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

All right. Welcome, everyone, to our next session. I'm Ben Budish, Barclays analyst covering the U.S. brokers, asset managers and exchanges. And for this fireside chat, we're delighted to have Adena Friedman, CEO of Nasdaq. Adena, welcome. Thanks so much for being here.

It's great to be here.

Maybe just to kick it off. Over the last several years, Nasdaq has been leaning into the technology part of the business, increasingly pivoting away from being a pure exchange. So can you talk a bit about this journey, which you've really spearheaded? Where do you Nasdaq moving towards in the future as well?

Sure, yes. Well, as everyone knows, I think our foundation is as an exchange operator. But over the last 15 years, actually, we've been getting more and more engaged in the technology space. And so when I rejoined Nasdaq 10 years ago as President, I started to work with the team that was focused on the technology side of our business. So we provide capital markets technology to exchanges and then surveillance technology, which is really, think about it as kind of part of the anti-fin crime suite of -- to the broker-dealer community and to exchanges as well. And as I was engaging with those clients and really understanding what their needs are going to the largest broker-dealers about how -- what are their areas of focus, and how can we help them? It was clear that we had really good relationship, we had very good technology. But we had -- were kind of a niche provider of technology to them. And they were looking for a bigger, broader platform where we could help them manage their largest problems. And those big problems are managing criminals out of their networks, managing their risk within the capital markets and managing the regulators and all the reporting for the regulators. And those are the types of things I kept hearing. And so as we started to think about broadening Nasdaq and where we could be the best partner to our clients, we started to lean in more and more on what I'll call risk management side of the technology, type of technology. Starting with anti-fin crime with the acquisition of Verafin, we had done a very complete study and strategy work on that. And then moved into the risk management and regulatory reporting with the acquisition of Adenza. So we are now a scale provider of technology for the entire industry, to really help them become more resilient, become stronger as organizations. And they do see us as a natural partner for that. I think that they understand that we're best-in-class on the exchange side. Our risk management capabilities are very strong ourselves. We're highly regulated. We understand them and they definitely are seeing us as a partner going forward. So that's been a really fun element of how we've been expanding with us. I think the other areas of expansion have been to serve corporates and investors with tools that help them connect better, and then of course growing our index business in terms of -- in addition to our exchange business.

Great. Maybe let's just talk about Adenza a little bit. So the strategic fit, it's increasingly clear all the time as we kind of go through earnings calls, learn more about the business. But there was a pretty strong reaction from The Street. So maybe what do you think was initially most misunderstood that drove that reaction?

Well, I think the first thing is that Adenza was a private company and it was not a well-known brand because Thoma Bravo had brought together two businesses, Calypso and AxiomSL, and formed Adenza. So the first question is what is Adenza? And when investors are -- when we're make -- we decided to make a large acquisition into a space that the investors are not familiar with. I think that, that's the first thing. I think the second thing is that once they started to understand how strong these assets are, they started to kind of really -- they really did a lot of diligence on the business and recognized that these are very strong assets. They're best-in-class within the industry. They have strong growth drivers underpinning the business as well as a large, large SAM and TAM. And so I think investors are starting to get more comfortable with it. We also -- it was a large acquisition for Nasdaq. It was the largest we've ever done. And it was in a, what I'll call, risk-off environment in terms of the environment that we were executing the deal in. But we had total conviction that this was the right next step for us. This is an area that we understand, we've been gaining a lot of expertise in, we understand our clients extremely well. We actually -- we know these assets quite well, in fact. I mean, Calypso has been in our space a long time in the capital markets space. And AxiomSL was a business that we evaluated, but we were in the middle of doing the Verafin acquisition. So we just weren't in the position at the time to buy it. But totally understood how good it was. It's such a great business. So I think we've had conviction. It took time to get, to provide all the information that our shareholders needed to have them have conviction. But also, I think we need to execute, and I think we're seeing quite well. So that, I think, is giving shareholders good confidence.

Right. Well, let's unpack that a little bit. So maybe thinking about the cross-sell opportunity between Nasdaq's legacy product set and Calypso and Axiom. How are you going after this? Where are the most natural areas of overlap for Nasdaq that perhaps didn't exist for Adenza on its own?

Yes. Well, first of all, when -- I mean, just talking to clients, and we have obviously relationships at the highest levels within broker-dealers all over the world. I think that -- and when you reach the -- like talking to the Chief Risk Officer, the COO, the CFO, the CTO. They know us, they understand the strengths that we bring. They understand also that they've got very large problems to solve. These aren't areas where they're going to differentiate themselves. These are areas where they want to expand the playing field. So if they could find a great partner to help them solve more of their challenges, they're going to want to lean into that partner. And that has been very much part of the conversations we've been having with clients. So as not only between Nasdaq and the Adenza, but even with between the Adenza products themselves, those businesses have only been brought together for 18 months. So there was a lot of opportunity also in the cross-sell there. But in terms of the areas that we've been initially focused on, because we have a very concerted effort to drive cross-sell across the business. The first thing has been looking at collateral management capabilities within Calypso and tying those to the clearinghouses that we serve in terms of managing the risk across the clearinghouses in addition to managing risk within the broker-dealers. So that's been one area. The second has been looking at driving the use of Calypso into Verafin clients because Calypso is actually, from a risk management perspective, an excellent tool for treasury risk management, capital risk management, as well trading risk management. And so we have 2,500 banks that use our Verafin products across the United States, and so we have an opportunity to support them more holistically. And then with all of the changes in the rules around Basel III end game, but also other rules that are coming across the world, making sure that are bringing AxiomSL into those clients where we already serve them with surveillance, capital markets, technology, and we're finding that there's a real opportunity there as well.

You mentioned Verafin, maybe we'll touch on that for a moment. So you continue to sign new Tier 1, 2 banks. Maybe talk a little bit about the challenges of going after this market segment, how Nasdaq is starting to overcome them. Maybe comment, if you could, on the current pipeline.

Yes. So Verafin has been just an amazing business for us to be the owner of. So we're really proud of that. And that business, the business itself has been just a juggernaut within the anti-financial crime space in terms of starting with the smallest banks and building their way up now to the largest banks. And what they've done that's really unique is they've always maintained an extremely modern infrastructure and model that has underpinned their business. Most notably in terms of bringing data together, harmonizing that data, normalizing it, and then using AI to run very advanced algorithms to root out criminal behaviors across the network. And as you've -- now we've grown to be 2,500 banks and now with $7 trillion of assets under custody that we can look at, and all the transaction volume that occurs across those banks, it makes us unique in terms of our ability to find patterns of behavior, looking at the payer and payee, making sure -- I mean, criminals don't bank in one bank, right? So they tend to move around. And so we are able to look across the system and find patterns of behavior. Now we also are able to reduce false positives because a lot of times, a bank might be receiving a new client. They've done some work on that client. But as they're starting to do transactions, they're going to be doing a lot of extra checks on that client because they're not familiar with that client. But if that client's already been banking somewhere else, we can basically eliminate that as a false positive very quickly. So when we've gone into the large banks now, we're able to show them that, by bringing their data into the consortia data lakes that we've created, we're able to bring down our false positives by anywhere from like 20% to 40%, depending on the parameters that we're putting on the system, and increase the fraud found significantly. So it's like an instant and very tangible ROI on the fraud side of things, any sort of payment fraud. On the AML side, it's a more complicated problem, and it's harder to kind of show an instant ROI because there are so many SARs that have to be written. But what we can demonstrate now is an incredible improvement in the efficiency by which banks have to manage their AML programs. We are using GenAI. One of the new capabilities that we've introduced and we're rolling out across all of our clients today is a GenAI copilot that allows us to do all of the research and write the reports related to potential actors. So if we get an alert in the system around AML, they have an army of people who go out and look around the Internet and try to figure out what -- whether this person or this entity is a criminal entity or not. And we are able now to use the GenAI tooling to be able to crawl all of that and do all the research, draw all the data down, show them all the links to any sort of references to this entity and then write the report based on conclusions that the AI has come up with. And that means that the analyst just has to read that and review it and make sure and confirm everything, which takes down their time of doing the work by 90%. So we're really, really excited to be rolling that out because that makes the AML program just so much more efficient, and that is an ROI for the client. So those are the types of things we're doing to make sure that we can serve the largest banks in the world in addition to continuing to serve the smallest banks in the world with great technology.

On GenAI, you mentioned the client ROI. What about for Nasdaq? So I think you've recently indicated the rollout is expected to be done around the third quarter. So what are the implications for the company? Is this an upsell? Does it make the value prop more compelling? Is it stickier? How does it impact the bottom line?

Yes, it's a great question. So we made the choice. We want to prove value. I mean, GenAI is a very new capability, so it's hard to sit there and go, "Okay, we've got some new capability that you've never used before. Can you pay for it?" So what we've actually done is we have been rolling it out across our clients. We want to prove value to them, and we can help them and know whether or not they're actually, number one, using it. And then are they really saving a lot of time on the research side? And therefore, as we talk to them about renewals and upgrades and other things that they want to do with us, I think that we are finding, it will be, that we kind of able to -- we're able to basically charge for the value of it as a formula of -- reflection of the return that they're getting on it as we look at contract renewals and other upgrades. As we also go into the Tier 1s with AML, because we've been going primarily into the Tier 1 banks with our fraud module. But as we want to broaden out and continue to cross-sell our Tier 1 banks, this, I think, will be a very powerful tool for us to be able to win business but -- and also to keep those clients and show a differentiation. So we do see it also as a sales opportunity for us, and typically in the Tier 1s.

Okay. And where else across the business might there be opportunities to deploy AI capabilities? And to what extent have you used cost saves, revenue drivers you indicated here, how should we be thinking about that? And what's sort of the time frame?

Sure. Yes, we actually talked about it internally as AI on the business and AI in the product, and we have an opportunity in both areas. So on the business, it means how do we make ourselves more efficient and effective? And we are focused on that across, I would say, three primary vectors right now. One is as the coding companion. How do we make it so that our development organizations, our engineering organizations, testing, all of those -- that part of product, product engineering, product creation, is more efficient? And we do -- we have actually rolled out a GenAI platform within Nasdaq where we can put all of our code into a repository. We can put all of our requirement documents, any sort of IP that we want, into a repository that's an enclave and secure for us. We can then bring in multiple models. We basically will test out multiple models to understand what's most effective and what are the tools that we think can be most effective in supporting our development organization, and then drive these skills, create skills that allow them to be more efficient in creating code and testing that code. Efficient, frankly, and better. I mean, it should make it so the code is cleaner, we can test more, et cetera. So there's a huge opportunity there. The second is in client success, which I'm sure you're hearing a lot of people talk about. How do you make it so clients have more self-service capabilities, but also are just getting better answers and more accurate and consistent answers to questions? And how do you make our organization a lot more efficient in that regard? And then the third area is in content creation. We do have groups of teams that write content and provide that out to our clients. How do we make it so that they can serve more clients and be more efficient with their business? So all of this is really to help us grow efficiently and more effectively. So we're pretty excited about that. On -- in the product, we are -- share focused on -- across lots of areas. So there's GenAI, which we just talked about with Verafin. We have -- Boardvantage's now going to be doing -- has the ability to do meeting summaries, material summaries, things like that, which are actually -- I mean, every Director is excited about that one. And then we have about, I think, over 200,000 Directors that are very excited to have that capability. So we're rolling that out. We've been in beta now with that for several months and we'll be rolling that out later this year. And then doing just other tools within -- in terms of writing like regulatory reports within Axiom or other things like that. And then algorithmic AI, we are deploying that in our markets. We have our first AI-driven order type that is a premium order type that has demonstrated improvement in fill rates, which we're very excited about, called Dynamic Midpoint Extended Life Order. And then we also have algorithmic AI across like our anti-fin crime, surveillance, other areas of the business. So lots of opportunity there to bring that in. Some of it is a direct upsell. Some of it's a new module that we're selling. Some of it's embedding it into the platform.

Great. Maybe moving over to your capital access platforms business. I think everybody's always curious to hear your view on the IPO pipeline. The markets are currently pricing in a number of Fed cuts over the next 12 months, which could ease financial conditions. So what can you tell us about the state of the IPO market today? How does the pipeline look? To what extent could perhaps the election result in IPOs getting delayed to 2025? I guess we're coming quite close, so maybe you have a pretty near-term view there. And what other macroeconomic factors should we be paying attention to here?

Yes. Well, we've been saying quite -- for quite some time that we would expect that the IPO environment would stay pretty light for the rest of this year. And that -- it is, I think, two things. I think everyone here can understand this. So the predictability of the economy right now continues to be difficult because we are expecting a rate cut, but we haven't seen them yet. We're expecting a soft landing, but we haven't experienced it yet. And so that just makes it harder for investors to necessarily underwrite risk. I think the second thing is that then you do have the election. And it's not that a lot of companies are actually going to be affected by the outcome of the election. In fact, a lot of the companies I'm meeting with that are looking to go public probably will have very little effect from the election. But it's just the noise of the election. Like when they go out on the road, do they want to be talking about the election or do they want to be talking about the next 3 years of the business? So I think that a lot of them are just patient and want to make sure that there's -- that unknown is known so they can go out and talk about it in a more known environment. So we're still seeing a lot of companies that may have been thinking about 2024, but not sure about it. I would say now, making more of a conviction decision to wait until 2025. There are going to be -- we've actually had more IPOs this year certainly last year, and we are seeing really actually some great outcomes for companies that have gone public. So those who are willing to take the risk, I'd say in many respects, are getting rewarded. But I just see it as being -- continue to be a relatively calm environment this year. Next year however, the pipeline is very strong. The companies are large, exciting companies, both in the tech space, the biotech space, in other sectors, energy and other sectors. So I have to say, I think that there is a robust pipeline getting into '25, assuming that the economy stays healthy.

Got it. Some of your other businesses under that umbrella, maybe Workforce Solutions. So your IR and ESG solutions business clearly been somewhat impacted by the current IPO cycle. What would your expectations be here with more healthy and open IPO markets in 2025?

Yes. So that is true. And I think that we've seen -- and we had mentioned that we've seen a slowing of the sales cycles last year, and we've seen kind of a better environment as we went into this year. So we hadn't seen it deteriorate further, and I would say that's still the case. It's still relatively slow, but healthy -- more healthy conversations. More -- companies are more willing to be a buyer than they were last year because it was a more uncertain environment last year. And then -- but the challenge is that we now have a slower IPO environment. So we have fewer new companies to sell to. And there is a -- we've talked about this flywheel effect between the listings and the Corporate Solutions for quite some time. So there is an opportunity, when you have a new listing, they get certain services complementary for several years. But we tend to upsell them. We also -- we have certain services that are also not part of that package that we'd like to bring in to the client. And so those opportunities are less as we've seen a lower IPO environment. And -- but at the same time, I would say that what we've been really focused on in those solutions is just continuing to build them so that they're really fit for purpose for the environment that the clients are working in. So we've done -- we have the sustainability lens that we've added into the IR platform as an increase and new module. That is an AI-driven module that helps them manage for ESG reporting and comparing themselves to other companies in terms of their ESG outcomes, in terms of index inclusion and other things. We also have other tools that we've provided to them on the Boardvantage side. We've been migrating our clients to cloud and introducing the new summarization tool. So as we have a better environment, hopefully next year, we'll start to have that flywheel effect come back into play and hopefully drive better growth in these businesses.

What about on the analytics side, can you talk about what you've been seeing there? What does the current asset manager appetite look like for those kinds of products? And any other similar kind of impacts? Or what's kind of your near-medium-term outlook?

Yes. So I mean, the analytics side, which is really the solutions that we offer to our asset management, asset owner clients. So it's the eVestment in Solovis and Data Link. They're doing well. And I would say eVestment in particular, we have some really great modules that have had really strong sales in terms of like Market Lens and new capabilities that we've offered. We brought all of the Mercer data and all of their research into the eVestment tool, and that's creating -- and we've had -- that's been a very large integration. So now that we're through that integration, we have a real opportunity to sell our clients on that data and that information, that we have a new clientele to be able to make sure we're servicing. We also have new -- in Data Link, new data that we were rolling out, that we're always rolling out to clients. And so those things are -- I would say that we have a very healthy environment there in terms of the types of modules that we have available to our clients and the buying appetite from the clients. It's definitely improved from last year.

Great. So maybe separately on the index side. So you're clearly benefiting from the popularity of the QQQs, the underlying performance of many of its constituents. But I think earlier this year, you mentioned 30% of your index AUM comes from indices other than the Nasdaq 100 franchise. So talk a little bit about what else the company is doing here. And how do you see your overall index franchise evolving over, say, the next 5 years?

Yes. So the index business has been a really exciting business for us for actually ever since I got back. It's been an area that we've been -- chosen to make some significant investments in to make sure that we are professionalized. We've completely professionalized the operation, the people, process, systems, right? So our people and our process, we really matured that. And now we're actually in the process of moving our index business onto our next-gen platform. So very, very exciting because it allows us to even be faster and more efficient in driving new products and new product creation to our clients. But what -- well, we have kind of three legs of the journey with index. One is to continue to launch new products. And we've launched something in the range of, I think, 80 new products over the last 12 months. It doesn't mean -- some of it could be different products based in Nasdaq 100, but it's also based on other indexes, new index products that we've launched with our clients. We always partner with index providers and asset managers that are wanting to launch products against our indexes. We do it globally. So it's exciting. So we have new products, and then we have global expansion. We've been really focused on Asia. It's been a really exciting area for us to drive new products and find and draw AUM into our products. And then also bringing it into the institutional community. That's an area that we've been under-invested in I'd say since the launch of our indexes. We've really been retail-driven in our index products. But the fact of the matter is a lot of our indexes have really matured to the state where they really should be part of the institutional ecosystem. We've been really focused first and foremost on the insurance side, the annuity side, bringing the Nasdaq 100 into that ecosystem. But we're just starting on that journey. And that's a huge opportunity for us, a lot of TAM is available there.

Maybe I want to pivot into sort of your Market Services and exchange business. But kind of tying the two in, we've seen a real rise in the trading of cash settled index options. What are you seeing on your end? How are you thinking about kind of developing growth in the NDX contracts? What are your kind of ambitions there?

Yes. So that's been a great partnership between the index business and the trading business. So those two groups have really been working together to launch the NDX options onto all of our options markets and also make sure that we're developing that ecosystem. So we have to make sure that the data is available and all the strategies that our clients want to execute are available through that options business. So there's been -- we actually have worked with a third party to really bring a lot of data out into the ecosystem and drive. And also the institutional adoption. The more we bring institutional adoption, the Nasdaq 100, that will obviously drive interest in the index franchise, the index options as well. So it's been -- we have a great partnership with CME on the futures. The options now complement the futures, I think that actually will drive and become a really nice virtuous cycle as well. And we've seen good growth there. It's very early. It's again, a area that we under-invested in for a long time. So the fact that we now are really putting a lot of people power behind developing our index options business, we're seeing really nice growth. And it's just beginning, I have to say. So we're really excited about that.

Great. So moving to the exchange businesses more specifically. So maybe a question, high level. How do you think about petition in the exchange business? Particularly in the U.S., how do you think about the trade-offs between market share, fee rates? What are your thoughts?

Yes. So I mean, it's a constant balance, as you know. The U.S. equities and options markets are highly competitive. They have been for a very long time. I think Nasdaq does an excellent job of competing in that highly competitive space. You have to kind of look at it again in multiple -- I would say, in multiple dimensions. The first is do you have a great trading system? Do you have the right tooling and capabilities to serve your clients? And that's something in what we are constantly investing. And as most of you know, we're rolling out our next-gen trading platform now across our options markets. And so that's exciting because we're seeing even lower latency and higher performance and more determinism within that platform. So it's a very exciting time for us there. Our clients are really happy with it. But we also look at it holistically in terms of all of the tools that we offer our clients around risk management, around revenue management and things like that. So that's one dimension. The second dimension, as you said, is pricing. It's a very dynamic space. And so we're always tuning our pricing to meet the needs of our clients. We don't chase share. That's something that we are very, very conscious of. We want to build durable share. And so when we do our pricing, we're looking at it in a very strategic way as to how to drive certain clients and certain capabilities into our markets to drive durable share and higher quality markets, like tighter markets. How do we make it so that there's a better experience when the investors come in? And so we will pay -- we will kind of do different pricing programs to make it so we have that durable share and that higher market quality, but we don't chase share that we think is fleeting. And that can then drive -- and then there's, of course, a different dimension, which is what is nature of the volume? Sometimes, certain volume is going to accrue to our benefit and other volumes can accrue to the benefit of other exchanges, and that creates some dynamic element of market share. But again, we don't try to -- we don't become concerned. Like we really look at this over the long term, creating durable value. And we try to make sure that we're focused also on what we can control. There's been a fair amount of volume that's gone into the OTC world. So when we look at our relative share, we said we might see to get some of that back, let's make sure we go after it. But then we also want to let our relative share in the context of exchange traded volume. And that's something we focus a lot on in terms of how we maintain and manage our share in that environment.

Got it. Can you talk a little bit about your Nordics exchanges? I feel like, once a year, you must get asked like, "Hey, why not divest these businesses?" Which is a hard no from you guys.

It is.

Maybe talk about the value of owning that business where you have more meaningful share, what it kind of brings...

Yes. The Nordic business is a fantastic business. And you're right that sometimes it's not as appreciated, I would say, as people from our investor community just because we have it embedded into the larger business units. But it is a fantastic business. First of all, the Nordic markets are, in my opinion, I think you would argue and the opinion of most investors, the best markets in Europe in terms of the quality of the issuers, the quality of the markets, the tightness of the spreads, the liquidity that's available. There is an incredible embedded ecosystem, financial ecosystem in the Nordic countries where you've really strong broker-dealers, you've got a lot of pensions, and at the highest level of retail ownership of equities in Europe. There's something like we think, across the Nordics, 47% of retail investors own equities. That's compared to about 57% in the United States. So it's -- but it's compared to about 19% of the rest of Europe. So it's a really great embedded ecosystem. So -- and I think that we do a great job for our clients. We really do focus, again, on market share -- sorry, on market quality, and making sure that we have the deepest pools that we serve our clients really well across all that entire ecosystem. And as a result, the business is doing well and it brings in a lot of benefit to us from our Market Tech business. We have -- we do the full stack. We do trading, clearing and settlement in certain countries there. We're in the equities and derivatives and fixed income. So we have an ability to take the expertise there and then leverage that for our Market Tech business in terms of selling technology to other exchanges. So it's a great part of our business.

Great. Maybe moving now to capital allocation. So you're currently ahead of your -- what was your original target for deleveraging post-Adenza. Any updated thoughts on getting below your leverage targets? How does this give you some more to do buybacks? What is sort of the thoughts around the trade-offs? And the near term, while you're in the process of leveraging, how should we all be kind of thinking about this?

Yes. So we are ahead of what we originally committed to shareholders in terms of delevering. We ended Q2 at 3.9x, and we expect to continue to delever. And what we've said is that we -- our expectation now is that we will be about 6 months ahead in terms of being able to delever down to the 3.3x, is what we've committed to by the end of 36 months. And now I think it will be faster than that, so -- a little faster than that. So we feel good about what we've been able to do to delever. I think where we will continue to be opportunist in making it so that -- because we do have certain debt instruments that will have expiration dates, and we'll look at doing some specific paydowns there. But in the meantime, we have the opportunity to be opportunistic in the market to look at whether we do debt paydowns or buying back debt or whether we buy back shares. And we look at it actually on an accretion basis, on a return basis, on a derisking basis. And in general, we feel pretty good about the decisions we've made right now to really focus on delevering. And -- but every month, we do a new evaluation of that to understand what is the market telling us in terms of the best use of capital? And we'll continue to be very active in that space to really kind of balance out the deleveraging as well as the buybacks.

So with maybe a little bit of room on the delevering side, it's clearly a priority. But what are your thoughts on further M&A? Maybe kind of tied us into sort of your broader vision for Nasdaq, so maybe not immediate M&A opportunities, but maybe longer term as well. What other kind of capabilities are of interest to the company?

Well, I think we actually have a very complete suite of capabilities. We have the best -- well, we think, of course, the best markets in the world. We think that we have an incredible index franchise that has huge growth opportunities. We have embedded software solutions across our entire ecosystem that serves the needs of our clients that -- where we are the right owner. We are the right provider of those solutions. On the investor and corporate side, we can help them manage their challenges in navigating the public markets. On the bank side, we now have a complete suite of capabilities to help them manage risk and the regulatory obligations. And so we feel very good about our organic path forward. We are very clear with shareholders that we have a job to do to integrate the business, to optimize the business, to show the benefits of these businesses together as part of Nasdaq, as One Nasdaq. And we have a good road ahead of us to make sure that we can execute on that well organically. And that is literally the entire focus of the organization. What we said at the time of the acquisition remains true, that if we do any M&A at all, it will be very small bolt-on deals that are just very nichey. But we are really, frankly, entirely focused on organic growth.

Got it. Maybe kind of coming back to the exchange business, I meant to ask you about this. Can you talk a bit about where you are in your cloud journey? You moved a couple of exchanges into the cloud. We talked about this in the context of AI earlier, top line versus cost save opportunities. So how do you think about that piece as well? Where is the company in the journey? And similarly, like how do you expect that to unfold over the next 5 years?

Yes. So I mean, we definitely view cloud infrastructure as the future infrastructure of the entire financial system. So -- and we're quite committed on that. We have spent last the 12 years moving more and more of our workloads to cloud. So it's -- if I just kind of go around the business. All of our solutions in CAP now are available through cloud, with the kind of our index business where we're moving into a cloud infrastructure. But we've moved our governance solutions, all of our IR solutions, all of our analytics solutions. And now -- and our data. We can deliver data through the cloud. And now we have the opportunity with our index business to kind of, as I said, with next-gen platform, to have that be a cloud-based platform. We look at our fintech business, we have -- we're moving our -- all of our surveillance clients into a cloud version of our surveillance platform. It's gone extremely well. Obviously, eVestment is a cloud-first, cloud-based, cloud-native platform. And our Market Tech business with our next-gen trading platform, we can deliver full end-to-end trade life cycle technology in full cloud. And so that has been an area where we've been engaging with our clients more and more on looking at moving portions of their market infrastructure into public cloud or into a hybrid cloud environment like we've done with our own markets. And then with our markets, we had already moved everything other than the matching engine to cloud. Like all of our market op systems, our revenue management systems, all of the things that support the trade, have been moved into cloud. What we really now have been focused on is how do we therefore move the matching engine into a cloud environment? But I would call it a hybrid cloud. So AWS has partnered with us. We are moving our markets into a cloud infrastructure that's in our data center. We want to create a private local zone within our data center to support the industry. And we want to show a path that we can then demonstrate to other markets that this is a possibility and this is the future of the business. So it's been a great partnership with AWS, and we expect to do a lot with them over the coming years to continue to migrate infrastructure into cloud.

Maybe I'll ask you one last question kind of on the exchange business as well. Maybe I'll tie 2 into 1. So in terms of the IPO pipeline, potentially more active 2025. How should we think about that translating into things like on-exchange activity, trading activity, not just the listings business? And then longer term, I think a lot of investors view like cash equities versus options a bit differently, options being like relatively less mature with a longer runway. Would you agree? How do you think options growth looks longer term versus cash equities? What are your thoughts?

Yes. I mean, certainly, over the last several years, we've seen significant growth in options volumes. I think in 2019, it was maybe 20 million contracts a day. Today it's like 47 million. So it's a very, very different environment today than it was just a few years ago, and we definitely see that as being a continued growth opportunity to us just in terms of the overall interest and expertise that's been coming into the options business, and new products being created, new strategies being leveraged within these -- in the options markets. Whereas the equities markets, I would say, have been -- are more mature marketplace, but there are ebbs and flows in volumes. And certainly what we do to make sure we create an optimal experience, we can charge a premium for those things where we provide premium value in the equities market. So it continues to be a really interesting journey there, too, just a different one.

Great. Well, with that, we're just about out of time. Adena, thank you so much for being here. What a pleasure to have you.

Yes, thank you. Thanks very much. Thank you.