Equiniti, Inc. ($BLSH)

Thank you for standing by. Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bullish to acquire Equiniti. [Operator Instructions]. I would now like to turn the call over to Michael Fidlli. Please go ahead.

Executive Officer, Tom Farley, Chief Financial Officer, Dave Bonanno; and Director of Corporate Development, Liam Foley. This call will contain forward-looking statements, including those relating to our proposed acquisition of Equiniti, the anticipated benefits, strategic rationale of the transaction, the expected timing and closing conditions of the transaction and the business opportunities following the transaction. These statements are not assurances of future performance. They are subject to risks and uncertainties, and our actual results could differ materially. Such risks and uncertainties include, among others, the possibility that the transaction may not be completed, failure to obtain required regulatory approvals, the possibility that anticipated benefits of the acquisition may not be realized and other risks related to the integration of Equiniti's business. For more details on these risks, please refer to today's earnings press release and our SEC filings, including our 20-F dated March 9, 2026. We undertake no obligation to update or revise any forward-looking statements. This call will also include a discussion of non-IFRS financial measures. A reconciliation of these metrics to the most directly comparable IFRS metrics can be found in our press release and presentation, which also contain additional information regarding non-IFRS financial measures and key performance indicators. I'll now turn the call over to Tom.

Good morning. I remember walking into the trading pits of the New York Board of Trade back in February 2008 and seeing paper everywhere. carbon copies, handwritten tickets, manual processes, every trade left a physical trail of friction. As President of the New York Board of Trade, I had a front row seat to one of the great market structure transitions of our time, the move from open outcry and paper-based processes to electronic trading. That transition changed everything. The paper era was rigid, opaque, error-prone and slow. The electronic era brought speed, scale, transparency and access and improved the market for everyone, traders, investors, brokers and issuers. Today, we are standing at the edge of another generational upgrade. Blockchain technology has laid the foundation for the next era of market structure, the blockchain era. This is capital markets reimagined as a programmable layer. Assets are no longer just records in fragmented databases. They become programmable, self-custodial and continuously functional through tokenization. Tokenization is the process of turning traditional financial assets into blockchain-based assets. But that definition understates the importance, the significance of what is happening. Tokenization does not simply move an asset from one database to another. It changes what that asset can do. Traditional assets are static. They sit inside fragmented systems. They settle slowly. They require reconciliation. Corporate actions are operationally complex. Ownership data is often delayed or incomplete or scattered across multiple intermediaries. Tokenization turns static assets into active infrastructure. A useful analogy here is the shift from the typewriter to the computer. The typewriter was not broken. It worked. Every page you produced, it was frozen the moment it was typed. If you made a mistake, you just retyped it. If you wanted to share it, you mailed it or fax it. If you wanted to find it later, you searched a filing cabinet. The computer changed what a document was. A document became editable, searchable, shareable, programmable and connected. Tokenized assets are the computer in this analogy, of course. They transform an asset from an inert record into a living piece of market infrastructure. Why does this matter? It matters because tokenized assets can deliver, first, always-on infrastructure. We live in a 24/7 world, but yet our core markets are still closed for more than 80% of the week. Tokenization enables assets to be traded, monitored and serviced continuously. Second, they offer -- tokenization offers instant settlement. Ownership and payment can move together through atomic settlement. That reduces delay, reduces reconciliation and reduces counterparty risk. Third, tokenization offers a new dynamic functionality. dividends, splits, votes, tender offers, compliance checks, corporate actions, they can all move from manual workflows to programmable execution. And this is where tokenization also intersects with one of the most important trends in the world, AI agents. AI agents will not be able to operate efficiently in markets built on fragmented records, manual workflows, delayed settlement or opaque ownership data. Agents need systems that are predictable, rules-based, machine readable and executable. Tokenized assets provide exactly that. A tokenized security can carry permissions. It can carry the compliance logic, ownership data and transaction rules directly in its infrastructure, in its code. That means AI agents can eventually interact with assets in a far more functional way, checking eligibility, routing transactions, executing instructions, monitoring events, many other use cases. In other words, tokenization does not just modernize markets for humans, it creates the asset infrastructure that autonomous software can also use. That is why this is such a powerful shift. The full scope of innovation is impossible to predict, but the direction is clear. Tokenization adds capabilities, control, customizability and automation to the core of capital markets. It writes the next chapter of market structure. The market structure revolution has already begun. Digital commodities and fiat have already migrated to the blockchain era. The first major asset successfully tokenized was the U.S. dollar in the form of stablecoins. Stablecoins have grown from 0 to roughly $300 billion in market capitalization with many trillions of dollars of payments volume per year. On our Q3 earnings call in November, I said that stablecoins were only the beginning. Tokenization was still in the first inning. I described the future where substantially every major asset class would eventually move unchanged. Since that call, in Q3, the market cap of non-stablecoin tokenized assets has grown by more than 50%. And that is encouraging, but it has grown from roughly $20 billion to $30 billion. In the context of global capital markets, $30 billion is still tiny. It is smaller than hundreds of individual S&P 500 companies. So why are we so excited? Because the global securities market is approximately $270 trillion. $270 trillion and tokenized securities are next. Markets do not claim to inferior infrastructure forever. Over time, markets migrate towards speed, efficiency, transparency and lower cost and tokenization is the next inevitable step. To unlock this massive $270 trillion opportunity, we looked around and asked ourselves, what type of service provider does the market need to catalyze this growth? We identified 3 critical characteristics that are needed to be the ideal, helpful, valuable service provider to catalyze large-scale adoption of tokenized securities. First, we needed an end-to-end tokenization stack. Second, we needed a unified ledger that can connect traditional finance and blockchain-based assets. And third, we needed a broad base of blue-chip public companies to collaborate with and to make scaled tokenization of securities a reality. Bullish already had deep tokenization capabilities in-house, as those of you who have been following the company know. But we did not yet have the full traditional finance ledger infrastructure, and we did not yet have the direct issuer relationships required to drive adoption at scale. That is why today's announcement is so important. Today, Bullish announces the acquisition of Equiniti, a leading global transfer agent with more than 2,500 public market issuers on its client list. Equiniti is a truly unique asset. It has sticky recurring revenue. It has average client relationships of more than 15 years. It serves thousands of issuers, including approximately 35% of the S&P 500 and more than 50% of the FTSE 100. It even processes $500 billion in issuer payments per year that Equiniti makes on behalf of its customers, a notable secondary opportunity for future platform modernization. Equiniti has what cannot easily be built, trusted entrenched relationships at the core of the issuer ecosystem. That is exactly the infrastructure needed to bridge traditional capital markets into the blockchain era. By acquiring Equiniti, we are assembling under one roof the 3 elements required for tokenization to become real at scale, the technology stack, the ledger infrastructure and the issuer network. Together, Bullish and Equiniti become a true force in the tokenization megatrend. Bullish is one of the largest and fastest-growing global regulated digital asset exchanges and information services businesses. Equiniti is a leading global transfer agent with approximately 20 million registered KYC shareholder customers that are simply a wallet away from accessing the benefits of tokenization, $0.5 trillion in annual dividends processed and thousands of blue-chip institutional clients. Combined, we're creating a tokenization powerhouse with approximately $1.3 billion in 2026 revenue and $500 million in pro forma and combined EBITDA less CapEx before any transaction synergies. There is a useful historical parallel here and one that I'm personally familiar with. At the turn of this century, ICE acquired the International Petroleum Exchange in London and the New York Board of Trade in New York. ICE combined world-class technology, a massive wave of electronic trading innovation and established exchanges and established exchanges with customers, contracts and cash flows, established exchanges like the International Petroleum Exchange and the New York Board of Trade. The result was one of the most valuable exchange businesses ever built. This transaction follows the same strategic logic. We are combining a business with customers, cash flows and embedded market infrastructure with a business built for innovation, growth and the next era of market structure, the blockchain era. Equiniti's end-to-end support of issuers on traditional rails is the perfect complement to bullish's blockchain capabilities. Together, we believe we are creating the world's largest blockchain-enabled issuer services provider. But before I go deeper into the 3 elements required for tokenization success, it is worth explaining why a transfer agent is so critical. The transfer agent is the foundation of the capital markets ownership stack with legal authority to say who owns what. Brokers, custodians, clearing agencies and downstream ledgers all depend on the transfer agent doing its job. The transfer agent maintains the official shareholder registry, the ground truth record of ownership, if you will. Tokenization works best when the token is not merely an abstraction of ownership, not a receipt or some sort of synthetic exposure, but the actual ownership record itself. To make that possible, the transfer agent must be able to write ownership to the blockchain either instead of or alongside the traditional ledger. Without the transfer agent, a token is just a receipt. With the transfer agent, it becomes legal title. That places the transfer agent at the very center of what we expect to be a multi-decade transformation of global market structure. Bullish is equipped to offer end-to-end tokenization services with this announcement. We can support token design, token engineering, issuance, compliance, operations of the token, but we couple it with value-added services like distribution or secondary trading of the token, liquidity provision and market visibility through our coin desk and consensus grants. These capabilities are part of the bullish DNA and got stronger today. Our blockchain and token engineering teams have been building since our inception in 2020. We can design smart contracts for tokenized shares, deploy those contracts and support the creation and operation of tokenized assets. We can monitor activities, support regulatory compliance and manage token operations once an asset is live, including over time, increasingly automated corporate actions, as I described earlier. We can also support secondary market distribution across venues and provide deep institutional market making. And as I said, through CoinDesk, we bring marketing, research coverage and global visibility. Equiniti's existing Investor Relations and public relations capabilities will only further strengthen that offering. This is not a narrow product. It is an end-to-end platform for the $270 trillion tokenized securities era. The ability to tokenize assets means very little without a trusted way to track ownership. That is where Equiniti's transfer agent ledger becomes so important. Bullish and Equiniti have already collaborated to build a single source of truth, a unified ledger that can move between Equiniti's traditional finance rails and Bullish's crypto rails. We will have more to share on that later today. We aim for a unified ledger to serve as the legal authority for holdings across across Equiniti's nearly 3,000 public companies. It will track ownership, support corporate actions, facilitate proxy voting and remain compliant through strong KYC and AML capabilities. This unified ledger is critical. Issuers will not accept a fragmented world where one system tracks traditional shares and another system separately tracks tokenized shares -- they need simplicity. We're hearing that from issuers day after day. They need one authoritative record. They need a ledger that can track both certificated shares and tokenized shares in a single compliant real-time environment. And we are not just describing that as a future operation. We have already built it. The future is now. By combining Bullish's crypto expertise with Equiniti's transfer agent leadership, we have created a unified ledger that can track tokenized shares and certificated shares in real time. The third requirement is adoption from thousands of blue-chip issuers. For tokenization to succeed, blue-chip issuers must see real value in tokenizing their shares. There are approaches already in the market today that essentially create synthetic exposure to real-world assets and call these tokenized securities. These products may look like shares, but in substance, they are often more like depository receipts or IOUs or something else. That is not the future we believe in or at least not the future we are interested in. Synthetic tokenization can further obscure ownership. Issuers do not want that. We will be guided by issuers. It can create distance between the investor and the issuer, and we do not believe institutional investors will accept that as the end state for tokenized securities. The durable opportunity here is issuer-led tokenization. Our vision for tokenization means the issuer is directly involved at all steps and benefits -- it means the token can represent real ownership, real rights, real compliance and real corporate actions. That is the approach we believe will create the largest and most enduring opportunity over time. And issuers will quickly understand the benefits, faster settlement, modernized operations, improved transparency, better control, programmable functionality, closer relationship with their investors and perhaps most importantly, new pockets of liquidity. Equiniti gives us access to thousands of the world's most important public market issuers instantly. That makes this transaction one of the most powerful catalysts for the next era of capital markets. Before I hand it over to Dave, our CFO, let me leave you with this. We are still very early, just like I said in the Q3 earnings call in this tokenization push. We believe it will be a 20-year-plus transformation of market structure. And bullish has now assembled something unique, 3 structural moats that reinforce one another. First, an end-to-end tokenization stack spanning origination of the token, issuance of the token, but also support of the token through trading liquidity and visibility. Second, a unified ledger that bridges the old school traditional certificated world with the tokenized world, a platform that speaks both languages at once. And third, thousands of the world's most important issuers are already embedded in our infrastructure and positioned to benefit from this transition. This is a one-o-one platform. It brings together regulated digital asset infrastructure, issuer services, transfer agent authority, liquidity, data, media and blockchain engineering. We believe this combination positions Bullish to lead the next era of global capital markets, and we're thrilled to be leading that charge.

Good morning, everyone, and thank you, Tom. Before turning to the specifics of today's transaction, I want to highlight that this acquisition delivers on the 5 core financial pillars we discussed during the IPO and second quarter earnings call. As a reminder, those pillars are organic revenue growth, diversified revenue streams, operating leverage, maintaining a highly flexible and liquid balance sheet; and finally, value creation through M&A. Today's transaction delivers on all 5 of these pillars. First, Bullish will increase our customer base by more than 10x, providing Bullish with a massive captive audience to power future growth. Second, it further diversifies our revenue streams across products and geographies. Third, it creates significant operating leverage, driven by accelerating revenue growth and continued cost reductions throughout the medium-term outlook. Fourth, the transaction also preserves our net liquid asset position to drive future growth. And finally, it delivers on value creation through M&A. Today's transaction will position Bullish directly at the center of the coming tokenization wave with significant scale and approximately $1 billion of expected free cash flow over the medium-term outlook. It is also significantly accretive on a pre-synergy basis when compared to our 2026 guidance and annualized first quarter adjusted transaction revenue prior to any of the synergies detailed in our medium-term outlook. Turning to the specifics of the transaction on Page 12 of the presentation. Bullish has agreed to acquire Equiniti for $4.2 billion with anticipated closing in January of 2027, subject to regulatory approvals and other customary closing conditions. The acquisition consideration consists of bullish assuming Equiniti's $1.85 billion in debt and issuing approximately $61 million in new Bullish shares, equal to approximately $2.35 billion based on Bullish's 30-day volume weighted average price of $38.48 per share. Following the close of the transaction, we expect bullish to have approximately 222 million fully diluted shares outstanding. The transaction also maintains Bullish's strong balance sheet. We expect a net liquid asset position exceeding $500 million post closing at current Bitcoin price levels and supported by rapidly growing earnings power and free cash flow. Turning to the combined 2026 financial outlook on Page 13. We've shown Bullish's existing 2026 guidance and 1Q annualized adjusted transaction revenue, combined with our expectation for Equiniti's 2026 financial performance. As a reminder, the 2026 combined financial outlook does not include any synergies. This results in a combined 2026 outlook of $1.3 billion of adjusted total revenue and approximately $500 million of adjusted EBITDA less CapEx. Now turning to our medium-term outlook covering the 2027 through 2029 period on Page 14. We expect total revenue growth to accelerate during the period from approximately 6% to 8% plus versus the combined 2026 financials, driven by approximately 20% growth in tokenization and blockchain services and relatively flat traditional transfer agent revenue and interest income. For the combined cost base, we anticipate $25 million to $50 million of additional cost takeout between 2027 and 2029 as compared to the combined 2026 financial results. driven by $50 million to $75 million of cost reductions being offset by approximately $25 million of investment into new infrastructure and product offerings. Finally, we expect a combined effective tax rate of approximately 20% between 2027 and 2029, although cash taxes are likely to be lower than 20% during that period. Finally, we expect the combined revenue growth and cost structure to result in a compelling financial profile with adjusted EBITDA less CapEx growing nearly $100 million per year over the medium-term outlook period, leading to approximately 50% adjusted EBITDA less CapEx margins exiting 2029, EPS growth of approximately 20% per year and cumulative free cash flow of approximately $1 billion. And with that, I'll turn it back to Tom before opening up the call for Q&A.

Thanks, Dave. I just want to reiterate how excited we are. We think this positions us to be the global tokenization leader, and we believe the tokenization of global securities market is a $270 trillion opportunity as I've described. And we're in the early innings, and we hope that all of you who dialed in this morning will be along for the ride. And with that, we'll open it up for questions.

[Operator Instructions]. Your first question comes from the line of Daniel Fannon with Jefferies.

So I just wanted to follow up on the longer-term outlook or I should say, the medium-term outlook. Obviously, longer term, Tom, I understand the focus and outlook for tokenization. But when I think about the 6% to 8%, can you kind of break that down a bit more? And ultimately, as you think about the 20% growth in tokenization and blockchain services that you're assuming, I just want to get a little bit more underneath is how you came up with that assumption.

Great. Thanks, Dan. Appreciate the question this morning. The assumptions in our medium-term outlook are a combination of our expectation around the pace of equity tokenization and our rollout of tokenization services, expansion of our stablecoin business as well as trading of securities and other ancillary services. As this technology is adopted throughout the medium-term period, we expect that to accelerate. As Tom mentioned, we are currently in the early days of this trend, but we are confident that it will play out over a 3-year period, and we believe we're perfectly positioned to offer a variety of different services into our customer base with accelerating growth throughout the period.

Understood. And then I guess just a follow-up on the history here of Equiniti's growth, how their market share as a transfer agent kind of evolved over the last couple of years. It seems like you're assuming pretty low growth in that business going forward. But just curious in the context of they operate in a pretty competitive environment. I think one of the peers announced a similar offering today as well in terms of what you're looking to do. So I just want to understand their competitive positioning a little bit better in terms of how they've operated over the last couple of years.

Yes, Dan, thanks. The global transfer agent industry is roughly a duopoly between Equiniti and Computershare. It's been a pretty balanced market with limited growth in recent years. We expect the traditional transfer agent business of Equiniti, again, to be roughly flat. Some of that will be us transferring business over to the tokenization platform that may decrease or flatline some of the existing revenue. We expect the interest income there to be flat. But generally speaking, it's been a duopoly with limited growth really due to consolidation and fewer public companies. We also expect that, that trend is likely to reverse or at least stop being a headwind over the medium-term outlook.

Yes. Perhaps staying the obvious in case anything is lost in the shuffle, Dan. The opportunity here is tokenization. And so when Dave is talking about growth, we're separating out the tokenization growth, which we expect to be significant. And he's separating out growth that would come from tokenization versus growth that would come from the existing 4 corners of the business.

Your next question comes from the line of Kenneth Worthington with JPMorgan.

How much of Equiniti's revenue today comes from traditional TA versus the blockchain services? And to what extent is Equidi servicing stablecoins in the digital commodities markets today? And then just on your point on tokenization, why do issuers want to tokenize their stocks? If the existing system works and it's time tested, do they care enough about quicker settlement to make this change? And my thoughts were there needs to be sort of a cost saving story or a valuation-enhancing story. Do you think that is there to encourage that tokenization push?

Ken, thanks a lot. Will you just repeat the first part of the question? I missed it.

How much of Equiniti's revenue is coming from traditional versus the blockchain..

Yes. Got it. So Ken, it rounds to 0, the blockchain revenue at Equiniti has today. That's part of the beauty of this transaction. And I referenced it in my prepared remarks. We've actually been working with them for months now separate and apart from this -- well, related but separate from the transaction. And we brought to bear our blockchain capabilities. We've been very impressed by their technology staff and actually their blockchain know-how, but this is the top of the first inning for them in terms of blockchain services. That's why it's so exciting. And so you're going to see from them today actually an integrated transfer agent capability for the very first time to be able to handle tokenized securities. So that's brand new. So I think that answers the first part of your question. And then the second part of the question, I would just highlight that issuers don't necessarily see the market working as well as you implied. I was on the other side. I had an issuer advisory council when I was leading the New York Stock Exchange. And you would not believe the negativity you hear from CFOs and IROs and general counsels about the way the market works today. There's intermediary after intermediary, distancing the issuer from what's actually happening with the stock. There's lots of opacity in terms of who's buying what, why is it being bought? How is it being bought? Where is it being stored? Where is it being recorded? And the issuers, so the CFOs, the day bonanos, if you will, are always looking for new pockets of liquidity, and that's very, very difficult to do in a rigid financial system that's so prescriptive and built on, in some cases, 50-year-old technology, but at a minimum, 20-year-old technology. So to put it succinctly, the benefits to the issuers are obvious. 24/7 is going to bring new pockets of liquidity, more transparency around my stock is more information. And then also that they're just going to make their investors happy because of the investor benefits that come along with it. Now I'm obviously a cheerleader for this tokenization trend, Ken, and it's only going one direction. I will say, just to temper the enthusiasm, the time line, it's the time line of this that's uncertain, not whether this wave is happening. And when I say the time line is uncertain, there is -- there are some regulations to be sorted out, and there are some protocols to be sorted out so that we can see the type of liquidity in the tokenized world for trading of these tokenized shares that we see in the certificated share world. But aside from that, the benefits to issuers are very clear, will be very clear. And we've already spoken to issuers, and we're hearing that directly from them.

Got it. And then Equiniti makes a lot of money from interest income. Is there a float component to the business? And how interest rate sensitive is the interest income?

Yes, Ken. As you can see on Page 13, Equiniti, we're expecting to have approximately $230 million of interest income that is from float. As Tom mentioned earlier, Equiniti processes $0.5 trillion of payments mostly related to dividends from its corporate issuers. So that is float income. The business has interest rate sensitivity. We can detail that more on the call -- our earnings call in a week or so. But there is a bit of interest rate sensitivity there. The mix of that float is about 2/3 U.S. dollars, 1/3 pounds. And it's currently unhedged, and we'll be considering alternatives for that as we go through the back half of the year.

Your next question comes from the line of Aditi Bulachandra with Citi.

Congrats on the announcement. Really excited to see you guys diving even deeper into the tokenization space. So I guess I had a bit of a more macro question, specifically surrounding clarity and regulation. We've seen a little more movement in the last few days. But I guess, Tom, what are your views on the Clarity Act as it stands right now and with what it says in regards to tokenization? And what happens if this current momentum that we're seeing in the last day or 2 stalls again?

Thank you. Great question. And I'll refer back to Ken's question and my comments there about the time line. One thing that would certainly be positive for the time line and kind of shifting the global securities tokenization adoption curve to the left would be a successfully passed Clarity Act bill because the Clarity Act brings a lot of clarity, apologies, to what is the security, what is the commodity, exactly what are the rules of the road, and it will also give a lot of comfort to our highly regulated broker-dealer brethren, other custodians, even other transfer agents to really move forward and start ramping up the tokenization push. I'm glad you brought it up. The one thing I would say is there's been a breakthrough on the stablecoin impasse, the stablecoin yield impasse. But there's still just all sorts of debate going on in this bill. And a lot of it is coming from our brothers and sisters in the digital assets community. And I would just implore them to realize the time is now. Just -- it's as good as we're going to get. Nobody is ever going to be perfectly happy with legislation. That's a good thing. And it's time to get behind this and start pushing in the same direction because the more we in the digital assets community are pulling in different directions, the more we're going to risk missing this moment and not getting a market structure bill, which could take us back 5 years to a time with a lot of ambiguity that none of us wants to go back to.

Your next question comes from the line of Owen Lau with Clear Street.

On the deal. On Slide 14, I want to go back to the 2029 exit EBITDA run rate EBITDA less CapEx margin of 50%. I think if I do the math, your pro forma margin is about 39% or so. I know you have some like cost optimization and reduction, but could you please give us more detail how you can go from the pro forma margin to 50% plus in 2029?

Yes. Thanks, Owen. And your math is directionally correct there on the starting and ending margins. The margin expansion is driven by 2 factors. First is the revenue growth that we expect to experience during the period. Again, the expectation we're setting is that accelerates from approximately 6% to 8% plus as we exit 2029. And then on the cost side, you can see that we expect $25 million to $50 million of additional combined cost reductions versus the 2026 combined base case. That's driven by synergies, partially offset by investment into the platform. Liquidity has spent significant resources and time in the last couple of years modernizing their infrastructure and rightsizing their workforce. And so we believe the company has been on a very strong trajectory with regards to cost control and takeout. We expect that to accelerate during 2026. And frankly, for bullish to be a beneficiary of a lot of hard work in '26 that flows through in '27. So we expect the cost takeout to actually be more front-loaded than backloaded. -- and again, the revenue growth to be accelerating throughout the period.

Got it. And then maybe a follow-up on the potential revenue synergy. Is there any potential like synergy on the revenue side between Bullish and Equiniti?

Yes, absolutely. It's part of the reason -- it's a major reason that we're doing the deal. We expect during the outlook period or there to be significant adoption of tokenization. We believe we're perfectly placed to offer a highly unique end of one type product into the market. We think there will also be additional synergies around trading visibility, liquidity, stable coins and more. So we're incredibly excited. And I actually think that we're doing this call from our consensus conference down in Miami. And both Tom and I, our phones are blowing up right now with new business around this. And so we can't wait to get down on the floor, meet our partners and new partners. And we expect that as the as time unfolds and we move forward here, we're going to see some really interesting new use cases, products, services and plenty of revenue synergies.

Owen, I would just emphasize, that is why we did this deal. It is revenue synergies. That is the -- if I could summarize the entirety of the strategic rationale, it is revenue synergies, maybe being a little bit glib. What we focused on in our model is just the sort of plain vanilla tokenization trend. So okay, we've got these issuer customers, they're going to be coming on board and the tokenization train, and we're going to be there to provide these tokenization services for them. Sitting down with them, designing the smart token, writing the smart token, operating it, operating a white list. Keep in mind, we have 20 million shareholder customers already white listed. They are a wallet address away from being fully white listed tokenization shareholders. And then we can take the bullish services, which, by the way, were instrumental in tokenizing the U.S. dollar stablecoins. Remember, we have substantially every stablecoin customer, all every one of the challenger stablecoins as an active customer of bullish, providing a whole number of tokenization services to them. So that's -- think the secondary trading, listing and compliant venues all around the world, the provision of liquidity, the marketing of those tokens, writing research on them. Those fit perfectly with the tokenization trend and also are a revenue synergy because now we have 3,000 issuers to be able to sell into as they are issuing securities, debt, equity and otherwise. So that is the deal. We have not contemplated other revenue synergies in here, which trust me, there are others, but we wanted to really focus on the more highly confident, but this is a business with $500 billion of annual payments. As you know, we are stablecoin experts. There is no stablecoins that are used within Equiniti. We know how to use those, and we know how to use those in a very exciting and profitable way. We did not contemplate additional synergies around the bullish Exchange outside of tokenization. We have not contemplated partnerships with Layer 1 blockchains as we move into this global securities tokenization trend. We've just focused on the core area of revenue synergies to the Equiniti issuers for tokenization services over the window that we've provided.

Your next question comes from the line of Gareth Gacetta with Cantor Fitzgerald.

I was wondering if you could provide any detail on sort of the issuers most eager to lean in throughout this whole diligence process? And also, how important do you think investor demand for the tokenized product is in driving the adoption? Because it sounds like if you create kind of a seamless integrated product behind the scenes, they might not even know which product they're actually trading with.

Yes. I think those are both questions, both great questions. The investor demand will indeed drive issuer demand and to some extent, vice versa. And you know how these things go. You get the early proof points. People realize, okay, this thing is happening. It's not a coincidence that -- just yesterday, I believe, or maybe it was Friday, the DTCC has put out an announcement. We're excited to speak to them. I know Frank Lasala, the CEO, is down here at this conference and look forward to collaborating with DTCC. The New York Stock Exchange has put out multiple announcements about how they will be handling tokenization. The NASDAQ has put out announcements about how they will be handling tokenization. So they're all talking to issuers. We're talking to issuers, and it kind of starts slowly like that. And then usually, there's a catalyzing event. And it's hard to predict what the catalyzing event will be in this case. But all of a sudden, you will see a hockey stick take-up on tokenized securities because the benefits for the investors are obvious and for the issuers are obvious. So once people see, they look over the fence and they go, wait a minute, they have lower cost of capital or, hey, it's cheaper to lend and borrow shares when I trade NVIDIA, who's now tokenized it as opposed to when I trade CoreWeave, which hasn't. And that's when the thing really ramps. For me to predict exactly when that would be is just impossible. I will speak, however, to your question about issuers. I'll give you one example, bullish. So we have -- as of today, yet last night, our Board agreed to fully tokenize our entire 151 million cap table of shares, and that has been approved. And now investors can go to the bullish investor website. They can see exactly how they can withdraw tokens. They can literally withdraw them to a self-custodial wallet, you could withdraw them to a MetaMast wallet or a Phantom wallet as long as they are white listed and on the white list, which we will operate, obviously, for issuers for a fee, goes back to revenue synergies. And that's something that's possible right now. And so investors will fool around with it and they'll say, "Oh, wow, this is really good for this use case. But hey, Tom, we really want you to improve the liquidity. And we'll say, okay, no problem. That's coming. New York Stock Exchange has announced they're launching a tokenized ATF. Bullish has announced they're launching a tokenized ATF. So that's how these things formed up. I lived it. When I went to the New York Board of Trade, I walked on to that floor and I told you about the carbon copies on the floor, there was 0 electronic trading, 0. And when we introduced electronic trading, some places, it went immediately to 50%. Other places, it didn't happen at all, and then there was a catalyzing event. But the truth of the matter is 2 years later, 100% was electronic and essentially 0 was being traded on the floor. And so that's what the transition is going to look like. It's going to be a little messy in the sense that we can't perfectly predict the timing, but that's some of the context for you to follow along at home.

Awesome. That's great color. And maybe could you just provide a quick update on capital allocation going forward? And maybe what do you think the net leverage at close will be and kind of deleveraging going forward?

Yes. So as I mentioned during my comments, we expect at closing to have north of $500 million of net liquid assets that's net of debt. So net leverage will be negative or essentially 0 post closing. And then I mentioned the free cash flow over the period. Not sure yet if we'll go immediately to pay down debt. Some portion of it probably will. But what we like about the transaction is it leaves us in a net cash position still even after assuming the $1.85 billion of liquidity debt and puts us in a position to generate very significant free cash flow. We could delever should we choose to or we can use the free cash flow, excess cash and strong balance sheet to pursue more growth either organic or inorganic.

Your next question comes from the line of Brian Bedell with Deutsche Bank.

Congrats on the deal. Look for -- yes. Maybe just go back, I know you said it's difficult to predict, but maybe just want to get a sense of how you're thinking about the U.S. listed equity market right now tokenizing their securities. So sort of maybe by the end of your time horizon you '29, maybe what portion of the market you think does take up tokenization in the U.S. And then also to what extent you see this happening globally relative to the U.S. in terms of the take-up U.S. versus non-U.S.? And can you also tokenize other types of securities with Equiniti's as well?

Yes, sure. Thanks, Brian. Let me take it in reverse order. Absolutely. So a lot of kind of ink is spilled about tokenized equities because we're also programmed from reading the Wall Street Journal watching CNBC or otherwise to follow the stock market. But the fixed income market is equally interesting to us. And in some ways, Dave and I talk about this a lot. In some ways, we think it's equally ripe for this sort of massive tokenization wave. So the short answer is absolutely yes. And I think we can agree if you just focused on the fixed income market, the fixed income market absolutely needs more transparency and liquidity tools, maybe even more so than the equities world. In terms of U.S., let me take a step back. It's not our intention to -- just to be clear because the preface of your question kind of invokes some words around this. It's not our intention to be a listing venue. Think NYSE or NASDAQ. I've been in that business. That's not our intention to be a primary listing venue. But we will very much seek to provide liquidity solutions and trading on regulated venues, secondary trading unregulated venues. And then in terms of your -- the portion of your question dealing with what will that adoption curve look like, you've Brian known Dave and I long enough we do 2 things. We kind of put out guidance that we feel confident in that's aggressive, but also you can rely on. But number two, we don't Bullish you. And the truth is we just don't -- we can't precisely predict what that curve is going to look like. And so for purposes of this guide, we just took a very humble approach to it and said, "Hey, what if some small almost single-digit number of issuers moves into this meaningfully single-digit percentage moves into this meaningfully over the near-term horizon. In reality, it is my hope and belief that we will see some pretty aggressive adoption of tokenization because the benefits are just way too persuasive. The good part about the U.S. is the current laws and regs allow for it right now. And as I sit here or as I sit here in 10 minutes when the market opens, as I said, bullish will have a fully tokenized cap table. The downside is that we have a series of rules called Reg NMS for National Market System around the trading that you really have to step through one by one to integrate the trading of tokenized securities. And that's why the liquidity solutions have followed and will follow the solutions of getting the shares actually tokenized and in the hands of the shareholders. I hope all that made sense. I was trying to answer kind of 3 questions in one.

Yes. No, that totally makes sense. I appreciate it. If I could squeeze just one more in, and that would be this industry is, like you said, it's a duopoly. Do you expect the tokenization industry, the business that you're buying to remain concentrated? Or do you see the potential for more entrants to do what you're doing essentially on the tokenization side and therefore, the tokenization aspect will be more fragmented longer term?

Yes, great question. You need the issuers. You need the issuer. You just -- you can't go issuer by issuer. There isn't enough time. This wave is too powerful and too fast. And you look around the world and there's maybe 2 that have the issuers. So let's start there. And the thing that gets us most excited, Brian, is you also need the value-added services because what we found in stablecoins is it's not dead easy to tokenize the U.S. dollar, but it's not rocket science. You need to have some brilliant PhD engineers who really understand how to architect and build a smart contract. But what you really need to make it success is what we call the success layer. You need the ability to list it on trusted venues where institutions congregate. You need liquidity solutions. Like where is the actual bid and offer going to come from? And you need the ability in order to bridge the liquidity gap from the old school world to the new world, you need to be able to bring visibility to what you're doing and research and marketing -- and no one can do all of that, not even close. So will there be competition? I'm sure because people don't like to ignore a $270 trillion opportunity. Are we particularly concerned? No. We just want to perfect our offering, and we think we're going to be a one of one when this transaction closes.

Your next question comes from the line of Joseph Vafi with Canaccord.

Congrats on this deal announcement. Really, really great to see. I joined a little bit late, but just -- yes, just I joined a little bit late, but I was just wondering here for looking at the business and your strategic view of it, bullish at core as an exchange, but with liquidity services, with some of your other offerings and now this acquisition, you really a bigger ecosystem infrastructure almost like player. I just wondering how you look at the business today and your place in the ecosystem and if you continue to look to expand that positioning kind of just away from exchange-based business and into a bigger ecosystem player.

Yes. No, that's great. I mean sometimes we joke that we just don't have imagination. All we do is kind of copy the best business models. I mean I came up in this exchange industry myself my first, I'll call it, big job was running the New York Board of Trade. We operated a floor-based trading venue, electronic trading venue, a captive clearinghouse for which we owned all of the technology and in some cases, even sold that technology to others. And we actually operated the warehouses, the physical warehouses for cocoa and coffee, some of which sit right there in Brooklyn on New York Harbor. That is to say -- and then I moved on to the New York Stock Exchange, where we offered the actual trading venues, we offer for equities and options. We even provided the data services for the entire industry, Opera, the consolidated tape, which is to say, I know no other way to make yourself integral to the ecosystem is to provide a vertical stack of customers so you can meet their customers where they are along the journey and build a really great business while you're doing it. In both cases, that I just highlighted to you, the margins doubled from already healthy bases in those businesses under our leadership and really part and parcel from running this integrated business. At Bullish, we now operate the trading solutions. We operate the clearinghouse, and we operate the infrastructure layer. That is keeping this golden source of truth, the ledger of who owns what. It's very -- in my mind, it kind of flows from the top or from the left to the right, where you have the trader walk in the door looking for trader solutions and then they need to risk manage the positions to the extent there are derivatives like an option through a clearinghouse, but then they also need to be able to keep track of who owns what and who owns legal title and settle the transactions and so on and so forth. So today, we've completed that ecosystem play that we've been looking for, Dave and I have been looking for since we joined full time 3 years ago this past Saturday. And we feel like we now have it, and it's time to really just build and catch this tokenization wave. Another consensus exclusive, we like to say. For any of you who are not here at Consensus, we would love to welcome you next year. Reach out to me if the ticket is in the way because I think when you come and you see this conference, you won't miss it in the future. It's truly an amazing gathering, 20,000 people, mostly institutional, focused on this next layer of programmable finance. With that, I just want to say, on behalf of Dave and our team here, thank you to all of you. I also want to say in case they're listening to our Equiniti colleagues, -- we look forward to working with you, and I want to thank them. We're so excited to have them along for the journey and these assets that we picked up today. And we look forward to seeing you on our earnings call actually quite shortly.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.