Nasdaq, Inc. (NDAQ) Earnings Call Transcript & Summary

All right. Our next session is with Nasdaq. Thank you, everyone, for joining today's session. So for those of you who don't know me, my name is Owen Lau. I cover information services, exchange and digital assets at Oppenheimer. So Nasdaq is more well known to be an exchange operator, but it has been transforming to become more like a technology provider. And today, we are very excited to have the Chair and CEO, Adena Friedman, joining us. Thank you, Adena, for your time.

Well, it's great to be here, Owen. Thank you.

So for the people who are listening to the webcast, please feel free to submit your questions online, and we'll do our best to address your questions. So without further delay, Adena, so let's start off with a more macro question. How do you think about the economy for the rest of this year and maybe even going into 2024? Can you please talk about the pipeline of the IPO market? Like many of you asked these questions. And do you expect more companies to go public in the second half of 2023 compared to the first half?

I think -- first of all, I think what we're seeing is the fact that the economy in the United States has remained remarkably resilient. The employment environment is strong, the overall consumer spending is strong, and we're seeing really continued resilience of an economic activity. We've also been able to see through Q2 earnings which sectors of the economy are continuing to do well, which sectors may be recovering from a kind of a post-COVID lull. And we're seeing just strength in many of the sectors that have been -- that have really emerged on the back of COVID. So as a result of that, what we're also seeing is this really interesting enthusiasm for how technology will continue to expand the economic outcome, expand the economic outlook, but also really kind of continue to define the economy going forward, particularly as we think about how AI could impact the economy. And so the markets have been strong. And the result of that has been a good recovery in our index values. But also we're starting to see what we're calling light green shoots when it comes to more activity in the IPO market. We have had a relatively -- as we all know, a very -- I should say, not relatively, quite slow start into 2023 from a new issuance perspective. We're really proud of the fact that we continue to have the vast majority of companies choose Nasdaq. We have had a 77% win rate so far this year. But as we go into the second half of the year, we're starting to see some of the larger companies that we've been talking with for a long time, really preparing themselves to tap the public markets if, of course, the environment stays receptive. There's always that if that we have to put in front of that. But when we look at our overall pipeline, which is -- continues to be very strong at about 150 companies or so, the majority of them still are focused on 2024. The first half of 2024, if the economy does, in fact, end up with a relatively soft landing or mild continued expansion, the employment environment remains solid. It doesn't have to be as strong as it is now, but solid. And then the interest rate environment is known, then I think that we'll find that there are a lot of companies who are looking in the first half '24 to go public.

Got it. And then another kind of common question is, I think Nasdaq also talked about, which is the elongated sales cycle. So many other company -- tech companies talk about that. Like given the kind of improving macro outlook, have you heard any change of tone from your clients? Have -- do you see any like stabilization in the sales cycle so far?

So when we talk about the elongated sales cycle, we're really primarily focused in our Capital Access Platforms business. Because when -- we have 3 key divisions. We have Capital Access Platforms, which are the products we sell to corporates and investors. We have our Market Platforms, which are the products that are sold primarily to banks and brokers with some institutional investors as well. And then we have our Anti-Financial Crime Technology business, which is really focused on the banks and brokerage community. And the part of our business that we've seen the longer sales cycles has primarily been with some level of corporates, particularly with IR. If the markets aren't doing great and they're looking at how they can manage their expense base in the context that the market is not being really, really strong, I think that it tends to fall on those organizations that have some control over that. So our IR tools have been -- have had some longer sales cycles. However, the advisory business, where we help companies unpack who's buying and selling, why are they buying and selling, who should they target, that's actually remained quite strong. I think then on the other side on the investor side, our Analytics platforms that are primarily designed to serve the investor owner, the asset owner community like pensions, sovereign wealth funds and endowments, that part of our business has had longer sales cycles. Those are bigger sales decisions to launch a portfolio management tool when they've been relying on Excel or something else for a long time. That is -- that, we've seen a slowdown there. But eVestment, which is the kind of what I would call an intelligence tool that connects asset owners and asset managers, we've seen a relatively stable environment there. If we go over towards the banks and brokerage community and then the exchanges, we've actually had a pickup in sales as we've gotten into the exchange world, but that's because COVID actually created more challenge in the sales cycles for the -- for our Market Tech business, and we're starting to see a recovery there. Whereas with our Anti-Financial Crime business, it's such essential technology. It's got such a strong return on investment, such a calculable time to value because we're saving the money essentially. We actually haven't seen any slowness or any real significant changes in sales cycles there.

Got it. So we'll dive into each business one by one later on. But let's start with the bigger deal, Adenza. So you recently made the announcement, you're going to acquire Adenza, which is a risk management and regulatory software provider. Again, like Nasdaq, it's more well known to be an exchange, but you started to pivot back in 2017 when you took over as CEO. So how does this fit with the first 5 years of this transformational pivot?

Sure. Well, as we've been going through and transforming Nasdaq to be a very scaled technology provider to, what I would say, the broad -- I'll call it [ definely ], the broad industry, which are corporates as they're tackling the capital markets, which is investors when they're managing their exposure to capital markets and then the banks and brokerage community and all of their dealings in the financial system. We've really decided to go down 3 key lanes, right? So the first we call -- I always like to call it the transparency pillar, and that's our Capital Access Platforms business, where we really provide access for corporates and investors to find each other, to communicate better with data and analytics, to make sure that they're managing their strategies successfully and then also for us to create some investment strategies with our Index business. And then we have our liquidity pillar, which is really our Markets and our Market Tech, where we provide markets technology that underpins those markets, and then we sell that technology to other markets. And then we've been broadening that out to start to work with the brokerage community and providing them critical trading technology and risk management technology as well. And then we have our integrity pillar, which is our Anti-Financial Crime business, which really is what I would say, more broadly, kind of a regtech platform to help banks manage their compliance and also, of course, to root out criminals and get them out of the system. So if we kind of look at those 3 lanes and then you put Adenza into that mix, I think what we've really found with Adenza is why it's so strategic to us, is that it really fits squarely in the liquidity pillar and then also in the integrity pillar. And then there's an element of transparency that they also provide. So Adenza provides critical trading and risk management technology to a very broad set of banks and brokers around the world. So it's a great complement to our Market Tech business. And that's the Calypso platform. And then they also provide regtech technology through AxiomSL to serve banks in terms of their regulatory compliance. And a huge part of Anti-Financial Crime is regulatory reporting. So there is a really good core line of sight and strategic alignment with the Axiom platform, with our integrity pillar, with the Calypso platform, with our -- I mean our liquidity pillar. And then as we think about how we continue to evolve the technology that underpins Adenza, as they've been really executing their cloud strategy, there's a large opportunity for us to think about the transparency that we can provide as we make those systems smarter when -- in more of a cloud format for those technologies going forward.

Got it. So let's talk about some numbers here. The ARR growth of Adenza was, I think, high teens in the first half.

That's correct.

How should investors think about the medium-term growth profile of Adenza? Is like 15% revenue CAGR the right expectation over the next 3 to 5 years?

So we haven't given a specific revenue in medium-term outlook specifically for Adenza, but we have said that it has been exhibiting a 15% growth rate in the revenue profile. We did mention that the ARR in the first half of the year has been about 18%. So that's exciting. And then -- but as we look at how we fit Adenza into our financial technology platform, which is really going to be a combination of our Marketplace Technology business and our Anti-Financial Crime business, we bring it all together with Adenza, our medium-term outlook for that whole platform, which we're now calling our Financial Technology platform, is about a 10% to 14% medium- to long-term outlook on the growth rate there. And you've got some very high growth areas of that business with our Verafin platform. You've got some -- I would say mid- to high single-digit growth parts of that business with our Marketplace -- our Market Tech platform. And then you've got Adenza that's in those teens that -- we haven't defined specifically, but that kind of is what rounds it out, to think about that 10% to 14% growth rate.

Got it. So during the last earnings call, you talked about why you think growth rate of Adenza is sustainable. One of the reasons you talk about is the go-to-market strategy. Adenza can go to the client with one module and then demonstrate the value, and then you can further penetrate and upsell some other modules. Could you please elaborate this point further for us so that we can appreciate the power of that further penetration?

Sure. Yes. Well, I think, first, let's start with what are the trends that are really underpinning our growth expectations for the business? I think the first thing is that the overall total market opportunity for what Adenza provides, if we look at all the banks spend around those services that Adenza provides, it's about $18 billion and it's growing at about a 6% growth rate. And then you look at the serviceable addressable market, which is just the vended spend, meaning they have internal build and they also have services that are provided by vendors, and so that's the serviceable addressable market that we provided. And that, I think, is somewhere in the range -- I actually don't have it in front of me, but it's somewhere in the range of [ 8% to 10% ]. And that's growing at an 8% number. And so that alone, just the fact that the market opportunity is growing quite nicely and that you're seeing a switch from internal bill to vended spend is obviously a good tailwind for the business. And then on top of that, when you look at how both Calypso and Axiom are built, they're built as platforms with very flexible modules, and they have a lot of modules that they can deploy. So they have a land-and-expand strategy similar to how we work our Market Tech business, it's a land-and-expand strategy. And how we actually penetrated the banks and brokers with our surveillance platform was a land-and-expand strategy, where you go in with one module, one capability, maybe you provide regulatory reporting for the United States for a large-scale bank. And you say, here, you want to modernize your regulatory reporting for the Fed. Well, that's a module. And then you say, well, you know what, actually, let's do the Fed and the OCC. Let's factor in the SEC. Let's actually look at other regulations that we have to comply with the United States, and you're adding modules over time, and that's an incremental opportunity for -- or a bigger opportunity for Axiom. Then they say, well, you know what you've done such a good job for us in United States. Let's go to Europe. And we have a plethora of regulatory regimes that we had to navigate in Europe. So that's a group of modules that they would then go buy. And then they would say, gosh, why don't we get everything on the same platform? Let's get all of our regulatory reporting across 100 different regulators in one place, and that's what Adenza can do. And that then becomes an enterprise platform, right? So it's a really -- and the same thing, by the way, on the capital market side. I go in with trading analytics, I then move to collateral management, then go to clearing. I want to do treasury risk management, liquidity risk management. And you just go across the business and you're helping them manage their capital markets exposure and risk everywhere. The result of that platform and the flexibility of that is that about half of the growth comes from upselling clients. The benefit of that is that you've got a shorter time to market. You usually already have a master services agreement. It's basically -- so you have a shorter sales cycle, you have a faster implementation cycle. And so that's a very good sale, right? The second half of it is a combination of pricing and new client sales. And we did give some stats on upselling and new sales within the first half of the year just to give people a sense of what they're experiencing as they're managing through 2023.

Got it. So another reason I think you're optimistic about the growth is like the regulatory and complex environment. You just talked about -- a driver of that was the banking crisis in March, but the other side of the argument is it could reduce the number of banks in this universe. How do you think about the net effect of this?

So I still think it's an enormous opportunity. So I'll start with there is a -- there are a lot of new regulations coming around the world. So you've got Basel III, end state -- or Endgame, I guess, is what they call it or Basel IV or whatever you want to call it. There's that whole implementation that's happening. I know some of those principles are now coming into the United States, and then you got on top of that even incrementally more regulation that's coming on the back of the challenge that everyone saw in March. And that means that more midsized banks are going to be subject to a higher regulatory standard. And so I think that, that obviously is a great opportunity. And one of the banks that Adenza signed in the first half of the year was probably one of the shorter sales cycles they've experienced with a super-regional U.S. bank who recognized the fact that they're entering in -- their AUM is -- their assets, I should say, are just going above $100 million, and they want to get ahead of the regulatory obligation. And so they basically bought the platform. And so that was a really interesting, I think, test case in terms of the power that the platform has to help the banks manage through this new regulatory regime. But you're asking also, okay, well, that's great. But Adena, there might be bank consolidation. So I think I want to talk about that both in terms of Adenza, but also in terms of our Anti-Fin Crime business. Adenza has hundreds of banks and brokers around the world. Consolidation of banks in the United States actually could be quite beneficial to them because if 2 small banks decide to merge and become larger, they then might also be subject to a higher regulatory standard. They may not have been a client before and they become one, right? So I think in the U.S., that actually could be a significant opportunity. And also recognizing that you can see we actually provided a kind of a breakdown of the clientele across Axiom and Calypso. And they tend to skew towards, I would say, the top 500 banks in the world, right? But now they're actually starting to see more and more opportunity to go into smaller kind of the midsized bank space, both on Axiom on regulatory reporting and Calypso. And they also see more and more opportunity to go to the investment management sector as they're getting subjected to more regulatory obligations and scrutiny as well. So all of that kind of creates a great tailwind. With Verafin and Anti-Fin Crime business, that's where we're penetrated across 2,500 banks. And so one of the things that Verafin does in their contracts, though, is that if there is a merger and their asset base goes higher, they get a higher contract value. So their contract will adjust to a higher asset base. And so that actually does protect them against mergers of the banks in the United States.

Got it. I think the third driver you mentioned on the deck that you put out during earnings call is the migration to cloud. I think the number was 53% of the sales this year have been cloud-deployed modules. Could you please expand that point further? How can it help Adenza increase the share of wallet?

Yes, sure. So I think -- let's look at cloud in the context also of Nasdaq. So I'll directly answer that question, then we'll kind of look at how do we then see that as an opportunity within Nasdaq. So that's correct, that 53% of the sales in the first half were cloud delivery modules. And so that means it's -- if you are an existing client and you say, gosh, I need to actually -- I'm going to go in and do treasury risk management with you now. You've been helping us on collateral management and you've been helping us manage -- looking at trading analytics. We want to kind of bring all of that into our treasury function, and we want to deploy our treasury management solution with you. Well, that's another module. And the cool thing is that all of the data that -- kind of we can bring all that data together, but we can deliver that module as a cloud-based module. And what that really means is it's a single-tenant implementation in a cloud environment where we're the managed service provider. So it's no longer deployed where you have to manage the technology and the infrastructure and the configuration anymore. We actually manage that for you. And the reason -- and that -- or I should say, Adenza manages that for you. So the result of that is that we get a higher contract value because we're doing more for you to serve you in providing that service. So they do see that as a way to amplify their share of wallet because they are taking a burden off the clients, and they're delivering it as more of a SaaS-orientated service. But I do want to be clear that these are still single-tenant implementations of cloud. What we see as an opportunity within Nasdaq, as you know, Owen, cloud has been something that we've been investing in for a really long time at Nasdaq. And we've done a lot of work to optimize how we leverage cloud, and we have a very deep partnership with AWS as well as a really strong relationship with Microsoft and Google. So when we look at the opportunity for us to help really amplify and accelerate Adenza in the cloud, I think it's because we know how to deploy it in a very, very efficient way. We can look at how do you start to create a platform layer that maybe allows us to be even more modern and how it's delivered, and even if the modules themselves are single tenant, how can you make a data management layer that might be more comprehensive for them? And that allows us to even kind of continue that journey and maybe accelerate that journey but also make sure that we're delivering it in a hyper efficient way. So we're pretty excited about what we can do with Adenza as we work with them on that strategy, but it is a big opportunity for them.

Got it. So Adenza itself, I think it has a pretty high margin. I think it's 58% adjusted EBITDA margin. How should we think about the CapEx and maybe incremental margin from here? So how high the margin can go?

Yes. So we actually, I think, have said that the CapEx is around $20 million to $30 million a year within Adenza. So when we look at their EBIT -- so their EBITDA is 58%, their EBIT is 56%. So it's not a huge delta between EBITDA and EBIT, which is great. And actually, Nasdaq is pretty -- is quite capital-light as well. So we have about $150 million to $200 million of CapEx every year across everything we do, whether that's our buildings, our technology, hardware, software, everything. And so I think that we know how to be efficient, they know how to be efficient. When we think about the opportunity for margin expansion and we think about the synergies that we've discussed with the shareholders, I think there's a few opportunities for margin expansion. First is the fact we will achieve our synergies, and we've announced that there's $80 million of net expense synergies that we expect to see. Second, their platform and ours. But I think as we move -- and that -- by the way, those synergies are going to come from us bringing our teams together. It's not just kind of come out of Adenza. It's coming out of Nasdaq and Adenza creating a single operating model, single team, single structure to go to market and manage our clients. And so we see that for Market Tech, for Surveillance and for Adenza together becoming a really great leverageable platform. That then allows us then with growth. For us -- we will always invest in our platform. We'll always invest in the technology. They already -- they've been doing a great job of investing in our platform. But at the same time, if we have good growth, like we expect to have, that becomes -- over time, that's margin expansion because they have a very high gross margin of about -- I think it's around 80% or like [ 78% ] to 80%. So they have a high gross margin and a leverageable platform. And then with cloud also we also then -- that can become margin-expansive over time as well. So it's -- that's a journey, though. And then the last thing, of course, is cross-sells, right? So we have a great ability to cross-sell our products across our franchise, across our platform now with them. And so as we look at that, that also obviously amplifies the growth rate of the combined business that, if you assume it's margin-accretive, which we see it as a margin-accretive activity with that high gross margin, then I think that we see that also as margin-accretive in general.

Got it. So in terms of maybe some strength in Adenza, how do you think about maybe importing some of its strength, from Adenza to Nasdaq? Like such as -- I think I remember some go-to-market strategy you can utilize from Adenza. Do you think it's applicable to Nasdaq? Or it's too early to tell?

Yes. No, that is part of our synergy expectations. So they've done a really nice job of creating kind of an enterprise sales layer, then with a very specific product strategy team, product specialists, then going to client service and managing it through that technology development group. And so while we have that within each of our franchises, they're not -- it's not all one, right? So it's different groups. And so we can obviously bring that into a singular group. That enterprise sales layer is not something we've had at Nasdaq either. So I think that, that also allows us to think more holistically about the sales opportunities within these very large clients. And that's not just within financial technology. That will also span across to Capital Access Platforms as well. And then we also think that this go-to-market -- the way that they do the handoffs and the go-to-market approach is something we've been working to get to a state of maturity on within Market Tech. We have a little bit more of a, say, maturity in Surveillance. And then Verafin is its own organization with a very mature process there. But we actually think that, that will benefit a lot from maturing that go-to-market approach within the Nasdaq products that then complement the Adenza products.

Got it. So I think we can talk about Adenza for a long time, but let's switch gears a little bit to other topic, which is digital assets. On the last earnings call, Nasdaq announced that it will halt the launch of digital assets custodian business, I think, which created some headlines. But Nasdaq still provides some other services to the crypto industry such as surveillance and also IPO and stuff like that. How do you think about the future of digital assets in the United States?

Yes, sure. Well, so digital assets in the United States, I mean, I think that we just have to recognize -- and I was saying to someone earlier today, you start a strategy of, for instance, for us to launch a custodian business in the United States, and you're kind of thinking yourself as probably like on a country road that's winding. I mean -- because it's not exactly a clear road in front of us, and it wasn't 1.5 years ago. But then you start to see some very significant roadblocks start to come in front of you, and that can be in the form of what happened with FTX, the regulatory, the -- kind of the regulatory discussions and uncertainty that's been thrown into the mix, the court decisions that have been thrown into the mix, the fact that there are conflicting court decisions. That then creates these roadblocks, and you start -- you have to start to always reevaluate. Are you going down a path that you continue to believe that will be an accretive activity for shareholders and that you will actually provide a unique value that you believe that you have a right to win at? And I think that as we started to look at the custodian business -- and let me be clear, we provide already a very good technology for trading crypto, for surveilling crypto and now for custody-ing crypto. And we have -- we've built a great, I mean, a really good next-gen technology for custody capabilities in crypto. We also have Anti-Financial Crime capabilities for crypto. So we have a very good technology strategy to continue to serve the crypto markets around the world. But us as an operator of a custodian in the United States, given the regulatory changes and the overlay and the challenges that have been put in front of the market in the United States, our decision was just now is not the right time to launch that. So we decided to halt the launch. We were working towards the end of getting our regulatory approval, and we just looked at the business opportunity, and we said it's really changed. So as we continue to evaluate us as an operator in the United States, we'll continue to look at the regulatory landscape and say, are there avenues and ways that we think we can launch as an operator in a way that allows us to have a right to win. And -- but the fact is we might choose to really focus in on that -- our technology role as kind of that first and foremost role that we have going forward.

Got it. So Nasdaq also filed an application to list BlackRock spot bitcoin ETF. I don't know how much you want to comment on that, but how much confidence do you have? And when do you think you can get the approval from the SEC with the inclusion of the surveillance sharing agreement?

Yes. So it's not for us to get the approval. It's actually for BlackRock to get the approval. But we've been really -- we so appreciate the partnership we have with BlackRock and also with Coinbase. Because the way that it's going to work is Coinbase will service the underpinning of the price discovery for the ETF. They will also have other exchanges over time or if there are others that they want to add, but Coinbase is the exchange of choice for their launch. And so we've entered into an information sharing agreement with Coinbase on surveillance-related information, so that we and BlackRock know that as an ETF issuer and as the ETF listing agent that we will have access to the information we need to understand the trading activity in the ETF and as it relates to the trading activity and the underlying that sits on Coinbase. And that's an important relationship. We have that in other instances, with other asset classes. But we've done a nice job with Coinbase and with BlackRock of working through that. And with that, it actually gives us confidence also to be the listing exchange for this because we know we'll have access information we need to do a proper job of surveilling the activity of the ETFs. But I don't have a view, honestly, Owen, in terms of the approval process. That's for BlackRock to work on with the SEC.

That's fine. I'm looking forward to like a 2023 or 2024 answer anyway. All right. So another hot topic is AI, artificial intelligence. Can you please talk about some of the key gen AI initiatives in Nasdaq? How can these projects create kind of like the incremental revenue and cost-savings opportunity for Nasdaq?

Yes. It's one of my favorite topics. So well, we actually already are a good -- a very solid user of AI in not -- so let's -- like we'll put generative AI here. We've been actually deploying AI -- other forms of AI within Nasdaq now for some time, and I'll give you a couple of examples, and then we'll talk about gen AI and its impact on the business. So within the Anti-Financial Crime business, we use Bayesian models, deep learning and other AI techniques to be smarter in identifying potential criminal activity. And they do things for pattern recognition and self-learning techniques that are really, really interesting, I mean, really fascinating, actually. So one example is with human trafficking. We start with -- we look at every transaction. We have consortium data models, so the data across the 2,500 banks can be pooled. We then look at all the transactions that have occurred. We have certain patterns that we understand are likely patterns of human traffickers. And we get that by talking to experts, and one of the experts we have is a woman who was a victim of child -- of human trafficking long ago. And she formed an organization that helps law enforcement build cases to be able to put these terrible people in prison. And so she's actually been working with Verafin for quite some time to help them really think through the patterns of behaviors in terms of how the human traffickers use the banking system, how they kind of -- what kind of footprint do they leave online and things like that to help us make sure we have the right models. We then use AI learning to make those models smarter and smarter. And that's what makes our engine better than our competitors because we can eliminate lots of false positives and get much, much more accurate depictions of this criminal behavior. So that's an example. The second one is we have our first AI-driven order type that we're asking the SEC to approve, where we're just taking about 125 different market characteristics in every stock, each stock, every 30 seconds, to put a variable timer on our midpoint extended life order, so we're calling that dynamic, M-ELO, that allows us to help institutional investors get a better fill rate based on the characteristics of the market in any given moment. So that's another example. But now we move to generative AI, and that's where you're talking about content. And that's where you have this wide -- I mean this very wide and exciting and varied way of leveraging AI across the franchise. And we talk about it in the business and on the business. So kind of in the products, we can automate some of the workflows in Anti-Fin Crime, in the Surveillance business. We can do like summaries of Board reports in our Boardvantage platform. We can do things in the products that make the workflows a lot more efficient for the users. Super excited about that, and we're already working on deploying our first kind of workflow co-pilot within the Verafin platform, hopefully, soon. We'll talk more about that when we launch it. The second use case is all in the business. So the coding co-pilot is the most obvious opportunity for us. We have a very scaled technology organization. We're growing fast. We want to get better at testing. We want to get better at -- faster at delivering code. We want to make it so that we have and amplify the capabilities of our development organization, and we definitely see a lot of potential there. And that obviously will amplify even further with Adenza. So really excited about that. So we have different proofs of concepts that we're deploying across Nasdaq now within our development organizations to see what is -- what drives the most efficiency, and therefore, what should we build and scale to. And then the last thing is, of course, on just content creation and working within the legal teams and the marketing teams and others to become more efficient in managing that kind of content. Sorry, long answer, but it's a really exciting part of what we're looking at right now.

No problem. So I think we have about 7 minutes left. So maybe let's switch gears a little bit to another bigger segment or the larger segment, essentially, the Financial Technology segment. So under this Financial Technology segment, I think you have Anti-Fin Crime, you have the Surveillance and you have Adenza going forward. Maybe can you please talk about the potential cross-sell opportunity between your Verafin and Adenza business? You touched a little bit earlier, but can you add more detail on that?

Yes, sure. Yes. So I think that when we think about the user universe, and we've been really focused on looking at decision-makers within the banks and brokers because it's important to recognize that these are very large organizations. And so you have to know that you're kind of walking in a similar door as you're looking at different services. And we look at key decision makers. So you got the Head of Trading kind of the front office, Head of Trading Capital Markets, and that's where the Calypso platform -- in some cases, the market surveillance platform is sold into that channel as well as trading and other capital markets technology that Nasdaq already provides. And so that's a good cross-sell as we think about the front office, so it's trading analytics and other risk management capabilities that Calypso provides. Then you look at the CFO and sometimes in the banks, the CFO also has a risk management role, sometimes they don't. But the CFO, we've got treasury analytics. We obviously have our corporate platforms. A lot of them are public companies. So they need IR and other things that support them, governance platforms. But then they also will look at, from the CFO's perspective, as I mentioned, the treasury risk management and other tools that Adenza provides. Then you look at Head of Risk Management. I mean that's where you've got AFC, you've got the Verafin platform, the Surveillance platform, the Axiom platform, in many respects also, elements of the Calypso platform around risk management. And that's a critical door that allows us to cross-sell an enormous amount of what we offer within the financial technology business. So I think that that's where we have to develop though, the muscles and the capabilities with this, as I mentioned, the go-to-market and the enterprise sales approach to be able to think about how we solve their problems holistically, leveraging these solutions and what can we do to make it easier for them to use them. And over a longer period of time, we'll have a great -- I mean this is going to be super creative in how we can continue to develop these products to make them even more useful and more integrated.

Got it. So Adena, you just talked about the Capital Assets Platform, which is another big part of your business other than Financial Technology. And within that, I think the Index business has been doing quite well recently. I think the growth rate was about 22% CAGR over the past 5 years based on my math. And we saw a substantial recovery in AUM in the second quarter. Could you please talk about the growth driver of the Index business going forward? Is it mainly driven by market appreciation or there's a demand for your index from new funds?

Yes. It's actually been a good combination of both. And so when we look at the last year, so even with all the market turmoil, the downturn in the markets and the downturn in market cap of the listed companies that sit in our Index products, we still actually had $25 billion of inflows over the last year and $10 billion of inflows just in the second quarter. So we have indexes that are, what I say, capturing the imagination of the investor universe and continuing to show that they can grow quite substantially just in terms of investor interest. And the reason for that is that we have a range. So we have, obviously, our benchmark index, the Nasdaq 100, which has been just a juggernaut of an index product. And obviously, we had a dip in performance in the fourth quarter, the first quarter as the markets -- on a year-over-year basis as the markets had faced some tougher times, but we've seen a good recovery of that. But then we also have other thematic indexes that are really tied to the future of technology. And that obviously has a big investor universe of interest in those technologies, whether it's cloud, it could be cyber, the AI and other things. Those types of technologies are obviously very important. Also, green energy. Those types of index -- thematic indexes. And then the last thing is smart beta. So we have more, what I'll call, strategic outcome indexes in terms of whether you want a dividend focus, a buyback focus, a momentum focus, a value focus, we do have indexes that really serve the different strategies that investors have. And I think the result of that is that -- and also, I would say the last thing is we're not a supermarket of indexes. We've been very discrete and focused on indexes that we can create in partnership with these large asset managers that allow them to capture the interest of their investors and that we partner on the IP. And so that's really been the cornerstone of our index business. And I think that's why we've had really good growth and really good focus. And we have a great business. I mean it really is a great business. So...

Got it. So I think we have 1 or 2 minutes left. Maybe, Adena, I just want to give you some time. Do you have any final thoughts for us? Do you want to summarize our conversation today. Anything else you want to talk about?

Yes. Thanks, Owen. Well, first of all, great questions. As you can tell, we have a lot of opportunity within the organization. And it's been an interesting time in the markets, but I definitely think we've been able to demonstrate a lot of resilience as a platform. And then we still continue to have these really interesting growth drivers that underpin the business. As we kind of go forward, I do want to point to the 3 lanes again. So we have 3 different growth paths that we're really focused on at Nasdaq. The first being the transparency pillar with our corporates and investors. And ESG, particularly the environmental side of ESG, continues to be a major focus area where we're maturing our capabilities, providing more data-oriented products to our clients, more workflow tools. The second is the liquidity pillar. Our markets have continued to perform really well. And it's funny, Owen, that we spent the whole time, we didn't talk about the markets. But the markets have really performed quite well with really interesting liquidity characteristics, particularly in options in the U.S. And then we also have our Market Tech business, which I said has had a good recovery from COVID, and we're seeing really interesting new sales there. And then we have our third pillar, which is our integrity pillar, and that's really our Anti-Financial Crime business, great grower, great product base, both of the Surveillance and the broader Anti-Fin Crime, and really good growth drivers there. So we're excited about our future. We're excited about our future with Adenza. And thank you very much, Owen, for letting me spend some time with you.

Sounds great. Thank you very much. I think we're running out of time. And again, thanks, Adena, for your time today, and thank you all for joining us. Have a good day.

Great. Thank you.

Thank you. Bye-bye.