Great. So we're going to go ahead and get started. For important disclosures, please see the Morgan Stanley Research Disclosure website at morgansanley.com forward slash research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Good morning, everyone. I'm Mike Cypress, lead analyst covering brokers, asset managers, and exchanges from Morgan Stanley Research. And it's my pleasure to welcome Sarah Youngwood, the CFO of NASDAQ.

Thanks for having me.

Many of you may know NASDAQ to be a global exchange operator, but in recent years, NASDAQ has been transforming the business through a series of acquisitions to become a technology and platform provider to serve corporates, investment managers, and financial institutions as they navigate and interact with the global capital markets and the broader financial system. So we're thrilled to have Sarah with us here today to discuss the transformation and to dig in. So welcome. Thanks for joining us.

Happy to be here.

Great. So let's cook off with your investor day. Last week spanned over four hours digging in to all different parts of the business. AI was a major theme, a dominant theme. So just curious what takeaways you walked away with, Sarah, and why raise your bar for the medium term solutions revenue guide and create a higher bar? Why raise your guide?

Yeah. So I'll start with the key messages. So we are a leading technology company that is a trusted fabric of the financial system, and we architect the world's most modern markets. We power the innovation economy. We build trust in the system. And what we've established at Investor Day is how we're positioned in this world, which is our position for transformation with AI, which is positioned for transformation in the financial system, for being our client's trusted financial partner. So it's very important that we have now realized the skill and the relevance to be that trusted financial partner because they'll need to choose how to go to N.A.I., and we believe their solution is going to be very much us. So that was the first point. The second point that we've made is that that transformation has also generated a very strong profile of durable growth. And we'll come back to that outlook that you're referring to. And in addition to that, a durable growth that is established with cycles, that is well positioned for growth vectors, we actually also have financial discipline, and that is expense, capital allocation, free cash flow, and so with those in place, we have the ability to add value for shareholders on a very sustainable basis. So those were some of the key messages. Now, to your question on why raise the bar, the first answer is because we've been doing that for the last five years. And so you've seen us increase our medium-term outlook, and we have operated, of course, within our medium-term outlook for the last five years. In addition, we've actually operated within this new medium-term outlook of 9% to 12% for four out of the last five years. Then we looked at the market opportunity, and we talked about a $38 billion sum going at 9%. We did a small retrospective to show that actually we've outperformed based on organic growth what we had said two years ago, so hopefully we have some credibility there. And that gives us an anchor, that 9%, at the bottom of that 9% to 12% range. And then lastly, we think we're very well positioned as mission-critical with additional growth opportunities in cross-sales as well as digital assets and gen AI. So with all that, we feel that we're just getting started, and we definitely were very comfortable raising that medium-term outlook.

And the guidance raise was notable because I think it was the fourth time in four years that you have raised your guidance.

That's right, fourth time in five years, but still really good.

The market has been a bit volatile to start the year, maybe a bit more than many had expected with AI disruption risk across markets taking up a lot of mind share, yet NASDAQ continues to deliver with accelerating top-line growth. So what do you see as some of the biggest misconceptions that you may want to correct?

Yeah, so in the last few weeks, we've seen Gen.AI taking a very generalized view on the sector. And we spent a lot of time at Investor Day establishing the difference and how we think about the differentiation. So first of all, gold standard data. We spent a lot of time talking about data and everything that makes most of our products at the level of gold standard data. And we didn't use those words lightly. We really detailed what that meant. The second piece is being mission critical. Very important to how our clients effectively do the most important things through us and also connect to the financial system through us. The third one is hyper-resilient. The regulated institutions turn to us as a regulated institution ourselves to understand what we are doing. And what they want is really for us to understand, which we do, that the cost of error is extraordinarily important. And so that hyper-resilience is incredibly important. Then we have tremendous innovation, and we embed that, we engineer that into our system. So it's domain expertise and innovation, both things coming into our systems. And 450 patents is just like one example of that. And the connectivity, very important, we talked about. And then lastly, we have the return to our clients. At some point, if you have all of those things, it becomes really difficult to want to do something about it. But if, in addition, it's not worth it financially, then why would you? So those were some of the elements that differentiate us. We spent a lot of time with that.

The last one being the enhanced ROI for clients.

We have a two-times ROIC to our clients, which is very, very strong if you think about the investment you have to make and whether it's a great investment, it's a tremendous investment. And then in addition to that, when you think about do I want to renew, We have also two times net benefits versus net costs on an ongoing basis, which, again, makes every year that decision a very easy decision.

Now, NASDAQ has been on a journey for a number of years now, transforming the business. Can you talk about maybe two or three of the biggest strategic choices that NASDAQ is making today to accelerate growth and the evolution as you look out?

Yeah, so I was thinking through that, and the reality is that we are extraordinarily well positioned thanks to decisions we made more than a decade ago. And actually, we're talking about Gen.AI today, and if we were making the decisions today, we would be late. And so 12 years ago, we decided to go to the cloud. 12 years ago, Adina Friedman, our CEO, became the CEO of the data business and realized the importance of data, both offensively and defensively. 10 years ago, we got started on AI. And all of the nomenclature and organization of the data, all of that skill set positions us extremely well for Gen AI. So now, of course, we are not sitting on those decisions from 10 years ago. In addition, we have a narrow IC framework to prioritize internal organic investments. And we have talked at Investor Day about how we are doing things through a new growth framework, which is expand within our time, then evolve as we really evolve the technologies and the delivery to our clients within our SOM. So that's taking from the time and going into the SOM. And then lastly, transform. And there are some important changes to the financial industry with tokenization, with 23.5, private markets, and of course transforming the client experience through Gen AI for our clients. And so the great news is that we are able to do that today, which is really growth-oriented, because we have the foundation we laid 10 or more years ago.

So let's dig in a bit on that growth framework. We'll come back to the latter points on transform. But look, a key component of your strategy across the fintech business is to land and expand. So can we talk about where you're having some of the most success there without maybe getting overly granular? Can you frame cross-sell in terms of the pipeline, attach rates, conversion timing?

Yeah, so one of the things you get always like stats so we started with telling you uh 20 is the land that's new clients and then this for fintech and then 80 is the expand and that would be upsells cross sales and everything else um so um when you think about uh that we actually had 460 plus um upsells just last year in 2025. And I thought with upsells, that upsell can be very powerful, like two examples. One would be in India, where Tal described that a large bank was taking us for one single implementation. And then we were able to give them the full coverage for an Indian bank. That was a 3x on the ACV. So upsells can be very powerful. A second example would be Verifin. We talk with enterprise very much about lending with wire fraud. And in two cases already, we've been able to expand with ACH, and that multiplies the ACH by two. So that's the upsell. And then on cross-sell to your question, And first of all, we've got this $100 million-plus target, which we're very well positioned to achieve. That's the year-end 2027 run rate. And we have already 42 of them. 45 million of the target is already signed. And we have seen an acceleration. We have a nice graph in our investor data show. It's really an exponential graph showing how we've delivered those 42 cross-sales. In addition, we have a great pipeline. As we have been talking for a while, it's important to maintain that pipeline. And so it's going at 20%, and it represents 15% of our fintech pipeline. And then when you have all of that, you also think through, okay, what's my baseline? Well, we've got, you know, top 300 clients, which are the ones that really actually need more than one client. Only half of them have more than one client, more than one product. So, again, just a lot of opportunities to deepen, to cross-sell, to penetrate further.

Maybe we could dig in a bit on the sales initiative. initiative sales team here, and maybe talk about how you're aligning incentives across the sales organization to avoid single product selling. Seems like there's a big opportunity if only half of your top 300 clients have more than one product. So more broadly, what adjustments have you made to the sales team and the approach of the last couple of years, and where might there

be scope for further tweaks as you look out from here? Yeah, so as soon as we did the Axiomis and Calypso acquisition we said one sales team and we started literally in that January with one sales team. That was very important. It's also one incentive framework and that is very important because that incentive framework does give credit to the cross-sell and to driving that motion. The other thing we've done is on the top accounts, which doesn't go as deep as the 300, but on the top accounts we've done a one NASDAQ representative. So we've got the ability to look at it as one firm and to make sure we're hyper coordinated and then to complement that you've got the C-suite relationships on both sides at NASDAQ as well as at the client to make sure that we are very much listening to our client and continue to do things that are important to our client to drive. That Crossel has that transformation partner that I talked about, which is really critical at this time because they're looking at the world out. Everybody needs to do something. And we feel, and we're hearing from our clients that we're very well positioned to be that transformation partner. And that means taking more from us.

In the fourth quarter, you're Verifin business. launched two agentic workers yeah let's talk about that um can you speak to some of the learnings you've had and what the client take up has been on that and more broadly can you speak to some of your ambitions and aspirations for agentic ai at nasdaq in the next 12 months versus

as you look at over the next couple of years yeah um so if you're looking at uh at verafine um we launched on in the fourth quarter our first agentic worker we followed it uh within two months with our second one. And today we have six that are already planned in the roadmap. And that is really working with our clients, looking at the areas where efficiency can be most importantly achieved, and actually starting to build that fleet of workers. And we already have 350 clients that are working on a daily basis with our two workers that are available. So that's a very, very fast adoption for something that is pretty much brand new, and that helps to create for our clients the RIC case for them to be able, at some point when they are past the free volume period to actually pay additional upsell fees to be able to continue to have those workers. So that has worked very well. We think it's very important for all the clientele, and that's also very powerful. So the small and medium-sized banks are the ones that are the majority of those 350 that are currently engaging with it, And then it applies also to medium-sized banks, and we're hearing very much from the large enterprise banks that this could be very interesting as an upsell for them, and you know that they are the ones who have the largest population that could be very much in target for those efficiency gains.

Great. And what would you say is one of the most compelling AI initiatives that maybe you're most excited about that investors may be underappreciating today?

That's always the hard question. Which of my children do I prefer? So in real life, I have three. But in this life, I have a lot of children. But I'm going to pick one that is, in fact, not very thin, because that's one that is quite appreciated by the market. But that also addresses fraud. In this case, surveillance is addressing the trading fraud. What's really interesting about surveillance is the scale of what it process. One trillion daily messages across 215 marketplaces or data sources, including our clients' input. And so then you take that and you normalize it, you consolidate it across a proprietary way of doing it, which we've established for a very long time. You add technology, including more recently AI. That's where AI comes in. And suddenly you are able to deliver on a daily basis 250,000 alerts. Then you've got the collective intelligence that starts working for you where clients actually give us feedback on those alerts which then inform back the process and what we are very fortunate is that we have the rights contractually to evolve our understanding to improve the product and to train the alerting system with the data of our clients on an aggregated and anonymized basis. So then when you have all of that, you end up with something that's very valuable, especially because this is a principle-based type of regulation so if you think about rules-based tells you do this very specifically and but principle-based it's like you shouldn't do that kind of thing but it doesn't give you exactly the time it doesn't give you the specifics so it's very important to look through on the learned experience of not just one client but all of the clients and then apply Gen AI through those signals to be able to actually derive conclusions and feed that feedback loop. And so that's what we're doing with Gen AI right now. That's what you couldn't do with one client data set, but we've become the standard of doing it and adding detection through all of the things I've described. And then lastly, And we also are positioned to start doing some agentic workflows to then process those errors even more efficiently. So that's an example. And again, I could spend a lot of time on all of our examples, but I have a lot of passion for this one. We speak about it a bit less.

Very helpful. Why don't we move on and talk about some of your other businesses and get to the transform element of the strategy. But first, let's talk about Index. Nelstec has an incredible brand and set up listed companies, including many that are here at our TMT conference. And so just curious how you're thinking about some of the biggest opportunities to broaden monetization of your Index business and how you're attacking this.

So this has been something which we've been continuing to do since our last Investor Day. So just for scale, 2025, we grew at 20%. Last five years, we grew at 21%. We had, in 2025, $99 billion of inflows, and that's on $882 billion of AUM in 2025. So it has become quite an important part of what we do. And we have three pillars of growth. The first one is adding products, new capabilities for our clients. And so we have added over 200 products in the last two years, which is 50% faster than the previous two years. If you think about that $99 billion of inflows that I have given you, those new products are 36% of the $99 billion. So that new product capability is a very important part of how we are generating alpha. The second pillar is international. And so here, we've been growing even faster than the 21% in the last five years, we've been growing at 34% in international, and it's not a small base anymore, and now it's $163 billion at the end of 25 in international AUM, in the ETP AUMs. So this is very significant, and it's really across the world in terms of geographies where we are operating. Then you're looking at institutional, and again, you're recognizing those themes from not just this investor day, but two years ago. So this has been something that we've been evolving in a very steady and very productive manner. And so Institutional is a $700 billion opportunity where we've been gaining market share, we've been growing at 20%, and it's now $66 billion. So again, starting to become an important part of what we have.

While we're on capital access platforms, which the index business is part of, let's talk about listings. You previously noted some optimism around a strong IPO pipeline for this year. So the question is, what needs to happen for that to translate into a sustained multi-year listing cycle? And then what implications might there be to IPO activity over time? Should tokenization of private companies gain traction?

So maybe a step back, in 2025, it was the seventh year where we were the leading exchange in terms of proceeds raised. We also had the largest IPO once again. And we also had the largest transfer, Walmart, to our exchange. So we're very well positioned. The pipeline is very much there. So last year we had 180 companies in the pipeline at the time of the year, 210 this year. What's going to be important is, of course, to have an environment, what is windows, pockets of stability where people can have confidence in actually going public. There is tremendous appetite both from the companies and their owners for that to happen and so we believe that with a little bit of stability, which today might be a difficult day to say that. We should be extremely well positioned. And what's also very attractive about the pipeline that I referred to is that how broad it is. It's not one sector. It's AI. It's space. It's like in many different types. It's also different sizes of companies, including some of a very, very large scale, which we are very much ready for should they come to market. So those are the elements. Now, in terms of multi-year cycle, it's already difficult enough to talk about one year, but what really makes a difference to investors, and I think you would certainly agree with that as investors, is to have the performance of those who go continue to show that there is interest in the following ones. So this is very much a virtuous cycle. And so we certainly, along with banks like Morgan Stanley, work to make sure that we strike the right balance to make sure that there is a great experience for both the sellers and the buyers in those processes. So in terms of tokenization, when you try to think about the liquidity, the depth, the transparency, the nanoseconds at which we operate, there's nothing today that matches the depth of the public market. You're talking about $127 trillion versus $15 trillion for the private markets. And so tokenization, it can be additive to being a public company, but it's not a replacement. We're not saying it as being a replacement for that.

So you don't see cause for if tokenization gains traction, private companies could stay private for longer and may not need to raise capital and go public?

What you need is the scale that I talked about, $127 trillion with the integrity, with the price discovery, with the transparency. And so we actually are working on tokenization ourselves, and we talked about that at Investor Day, too, because we want to be part of it, and we think it's a very, very good technology that can be additive, but it can be additive if you're making it part of the process of being a public company rather than not accessing this massive pool of liquidity through being a public company.

Speaking of market structure innovations, one of the other things that we have seen gain a lot of traction of late is the short-dated options that continue to grow across the index space. But you recently got regulatory approval and launched a set of short-dated options in select single-name stocks with Monday and Wednesday expiries that complement the Friday expiry. So questions here, what do we need to see for Tuesday, Thursday expiries to come online? What do we need to see for this to expand beyond, I think, the initial eight symbols? And then what are the considerations that you're taking into account here? What may come first, and what's been the feedback and action that you've seen?

So this is a space where we're being very intentional. We're being actually quite slow, but intentionally so. We are being very resilient in the way we want to structure it. So we're starting with, as you said, eight securities, the MAX 7 plus Broadcom plus IBIT, which is the Bitcoin BlackRock ETF that is on our market, NASDAQ. So if you take those, they're very, very liquid, and they're a very good place where you can actually have zero DTE. Then we're watching it. And what we've observed for the approximately one month that it has been in place is actually that the volume, the net volume, has been additive. So that's one of the things that's very important to watch. The second thing is we are listening to the market participants' feedback, whether it's retail, whether it's the SEC, whether it's other participants. And it's all right now very, very well received. So to see a need for Tuesday or Thursday or for additional securities, we would give it a bit more time to continue to see those additional volume. By the way, our market share has also been really interesting. You know, we have a very large market share. We have a five percentage point versus the number two in options. And in those zero DTE over the short period we've been observing it, we've actually had that or more in market share also. So seeing that everything is operating as we intended, that we're seeing net additions and that we are in volumes and that we're seeing very orderly and good feedback from the market, it's going to be important to want to do more. And again, we would do it in this very slow, intentional, measured way.

Fair enough. One of the pillars under your transform agenda, if you will, in terms of the growth initiatives, is to expand market hours. So 23.5, you've outlined plans to enable 23.5 equity trading in the second half of this year, pending regulatory approval and industry alignment. So where are you seeing demand to offer such extended hours? How might you size the volume opportunity compared to what you already do today in the pre-trade and as well as the after-trade, after-hour sessions? And talk about what the path looks like here.

So we think 23.5 is very much an exciting opportunity. You are seeing in our data already that there is great appetite coming from international players to participate in the U.S. markets. So if I go back to that set of $127 trillion that I gave you, half of that is in the U.S. So it's a really – and the rest of the world is sharing in, you know, 16%, 16%, 3%, 4%, small numbers. And so the rest of the world would like to operate in their trading hours. And we're very fortunate to have that. and now what we need to do is to see the volumes come in is to make sure that we have the right liquidity during that session in other people's trading hours and also the right operational framework. And so we're working with the industry to make sure that we put in place the guardrails to have all of that and we expect the volumes to start probably slow because I think everybody is going to want to go in it in a measured way, but it could accelerate over time.

And it's 23, not 24?

We like 23.5. That doesn't mean that over time it couldn't go further than that, but again, back to as you do it, you want to do it with enough liquidity and you want to do it with operational maturity. So we think 23.5 is a very good place. And, of course, we need to have regulatory approval and the other infrastructure market participants ready. We're going to be ready in the second half of this year.

So it's the operational resilience systems need a little bit of downtime, I suppose, for updates and other sort of things.

Yeah, and also, I mean, so far we are not seeing that much demand for the weekends, And so we want to make sure that that liquidity is there when it is open.

With the remaining couple of minutes we have left, when do we bring it all together across the market, solutions, fintech, capital allocation? How should investors think about NASDAQ's long-term growth algorithm, the scope for margin expansion as the business continues to become more software, data-centric, and a platform company?

Yeah, so if you start with this medium-term outlook, solutions, medium-term outlook that we started with, that 9% to 12% is very much founded in the macro topics that I talked about at the beginning. But if you go in it by division, we took capital access platforms from 5% to 8% to 6% to 10%, and we just talked about 23.5% as a driver for data. That's certainly one of the accelerants, but data in general has very strong structural growth associated. And we also talked about index, and index has a lot of alpha drivers, which are continuing to drive the capital access platform growth rate. In fintech, we talked about the upsell and cross-sell motions, which are extraordinarily important, and we talked about Gen.AI. We touched on tokenization. There was more than what we touched upon. When you take all of that and the critical nature of our solutions, we see the possibility over time to continue to grow within our 10% to 14% range. Then market services, we've got a tremendous share. We've got a tremendous capture. We're balancing those two things. We have leadership versus the next competitor in both of those. And with that position, we are able to then create new areas of growth. And we talked about zero DT being one of the examples, but index option is a very important driver, too. So we're not just growing our pie. We have structural trends that are favoring that. We have new opportunities to create alpha, even in market services. So with that, you've got durable growth. and that is profitable growth. So you add 400 basis points of efficiencies, and when I say 400 basis points, I'm talking about the last two years since Invest Today, from 52% to 56% operating margin. And so now you have us at a rule of 70. So there are only 18 companies that are in S&P 500 and that are actually above the rule of 60. And so that is rule of 60 with scale of $5 billion of revenue and $2 billion of free cash flow and 8% growth. And we're one of 18 that belongs to that very good group. And we are at 70, 12% and 58%, 12% revenue growth and 58%. So then you take all of that and you add free cash flow. Free cash flow conversion is at 109%, really absolute basis and relative basis extraordinary. That enables us to do a lot with our capital allocation, and we shared how much we've done, for example, in share with purchases, $500 million since the beginning of the year, the focus on organic growth, and the possibility to add bolt-ons to the extent that it augmented organic growth. And suddenly you have a mix of growth investments, capital return to add sustainable value to shareholders.

I'm afraid we're out of time. That's very helpful. Appreciate your time, Sarah. Please join me in thanking Sarah Youngwood.