Good morning. I'm Heather Balsky, BofA's Business and Information Services analyst, and I'm pleased to be here with Chief Financial Officer of Nasdaq, Sarah Youngwood. With over 4,500 companies on its exchange, Nasdaq is the largest listing venue in the United States. It is, of course, a leader in both stock and option trading, but since 2017, it's been in the midst of a strategic pivot to being a scale technology and information services provider. Today, nearly 80% of Nasdaq's revenue is from non-trading businesses. This includes indexing, data, corporate services, marketplace technology, regulatory reporting, and financial crime management technology. Sarah, who I'm pleased to have here with me, was appointed a CFO late last year. Before coming to Nasdaq, she was the CFO for UBS, where she played a key role in modernizing the bank's infrastructure and facilitating the acquisition of Credit Suisse. She also has 25 years of experience at JPMorgan, where she held senior roles in investment banking, investor relations, and as CFO of Chase and JP Chase Technology. Sarah, thank you so much for spending time with us. Thanks for having me. So to start, I imagine it's been an extremely busy few months for you. How are you settling into the new role? Well, most people don't have the privilege of doing Investor Day on their first 100 days. Yeah. So I've started with that. When I think about settling, settling is about what is delivering versus expectations. And so I came into the role thinking, I'm looking for a modern company that has financial excellence and a wonderful team. And Nasdaq has delivered all of that and more. So on the first one, it is truly a modern company that is global. It's a platform company that has been very well invested, and Adena has really done that pivot that you just described. In terms of the second one, financial excellence, we talked about being one of 15 companies in S&P 500 that is meeting the Rule of 60 with 5% growth and at our scale, and we're really proud of that. And the more you dig into that financial performance, the more you get impressed. I just love the growth margin, the growth, the margins, the free cash flow. That's just like for me, how you add value to shareholders and just like to settle with that. And then the third one is the team. You've seen us interact at Investor Day, and, we're all rooting for each other. It's a very, very strong bench. That's wonderful. And, Adenza. Yeah. Let's dig deeper into the acquisition. You've talked about how AxiomSL, together with Calypso, already services over 90% of G-SIB banks. Since you're already so well penetrated, can you walk us through the pathway to your low- to mid-teens revenue growth target for Adenza? Yeah. So when you think about where we start, we have most of the G-SIBs, but both in the RegTech as well as the capital markets tech, we are just under the 10% penetration, and so still a lot of room to grow. And that's where it's very exciting, and that's also... So what we're doing is, we have an in, and so if you take AxiomSL, for example, most of the banks are gonna have that product, but they may have one module. We have 55 countries and many more modules than that. So, the ability that we have is to deliver a modular experience for our clients. Like, you buy one thing, and then you add, and the growth formula is 50% is upsell, and then the rest of the 50% is pricing, and then cross-sell and new logos. So that's how we generate additional penetration. And the penetration is both penetration of the sum and penetration of time becoming part of sum and then being captured by us. Because a lot of our clients are interested in, for example, doing AI or having more robust scale than Excel for some of those important services that we can deliver. That makes sense. That's helpful. You've set some very ambitious synergy targets for the deal. $100 million in cross-sell for FinTech by year-end 2027. Mm-hmm. $80 million in net cross synergies by the end of next year. Can you give us an update on how things are trending relative to those targets? Yeah. So I'm very pleased about the execution on this cross-sell, because if you think about an acquisition that we closed November first, we already have one sales force for FinTech. We are already putting in place one institutionalized client listening source that enables us to operate as one sales force. We're putting in place several campaigns. We have three that are already starting, that are joint campaigns that are geared specifically towards the cross-sell. We also have sales incentives that have been designed to be conducive to develop the muscle memory that is necessary for the cross-sell. And then we have the benefit of what we already inherited from Thoma Bravo, which is that they had put in place a data integration for the clients between Calypso and AxiomSL. I think that when I think about what is gonna be producing cross-sell is making it very easy for our clients to want to do more with us, but then to do more with us. Like, there is no implementation. If your data is already integrated, you just have to pay the extra fee. So we are seeing that starting to happen, and we're seeing it across all of the pieces, whether it's Verafin to Calypso, Calypso to Verafin, AxiomSL to Calypso, Verafin to the rest of Nasdaq. We have a lot of opportunities. That sounds really great. I'm gonna switch topics. We're gonna move on to anti-financial crime. Your, your anti-financial crime business, Verafin, has been moving upmarket- Mm-hmm. and recently signed Citibank and a couple of other large banks. What's been the early feedback from those first few Tier 1 bank clients? Yeah, so rarely do we have the opportunity to have clients giving feedback publicly. Especially when it's great feedback, we are very grateful for Citi's words that were shared at Investor Day. We are a great partner, and we have differentiation that nobody has had, and that differentiation is across two elements. The first element is we have a workflow that enables us to go through 74 banking systems, whether it's that of Citi or that of a very small bank or the many pieces of infrastructure of a large bank, and access the data in a very safe way, process it through AI machinery, and the company was created on AI 15 years ago, and then produce results that are easy to understand. The second thing that we have is we've got $8 trillion of assets in our consortium. So it's the data of 2,500 banks, and we're the only ones that have a consortium of data that we can use to supplement the insight. The workflow itself provides good insights, and even just that is helpful to the bank. But in addition, you have the value of seeing not just your own transactions on the other side of your transactions, but the two sides of transactions of banks that represent $8 trillion of assets, and that is very, very well received. That's great. That's great. And how many more Tier 1 proof of concepts are ongoing? How deep is the pipeline with the Tier 1s? We think that the product can be helpful to any Tier 1s. The proof of concepts are our slow process, and we have several that are ongoing. But when you look at us delivering, we promised that we would have one Tier 1 in 2023. We had three, plus we had four Tier 2s, and so it is something which we believe we will be able to continue to do in terms of, like, the new ones. But the other very important piece about the generation of revenue once again, is the upsell. When you lend, you lend with a first product, and then you can expand. What we are addressing is $3 trillion of money laundering and $0.5 trillion of fraud in the system. There's plenty, and unfortunately, whether Tier 1, Tier 2, or small banks, everybody is affected. Yeah, that's, that's very true. Talk about the environment for your business. Can you talk to us about the listings backdrop? IPOs have slowed to a trickle over the past couple of years. When will we see some normalization? Yeah. So what you've seen is 2021 was a fantastic year, and since then, it has been, as you say, a trickle, better than a trickle. We've done the best in terms of like having a very strong win rate. So for the last five years, we've been at 74% win rate. So within that environment, we have control that we can control, which is our performance. We just put out an IPO Pulse, and that IPO Pulse is taking rates, market sentiment from investors, valuation, investor reception or performance of the deals that have happened, and other proprietary data that we have. And, and then if you backtest that, it's a predictor of IPO activity, and it is a very strong correlator to that. If you look at it today, that IPO Pulse is telling you that we are at the highest level since 2021. That doesn't mean that we are at the 2021 level at all, but it's the highest level since 2021. Cautiously optimistic, we think that there are a lot of elements that could provide the green shoots towards a restart of the IPO activity, which for us is part of the flywheel. Okay. So that takes me to: How do you anticipate a Fed pivot? Lower interest rates and higher equity issuance will impact your other businesses. Yeah. So now you're taking me back to my previous tagline. I love talking about the Fed and the pivots and rates. And so, when we don't think that anything happens next week, for example, but we think that there is a high probability that whether it's May or June, there is a restart of the Fed pivot. So if we see that, we think that they have a soft landing that is hopefully secured, but is most likely secured. And with that, that they need to shift between the inflation data and the rate data and not to create that gap. And so if this happens, that's one of the very important piece of the math in that IPO Pulse Index that is very conducive to the capital markets activity. And if we combine that with the ability to continue to have that strong win rate, for us, that is a tailwind, to our business. And what it does, too, is investor sentiment then translates into sales cycles. And we had talked about elevated, duration of the sales cycles. We talked about in the fourth quarter, the green shoots of it starting to be a bit better. We would continue to say that as of Investor Day and as of now, but don't think of it as a switch. Think of it as a slow wave, where you are starting to see a bit more activity, a bit more engagement that's not yet activity, and then you have a delay towards that. But we are optimistic that if we see that recovery in the capital market, it puts the engine into gears. That is helpful. Let's move on to technology. Now we have to talk about artificial intelligence, and that's a rule. I like them. How does AI play into Nasdaq's products? So one of the things that I love about Nasdaq is that it started AI seven years ago, not at last five minutes when they thought they had to. And at Verafin, it's 15 years ago, the company was created on the basis that the only way to fight this financial crime was to use data at scale in the cloud with AI. And so that premise is important to us, and we play it in two ways: in the products and on the business. On the business is whether it's the legal functions, interpretation of contracts that can go much faster with AI, whether it's in technology, writing code faster, et cetera. There are many, many applications, and everybody is doing that. In the product is where I think we have even more differentiation, which is that, it's something which we have started to invest so long ago, that at this point, we have the data, and especially the gold proprietary data that we have that is in place. And in place means usable, 'cause there is a difference between data and usable data in the context of AI. So once you have that, and we've been doing it. Obviously, seven years ago, it was algorithmic AI. But that enables you to be ready for Gen AI. Mm. And, in that, we are starting to have some very promising POCs, for example, for financial crime management. We have one that reduces the time of a reviewer of an alert that could be a fraud alert by 90%. Mm. 90% reduction is a very good ROI for the client. Yeah. So we're talking about the clients needing less people, and they have hundreds of people that are dealing with alerts. So when you can reduce that time by 90%, it's up to 90%, it depends on the use case, but that's very, very helpful. We also use AI in different ways. For example, we have in options, strike optimization. We have the first AI-powered order book, which is M-ELO, that has been approved by the SEC. So we really put it in the business, in the products. Across all of our products, we have a part of AI that's also in one of our sustainability-oriented products as part of CAP. So it's a bit everywhere, and it's also what I like about it as a CFO, is that it's not massive new investments because we have the strong foundation that we have, and so those are very strong returns. That's helpful. Nasdaq has a long-standing relationship with Amazon. Mm-hmm. How has that partnership helped you digest these new innovations? Yeah. So we're very proud to be a partner of Amazon, and it's across, of course, cloud, as well as many other dimensions. And what's also really interesting, we talked about that with Brian at Investor Day, is that we go beyond Amazon. We have partnerships with many of those amazing companies, whether it's NVIDIA, whether it's Microsoft, well, you can name them all. And we are an innovator and a disruptor, and when they need to have somebody that is ahead of the curve to test new technologies, to go fast, to do POCs, very often they turn to us. And so that brand that we have serves us very well because, in turn, it keeps us fresh and it keeps us innovative, and so we've been very fortunate to have the strength of those relationships. You've moved your second options market into the AWS- Yep ... cloud. When you look at the market share, revenues, and operating costs of these two exchanges relative to others... How much does this cloud capability move the needle? Yeah. So it moves the needles in different ways. The first thing is market share. So if you look at the MRX one, which has been there since late 2022, we've actually increased the market share by close to 2 times. So that's the first proof point. The second one is about cost. And so you're not gonna see tons of operating leverage yet in our system because we are continuing to invest. But every new cloud transition becomes more efficient than the previous one, and so over time, it does generate operating leverage. And then you have the cost of the messages. So the scale at which we operate is, like, incredible. Overall, for Nasdaq, we would have, like, 200 billion messages a day that we transmit. And that number has multiplied by four in the last five years. But the good news is that the cost of the messages has reduced by 80% in the last five years. And again, cloud has been a big part of that. And so, it's really important to do it across many dimensions. That's helpful. Switching gears to regulation. Mm-hmm. A couple of weeks ago, the SEC adopted a rule requiring all large publicly traded companies to disclose information on climate-related risks and emissions. You have a large ESG data business and relationships with thousands of issuers, and you now have a large regulatory reporting business. Is there an opportunity here? Yeah. So first of all, we're an advocate for our issuers, and we've played, we believe, a good role in making sure that we provide comments on some of those proposals. And in fact, what has been provided is a good reflection of the comments that we had provided, i.e., striking the balance between the transparency, which is important and needed, as well as what the corporates can deliver and can operationalize. And so we feel that we have a role in terms of advocacy, but we also have a role in terms of helping them to implement those rules that are coming and that we're intimately familiar with. So when we talk about Sustainability Lens or Metrio, it gives you insights into some of the data. And then on investment, we also have some additional pieces that look at ESG as opportunities. Index is also a place where it hasn't been a huge contributor yet, but it's an area that is growing in terms of, like, sustainability. And then even in Axiom itself, there is a module that is ESG related and which has sold several times, actually, in the last quarter alone. And what's nice is that if you're a Calypso, again, tied to that integration of data, if you have a Calypso product and you want to add it, it's just a matter of asking. And so, we seek growth. We have a $250 million sustainability revenue to be achieved by 2027, and we're progressing towards that, and we just reaffirmed this one. Great. The SEC has also been extremely busy rejiggering equity market structure, releasing a package of four rule proposals in late 2022. What has your dialogue with the SEC been like on these proposals? So we believe we have very constructive dialogue with the SEC. They view us as an important factor in the transparency and the efficiency of the capital market. And we also, of course, help on the integrity, as we discussed before. And so we provide comments on all of the proposals, and we feel that it has been a productive dialogue with the SEC. And what's also nice is that when there is change, it's change that happens over long periods of time, and the market structure has the time to adapt to those changes. That's helpful. We got a final rulemaking earlier this month on the first of the four proposals. Yep. When should we expect these other final rules to come down the pike? And do you think there's going to be a significant revisions versus the proposal? Yes. So in general, again, it's a fairly slow movement. The one that has come through was within our expectation and constructive. And when you look at the other ones, we feel that, again, this is a long time in the making, that we, we don't think there is anything that's imminent. And we will have time, not just for us, but as a market structure and with all of the financial participants to adapt. Hopefully. Thank you. You know what? We're down to one more question. Yeah. Let me just check to see if there's any questions out there, and then otherwise, we'll, we'll do our last one. Oh, wait one minute. Thank you. Thanks. You talked about how you guys are using AI in the products and in the business. Yeah. I was wondering if maybe you could touch on how, I guess, the perpetrators of financial crime are using AI. Like, are you seeing ChatGPT and other gen AI tools resulting in elevated financial crime? And then what does that mean for your opportunity set? That's a great question because absolutely, they are structured as companies, and they are very efficient, and they're using new technology, as much as everybody is. It puts the onus on the operators of the financial systems, including us, but including our clients, to use technology. So when you think about many years ago, when the perpetrators were slower moving, and when you didn't have real-time payments, you didn't have an obligation to use AI to combat them. But if you let them use those industrial strength tools, and you on your end, as a small community bank, use something that's fairly basic, you will not win that race. And so what we do is we provide in a solution that is extremely easy to implement. Like, when we do that, with a small bank, it's a month or two of implementation. It's turnkey, and it doesn't matter which, core banking operating system you use, we can see your data. And we don't need to do a conversion of your data. We can just see it, in a trusted way, and then we can deliver, that tool and those insights to you, that are matching the pace, of the perpetrators. And so it used to be that you may have had a choice, but the reason why we are saying last year we added 237 clients, it's a lot of clients, that are coming to that realization, and there are still thousands of banks that don't have, the benefit of Verafin’s products, and that should and will. Thank you. So bringing us to a close with another look toward the future as you bring together the capabilities of Nasdaq with AxiomSL and Calypso. What opportunities get you most excited over the medium term? So when you think about where we are, we used to be a very trusted provider, but we didn't have the full scope and scale across all of the different solutions that would make us a vendor of choice for financial institution. And what the acquisition of Calypso and AxiomSL is it positions us for both very large bank and smaller bank as having the critical mass to become a structural partner, a vendor of choice. And that's a big step to go from point solution to vendor of choice, and that's what gives us the ability to do the cross-sell. We have people who want to do more with us, who view us as trusted, and trusting a partner with your data is kinda like the biggest sign of trust - Yeah. -that you can give when you are a financial institution. And so we've got that, but we can leverage it across different solutions, which is why we're getting ourself organized, for this $100 million plus of cross sell by 2027. I think that's very exciting, not just in terms of the number, but in terms of the opportunity that it represents for our ability, to really be the trusted fabric of the financial system. It makes a lot of sense. That sounds great. Thank you so much, Sarah, for joining us. We really appreciate this conversation. Thank you. I really appreciate it, too.