Nasdaq, Inc. (NDAQ): Growth, Leverage and the Data-Driven Pivot

Top-line Surge Meets Rising Leverage: The Most Important Development#

Nasdaq reported FY2024 revenue of $7.40B — a sharp +22.15% year-over-year increase — while free cash flow rose to $1.73B (+12.34% YoY). At the same time the company finished 2024 with net debt of $9.28B, which implies a net-debt-to-EBITDA ratio of 3.77x using FY2024 figures. The combination is striking: robust top-line and cash-flow improvement on one hand, and materially higher leverage on the other, creating a strategic and financing trade-off that shapes Nasdaq’s near-term options and valuation premium.

Financial performance: what the numbers say (and how we calculated them)#

Nasdaq’s FY2024 financial statements show revenue rising from $6.06B in 2023 to $7.40B in 2024. Using those figures, revenue growth is (7.40 - 6.06) / 6.06 = +22.15%. Operating income of $1.80B yields an operating margin of 1.80 / 7.40 = 24.32%, and reported net income of $1.12B produces a net margin of 1.12 / 7.40 = 15.14%. EBITDA reported for 2024 was $2.46B, representing an EBITDA margin of 33.24% (2.46 / 7.40).

Free cash flow (FCF) rose to $1.73B in 2024 from $1.54B in 2023, a YoY increase of (1.73 - 1.54) / 1.54 = +12.34%. Operating cash flow in 2024 was $1.94B, which is ~174.77% of the year’s reported net income (1.94 / 1.11 = 1.7477), indicating strong cash conversion in the period. Those cash-flow improvements support both investment in product development and shareholder returns (dividends + buybacks), but the balance sheet move toward higher leverage tempers flexibility.

Our balance-sheet-derived metrics show total debt of $9.87B against shareholders’ equity of $11.19B, implying a debt-to-equity of 88.28% (9.87 / 11.19). Using reported net debt ($9.28B) divided by FY2024 EBITDA ($2.46B) gives a net-debt-to-EBITDA of 3.77x. The current ratio computed from current assets ($7.79B) and current liabilities ($7.90B) is 7.79 / 7.90 = 0.99x.

Where our numbers diverge from some published ratios, the reason is methodological: many service providers report TTM or pro-forma figures (aggregate trailing-12 or adjusted EBITDA, differing cash definitions, or post-close debt from acquisitions). We flag these differences explicitly when they appear below.

Income statement trend (FY2021–FY2024)#

The table above highlights two clear patterns. First, revenue moved materially higher in 2024 (+22.15% YoY). Second, EBITDA improved both in absolute terms and margin percentage, reflecting the higher mix of Solutions and Market Services revenue. Those dynamics support Nasdaq’s narrative that recurring, higher-margin products are driving scale.

Balance-sheet and leverage snapshot (FY2021–FY2024)#

Two observations stand out from the balance-sheet table. The company’s asset base expanded meaningfully in 2023 (reflecting acquisitions and intangible increases), then moderated in 2024 as cash balances and liabilities shifted. Net debt rose from $5.35B in 2022 to $9.28B in 2024, reflecting M&A activity and financing decisions that increased leverage. The net-debt-to-EBITDA of 3.77x using FY2024 figures is materially higher than earlier years and is the single most important balance-sheet metric for assessing financial flexibility.

Strategy and execution: from exchange to data and software#

Nasdaq’s strategic pivot — scaling Market Technology, Market Services (data and analytics), Capital Access Platforms and index businesses — is visible in the revenue mix and ARR dynamics reported in 2025 quarters. Management has emphasized ARR and subscription-like revenue as evidence of more predictable earnings, with ARR reported near $2.9B in Q2 2025 and SaaS revenue showing double-digit organic growth in the quarter Investing.com - Nasdaq Q2 2025 Earnings Call Transcript.

The advantages are straightforward: data products and licensed market technology scale with limited marginal cost, generating higher gross margins and recurring cash flows. Nasdaq’s FY2024 gross-profit ratio of 40.39% and EBITDA margin of 33.24% reflect this mix shift. The company’s listing franchise — Nasdaq led new listings for decades and maintained leadership through Q2 2025 — feeds a virtuous cycle of data usage, index licensing, and corporate services demand Nasdaq - IPO Performance.

Yet execution is not frictionless. Expanding market-data product suites and AI-enabled offerings requires R&D and integration investments, plus capital to pursue acquisitions that accelerate capability (visible in prior years’ acquisition spending). Management’s ability to convert those investments into sustained margin expansion will determine whether the market’s premium multiple is warranted.

Margin dynamics and operating leverage#

Nasdaq’s FY2024 operating margin of 24.32% sits below some high-margin peers on an adjusted basis, but profitability has improved in absolute terms as Solutions scaled. The core margin levers are product mix (more Solutions and Market Services), scale in technology delivery, and operating efficiencies from automation and AI. Management has highlighted AI-driven surveillance and analytics as a driver of operating leverage; external coverage documents partnerships and product launches (e.g., AI-powered surveillance with cloud partners) that aim to shorten investigations and reduce manual costs Markets Media - Nasdaq Launches AI for Surveillance.

If AI reduces investigation time by the management-quoted ~33% in targeted surveillance workflows, the effect will be twofold: lower operating expense in those product lines and improved product stickiness for clients that rely on faster, more accurate surveillance. The scale of savings depends on adoption and the portion of operating cost tied to manual surveillance activities; even partial realization would lift margins, but realizing broad cost savings across a diversified business takes time.

Cash generation and capital allocation in practice#

Nasdaq converted earnings into cash effectively in 2024: operating cash flow was $1.94B and FCF $1.73B, allowing the company to fund dividends ($541MM paid in 2024), modest buybacks ($145MM repurchased in 2024), and still service debt. Dividend payments represent a payout ratio of ~36.6% on the reported dividend-per-share of $0.99 (dataset), which is consistent with a sustainable distribution profile given the cash-flow base.

Capital allocation choices over the past few years leaned toward strategic acquisitions and investments in product expansion. That activity explains both the growth in intangible assets and the rise in net debt. The company’s 2024 net cash used in financing activities of -2.56B reflects debt repayment and other financing uses. Importantly, cash at the end of 2024 stood at $5.01B, down from $7.12B at the end of 2023 — a decrease of -29.63% — underscoring the cash impact of financing and investing decisions (including earlier acquisitions) even as operating cash flow increased.

Valuation profile and metric reconciliation#

The market price in the provided quote is $94.84 with reported EPS $2.60, yielding a spot P/E of 94.84 / 2.60 = 36.48x (rounded), which matches commonly cited TTM multiples. Using the reported market capitalization of $54.42B and FY2024 revenue of $7.40B produces a price-to-sales ratio of 54.42 / 7.40 = 7.36x. That calculation differs from some published TTM price-to-sales figures (6.71x in the provided dataset) because external providers often use different trailing-revenue definitions (TTM vs fiscal-year) or include adjustments for divestitures and acquired-revenue timing. We call out these methodological differences when comparing multiples.

Similarly, computing enterprise value (EV) as market cap + total debt - cash & short-term investments gives an approximate EV = 54.42 + 9.87 - 0.78 = $63.51B. Using FY2024 EBITDA of $2.46B yields an EV/EBITDA of 63.51 / 2.46 = 25.80x, which is higher than the dataset’s EV/EBITDA of 22.37x. Again, differences arise from alternative EBITDA definitions (TTM vs adjusted), timing of debt tranches, and the cash definition used by data vendors. The important investor take-away is that Nasdaq trades at a premium multiple relative to many financial-services peers, reflecting expectations for durable, higher-margin recurring revenue.

Competitive position and moat durability#

Nasdaq’s moat is rooted in three comparative advantages: proprietary market and reference data, an exchange-grade technology stack that can be licensed, and network effects from listing leadership and index products. Those assets create high switching costs. Competitors (ICE, CME, Cboe) have scale and strengths in derivatives, clearing, and alternative data bundles, but Nasdaq’s suite of capital-access products (listings and CAP) and market-technology customers create differentiated recurring revenue.

However, durable moat does not guarantee margin parity with peers. Some peers show higher adjusted operating margins and different capital structures. Nasdaq’s path to margin convergence will require sustained mix-shift toward software and data, successful AI productization that delivers tangible cost savings and pricing power, and disciplined capital allocation that balances growth purchases with debt reduction.

Risks and stress points#

Several measurable risks are embedded in the numbers. First, leverage: net-debt-to-EBITDA of 3.77x (FY2024 basis) limits optionality and raises sensitivity to rate moves when refinancing. Second, cyclicality in capital markets — IPO and listing volumes can move rapidly with market sentiment; a slowdown would compress CAP-related revenue and ancillary data usage. Third, valuation cyclicality: the premium embedded in a ~36.48x P/E assumes sustained earnings growth; any meaningful slowdown or margin pressure could compress the multiple. Fourth, execution risk on AI and product rollout: benefits are contingent on client adoption and realistic timeframes for cost savings.

What this means for investors#

Investors should view Nasdaq’s story as a classic growth-with-leverage profile. The company is executing a strategic pivot from transactional, volume-sensitive exchange fees to recurring, higher-margin solutions and data. That shift is visible in ARR growth and the FY2024 revenue step-up. Cash generation is healthy and improving, which funds dividends and modest buybacks, but net debt increased to levels that materially raise leverage metrics when measured against unadjusted EBITDA.

Two practical implications follow. First, the binary driver of valuation will be the pace at which recurring Solutions and Market Services revenues scale and the extent to which AI and automation convert into durable operating leverage. Second, balance-sheet management — whether through debt reduction, disciplined M&A, or incremental buybacks — will materially affect investor returns because leverage amplifies both upside and downside. For investors tracking Nasdaq, the clearest near-term catalysts are sustained ARR growth, continued listing momentum, and evidence that AI-enabled products are producing measurable margin improvements.

Key takeaways (quick-read)#

Nasdaq finished FY2024 with $7.40B revenue (+22.15% YoY), $1.73B FCF (+12.34% YoY) and net debt of $9.28B (net-debt/EBITDA 3.77x). The company’s strategic pivot to market technology, data, and CAP is driving higher-margin recurring revenue and ARR expansion, but increased leverage and the need to execute AI-driven margin gains are the two material watchpoints for investors. Q2 2025 commentary and ARR disclosures reinforce the strategy Investing.com - Nasdaq Q2 2025 Earnings Call Transcript, while listing leadership continues to be a defining distribution advantage Nasdaq - IPO Performance.

Forward-looking considerations and monitoring checklist#

Look for three concrete, data-backed signals to assess progress. First, recurring revenue growth and ARR momentum: sustained organic ARR expansion above mid-single digits will validate the subscription thesis. Second, margin inflection tied to AI/product automation: sequential improvement in adjusted operating margin attributable to product mix and cost-savings initiatives will be a critical signal for multiple expansion. Third, leverage trajectory: falling net-debt-to-EBITDA (from 3.77x downward) would restore capital flexibility and reduce refinancing risk.

Finally, keep an eye on listing cadence and IPO market activity — these directly feed Capital Access Platforms revenue and downstream corporate services and data consumption. The listing franchise is both a leading indicator and a durable competitive asset for Nasdaq.

Closing synthesis#

Nasdaq sits at an inflection: the company is materially reweighting revenue toward recurring, higher-margin software and data while maintaining a dominant listing franchise and investing in AI-enabled products. FY2024 results show that the pivot is producing real top-line and cash-flow improvement, but the financing of growth has raised net leverage to a point where capital-allocation choices matter more than they did historically. The investment story is therefore two-fold: growth and productization of data/AI on the upside, and leverage and execution risk on the downside. Monitoring ARR progression, AI monetization outcomes, and a measured reduction in net debt will be the objective, data-driven way to judge whether Nasdaq’s premium multiple is fully earned.

Sources: Nasdaq FY2024 financial statements (filed 2025-02-21) and company-disclosed Q2 2025 segment/ARR commentary Investing.com - Nasdaq Q2 2025 Earnings Call Transcript; listing metrics Nasdaq - IPO Performance; AI and product reporting Markets Media - Nasdaq Launches AI for Surveillance; supplemental financial-health context DCFModeling - NDAQ Financial Health.