NDAQ Nasdaq, Inc.
Quality fintech-exchange franchise, but $92 already prices in flawless Adenza execution; fairly to fully valued.
The story
Nasdaq has become a capital-markets technology and data franchise. Its Financial Technology (Adenza/Calypso, Verafin, surveillance) and Capital Access Platforms (index licensing, data, listings) produce recurring, high-margin, switching-cost-protected revenue, and its exchange network effects keep cash coming in. It is a mature but still compounding business: Adenza integration and cross-sell are adding high-single-digit growth, while the 2023 acquisition left heavy debt and goodwill that drag on reported capital efficiency.
Growth of about 7% matches the 5-year organic plus Adenza CAGR (about 10% including M&A) and the shift toward SaaS and index revenue. The 35% margin on gross revenue reflects synergy capture and mix shift above the current 31.7%, short of software-only peaks because pass-through transaction rebates sit in the revenue line. Sales-to-capital of 1.5 is set on incremental capital; the reported 0.41 is distorted by Adenza goodwill. A 10-year horizon credits the exchange/index moat without full franchise status.
Value drivers
| Revenue growth (Y1) | 7.0% |
| Terminal growth | 3.5% |
| Forecast horizon | 10y |
| Target operating margin | 35.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.50 |
| Beta | 0.95 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.1% |
| Terminal WACC | 9.3% |
Valuation bridge
| PV of explicit FCFF | 18.74B |
| PV of terminal value | 21.66B |
| Equity value | 31.68B |
| ÷ shares → per share | $56.67 |
News
bullish +0.60 · 8 articles
- Blockchain.com To Go Public At $6 Billion Valuation
- Nasdaq Launches Agentic AI Environment for Calypso Capital Markets Platform
- What Does Nasdaq (NDAQ) Early Adenza Synergy Progress Mean For Its Growth?
- Nasdaq (NDAQ) Could Be 11% Undervalued As HSBC Expands Calypso Tie Up
- Nasdaq's Adenza Acquisition Delivering Synergies Ahead of Schedule, RBC Capital Markets Says
- Nasdaq Eyes Always-On Markets With Tokenized Equities and 23/5 Trading
- Nasdaq Eyes 2027 Equity Tokens as AI, Cloud and RegTech Fuel Growth
- NYSE, Blockchain Team Up For Round-The-Clock Trading
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 9.36B | 7.0% | 32.4% | 2.53B | 408.38M | 2.12B | 1.94B |
| 2 | 9.98B | 6.6% | 33.0% | 2.75B | 412.69M | 2.33B | 1.96B |
| 3 | 10.60B | 6.2% | 33.7% | 2.98B | 414.09M | 2.56B | 1.97B |
| 4 | 11.22B | 5.8% | 34.3% | 3.21B | 412.37M | 2.80B | 1.98B |
| 5 | 11.83B | 5.4% | 35.0% | 3.45B | 407.33M | 3.04B | 1.97B |
| 6 | 12.43B | 5.1% | 35.0% | 3.62B | 398.83M | 3.23B | 1.91B |
| 7 | 13.01B | 4.7% | 35.0% | 3.79B | 386.76M | 3.41B | 1.85B |
| 8 | 13.57B | 4.3% | 35.0% | 3.96B | 371.07M | 3.59B | 1.79B |
| 9 | 14.10B | 3.9% | 35.0% | 4.11B | 351.77M | 3.76B | 1.72B |
| 10 | 14.59B | 3.5% | 35.0% | 4.25B | 328.91M | 3.93B | 1.64B |
Key risks
- Adenza/Calypso growth and synergies disappoint while about $8.4B of net debt limits flexibility
- Cyclical drop in trading volumes and IPO listings plus fee or regulatory pressure on market data
- Competition from ICE, CME, LSEG and fintech challengers in index, surveillance and risk software
Catalysts
- New Calypso/AxiomSL cross-sell wins (e.g., HSBC) and agentic AI products lifting FinTech ARR
- IPO window reopening (crypto and AI listings such as Blockchain.com) and deleveraging enabling buybacks