TransUnion and Nasdaq Exceed Expectations in Q1 2023 Earnings Reports

Earnings call: TransUnion surpassed expectations with an 8% revenue growth By Investing.com

TransUnion (NYSE: NYSE:TRU), a global information and insights company, reported a strong second quarter in 2024, surpassing expectations with an 8% revenue growth on an organic constant currency basis. The company has raised its full-year guidance following significant revenue contributions from its financial services and emerging verticals segments, as well as double-digit growth in international markets. TransUnion is also advancing its technology with the OneTru platform, expected to enhance innovation and drive further revenue. TransUnion's earnings call highlighted the company's successful quarter and optimistic outlook for the remainder of the year. With initiatives like the OneTru platform and the next-generation TruValidate, TransUnion is poised to enhance its offerings and maintain competitive strength in the market. Despite some segment declines and margin pressures, the company's strategic focus on technology transformation and market expansion underpins its positive guidance revisions for 2024. TransUnion's commitment to innovation and market expansion is reflected in its recent performance and future outlook. With a strong second quarter in 2024, the company's strategic initiatives are bearing fruit, as evidenced by the impressive 8% revenue growth on an organic constant currency basis. Here are some key insights from InvestingPro that further illuminate the company's financial health and market position: Among the InvestingPro Tips, two particularly stand out in the context of the article: For readers interested in an in-depth analysis, there are 11 additional InvestingPro Tips available that can provide a more comprehensive view of TransUnion's financial and market performance. To explore these insights, visit https://www.investing.com/pro/TRU and remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. Operator: Good day and welcome to the TransUnion Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Greg Bardi, VP of Investor Relations. Please go ahead. Greg Bardi: Good morning and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer, and Todd Cello, Executive Vice President and Chief Financial Officer. We posted our earnings release and slides to accompany this call on the TransUnion Investor Relations website this morning. And they can also be found in the current report on Form 8-K that we filed this morning. Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses, and other items, as well as certain non-GAAP disclosures and financial measures, along with the corresponding reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures. Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements because of factors discussed in today's earnings release, in the comments made during this conference call, and in our most recent Form 10-K, Form 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statement. With that, let me turn it over to Chris. Chris Cartwright: Thank you, Greg. And let me add my welcome and share our agenda for the call this morning. First, I'll provide the financial highlights for our second quarter 2024 results. Second, I'll discuss OneTru and how we're modernizing our technology and product platforms. Finally, Todd will detail our second quarter results, along with our third quarter and full year 2024 guidance. Now, in the second quarter, TransUnion exceeded guidance across revenue, adjusted EBITDA, and adjusted diluted EPS. Given the strength in the quarter and recent large breach remediation wins, we're raising our full year 2024 guidance, which Todd will detail later. We expect a strong year for both revenue and earnings growth. With that said, we are maintaining our conservative guidance posture due to ongoing macroeconomic and geopolitical uncertainties. Revenue grew 8% on an organic constant currency basis, above our 5% to 6% guidance. Our organic constant currency growth, excluding mortgage, of 4% also exceeded our expectations. In the U.S., we experienced muted, but stable lending volumes that were consistent with the first quarter and well below historical trends. Consumer finances in the U.S. remain broadly healthy due to continued low unemployment and some real wage growth, but pressures on lower income consumers have led to waning spending activity. Inflation slowed in the quarter after a modest tick-up at the start of the year, and market expectations are for the Fed to start lowering interest rates later in the year. Consumer delinquencies rose slightly for mortgages and auto loans, but have begun to stabilize for credit cards and personal loans. Our U.S. market segments grew 6%. Financial services was up 11%, led by 50% plus growth in mortgage. Emerging verticals grew 4%, driven by strength across insurance, public sector, tech, retail, and e-commerce, and media. Within U.S. markets, NeuStar also delivered another solid quarter. Trusted Call Solutions continues to lead the way, growing more than 40% with positive contribution across our verticals. NeuStar delivered mid-single digit growth in the first two quarters of the year and remains on track for mid-single digit growth in 2024. Consumer Interactive declined 1%, as expected, and we believe we're closer to an inflection point to return Consumer Interactive to sustainable growth, supported by strong identity protection and breach wins, and progress in stabilizing our consumer direct offering. Our international segment grew by 14% on a constant currency basis. The 13th consecutive quarter of double-digit growth. India led with 27% growth, while Asia Pacific, Latin America, Canada, and Africa all grew double digits. And finally, we prepaid $80 million in debt during the quarter and intend to make further prepayments in the second half of the year. We also completed a debt refinancing to extend our maturity profile and reduce our interest expense. We made strong progress with our technology modernization in the second quarter. Slide 5 illustrates how we're aligning TransUnion around a new global technology platform and solutions. By consolidating our powerful yet independent products into integrated suites on a next generation technology foundation, we believe that we can accelerate innovation, reduce cost, and leverage our solutions across our regions to drive revenue. Now to orient you on this visual from the bottom up, OneDev is the internal name for our new technology infrastructure operating system. OneDev standardizes our infrastructure services and developer tools in a single foundation to reduce cost and increase engineering productivity. In fact, it's the primary driver of our technology modernization savings. Built off of OneDev, OneTru is our core solutions enablement platform, which centralizes our common product services of data management, identity resolution, analytics, and delivery. OneTru is a key driver of innovation and revenue growth. And leveraging OneTru, our solutions are being integrated into end-to-end product suites under single brands, such as TruValidate fraud prevention and TruAudience marketing solutions. These integrated suites deliver dramatically better performance within clear global brand families. I'll now further explain how each technology layer creates value across the enterprise and share some examples of the benefits we've already delivered in our TruValidate fraud suite and Factor Trust alternative lending product. Now OneDev builds upon the success of Project Rise to create a global technology foundation common across our applications, reducing complexity, saving costs, and freeing engineering resources for innovation. OneDev creates a single technology operating plane that is cloud agnostic, preventing supplier lock-in. It also standardizes our developer utilities, creating a one-trans-union way for managing security, compliance, capacity provisioning, and software deployment. In addition to improving our developer productivity, OneDev will help us rationalize third-party software and other legacy technology costs. We will continue to operate our own private cloud infrastructure for certain applications where the economics are more attractive. OneDev provides the foundation for OneTru, which is our central data management, identity, and analytics hub. The platform standardizes the process of transforming raw data into actionable intelligence and deploying it within our product suites. This also allows our product specialists to focus on the data and analytic customization and workflow functionality needed to create innovative products. Let me detail the key processes that OneTru standardizes. OneTru integrates our data assets in credit risk, marketing, and fraud prevention into a unified data management environment. We embed strong permission and compliance controls to separate our credit and non-credit data. Our data scientists have easy access to our full complement of proprietary and public data for rapid, cross-functional development of insights. OneTru identity graphs link our offline and online data together for a consistent view of consumer identity, helping customers to reliably resolve identities across product lines and use cases. By servicing clients across risk, marketing, and fraud services, we participate in a broad feedback loop that reinforces our identity capabilities. OneTru Analytics Services consolidates and standardizes our tools and models in a single interface for use by our internal teams and customers alike. As new capabilities emerge, such as artificial intelligence or machine learning as a service, we can deploy these capabilities rapidly and at scale. And finally, OneTru's delivery layer leverages consistent and configurable technology for seamless delivery of our data and intelligence to customers for easier product upgrades and cross-selling. Now, I want to reinforce that OneTru already powers Heritage NeuStar marketing and fraud products, as well as our new enterprise identity graphs, our innovation labs, and our internal analytics environments. We're also launching a number of new products on OneTru this quarter, including TruValidate Fraud Prevention, TruAudience Marketing, and a number of enhancements to our advanced acquisition suite. We plan to continue this rapid pace of innovation and modernization over the next 18 months as we further refine and scale this platform. Now, TransUnion products will be integrated into broader functional suites built upon the world-class capabilities of the OneTru platform and then taken to market using the Tru portfolio brands. Over the last few years, we've organized our broad range of B2B products and our multitude of brands into several global product families. These global brand families clarify our offerings, they demonstrate the breadth of our capabilities, and make it easier for customers to find what they need. We continue to leverage our core competency in consumer identity to expand further beyond credit and risk into marketing and fraud prevention use cases. And we'll measure the success of our technology and product platform strategy in terms of driving better growth across credit, fraud, and marketing, as well as delivering on our cost savings targets. In the interim, we are tracking progress toward improving our product quality, our time to market, and the pace of innovation. So let me briefly spotlight the benefits that we're already seeing with TruValidate and FactorTrust. Our integrated TruValidate suite, powered by OneTru, combines our comprehensive identity data along with fraud signals from a range of NeuStar and TransUnion products. We aggregate the signal in our single platform where we apply advanced analytics to extract deep insights. The predictive uplift from consolidating all of our fraud signals and analytics onto OneTru has been notable. When we compare OneTru to our current in-market offerings, we see a 30% plus increase in fraud detection, along with a 75% decrease in false positives. This enhancement enables customers to better protect themselves while providing a friction-right experience for consumers. Now we're nearing the end of our beta testing for our first release with select customers. The initial results are extremely positive. We expect the first general release to be available later this quarter. Our fraud product suite serves thousands of customers today around the world and represents roughly $300 million in revenues last year against a multi-billion dollar addressable market. We aspire to be the customer's first call for fraud mitigation, and we see a substantial opportunity to gain market share with our integrated suite, which we know performs much better than the patchwork of point solutions so many customers use today. We're also in the process of modernizing FactorTrust, our short-term lending bureau within our TruVision suite, to OneTru over the course of 2024. The FactorTrust modernization serves as proof of concept of how OneTru can enhance our credit bureau capabilities across batch, online, and analytics. We're already taking foundational steps to migrate our core U.S. and Indian credit bureaus to OneTru starting early in 2025. OneTru is improving the speed and efficacy of FactorTrust, which we believe will strengthen our competitive positioning in the short-term lending space. We're seeing substantial improvement in the speed of batch processing from 24 hours to one hour, allowing faster on-demand retrospective analyses. Additionally, OneTru's modern delivery layer allows us to deliver enhanced data attributes and model upgrades seamlessly with improved model deployment, self-service analytics, and batch capabilities. We see opportunity for a near-term upgrade cycle, followed by more frequent and ongoing upgrades, strengthening our position for more competitive wins in the future. We look forward to continuing to update you on how OneTru platform is driving innovation across our product lines over the next several quarters. And now I'll hand it to Todd to provide further details on our second quarter financial results and our updated full year 2024 outlook. Todd? Todd Cello: Thanks, Chris, and let me add my welcome to everyone. As Chris mentioned, in the second quarter, we exceeded our guidance on all key financial metrics. Mortgage drove roughly half of our $15 million of revenue outperformance. The other half of outperformance was broad-based, principally in emerging verticals and international. Second quarter consolidated revenue increased 8% on a reported basis and organic constant currency basis. There was no impact from acquisitions and an immaterial impact from foreign currency. Our business grew 4% on an organic constant currency basis, excluding mortgage from both the second quarter of 2023 and 2024. Adjusted EBITDA increased 11% on a reported and constant currency basis. Our adjusted EBITDA margin was 36.2% at the high end of our expectations and up 115 basis points compared to the year ago quarter due to flow-through on revenue growth and realization of transformation cost savings. Adjusted diluted EPS was $0.99, an increase of 15%. Adjusted tax rate for the quarter was 23.4%. Finally, in the second quarter, we took $33 million of one-time charges related to the next phase of our transformation program, $15 million for operating model optimization, and $18 million for technology transformation. We incurred $76 million of one-time transformation expenses in the first half of the year and expect to incur approximately $200 million throughout 2024, driving at least $65 million of in-year operating expense savings. As part of our $355 million to $375 million program, we expect the remaining $75 million to $95 million of one-time expenses to be incurred in 2025. Looking at segment financial performance for the second quarter, U.S. markets revenue, which includes Consumer Interactive, was up 6% compared to the year ago quarter. Adjusted EBITDA for U.S. markets was up 9%, and adjusted EBITDA margin was up 120 basis points to 39%. Our U.S. market segment benefited from a sequential increase in realized transformation cost savings. Financial services revenue grew 11%. Excluding mortgage, financial services revenue was down 2%. Trends were consistent with the levels seen in the first quarter. We continue to outperform softer volume activity driven by new business wins and successful cross-sell, including with NeuStar Solutions. In the third and fourth quarter, we expect improving financial services ex mortgage growth rates as comparisons ease in the back half of the year. Our credit card and banking business was down 2%. Activity remains tempered as lenders balance improving deposit basis and stabilizing delinquency rates against mixed consumer confidence. We are enabling our customers to navigate the current environment and position themselves for future growth with highly relevant products such as Trusted Call solutions, TruIQ's analytical suite, and our marketing solutions. Consumer lending revenue declined 3%. Fintech online activity remains muted but stable with a modest uptick in batch marketing. The short-term lending space remains soft. We continue to see wallet and new logo wins across both fintech and short-term lending as well as expanding new customer use cases. Our Auto business grew 3% despite continued headwinds in the auto market driven by our innovative credit solutions and new wins in Trusted Call Solutions. New vehicle sales continue to grow modestly but there remain affordability challenges across the market from higher interest rates in still high used car prices. We expect similar trends to persist throughout the year. For mortgage, revenue grew 53% against inquiry volume declines of 11%, modestly better than our expectations. We saw good prequalification volume supported by healthy shopping activity while mortgage originations remain down and significantly below historical averages. On a trailing 12-month basis, mortgage represented about 9% of total TransUnion revenue. Emerging verticals grew 4% in the quarter led by insurance, public sector, tech retail and e-commerce, and media, offsetting modest declines in telco and tenant employment. Insurance grew 6% as market trends progress as anticipated which we expect to support growth acceleration in the second half of the year. Insurers are gradually increasing marketing activity as rate adequacy improves, driving demand for our credit-based marketing solutions as well as our suite of identity-based data hygiene, audience and analytic solutions. Consumer shopping activity remains strong. We continue to have a robust new business pipeline, particularly across our TruVision Driving History suite as well as cross-sell of Neustar and Sontiq Solutions. Public sector grew double digits with strength across credit, communications and fraud solutions as well as favorable project timing. Media and tech retail and e-commerce both grew mid-single digit. The overall marketing backdrop remains muted but stable and we delivered good growth in Trusted Call Solutions and our risk products. Elections grew modestly while telco and tenant and employment declined low single digit. Tenant employment year-over-year declines dissipated and we expect growth in the second half of the year as we lap the impact of our product recalibration and ramp recent new business wins. Turning to Consumer Interactive, revenue decreased 1%. Our indirect channel grew, benefited from continued breach wins. Our direct business declined as expected as we work through the impact of our recalibrated marketing strategy. For my comments about international, all revenue growth comparisons will be in constant currency. For the total segment, revenue grew 14% with five of our six reported markets growing by double digits. Adjusted EBITDA margin was 42.8% up 120 basis points. Now let's dig into the specifics for each region. In India, we grew 27% on top of 35% growth in the prior year second quarter. We grew strongly in consumer credit, commercial credit, fraud, marketing and direct to consumer, supported by healthy market trends. Our UK business returned to growth up 4% in the quarter. UK market continues to stabilize with improving inflation figures and expectations for lower interest rates, supporting gradually improving banking and fintech activity. Additionally, our consumer offerings as well as our insurance and gaming verticals drove strong performance. In Canada, we again delivered strong performance, growing 12% against flattish market volumes. Growth was broad based, benefiting from share gains and batch sales and financial services, strengthened insurance, and recent consumer indirect and breach wins. Into the second half of the year, we anticipate some deceleration in our growth rate in Canada as we lap sizable new business wins, but expect to deliver healthy and market leading performance. In Latin America, revenue growth accelerated to 13% with broad-based growth across regions. Colombia grew double digits, and we're starting to see the improving fintech growth after a period of retrenchment. Brazil also accelerated to double-digit growth driven by improving new business win momentum. In Asia Pacific, we grew 14%, led by very strong growth in the Philippines and another solid quarter in Hong Kong. Finally, Africa increased 10% with broad-based growth led by our retail vertical. Turning to the balance sheet. We ended the quarter with roughly $5.2 billion of debt and $543 million of cash on the balance sheet. We finished the quarter with a leverage ratio of 3.3 times. We made an $80 million debt prepayment in the second quarter and expect to make further prepayments over the course of 2024 with excess free cash flow after funding our transformation initiatives. Remember that we expect roughly $280 million of accrued onetime transformation expenses from the fourth quarter of 2023 through the end of 2024, with the majority paid out this year. In the quarter, we also successfully completed debt refinancing to extend our maturity profile and reduce our interest expense. We refinanced $1.5 billion of our $2.2 billion Term Loan B5 into Term Loan B8 as well as our entire Term Loan A and revolving credit facility. We extended the maturity of the portion of our Term Loan B5 from 2026 to 2031 and our Term Loan A and revolving credit facility from 2028 to 2029. Additionally, we successfully removed the credit spread adjustment for the portion of our Term Loan B5, Term Loan A and revolving credit facility. Since announcing our Neustar acquisition, we have voluntarily prepaid $1.6 billion while executing on three refinancing transactions to lower our interest expense and extend our maturity profile. Net of our swaps, our all-in average effective cost of debt at today's rates is roughly 4.9% below the current SOFR rate. You can find two slides on our debt profile in the appendix of our presentation. Based on our expectation for adjusted EBITDA and cash generation, we expect our leverage ratio to be in the low three times range by the end of 2024. We continue to work towards our leverage ratio target of under three times. We do not view 3 times as an ending point for deleveraging and view debt prepayment as an attractive use of cash. Turning to guidance. We are pleased with our outperformance over the first six months of the year, but our approach remains unchanged. We continue to assume muted economic growth throughout 2024 with steady lending volumes and no benefit from interest rate cuts. That brings us to our outlook for the third quarter of 2024. We expect foreign exchange to have a less than 0.5% impact on revenue and insignificant impact on adjusted EBITDA. We expect revenue to be between $1.044 billion and $1.06 billion or up 8% to 10% on an organic constant currency basis. Our revenue guidance includes approximately two points of tailwind for mortgage, meaning that we expect the remainder of our business to grow 6% to 8% on an organic constant currency basis. Included in our guidance is a roughly 4.5% benefit from recent large breach remediation wins that we expect will be realized in the third quarter. We expect adjusted EBITDA to be between $367 million and $380 million, up 3% to 7%. We expect adjusted EBITDA margin of 35.2% to 35.8% or down 90 to 160 basis points. A few nuances on third quarter margin. The impact of our lower margin large breach wins is a roughly 80 basis points drag on quarterly margins. Additionally, the impact of normalizing incentive compensation when compared to last third quarter's low levels when we had a reversal of variable compensation accrual is a little over 100 basis points drag. Excluding those items, we expect to deliver strong underlying margin expansion, benefiting from revenue growth and the realization of our transformation savings. We also expect our adjusted diluted EPS to be between $0.97 and $1.02, up 6% to 12%. Turning to the full year. We now expect revenue to come in between $4.098 billion and $4.138 billion or up 7% to 8% on an as reported and organic constant currency basis. We expect our organic constant currency growth, excluding mortgage to be up about 4% to 5%. For our business segments, we expect U.S. markets to grow mid-single digit or up low-single digit, excluding mortgage. We anticipate financial services to be up low double digit or low-single digit growth, excluding mortgage. We expect mortgage revenue to increase about 50% based on mortgage inquiries being down over 5%. We expect inquiries to be down roughly 5% in the second half of the year. We expect emerging verticals to be up low single digit. We now expect Consumer Interactive to increase low-single digit, an increase from down low-single digit due to the breach wins. We continue to expect international to grow low-double digit. Turning back to the total company outlook. We expect adjusted EBITDA to be between $1.455 billion and $1.485 billion, up 8% to 11%. That would result in adjusted EBITDA margin being 35.5% to 35.9% or up 40 to 80 basis points. We anticipate adjusted diluted EPS to be $3.78 to $3.90, up 12% to 16%. We expect our adjusted tax rate to be approximately 22.5%. Depreciation and amortization is expected to be approximately $530 million. We expect the portion, excluding step-up amortization from our 2012 change in control and subsequent acquisitions, to be about $245 million. We anticipate net interest expense will be about $250 million for the full year. We expect capital expenditures to be about 9% of revenue. We continue to expect to incur approximately $200 million in onetime charges in 2024 related to our transformation program. Before wrapping up, I want to summarize the drivers of our guidance raise from what we guided in April. The increase in our revenue and adjusted EBITDA guidance is driven by two factors, first is our outperformance in the second quarter as we exceeded the high end of our revenue expectations by $15 million and adjusted EBITDA by $5 million; second, we expect our large breach wins to contribute roughly $40 million of revenue and $5 million of adjusted EBITDA in the second half of the year, with the vast majority recognized in the third quarter. The margin profile of breaches can vary depending on the services offered. With the acquisition of Sontiq, we are now able to play a meaningful role in the breach market with end-to-end services to meet the needs of a particular event. The large breach wins we are servicing now utilize all of our services, including print notification, which collectively are lower margin. By comparison, the numerous small breaches we continue to win typically utilize the higher-margin services. These large breach wins build our momentum, credibility and relevance in the growing space. Importantly, excluding the breach benefit, our expectations for the second half of the year are unchanged from April as we maintain our prudent guidance approach. We continue to expect healthy revenue growth and strong underlying margin expansion in the back half of the year. We are pleased with the progress on our transformation programs and remain well on track to deliver at least $65 million of savings throughout 2024. I'll now turn the call back to Chris for some final comments. Chris Cartwright: Thanks, Todd. And to wrap up, we exceeded second quarter expectations driven by mortgage growth and broad-based outperformance in emerging verticals in International. We achieved key milestones against our transformation and technology modernization programs reinforcing our confidence in delivering against our financial commitments. And we're raising our 2024 guidance behind the strong second quarter results and our recent breach wins. We remain focused and confident in delivering strong results in the current low growth market environment. Now let me turn it back over to Greg. Greg Bardi: That concludes our prepared remarks. For the Q&A, we ask that you each ask only one question so that we can include more participants. Operator, we can begin the Q&A. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will be from Jeff Meuler from Baird. Please go ahead. Jeff Meuler: Yeah, thank you. Good morning. So I want to ask about card and banking and consumer lending, I guess, both in the quarter and going forward from the standpoint that it sounds like market conditions are stable, but your numbers got a little bit worse in the quarter on a year-over-year basis. So what drove that? And then going forward, I hear you on the benefit from the easier comp, but at what point do we see greater, I guess, underlying improvement beyond the using comp benefit, especially now that DQs are starting to level off given that they're further along in the normalization process. Thank you. Todd Cello: Hey, good morning, Jeff. This is Todd. Thanks for the question. So as it pertains to financial -- let's talk about financial services just in total, excluding mortgage. I know your question is about card and banking and consumer lending. But in the first quarter, we did grow 1%, and we just reported a decline of 2% in the second quarter. What we think is a more instructive way to look at it is to look at what actually happened in the first half of the year. And when you look at it on that basis, everything was pretty much flat. What we see there is simply a continuation of the trends that we saw exiting 2023. Needless to say, in Q3 of 2023, we saw a step down. And we've been pleased with what we characterized in our prepared remarks as a stabilization in our volumes. So when you look at the second half of the year, to your point, the volumes comparisons will definitely get easier where we're expecting in the third quarter, a low-single digit growth rate for financial services ex mortgage. But when you get into the fourth quarter because remember, the step down that we saw in 2023 was started really in September. So you saw the full run rate of that happen in the fourth quarter of 2023. So the comparable there look is about a mid-single digit grower in the fourth quarter that we're expecting. A lot of the focus, and rightfully so, is on how our volumes are performing, but it is also important to note that we do continue to win meaningful new logos, new business, as well as we've been successful within financial services and cross-selling Neustar capabilities. So the point in that is it's important to look at this a little bit more broader than just the volumes because there are other places that we have had some success. Chris Cartwright: Yeah. I would just reinforce a couple of points. I mean we view this as stable market conditions, even though technically, we are a bit negative in the two categories that you pointed out. I mean, naturally, you are going to expect some variations in and around the floor. And so we think these fluctuations are within a stable, but muted, lending environment. I think the more important takeaway is that we are demonstrating that, through our diversification and overall business model strength, we can grow even when the conditions are muted. And so we've got nice top-line growth, good fall-through margin improvement and the ability to delever despite the fact that we're still in kind of a stable -- I mean, kind of a stable, but depressed, market conditions. Now looking forward, when do we think we're going to actually start to see growth beyond just steady conditions against easing comps? Look, it's tough to predict, but the consumers are holding up pretty well because they're employed and they're enjoying some real wage growth. There has been increasing distress among sub-prime and lower-income consumers, but we think some of that is moderating. And as you point out, delinquencies are easing. The deposit bases within the banks are stabilizing. And I think that means we're getting closer to market conditions, where marketing activity and the customer acquisition is going to improve. Of course, if the Fed does come through with any rate reductions in the second half of the year, that would be additive to our forecast at this point. Operator: Thank you. And the next question will be from Andrew Steinerman from JPMorgan (NYSE:JPM). Please go ahead. Andrew Steinerman: Hi. Glad to hear that Neustar's revenue growth was solid in the quarter and on track for the year. Could you just give some more color on what's driving Neustar's revenues within the marketing and fraud solutions? And how is joint product development going traction in joint product development products that have been introduced? And lastly, is Neustar still expecting to have EBITDA margins around 32% this year? Chris Cartwright: Well, first, quickly on the margin question because that's probably faster to address. Yes, 32% is our guide for the year. And we do believe that there's upside to those margins as we complete the realization of the acquisition synergies as we complete the technology modernization that we outlined in the third, fourth quarter environment last year. And also, as we return to more normalized marketing conditions, marketing has been in retreat for about 12 months plus now and our marketing products tend to be higher margin than the communication products because there's a lower cost of goods sold associated with them. So we also have some mix headwinds that are keeping Neustar margins a little bit lower than we expect in more normalized conditions. Now if you look across the board, we're having a pretty good year in fraud with Neustar, we're having a softer year in marketing relative to our guidance, and it's because of the pressures on businesses to find efficiencies in marketing in a more difficult environment. And we're doing pretty well on communication solutions, in particular, the subcomponent of communications, which is Trusted Call Solutions where we're getting really outsized growth because we've got a product that's getting great market acceptance, and we're going to continue to ride that. On the innovation front, we are very close to launching the next generation of our integrated marketing products, a unified marketing solution that combines the best of heritage TransUnion and Neustar on a single integrated platform. And that's one of the reasons why we took the time in this earnings call to focus on the many components of OneTru in the tech transformation because this next-generation solution is built upon OneTru. And also on OneDev, the underlying foundation. And it's going to bring together all of the data, the marketing audience data, all of the identity data and resolution capabilities in the range of identity, hygiene, audience planning, activation and media measurement services in a single integrated system. So we expect that to launch late third quarter. And rolling into next year, we think we're going to see material acceleration in growth there regardless of market conditions. We're also excited because we've achieved the same kind of product innovation milestone in the fraud world. We are launching the next-generation TruValidate fraud solution. We highlighted it in my section of the earnings. You can see it performs dramatically better. And it's been a point of integration and consolidation of the various fraud solutions that we have either acquired or built in different geographies through the year on the common Neustar platform. And by aggregating all of that signal and bringing advanced analytics against it, we're able to identify fraud far more effectively, but also reduce false positives, which saves our customers a lot of needless labor. So I'd say in the broad, Andrew, we're kind of moving from the acquisition integration phase, and we're kind of deeply now in the acquisition innovation phase. Operator: And the next question will be from Faiza Alwy from Deutsche Bank (ETR:DBKGn). Please go ahead. Faiza Alwy: Yes, hi. Thank you so much. So wanted to talk more about emerging verticals beyond Neustar? You've done well in the first half, you highlighted 4% growth, but you're still keeping the low-single digit growth outlook for the year. So just curious on some puts and takes there and how we should be thinking about the back half? Todd Cello: Good morning, Faiza. I'll take that question. Yes, we are pleased with the performance that we've had thus far with the emerging verticals, in particular, growing 4% in the latest quarter, but there are several moving pieces that I do feel are important to walk through. In our prepared remarks, we did speak about some good growth that we are seeing in insurance. The insurance vertical grew 6% in the quarter. As we think forward about that business, marketing continues on the recovery, which is a positive thing for the industry overall as rate adequacy has improved. And we're also seeing some strong shopping activity by consumers. So we expect that to continue on. Within the Emerging Verticals, it almost like I would think about segmenting where the growth came from. So insurance is clearly the standout because of its size and the growth that we're seeing, but also in the quarter, we saw good growth in public sector, which was a double-digit grower, broad-based, but the public sector business does have some project work in it, so that can be uneven from quarter-to-quarter, but nevertheless, was a meaningful contributor to the growth rate. Also, our tech retail and e-commerce and our media vertical grew greater than the 4% for Emerging Verticals overall, which we view as a very solid result because much of the marketing revenue that we just spoke about from Neustar and the joint capabilities that TransUnion has created, they reside in these two verticals. So when you look at insurance, public sector, tech retail, e-commerce, media that's where the vast majority of the growth is coming from. Offsetting that, we are seeing our collections business still growing, but lower than the overall growth rate for Emerging Verticals. And as we said in our prepared remarks, the tenant and employment business declined, but we expect that those declines have dissipated. We know they have, and we're going to see this business return back to growth with our recalibrated product offering. And then finally, something I always keep in mind, Chris just talked about our communications product suite, which TCS is part of, but our communications vertical houses many of the legacy Neustar products that are slow -- flattish to slow or declining growth and they're going to be a drag. So the net-net is you see some good growth from the vast majority of these verticals and then there are some offsets that are there. Thinking about this just relative to our guide for the second half of the year. As we said, we didn't change the guide. So with that being said, I think that we look at this and say that the risk in the Emerging Verticals skews more to the upside than to the downside for all the reasons that I just went through for each of the Emerging Verticals. Chris Cartwright: Yeah. And I think that's just kind of an important point philosophically to emphasize really to all of the analysts and investors on the call is that we're maintaining our guidance posture of beat and hold as opposed to beat and raise, right? And so we're letting the beats flow through, but we're maintaining the same conservative expectations in the future quarters in the second half of the year that we did at the outset of the year. And we think that's more prudent given the gyrations in the macro market over the past couple of years and some of the difficulty in forecasting the business. And we feel like we're well positioned to deliver against the guidance that we're reinforcing in this call. Operator: And our next question will be from Toni Kaplan from Morgan Stanley (NYSE:MS). Please go ahead. Toni Kaplan: Thanks so much. I think this was touched on a little bit, but just wanted to really nail it down. You mentioned that you didn't change sort of your guidance expectation. So I definitely appreciate that. But backing out the breach wins, your 3Q organic growth guide implies a bit of a deceleration in organic growth. And so maybe just talk about what the slowdown implied would be from? And maybe it's just conservatism, but are there specific headwinds to call out or really, is it just you wanting to really be able to show good numbers and be conservative? Thanks. Todd Cello: Toni, I'm glad you asked the question because it's an important point. And it really just kind of reinforces the point that Chris just made in that when you look at the -- our performance, and let's do this for TransUnion in total, excluding mortgage. In the first quarter, we grew 5%. Second quarter, we grew 4% and now the growth rate at the high end, we're saying excluding the breach, because the breach wins that we've had a onetime nature, we'd be at about 3.5% in the third quarter. And then you can do the math and the implied is going to be about 3% for the fourth quarter. So clearly a step down from what we've seen. But just simply put, as Chris just said, we just feel it's the prudent thing right now to not get in a situation where we're raising expectations because the business in core financial services, I answered previously, it continues to be stable. We haven't seen that uptick yet happen. So as a result, we think what's best is for us to stick with the numbers that we put out going back to February for the second half of the year because things do still remain uncertain for us. So that second half guide is unchanged. And again, reinforcing no assumption of a lending recovery or any type of marketing recovery, benefit from a Fed rate cut. And I'll just leave you with Q1 and Q2. We guided 2% to 3%, and we were fortunate to be able to outperform that. And I can tell you that, that is what the team is working towards to do that in the second half of the year. Operator: Thank you. And the next question will be from Kelsey Zhu from Autonomous. Please go ahead. Kelsey Zhu: Hi, good morning. Thanks for taking my questions. So on breach revenues, I think you mentioned large breach wins in the quarter. I was wondering if you can give us a little bit more details on that. I think breach revenues are generally hard to forecast and can be lumpy. So what's the sustainable level of growth in your view? And then on top of that, if you could tell us a little bit more about the competitive landscape there, that would be great because Experian (OTC:EXPGF) also highlights that there's strong growth there. Chris Cartwright: Yeah, Kelsey. Well, breach is a large and growing market. And you only have to follow the news for a few weeks, and you're going to see major companies sustaining breaches. With the acquisition of Neustar -- I'm sorry, with the acquisition of Sontiq, and the investments that we've made, we feel like we have emerged as a significant player in breach now. And our brand is such that we are kind of in the deal flow, and we've got the broad set of capabilities to service small and large needs alike, reach needs that skew through the physical or the digital. We've got the comprehensive range of services and we're going to compete more effectively win share and have a higher sustainable level of breach revenues. Now that said, you are correct. These deals are episodic. Sometimes, you're going to have big ones, sometimes we may not have the big one in the quarter. And that's why we've taken pains to really call out this higher than usual level of breach wins in the third quarter. I think it's also important to understand that these breach wins come with attractive margins. They may not be quite as high as our enterprise margins in total, but they're not dramatically different, right? So I would hate for an analyst to look at what we're reporting in the third quarter and conclude that, that's the typical margin of the breach business. Third quarter financial performance really is just about the timing of revenue arrival against the expenses. And on these particular breaches, we're doing broad physical notification through the mail, and we're just paying a lot of postage. What it doesn't include is the much higher tail of revenue that's going to continue for the next year or two related to the digital services associated with these wins. So we look at the breaches on a deal-by-deal basis, they are attractive to margin, it's fast growing. And we think we're much better positioned to compete for them going forward. Operator: And the next question will be from Manav Patnaik from Barclays (LON:BARC). Manav Patnaik: Thank you. I just wanted to ask on that seven product suites that you showed. It sounds like you've grouped all the offerings into that. But is that internally, I suppose, is the leadership aligned by each of those? Or is it more by the segmentation you provide just wondering how interconnected these things are? Or are they really being separated into these seven product offerings or brands, rather? Chris Cartwright: Yeah, Manav, I love the question. So let's talk about our global operating model. Certainly, we've got countries and we have vertical leadership within those countries that focus on the specific wants and the needs and the use cases for our products that are most relevant within those verticals. But we also have a parallel product organization, our solutions organization. And we have defined leadership and product management teams that align directly to the product families that you see. So if you were here, I could introduce you to our marketing lead, our fraud lead, our consumer lead, et cetera. And so it is much like a large global software company that's going to have a product leader overseeing a particular category of software or a consumer packaged goods company that's going to have a category manager. But then they are interfacing with the folks that lead the go-to-market in the countries or the specific verticals. Operator: Thank you. And the next question will be from Heather Balsky from Bank of America (NYSE:BAC). Please go ahead. Heather Balsky: Hi. Good morning. Thank you for taking my question. I wanted to ask a question on Consumer Interactive outside the breach. You talked about nearing an inflection in that business. I'm curious if you can talk a little bit more about that, what you're seeing and what gives you confidence in the business accelerating. Chris Cartwright: Yeah. Good question, Heather. So we talked a lot about a consumer in recent calls and the three portions of consumer. And that the most challenged one has been the direct-to-consumer subscription business that we have through transunion.com and other properties. And what we're seeing now is that the rate of decline is slowing and slowed in the second quarter. We expect it to slow further in the third and reach kind of an equilibrium point or kind of low-single digit declines by the fourth quarter of this year. And that will really reduce the drag on earnings from this piece of the business in the larger indirect piece where there has been really a mix of success for the freemium players and revenue pressure from the subscription players and just more kind of competition for share in that, we're seeing stabilization, and we're getting growth out of that segment. And then what's really helping our results the most is the multiyear mid-double digit compounding that we're getting out of Sontiq. So Sontiq grew 20% last year, it was a great year, driven in part by success in breach, but also in underlying identity subscription sales. And this year, we're positioning ourselves for another year of really strong growth. Now stepping back a bit, we still firmly believe that we're going to return the consumer business in total to consistent revenue growth, to consistent compounding. And we're going to pursue each of the monetization options to make that happen. So we're going to continue to do well on the subscription front. We're going to improve our capabilities in terms of offering supporting offers directly to consumers, both through our web properties, but also enabling other players to do so in the marketplace. And we're going to build upon the momentum in identity and breach remediation. Operator: Thank you. And the next question will be from Shlomo Rosenbaum from Stifel. Please go ahead. Shlomo Rosenbaum: Hi, thank you very much for taking my questions. Just I want to just -- one clarification thing and then to jump on to one other item. Just -- was there any unusual breach activity in the current quarter in the 2Q '24, just because the bottom of Slide 12 says on Consumer Interactive, indirect growth led by breach. I want to know if that is for some of the unusual activity you talked about that's heading in 3Q. Did any of it kind of pop into 2Q? And then the more important question is, Chris, where you guys stand in terms of the transformation project? Are you tracking in line, ahead? I'm not just talking about the costs, I'm talking about what you expect to get out of it, the timing of the project and your optimism about the success? Chris Cartwright: Okay. Well, thanks for both of your questions there. And look, there was nothing unusual in the breach activity I mean the only, I guess, unusual or new thing is our ability to compete and win these big breach jobs. And we won several of them, and we're getting the benefit of that in the third quarter, but the second quarter, it's not really a factor. Todd Cello: Well, we have it on the slide, right? So that's what he's responding. That's what he's asking about. So we did have -- in our indirect channel, Shlomo, all we're doing is just characterizing where the growth is coming from in that channel and indirect, remember, it represents breach, but also our business with the premium players, the offer aggregators as well. So the point there is just that breach was the driver of the growth. Chris Cartwright: The people's breaches as opposed to our own. So -- but then moving on to your question about the technology transformation, which again we spotlighted in this quarter, I feel like we are making great progress. We are well at pace to achieve the technology transformation benefits. Certainly, the ones that we outlined in the third quarter call from last year, and you're going to see a good deal of savings in 2024 because of those activities. And then the longer pole in the tent was the technology-specific savings that are largely enabled by OneTru that will come a little bit later, but we're definitely tracking to that. But just something I said earlier, we focused in the early days after our acquisitions on achieving integration savings and those are well in hand. The $80 million plus that we guided for Neustar and all the acquisitions for both Argus and Sontiq, we're very confident about delivering that, but what we've really been focused on now is reengineering our products in these integrated product suites in the seven families, leveraging what we think are best-in-class underlying platforms. OneTru, certainly, which includes the guts and the intelligence of all information products, be it data management, identity analytics and the ability to flexibly deliver that to the upstream product families. And of course, this underlying infrastructure utility layer, which we can now standardize across TransUnion, across all the products that reside on the suite, which is going to simplify a lot, take a lot of cost out and free up engineering cycles. Operator: Thank you. And ladies and gentlemen, our final question today will be from Andrew Nicholas from William Blair. Please go ahead. Unidentified Analyst: Hi, good morning. This is Tom Rush [ph] on for Andrew. I want to touch on auto and ask if you saw any disruptions in the quarter from the CDK outage. And if there was any disruptions, are you kind of expecting a delay to impacting auto sales to up out July and third quarter volumes? Thank you. Todd Cello: As far as you go back to our prepared remarks, auto, we were pleased with the performance. We grew 3%. We saw a little bit of impact from that situation. And as we look forward into the second half of the year, again, kind of small impact. If it was something of significance, we would have flagged it for you. So we feel that it's managed. Perfect. That brings us to the end of today's call. Thank you for your time, and have a great rest of the day. Thanks. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Earnings call: Nasdaq reports a net revenue increase to $1.2 billion By Investing.com

Nasdaq (NDAQ) has reported a strong financial performance for the second quarter of 2024, with net revenues increasing by 10% year-over-year to $1.2 billion. The company's solutions revenues grew by 13%, and its overall annualized recurring revenue (ARR) saw a 7% increase to reach $2.7 billion. Operating income and margin also saw improvements, with the former growing by 14% and the latter reaching 53%. The Financial Technology division and capital access platforms both contributed to the revenue growth, with respective increases of 16% and 10%. Nasdaq's integration of the Adenza acquisition is ahead of schedule, and the company is making strides in deleveraging, having paid down $174 million of commercial paper. Nasdaq has demonstrated a robust performance in the second quarter of 2024, with significant growth in revenues and operating income. The company's strategic acquisitions and focus on innovation, particularly in financial technology solutions, have contributed to its success. Nasdaq's leadership remains confident in the company's growth trajectory and its ability to meet the evolving needs of the global financial market. Nasdaq's (NDAQ) second quarter of 2024 results reflect a company in a strong financial position, with notable increases in net revenues and operating income. To further understand the company's market standing, here are some insights based on recent data and analysis from InvestingPro. InvestingPro Data indicates Nasdaq's market capitalization stands at a robust $38.75 billion, with a high price-to-earnings (P/E) ratio of 35.84, suggesting investor confidence in the company's future earnings potential. The adjusted P/E ratio for the last twelve months as of Q2 2024 is slightly lower at 32.94. Revenue growth has also been impressive, with a 7.57% increase over the last twelve months, and an even more remarkable quarterly revenue growth of 25.05% in Q2 2024. In terms of performance, Nasdaq has seen significant returns recently, with a 7.6% price total return over the past week and a 34.22% return over the past year, indicating strong investor sentiment. Additionally, the stock is trading near its 52-week high, at 99.22% of the peak price, underscoring the market's bullish outlook on the company. An InvestingPro Tip worth noting is that Nasdaq has raised its dividend for 12 consecutive years, demonstrating a commitment to returning value to shareholders. This consistent dividend growth, coupled with the company's financial performance, could be attractive to investors seeking stable income alongside capital appreciation. For those looking to delve deeper into the company's prospects, InvestingPro offers additional tips. There are currently 11 more InvestingPro Tips available, which provide a comprehensive analysis of Nasdaq's financial health and market position. These tips can be accessed at: https://www.investing.com/pro/NDAQ. Interested readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further insights that could help in making more informed investment decisions. Operator: Good day and thank you for standing by. Welcome to Nasdaq's Second Quarter 2024 Results Conference Call. At this time, all participants are in the listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Ato Garrett, Senior Vice President, Investor Relations. Please go ahead. Ato Garrett: Good morning, everyone, and thank you for joining us today to discuss Nasdaq's Second Quarter 2024 Financial Results. On the line are Adena Friedman, our Chair and Chief Executive Officer; Sarah Youngwood, our Chief Financial Officer; and other members of the management team. After prepared remarks, we will open the line for Q&A. The press release and earnings presentation accompanying this call can be found on our Investor Relations website. I would like to remind you that we will be making forward-looking statements on this call that involve risks. A summary of these risks is contained in our press release and a more complete description in our annual report on Form 10-K. Also, please note that we will discuss our financial results on a pro forma basis and with year-on-year growth rates, which means that we are showing results versus the prior year period as if we owned Calypso and AxiomSL for all of 2023 and excluding the impact of FX. References to organic growth exclude the impact of FX, acquisitions and divestitures. Reconciliations of US GAAP to non-GAAP results can be found in our press release as well as in a file located in the financials section of our Investor Relations website at ir.nasdaq.com. I will now turn the call over to Adena. Adena Friedman: Thank you, Ato, and good morning, everyone. Thank you for joining us. On the call this morning, I'll provide some perspective on the external environment, discuss our strong quarterly performance highlights as well as our progress against our strategic priorities, and then I'll hand the call to Sarah to walk through the financial results in more detail. Turning to the economy in the US, we're continuing to see solid, but slowing GDP growth, along with cooling inflation and slightly rising unemployment. These data points support the potential for easing monetary policy in the coming months as the Fed continues to strive for an economic soft landing. The general stability in the US economy and the potential for a lower cost of capital going forward is resulting in modest improvements in the IPO landscape as we progress through 2024, including solid activity this week. However, investors continue to contend with external uncertainties and the timing of monetary policy shifts as well as our dynamic macro political environment. As a result, we continue to expect modestly improving IPO activity for the remainder of 2024, and our current US IPO pipeline indicates that stronger momentum is likely to manifest starting in the first half of 2025. We're also seeing stronger economic underpinnings in Europe, aided by the ECB's easing monetary policy, including improving economic prospects in the Nordics. The improvement is not yet translating into a material increase in new public issuances, but our European IPO pipeline is healthy and growing, particularly for 2025. As investors and industry participants navigate the dynamic market environment, we continue to see sustained robust trading activity in the markets as well as strong demand for mission-critical technology solutions from financial institutions globally. As a result, our markets continue to experience strong volumes, and client demand for our FinTech solutions remains consistent with trends we have seen through the cycle, which provides a healthy backdrop for continued revenue growth across our solutions suite. Now let me turn to our financial results, which demonstrate the power and resilience of our diversified business model and our ability to succeed through economic cycles. We delivered a strong quarter with $1.2 billion in net revenues, an increase of 10% year-over-year, with solutions revenues at 13% growth. Our overall annualized recurring revenue, or ARR, grew 7% to $2.7 billion. I'm particularly pleased with the strength of the performance across our business, which is a testament to the power of our platform. We're integrating the Adenza acquisition ahead of schedule and are realizing the investment thesis that underpin the transaction as we demonstrate its value for clients, shareholders and employees. Our expenses for the quarter increased 7% year-over-year, within our guidance. Our operating income grew approximately 14%. And importantly, our operating margin increased to 53%, representing over one percentage point of operating leverage while we continue to invest to support growth in our business and deliver on synergies. Turning now to a discussion of the business highlights, starting with capital access platforms. While ARR growth in the division remained at 1%, our index revenue grew 29%, resulting in overall revenue growth for capital access platforms of 10%. In Listings, we welcomed 31 operating company IPOs maintaining our strong win rate of 72% based on Nasdaq eligible listings. While the slower IPO environment remains a headwind, we're encouraged by signs of improvement, as supported by our most recent IPO Pulse Index, which is near a three-year high. Overall growth in data and listings continue to experience challenges as modest growth in market data and the slowly improving IPO environment were offset by the impact of prior year delistings. Growth in our analytics business benefited from continued demand across the investment community for actionable intelligence and increased efficiency. However, that growth was partially offset by continued headwinds in corporate solutions, resulting in more muted growth for workflow and insights. Our index business delivered another exceptional quarter with $17 billion of net inflows during the quarter, totaling $53 billion over the last 12 months. We also achieved another record in Index ETP AUM exiting the quarter at $569 billion. Turning next to Financial Technology. ARR growth across the division was 13%, including 25% in Financial Crime Management Technology, 14% in the combined AxiomSL and Calypso solutions and 9% in the combined Market Technology and Trade Management Services. The division had 69 new client signings, 96 upsells and 4 cross-sells. We also saw continued cloud adoption as 68% of AxiomSL and Calypso 's combined bookings in the quarter were cloud-based with a strong pipeline for future quarters. Turning to the specific subdivisions. Financial Crime Management Technology continued its strong momentum. We signed over 50 new clients in the SMB space, and we continue to make progress in the Upmarket segment focused on Tier 1 and Tier 2 banks. In July, we signed a new international Tier 1 bank, which is also an exciting cross-sell. Going forward, we continue to maintain a strong sales pipeline within the core SMB segment, and we have a growing pipeline of new clients and upsells among Tier 1 and Tier 2 banks. Across Regulatory Technology, we see sustained demand across both existing and new clients as financial institutions face increasingly dynamic regulatory environment, including changes in regulation globally related to asset thresholds. Among the many regulatory trends that are driving sales demand, we're pleased with our progress in signing clients around the world as they focus on implementing Basel IV and preparing to implement Basel III end game. In Capital Markets Technology, we continue to see strong demand for mission-critical technology as many of our clients focused on modernizing their infrastructure to enhance resilience and performance. For Calypso, we see robust new demand, especially in the Treasury segment in addition to cloud transformation of large-scale clients. In our Market Services division, we delivered revenue growth of 3%. We experienced healthy volumes across North America and Europe, and we achieved a sequential increase in North American options market share as well as growth in Nasdaq US equities on-exchange market share and capture. Our US index options achieved record revenues, more than doubling versus last year, due to higher capture and volumes. In our US Cash Equities business, we executed successful Russell, MSCI and S&P rebalances during the quarter, which showcased the strength and resiliency of our markets. During the Russell event, for instance, nearly 2.9 billion shares, representing a record notional value of over $95 billion, were executed in the Closing Cross, representing the largest liquidity event on the Nasdaq Stock Exchange or the Russell Reconstitution. In our European markets, the strength of our market ecosystem, as evidenced by the depth of book, breadth of participants and product innovation continues to drive market share gains. Overall, we're pleased to report a solid quarter of market services and remain focused on retaining our leading position across all of our markets. I now want to spend a few minutes updating you on how we're executing against our 2024 strategic priorities of integrate, innovate and accelerate. Starting with integrate, we have actioned over 70% of the $80 million of net expense synergies, and our leverage ratio reached 3.9 times at quarter-end, both ahead of plan. Both AxiomSL and Calypso are fully integrated into the Financial Technology division and we've established strong leadership, a well-structured operating model and a One Nasdaq go-to-market approach to ensure we're delivering for our clients with the highest level of efficiency and effectiveness. Our CRM's integration for the Calypso and Axiom solutions is now completed ahead of schedule, and this supports divisional sales coordination as well as the sales incentive program established at the beginning of the year. Importantly, across AxiomSL, Calypso and Verafin, we've been highly focused on cultural integration into the broader Nasdaq enterprise. And internal surveys continue to show that our employees are highly engaged and energized to deliver for our clients. We're also making strong progress advancing our innovate priority. We currently have approximately 50% of our employee base working with AI tools focused on enhancing productivity as well as driving our product road map. By the end of Q3, 100% of our developers will have access to AI copilot tools and we recently had over 650 employees participate in several AI hackathons across Nasdaq. During the quarter, we continued to introduce new AI capabilities within our client-facing solutions. Consistent with other Gen AI capabilities recently launched in our Verafin and Boardvantage solutions, with an investment, we have deployed a new AI-powered feature for the Market Lens module called Pension Meeting Minute Summarization. The feature provides asset managers with key insights on current and future pension fund strategies to help inform their business development and engagement priorities with top pension decision makers. We also have a strong pipeline of AI features scheduled to launch in the coming quarters, including in Market Surveillance and IR Insight. And we're seeing strong early traction in client adoption and effectiveness related to the capabilities that are already in market. Specifically, Dynamic M-ELO, the first SEC approved AI order type, which we launched in April, is driving a 20% increase in both volumes for this order type and improvement in fill rates compared to the prior static version. Verafin's integrated Gen AI feature, Entity Research Copilot, is now deployed at more than 250 clients and we expect to complete our rollout in the third quarter. Client feedback has been positive, demonstrating that the integrated copilot functionality with the integrated copilot functionality, Verafin solutions can reduce alert research time by up to 90% compared to banks that do not use Verafin. Beyond AI, we continue to drive innovation towards key growth priorities. For example, in our Index business, innovation is at the heart of our growth strategy as we extend the franchise to new markets globally, drive institutional adoption and introduce new products beyond the NASDAQ 100. During the quarter, 50% of index product launches were outside of the United States. And we're quickly gaining traction in investor adoption. In total, we launched 18 new products with our partners, including 12 ETPs and three insurance annuity vehicles geared towards our institutional clients. Additionally, we're pleased that our AI-themed ETP saw more than $1 billion of inflows over the last 12 months. Wrapping up with our Accelerate priority. The addition of AxiomSL and Calypso has significantly elevated the dialogue we have with our clients as a strategic partner. There's no better evidence of that than the early traction we're seeing in our cross-sell efforts. Since closing the transaction, we have executed on 11 FinTech cross-sells. We had four this quarter, including two cross-sells of our AxiomSL solution, two Calypso clients. This is a great start, but it's only the beginning on our journey to exceed $100 million in cross-sells by the end of 2027. Just eight months since the acquisition closed, 10% of the opportunities in our pipeline are cross-sells, and we expect this to grow sequentially. The division has several strategic cross-sell campaigns underway, which are generating strong top-of-funnel interest and underpins our continued confidence in our ability to grow cross-sell bookings over the coming years. To wrap up, we're pleased to deliver a quarter of strong results, driven by continued momentum in solutions and the power of our diversified platform to drive scalable, profitable and durable growth. Importantly, we're delivering on the Adenza acquisition thesis as our clients increasingly see Nasdaq as a strategic partner that can help solve their largest, most complex challenges. We look forward to leveraging this momentum to unlock our next phase of growth. And with that I'll now turn the call over to Sarah to review the financial details. Sarah Youngwood: Thank you, and good morning, everyone. In the second quarter, we made excellent progress in both the integration of Adenza and the accelerated paydown of debt. We actioned over 70% of net expense synergies six months ahead of schedule. We have also come in ahead of our accelerated deleveraging plans ending the quarter of 3.9 leverage. Turning to our second quarter results on Slide 10. We reported net revenue of $1.2 billion, up 10%, with solutions revenue up 13%. Operating expense was $539 million, up 7% within our guidance with an operating margin of 53% and an EBITDA margin of 56%. Overall, this resulted in net income of $397 million and diluted EPS of $0.69. Slide 11 shows the drivers of our 10% pro forma revenue growth for the quarter. We generated 8% outside growth on a net basis, driven by new and existing clients as well as our focus on product innovation. Overall, beta factors were 2% this quarter, driven by higher valuations in Nasdaq indexes as well as higher overall volumes in market services. On Slide 12, we had 7% ARR growth. And as part of that, we had 17% SaaS revenue growth, resulting in SaaS as a percent of ARR now at 37%, up four percentage points. Let's review division results for the quarter, starting on Slide 13. In capital assets platforms, we delivered revenue of $481 million, reflecting growth of 10%. We had another exceptional quarter for our Index business with revenue up 29%, driven by $53 billion of organic inflows in the last 12 months, including $17 billion this quarter, and market performance, both resulting in average ETP AUM of $531 billion. In addition, future volumes were up 25%. Data and Listings revenue was up 1%, while ARR was down 1%. The difference was driven by small one-time revenue benefits primarily related to listings. Revenue from higher data sales and usage, new listings and pricing offset the impact of delisting, downgrades and lower amortization of prior period initial listing fees. We expect the quarterly headwind from lower amortization of prior period listing fees to increase from an immaterial impact in 1Q '24 and approximately $1 million in 2Q '24 to about $3 million in each of the next four quarters. However, we have seen roughly 25% fewer delistings in the first half of the year versus the prior year period, suggesting that delistings should be less of a revenue headwind in 2025. Lastly, Workflow and Insights revenue was up 4%, in line with ARR growth of 4%. This was driven by continued growth in innovative analytics products, mainly Datalink and eVestment. This was partially offset by continued headwinds in Corporate Solutions. Analytics had a strong quarter with both revenue and ARR in high-single-digits. Operating margin was 56%, up one percentage point. Looking forward, we expect full year revenue growth for capital access platforms to exceed our medium-term growth outlook range with index expected to come in above its range. Workflow and Insights expected to come in below its range and with Data and Listings essentially flat year-on-year. Moving to Financial Technology on Slide 14. We had another quarter of strong growth with division revenue of $420 million, a 16% increase and with ARR growth of 13%. This performance reflects double-digit revenue and ARR growth across our three subdivisions. Financial Client Management Technology delivered 24% revenue growth and 25% ARR growth with 53 new clients in the quarter. Capital Markets Technology had revenue growth of 14% and ARR growth of 11%, on the back of seven new clients and 38 upsells in the quarter. The difference between revenue and ARR growth is driven by the timing of on-prem renewals and professional services fees. Together, Trade Management Services and Market Tech grew revenues 2%. We experienced strong subscription revenue and ARR growth, up 9% for both businesses and up three percentage points sequentially. The lower growth in revenue was due to year-over-year decline in Professional Services revenues. As we mentioned last quarter, in Market Tech, we had a very large implementation in 2023, which created a $27 million revenue benefit in the full year of 2023. And this year has resulted in subscription revenue or ARR of $11 million. We expect this year-over-year headwind to persist in Q3 and abate in Q4. Calypso had revenue growth of 34% and ARR growth of 13%. Revenue was higher than the expectation we provided in the first quarter call due to broad strength in sales activity, including a strategic early renewal, 29 upsells and five new clients. As we look forward, we continue to see solid momentum in the business and expect Capital Markets Technology revenue growth for 2024 to remain in line with our medium-term outlook. Overall, for the second half of 2024, we expect more normalized growth across the products within the division versus the first half of the year with consistent growth across quarters. Regulatory Technology had revenue growth of 16% and ARR growth of 10%, with seven new clients and 58 upsells in the quarter. The difference between revenue and ARR growth is driven by AxiomSL, which had 23% revenue growth and 14% ARR growth. The 23% revenue growth was primarily due to strong subscription revenue, including a large on-prem renewal, 29 upsells and one new client in the quarter, partially offset by a decline in professional services fees due to the timing of client deliveries. The FinTech operating margin was 47% in the second quarter, up three percentage points, including the benefit of synergy realization. As we finalize the business combination accounting for Adenza during the measurement period, let me update you on a change we are evaluating on AxiomSL. As part of this potential accounting change, we would recognize on-prem subscription-based revenue on a ratable basis over the contract term, whereas we currently recognize approximately 50% upfront. This is due to the frequency of critical mandatory regulatory updates that we implement and embed in the AxiomSL software throughout the contract term. We believe this change would enhance our financial reporting and would not change the Adenza medium-term outlook we had provided nor our ability to achieve it this year. If an adjustment is made, it would not have a material impact on Nasdaq overall, and 2Q would remain a strong quarter with FinTech revenue growth near the top of its medium-term outlook range, solutions revenue growth at the high end of its medium-term outlook range and AxiomSL and Calypso combined revenue growth above 20%. Importantly, combined ARR growth of 14% and net revenue retention of 111% would be unchanged. Specifically at the AxiomSL level, we expect subscription revenue growth to be more consistent going forward and remain in line with our medium-term outlook. AxiomSL's 2Q '24 subscription revenue growth would have been generally in line with ARR. However, the timing-related decline in professional services fees I mentioned earlier would have driven total AxiomSL revenue growth for the quarter to the low to mid-single digits. We expect to receive additional information to finalize our analysis in 3Q. And if we make the change, we will provide updated historical information by quarter for 2023 and the first half of 2024, during 3Q and ahead of reporting our 3Q earnings. Now wrapping up the divisions with Market Services. Net revenue was $250 million for the quarter, up 3%. Growth was driven by higher volumes in cash equities in both North America and Europe as well as in US options, increased capture in North America equities, US index options high growth, share gains in European equities from a very strong base and one additional trading day. This was partially offset by lower share in US options and equities, though share for options was stronger sequentially and increased over the course of the quarter. We also had lower US state revenue. Market Services second quarter operating margin was 58%, a one percentage point decline from the prior year, primarily due to continued investments in market monetization and regulatory obligations. Moving on to non-GAAP operating expense on Slide 16. This quarter was $539 million, reflecting pro forma growth of 7% or $15 million sequentially. This is within the guidance we provided on our first quarter earnings call. And as a reminder, second quarter included the impact of annual merit adjustments and equity grants. All-in, we generated positive operating leverage with an increase in both operating and EBITDA margin of over one percentage point. This included the benefit of synergies this quarter and the funding of additional revenue-related expense. We originally targeted $80 million of net expense synergies through the end of 2025. As of Q2, we have already actioned over 70% of that amount, six months ahead of schedule. The P&L benefit of the actions already taken represent approximately one percentage point reduction in expense growth in the first half of this year. Please note that the actions of 2Q and 3Q have a longer time line to expense recognition. And as such, we expect the full impact of synergies to moderate expense growth by approximately 1.5 percentage points for 2024. For the full year, we expect non-GAAP operating expense of $2.145 billion to $2.185 billion, reflecting an increase to the bottom end of the range to account for strong revenue generation, which increases variable compensation and enables us to invest in growth initiatives while also accounting for the synergy benefits realized in the year. Additionally, we continue to expect a full year tax rate of 24.5% to 26.5% on a non-GAAP basis. Turning to our capital allocation on Slide 17. Nasdaq continued its track record of strong free cash flow generation with $328 million in the second quarter, representing a conversion ratio of approximately 100% over the trailing 12 months. This takes into consideration specific onetime costs associated with the Adenza acquisition and integration. This quarter, we continued to prioritize debt reduction and are ahead of our accelerated deleveraging plan. We paid down net $174 million of commercial paper and ended the quarter at 3.9 times gross leverage versus 4.1 times last quarter. This was achieved while also increasing our quarterly dividend 9% to $0.24 per share or $138 million, reflecting a 37% annualized payout ratio, and repurchasing approximately $60 million of our shares to opportunistically take advantage of the attractiveness of our stock and start to offset 2024 employee dilution. Looking ahead, we remain focused on deleveraging and expect to pay down the remaining commercial paper balance near term while remaining opportunistic and flexible. We also remain committed to offsetting employee dilution. In closing, we are thrilled with the pace at which we are delivering and the results of our integration. We are executing on our plans with focus and discipline, building a financial technology powerhouse, driving durable growth and profitability for our shareholders. Thank you for your time, and I will turn it back to the operator for Q&A. Operator: Thank you. [Operator Instructions] And I show our first question comes from the line of Dan Fannon from Jefferies. Please go ahead. Daniel Fannon: Great. Thank you. So within Financial Crime Management, you highlighted price increases as a contributor to growth. I was hoping you could talk about pricing more generally across your businesses and specifically what maybe price contributed to the strong growth in the quarter across the various segments. Adena Friedman: Sure. Well, I would just say that as we've talked about in the past, price increases are different per product and kind of different from -- in terms of how we structure contracts with our clients within FinTech. So we don't provide you a very specific answer to that question. But I think that if we think about what we've said at least for the AxiomSL and Calypso products in the past is that about half of the revenue increase that we see in any given quarter comes from upgrades and upsells of our clients and the other half comes from new sales and price increases, the price changes we make within the contracts. Some of our contracts have CPI increases and somewhere -- what we would do is we would upsell our clients or increase price upon contract renewal. So that would mean that we would have a constant price for a period of time and then increased price on contract renewal. We do that on the basis of increased value to the clients or the fact that the clients themselves are growing and, therefore, they're getting more value out of the product. So that's -- it kind of depends on the product, Dan. Daniel Fannon: Understood. And you mentioned that 10% of the pipeline is made up of cross-sell opportunities. I guess in a lot of upsells and momentum is known, as you highlighted in the business, across a lot of the businesses. I was hoping you could talk about kind of the use cases you're seeing early within the cross-sell and maybe how those -- that dialogue is progressing from what you're having such day and where you see that momentum in terms of the actual products. Adena Friedman: Sure. Well, within the quarter, as I mentioned, we had four cross-sells, and two of them were selling AxiomSL to Calypso clients. And so that really comes from the fact that we have a really strong relationship with our clients. In Calypso, they have new regulatory obligations that they're having to become ready for and they've chosen to work with us. And one of the benefits we have is that we can actually -- we have a data API connector between those two products. So we can take data directly out of the Calypso platform and feed it into AxiomSL and make it much easier to implement the AxiomSL solution for those regulatory obligations. So that is definitely helping to drive demand. We also -- in terms of our cross-sell campaigns, we have one cross-sell campaign that's really focused on our exchange clients where we have clients -- where we provide clearing technology and Calypso has amazing collateral management capabilities. And so we are working with them to show the benefits of adding the Calypso collateral management into their clearing operations. I mean, then we also have, as I mentioned, the Calypso AxiomSL. And then the third one is actually looking at our Verafin clients across the United States and offering both treasury management as well some AxiomSL regulatory reporting solutions to the broader bank community. So those are the areas where we're doing strategic campaigns, and we're definitely seeing that feeding the funnel. But also, frankly, as I mentioned in July, we have one of our great Tier 1 clients for AxiomSL and Calypso has now signed up to take Verafin. So I think the strength of our relationship with them across all of our, frankly, all of our business has been a driver of having them trust us with their anti-financial crime needs as well. Daniel Fannon: Great. Thank you. Operator: And I show our next question comes from the line of Alexander Blostein from Goldman Sachs (NYSE:GS). Please go ahead. Alexander Blostein: Hey, good morning, everybody. Thank you for taking the question. I was hoping we could start with discussion on momentum you guys are seeing at Adenza. And you provided a number of different KPIs, both in terms of the upsells and sign -- and the number of new clients you've signed and the cross-selling. Can you help us maybe frame what the sort of KPIs mean in terms of the revenue opportunity you see on the back of these wins? So I don't know if it's a revenue pipeline or revenue backlog, you kind of set of frame around these wins. But just trying to better understand what this could mean in terms of revenue growth? Thanks. Adena Friedman: Yes. I mean I think that the best way to measure that is through ARR. So because the ARR, the contract values of the new sales are factored into ARR in terms of the annualized contract value. And so that as you see the ARR coming in, I think it's 13% across all of FinTech. And then we've given you the ARR growth for each of the subdivisions, it really does help you have a predictive effect on the subscription revenue that's coming in across those businesses going forward. And I think we give you a lot of the ARR figures both in the script and in the release and presentation. So I think that's what we look at in terms of the overall health of the business, the overall health of how we look at the forward potential of the subscription revenue. And then, of course, there is also the professional services revenues, and we try to give you some understanding of the dynamics there. As we've mentioned before, for the AxiomSL and Calypso combined properties, when we look at the overall outlook for the business, meaning some outlook for revenue, it's slightly below our ARR expectations because of the fact that professional services fees grows a little bit more slowly in general over a long period of time than the subscription revenues. But that's -- I think that's the way to kind of evaluate the business. Alexander Blostein: Great. Awesome. Helpful. So, and then on Verafin, you highlighted the Tier 1 international bank, which is I know is an important market for the firm. Can we maybe spend a little more time on sort of how you see an opportunity set and the revenue contribution from international markets shaping out for Verafin as you kind of push further into that market? Adena Friedman: Yes, great. Well, first of all, today, the Tier 1, Tier 2 banks, the revenue contribution is still very small because we're still signing new clients, we're implementing them. We don't start recognizing the revenue until we implement in terms of making sure that we have them up and running. And the implementation times are ranging from, I would say, six months to a year depending on the complexity of implementation. So and most of the new sales that we've had in the Tier 1, Tier 2 space have focused on payments fraud. We also have this new consortia-based check fraud solution that's really exciting that we're definitely driving demand. And as we go into the international banks, one of the things that we've been focused on, both in Canada and the UK, is looking at payments fraud across kind of what I'll call international payments fraud into their US operations in other parts of the world. But that's where we really have this incredible strength in our business and in our solution. We can cut down false positives anywhere from, frankly, 20% to 40% depending on how they implement it. We can increase fraud found, and that's been really exciting for the banks to see. We run these proof-of-concepts to prove out the solution, and it's pretty remarkable actually as to the benefit they get. Taking that proof-of-concept and turning to a contract takes time. So we are super excited to see our latest Tier 1 signed in July. The proof-of-concept was done probably by April or so, just to give you a sense. Alexander Blostein: Great. Awesome. All right. Thank you so much. Operator: Thank you. And I show our next question comes from the line of Kyle Voigt from KBW. Please go ahead. Kyle Voigt: All right. Good morning. Maybe just the first question on the deleveraging that's coming in ahead of expectations. You noted that repaying the additional CP is a priority, but I think there's only $50 million left on that, and I think you're generating close to $250 million plus of free cash flow for dividends. So can you just help us frame what's the preference here in terms of enacting further repurchases opportunistically on a go-forward basis after you repay the $50 million remaining or should we think about the priority really getting that net leverage lower and simply letting the cash build up on the balance sheet near term? Sarah Youngwood: Thank you very much, Kyle. So we remain focused on the capital priorities that we have outlined at Investor Day. So of course, always the organic growth first and then the deleveraging remains very important. So you are right that we would start with the CP and the balance that you mentioned is approximately correct. And then after that, we would be opportunistic. We, first of all, have done about half of the employee dilution-related share repurchases. So I think you would expect us to continue to do that. And we use the word opportunistic, flexible because there are other things we could be doing, which is around either debt or equity. Kyle Voigt: Okay. Understood. And then just a follow-up, and I hate to use this as a question, but I just wanted to clarify something specifically that you said, Sarah, on the Listings business. And I know you said $3 million of initial listings amortization headwind starting in the third quarter and the fourth quarter. Just can I clarify, is that on a year-over-year basis? Or are you talking about an incremental $3 million headwind on a sequential basis in 3Q and then another $3 million sequentially in 4Q? Sarah Youngwood: So what I gave is that in 2Q, it's $1 million year-on-year. And then in 3Q and after for the following three also, it would be $3 million. So you could add two on the sequential, but it's year-on-year. So $3 million year-on-year, $1 million becomes $3 million between 2Q and 3Q. Kyle Voigt: Understood. Thank you very much. Operator: Thank you. And I show our next question comes from the line of Michael Cho from JPMorgan (NYSE:JPM). Please go ahead. Michael Cho: Hi. Good morning. Thanks for taking my question. I just wanted to follow up on Verafin as well. Just Adena you talked through kind of the proof-of-concepts going and kind of the, it seems like it would seem like a pretty quick turnaround for the most recent Tier 1 from April and to planning in July. I mean, can you just give any more color around the pipeline and the additional proof-of-concepts you're undertaking right now for the Tier 1 and Tier 2 clients? And then just like broader, longer term, like what do you think the right pace of new client additions should be for this cohort of Tier 1, Tier 2 clients as we look further down the road as that sales force scale as well? Adena Friedman: Yes, sure. Yes. So right now, we've actually had an increasing number of POCs and we're -- we don't give specific numbers, but it's a really healthy number of clients evaluating our solution with the proof-of-concepts that we have underway. Over time, we'd like to actually think we won't have to run as many because we'll have proven the solution out enough times across clients that it just becomes something that people fully understand and they don't necessarily need a proof-of-concept, which is why we're -- right now that number is building as we're gaining more traction, we're signing clients. More clients are curious about it and they want to understand the benefit to them. But over a period of years, we'd like to think that it will just become part of the flywheel. So I would say right now, we should continue to expect a small number of clients over a period of a year, not necessarily every quarter, as we've kind of shown, but hopefully, we're going to see more momentum and more regular signings in the years ahead. So it just -- it builds on itself. And that certainly has been the experience of Verafin over time, and they leg into a new segment of the banking industry. They'll get 1s or 2s kind of in a quarterly basis, it will start to trickle in and then it starts to become more of a regular pace. And then they start to really demonstrate the strength, particularly with the consortium data that they have that really kind of feeds on itself and, therefore, it gains momentum. But I can't give you a specific, I wish I could, give you a specific understanding of how much time that would take. But we're definitely measuring in a period of years at a time like how do we gain more momentum, how do we sign more clients in the years to come. But that's about as much color as I can give you right now. Michael Cho: Okay. No, that's great. Thank you. And then just for a follow-up, just inside Capital Markets Tech within FinTech, clearly, some good revenue tailwinds passing there. I mean I think you've called out a few moving pieces there, but can you just watch out maybe the quarterly -- quarter-to-quarter uptick in revenues and if there's anything onetime or large from clients there? And then I think you also mentioned maybe like more normalized quarterly year-over-year growth in the second half versus first half. Can you just flesh that comment as well? Thank you. Sarah Youngwood: Sure. So basically, what we had is really a broad momentum across our businesses, but specifically here also in the Calypso where we had one of strategic early renewal, but also 29 upsells and several new clients and so it was five new clients. And so as you look forward, you are going to continue to see solid momentum in the business. And we told you also that 2024 would remain in line with our medium-term outlook. But of course given the type of first half we have had, I think, it was not a surprise that we mentioned that we would expect more normalized growth across the products within the division versus the first half of the year. And also we pointed out consistent growth across quarters. And so this is what we said at the Capital Markets Technology revenue level. Adena Friedman: Yes. And I just want to make sure, it was actually within the subdivision, which is the Capital Markets subdivision. Yes. Operator: Thank you. And I show our next question comes from the line of Patrick Moley from Piper Sandler. Please go ahead. Patrick Moley: Yes. So I just wanted to go back Adena to your comments on the IPO environment. It sounded like you said that you expected the landscape to sort of improve throughout the remainder of the year, but you didn't expect it to manifest until the first half of 2025. So could you maybe just clarify your expectations for the rest of this year and when you expect that to show up in the financials? Adena Friedman: Sure. Well, I think we've seen a modest improvement year-over-year. I think in a way, I think we've all been surprised by the fact that you've got strong market performance in general, but a continued, I would say, muted IPO environment. Now we are seeing a very good week. We have the largest IPO of the year happening today, and we had another great IPO yesterday. But I think that we still are seeing it coming trickling in like that, not necessarily a steady stream of IPOs coming to market in size. And so as we look out over the pipeline and certainly, the conversations we've had with clients, we do think that we'll continue to see a modest improvement year-over-year in the IPO environment, which, of course, last year was not a strong year. But as we -- a lot of the conversations we're having, particularly in the technology space, has been more geared towards the first half of 2025. Now that's changed, right? So if we can -- if there's some positive momentum that happens in the economy, positive things that are happening as we go through the fall, I think you could see the door opening up because more and more companies are getting ready to go out. But I'd still think a lot of them are thinking that they'll wait past the year and go in 2025. Patrick Moley: Okay. Great. And then just a follow-up on index options, you're seeing really strong momentum there. I think you mentioned that revenues have doubled versus last year. Volumes were up, I think, 50% year-over-year. So it does seem like you're taking price there. Could you maybe just update us on the broader vision for index options in Nasdaq and maybe your approach to pricing potentially at the expense of not picking up as much market share as you'd like? Just kind of how you think about that. Adena Friedman: Well, I think, first of all, we're really excited about how the index options business is developing. And I think that the trading ecosystem as well as investors are recognizing the benefits of being able to hedge their index exposure through the options market. And obviously, we've seen that with other index franchises, but now with the NASDAQ 100, we're really building momentum and leveraging both futures, where futures volumes were up 25% year-over-year a quarter, as well as in terms of the options business. And now you have more ability to do that. So very excited about where that's going. It is something where we have it as a premium part of our options franchise because I think that the benefits that our clients are getting from the hedging capabilities are very strong. And so it kind of warrants the fees that we charge there. It is not having a -- that's not having an impact on demand. The demand is really strong and continuing to grow. Now we've done a lot of work. There's been a lot of leg work over the last several years to build up an understanding of the options, how to use hedging. We have a data capability that we give out, we provide to the clients to help them understand just do a lot of analytics on it to help them understand how to use the options the right way. And so the educational process we've had, frankly, over three years, I think, is really now paying off. And we expect to continue to grow. We will be looking at additional indexes, additional indexes that we want to bring on to our index options franchise. But even now, the other thing I would mention is that there's also a really pulled flywheel back to the index business. So the index team and the options team have been working hand-in-hand to make this work really well because there's benefit back to the institutional community with index and their ability then to have better hedging tools and their ability, therefore, to adopt our index products more successfully. So that's another part of the flywheel that's coming out of this. Operator: Thank you. And I show our next question comes from the line of Craig Siegenthaler from Bank of America (NYSE:BAC). Please go ahead. Craig Siegenthaler: So we had a question on Solovis. Back in May, Bloomberg reported that you're considering a sale of Solovis and while this could help you reach your financial leverage target faster and maybe the next deal. We were just curious, given the news because Solovis is strategic fits pretty well within your objective to provide software data and other services in the financial service ecosystem. And arguably, there's other businesses, maybe like the Nordic Exchange, which doesn't fit as well. So I was just wondering if you could comment on the potential for Nasdaq to sell existing businesses. Thank you. Adena Friedman: Yes. So I won't comment on any particular rumor that's out there. But I would just say this, we do a very detailed review every year of our capital allocation. We look at our businesses strategically, financially across several different factors and evaluate how each one of them fits into our overall client experience and making sure that we're always the right owner for the businesses. And as you've known since I became CEO, many years ago now, 7.5 years ago, we've made decisions to divest of certain businesses where either we're just not the right owner of the business because our clients are not seeing us as a strategic owner. They might see us as an owner. They definitely understand that we own the business, but they might not necessarily strategic to our franchise or we have capital allocation priorities that really skewed towards different parts of our business. In terms of you know you did mention areas of our business. I would say, I do want to say one thing. We view our Nordic business to be very strategic to Nasdaq. And I've said this on prior calls, the Nordic Exchange business, they are the best exchanges in Europe. The innovation ecosystem that exists in the Nordic is incredible and very consistent with the US. And I would say that we do a great job of operating those markets and we're really proud to be the operator of the Nordic market. The other thing is the team there is really contributes a lot to our broader technology business. So we deploy members of the Nordic team out to work and help our market tech clients around the world. We have a great set of clients in the Nordics that are now wonderful clients in our FinTech solutions. So there's a lot of strategic intersection with our Nordic business. I do want to provide a defense of that. But generally, Craig, we do this work, and we make these decisions over time because that we look at it as in terms of the long-term strategic fit to Nasdaq. Craig Siegenthaler: Thank you, Adena. And just I had a follow-up on the response to the last question on index options and specifically the NASDAQ 100 Index. What is your desire and ability to expand NDX with zero DT options? And then also with rising retail engagement and there's a lot of interest around tech overall, so it fits perfectly in here. I was curious on your comment about launching other indexes. I'm just curious in terms of what you could do there. Adena Friedman: Yes. I mean, we always look at our index products that we think, as you mentioned, have really strong retail appeal, but also institutional appeal, where they're large enough and there's enough assets in there to drive liquidity into a future or an options product. And really looking at it from a hedging perspective. We have a whole range of index products beyond the NASDAQ 100. We have thematic indexes in terms of different technology trends like cloud and IT security, AI. We have thematics across different investment strategies like momentum strategies, dividend strategies, things like that. And so to the extent we think that there actually could be a trading ecosystem we could build around that, we will consider it. I don't -- we don't have any particular index product right now that we're targeting. But I would say that we do a lot of great analysis on that. And then in terms of how we structure the options and how we look at option duration, we will obviously evaluate that in the context of investor appetite and we'll work with the SEC on that when appropriate. Craig Siegenthaler: Thank you. Operator: Thank you. And I show our next question comes from the line of Alex Kramm from UBS. Please go ahead. Alex Kramm: Yes. Hey, good morning, everyone. Just wanted to come back to what you called out on Calypso or Capital Markets with that early strategic renewal. Can you just explain what exactly happened there? Why? And is that something that we should expect more often? And then maybe related to that, on the impact side, looks like ARR up $25 million quarter-over-quarter in that segment. Can you dimensionalize how big that renewal specifically was? Also on the transactional side, you beat me pretty handily, so maybe more than $10 million. Is it all related to that? So just trying to understand how big some of these individual renewals could be. Thank you. Adena Friedman: Yes. So I'd actually say that having early renewals is not totally unusual, right? I mean, if we call it out just because it was -- we're really excited about the fact that we had a strategic client who chose to renew early and extend their contract. And I think that it's something that we're proud of. Now with, as we mentioned, with Calypso revenue, just to remind everyone, our view is that ARR is a very good reflection of how you should look at the overall health of the business, the stability. Because of the fact that the license fees, you have half the license revenue recognized upfront and half recognized over the life of the contract. But our cash revenue, how we get the cash in the door and the overall ACV value of those contracts is better reflected in ARR. So we continue to see the ARR being very stable, very healthy. We think that's fantastic. We will have events like this early renewal that happened on occasion. We also had, as we mentioned, five new other clients, 29 upsells, all of that, Alex, contributed to the strong revenue in the quarter. But over time, I think, as Sarah was saying, over time, kind of looking at ARR is a better reflection of the overall growth characteristics of the business. I think it's a better way to look at it over time as opposed to in a single quarter. Sarah Youngwood: Yes. The only thing I would add is, by definition, ARR impact of a renewal is not as much as a new client or an upsell. And then so if you were focused on why we had a good performance on ARR at Calypso or in Capital Markets deck, it was really because of the breadth of everything that has happened. Alex Kramm: That's helpful. Thank you very much. And then secondarily, topic that we talked about a lot a few years ago on the back of a strong listings environment that we had at that point, there was a lot of excitement around eventually getting IR solutions on the back of that when those start paying. I know, obviously, there's been a decent amount of delistings since then. So I guess this is not really coming through, but maybe you can just tell us where we are in that, if you're still seeing a decent amount of upsells? Or is that, unfortunately, it's just not coming to fruition given the kind of companies that were listed three years ago or so? Adena Friedman: Actually, we are seeing conversions of our clients to paying clients at the end of the free period. So that is still happening, Alex. But I think that there are other headwinds. So a few things to mention on IR services, and I would actually say this across Corporate Solutions. So the first thing is that we obviously gain new clients through IPOs, right? So that's one of the avenues for us to gain new clients, whether that's for our IR solutions or ESG solutions and our governance solutions. So that is definitely a funnel, a pipeline for us. Now some they then become paying clients on their base services over a period of two to four years, depending on the kind of the way that the IPO is structured. But we also can upsell clients in that period of time. So when you have a healthy IPO environment, you have new companies coming in, and then you're showing them the base services and you can upsell them on new services, that really does become a really nice flywheel right after the IPO. And then you have an additional opportunity when, as you mentioned, the IPO package rolls off. And those IPO packages are rolling off. And so we are still seeing that happen. But the flip side of it is when you have delistings, then you have paying clients who are no longer listed, and that obviously creates churn. And you have other clients who are continuing to take the services, but they are -- they're maybe taking fewer services because their IR budgets are being squeezed. And so that's becoming the contra, I'll call it, the contra flywheel of having more delistings. I would say when we look at the overall conversion rates, they are lower than what we've seen on an average basis. But they are -- but I think that's partly because of the fact that some of the companies are delisting. But those who are seeing this, they were seeing relatively normalized conversion rate. Operator: Thank you. And I show our last question comes from the line of Owen Lau from Oppenheimer. Please go ahead. Owen Lau: Hi. Good morning. Thank you for taking my questions. So for AI, you have many initiatives going on. And when we look at Dynamic M-ELO, you highlighted a 20% increase in both volumes and improvement in fill rate. Could you please talk about how it could impact your market shares and financials over time and how difficult it is for your client -- for your competitor to launch similar products? Thanks. Adena Friedman: Thanks, Owen. Well, I'd say on the first question, this is kind of a specialized order type. So it's not going to be something that's going to have a massive effect on market share, but it is a premium product. So our clients get a huge value out of it. It's a really nice way to get a higher fill rate in size at the midpoint. So it's a really -- it's a premium product in terms of the pricing that we charge. So it's more of a revenue opportunity than it is a market share opportunity. In terms of being able to replicate it, we do provide in our filing and explanation of how we do it. But I would tell you that it took several years for us to fine tune it with our AI team, data science team. It's actually quite complicated and complex to structure the right way, to make sure you're getting the right outcomes. We're constantly fine-tuning the various data points and the weightings of those data points as to how they're affecting the timer on the product. So I would say it's actually extremely hard to replicate, even though kind of look at it like the formula is available, but how you actually manage that formula is very much a part of the greatness of our technology division, frankly. Owen Lau: Got it. And then for Financial Crime Management Technology, we heard that some other enterprise software companies had to lower the ARR guidance because of some uncertainty in the macro environment, but the momentum in your business seems to be quite robust. And you highlighted the new Tier 1 clients signed in July. Could you please remind us how Verafin could fare or grow in different macro environments? Is there any reason we should be worried about if the macro environment turn? Thanks. Adena Friedman: Sure. Well, I would actually talk about, let's talk about the FinTech level, and then we can talk about it in specific areas. But the way that we look at our FinTech solutions is we provide mission-critical technology that helps clients manage risk, manage their regulatory obligations and manage criminals out of their networks, as well as providing core capital markets technology to the entire exchange ecosystem. So it is -- to us, those are very durable, durable kind of demand drivers. Managing risk, as the world gets more complicated, the world gets more risky. And I think our ability at a global scale, on a global level to be able to help our clients manage risk in their trading books, in their treasury operations in their capital obligations, as well as also the managed risk in markets is just -- it's tremendous, honestly. And so I think that has actually been a really great demand driver. I think that as we look at the regulatory obligations, those are extremely durable around the world. Different regulators go at different paces, but there's always regulation that's changing. Now changes, it's really changes in regulations that drive demand as well as the growth. If banks are growing and expanding their businesses into new countries, that also drives great demand. And so those are things that are also quite durable. I think then on anti-financial crime, as we've mentioned before, it's a $3.5 trillion problem between anti-money laundering and fraud, we are just getting started. And so it's not just the fact that the TAM is really large, the total market opportunity, but our solution is unique. I think our solution is remarkable in terms of the way that we bring data together, the way that we are able to look at consortium data in a way that really allows us to be very curated in the topologies we apply using AI and in automating workflows to make it as efficient as possible, then I think that creates a great opportunity for us. And we're only really in North America today. So we have a lot of opportunity globally there. So I think, Owen, that we've chosen to get into this business in a way with very specific ambitions to be that solutions provider of their most complex challenges that the banks face in all economic environments and that is what we think is going to create durable growth for us. Owen Lau: Got it. Thanks a lot. Operator: Thank you. That concludes our Q&A session. At this time, I would like to turn the call back over to Adena Friedman for closing remarks. Adena Friedman: Thank you. Well, as you heard this morning, Nasdaq continues to make progress on our three key priorities of integrate, innovate and accelerate. And through our complementary and integrated solutions, Nasdaq is delivering consistent growth, and the One Nasdaq strategy is accelerating our evolution as a trusted technology provider to the financial services industry. We look forward to updating you on our strategic progress in the quarters to come. And thank you all for joining and have a great day. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.