory Burden on Public Companies
Q: Can you discuss efforts to lighten the regulatory burden on public companies and areas of potential progress?
A: We're engaging with the new administration to unlock growth by improving the public market environment. Key focus areas include reforming the proxy process, balancing accounting policies and PCAOB approach, and pursuing litigation reform. Additionally, we aim for better disclosure to companies on stock activity, including short positions. -
Impact of Bank M&A on Sales Cycles
Q: Could bank M&A lead to longer sales cycles due to uncertainties in regulatory and M&A activity?
A: Most bank M&A occurs among small banks; our Anti-Financial Crime contracts are structured to adjust pricing when banks merge. Mergers present opportunities to win new clients or expand solutions to combined banks. At higher levels, mergers can introduce new regulatory obligations, creating sales opportunities. Sales cycles are always lengthy, but we're seeing healthy dialogue and many opportunities globally. We're not concerned about significant impacts. -
Strong Fintech Sales Metrics and Future Outlook
Q: Are strong Q4 Fintech sales metrics seasonal, or do you see improving momentum in '25 and potential for stronger ARR growth into '26?
A: Q4 is always our seasonal high sales quarter across Fintech. While Q4 will always be the big quarter, we're also seeing strong trends and excellent client engagement carrying into 2025. This may support future growth, but expect Q4 to remain the high quarter. -
ARR vs Revenue Growth and Expense Synergies
Q: There's differential between ARR and revenue growth in '24; what should we expect in '25? How will expense synergies benefit '25 quarterly?
A: ARR vs revenue differences are due to professional services fees impacting metrics, and Calypso's on-prem revenue recognition with tough comps and timing differences. On expenses, benefits from our expanded efficiency program contribute 2% to lowering expense growth rate in 2025 vs 2024, with a tail mostly in 2026. We're continuing to drive these efficiencies throughout 2025. -
Conversion of New Listings and ESG Outlook
Q: How quickly are new listings adopting your software solutions, and has negative tone on ESG affected your ESG solution outlook?
A: Corporate Solutions, part of Workflow and Insights, lags the IPO environment. We introduce solutions to companies during IPOs and convert them to paying clients over time. Moderation of delistings will help, but recovery to normalized growth will take time. For ESG solutions, demand has shifted towards Europe due to new disclosure obligations. We still have opportunities but will monitor policy developments in the U.S..