NDAQ

Nasdaq has quietly transformed from a trading venue into a recurring-revenue technology and data franchise, and FY2025 shows the model working: revenue grew 11.6% to $8.26B, operating income jumped 29.6% to $2.33B, and the Financial Technology segment delivered 14% ARR and revenue growth on new clients, cross-sells and upsells. The moat is real and diversified across three legs — Capital Access Platforms (seventh straight year as the top U.S. exchange by IPO proceeds, over $24B raised; record $1.2T in listing transfers), Index (record $99B net inflows, all-time-high $882B ETP AUM, 122 new products), and Market Services (record revenue on strong cash-equities and options volumes). Margins are excellent for a services business — 63.5% on revenues-less-transaction-expenses, 28.2% operating, 21.6% net — and $2.25B of operating cash flow (+16.3%) comfortably funds a rising dividend ($601M) and sharply higher buybacks ($616M, up 325%).

The headline is the eye-catching +60.1% net income and EPS growth, but the MD&A tells you to discount it: FY2024 was depressed by Adenza integration costs, a pension settlement charge, and a loss on debt extinguishment, while FY2025 booked a gain on early debt extinguishment. The cleaner read is operating income up ~30% and revenues-less-transaction-expenses up 12.9% — still strong, but roughly half the pace of the EPS optics. Investors extrapolating 60% growth will be disappointed. The balance sheet also carries the Adenza legacy: $9.0B of total debt against just $604M of cash and $12.2B of equity (1.54x liabilities/equity), though management is deleveraging (long-term debt down 5.6%) and coverage from cash flow is ample.