Nasdaq (NDAQ) Q3 2026 earnings call transcript

Good morning, everyone, and thank you for joining us today to discuss Nasdaq's third quarter 2026 financial results. On the line are Adina Friedman, our Chair and Chief Executive Officer, Sarah Youngwood, our Chief Financial Officer, and other members of the management team. After our prepared remarks, we'll open the line for Q&A. The press release and earnings presentation accompanying this call can be found on the Investor Relations website. I would like to remind you that certain statements we make on this call, including statements about our outlook, expectations, plans, and strategies are forward-looking statements. These statements involve risks and uncertainties, and our actual results could differ materially from those expressed or implied in these statements. A summary of the risks is contained in our press release and on a more complete description in our annual report on Form 10-K.

These statements speak only as of today, and we undertake no obligation to update them. We will discuss our financial performance on a non-GAAP basis, excluding the impact of acquisitions and investitures, and the impact of changes in FX. Definitions and reconciliations of our non-GAAP measures to the most directly comparable U. S. GAAP measures can be found in our earnings presentations, as well as in a file located in the financial section of our investor relations website at ir. Nasdaq. com. And with that, I will now turn the call over to Adina.

Thank you, Atto, and good morning, everyone. Today, I will start with a review of our third quarter financial results and will then review the operating performance across our divisions. I will then hand the call over to Sarah to walk through the financial results in more detail. In the third quarter, Nasdaq delivered strong results across each of our divisions, building on the outstanding momentum from the first half of the year and reinforcing our position as a trusted transformation partner to our clients.

Nasdaq is positioned to lead some of the most significant and enduring trends reshaping the financial system, many of which are still in the early stages of their impact. The investing landscape is undergoing significant change from the continued growth of passive investing to expanding levels of direct retail ownership, creating opportunities that reinforce Nasdaq's role at the center of the capital markets. The shift towards more connected and always-on markets is gaining momentum, and Nasdaq is shaping the next generation of market infrastructure.

At the same time, artificial intelligence is becoming increasingly foundational to how institutions make decisions, manage risk, and allocate capital, and Nasdaq is extending its leadership through solutions embedded across our platform. The economic environment remains constructive for the progression of these key trends. The U. S. economy continues to demonstrate resilience while managing through inflation and elevated interest rates, and is supported by strong corporate earnings, healthy consumer spending, and continued investment in AI and digital infrastructure. Now I'd like to turn to our results. In the third quarter, we delivered $1.5 billion in net revenue, up 14% year-over-year, and solutions revenue of $1.2 billion, up 18%. percent. Our overall annualized recurring revenue or ARR grew 14 percent year-over-year to 3.4 billion dollars.

Expenses were 638 million dollars up 12 percent. We delivered 19 percent diluted EPS growth driven by a 16 percent growth in operating income and the benefit of our share repurchase program. Within our divisions, Capital Access platforms generated 20 percent revenue growth and and 8% ARR growth. Financial technology delivered 16% revenue growth and 18% ARR growth. And market services delivered 2% net revenue growth.

Now turning to the divisional results, I will start with Capital Access Platforms where I will first discuss data and listings. Our listings franchise continued its strong momentum from the first half of the year. We welcomed 15 new operating companies raising $32 billion in proceeds, including eight of the top 10 largest IPOs in the quarter, contributing to a 79% win rate.

On a year-to-date basis, we have a 74% win rate, including 56 new operating company listings, raising a total of $144 billion in proceeds. We look forward to welcoming Hilton to Nasdaq in early November following its announcement on October 20th that it plans to transfer its listing of common stock to the Nasdaq stock market. Our European listings business continued to drive growth in the Nordics, where we welcomed eight new operating companies, including IQM Quantum Computers, which was the largest European listing by market capitalization in the quarter. While we have seen a modest softening in the IPO environment in recent weeks, with some companies in certain sectors reevaluating the timing of their IPOs, our listings pipeline remains robust, and we are well positioned to support the diverse group of companies preparing to enter the public markets across a wide range of sectors.

Our data business achieved double-digit growth driven by the strong client demand for our gold standard data, powering AI solutions, and the transition to always-on markets. During the quarter, we delivered a 34% year-over-year increase in the number of enterprise licenses across various client types and multiple geographies. Our index franchise achieved a record $141 billion in net inflows over the last 12 months and $49 billion in the quarter, driven by product innovation, global expansion, and growing investor demand for our products. We launched 32 new products in the quarter, including 10 insurance product launches, bringing total year-to-date launches to 97 products ahead of our pace at this point last year.

50% of all products launched during the quarter were introduced outside the United States. Product innovation continues to generate significant growth for our index business, with 35% of the trailing 12-month net inflows driven by products launched over the last five years.

We continue to experience early momentum from our partnerships with BlackRock and State Street, with combined AUM exceeding a billion dollars. We also continue to grow our longstanding partnership with Invesco, expanding the Invesco Q2Q innovation suite through the launch of the the Invesco Nasdaq International Innovators 100 ETF.

Turning to workflow and insights, our growth was driven by analytics with double digit revenue growth in both investment and data link. This was supported by strong bookings growth and expanding client adoption. The rising demand for AI enabled solutions continues to fuel growth within investment. Year to date, 25% of investment bookings were related to AI use cases. We expanded the coverage of einvestment's data assets to more than 95,000 private funds, a 19% increase from the end of 2025, strengthening our position as a trusted provider of institutional investment intelligence. We also expanded einvestment's reach through a new partnership with Juniper Square, launching Capital Intelligence, which embeds Nasdaq investment data directly into Juniper Square's workflows for their private markets clients.

In data link, we continue to expand distribution as clients develop AI native workflows. For example, we recently entered a partnership with Robinhood to embed a new proprietary data set into its agentic trading platform. This gives investors access to sophisticated market sentiment and institutional grade investor insights to power agentic decision making.

Turning to financial technology, we achieved another excellent quarter, delivering revenue growth of 16% and record ARR growth of 18%. Clients continue to choose our solutions to modernize and transform their organizations, driving resilient demand for our mission-critical technology, with sales cycles, contract term lengths, and bookings mix remaining consistent. In the quarter, we signed 54 new clients, five cross-sells, and 135 upsells. Our long-standing investments in our cloud capabilities continue to underpin our performance. This quarter, 85% of bookings across our fintech portfolio were for cloud-based solutions.

Nasdaq achieved its highest-ever ranking in TARDIS RiskTech 100 this quarter, placing number two globally and earning 14 category awards across risk management, financial crime prevention, trade surveillance, and corporate governance. This achievement is a testament to our One Nasdaq strategy in action, building integrated capabilities that help clients solve their most pressing challenges. In financial crime management technology, Nasdaq Verifin delivered 23% revenue growth, with ARR growth increasing two percentage points sequentially to 19%. During the quarter, we signed 45 new S&B clients and three enterprise deals, bringing the total enterprise signings to 12 a year to date, exceeding the nine enterprise signings we delivered in the entirety of last year. Nasdaq Verifing continues to accelerate AI innovation across both its products and operations, with more than 850 clients using our Agentec AI workforce.

Expanding those capabilities, we moved two new Agentec workers into production in the quarter, the Agentec AML analyst for structuring and our first fraud-focused worker, the Agentec fraud analyst for ACH. Regulatory technology delivered a sustained growth driven by a client demand for NASX solutions that support modernization initiatives across cloud, AI, and digital assets. Overall, we signed 10 new clients, including two cross-sells and 86 upsells. In Axiom SL, we delivered higher subscription revenue driven by strong client engagement and upsells. We continued to build momentum internationally, expanding geographic coverage with one of the largest private banks in Switzerland and adding a lead Brazilian bank as a client.

We continue to see strong engagement from a wide range of banks across both size and geography as they prepare for the evolving regulatory landscape. For instance, we signed a G-SIB to a Basel III implementation this quarter. We also deepened our relationship with the super regional U. S. bank, which expanded its use of our cloud-based solutions to modernize its operations.

In surveillance, we saw strong demand as markets moved towards always-on operations, including client wins with Kraken, Calci, and APEC. These engagements highlight our role in helping emerging market operators safeguard market integrity and investor confidence at scale. We also expanded client adoption of our AI capabilities, signing new clients for Calibration Copilot and Gen AI News Copilot, while building a growing sales pipeline for our broader AI solutions.

Capital Markets Tech continued its strong momentum, driven by robust growth in trade management services, as well as new client wins and upsells in our software solutions. Across the business, we signed two new clients, including one cross-sell and 48 upsells. In Calypso, we're driving the platform across AI, post-trade, and digital asset capabilities, supporting clients as they modernize and automate critical workflows.

We announced that HSBC is extending its 15-year partnership with Nasdaq, adding Calypso's comprehensive exchange-traded derivatives clearing capabilities. This new capability brings clearing across OTC, exchange-traded derivatives, and repos into a unified platform, helping HSBC manage margin, collateral, and risk more efficiently. This milestone reflects our continued investment in Calypso to provide the integrated technology, collateral efficiency, and AI-ready data foundation that clients need as markets move towards an always-on future. This quarter, we also launched agentic AI capabilities within Calypso, enabling clients to deploy and scale AI agents across the trade lifecycle. These agentic capabilities will be critical as market infrastructure evolves towards an always-on environment.

This new operating paradigm requires continuous risk management and real-time intelligence to help clients monitor, prioritize, and respond to events at scale.

In market technology, the growing demand for always-on markets continues to fuel demand for our technology. This quarter, Bruce ATS signed an agreement to use Nasdaq's trading technology to power for the first 24-7 US equities trading ecosystem. Expanding continuous US equities trading through the weekends through an institutional grade ATS is a significant development for the markets. We're pleased to be Bruce's partner to achieve this next step.

Turning to market services, we continue to lead the industry in share and capture. The division developed, sorry, the division delivered 2% revenue growth to $309 million, a record for the third quarter. Our performance was fueled by higher share and near record capture in U. S. equities. We also experienced higher volumes across U. S. equity options, Nordic cash equities, and fixed income.

Looking ahead, we remain on track to launch 23.5 trading on the Nasdaq stock market on December 6, 2026. This launch of expanded, nearly continuous weekday trading hours is an important step in the journey to always-on markets, enabling broader investor access and greater transparency for all market participants.

Within market services, Nasdaq has established Digital Liquidity Networks, which unifies the capabilities, investments, and solutions we've been developing to advance tokenization and always-on markets under one strategy. Within Digital Liquidity Networks, we closed our acquisition of Level Markets on October 15th, adding the third largest alternative trading system, or ATS, in the U. S. by trading volume. This acquisition strengthens our ability to deliver institutional-grade liquidity and execution solutions to our clients. We now have new flexibility in serving our clients' needs in the existing U. S. equity market environment through an off-exchange venue. We also have the ability to expand level ATS to new markets and to connect its 2,500 institutional and retail brokerage clients to multiple global markets and asset classes through Level Connect.

Additionally, we continue to work closely with DTCC as it prepares to launch its tokenization service this month, and we remain on track to launch the Nasdaq equity token in the first half of next year. Together, these efforts advance the modernization of U. S. equity markets while putting issuers at the center of tokenization.

Our third quarter results demonstrate the durability of our strategy and our strong position at the intersection of the trends reshaping our industry. We remain focused on delivering trusted, scalable solutions that support both innovation and resilience across the financial system. Through the markets we operate, the technology we provide, and the intelligence and risk management solutions we deliver, we're partnering with clients to navigate an increasingly interconnected financial ecosystem.

With that, I'll turn the call over to Sarah to walk through our financial results in more detail.

Thank you, Adina, and good morning, everyone. In the third quarter of 2026, Nasdaq delivered excellent results, headlined by diluted EPS growth of 19%, solutions revenue growth of 18%, and AR growth of 14%, including record FinTech AR growth of 18%. Let's start with quarterly results on slide 11. We reported net revenue of $1.5 billion, up 14 with solutions revenue of billion up 18 Operating expense was million up 12 leading to an operating margin of 57 and an EBITDA margin of 60 both up one percentage point over the prior year period This resulted in net income of $588 million and deleted EPS of $1.04, up 19%. Slide 12 shows the drivers of our 14% net revenue growth for the quarter.

We generated 10.5 percentage points of alpha, supported by new and existing clients and product innovation. Meanwhile, beta factors contributed 3.5 percentage points of growth, driven by higher evaluations in Nasdaq indices, higher derivatives volumes in index, and higher overall volumes primarily in U. S. options. Let's review division results starting on slide 14.

In Capital Access Platform, we delivered revenue of $641 million, up 20 percent, with ARR growth of 8%. Data on listings revenue and AIR will both up 10%. The move towards always-on markets and expanding AI use cases are supporting client demand for our data franchise, and we expect them to be durable trends for years ahead. The strong data revenue growth this quarter was driven primarily by upsells, new bookings, pricing, and usage. Listings revenue benefited from IPOs and pricing increases, partially offset by 2025 delistings and lower amortization of prior period initial listing fees, which were consistent with the last quarter.

Index revenue was up 39%, with 15 percentage points of growth driven by alpha, ARR, which covers a very small portion of index revenue, increased 10%. Revenue growth was primarily driven by a record average ETP AUM, which surpassed $1.1 trillion in the third quarter. The performance was bolstered by record net inflows of $141 billion over the last 12 months, including $49 billion in the third quarter. We are driving strong momentum in the Nasdaq 100 franchise, which is supported by secular growth in passive investing with strong retail ownership and further market share expansion. Volume-based revenue was also a contributor to growth, with record derivatives contract volumes up 70% in the quarter and amidst the continued mix shift in derivatives from higher priced e-mini contracts to lower priced micro e-mini contracts.

In Webflow and Insights, revenue was up 5% in the quarter, with ARR growth up 6%, driven by double-digit revenue growth in both e-vestment and data link, while Corporate Solutions revenue was essentially flat. Quarterly operating margin for the division was 64%, up 3 percentage points versus the prior year period. Before we wrap on capital access platforms, an update on our portfolio optimization. In addition to the previously announced sale of Nasdaq fund secondaries to Nasdaq private markets and the acquisition of Dasity, which was closed in the third quarter, we announced the wind down of our sustainability advisory business and the sale of Nasdaq material to Osapiens, which closed on August 19th. In the third quarter, the net effect of these three items would have been a net increase in the workflow and insights for former adjusted revenue growth rate of approximately 50 basis points.

Moving to financial technology on slide 15, revenue was $529 million, up 16%, driven by double-digit revenue growth across all three subdivisions, with record ARR growth of 18%. Our business continues to see strong demand across all fintech subdivisions, with cloud deals accounting for 85% of ATV bookings in the quarter. The division signed 54 new clients, 135 upsells, and 5 cross-sells in the quarter. Cross-sells continued to represent over 15% of the fintech pipeline. Financial client management technology revenue grew 23% in the quarter with AR growth of 19% and net revenue retention of 111%. We signed 45 new SMB clients in the third quarter, contributing to 26% year-to-date ACV bookings growth versus the prior year period, and reflecting sustained demand in the SMB segment.

In enterprise, we signed two cross-sales and one expansion enterprise clients signed in the second half of 2025 progressed through their implementations during the quarter contributing to the sequential improvement in revenue and ar growth regulatory technology delivered revenue growth of 13 percent and ar growth of 15 percent, reflecting strong performance across both surveillance and Axiom SL. The subdivision delivered 10 new clients, including two cross-sales and 86 up-sales in the quarter.

Capital market technology revenue grew 14 percent, with AR growth of 19 percent. The subdivision signed two new clients including one cross-sell and 48 upsells. The quarter's strong performance reflects the pricing increase in trade management services which we announced earlier this year, demand for data center service and an elevated level of testing, demand for market technology driven by infrastructure modernization initiatives, and continued execution at Calypso despite a top comp on revenue growth in the quarter due to upfront revenue in the prior year period.

This was partially offset by lower professional services revenue, which was part of the difference between revenue and AR growth.

As a reminder, Capital Markets Technology revenue growth in the fourth quarter of 2025 benefited from a contribution from Calypso upfront revenue, which will create a tough comp for for capital markets technology in the upcoming quarter.

Financial technology quarterly operating margin was 46%, up one percentage point versus the prior year period. Wrapping up the divisions with market services on slide 16. The division delivered net revenue of $309 million, up 2%, and representing a third quarter record. Worth in the quarter was driven primarily by alpha in U. S. equities with extremely strong capture due to the lower volatility environment as well as higher market share in both U. S. and European equities with an additional beta contribution from higher industry volumes in U. S. options and European cash equities. performance was partially offset by a change in capture in U. S. options, which was a strong nine cents but rounded down due to the continued mix shift in the composition of order flow towards consolidators in a lower volatility environment, lower capture in European equities due to a pricing change for retail volumes in support of market share, and lower revenue in Canadian equities due to market volatility in commodities.

Our leading positions in both equities and options provide a natural balance across market conditions. As volatility and trading activity evolve, we benefit from a diversified portfolio that is not dependent on a single market environment. We continue to manage effectively the balance between capture and market share across our markets. We maintain a strong lead over our closest competitor in U. S. multi-listed options with a year-to-date market share gap of over 500 basis points combined with a lower sequential decline in capture. Further, we are well aligned with industry growth vectors including the off-exchange segment with the acquisition of level, the continued expansion of index options, and the launch of 23.5 trading. Quarterly operating margin for the division was 61%, down 5 percentage points versus the prior year period, primarily due to revenue performance and a $5 million contract expense benefit in the prior year period, which we previously mentioned.

Before we wrap on market services, as Adana mentioned, we closed the acquisition of LEVEL on October 15th and launch Digital Liquidity Networks, which will unify the capabilities, investments, and solutions which we have been developing to advance tokenization and always on markets under one strategy. The level of revenue contribution for the fourth quarter is expected to be $7 to $8 million, and the expenses are included in our updated expense guidance.

Moving forward, we will report revenue from level and digital liquidity networks within other revenue in our market services division.

Moving to expense on slide 17. We had operating expense of $638 million in the third quarter, an increase of 12%, driven by employee compensation, reflecting our strong revenue execution and severance costs, increased marketing expense due to a strengthening IPO environment, and investments in technology to support revenue and drive innovation and growth. The third quarter operating margin was 57% and the EBITDA margin was 60%, both up one percentage point versus the prior year period. We are updating our non-GAAP expense guidance for the year to a range of $2.550 billion to $2.580 billion from $2.530 billion to $2.570 billion with two primary drivers. We are raising the top end of the range to reflect expected costs from the recently closed acquisition with the two transactions contributing about equally to the increase.

and we are raising the midpoint due to the combination of the impact of the recent M&A and the strong revenue performance we have experienced here to date.

We maintain our 2026 non-GAAP tax rate guidance of 22.5% to 24.5%. Turning to capital allocation on slide 18, Nasdaq generated free cash flow of $616 million in the third quarter. Over the last 12 months, Nasdaq generated $2.3 billion in pre-cash flow at a conversion ratio of 98%. We paid a dividend of $0.31 per share, or $173 million in a quarter, representing a 30% annualized payout ratio. During the quarter, we repurchased a total of 3.6 million shares of our common stock for $323 million. In combination with the dividend, Nasdaq returned nearly $500 million to shareholders in the third quarter.

Through the first three quarters of the year, we have repurchased $1.2 billion, almost doubling the $616 million of repurchases in all of 2025. Additionally, in October, we launched a variable notional accelerated share of purchase plan of $315 to $385 million. It will be completed in the fourth quarter. We finished the quarter with a gross leverage of two and a half times.

In closing, Nasdaq delivered another quarter of excellent execution. Our third quarter results in combination with our performance in the first half of the year demonstrate the strength of our business model and strategy, our position as a trusted transformation partner to our clients, and our leadership in helping to shape the next generation of financial markets. As we enter the fourth quarter and move forward the new year, We are extremely confident in our opportunity, and we remain focused on executing on our strategic objectives and delivering long-term value to shareholders.

With that, I'll open the call for Q&A.

Sure. Yeah, thank you. We really appreciate that question. We are really focused on making sure that we deliver data that is AI-ready and we deliver capabilities within our software solutions that really drive towards agentic capabilities for our clients. And as you can see, we're starting to broaden out how we're doing that and where we're delivering that. So, starting actually in CAP with the investment and data link and our market data, we have created MCP connectors to allow our clients to absorb and ingest the data in a very flexible way to allow them to integrate them into agendic workflows. I do want to say we're very careful in how we deliver that, making sure we can track and trace it and also understanding the use cases that our clients are using the data for.

But it is definitely driving, I wouldn't say upsells, but just demand for our products for sure. And we've mentioned a couple stats, 25% of the new bookings for investment related to AI use cases is an example. And then data link, which is oftentimes the partners are using this is for agentic workflows, and I think Robin has a good example of that.

And then within FinTech, we have a whole range of capabilities we're delivering, and we mentioned that we have over 850 users now of the agentic workers within Verifin, and we have over 70 clients signed now to paying deals So they have signed contracts to make sure that they paying for those solutions And we have a nice pipeline of opportunity to continue to upsell our clients with those capabilities So we really excited about the momentum there I think we mentioned in prior quarters, it's kind of a freemium model. So now we're actually propagating that freemium model into Calypso and surveillance. And we're introducing agentic workers and agentic AI into Eclipse for risk management and into surveillance for basically workflow management on alerts.

And those are just starting. So we're building a pipeline. I think we mentioned that we've been selling more of those solutions through surveillance. Eclipse, we just announced it a couple of weeks ago at Cybos. It had a really, really strong resounding, actually, support from the client. So we're excited about building a pipeline there. And then lastly, I should mention a broader strategy, which is as clients are thinking about how they're going to deploy AI, they're moving more and more of their own infrastructure into cloud.

And so we are seeing an uptick in cloud signings within our FinTech solutions. I mentioned we had 85% of bookings in cloud, and that allows us to be more of a managed service provider, which, of course, delivers an uplift in the ACV that we're signing. So we feel all in, you know, we're really driving and playing into the demands that our clients are needing. And I think we're delivering ahead of what they would expect. I mean, the level of support is really, really high.

Thank you.

Sure. Yeah, you know, we're all – the entire industry is kind of at the beginning of a trend. So we want to make sure that the very first thing we do is build trust with our clients and therefore build adoption from our clients. And so that's why we've chosen an intentional approach to giving them a capability with some limits on it where they can try and kind of try before you buy.

And I think that's been, I think we're really starting to prove that out to be a successful approach within Verifin. As I mentioned, we do have the 70 paid clients. We have a really nice pipeline. We're also signing them to shorter term contracts. And that's actually been both ways. I think what the clients are looking at this and saying, let me make sure that it's really, it's really going to drive the efficiencies I want. And us saying, well, we want to make sure that, you know, we know that these, that these capabilities have a lot of value. We're going to be able to prove really strong return on investment for these products. And so we want to make sure that we have the flexibility to continue to get paid for the value we're providing as we expand the agentic workforce with our clients.

And so I think that we're just now getting to the point where we feel really good about the monetization strategy we have. And now we're able to replicate that with some of the other FinTech solutions as we're driving agentic capabilities in those solutions. And you're going to continue to hear us rolling out new agent capabilities across Sintech and in CAP in the quarters to come. But I also would say in the data space, we are upcharging. So if you are taking our data through an MCP connector, we are upcharging for that MCP connector. And we've done that in the past where if it's a new delivery method, we will pay an upcharge for that delivery method.

And that's a way for us to get some immediate revenue. And then over time, as we understand how they're expanding the use cases and we're driving our data into more expanded AI capabilities, we'll look at different pricing models that will support that as well.

Thank you.

Sure. Yeah, I think in a way those are two distinct conversations, but they're related, obviously. So if we think about the innovation exemption as it stands and how it's constructed, and we've been very clear with the SEC on our views on it, So our view is that the innovation exemption does not – well, it allows the issuers to opt out. The overall construct of the innovation exemption we think is – we're not supportive of. I mean, to say it that way. So, you know, it sits outside of all the general rules that govern the trading venues that trade U. S. equities today. So it doesn't – none of the trades get reported to the tape.

They're not they're not there's no there's no transparency into those venues at all. There's no way for issuers even to understand how to manage their own insider trading programs if they have this kind of trading that's happening outside the confines of Reg NMS. And our view is that tokenization, we should be focused as an industry as on tokenizing the all of the trading, not trying to create this kind of side sidecar kind of experimentation. The good news is I think the SEC did limit the extent to which these innovation exemptions can have an impact on equities.

The most important thing is that there are hard limits on the trading in terms of 25 basis points for stocks that are essentially in the rest of 1,000 and 250 basis points for smaller companies. So it's not going to have a huge impact on our business. It's just the notion of it and how we go about creating change in the industry. I think it's important for us to work together. There was no comment period for this either, and so we feel they're asking for comments now. I think we're providing them.

So we have been having conversations with our issuers, making sure they understand the risks as we see it. We have made a public statement that we will not be including our stock into TSVs. So if a TSV reaches out to us, we will opt out. And as we then pivot the conversation with issuers to, well, how would tokenization work? How can it benefit them? We then talk more about the efforts that we're undertaking, which is that we're building the Nasdaq equity token standard. We're working with ETCC and other post-trade providers.

We're working with Kraken to innovate in the space to deliver an underlying tokenized equity that goes down to the QCIP and the master security file. and also offers real-time settlement through an ecosystem. And the really neat thing is that with the Level ATS now, when we distribute the tokenized equities out through Kraken, they will use Level ATS to execute those equity orders. So it's a really, really nice, elegant solution, and then we'll have instantaneous settlement through another partner. And so that's a really interesting, innovative way. But it also allows the issuer to have line of sight into those investors. So the NASIC equity token actually delivers the ability for us to track and trace to provide, not down to like who it is, but just to have the issuer understand that the tokens are sitting where and how do they communicate to them and how do we allow for things like proxy to happen in a more elegant way.

So a long answer, but we really care about this, and we're working very hard to drive it through the center of markets, and then also to offer this as part of our global solutions from a technology perspective. As markets move to always on, we think that this is a core part of the demand drivers across our fintech solutions, our index business, and our data business.

Thank you.

Sure. In the conversations, they actually have been very constructive conversations because it's an opportunity for us both to discuss, you know, to make sure they understand and are aware of the TSVs that are asking to tokenize their shares. but also that we get a chance to educate on what is tokenization and how can it be beneficial to them and why should they care.

And I can say that as we've pivoted from a discussion of the TSV to what is the Nasdaq equity token, what are we building, and how will it create a better way for them to be able to manage their shares in the public markets and communicate with investors, they actually get – I'm going to say some at least get excited. Some are neutral. Some get excited about it. And we have had a couple of clients say, well, we would like to be an early adopter of the Nasri equity token. So that's great for us because it's allowing us to kind of have a level of engagement that's important.

And we'll see. You know, we're going to launch in the first half of next year. So we have some time to continue to work on it and engage those issuers as to, like, what is it we're delivering to them and how does the platform work? We're also partnering with some really important key partners that are part of the core infrastructure of the markets today.

And we look forward to having further opportunity to announce that going forward. Thank you.

Sure. So the increment, I think, first is as we're moving up market into enterprise, the strongest entry point for us is fraud and in the fraud space. And what's great is that we can basically implement our layer on top of whatever existing ASC system they already have. So we can just make their alerting better, take down their false positives. Every time we run a proof of concept with a client, we can demonstrate clear, measurable ROI, which is terrific on reducing false positives and increasing fraud found. And so it's a very, I don't say easy, but it's a very straightforward way for us to enter in and help them. I think the AI and the ability for criminals and networks to use AI to really amplify their activities is making this a very urgent problem.

It's a $500 billion plus problem in the world, just fraud alone, $4.4 trillion in AML. And so this is such an urgent issue and an area where we've seen a complete change in the attitude of banks towards this is a collective action problem we need to solve as an industry. We can't do it alone. And so the value of our consortia data lake is becoming extremely, extremely valuable. The other thing is we can use it, Gen AI now, into that consortia data lake, and we've been adding new data sources into it as well that allows us to see criminal networks much more holistically. And we're able to look at, you know, what would be seemingly unrelated fraud alerts and kind of bring them all together and realize this is a criminal ring.

We found one criminal ring that was across 1,000 accounts in 45 institutions that had different topologies of behavior. I mean, they were executing different criminal activities. And we're able to see that now, that we can then deliver that into our clients and say, this is not just an isolated SARS. This is something that is part of a bigger ring. And they can do joint SARS reporting. So it's really quite exciting. And I think the large banks realize that they can't do it alone anymore. So that's what's been driving both the demand, but also a sense of urgency that they have to solve the problem differently.

Thank you.

Sure. Yeah. So, Capital Market Stock, as you know, has the three components, Alex. And TMS continues to be a strong driver of growth. As you said, we did announce that we had a pricing action earlier this year. It was effective Jan 1. So, it's been in effect all year. And that's certainly creating lift. The second thing is there's just demand for connectivity, demand for new forms of connectivity. We also have some new innovations we've brought into our infrastructure around liquid cooling. and we're still benefiting from some of the expansion that we've done in the data center in the last couple of years.

And then in recent quarters, this quarter, next quarter, and actually I think one of the quarters earlier this year, there's some benefit of elevated testing.

So, you know, it's not just us who do migrations, but we have other systems inside our data center where they're managing through migrations. And we allow, you know, we offer testing for a fee, and that actually is creating an uplift in revenue. This quarter, you'll see it again next quarter, starts to trail off a little bit in Q1. But that's kind of episodic. So I do want to say that's not all that some of that comes and goes. But the overall demand for TMS is high, and we've been innovating to offer new capabilities. Then in Calypso, very exciting what we're doing to innovate there. I do want to emphasize actually the launch of the exchange-traded clearing solution.

That is kind of almost a brand new product. We had like very, very narrow capabilities in exchange-traded clearing before. And HSBC has been a great partner to work with us to build out a complete capability there that really allows us to go to market with essentially a new module, a new product within Calypso, and be much more comprehensive in allowing people to manage risk. Our view is always on markets and AI are going to make it so that the convergence of markets and asset class sociographies is going to be amplified very significantly And so risk management you can just look at risk management in one asset class anymore you got to look at it across whether it OTC or exchange traded and it got to be global so and then you have to use agenda capabilities to manage risk in real time and take action in real time over time so all of the capabilities we're building in Calypso are related to that in addition to tokenization and it's been a big investment year for us but we see it unlocking durable demand.

And then the last thing in market tech is we have market – we're continuing to find really great opportunities in market tech. We mentioned Bruce, but we have other markets that are using us for managed services, and we're continuing to help them modernize their platforms and moving to cloud. So I would agree, Alex. I think it's a really good demand environment right now.

Thank you.

Yeah, actually, in this nearer term, we actually see it as being actually more of a driver towards data and our solutions businesses. And then over time, as we develop out the Nasdaq equity token and build that platform and start to offer capabilities on top of that platform, we see that as a new revenue opportunity that would sit within market services. But I think that what, you know, and then the last thing is, of course, tokenization, if it's done right and it's done across asset classes and unlocks collateral and makes it so that markets are more liquid and markets are more accessible to more investors, you're increasing the liquidity of markets, which will obviously have a tailwind to market services.

So, but to me, that's like a little bit of like, I don't want to say a lagging indicator, but it's a little longer term than I've got to get my infrastructure ready for always on and I need to get my infrastructure ready for tokenized collateral. Those are things that have, we think, a near term demand driver within Calypso and market tech and in trade surveillance. So, that it is, we see add visibility into the TAM. We kind of understand where it could come from. We have now very specific points of execution that we are starting to articulate to you as to where are we focusing on driving tokenization, always on markets, tokenization. They're all related to each other.

Level becomes a part of that. The equity token design, Calypso's digital assets capabilities and AI capabilities, trade surveillance in terms of demand there, and then, of course, increased demand for our data as the markets globalize. we see all of those things coming together to create our ability to execute against the TAM.

Thank you.

Yeah, great. Well, so as you know, we have a really wonderful partnership with CME, and they do a terrific job. I think I was reading their earnings yesterday, so I was reading their comments, and they talked about the growth of direct retail investors into their platform. They are very focused on creating more accessibility to retail for their futures franchise, and it's obviously showing up in the numbers. I mean, a 70% increase in volumes is really spectacular, but it's also, as you said, it's also coming from some of those smaller price. So, like, as they make the notional value of each futures contract cheaper, it makes it so it just opens up a new avenue towards retail, and I think that's very intentional and very smart in how they're doing that.

And they are connected to a whole range of retail platforms to be able to execute that. So the partnership is as strong as ever. And then as you're right about NDX, because if you also, you know, NDX and I would say 23.5 trading are amplifiers of demand for the option, well, for the futures, for the ETF, for the underlying, and then over time is we don't currently have extended hours and options, but we would expect over time that options hours will expand, and that will give us a chance to expand the NDX franchise. But the NDX franchise, just in U. S. market hours, is continuing to grow, and it is a flywheel between the underlying ETF, the option, and the future.

Strategies can be executed, and more sophisticated strategies can be executed. So I think they all play off each other really nicely.

Thank you.

just curious how you think about the financial system's ability to fund instant settlement given the substantial benefits from netting today thank you yeah that's that's actually a great question i want to make sure i cover that um the more immediate opportunities sit in this idea of collateral management collateral mobility um because it's not just equities that are getting tokenized but treasuries are getting tokenized money market funds are getting tokenized money is getting tokenized. And so all forms of collateral are moving and repos are getting collateral tokenized. So all forms of collateral are moving into a tokenized state.

And that allows for the opportunity for banks to think about moving their money from one collateral pool to another in a much more seamless way. NASA eclipses is the premier provider of collateral management capabilities to the industry around the world. And then we have a partnership with BATON systems that basically they connect into clearing houses and clearing pools and they can move the collateral from one to another and they're working with us to move that in a tokenized state. We actually also were able to demonstrate that. So we had a proof of concept with two major investment management firms leveraging Canton to move collateral from one collateral pool to another and it worked instantly and it worked perfectly.

So that proof of concept was a really good one. Yeah, I was checking to make sure I could name them. So it was Vanguard and Wellington. So it was really exciting to have such large and premier asset managers working with us on this. So that's the most immediate. I do want to get to the point of instant settlement.

So let me be clear in terms of what we think is netting is very important in U. S. equities, very important. We trade about a trillion dollars a day. So having to gross up trading in equities is an incredibly expensive proposition. It's not something that the industry feels that that's and it's also a huge benefit. You know, there's so many reasons why netting is important. And that generally comes with batching the clearing. The question is, do you need to do it all T plus one? You know, can you batch intraday? Can you batch even at the end of the day and just start to eliminate more and more of the risk, the overnight risk and the time risk associated with clearing?

And I think that's a real possibility with tokenization. You put it into a more elegant form and money can move and stocks can move more easily. Then you can start to think about how you bring settlement up faster. But in the meantime, there's also the opportunity for us to work on a very innovative capability where you would have gross trading. So this is pre-funded or essentially gross settlements real-time of retail trades. So you have to think about it as like in the retail ecosystem with much smaller trade sizes and a different way of managing accounts, the crypto world is already pre-funded in cash anyway. So it's a continuation of that model, but with tokenized equities.

And that's what we're doing with Kraken. And we would then settle them through a very innovative custodian solution that we're working on with a partner. So I think it's very, very exciting to see how we can think differently about the future of markets this way.

Thank you.

Go for it, Sarah.

Yes, we have, as you know, very strong free cash flow, over $2 billion. That enables us to do a lot. We've also been at two and a half times within our leverage target range. You've seen us continuing to be focused on organic growth. And so needless to say that you're seeing the execution on that organic growth this quarter. You're seeing the very large sum in time opportunities that we have. So a lot to do there and we're well invested in that regard. You've seen us do partnerships. We've seen us do tokens, and so whether it's Daciti or whether it's Level, those are very additive, and we've talked about those. And we might do bolt-ons also.

And I've talked about our share of purchase program. We love buying our stock. It has been a core part of our program, and $1.2 billion, which is twice what we did approximately last year, just in three quarters, is really participating in the EPS growth formula for us. And we're very, very happy to return capital to shareholders in that very equitable form, especially given how attractive from that point of view is the only point of view that stock price is. So as a buyer of our stock, we love doing it. So a lot of flexibility, a lot of opportunities, and we are continuing to to evaluate what goes for charolders.

Thank you.

Yeah, so I think it's actually that Lyle's point is a really good one. So in terms of the runway, it's actually a fair amount of runway because we have a lot of established clients in both of those products that have been on-prem clients for a long time. And so as they're renewing, and those renewal cycles are long, right? So we could sign a client for anywhere from, I would say, anywhere from the shortest being three, but most of the time five to seven years and sometimes 10. So So they come along in waves, but during that renewal, we really work towards getting them into a cloud state. But those migrations are big, and it requires a lot of conversation with the client.

So we still have a long runway. We tend to say that it's about a one-and-a-half times uplift on ACV as we move into a cloud migration because we then become a managed service provider to them, and so we're doing more for them to manage their infrastructure, and they're not having to do as much. So, I mean, it is turning out to be about that.

In terms of the, yeah, so actually one thing that we also focus on is what is the percentage of SaaS revenue to our total ARR? And that's slowly creeping up. We're at 38%. It's slowly creeping up as we continue to move more and more of our ARR, our annualized clients to cloud. In terms of AI workflows, great question, because we basically are delivering those AI capabilities in the cloud form, right? So it doesn't necessarily, like for Calypso, I don't think you have to be a full CapCloud client to be able to take advantage of the AI layer we've created. But generally speaking, we deliver our AI capabilities through our cloud-based solutions. So it's important to make sure that we innovate in our products and we deliver those innovations in a modern state that allows our clients to innovate as well.

We just don't want to choke them off, particularly Clipso. We don't want to make it a prerequisite necessarily, but for other products, we will.

Thank you.

Well, actually, we just look at the growth drivers underpinning solutions businesses versus markets. We've had really nice, strong growth in markets. And we actually expect with, as we move to globalized markets and tokenized markets, we will have an uplift in liquidity that should come from those activities, because that's a big driver of why it's so attractive is opening up the accessibility of markets. But our solutions businesses generally are growing at a rate that's faster than our markets businesses on a longer term basis. Our indexes is, for instance, 39% growth in the quarter, but just imagine that the growth of index alone is really at a very high rate. And we expect we just see a lot of demand drivers there to underwrite that innovation economy and the investor's appetite for that.

So we would expect our – and then the last thing is, of course, in all of our software and data solutions, those are intimately linked with the ability to actually increase the liquidity, right? So all of that's kind of that flywheel. And I can't sit there and say what exactly the mix of business is going to be, but as a general matter, our solutions businesses are becoming a bigger part of our business over time just based on the relative growth rate. And in the future, we have kind of growth opportunities in both elements of our business that's really strong and exciting.

Thank you.

Great, thank you. Well, our third quarter results reflect the disciplined execution of our strategy and reinforce our role as a trusted transformation partner to the global financial system. I want to thank all of you for joining the call today, and have a great day.