Ladies and gentlemen, thank you for standing by and welcome to the Nasdaq Second Quarter 2020 Results. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Ed Ditmire, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining us today to discuss Nasdaq's second quarter 2020 financial results. On the line are Adena Friedman, our CEO; Michael Ptasznik, our CFO; John Zecca, our Chief Legal and Regulatory Officer; and other members of the management team. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material, non-public information and complying with disclosure obligations under SEC Regulation FD. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I will now turn over the call to Adena.

Thank you, Ed. Good morning, everyone. And thank you for joining us. I would like to begin by acknowledging how deeply proud I am of the Nasdaq team's continued commitment to our clients and the communities in which we live during these last few months. With the second quarter being our first full period with a vast majority of our global workforce working remotely, I could not be more proud of the results that we have delivered for our stakeholders amid what is still a very unprecedented time. The executive leadership team and I are acutely aware that our colleagues, clients and so many of our stakeholders are tackling work, family and health responsibilities simultaneously. We are in the fortunate position that our business can operate in a remote working environment globally. And we've remained highly productive and available to our clients throughout this period. That said, we also recognize that some of our team members prefer the opportunity to work in an office environment. And over the long-term, we believe that there are social and creativity benefits that come from working together physically. Therefore, we are working to reopen our offices in a deliberate way as the virus subsides to specific cities and countries where we operate. We are taking a very measured approach to the reopening of our offices that prioritizes our employees’ health and safety. In that regard, we will continue to make it completely voluntary until at least year-end 2020 for our employees to choose to return to our offices. The second quarter was marked not only by the deepening impact of the global health crisis, but by the escalation and recognition of the social injustices across many communities around us. We are committed to creating lasting, positive change and I'll highlight two examples. Last month, we announced immediate actions to strengthen our continued commitment to diversity and inclusion. In addition to our $5 million first quarter pledge to COVID-19 relief, in the second quarter we pledged an additional $3 million in cash donations to organizations serving underserved minority communities and fighting the impacts of the health crisis. In addition, as we look at Nasdaq’s broader purpose in the communities where we operate, particularly as a proponent of inclusive growth and prosperity, we see the Nasdaq Foundation as a core component of our societal mission. As a result, in addition to committing to an annual contribution to the Foundation of approximately one quarter of a percent of our operating profit starting in 2021, we made a one-time capital injection in Q2 of this year of $10 million to improve the funded position of the Foundation and to support its refined mission. We will update the market as we announce specific campaigns designed to support our Foundation's objectives. There's also a lot of momentum inside of Nasdaq to improve and accelerate our efforts to advance our culture. Therefore, we're increasing our internal resources devoted to programs focused on diversity-oriented professional development, employee experience and talent acquisition. Our ultimate ambition is for the Nasdaq team to reflect the diversity of the populations of each of the countries where we operate, and to provide a performance-driven culture that demonstrates respect and belonging for all of our employees. We are fully committed to taking the necessary steps in the months and years ahead to achieve this ambition. This starts with publishing our diversity statistics from countries where we are permitted to collect that data, which we will start to do by the end of the third quarter. These will serve as an honest assessment of where we are and how far we need to progress. Nasdaq has always had a strong commitment to all three elements of ESG, environmental, social and governance practices. We believe our societal efforts will further enhance our position as a leader that is continuously striving to improve. Now I will turn to our strong financial results for the second quarter of 2020. Nasdaq delivered net revenues of $699 million, an increase of $76 million, or 12% from the prior year period, driven almost entirely by organic growth. I'm incredibly proud to report that once again each of our four business segments delivered positive organic growth during the quarter, a testament to the resiliency of our business and the dedication of the Nasdaq team under the new remote working environment. Net revenues in our Market Services business grew 22% while revenues in our non-trading segments grew 7% from the prior period. On an organic basis, revenues across the non-trading segments increased 6% year-over-year, with growth from acquisitions contributing 1% to total growth. Operating leverage was particularly strong as expenses were up slightly during the period resulting in the non-GAAP operating margin expanding nearly 500 basis points to 53% and contributing to non-GAAP EPS growth of 26%. Turning now to the specific highlights from the second quarter, I will also briefly address the evolving industry and client dynamics we're observing and how we see these influencing our performance for the remainder of 2020. I will begin with our foundational marketplace businesses. Our Market Services segment saw net revenues of $276 million, a 22% increase from the prior year period. This was led by higher cash equity trading and equity derivatives revenue amidst the continued surge in volumes for cash equities and equity linked derivatives. These elevated volumes were driven not only by evolving expectations around the pandemic’s implications, but by the way the pandemic seems to be accelerating certain long-term dynamics that have spurred significant sector rotations in the market. We said last quarter that the volume outlooks set up constructively due to both this pandemic's uncertainties and the fact that 2020 finishes with the U.S. presidential elections. A quarter later, we increasingly expect that the current economic and political backdrop will continue to support elevated volumes during the latter half of the year. Our Corporate Services segment delivered revenues of $126 million, a 2% increase, boosted by a return in new listing activity and continued demand for our Investor Relations intelligence solutions, as well as higher revenues from corporate governance solutions. After returning to organic growth in 2019, our IR and governance businesses saw an acceleration in the first half of this year driving 8% organic growth in Corporate Solutions in the second quarter, excluding a 2% impact due to unfavorable changes in foreign exchange rates. Our IR advisory services including our relatively new ESG advisory solution were top contributors in the period. We believe the restructured and repositioned Corporate Solutions product suite has a much stronger alignment with the secular trends that are driving our corporate clients’ interactions with their investing community, and other stakeholders. That said, we did experience reduced demand from corporate clients in sectors that are highly impacted by the effects of the pandemic, such as travel, retail, energy and financials where focus on expense control has become a priority. Additionally, prospect engagement in a volatile environment has created longer sales cycles for some of our corporate services. Recognizing that these impacts could change quarter-to-quarter, we have endeavored to provide our clients with near term savings opportunities within the context of what are meant to be continued and eventually rebounding long-term relationships. In our Listing segment, Nasdaq led U.S. exchanges for IPOs during the period welcoming 42 IPOs for a 67% win rate. For the first six months of 2020, we welcomed 69 IPOs, representing 69% of all US-IPOs. Our IPOs have raised $17.4 billion, which represents 66% of total IPO capital raised in the United States. Excluding SPAC, we have welcomed 55 operating company IPOs for an 85% win rate in the first half of the year. Listing highlights from the second quarter include three of the top four largest IPOs by capital raise, including Royalty Pharma, the largest U.S. IPO of 2020 to date; Warner Music Group; and ZoomInfo, the largest technology IPO of the year. Notable SPAC listings during the period included DraftKings and Nikola Motor Company. The reopening of the IPO window is very encouraging. We have seen a steady inflow of listings from technology and healthcare, industries illustrative of the kinds of companies innovating to solve some of society's most pressing challenges, which are finding a very receptive audience with investors. Companies are also responding positively to Nasdaq’s virtual experience during IPOs reflected in our market-leading win rate. Feedback from newly listed companies and also importantly from the investment banking and underwriting communities have been tremendous. Our partners appreciate the seamless manner in which we transitioned our IPO first trade process once we changed our operation to a remote environment in March. Looking ahead to the second half of the year, we see a very healthy pipeline of companies looking to tap public markets with many intending to execute again ahead of the November U.S. presidential election. Now let me turn to our technology and analytics businesses. Our Market Technology segment delivered $84 million in revenue and signed $38 million in new order intake. Our annualized recurring revenue in the quarter was $268 million, a 9% increase year-over-year. New order intake overall was moderate during the period as client decision-making around large-scale technology projects has slowed during the pandemic. Looking within the product offerings, we note that we had strong new order intake in Nasdaq trade surveillance, a SaaS offering focused on our broker-dealer clients. We signed 5 new marketplace technology customers, all of which were signed after a virtual sales process and all of whom selected our SaaS delivered market technology solutions. We were also excited to announce during the second quarter the launch of Nasdaq’s Marketplace Services platform to provide our market technology clients with seamless access to standard cloud-based infrastructure components and full trade lifecycle capabilities as they move to the next phase of their digitalization. This service was announced alongside the signing of our first client LEX Markets, which will leverage our cloud masking services to power their trading platform for commercial real estate securities. There is heightened interest in the ways that our next-generation technology, particularly the SaaS capabilities that we have built into both market infrastructure and surveillance products, can help our clients deal with heightened scalability and flexibility challenges that the pandemic brings. These examples also highlight how we've made significant strides in adapting the ways that our technologists are performing in a more remote work environment. Still, implementation projects, new order intake levels and funding for new market initiatives have been modestly impacted by pandemic-related factors. We continue to expect to see the short-term mostly logistical growth headwinds that increase the risk of the market technology being below the bottom of our medium-term growth objectives for the current year. Turning to our Information Services segment, we delivered net revenues of $213 million, up $19 million or 10% from the prior year period. Index AUM rose to $272 billion at the end of the period, up 34% versus the prior year, and eclipsing a previous quarter-end high of $233 billion in the fourth quarter of 2019. Index revenue was $68 million, up 24% year-over-year, with contributions driven primarily by the increase in ETP licensed product AUM and secondarily from fees generated from trading of licensed futures. We're incredibly pleased with the strength and resilience of our flagship index products during the quarter. We believe that the Nasdaq Composite and the NASDAQ-100 performance reflects investor interest in the companies that are supporting the modern infrastructure for tomorrow's economy, workforce and workplace. Year-to-date, AUM in all ETPs licensed to Nasdaq’s indices are up over $40 billion and almost 26% of that increase or $26 billion, came from net investor inflows to the products, with the remainder from market performance during the year. While this segment is sensitive to what can be reversals in exogenous market beta and futures volume trends, there's no ignoring that the second quarter’s positive results put us in a better position for full year performance. Our Investment Data & Analytics revenues increased 13% from the prior year period, including the contribution of Solovis which we acquired in March. While 2020 organic growth of eVestment is seeing some impact from budget tightening on the part of the buy side, the addition of Solovis’ real-time performance and risk modeling gives us more opportunities to catalyze allocation decisions on the part of asset owners, decisions that in turn encourage higher usage of eVestment's leading asset manager research and selection tools. Revenue in Market Data saw modest organic growth during the period and continues to deliver consistent results. We've seen relatively stable performance and expectations in our Market Data products. And finally, for the third consecutive quarter, the majority of our revenues in the Information Services business came from index licensing and investment in analytics products that are a direct result of focusing our investments into expanding our capabilities in higher growth areas within Information Services. So, after reviewing each business, collectively, what does this mean from our investors’ perspective? Overall, we continue to benefit from a business model that delivers well during challenging times, due to the resilient and diversified nature of our business. With our diversity of offerings and customers, we benefit from certain segments bolstering our results when others face some short-term pressures. That has been the story of Nasdaq for many years now, and overall it provides for more stability and predictability than many of our direct peers. We continue to see 2020 as an elevated risk environment related to the pandemic’s implications, and related changes to client purchasing behaviors could continue to build in some portions of the business as the year progresses. But we also recognize that the strong performance for our index business and the rebound in demand for IPOs has us feeling directionally more optimistic than we were three months ago. On the last quarter call, we referenced our long-term outlook of 5% to 7% annualized growth in our non-trading businesses. As we experienced the early days of the pandemic’s impact on the economy, we communicated that we saw risks in our ability to achieve the lower end of that growth range in 2020. Given the strength of our second quarter performance, we believe that the risks have moderated somewhat. Therefore, unless there's a sharp reversal in the current environment, our confidence has increased in our ability to achieve the lower end of our 5% to 7% organic revenue growth range collectively across our non-trading businesses for the full year of 2020. We will continue to provide updates on our growth progress as we address our third quarter results in October. In addition to the strong results from our businesses this quarter, we also saw positive developments on the regulatory front in the period. In June, the D.C. Circuit Court of Appeals ruled decisively against the SEC on two issues that were very important to us. First, the court’s rule that the SEC exceeded its legal authority by creating a process to review fees long after they had taken effect. The rule vacated or invalidated the SEC’s actions in October 2018, when it overturned the ruling of its own administrative law judge that proprietary data prices were properly regulated and constrained by competition and mandated the review of hundreds of other fees. Second, the court’s rule that the SEC’s excess fee pilot was unauthorized because the SEC lacks the authority to adopt rules and impose obligations if their sole purpose is to gather data. For the commission to regulate, it must identify a problem and justify its proposed solutions with sufficient economic analysis of the cost, benefits and possible alternatives. The pilot would have subjected thousands of U.S. issuers to a multi-year experiment to determine what might happen if liquidity-incenting rebates and exchanges were restricted or eliminated. We continue to believe that the U.S. stock markets are the envy of the world delivering unmatched liquidity and resiliency at extremely low cost in a highly competitive environment. We hope that as the SEC moves forward in its efforts to find ways to improve the markets, they do so with the utmost thoughtfulness to ensure that reforms fully deliver benefits across a wide range of issuers, intermediaries and investors that depend on them. Going forward, we urge the SEC to adopt a more inclusive approach to developing consensus around rule proposals and significant rule changes, particularly when those changes are wide-ranging and carry a significant risk of unintended consequences. As we look to the second half of 2020 and beyond, we now know that we will be navigating a world and economy characterized by the pandemic’s effects for longer than we were expecting. We've also learned important lessons during this period that bolsters our confidence in our longer-term strategy to maximize opportunities as a leading technology and analytics provider while maintaining our foundational marketplace-focused businesses. Importantly, we observed several key trends that underscore the flexibility of our strategic ambitions to serve markets everywhere. For example, we're now able to reach a new set of clients and finalize deals in our Market Technology business using our SaaS-based solutions, which provide more turnkey and scalable market capabilities for our clients in a fast-changing economic environment. While our index business will always be subject to cyclical beta-related impacts due to the nature of its revenue model, we have seen a new appreciation for the thematic approaches that characterize the majority of Nasdaq's index franchise. And of course, we have the good fortune to be in the right thematic areas for a world that is changing in ways that make technology and healthcare more important to everyone's lives than ever. Additionally, our institutional investor clients are increasingly turning to data-driven decision-making in a volatile and unpredictable environment, which underscores the value of our data analytics offering. And lastly, over recent years, there's been a growing urgency among companies globally to make a positive contribution to the environment and to focus on governance practices. This year, the focus on the pandemic and its impact on our society and in particular on our underserved communities, has elevated a commitment from the private sector to key areas of social responsibility as well. As a result, we're starting to be rewarded for our efforts to expand our offerings, addressing corporate issuers and other clients’ rising ESG needs. As I wrap up, I will summarize by saying that Nasdaq remains sharply focused on advancing our strategic mission. Our global team has demonstrated their seamless adjustment to the remote nature of our current operating environment. And our team's ability to deliver uninterrupted service to our clients has been demonstrated in our strong results this past quarter. And with that, I'll turn it over to Michael to review the financial details.

Thank you, Adena. And good morning, everyone. My commentary will be primarily focused on our non-GAAP results and all comparisons will be to the prior year period, unless otherwise noted. Reconciliations of U.S. GAAP to non-GAAP results can be found in our press release, as well as any file located in the financial section of our Investor Relations website at ir.nasdaq.com. I will start by reviewing second quarter revenue performance as shown on Page 3 of the presentation and organic revenue growth on pages 4 and 14. The $76 million increase in reported net revenue of $699 million is a net result of organic growth of $75 million including a 22% organic increase in Market Services and 6% organic growth in the non-trading segments, a $3 million positive impact from acquisitions, and a $2 million unfavorable impact from changes in foreign exchange rates. I will now review quarterly highlights within each of the reporting segments. I will start with Information Services, which as reflected on pages 5 and 14 saw a $19 million or 10% increase in revenue. Organic revenue growth during the period was 9%, primarily reflecting very strong growth in our index business and then smaller but positive contributions from each of the Investment Data & Analytics and Market Data businesses. Operating margin of 62% declined about 1 point compared to the prior year period, primarily due to the inclusion of Solovis. Market Technology revenue, as shown on pages 6 and 14, increased $5 million, or 6%, with organic growth of $4 million, or 5%. Organic growth during the period primarily reflects an increase in Software-as-a-Service surveillance revenues. As Adena noted, annualized recurring revenue or ARR rose 9% compared to the prior year period. Operating margin of 18% was up 8 points from 10% in the prior year period, and year-to-date margin of 14% for the segment is up 4 points. Turning to Corporate Services on pages 7 and 14, revenues increased $3 million or 2%. Organic revenue growth was 3% or $4 million, reflecting an increase in U.S. Listings revenues and increases in both IR intelligence revenues and governance solutions revenues. This was partially offset by lower event related revenues at the Nasdaq MarketSite and lower Nasdaq Private Market program activity, both mainly due to the business impact of COVID-19. The operating margin of 39% for the segment was up 3 points from the prior period. Market Services net revenues on pages 8 and 14 saw a $49 million or 22% increase. Excluding the negative $1 million impact from unfavorable changes in foreign exchange, the organic revenue increase of $50 million, also 22%. The organic increase driven in the period primarily reflects increases in cash equities and equities derivatives net revenues due to higher industry trading volumes. The operating margin of 64% for the segment remains elevated due to the high volume environment. Turning to pages 9 and 14 to review expenses, non-GAAP operating expenses were $327 million in the second quarter of 2020, an increase of $5 million or 2% compared to the second quarter of 2019. This reflects a $7 million increase from the impact of acquisitions, as well as higher compensation expense, infrastructure costs and depreciation expense, partially offset by lower corporate travel expenses, event spending and changes in foreign exchange rates. Turning to Slide 10, we are taking our 2020 non-GAAP operating expense guidance range to $1.33 billion to $1.36 billion. While we've experienced reduced levels of travel and event spending, it is important to note that we plan to continue to invest in the infrastructure necessary to support the current and potential for even greater activity on our platforms. In addition, we're also continuing to allocate the capital and resources to deliver on our longer-term growth initiatives and our full-year expense guidance range reflects these investments in the second half of the year. Based on our latest internal expense forecast, which takes into account the impact of the relatively strong organic growth on variable compensation, as well as the latest foreign exchange rates, as we stand here today, we see ourselves as most likely to be in the top half of our updated expense guidance range. Moving to operating profit and margins. Non-GAAP operating income increased $71 million in the second quarter of 2020, and the non-GAAP operating margin was 53% compared to 48% in the prior year period. The nearly 500 basis point increase in the margin year-over-year reflects strong operating leverage, particularly in Market Services business as well as multi-year efforts to enhance the company’s scalability. So, we would expect some near-term reversion should market volumes moderate. Net interest expense was $25 million in the second quarter of 2020, a decrease of $3 million versus the prior year. The non-GAAP effective tax rate was 26.4% for the second quarter of 2020. For full year 2020, we continue to expect the non-GAAP tax rates to be between 25.5% and 27.5%. Non-GAAP net income attributable to Nasdaq for the second quarter of 2020 was $256 million, or $1.54 per diluted share compared to $203 million or $1.22 per diluted share in the prior year period. Let me now turn to the balance sheet. As we’re taking steps from the first quarter of 2020 to increase cash reserves and eliminate near-term maturities, in the second quarter, Nasdaq took advantage of a receptive credit environment and issued a $500 million 30-year bond. Then, as the short-term credit environment continued to improve, we became more comfortable with reducing our cash position to more normal levels and used the proceeds from our debt offering and the excess cash on hand to redeem outstanding commercial paper and to repay all the borrowers on our revolver. As a result, the company returned to lower leverage while enhancing available liquidity. Turning to slide 11, the net of these actions is that debt decreased by $626 million versus March 31st, primarily due to $1.1 billion of aggregate net payments on revolver borrowings and commercial paper that I mentioned a moment ago. Our total debt-to-EBITDA ratio ended the period at 2.4 times, down from 3 times in the first quarter of 2020. Net debt-to-EBITDA was 1.9 times, down from 2.3 times in the first quarter of 2020. Also, during the second quarter of 2020, the company paid common stock dividends in the aggregate of $80 million and repurchased common stock in the amount of $30 million. Year-to-date, through June 30th, the company has repurchased common stock in the amount of $152 million, largely completing our objective to use share repurchases to offset dilution of equity compensation and other sources of gross issuances to ensure investors benefit from a stable share count. With that, I'll turn it back over to the operator for Q&A.

Thank you. Our first question comes from Rich Repetto with Piper Sandler. Your line is open.

You seem like you're in the sweet spot right now, given your exposure to equity trading and equity options as well as having the high percentage of recurring revenue. So, I guess my question is, with so much volume now going into off-exchange, the TRF percentage up in the low 40 percentage, are we missing anything? I'm trying to look at the unintended consequences of having so much off-exchange volume. Your revenue capture actually went up in equity, which I didn't understand. But just trying to see how, given that you're in the sweet spot, make sure we're catching all the reflections here or all the possibilities?

Sure. Well, I would agree that retail participation in the markets, both the equities markets and the equity options markets, has certainly been elevated this year. And you are right, that it is resulting in more off-exchange volume occurring. I think that what we've been really focused on is, for the volume that does come to the exchanges, what can we do to maximize our position? And so we've been working really hard on a few fronts. One is overall customer service and availability. Second is just the scalability of our business and ability to handle these really large volume days, particularly on the Russell and the S&P 500 rebalance days. Third is that we continue to improve the performance of our systems with tech improvements and initiatives to make sure that we optimize the performance of our markets. Finally, we must ensure that we educate our customers on how to use all the elements of our markets, like our M-ELO orders and other tools, to capture as much volume as we can. We do benefit from the overall elevated environment, but we monitor the internalization rate closely to ensure it doesn't diminish the price discovery occurring in the market. We're focused on making sure retail investors are educated as they enter the markets. The online retail brokers and FINRA contribute greatly to these efforts, and we're collaborating with them in facilitating retail investor education.

Is there any information on revenue capture that was part of the question?

So the revenue capture is really a function of a lot of things. It depends on which markets are leveraged to come into the market and our overall capture rate. We carefully assess how much volume is directed towards auctions. We also had two large auctions at the end of the quarter with the S&P 500. That was 1.2 billion shares. The Russell rebalance was 1.5 billion shares, with evident engagement in the options market versus intraday trading.

Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.

Hey, good morning, everyone. Quick one on COVID and the current pandemic. You talked about how there's some negative impacts on the revenues, but positive on expenses. Anything to note positive on the revenues? I mean, are there new business wins or anything that have come out, new use cases that your clients have seen where you may be benefiting coming out of this? Or is it too early to tell?

Actually, I think there are a couple of areas that are relevant. The first is the demand for our SaaS-based technology has increased during this period because clients are realizing they need scalability and flexibility to manage their infrastructure remotely. This has elevated demand for our surveillance solutions since firms wish to ensure compliance as their compliance teams transition to remote work. Additionally, all five of the new clients signed in the quarter utilized SaaS-based solutions. Our demand for these services has generally increased. The second area is about the index side. We continue to have a lot of dialogue with our index partners considering new products that align with long-term changes in the economy to ensure we deliver indices that investors feel they can invest in for the long-term. Finally, there’s an increase in demand for certain elements of alternative data from our Quandl platform, as clients seek better insights ahead of government data releases.

Our next question comes from Ken Hill with Rosenblatt. Your line is open.

Hi, good morning. I was hoping to ask about Nasdaq Marketplace Services Platform. I know you launched this at the end of June. You have some detail on the website. Can you help me narrow the focus a little bit? It seems to encompass a lot of great concepts that fintechs and exchanges want to do. How do you see it specifically positioned within the current market landscape? Secondly, who would you define as your natural customer base and what is your addressable market over time?

Certainly. We often joke with our marketing department about buzzwords. Let me break it down. What we've been investing in over the last several years in market tech is essentially what we call the Nasdaq Financial Framework, a core platform that allows for microservice architecture. This includes a common data layer, common data management capability, and a common security layer across everything we build. On top of that, we then build capabilities like trading, risk management, processing, settlement, and surveillance functionalities. The Marketplace Services Platform completes the trade lifecycle in microservices, allowing clients to rapidly deploy markets in the cloud. Primary clients for this platform are new markets—clients aiming to launch new markets or other financial instruments like crypto. LEX Markets is a perfect example of utilizing the platform to support their real estate securities trading platform.

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Let me just shift gears to the expense outlook. Obviously, very good performance with the operating margin continuing to grow. It seems like there have been about 300 basis points of operating leverage so far, halfway through the year with 6% non-trading revenue growth and 3% operating expense growth. As we enter the second half of the year, do you think we can still achieve that kind of operating leverage? Can you also comment on non-trading revenue growth? Does the new market technology depend on improvement in sales trajectory for the second half?

That’s okay. Regarding operating leverage and order intake, do you have any comments on the operating leverage you want to start with?

We’ve covered that to some degree in the remarks, Adena. The operating leverage is being benefitted from the additional revenue on the trading activity. We still think for the overall expense guidance hovers around the 3% range for the full year. That would come in the mid to upper end of that range.

On the order intake question from market tech, I would say that we certainly continue to see a good pipeline of opportunities with order intake. However, we have seen somewhat moderated order intake this year because larger technology decisions have been taking longer as they navigate their own situations before making significant changes to their systems or launching new products within their markets. Overall, the health of that business remains strong and the demand for our services continues to remain robust.

Thank you. Our next question comes from Mike Carrier with Bank of America. Your line is open.

Good morning. You mentioned that you're more comfortable on the low end of the non-transactional revenue growth range this year, but expecting some client activity in corporate and tech to be slower. Are you seeing clients gradually picking back up in terms of activity? If that's the case, are you seeing an opportunity for new orders if we’re in this environment for the longer term? And for Michael, if we don't see a pickup in activity, what areas do you have for flexibility on the expense side?

I think that clients are adapting. They first had to get through a surge in volume and a complete change to their operating model. It's a balance as they deal with this new normal. However, there was a momentum for new markets to launch, and firms are looking to introduce new instruments on their platforms. Therefore, those decisions aren’t postponed indefinitely—they’re just taking longer as they consider their long-term capital allocation. Furthermore, the exchange world’s performance has been robust, and we see this volume activity reflected in other countries as well. I believe our clients’ models are resilient enough to make decisions in favor of further investments in modernizing their infrastructures.

I would reiterate that we manage expenses in the context of revenue. In a period like this, there’s uncertainty linked to revenue activity on the transactional front. We are seeing the benefits of reduced discretionary spending on travel and events, and we will continuously monitor discretionary expenses and focus on our long-term growth initiatives. However, we are committed to investing in our capability to meet market demands.

Thank you. And our next question comes from Chris Harris with Wells Fargo. Your line is open.

There was a significant drop in the U.S. options capture rate in the quarter. Can you talk about what's happening there? Is this a good run rate for U.S. options capture?

The U.S. options capture rate is affected by the retail activity pouring into the options markets—these orders generally gravitate towards price-time markets rather than the floor-based or complex markets we operate in. Price-time markets correlate with lower capture rates. We’ll need to monitor how resilient retail participation is in that market segment. While the capture might be lower, volumes are rising, which indicates balance. I view the increasing participation across varied segments and the democratization of markets as positive developments.

Thank you. Our next question comes from Alex Blostein with Goldman Sachs. Your line is open.

I was hoping to get to the Infra Services segment for a second. Could you talk about sources of growth particularly around the U.S. prop business this quarter as well as the pickup in investment in data products you seem to have observed sequentially? A bit more color would be helpful.

We continue to find demand for our proprietary products, particularly as retail-investing dynamics continue to rise. More retail brokerage firms want access to real-time information, and we're committed to offering competitive pricing. In terms of our data and analytics business, we still see growth in eVestment, albeit moderated. Significantly, we’ve made strides in solidifying our value proposition for clients with our revised pricing model, benefiting business resilience, and driving new product delivery.

Thank you. Our next question comes from Kyle Voigt with KBW. Your line is open.

Could you provide an update on how much of the index revenue line is driven by AUM base fees? Last time we checked, it was around 60%. Furthermore, it would be helpful to understand the average fees on assets benchmarked against the NASDAQ-100, particularly since AUM was up 54% year-over-year versus 34% total growth.

To provide some insight, about 60% to 65% of revenue from the index business comes from AUM-driven sources, while the remainder stems chiefly from futures volumes and data revenue, all of which may fluctuate per quarter. The specifics around index fees are proprietary; however, I would indicate that the NASDAQ-100 Index program has not changed its fee base significantly over the years since our partnership with Invesco is longstanding.

Thank you. Our next question comes from Ari Ghosh with Credit Suisse. Your line is open.

Just circling back to your comments on the index business. The recent performance is especially noteworthy given that organic net flow growth has accelerated outside market beta to around 15%, outpacing industry trends. What differentiates your index business from larger players? Looking ahead, where do you see the most room for product innovation? Is it in smart beta, ESG, or other areas?

The NASDAQ-100 and the Nasdaq Biotech Indices are foundational franchises for us. We are also successful with smart beta indices reflecting current thematic trends. Our focus is selective; we collaborate closely with partners to launch products exhibiting strong investor demand. This approach allows us to effectively manage long-term trends, particularly in technology, cloud indices, and biotech. Our index strategy relies on a robust understanding of emerging trends to develop products that resonate with investors, enhancing resilience even in fluctuating markets.

Thank you. We have a follow-up from Alex Kramm with UBS. Your line is open.

You mentioned ESG three times in your prepared remarks today. Can you give us color on how significant ESG is for you, how fast it’s been growing and the impact you foresee on potential growth?

ESG is one of the major macro trends we are focused on, and we want to ensure we are leveraging it carefully. We're committed to offering ESG versions of existing indices and have also engaged in an acquisition aimed at addressing heightened demand for ESG reports among our corporate clients. While still small in revenue, this area is poised for growth as we develop this space. Our ESG advisory service launched 18 months ago is also establishing a significant presence. Furthermore, we want to make contributing positively to the environment and governance focus essential areas in our growth strategy.

Thank you. There are no further questions in the queue. I'd like to turn it back to Ms. Adena Friedman for closing remarks.

Thank you all very much for your time today. We are pleased to see that our businesses are delivering strong organic revenue growth in the quarter. Guided by our strategic direction, we have a clear focus to finish 2020 strong as we re-imagine markets to realize the potential of tomorrow, and we are committing to executing our plans diligently while keeping our employees safe and set up for success while in the remote environment. Thank you very much and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.