Nasdaq, inc (NASDAQ:NDAQ)
Q2 2021 Earnings Call
Jul 21, 2021, 8:00 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Good day and thank you for standing by. Welcome to the Nasdaq Second Quarter 2021 Results. [Operator Instructions] Please be advised that today’s conference is being recorded.
I would now like to hand the conference over to your speaker today, Ed Ditmire, Senior Vice President of Investor Relations. Please go ahead.
Ed Ditmire — Vice President, Head of Investor Relations
Good morning, everyone, and thank you for joining us today to discuss Nasdaq’s second quarter 2021 financial results. On the line are Adena Friedman, our CEO; Ann Dennison, our CFO; John Zecca, our Chief Legal and Regulatory Officer, and other members of the management team. After prepared remarks, we’ll open up to Q&A.
The press release and presentation are on our website. We intend to use the website as a means of disclosing material, non-public information and complying with disclosure obligations under SEC Regulation FD.
I’d like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC.
I will now turn the call over to Adena.
Adena T. Friedman — President and Chief Executive Officer
Thank you, Ed, and good morning, everyone, and thank you for joining us. My remarks today will focus on Nasdaq’s second quarter 2021 financial and business performance, as well as the progress we’ve made to drive forward along our strategic direction.
I would like to begin by acknowledging the Nasdaq team’s deep commitment and delivering results for our clients, while creating sustainable value for all of our stakeholders. Nasdaq’s mission reflects our focus on becoming the premier platform and ecosystem for the global capital markets and beyond with unmatched technology, insights, and markets expertise, and we made important progress during the second quarter. Our financial results demonstrate our businesses ability to capture opportunity in a unique economic environment, even as we continue to strengthen its position for long-term growth.
We see strong demand for many of our products and services as corporate issuers, institutional investors, banks, brokers, and marketplace operators, all navigate today’s rapidly changing world. Our core foundational marketplace is benefited from an active capital market backdrop that saw record setting industry, US equity and options trading volumes in the first half of 2021. Our client-first model has also driven our ability to win the majority of new listings and one of the strongest periods of industry activity in years. Meanwhile, expanding demand from institutional owners for index strategies, as well as asset allocation and portfolio management tools from banks for modern anti-financial crime solutions and from corporates for ESG and investor relations solutions underpinned our performance in the Solutions segment businesses. Our performance in these businesses is also a testament to our client-centric approach and strategically aligned offerings as we invest in and grow new and innovative technology to meet that demand.
We also achieved other important milestones against our corporate journey of this quarter. First, Nasdaq completed the sale of our US Fixed Income business to Tradeweb Markets at the end of the second quarter. Second, we announced our strategic investment in Puro.earth, a leading carbon removal marketplace, along with the launch of our new ESG Data Hub, these solutions further expand the ways that we can partner with our clients to support their unique sustainability efforts. And third, we announced yesterday that we are starting an exciting next chapter for the Nasdaq Private Market as part of our partnership with the group of leading banks in the private market space. It highlights both the success of the Private Market platform we developed at Nasdaq, and the growing interest in developing a robust ecosystem for private company liquidity. All of these actions underscore our commitment to our strategy and allow us to reprioritize elements of our unique business model to advance our focus on the most impactful secular opportunities.
I will now turn to our financial results from the second quarter of 2021. Overall, Nasdaq delivered net revenues of $846 million, an increase of $147 million, or 21% from the prior-year period, driven by 18% organic revenue growth in our Solutions segments and 10% organic growth in our Market Services businesses. We continue to execute against key secular growth opportunities as illustrated by strong momentum in our institutional investor, analytics and anti-financial crime solutions businesses, as well as the broad-based growth in total Company ARR of $1.8 billion. This equated to an increase of 22%, compared to the prior-year period, reflecting both the acquisition of Verafin and a 12% increase in our existing ARR.
Turning now to specific segment highlights from the second quarter, I’ll begin with our foundational marketplace and corporate businesses. Our Market Services segment saw net revenues of $312 million, a 13% increase from the prior-year period. Market Services transactional revenues, the sum of our cash equity, equity derivative and fixed income and commodities trading businesses increased by 27% in total in the second quarter of 2021, compared to the prior-year period, with the largest contributor of this being our equity derivatives revenues, where we experienced strong increases in US options industry volume. Nasdaq’s options markets specifically traded $782 million of multiply listed options contracts, an increase of 28% year-over-year.
Driven by an active dynamic equities market, we have also seen increased levels of activity from companies seeking to tap the public market to raise capital, which has resulted in a 13% increase in the overall number of operating companies listed on the US on Nasdaq in the last 12 months. Specifically, we have 352 more operating companies listed on Nasdaq in the US than we did in June of 2020. The increase in our number of listed companies naturally contributes to higher industry volumes and contributes to higher trading on Nasdaq in particular since we have approximately two times higher market share in our own listed stocks than we have in stocks listed on other markets.
I would also like to highlight for a moment another record-breaking Nasdaq Closing Cross during the annual Russell US Indexes reconstitution, which occurred in late June. The Closing Cross successfully executed 2.3 billion shares of Nasdaq listed securities, representing approximately $81 billion in market value and occurred in under two seconds. This Closing Cross was 760 million shares larger than our second largest Closing Cross ever, which occurred in March of this year with the triple witch [Phonetic] exploration. I’m incredibly proud of our team as this milestone underscores our leadership and operating the industry’s most robust and resilient market infrastructure.
Next, our Corporate Platforms segment delivered revenues of $154 million, a 22% increase year-over-year. The business continues to thrive with elevated levels of new listings since the market recovery in the second half of 2020.
In our Listings business, Nasdaq again led US exchanges for IPOs during the period, welcoming 135 IPOs that raised $31.7 billion, including 88 operating company IPOs and 47 SPAC IPOs. The Nasdaq Stock Market led US exchanges with a 78% total win rate on IPOs, as well as executing the largest direct listing ever, Coinbase. In addition to new listings, we also welcomed 10 switches from the second — in the second quarter 2021, representing a combined $183 billion in market value, including Honeywell, a Dow 30 company. The total market value of all companies transferring to Nasdaq since 2016 now exceeds $1 trillion.
Meanwhile, our Nordic listing platform hosted 62 IPOs in the second quarter, bringing the total to 86 in the first half of 2021, contributing to an 11% year-over-year increase in the Nordic listed issuer base, compared to the prior year quarter.
Nasdaq is proud to be the exchange partner supporting companies throughout their corporate lifecycle with our commitment to providing issuers with an industry-leading market model and a full suite of investor relations, board engagement, and ESG solutions. Revenues in our IR & ESG Services increased $4 million, or 8% to $56 million in the second quarter, compared to the prior-year…