Nasdaq, Inc. (NDAQ) Earnings & Analysis

Latest quarter

Nasdaq reported Q3 revenue of $2.4 billion, up from $2.0 billion a year earlier. On the basis used by the consensus, revenue was $1.5 billion and exceeded the estimate by 1.00%, although both reported revenue and the estimate rounded to $1.5 billion. Adjusted EPS of $1.04 beat the $1.02 consensus estimate.

CEO Adena Friedman said net revenue, which excludes certain transaction-based expenses, was $1.5 billion. CFO Sarah Youngwood said Financial Technology revenue rose 16% to $529 million, with growth across its three subdivisions. She said index revenue rose 39%, helped by higher average assets in index-linked exchange-traded products and derivatives volumes. Market Services net revenue rose 2% to $309 million, supported by U.S. equities and higher trading volumes in some markets.

Nasdaq reported diluted EPS of $0.96, compared with $0.73 a year earlier. Its operating margin rose to 30.6% from 29.6%, while gross margin fell to 61.9% from 66.4%. Nasdaq generated $521 million in operating cash flow during the quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Friedman said demand for Financial Technology remained consistent, with “sales cycles, contract term lengths, and bookings mix remaining consistent.” Cloud-based solutions accounted for 85% of the division’s bookings in the quarter. She said Nasdaq Verafin revenue grew 23%, while the company signed new clients and expanded existing relationships across its technology businesses.

Asked about AI demand and pricing, Friedman said Nasdaq is making data available for clients’ agentic workflows and introducing agentic capabilities in Verafin, Calypso and Surveillance. She said more than 850 users were using Verafin’s agentic workers and more than 70 clients had signed paying contracts. For data delivered through an MCP connector, she said “we are up charging for that MCP connector.”

Youngwood said data revenue growth was driven by upsells, new bookings, pricing and usage. She said index revenue benefited from higher assets in exchange-traded products and derivatives volumes, alongside a shift from higher-priced E-mini contracts to lower-priced micro E-mini contracts. Friedman said the IPO environment had softened modestly in recent weeks as some companies reconsidered listing timing.

In Market Services, Youngwood said higher U.S. equities capture and market share contributed to growth, partly offset by changes in U.S. options and European equities capture. She said the division’s operating margin fell to 61%, partly reflecting revenue performance and a prior-year expense benefit. At company level, she attributed higher operating expenses to compensation, severance, marketing and technology investment.

Asked about Capital Markets Technology, Friedman said a pricing change and demand for connectivity supported trade management services. She said paid testing associated with system migrations was also contributing revenue, but that the benefit would begin to trail off in Q1. Youngwood said prior-year Calypso upfront revenue would make the upcoming quarter’s comparison more difficult.

Guidance

Youngwood said Nasdaq updated its 2026 non-GAAP operating expense guidance to $2.550 billion-$2.580 billion from $2.530 billion-$2.570 billion. She said the revision reflected expected acquisition costs and the combination of recent transactions and revenue performance through the year to date.