Nasdaq's Q2: Record Results, AI Monetization, and a Pivot to Market Modernization
The exchange giant rides AI adoption and market structure innovation to record volumes and AUM, while opening new fronts in perpetuals and tokenized collateral.
NDAQ · Earnings Call · 2026-07-23
Record Quarter, Record Confidence
Nasdaq’s second-quarter 2026 results were historic. Net revenue jumped 15% to $1.5 billion, and diluted EPS climbed 25% to $1.07, crossing the $1 per-share threshold for the first time. “Nasdaq delivered outstanding growth across each of our divisions, underpinned by our leadership in driving the transformation of the financial system.” — Adena Friedman, Chair and Chief Executive Officer · 2026-07-23 The quarter brought a string of milestones: Index AUM surpassed $1 trillion, the largest IPO in history (SpaceX) landed on its exchange, and record volumes were set across multiple venues.
In our Index business, assets under management surpassed $1 trillion for the first time in our history, and we had our largest quarterly net inflows ever.
Management remained confident in the medium-term growth algorithm, even after lifting full-year expense guidance by ~$50 million to $2.53–$2.57 billion. The IPO environment stayed robust, with 26 new operating company listings and a strong pipeline.
AI: From Efficiency to Monetization
The generative AI narrative is shifting from internal efficiency to client monetization. Management highlighted that the agentic AI workforce at Nasdaq Verafin is now used by 750 clients, with new role-based workers in beta. Adena Friedman detailed a pragmatic approach: some capabilities are embedded in products, others are offered on a freemium basis, converting free alerts into paid subscriptions. “We're in the very early innings of monetizing our AI capabilities, but we're very encouraged by the way that the clients are moving from free to a paid subscription.” — Adena Friedman, Chair and Chief Executive Officer · 2026-07-23 This builds on the internal "AI on the business" program mentioned in the April call, targeting $100 million in expense efficiencies by 2027. “We do have an internal program to drive AI adoption within the operations of Nasdaq, and we say that's AI on the business.” — Adena Friedman, Chair and Chief Executive Officer · 2026-04-23 The data side is equally strategic: the new Data Link Model Context Protocol (MCP) makes it easier for clients to feed Nasdaq data into AI workflows, with an incremental charge for the MCP layer. The market modernization theme is also playing out in data, as international clients license real-time data ahead of 23/5 trading.
New Frontiers: Perpetuals, Tokenization and the Always-On Market
Perhaps the most striking change is the proactive discussion of perpetual derivatives. Historically absent from Nasdaq’s lexicon, "perps" were mentioned several times on this call, with management framing them as both a potential opportunity and a minimal threat to existing revenue. “if you think about what do perpetuals solve in the crypto ecosystem, they solve the ability for investors to trade on margin... those 2 things are very, very accessible in the equities world today.” — Adena Friedman, Chair and Chief Executive Officer · 2026-07-23 The company sees technology and licensing opportunities if these products cross into equities. More concretely, Nasdaq piloted tokenized collateral trades on the Canton Network with two large asset managers, using Calypso to move tokenized money market funds as collateral. “we had 2 major asset managers... they take a tokenized money market fund that they've created... transfer that collateral using Canton.” — Adena Friedman, Chair and Chief Executive Officer · 2026-07-23 This is a potential new module for Calypso, extending its collateral management franchise. Meanwhile, 23/5 trading remains on track for December 6, with record volumes at Triple Witch and Russell reconstitution demonstrating the scale of the opportunity.
Capital Allocation and Regulatory Winds
The company is returning capital aggressively: $530 million returned in Q2, including $356 million of buybacks, and a new $200–$250 million variable ASR launched in July. Gross leverage fell to 2.6x. Management is also reshaping the portfolio, announcing the acquisition of Dasseti (AI due diligence) and the sale of Nasdaq Fund Secondaries to Nasdaq Private Market. “we really like to operate in regulated markets. And we operate best when the markets provide, like, clear rules of the road.” — Adena Friedman, Chair and Chief Executive Officer · 2026-01-29 This aligns with their engagement on the SEC's order protection rule review, where they see potential for innovation if the rule is loosened. On the expense side, the guidance increase reflects higher compensation and marketing tied to the robust IPO environment, but operating margin still expanded 2pp to 57%, and Operating income rose 24% year-over-year, underscoring the leverage in the model.