NDAQ Financial Analysis

Analysis Date: 1/30/2025

Business Model

Nasdaq generates revenue through three main segments: Capital Access Platforms, Financial Technology, and Market Services

Revenue Sources

• Capital Access Platforms (42% of revenue): Data & Listing Services, Index, and Workflow & Insights
• Financial Technology (35% of revenue): Financial Crime Management, Regulatory Technology, Capital Markets Technology
• Market Services (22% of revenue): Trading and clearing services across asset classes

Revenue Distribution by Channel

• Solutions revenue (77% of total): Capital Access Platforms and Financial Technology
• Market Services revenue (22% of total)

Income Statement Analysis

• Net revenue grew 20% in 2024 to $4.7B driven by Solutions revenue growth of 26%
• Operating margin expanded to 54% in 2024 from 53% in 2023
• Q4 2024 net revenue grew 10% year-over-year with Solutions revenue up 10%

Balance Sheet Analysis

• Total debt reduced by $378M from year-end 2023
• Cash balance increased by $139M to $592M
• Total equity increased 3% to $11.2B

Cash Flow Analysis

• Strong operating cash flow of $1.9B in 2024
• Free cash flow conversion ratio of 97% in 2024
• Dividend payout ratio of 34% in 2024

Capital Allocation

Management is focused on deleveraging following the Adenza acquisition while maintaining dividend payouts. Gross leverage ratio reduced to 3.6x by end of Q4 2024. Returned $138M to shareholders through dividends in Q4. No share repurchases in Q4 as focus remains on debt reduction.

Management Commentary

2024 was a transformative year with substantial progress as a scalable platform company

Successfully executing on cross-sell opportunities and expanding client relationships

Well positioned to drive profitable and durable growth in 2025

Tracking ahead of schedule on deleveraging and cost synergy targets

Overall Sentiment: Positive, with management confident in execution and strategic positioning while maintaining focus on integration and efficiency

Recommendation

Rating: Buy

Reason for Rating: Strong execution, expanding margins, and progress on deleveraging support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 7:49:53 AM