Nasdaq Outlines Strategy To Deliver Next Phase Of Resilient And Scalable Growth

Highlights enhanced value-creation opportunity following strategic pivot to a platform business with a more scalable, recurring, and profitable revenue profile
Reaffirms medium-term outlook and provides 2024 priorities, including progress made to achieve synergy and deleveraging targets associated with Adenza integration
Expects to action approximately 70% of targeted $80 million in net expense synergies ahead of plan, by the end of 2024
Details accelerated deleveraging plan with intent to reach a 4.0x leverage ratio nine to twelve months before – and a 3.3x leverage ratio at least six months before – previously announced targets

Nasdaq (Nasdaq: NDAQ) today will host its Investor Day at 8:00 AM ET, where Adena Friedman, Chair and CEO, Sarah Youngwood, Executive Vice President and CFO, and other members of the senior leadership team will detail the company’s plans to deliver its next phase of resilient and scalable growth.

Nasdaq has reaffirmed its medium-term financial outlook and will outline its key 2024 priorities. Additionally, the company will discuss its financial framework and capital allocation strategy as well as highlight the benefits of its divisional structure, unified with a One Nasdaq go-to-market approach.

“Nasdaq is the trusted fabric of the global financial system, providing market-leading platforms that enhance the liquidity, transparency, and integrity of the global economy. Over the past several years, we have continuously invested to create an integrated and durable growth platform with mission-critical capabilities to serve our clients even more holistically,” said Adena Friedman, Chair and CEO. “Across our divisions, we are uniquely positioned to grow our share of a $31 billion serviceable addressable market opportunity and further reinforce our position as a trusted partner to the industry. We are confident this will unlock a new chapter of scalable, durable, and profitable growth that delivers significant value for our clients and shareholders.”

Executing 2024 Strategic Priorities

Nasdaq will discuss its 2024 strategic priorities, which are designed to deliver performance in line with its medium-term outlook target ranges. The three key priorities are:

Integrate: Execute Adenza Integration

Following the completion of the acquisition, Adenza has already accelerated Nasdaq’s growth story by expanding Nasdaq’s total pro forma revenue, Solutions revenue, and non-GAAP operating margin. Nasdaq will continue to successfully integrate Adenza to expand its growth opportunities, unlock synergies, and drive operating leverage. The company expects to action approximately 70% of the targeted $80 million in net expense synergies ahead of plan, by the end of 2024, with a portion realized in 2024 and fully realized in 2025.

Innovate: Leverage Technology Infrastructure to Drive Innovation

Nasdaq’s longstanding focus on embracing cloud workflows throughout its market infrastructure and software solutions, coupled with years of investment in AI, positions the company to benefit from the next wave of technology innovation. Nasdaq’s modern, cloud-native applications and its unique, proprietary data, create a strong foundation to introduce generative AI capabilities that will enhance the value that the company can provide to its clients and can further Nasdaq’s competitive position.

Accelerate: Unlock the Value of the Divisional Structure to Drive Incremental Revenue

The company will continue to accelerate the impact of its divisional structure and leverage its One Nasdaq strategy to create and deliver on new growth and revenue opportunities. Within its Financial Technology division, Nasdaq expects to achieve at least $100 million in incremental revenue through cross-sell opportunities by year-end 2027.

Enhancing Shareholder Value via a Disciplined Capital Allocation Strategy

Nasdaq will also provide details on its financial framework and capital allocation strategy. This strategy, which is fueled by strong free cash flow generation and capital discipline, will focus on four key actions:

Utilizing a disciplined ROIC-based framework to allocate investment capital to drive organic growth.
Accelerating its deleveraging plan, now targeting an estimated leverage ratio of 4.0x, nine to twelve months before Nasdaq’s previously stated goal. Nasdaq expects to reach 3.3x, at least six months ahead of its previously stated goal.
Growing the dividend and progressing towards an annualized payout ratio of 35% to 38% by 2027. This includes raising the 2024 quarterly dividend by $0.02 per share, to $0.24 per share, which will be reflected in the June 2024 dividend payment.
Offsetting dilution from employee vesting and mitigating dilution from the Adenza acquisition equity issuance over time, both through the company’s previously announced Board authorized share repurchase program.

Reiterating Medium-Term Financial Outlook

Nasdaq will reaffirm its previously stated medium-term financial outlook:

Capital Access Platforms Revenue growth of 5% to 8%.
Financial Technology Revenue growth of 10% to 14%.
Total Solutions Revenue growth of 8% to 11%.
Non-GAAP Operating Expense growth of 5% to 8%.

This outlook reflects a three-to-five-year period and assumes a stable market backdrop. The company will also reaffirm its 2024 non-GAAP operating expense guidance with a range of $2,105 million to $2,185 million and its 2024 non-GAAP tax rate guidance with a range of 24.5% to 26.5%.

Reconciliations of U.S. GAAP to non-GAAP operating expense and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business.

Webcast and Materials

The agenda, slide presentation, and a live webcast are available on Nasdaq’s investor relations website: http://ir.nasdaq.com.