Cigna earnings beat by $0.04, revenue topped estimates
Introduction & Market Context
Nasdaq, Inc. (NASDAQ:NDAQ) reported strong first-quarter 2025 results on April 24, with double-digit growth across all business segments. The exchange operator and technology provider posted an 11% year-over-year increase in net revenue to $1.24 billion, while diluted earnings per share jumped 24% to $0.79, continuing the positive momentum seen in the previous quarter.
The company’s stock, which closed at $73.50 on April 23, showed a positive pre-market reaction with shares up 0.27% to $73.70. This follows a 1.11% gain in the previous session, as investors anticipated the strong quarterly performance.
As shown in the following comprehensive financial overview from the company’s presentation, Nasdaq achieved significant growth across key metrics:
Quarterly Performance Highlights
Nasdaq’s Q1 2025 performance was characterized by strong growth across all three business divisions. Net revenue reached $1.24 billion, representing an 11% increase year-over-year (12% on an adjusted basis). Solutions revenue, which combines the Capital Access Platforms and Financial Technology segments, grew 9% to $947 million and now accounts for 77% of total net revenue.
Operating income rose 15% to $682 million, resulting in an operating margin of 55%, an improvement of 2 percentage points from the prior year. This expansion in profitability demonstrates Nasdaq’s ability to grow revenue while maintaining disciplined cost management.
The following detailed breakdown illustrates the strong performance across all segments:
Recurring revenue continues to be a cornerstone of Nasdaq’s business model, with Annualized Recurring Revenue (ARR) reaching $2.83 billion, up 8% year-over-year (9% on an adjusted basis). Notably, Software-as-a-Service (SaaS) revenue grew 14% to $1.06 billion, now representing 37% of total ARR, a 2 percentage point increase from the previous year.
The following chart illustrates the consistent growth in recurring revenue and the increasing proportion of SaaS revenue:
Segment Analysis
Nasdaq’s Capital Access Platforms segment, which includes Data and Listing Services, Index, and Workflow and Insights, delivered an 11% increase in revenue to $515 million. The Index business was particularly strong, with revenue growing 26% year-over-year, driven by record average Exchange Traded Product (ETP) Assets Under Management (AUM) of $662 billion, a $170 billion increase from the prior year.
The segment maintained its market leadership position with an 82% win rate for eligible U.S. operating company IPOs in the quarter. Nasdaq welcomed 45 operating company listings that raised nearly $5 billion in proceeds.
As shown in the following operational highlights, the Index business continues to be a significant growth driver:
The Financial Technology segment, which includes Financial Crime Management Technology, Regulatory Technology, and Capital Markets Technology, saw revenue increase by 10% to $432 million. This growth was led by the Financial Crime Management Technology business, which grew 21% year-over-year.
The segment’s ARR increased 12% to $1.55 billion, while SaaS revenue grew 21% to $631 million. The strong performance reflects Nasdaq’s success in cross-selling and upselling to existing clients, as well as winning new business.
The following chart highlights the key operational metrics for the Financial Technology segment:
Market Services, which includes trading services across various asset classes, delivered exceptional performance with revenue growing 19% to $281 million. This was driven by record volumes in U.S. cash equities and U.S. options, with matched average daily share volume reaching 2.3 billion shares and matched average daily contract volume hitting 15.6 million contracts.
The segment’s operating income surged 31% to $173 million, resulting in an operating margin of 62%, an improvement of 5 percentage points from the prior year.
The following operational highlights demonstrate Nasdaq’s strong market position:
Strategic Initiatives
Nasdaq continues to execute on its three strategic pillars: enhancing liquidity, providing access and transparency to capital markets, and ensuring the integrity of the financial system. The company announced plans to launch 24/5 trading on the Nasdaq Stock Market by the second half of 2026, a significant expansion of its trading capabilities.
The company’s growth strategy is focused on both organic initiatives and disciplined capital allocation. The net revenue bridge below illustrates the various factors contributing to Nasdaq’s growth, with 9.5% coming from "alpha" growth factors such as existing client increases, new clients, cross-selling, and innovation:
Financial Health
Nasdaq generated $674 million in free cash flow during the first quarter, with a free cash flow conversion ratio of 102% over the last twelve months. This strong cash generation supports the company’s capital allocation priorities, including organic investments, debt reduction, and shareholder returns.
The company continued to make progress on deleveraging, reducing its gross leverage ratio from 3.6x at the end of Q4 2024 to 3.4x at the end of Q1 2025. This reduction was achieved through a combination of debt repayment and EBITDA growth.
As shown in the following chart, Nasdaq is steadily improving its financial position:
During the quarter, Nasdaq returned capital to shareholders through dividends and share repurchases. The company paid a quarterly dividend of $0.24 per share, totaling $138 million, representing an annualized payout ratio of 32%. Additionally, Nasdaq repurchased 1.6 million shares at a total cost of $115 million.
Forward-Looking Statements
Looking ahead, Nasdaq provided guidance for 2025, expecting non-GAAP operating expenses to be in the range of $2.265 billion to $2.325 billion, and a non-GAAP tax rate between 22.5% and 24.5%. The company also outlined its medium-term outlook, with Capital Access Platforms revenue expected to grow 5-8%, Financial Technology revenue projected to increase 10-14%, and total Solutions revenue anticipated to rise 8-11%.
Nasdaq aims to continue its deleveraging efforts, with a target to further reduce its gross leverage ratio by the end of 2025. The company’s strong cash flow generation and disciplined capital allocation strategy position it well to achieve these financial goals while investing in growth initiatives.
The company’s focus on expanding its recurring revenue streams, particularly in high-growth areas such as Financial Crime Management Technology (expected to grow in the mid-20s) and SaaS offerings, underscores its commitment to building a more stable and predictable business model.
Nasdaq’s Q1 2025 results demonstrate the company’s ability to execute on its strategic priorities while delivering strong financial performance across all business segments. With continued momentum in its Solutions businesses and record volumes in its Market Services segment, Nasdaq is well-positioned for sustained growth in 2025 and beyond.
Full presentation:
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