NEW YORK - Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the first quarter of 2024.
First quarter 2024 net revenues1 were $1.1 billion, an increase of 22% over the first quarter of 2023, up 6% organically2 or 7% on a pro forma3 basis, including Adenza in the first quarter of 2023 results for Nasdaq. This included Solutions4 revenue increasing 35%, with organic growth of 11% or 13% on a pro forma basis.
Annualized Recurring Revenue (ARR)5 of $2.6 billion increased 29% compared to the first quarter of 2023, up 5% organically or up 7% on a pro forma basis.
Financial Technology revenue of $392 million increased 71% over the first quarter of 2023, up 4% organically or 10% on a pro forma basis.
Index revenue of $168 million increased 53% and experienced $46 billion of net inflows over the trailing twelve months and $21 billion in the first quarter, with ETP AUM surpassing $500 billion in the quarter.
GAAP diluted earnings per share decreased 34% in the first quarter of 2024. Non-GAAP diluted earnings per share decreased 9% in the first quarter of 2024, but increased 6% organically.
The company returned $127 million to shareholders in the first quarter of 2024 through dividends and repaid the $340 million remaining balance of our term loan. There were no share repurchases in the first quarter of 2024.
Adena Friedman, Chair and CEO said, 'Nasdaq delivered another quarter of solid results, with double digit revenue growth in our Solutions businesses including strong Financial Technology results and exceptional Index performance. We continue to make progress on our Integrate, Innovate, and Accelerate strategic priorities with ongoing momentum across our integration work streams and the One Nasdaq go-to-market strategy.
As we look toward the remainder of the year, we are well positioned to deliver on our next phase of scalable, profitable, and durable growth.'
Sarah Youngwood, Executive Vice President and CFO said, 'Nasdaq's financial performance in the first quarter underscores the growth profile and durability of our business model. We are making disciplined investments while achieving meaningful progress executing on our expense synergy target and our deleveraging plan.'
FINANCIAL REVIEW
First quarter 2024 net revenues were $1.1 billion, an increase of $203 million, or 22%, versus the prior year period with 6% organic growth or 7% growth on a pro forma basis. Revenue growth includes a $150 million net benefit primarily related to the acquisition of Adenza and a $2 million increase from the impact of changes in FX rates.
Solutions revenue was $871 million in the first quarter of 2024, an increase of $227 million, or 35%, versus the prior year period with organic growth of 11% or 13% growth on a pro forma basis, reflecting strong growth from Index and Financial Technology.
ARR grew 29% year over year, 5% organically, or 7% on a pro forma basis in the first quarter with 12% pro forma ARR growth for Financial Technology and 1% ARR growth for Capital Access Platforms.
Market Services net revenues were $237 million in the first quarter of 2024, a decrease of $23 million, or 9%, versus the prior year period. The $23 million organic decrease was primarily driven by an $11 million decrease in U.S. equity derivatives revenue, an $8 million decline in U.S. tape plan revenue, and a $3 million decline in U.S. cash equities revenue.
First quarter 2024 GAAP operating expenses were $707 million, an increase of $205 million, or 41%, versus the prior year period. The increase for the first quarter of 2024 is due to the inclusion of $86 million in amortization expense of acquired intangible assets, $68 million of other AxiomSL and Calypso operating expenses, a one-time charge of $23 million associated with the settlement of our pension plan, and organic growth driven by increased investments in technology and our people to drive innovation and long-term growth. The increase also reflected $8 million of restructuring charges associated with the programs we initiated to optimize our efficiencies as a combined organization as well as integrating the Adenza acquisition.
First quarter 2024 non-GAAP operating expenses were $524 million, an increase of $88 million, or 20%, versus the prior year period with 4% organic growth or 5% on a pro forma basis. The increase for the first quarter of 2024 is primarily due to the inclusion of $68 million of AxiomSL and Calypso non-GAAP operating expenses. The organic and pro forma increases reflect growth driven by increased investments in technology and our people to drive innovation and long-term growth.
First quarter 2024 cash flow from operations was $530 million, enabling the company to continue to make meaningful progress on its deleveraging plan. The company returned $127 million to shareholders through dividends and repaid the remaining $340 million term loan balance and a net $67 million in commercial paper. We did not repurchase shares during the first quarter of 2024. As of March 31, 2024, there was $1.9 billion remaining under the board authorized share repurchase program.
2024 EXPENSE AND TAX GUIDANCE UPDATE6
The company is updating its 2024 non-GAAP operating expense guidance to a range of $2,125 million to $2,185 million, and maintaining its 2024 non-GAAP tax rate guidance to be in the range of 24.5% to 26.5%.
STRATEGIC AND BUSINESS UPDATES
March 5th Investor Day highlighted Nasdaq's strategy to deliver its next phase of resilient and scalable growth. Approximately 500 investors and analysts participated in Nasdaq's 2024 Investor Day, where Nasdaq highlighted its strategic initiatives of Integrate, Innovate, and Accelerate, introduced the One Nasdaq go-to-market strategy, and outlined its capital allocation priorities to support organic revenue growth and leverage reduction.
AxiomSL and Calypso achieved 15% combined pro forma ARR growth. AxiomSL and Calypso had 45 upsells and signed 2 new clients. Combined gross revenue retention7 was 96% and net revenue retention8 was 111%. Excluding the impact of a significant 2023 bankruptcy first noted last quarter, gross revenue retention was 98% and net revenue retention was 113%.
Verafin had solid growth in SMB customers while launching a new AI-based copilot capability. Within Financial Crime Management Technology, Verafin had 24% ARR growth in the first quarter. This included the addition of 28 new SMB clients, underscoring the continued growth within its core client base. Additionally, after an extensive Beta program, the business rolled out its first copilot feature, the integrated Entity Research Copilot, to its customer base of more than 2,500 financial institutions. Verafin's solutions, combined with the integrated copilot, significantly improve investigator efficiency with up to a 90% reduction in alert review time compared to legacy approaches.
Exchange-traded product (ETP) assets under management (AUM) linked to Nasdaq indices reached record levels, surpassing $500 billion at quarter-end, with growth in derivatives volumes. Market performance and $46 billion in net inflows in the trailing twelve-month period, including $21 billion in the first quarter, resulted in record quarter-end ETP AUM linked to Nasdaq indices at $519 billion. This quarter also marked the 25th anniversary of the launch of the Invesco QQQ Exchange Traded Fund, which tracks the Nasdaq-100, highlighting the longstanding relationship between Nasdaq and Invesco. Nasdaq futures and options volumes increased 5% year-over-year, also contributing to revenue growth.
Launched Dynamic Midpoint Extended Life Order (M-ELO) for U.S. cash equities on April 15th. Nasdaq launched Dynamic M-ELO, the first SEC approved AI-powered order type designed to improve fill rates and create greater efficiency in equities markets. This new order type analyzes more than 140 data points every 30 seconds on a symbol-by-symbol basis to detect market conditions and optimize the holding period prior to which a trade is eligible to execute.
Nasdaq maintained its leadership among exchanges in U.S. multi-listed options. In the first quarter of 2024, Nasdaq led all exchanges during the period in total volume traded for U.S. multi-listed equity options. Nasdaq also achieved record revenue in its proprietary index options franchise, driven by record trading volumes.
Investor demand underpinned the success of the Borse Dubai secondary offering. Nasdaq successfully coordinated the secondary offering of 31 million shares offered by Borse Dubai. Borse Dubai remains a strategic shareholder of Nasdaq with over 10% ownership and representation on Nasdaq's board. The transaction priced on March 19th and closed on March 22nd with strong investor demand resulting in an oversubscribed transaction.
ABOUT NASDAQ
Nasdaq (Nasdaq: NDAQ) is a 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information set forth in this communication 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. Such forward-looking statements include, but are not limited to (i) projections relating to our future financial results, total shareholder returns, growth, dividend program, trading volumes, products and services, ability to transition to new business models or implement our new corporate structure, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain acquisitions, divestitures and other strategic, restructuring, technology, environmental, de-leveraging and capital allocation initiatives, (iii) statements about our integrations of our recent acquisitions, (iv) statements relating to any litigation or regulatory or government investigation or action to which we are or could become a party, 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.
Contact:
Nick Jannuzzi
Tel: +1.973.760.1741
Email: Nicholas.Jannuzzi@Nasdaq.com
David Lurie
Tel: +1.914.538.0533
Email: David.Lurie@Nasdaq.com
NASDAQ, INC. 
