Global exchange operator Nasdaq (NASDAQ: NDAQ) reported revenue ahead of Wall Street’s expectations in Q3 2026, with sales up 12.6% year on year to $1.48 billion. Its non-GAAP profit of $1.04 per share was 2.3% above analysts’ consensus estimates.

Is now the time to buy NDAQ? Find out in our full research report (it’s free for active Edge members).

StockStory’s take

Nasdaq’s third quarter saw a strong positive response from the market, with management attributing momentum to the expanding demand for its AI-enabled solutions and the successful execution across its Capital Access Platforms and Financial Technology divisions. CEO Adena Friedman highlighted that “AI is becoming increasingly foundational to how institutions make decisions, manage risk, and allocate capital,” driving elevated client adoption of data products and fintech services. The company also benefited from a surge in recurring revenue, strong IPO activity, and expanding partnerships, offsetting modest softness in the IPO environment late in the quarter.

Looking ahead, Nasdaq’s outlook is shaped by ongoing investment in AI, the transition to always-on market infrastructure, and the anticipated launch of the Nasdaq equity token. Management emphasized that “clients are moving more infrastructure to the cloud,” supporting broader adoption of AI-powered analytics and workflow tools. CFO Sarah Youngwood noted that the company expects continued growth in annualized recurring revenue as tokenization and new trading capabilities roll out, though she cautioned that market and regulatory dynamics could influence the pace of adoption in the coming quarters.

Key insights from management’s remarks

Management cited accelerated recurring revenue growth, AI-driven product adoption, and key product launches as major contributors to third quarter performance.

• AI-led product demand: Nasdaq reported significant adoption of its agentic AI solutions, with over 850 clients using these tools across Verafin and new deployments in Calypso and Surveillance. Management pointed to a “freemium” approach that is converting trial users to paying clients and fueling a robust upsell pipeline.

• Recurring revenue expansion: Annualized recurring revenue (ARR) grew 14% year-over-year, supported by strong client retention and upselling, particularly in cloud-based fintech offerings. Cloud migrations were credited for driving higher contract values as the company becomes a managed service provider.

• IPO and listings momentum: The listings franchise maintained high win rates for initial public offerings, including eight of the top ten largest IPOs in the quarter. While some late-quarter softening was observed, the pipeline remains “robust” and management expects to support a diverse range of new issuers.

• Index and product innovation: Nasdaq launched 32 new index products and expanded partnerships with BlackRock and State Street, helping to deliver record net inflows and drive index revenue higher. Over one third of net inflows came from products launched in the past five years.

• Tokenization and market modernization: The acquisition of LeveL Markets and the development of the Nasdaq equity token position the company at the forefront of tokenized assets and continuous trading. Management sees near-term demand in collateral management and expects these efforts to support both data solutions and long-term growth in Market Services.

Drivers of future performance

Nasdaq’s forward-looking strategy centers on sustained AI adoption, cloud migration, and the evolution of global market infrastructure, with tokenization and expanded trading hours as key growth levers.

• Ongoing AI and cloud adoption: Management expects continued momentum as more clients migrate to the cloud and adopt AI-enabled products, increasing average contract values and supporting recurring revenue growth. The ramp-up of agentic AI modules across fintech solutions is seen as a critical differentiator.

• Tokenization and market access expansion: The company is prioritizing the rollout of the Nasdaq equity token and expanding collateral management services, aiming to capture demand as financial institutions seek instant settlement and asset mobility. Early client engagement in tokenization is constructive, but widespread adoption will depend on regulatory acceptance and industry readiness.

• Regulatory and competitive landscape: Management acknowledged that evolving regulations—such as the SEC’s innovation exemption—and continued pushback from some issuers may influence the pace of tokenized equity adoption. The company is focused on education and partnership to shape the regulatory environment and maintain its competitive edge.

Catalysts in upcoming quarters

In the coming quarters, the StockStory team will monitor (1) the pace of adoption for AI-powered fintech products and conversion from freemium to paid contracts, (2) execution milestones in tokenization, including the first wave of Nasdaq equity token launches and collateral management partnerships, and (3) progress on expanding cloud migrations and recurring revenue streams. We will also watch for regulatory developments and new market access initiatives, such as 23/5 trading.

Nasdaq currently trades at $102.66, up from $96.12 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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