Nasdaq Outlines Strategy to Deliver Next Phase of Resilient and Scalable Growth
- Nasdaq transitions to a platform business for increased value creation and profitability.
- Company outlines 2024 priorities, focusing on synergy and deleveraging targets post-Adenza integration.
- Aims to action 70% of $80 million net expense synergies by 2024, ahead of schedule.
- Accelerated deleveraging plan to reach 4.0x leverage ratio before targets.
- Reaffirms medium-term financial outlook with revenue growth projections and capital allocation strategy.
- None.
Insights
Nasdaq's strategic pivot towards a platform business model is indicative of a broader industry trend where companies seek to capitalize on scalable and recurring revenue streams. The emphasis on achieving synergy and deleveraging targets post-Adenza integration suggests a proactive approach to cost management and balance sheet optimization. The acceleration of deleveraging to reach a 4.0x leverage ratio ahead of schedule could be seen as a positive signal to the market, potentially leading to improved credit ratings and reduced interest costs over time.
Furthermore, the commitment to a disciplined capital allocation strategy, with a focus on Return on Invested Capital (ROIC), is a critical aspect for shareholders. It indicates that management is prioritizing investments that are expected to yield high returns. The increase in the quarterly dividend and the share repurchase program to offset dilution aligns with shareholder value enhancement practices. However, investors should monitor the execution of these strategies, as deviations could impact future earnings and stock performance.
The assertion that Nasdaq is positioned to grow its share of a $31 billion serviceable addressable market is a bold claim, reflecting confidence in its competitive edge and innovation capabilities. The focus on leveraging technology, particularly cloud-native applications and generative AI, to drive innovation, is a testament to Nasdaq's commitment to staying at the forefront of technological advancements in the financial sector.
However, the potential benefits of these innovations hinge on their market reception and the ability to effectively monetize them. The targeted $100 million in incremental revenue through cross-sell opportunities by 2027 within the Financial Technology division is an ambitious goal that will require careful execution and market adaptation. Investors should track the progress of these initiatives to gauge their impact on Nasdaq's growth trajectory and market position.
The medium-term financial outlook provided by Nasdaq, with revenue and non-GAAP operating expense growth projections, offers a glimpse into the company's expectations in a stable market backdrop. This outlook is contingent on economic conditions that support the capital markets. Factors such as interest rate changes, regulatory developments and market volatility could influence these projections.
Investors should consider the broader economic landscape when interpreting Nasdaq's financial targets. The forward-looking statements regarding revenue growth in the Capital Access Platforms and Financial Technology divisions suggest an anticipation of continued demand for Nasdaq's services. However, the non-GAAP measures, while useful for management and investors, exclude certain expenses that are real costs and should be considered when evaluating the company's financial health.
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
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
NEW YORK, March 05, 2024 (GLOBE NEWSWIRE) -- 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
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
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
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% to38% 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% to8% . - Financial Technology Revenue growth of
10% to14% . - Total Solutions Revenue growth of
8% to11% . - Non-GAAP Operating Expense growth of
5% to8% .
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
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.
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions, and career opportunities, visit us on LinkedIn, on X @Nasdaq, or at www.nasdaq.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information set forth in this press release contains forward-looking statements that involve a number of risks and uncertainties. Nasdaq cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. These forward-looking statements can often be identified by the use of words such as "will," "expect," "designed," "outlook," "target," "plan," "estimate," and "can," as well as variations of such words and similar expressions. Such forward-looking statements include, but are not limited to (i) management’s vision for the future of Nasdaq, projections relating to our future financial results, growth, dividend program, products and services, ability to transition to new business models or implement our new corporate structure, taxes and achievement of synergy targets related to the acquisition of Adenza, (ii) statements about the benefits of certain acquisitions and other strategic, restructuring, technology, de-leveraging, share repurchase and capital allocation commitments and initiatives, (iii) statements about the integration of our recent Adenza acquisition, (iv) our medium-term growth outlook and (v) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq’s control. These factors include, but are not limited to, Nasdaq’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, geopolitical instability, government and industry regulation, interest rate risk, U.S. and global competition.
Further information on these and other factors are detailed in Nasdaq’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q, which are available on Nasdaq’s investor relations website at http://ir.nasdaq.com and the SEC’s website at www.sec.gov. Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.
WEBSITE DISCLOSURE
Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.
Nasdaq Media Relations Contact:
David Lurie
+1.914.538.0533
David.Lurie@Nasdaq.com
Nick Jannuzzi
+1.973.760.1741
Nicholas.Jannuzzi@Nasdaq.com
Nasdaq Investor Relations Contact:
Ato Garrett
+1.212.401.8737
Ato.Garrett@Nasdaq.com
-NDAQF-
FAQ
What is Nasdaq's (NDAQ) strategic pivot to a platform business about?
What are Nasdaq's 2024 priorities as per the press release?
How much of the targeted $80 million in net expense synergies does Nasdaq aim to action by 2024?
What is Nasdaq's accelerated deleveraging plan aiming for?
What does Nasdaq reaffirm in terms of its medium-term financial outlook?
