Nasdaq Inc. (NDAQ, Financial) is making significant progress towards its 2025 strategic goals, focusing on integration, innovation, and acceleration to drive sustainable growth. The company is enhancing its net expense efficiency program, with a plan to implement $140 million in expanded net expense efficiencies by the end of the year. Already, over $100 million has been realized by the close of the first quarter.
Financially, Nasdaq's senior unsecured debt rating was boosted by Moody’s from Baa2 to Baa1 as of March 31, reflecting improved creditworthiness. On the innovation front, the company has been advancing its product offerings by introducing new AI-powered features and launching new Index products. Notably, client usage of Nasdaq Verafin’s Co-Pilot tool has surged by 20% in the first quarter, with more than 1,200 clients now using the tool to streamline alert reviews.
Nasdaq's One Nasdaq strategy is gaining traction following the Adenza acquisition, with the company securing 19 cross-sell wins across key solutions such as Surveillance, AxiomSL, and Verafin. This strategic move positions Nasdaq to exceed $100 million in run-rate revenue from cross-sells by the end of 2027. By the end of the first quarter, cross-selling activities comprised over 15% of the Financial Technology sector’s sales pipeline, demonstrating the effectiveness of Nasdaq's integrated growth strategy.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for Nasdaq Inc (NDAQ, Financial) is $82.19 with a high estimate of $104.00 and a low estimate of $55.00. The average target implies an upside of 11.82% from the current price of $73.50. More detailed estimate data can be found on the Nasdaq Inc (NDAQ) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, Nasdaq Inc's (NDAQ, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Nasdaq Inc (NDAQ, Financial) in one year is $43.91, suggesting a downside of 40.26% from the current price of $73.5. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Nasdaq Inc (NDAQ) Summary page.
NDAQ Key Business Developments
Release Date: January 29, 2025
- Net Revenue: $4.7 billion for the full year, up 9% from 2023; $1.2 billion for the fourth quarter, up 10% year over year.
- Solutions Revenue: $3.6 billion for the full year, up 10%; $949 million for the fourth quarter, up 9%.
- Operating Expense: $2.162 billion for the full year, up 6%.
- Operating Margin: 54% for the full year, up over 1 percentage point; 55% for the fourth quarter, up 2 percentage points.
- EBITDA Margin: 56% for the full year, up over 1 percentage point; 57% for the fourth quarter, up over 1 percentage point.
- Net Income: $1.6 billion for the full year; $438 million for the fourth quarter.
- Diluted EPS: $2.82 for the full year; $0.76 for the fourth quarter.
- ARR (Annual Recurring Revenue): $2.8 billion, up 7.5% year over year.
- Index Revenue Growth: 31% for the full year; 29% for the fourth quarter.
- Free Cash Flow: Approximately $1.6 billion for the full year; $439 million for the fourth quarter.
- Gross Leverage Ratio: Reduced from 4.3 times to 3.6 times by the end of 2024.
- Dividends Paid: $0.94 per share or $541 million for the full year.
- Share Repurchases: 2.3 million shares for roughly $145 million in the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nasdaq Inc (NDAQ, Financial) reported a 9% increase in net revenues for 2024, reaching $4.7 billion, with Solutions revenue growing by 10%.
- The company achieved significant client engagement, signing 263 new clients, 424 upsells, and 11 cross-sells in 2024.
- Nasdaq's Financial Technology division delivered strong performance, with 12% ARR growth and notable expansion in Financial Crime Management Technology.
- The company successfully integrated acquisitions like AxiomSL and Calypso, enhancing its platform capabilities and achieving expense synergies ahead of schedule.
- Nasdaq maintained its leadership in listings, with 180 IPOs in 2024, raising $23 billion in total proceeds, and achieved an 80% win rate among eligible operating company IPOs in the US.
Negative Points
- The Workflow and Insights business has been growing slower than expected, impacted by a slower issuance environment and delistings.
- Nasdaq faces challenges in the Corporate Solutions segment due to elongated corporate buying cycles and beta headwinds.
- There is potential uncertainty in client demand for AxiomSL's offerings if there is a reversal in bank regulations under the new US administration.
- The ARR growth for Capital Markets Technology decreased from 12% to 9%, driven by year-over-year comp differentials and timing of deal signings.
- Professional services revenue faced downward pressure in 2024, particularly impacting AxiomSL solutions, though improvement is expected in 2025.
