Breaking Down Nasdaq, Inc. (NDAQ) Financial Health: Key Insights for Investors

You're looking at Nasdaq, Inc. (NDAQ) right now, trying to figure out if its recent strength is just market noise or a defintely solid structural shift, and the numbers from the Q3 2025 earnings report-released in October-suggest the latter. That quarter saw Nasdaq post net revenue of $1.3 billion, a strong 15% jump year-over-year, alongside non-GAAP diluted earnings per share (EPS) of $0.88, beating analyst consensus. This isn't just about trading volume anymore; the real story is the successful pivot to a technology platform, evidenced by the Solutions business surpassing $1 billion in quarterly revenue for the first time, pushing Annualized Recurring Revenue (ARR) to a robust $3.0 billion. So, while the stock's market capitalization sits near $48.84 billion as of November 2025, the underlying health is tied to this predictable, high-margin revenue stream, which is why analysts project full-year 2025 revenue around $5.17 billion and EPS near $3.36. Let's break down what this means for your portfolio.

Revenue Analysis

You're looking for a clear picture of where Nasdaq, Inc. (NDAQ) makes its money, especially after their strategic shift toward becoming a technology platform. The direct takeaway is that the business model is now heavily weighted toward high-growth, subscription-based Solutions, which is defintely a positive for revenue predictability.

For the trailing twelve months (TTM) ending September 30, 2025, Nasdaq, Inc.'s total revenue hit $8.17 billion, showing robust growth of 16.40% year-over-year. This growth isn't just a fluke; it's driven by a fundamental change in their revenue mix, moving away from pure transaction volume toward sticky, recurring contracts. This shift is best measured by their Annualized Recurring Revenue (ARR), which reached a milestone of $3.0 billion in the third quarter of 2025, an increase of 10% over the prior year.

Here's the quick math on the third quarter of 2025 (Q3 2025) performance, which saw net revenue increase 15% year-over-year to $1.315 billion: The company is now structured around two main pillars: Solutions and Market Services.

The Solutions segment is the engine, accounting for roughly three-quarters of the firm's quarterly revenue. This segment is where the firm's transformation into a technology-focused entity is most visible. It includes Financial Technology, Index, and Capital Access Platforms, reflecting a move toward providing data, software, and analytics to clients globally. If you want to understand the foundational principles driving this, you can look at the Mission Statement, Vision, & Core Values of Nasdaq, Inc. (NDAQ).

Within the Solutions segment, you see two power players driving the growth:

• Financial Technology Revenue: Grew 23% year-over-year to $457 million in Q3 2025. This is a huge jump, showing strong client adoption of their risk and compliance software.
• Index Revenue: Climbed 13% year-over-year to $206 million. This comes from licensing fees on their indexes, like the Nasdaq-100, a stable and high-margin business.

The Market Services segment, which is the traditional exchange business-think trading, clearing, and settlement-still matters, but it's no longer the sole driver. It delivered a solid $303 million in Q3 2025. What this breakdown hides is that the growth in Market Services is often more cyclical, tied to trading volumes and volatility, but the Solutions segment provides a buffer with its predictable, subscription-based revenue stream. That stability is what analysts like to see.

Profitability Metrics

You want to know if Nasdaq, Inc. (NDAQ) is making money efficiently, and the quick answer is yes, they are, but the story is in the margins. The company is actively shifting to a higher-margin, technology-focused business model, which is improving their bottom line even as they face revenue headwinds in some areas. Their Trailing Twelve Months (TTM) Net Profit Margin, as of late 2025, stands at a strong 19.9%.

Here's the breakdown of the key profitability ratios based on the latest available 2025 TTM data, which reflects approximately $8.17 billion in revenue and $1.63 billion in net income:

• Gross Profit Margin: The margin is about 62.2%. This shows the cost of providing their services-like data and technology-is well-managed, yielding 62 cents of gross profit for every dollar of revenue.
• Operating Profit Margin: This margin sits near 29.1%. It's what's left after covering all operating expenses, including R&D and sales costs, demonstrating a solid level of operational control.
• Net Profit Margin: At 19.9%, this is the final takeaway, showing nearly 20 cents of profit for every dollar of revenue after all expenses, interest, and taxes.

The margins are defintely moving in the right direction. Just a year ago, the Net Profit Margin was only 13.7%, meaning the jump to 19.9% is a significant sign of quality earnings and successful cost management.

Operational Efficiency and Margin Trends

The trend shows clear margin expansion, which is a massive win for Nasdaq, Inc. The company has been aggressively pursuing operational efficiency, notably expanding its efficiency program target to $140 million, with over $100 million actioned by the end of Q1 2025. This focus on cost control and leveraging higher-margin businesses-like their Financial Technology and Index segments-is the engine driving that Net Margin growth. For example, the Q1 2025 non-GAAP operating margin was a very healthy 55%, reflecting the strength of their solutions-based revenue.

The shift to a technology-first company is working. It's a classic move: trade some volume-based revenue for recurring, high-margin software-as-a-service (SaaS) revenue. The Annualized Recurring Revenue (ARR) grew 10% year-over-year to $2.9 billion in Q2 2025, and this type of sticky revenue is what drives long-term margin stability.

Industry Comparison: Where NDAQ Stands

When you compare Nasdaq, Inc.'s profitability to the broader US Capital Markets industry, you see a mixed picture that highlights their unique business mix. Here's the quick math:

What this estimate hides is that the industry average is skewed by a small number of ultra-high-margin financial data and index providers. Nasdaq, Inc.'s margins are lower than the average because they still operate a significant, yet lower-margin, Market Services (trading) business. Still, their 19.9% Net Profit Margin is a respectable figure that shows they are a high-quality, stable compounder, and their focus on margin expansion is key to their investment thesis. For a more complete picture of the company's financial standing, you should check out the full analysis at Breaking Down Nasdaq, Inc. (NDAQ) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You want to know how Nasdaq, Inc. (NDAQ) pays for its growth-whether it leans on lenders or shareholders. The short answer is that the company maintains a balanced, yet debt-heavy, capital structure, which is typical for a stable, recurring-revenue business in the financial sector. Their strategy is a clear preference for debt financing to fund strategic acquisitions, but they back it up with a strong commitment to de-leveraging quickly.

As of the quarter ending September 2025, Nasdaq, Inc.'s total debt stood at approximately $9.552 billion, which is the sum of $431 million in short-term debt and $9.121 billion in long-term debt and capital lease obligations. This debt load is set against a total stockholders' equity of $12.023 billion, which gives us the key metric for financial leverage.

The company's debt-to-equity (D/E) ratio for the same period was 0.79. To be fair, this is a healthy, manageable level. It means for every dollar of shareholder equity, the company has 79 cents of debt. This is slightly above the broader Financials sector average, which one analysis pegs at around 75.1% (or 0.751) on an adjusted basis. A D/E ratio below 1.0 is defintely a good sign of financial stability, showing that equity still covers a larger portion of assets than debt.

• Debt-to-Equity: 0.79 (Sept 2025)
• Long-Term Debt: $9.121 billion
• Short-Term Debt: $431 million

This debt strategy is well-received by the major credit rating agencies. In a sign of confidence in its diversified business model, Moody's Ratings upgraded Nasdaq, Inc.'s long-term issuer and senior unsecured debt ratings to Baa1 from Baa2 on March 31, 2025, with a stable outlook. Similarly, Standard & Poor's maintains a long-term issuer credit rating of BBB+, also with a stable outlook. These investment-grade ratings keep the cost of borrowing low, which is crucial for a company that uses debt to fuel big-ticket acquisitions, like the Adenza deal.

The company is actively managing its debt, not just sitting on it. In February 2025, Nasdaq, Inc. announced cash tender offers to repurchase up to $200 million of outstanding senior notes with maturities ranging from 2028 to 2052. Furthermore, a filing in October 2025 noted the repurchase of $279 million in debt, which actually resulted in a pre-tax gain of $19 million from the early extinguishment. This shows a smart, opportunistic approach to lowering interest expense and optimizing the balance sheet. They are using debt, but they are also working to pay it down when the timing is right. You can dive deeper into who is holding this debt and equity by Exploring Nasdaq, Inc. (NDAQ) Investor Profile: Who's Buying and Why?

Here's the quick math on their leverage:

What this estimate hides is the nature of their revenue-a significant portion is highly recurring, non-trading revenue from their Financial Technology and Capital Access Platforms segments, which makes a higher D/E ratio less risky than it would be for a more cyclical business. The stability of their cash flow allows them to carry more debt safely. The clear action here is to monitor their debt-to-EBITDA ratio; Moody's expects it to improve to approximately 3.3x by the end of 2025, provided there are no new debt-funded acquisitions. Finance: track the de-leveraging progress quarterly.

Liquidity and Solvency

You need to know if Nasdaq, Inc. (NDAQ) has the cash to cover its near-term obligations. The direct takeaway is that while the core liquidity ratios are tight, they are offset by strong, consistent operating cash flow and the nature of the business model. For a financial exchange and technology provider, a current ratio near 1.0 is not defintely a red flag, but it demands a closer look.

As of late 2025, the company's short-term liquidity, measured by the current ratio (current assets divided by current liabilities), is 0.99. The quick ratio (or acid-test ratio), which excludes less-liquid assets like inventory, is also 0.99. Both ratios being slightly below the 1.0 threshold mean that, on paper, current liabilities slightly exceed current assets. This is common for financial services firms that have large, non-debt current liabilities like clearing fund deposits.

Here's the quick math on working capital: a ratio of 0.99 means that for every dollar of short-term debt, Nasdaq, Inc. (NDAQ) has only $0.99 in assets convertible to cash within a year. This results in a marginally negative working capital (Current Assets minus Current Liabilities). Still, this is a trend-aware realist view. The company's business is increasingly driven by subscription-based services, which provide highly predictable revenue and cash flow, making a lower-than-average liquidity ratio more tolerable for investors.

The cash flow statement provides the real story, showing significant cash generation that mitigates the tight balance sheet ratios. For the trailing twelve months (TTM) ending in late 2025, Nasdaq, Inc. (NDAQ) generated approximately $2.1 billion in cash flow from operating activities. This strong operating cash flow is the primary strength of its liquidity position, supporting both internal growth and shareholder returns.

Cash flow trends for 2025 show a clear capital allocation strategy. The company is actively managing its capital structure through financing activities, including debt reduction and shareholder returns. In the first three quarters of 2025 (Q1, Q2, and Q3), the company's financing cash flow included:

• Debt Repayment: Repurchased $279 million (Q1), $400 million (Q2), and $69 million (Q3) of senior unsecured notes.
• Shareholder Returns: Paid out dividends totaling $138 million (Q1), $155 million (Q2), and $155 million (Q3).
• Stock Repurchases: Repurchased $115 million (Q1), $100 million (Q2), and $115 million (Q3) of common stock.

The consistent repayment of debt and return of capital to shareholders shows management's confidence in future cash generation and a focus on financial discipline. Investing activities, which often involve acquisitions or capital expenditures, are a necessary use of cash for a technology-focused exchange. The company held $697 million in cash and equivalents as of September 30, 2025.

What this estimate hides is the high quality of Nasdaq, Inc. (NDAQ)'s revenue mix, with Annualized Recurring Revenue (ARR) reaching $3.00 billion as of Q3 2025. That recurring revenue stream acts as a powerful, predictable liquidity buffer, which is why the market tolerates the sub-1.0 current ratio. For a deeper dive into the company's strategic position, you can review the full analysis at Breaking Down Nasdaq, Inc. (NDAQ) Financial Health: Key Insights for Investors.

The main liquidity strength is the operating engine; the main concern is the structural tightness of the current ratio. Still, the $2.1 billion in TTM operating cash flow gives them plenty of room to maneuver. Your next step should be to model how a 10% drop in recurring revenue would impact that operating cash flow figure.

Valuation Analysis

You're looking at Nasdaq, Inc. (NDAQ) and wondering if the price you pay today reflects its true value. Honestly, based on the metrics for the 2025 fiscal year, the market is pricing NDAQ as a high-quality, growth-oriented financial technology and data company, not just a traditional exchange.

The consensus is a 'Moderate Buy,' but the valuation multiples tell a more nuanced story. The stock has traded between a 52-week low of $64.84 and a high of $97.63, closing recently around the $85.54 mark in mid-November 2025. That's a solid run, but it means you're not buying at a steep discount, so let's look closer at the ratios.

Is Nasdaq, Inc. (NDAQ) Overvalued or Undervalued?

The Price-to-Earnings (P/E) ratio, which compares the stock price to its earnings per share (EPS), sits at approximately 31.10 (Trailing Twelve Months, or TTM, as of September 2025). This is a premium compared to its peers in the Capital Markets industry, suggesting investors are willing to pay more for Nasdaq, Inc.'s stability and pivot toward higher-margin, recurring revenue from its data and technology segments. The forward P/E is estimated to be lower, which is the market's way of saying they expect earnings to grow.

The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which is a better measure for comparing companies with different debt structures, is around 18.96 (TTM ending September 2025). This is high; the median for the Capital Markets industry is significantly lower, suggesting the stock is defintely trading at a premium to its sector peers. Here's the quick math on the key valuation multiples:

The Price-to-Book (P/B) ratio is around 4.15. For a financial services provider like Nasdaq, Inc., a high P/B is common because its value isn't just in tangible assets (like buildings or cash) but in intangible assets-things like its brand, market position, and proprietary technology platforms. What this estimate hides is the value of its intellectual property, which is substantial. If you want to dive deeper into the strategic drivers, you should look at the Mission Statement, Vision, & Core Values of Nasdaq, Inc. (NDAQ).

Analyst Consensus and Investor Return

Wall Street analysts have a favorable view, with a 'Moderate Buy' consensus rating. Out of 18 analysts, 14 recommend a Buy, and 4 suggest a Hold. The average 12-month price target is set at approximately $99.67. This implies a forecasted upside of around 16% from the current price, which is a healthy return for a large-cap stock.

For income-focused investors, the dividend profile is stable but not a primary driver of return. Nasdaq, Inc. maintains a low and sustainable payout ratio of approximately 36.06%. This means they keep most of their earnings to reinvest in growth, which is exactly what you want from a company transitioning to a tech-heavy model. The annual dividend is about $1.08 per share, translating to a modest dividend yield of about 1.26%.

• Analyst Consensus: Moderate Buy.
• Average Price Target: $99.67.
• Implied Upside: ~16% from current price.
• Dividend Yield: ~1.26%.
• Payout Ratio: ~36.06% (Sustainable).

Your next step should be to model a discounted cash flow (DCF) valuation, specifically focusing on the projected cash flows from the non-trading, recurring revenue segments, as those are the core drivers of this premium valuation.

Risk Factors

You're looking at Nasdaq, Inc. (NDAQ) and seeing a strong shift to a tech-first platform, which is great, but every seasoned investor knows you must map the downside. The company is not immune to the macro environment, and its dual identity-part exchange, part solutions provider-creates a unique risk profile. The primary risks for Nasdaq, Inc. (NDAQ) fall into three buckets: external market forces, internal operational costs, and the ever-present regulatory landscape.

The most immediate external threat is simple: market volatility and a slow IPO market. When economic uncertainty hits, trading volumes can drop, directly impacting the Market Services segment. Also, a sustained weakness in the Initial Public Offering (IPO) market means fewer new listings, which pressures the core Listing Services business. For example, analysts have noted that a slower-than-anticipated recovery in capital markets, especially IPO activity, is a key risk to earnings per share (EPS) projections.

• Sustained low IPO volume hurts listing revenue.
• Economic uncertainty reduces trading volumes.
• Geopolitical instability can trigger market shocks.

Internally, managing a growing, diversified technology business is expensive. In the third quarter of 2025, total operating expenses were $729 million, an increase from the prior year, driven by compensation and technology infrastructure. This means they have to defintely manage cost creep to protect that strong profit margin. The company is aware of this, which is why they've been focused on integration and efficiency. They've incurred restructuring charges, like the $12 million in Q3 2025, to streamline operations and accelerate momentum.

Here's a quick look at the core risk areas and the company's counter-strategy:

The regulatory and competitive risks are constant. Nasdaq, Inc. (NDAQ) operates in a highly regulated space, and any new rule-like the potential implementation of a financial transaction tax in the European Union-could divert trading volumes. Plus, the financial services and technology sectors are fiercely competitive. The company's mitigation strategy is to lean into its technology platform, which is why the Solutions segment-which includes Financial Technology and Regulatory Technology-is so crucial. They are also actively deleveraging, reducing their gross leverage ratio from 3.2x in Q2 2025 to 3.1x in Q3 2025, which improves their financial flexibility to weather any unexpected storms. You can learn more about their long-term focus here: Mission Statement, Vision, & Core Values of Nasdaq, Inc. (NDAQ).

Growth Opportunities

You're looking at Nasdaq, Inc. (NDAQ) and asking the right question: can this exchange operator keep growing like a tech company? The short answer is yes, because they've already made the pivot. Their future growth is defintely tied less to volatile trading volumes and more to their high-margin, recurring-revenue Solutions business, which just crossed a major threshold.

The consensus for the 2025 fiscal year (FY2025) is strong, with analysts projecting total revenue to hit around $5.14 billion, a year-over-year improvement of about 10.5%. More importantly, the full-year earnings per share (EPS) is expected to increase by 17.7%, reaching an estimated $3.417 per share. Here's the quick math: that kind of EPS acceleration shows the operating leverage from their strategic shift is kicking in.

The Solutions-Driven Revenue Engine

Nasdaq, Inc.'s growth is now primarily fueled by its non-trading segments-Financial Technology and Capital Access Platforms-which they call the Solutions business. This segment's Annual Recurring Revenue (ARR) hit $3.00 billion in the third quarter of 2025, marking a 10% year-over-year increase. This stability is what investors pay a premium for.

The company has provided a clear medium-term outlook for these segments, showing where the focus-and capital-is going:

The Financial Technology segment, which includes anti-financial-crime and regulatory compliance software, is the clear growth leader. This is a direct result of strategic acquisitions and the integration of those platforms.

Key Growth Levers: Tech, M&A, and Market Expansion

The Adenza acquisition is the biggest near-term driver, with the integration on track to fully realize targeted expense synergies in 2025. This is not just about cutting costs; it's about cross-selling. The 'One Nasdaq strategy' has already delivered 30 cross-sell wins since the deal closed, and cross-selling activities now make up over 15% of the Financial Technology sales pipeline.

Product innovation is also rapidly modernizing the market infrastructure. They are making significant investments in artificial intelligence (AI) and cloud workflows, which strengthens their core offering. Plus, they are actively exploring the next wave of market structure changes:

• Launched the Agentic AI Workforce in Nasdaq Verafin for compliance.
• Filed with the SEC to enable the trading of equity securities and ETFs in tokenized form.
• Expanding focus on private markets through the eVestment platform.

These initiatives position Nasdaq, Inc. to capture new revenue streams from the secular shift toward digitized, cloud-based financial services. You can get a deeper look into the investor base driving this valuation shift by Exploring Nasdaq, Inc. (NDAQ) Investor Profile: Who's Buying and Why?

Competitive Moat and Forward Action

Nasdaq, Inc.'s competitive edge is multifaceted, moving beyond its brand as the premier listing venue-though that remains strong, with an 81% win rate for eligible operating company listings in the first half of 2025. Their true moat is now their advanced technology infrastructure, including the use of Field-Programmable Gate Array (FPGA) for ultra-low-latency market data delivery. This tech leadership, coupled with their diversified, recurring revenue model, provides a stable foundation against rivals like Intercontinental Exchange (ICE) and the London Stock Exchange Group (LSEG).

The company is managing its expenses tightly, too, with the 2025 non-GAAP operating expense guidance narrowed to a range of $2.305 billion-$2.335 billion. This discipline, even while investing heavily in AI and cloud, shows management is focused on margin expansion.

Next Step: Portfolio Manager: Model the Financial Technology segment's revenue with a 12% growth rate for 2026, factoring in a 50 basis point margin expansion from Adenza synergies.