Nasdaq, Inc. 10-Qquarter ended 2026-06-30

Executive Summary

Nasdaq earns trading fees and sells listings, indices, data and financial software to investors, companies and financial institutions. Its recurring technology businesses are expanding alongside its exchange and index franchises, with financial-crime, regulatory and capital-markets software all delivering double-digit growth. Q2 revenue less transaction-based expenses rose 15% to $1.50B, supported by technology subscriptions, higher index assets and stronger trading activity. Operating income grew 25%, but investors should distinguish durable customer expansion from the benefits of buoyant markets and one-time items.

What's Happening in the Business

Index products were the standout growth engine. Index revenue reached ≈$278M, up 38%, as higher market values and investor inflows increased assets linked to Nasdaq indices; a $6M one-time contract modification also helped. Quarter-end exchange-traded product assets reached $1.11T, up 50%. Listings strengthened too: Nasdaq won 74% of eligible U.S. listings and attracted seven of the ten largest operating-company initial public offerings, including SpaceX.

Financial Technology’s three subdivisions achieved double-digit growth for a second consecutive quarter. Segment annual recurring revenue grew 16%, supported by new subscriptions, existing-client expansion and pricing. Nasdaq signed 58 new clients, seven cross-sells and 107 upsells. Higher Calypso upfront license revenue also contributed, although professional-services revenue declined. Management reported more than $160M of net expense synergies actioned from the completed Adenza restructuring program.

Nasdaq finished transferring Nordic power futures positions in Q1 and stopped related trading and clearing services in June. The remaining wind-down is expected through the rest of 2026, with regulatory capital released over time; it also triggered a $20M intangible-asset impairment in Q2. Equity and fixed-income clearing continues.

Key Financial Highlights

Q2 and H1 ended 6/30/2026; changes are Y/Y.

• Trading drivers: Cash-equity trading revenue rose 19% to $160M as Nasdaq’s matched share increased to 14.7% from 13.9%. U.S. equity-derivative revenue grew 7.9% to $123M; stronger industry volumes were partly offset by lower revenue captured per trade.
• Expense structure: Q2 compensation rose 8.8% to $383M. Segment profits exclude $150M of corporate costs, unchanged Y/Y, including acquired-intangible amortization, integration, restructuring and legal expenses.
• Non-operating effects: H1 included $39M of net divestiture gains vs $89M a year earlier, plus $50M of income from unconsolidated investees. The effective tax rate rose to 22.9% from 18.3%, partly because prior-year audit-related benefits did not recur.
• Cash generation: H1 OCF was broadly flat at $1.40B, above reported net income; working-capital changes and adjustments removing divestiture gains limited growth. Capital expenditures rose 27% to $137M, leaving FCF of $1.26B.
• Capital allocation: H1 repurchases totaled $903M and dividends $327M. Shares outstanding fell 1.4% from year-end, so buybacks exceeded issuance. A further $250M accelerated repurchase agreement followed in July.

Risk Assessment

• Market dependence: Higher index valuations, inflows and trading volumes supported growth; reversals would pressure asset-linked fees and transaction revenue.
• Antitrust investigation: The European Commission’s formal investigation into Nasdaq and Deutsche Börse’s European derivatives activities could result in fines or remedies.
• Acquisition exposure: Goodwill of $14.2B and acquired intangibles of $6.22B exceed total equity of $12.0B, making disappointing acquired-business performance a significant impairment risk.
• Financial flexibility: Total debt obligations of $8.76B constrain flexibility alongside shareholder distributions, although Nasdaq has an undrawn $1.50B revolving facility.
• Clearing exposure: Counterparty defaults could create losses beyond posted collateral; exiting power futures reduces one exposure but does not eliminate Nasdaq’s remaining clearing obligations.

This 10-Q lists no risk factors of its own and refers to the annual report. The risks above come from the rest of this filing. Full list: the company's 10-Ks on SEC.

What to Watch

• Technology durability: Annual recurring revenue growth is 16%; continued subscriptions and client expansion would validate durable growth, while weaker recurring growth would expose reliance on upfront licenses.
• Index demand: Quarter-end linked assets stand at $1.11T. Continued inflows would broaden the growth foundation; market-driven asset declines or outflows would test fee resilience.
• Trading economics: Cash-equity matched share improved, while options capture weakened. Sustained share gains and stronger retained revenue would support growth; heavier rebates or weaker capture would dilute volume benefits.
• Capital allocation: H1 shareholder returns nearly consumed FCF. Future filings will show whether repurchases coexist with debt reduction or increasingly compete with financial flexibility.