All right, everyone. Welcome back to the 2025 Piper Sandler Global Exchange and Trading Conference. I'm Patrick Moley, Senior Research Analyst covering the exchanges, brokers, and trading companies. Our next guest, we're joined by Nasdaq's Chair and CEO, Adena Friedman. Nasdaq is a global exchange operator and financial technology company that services a broad range of financial market participants. Adena has been CEO of Nasdaq for, I think, almost ten years now. Eight and a half. Eight and a half. Okay, eight and a half. Since you've taken over, Nasdaq's undergone a pretty significant strategic pivot toward more of a financial technology firm. We do appreciate you continuing to take part in the exchange conference. We've seen a lot of volatility in the first half of the year. People were pretty optimistic, I think, coming in that we would see a reopening of the capital markets in the IPO window. From the beginning of the year to now, how has your conversations with clients been and how does the IPO pipeline look? Does it seem like things are opening up? I mean, certainly it has been a different start to the year than I think people are envisioning when we were going through it. It has—it's interesting. First of all, the underpinning of the U.S. economy continues to show strength. I think that's what—and resilience, which I think has helped because as we've been managing through a lot of changes in the overall environment, we're able to show that the data is still coming out to show that the economy is working. People are continuing to put capital to work. Companies are putting capital to work. They're investing. The capital markets have gone through a lot of volatility, but that's also starting to kind of moderate so that there's a little bit more of an opportunity probably for the IPO window to really open up. You're starting to see companies go out, do well. I think that's going to hopefully create some momentum. Lots of very, very constructive conversations with companies wanting to come out into the public markets ready. They've been getting themselves ready in some cases for a couple of years. A lot of pent-up supply. I also feel like investors are realizing that this is an environment that's going to be relatively persistent. Let's start to blend capital and figure out where we want to put our dollars. Therefore, the companies that are getting out are doing pretty well. We're optimistic that we could see more activity as we go through the summer and into the second half of the year. Any specific sectors where you're seeing the most engagement? You're certainly seeing it in anything related to AI technology, the financial services, right? So fintech has been an interesting space. We have—I know that Chime's out in doing their marketing now. And then also anything I would say in the digital space because you have to think about what's going to—how are investors going to be able to evaluate companies in different sectors? In sectors that are more impacted by the potential of the tariff environment, it's going to be harder for investors to predict the future of those companies. I think those companies are taking a little bit more of a wait-and-see approach, whereas companies that are in the digital economy that are less affected or are really kind of more domestically oriented, those companies are finding that the investors are more ready to put risk capital to work. Those are the types of companies that are coming out. In terms of the sales cycle earlier this year, you'd indicated that you were seeing some delays in customer decision-making as a result of some of the tariff uncertainty. At the time, I think you said that these were idiosyncratic. How has that sales cycle kind of evolved throughout all the tariff volatility that we've seen? Are you seeing that improve at all? Yeah. First of all, you're right that it was very specific to certain conversations, particularly within the U.S. and within one of our product areas that I think that we saw as some conversations were just like, well, let's understand what's happening around us a little bit more before we continue. Those conversations have normalized. I would say that the overall demand orientation around our financial technology solutions is quite strong. It's very healthy. There are conversations all over the world, and our teams are very busy engaging with our clients on making sure that they're choosing us and that we're moving forward with all those product implementations. It feels like quite a healthy environment. I would say that we feel that we're really well positioned competitively with our products to be able to continue to drive the business forward very successfully. At Investor Day last year, and you talk about on the calls, but this idea of the One Nasdaq strategy and bringing your products to business or to customers across the three business lines, how has this strategy been working out for you? The target that you laid out of $100 million in cross-selling opportunities by the end of 2027, how have you progressed toward that goal? Yeah. I think we're progressing as we would expect. It's still early days. The first thing is we had to get our teams working together. The second thing is we had to get our client data in a state where we could really track that, but not only track it, but also find where the opportunities are and make sure we're engaging our clients in a holistic way. The third thing is, of course, culturally, we want to make sure we're aligning incentives and behaviors and everything to gear towards being able to achieve that target. I would say we're very much on track along all three of those areas, as well as the fact that our clients are excited to work with us on more. When we go out with Tal or I or Valerie, we go out and talk to our clients, their first inclination is, well, what more can you do for us? Oh, I did not know that you had that. Let's talk more about that. Really opening the doors across the banks is something that I think we are getting better and better at. Right now, I think, as we have mentioned on the second quarter—no, the first quarter call, sorry—on the first quarter call, about 15% of our fintech pipeline is in cross-sales. As long as we are able to close deals that are consistent with our pipeline, we feel very good about that $100 million target just in terms of kind of the trajectory of sales going forward. I think did that jump from 10 to 15 in the first quarter? Yeah. It's going to ebb and flow. I don't want people to think it's going to be a constant 15 or a constant 10 because obviously when we close a deal, that comes out of the pipeline. You have to replenish the pipeline, so that's going to ebb and flow a bit. I don't want people to overread it. The general tenor of it being in the 10% range, that's a good place for us to be. You mentioned that you were finding it easier to—or you're engaging banks and seeing that they have a need for more products. Any specific anecdotes that you can give on what those opportunities might be and where you're seeing the most traction? Yeah. I mean, I do actually think we have strong demand in every vector of our product suite. That is exciting. If we look at the fact that surveillance, we've had some new regulations come out. We've also just—we've actually been able to move more into the crypto space there as well as in the investment management space around our surveillance solutions. The demand there is very good. Market modernization continues to be a broad-based theme across markets. You're seeing us—hopefully you're seeing that we're doing really well in signing new contracts for our next-gen solution, which we have finally named Nasdaq Eclipse. That is Eclipse Trading, Eclipse Clearing, Eclipse Settlement. We're very excited about a lot of new signings there and our work to continue to modernize markets as well as with our partnership with AWS on their infrastructure. With Calypso, it's just people are wanting to make sure that they're modernizing their capabilities around risk management, they're standardizing them across the world and across asset classes. We continue to build out new capabilities there. Also, we're doing some really cool things in terms of bringing more AI capabilities into the risk management side that I think will continue to really accrue to our benefit and demand. Axiom SL is just a constant demand driver around changes in regulation. The ability for bank is moving down, is moving across, but also banks are growing. They're looking at new ways to grow. That means that they have to deal with new regulators. Lastly, of course, in our anti-financial crime suite, it is just an incredible demand driver for anti-financial crime technology. Our solution is very differentiated. We're proving that out. We're doing really well within the SMB space. That's the small to medium banks. Really well as we continue to move up market. We're just starting to move into Europe and getting some POCs running. Very early days there. We've talked a lot today with other folks about market modernization, whether it's 24/7 trading, whether it's tokenization. It seems like there's a lot that's building. There are going to be new challenges and things that people need to manage in terms of the risks. It seems like this would present a big opportunity for you, whether it's in surveillance and things like that. Crypto specifically and tokenization is one. How do you view those two or that pocket of the market? What role do you think Nasdaq plays there going forward? What opportunities does it open up for you? Yeah. I mean, first of all, I think that the regulatory environment around crypto exchanges in the United States is continuing to be formed. We want to make sure we understand what that landscape looks like as we consider our role specifically in that space in the United States. As a market technology provider, we're already providing trading and clearing technology to crypto markets. Surveillance technology, we're definitely seeing that's definitely a growth lane for us. We also are thinking about it in terms of the more that cryptocurrencies become bankable and therefore they go into the banking system, and the more that stablecoin actually becomes normalized, like that stablecoin legislation, other things come, taking out the friction. There's a lot of opportunity to take friction out of the financial system just through the technology that underpins it. The tokenization, as you said, of the industry. One example is the flow of collateral and how we can help facilitate and hopefully break down friction in the flow of collateral globally because we are the number one collateral management solution for the industry through our Calypso platform. If we can help them then manage that collateral in a more modern way, leveraging stablecoin and other tokenized technology, we're pretty excited about how we can use our technology assets to bring it forward. Of course, we list ETFs and we're very excited to be the home of IBIT and other crypto ETFs. We will have to look at what are the other opportunities in front of us as the regulatory environment becomes more clear. Shifting gears, the index business has continued to impress. I think revenues have surprised to the upside for the last five quarters. Can you walk us through the strength that you've seen here and what you feel like is driving the outperformance? I think we do a pretty good job of providing, first, just overall transparency into the index business, but also this alpha beta split that we're now disclosing to our investors that Sarah introduced, I think is really helpful to say, well, what's really our effort that we're driving forward? Where do the markets play a role? What we're seeing is just a really healthy alpha generation within the index business with a good beta drop backdrop. We have, of course, the flagship product with the Nasdaq- 100, which historically has been really a retail product. What we're now working on is how do we get that more into the institutional ecosystem? We're starting to, we're announcing kind of we're launching new products, new capabilities around that. We have a sales team. We have a strategy. That's one of the vectors of growth. The second is continuing to create new products and broaden and diversify our suite. We've talked about the fact that even, I think, through the first quarter, we'd already created, I don't want to say the wrong number, but I think it was 30 new products or 33 new products in the year. We also mentioned that over the last 12 months, like 50% of the inflows were in non-Nasdaq- 100 products. We are really showing that there's really exciting new products that we're bringing to market. The third is globalizing the business. We've definitely been much more intentional about using One Nasdaq to open doors around the world and make sure we're really bringing those indexes around the world. All three of those lanes are really good growth drivers, driving alpha with a good beta drop backdrop for the most part. Obviously, a little more volatility as we go through the year, but overall a good backdrop. We've talked to a few people today as well about 24/7 trading. Earlier this year, you announced that you would look to enable 24-hour trading in Nasdaq markets. I think the target you set was the second half or sometime in 2026. What's driving the demand from your perspective for around-the-clock trading? What are some of the biggest hurdles, whether it's market structure or regulatory, that need to be crossed for us to really see that proliferate? Yeah. So I think first we're focused first on 24/5. It could be that, and we're engaging very much with the industry and with the industry infrastructure to say what's the right paradigm. It could end up being 23/5 at first just to accommodate certain things. I would say let's just call it 24/5. There is retail demand around the world to trade, in particular, Nasdaq stocks. We've seen ATSs kind of pop up to facilitate that demand. I think the concern we've always had is that the guardrails that really protect investors during the market day in the U.S. do not exist after hours. I like to call them non-U.S. hours. In non-U.S. hours, between after 4:00 P.M. and before 9:30 A.M., we don't have any volatility guards. We do not have all of the things that really kind of make it so that we have the same level of rigor and resilience that is built into the market infrastructure during the regular U.S. hours. If we are going to put our brand and we are going to bring our markets and bring an exchange into the non-U.S. hours, we want to do it right. We said, okay, let's do it right. Let's give ourselves the time to do it right. That means having a consolidated tape that facilitates those hours. The SIP committees have approved that. That was a big step to get the SIP committees to approve having 24/5 distribution of data. We now have to build that, which we know how to do, but we have to do the work. The second is making sure that from a clearing and settlement perspective, that DTCC can accommodate this kind of trading activity so that we have kind of a seamless capability. The third thing is we just have to make sure we accommodate our own systems. We build those solutions for others. So we know exactly what we need to do. We just need to make sure we're building out the capability to accommodate it. We will not put that, though, in our core match. We'll have a second matching engine to support the non-U.S. hours. The last thing is just regulatory approvals, which I actually do not see as a gating issue. We could be up and running in a year, but it could take us longer. We wanted to give ourselves kind of the second half of 2026 to say, let's get the whole industry ready. The last thing that we really want to make sure, though, is that we're bringing the industry with us, including the listed companies. This is their stock. Their stock is going to be trading. I think what accommodates the fact that they're saying, well, it's already trading. Let's make it trade better. Let's put the resilience and everything in place to make it work. How do we manage corporate actions? How do we make sure that this really does work? We want to take the time to engage the industry on that. That's what we're spending a lot of our time on. Shifting gears, I think you issued a press release a week or two ago about some of the legislative changes that occurred in the state of Texas. What are your thoughts on Texas emerging as a capital markets hub more and more? You announced an initiative to launch a regional headquarters in Dallas. I know that you've had a big presence in the state in the past, but what do you see? What's going on down there now? What do you kind of view as the opportunity in Texas going forward? Yeah. I mean, I think we have to look at, first of all, the Texas economy is a really big economy. We have 900 clients in Texas. Now, that includes about a little over 200 listed clients and then hundreds of other clients that use other solutions we have to offer, including anti-financial crime. There are a lot of banks in Texas. Our IR solutions, we serve a lot of non-Nasdaq listed companies with investor relations and governance and other things. We have a big presence there. The second thing is that it is a very pro-business environment in Texas. More and more companies are moving headquarters or establishing themselves in Texas. It is a growth area for us. We want to make sure that we are in the state, engaged in the state, engaged with our clients very completely. I think the third thing is, as you said, that the governor has a very concerted effort to create a capital markets hub in Texas, which we think is great. Just more opportunity for us to have great capital markets in the United States. What we talk to our clients about, though, is let's make sure we have a really strong presence in Texas. We're there for our clients to serve them, but they then connect into a global market with a global investor base and all of the benefits that we provide our listed companies, which are numerous. We make huge investments in that area to serve our clients. It is an exciting time. I also, Texas is leading the way on thinking about certain corporate reforms that are so necessary for this country. Some of them they can do within the state. Some of them we have to advocate in Washington. We've launched an entire blueprint of what needs to change in the regulatory environment in the United States to make the corporate experience less onerous and more constructive to be a public company. A lot of those are very consistent with what the Texas legislator is trying to achieve. We have been encouraging them, working with them to make sure that our messages that we're sending down to Washington are also resonating in the state of Texas. It is an exciting time. Yeah. So we were up here with Lynn Martin earlier, and she said that there was some demand from customers that were looking to dual list. Do you know when you'll have more of a presence down there? I think you've announced that you're going to open up a regional headquarters. Was there anything being done right now and any timeline you can give us as to when? We have to, that's up to the property management teams. We have some work to do there. We have a team established there. We have a real presence there already. We want to make sure we're building out that presence in a really meaningful and thoughtful way. We're working with our teams to make sure that. We don't have specific dates, but it's very much in motion. Sure. All right. Very good. M&A has been a big topic of conversation this year for Nasdaq. I think it was overblown, and you were pretty adamant on the call that you're not looking to do anything in the short term. I think that there is a cohort of investors out there that feel like your strategy longer term is that within the next few years, you could look to do a larger scale deal. What would you say to those folks that kind of think that you're destined to do a larger deal in the next few years? I would say, first of all, we have an incredible organic growth path in front of us. We have to really make sure that we optimize for that outcome. It's a hugely high return activity for us to grow organically. We have three really nice lanes of organic growth across our platform. Let's make sure we execute really well. The second thing is we are continuing to de-lever. We want to make sure we're also over time buying back stock to make sure that we deliver on what Adenza was intended to deliver on. We feel great about our execution on the Adenza transaction, but let's make sure that we execute completely for our shareholders across that. That is what we're focused on. Now, we've always said that could there be some really small bolt-ons potentially, but right now, honestly, that organic journey is pretty awesome. That's really where we're spending our time, our energy, our focus, and conversations. That's where we are and where we're going to take the company right now. All right. Great. You spoke on it a little bit earlier, and I know we talked about it last year, but artificial intelligence. When do you expect, or what areas, I guess, of artificial intelligence are you implementing today, whether it's on the product side or internally? When do you expect to generate returns from these investments? Can it be supportive of further margin expansion for Nasdaq in the future? Yeah. We talk about AI in two vectors. One is AI in the product and then AI on the business. Definitely the easier part of that is the AI in the product because we have incredible engineers. We've modernized our products. Our products, for the most part, have really good modern data underpinnings. It's fun. All the development organizations are, we've built AI capabilities into all of our product roadmaps. That's really moving along really nicely. We've already launched out a lot of AI capabilities, like in anti-financial crime. We're launching similar capabilities in surveillance on the workflow automation. Obviously, anti-financial crime has a huge amount of AI on the detection side too. We also have it in, as I mentioned, with Calypso, with the XVA Accelerator in our markets, with Dynamic M-ELO, in Boardvantage. Super cool stuff happening there. We have a lot going on. AI on the business, harder. That is change management. That is changing how you deliver product or develop and deliver product, how you deliver service to your clients, how you think creatively around marketing and other things. We have gone through a journey of maturing our organization to be ready to deploy that at scale and really managing through the change. We are starting to see the effects of that. The first year was just making sure everyone understood the technology, put it into people's hands, and get them using it. The second year was, let's do, we did six hackathons across hundreds and hundreds. I think actually probably over 1,000 of our employees engaged in hackathons to show where we could use this technology to drive efficiency in the business. That was the entire purpose of all of the hackathons. Low code, no code, high code. It was super fun. It also showcased where there are pockets of efficiency that can be delivered. Now we're saying, okay, now let's scale this and let's actually drive it across the business and deliver impact. We call this, this is the first year of impact. That is part of the expansion of our efficiency program because we saw and we know that we can deliver impact. That's in product development. That's in client success, marketing, other places. One of the things that I keep telling our team is we are a growth business. If we can actually change the way we develop product and deliver product in a way that delivers more capabilities per sprint, higher code quality per sprint, then we can go faster and we can deliver more capabilities to our clients. Therefore, we can grow faster. That is the way that we are approaching it. I think that is keeping people engaged in a really constructive way. I am excited about it, but it is just the beginning. Yes, I do think over time there is margin expansion opportunity. We covered a lot of ground today. I think we have time for one more, actually. What do you think the biggest storylines are going to be over the next five, 10 years in the exchange business? Is it going to be AI? Is it going to be tokenization, 24/7 trading, 24/5 trading? What are you kind of focused on? There's so many things to choose from. There's so many things, really. I mean, we actually are engaged on all of those. When we go through our strategic framework and we talk about the future of our business, we talk, I would say most on AI and tokenization as two major modernization trends that we want to make sure that we're staying in front of, we're engaged in, but also with our risk profile. We are a hyper-resilient business. We are critical infrastructure to the U.S. economy, the Nordic economy. We provide critical infrastructure to economies all over the world. We can be an innovator, and we will be an innovator across whether it's tokenization or AI. I personally think AI is a global mega trend, is the biggest global mega trend that this world has seen and will see for quite some time. Of course, in our business and in the financial industry, the broadening out of tokenization into the traditional finance world is exciting and very interesting. Okay. All right. Great. That about does it. Thank you so much for joining us, Adena. It's been great. Great. Thank you very much.