Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the fourth quarter and full year of 2025.
Q4 2025 Financial Performance
Nasdaq’s fourth-quarter results highlighted robust organic growth and operational efficiency across all primary segments. The company reported record annual net revenue of $5.2 billion, with its high-margin Solutions business now accounting for a staggering 77% of its total revenue mix.
Net Revenue: $1.4 billion, a 13% increase year-over-year.
Adjusted EPS: $0.96, beating the Zacks Consensus Estimate of $0.92 and reflecting a 27% increase over Q4 2024.
Solutions Revenue: $1.1 billion, up 13%, now accounting for roughly 77% of total net revenue.
Operating Margin: Expanded to 56%, a 200-basis-point improvement over the previous year.
Segment Highlights
The company’s shift toward becoming a technology-led service provider was evident in its segment breakdowns:
Financial Technology: Revenue reached $498 million, up 14%, fueled by the continued integration of the Adenza acquisition and strong demand for financial crime management tools.
Index Business: Reported 23% growth in revenue for the quarter, ending the year with record Assets Under Management (AUM) and $99 billion in net inflows over the last 12 months.
Market Services: Net revenue rose 16% to $311 million, benefiting from record industry volumes in U.S. cash equities and options.
Key Strategic Initiatives
23/5 Trading: Nasdaq announced plans to launch 23/5 trading for the Nasdaq stock market in the second half of 2026, pending regulatory approval.
AI Integration: The company continues to roll out its “Agentic AI” workforce, including specialized AI analysts for sanctions and due diligence, to drive efficiency for banking clients.
Cross-Sell Targets: Management remains on track to surpass $100 million in run-rate revenue from cross-selling initiatives by the end of 2027.
2026 Financial Guidance and Management Commentary
For the upcoming fiscal year, Nasdaq provided the following outlook:
Non-GAAP Operating Expenses: Projected in the range of $2.455 billion to $2.535 billion.
Non-GAAP Tax Rate: Expected to be between 22.5% and 24.5%.
CEO Adena Friedman expressed confidence in the company’s trajectory, citing a “very healthy pipeline of late-stage private companies” as a signal for an active IPO market in 2026. “2025 was an excellent year of execution,” said CEO Adena Friedman. “We are well-positioned to build on our momentum in 2026 by deepening client relationships and unlocking greater value through our unified ‘One Nasdaq’ platform.”
Capital Allocation
Nasdaq remained active in returning value to shareholders in Q4, distributing $153 million in dividends and repurchasing $286 million of common stock. The company also improved its balance sheet, ending the year with a gross leverage ratio of 2.9x, outperforming its initial target of 3.0x.
Key Risks to Monitor
While the outlook is bullish, investors should keep an eye on three primary headwinds:
Regulatory Hurdles: Potential delays in the “23/5” trading approval or changes in SEC leadership could shift implementation timelines.
Macroeconomic Sensitivity: While 77% of revenue is now “Solutions-based” (recurring), a significant market downturn could still impact transaction-based volumes and Index AUM.
AI Monetization: Investors will be looking for concrete evidence that AI investments are translating into bottom-line margin expansion rather than just higher CapEx.
Bottom Line
Nasdaq enters 2026 with a Gross Leverage Ratio of 2.9x, ahead of schedule. This balance sheet flexibility gives them the ‘dry powder’ for potential tuck-in acquisitions or increased share buybacks if the market sees a mid-year correction.