Nasdaq Completes Acquisition of Adenza, Solidifying Its Position at ‘the Heart of the Global Financial System’

In a move that underscores Nasdaq’s commitment to modernize markets and enhance the integrity of the world’s financial system, Nasdaq completed the acquisition of Adenza, an important and transformative transaction for the company.

Adenza is a premium software technology company and a leading provider of capital markets, risk management and regulatory reporting technology to the world’s financial institutions. With the addition of Adenza, Nasdaq will provide an even more holistic technology suite across market infrastructure, surveillance, compliance, regulatory reporting and risk management to financial institutions globally.

The acquisition represents the next major milestone in Nasdaq’s evolution as a leading technology provider to the world’s financial system, enabling Nasdaq to become an even more comprehensive partner, uniquely placed to help clients navigate the rapidly evolving regulatory environment and address their most complex challenges.

As the economic, geopolitical, regulatory, and competitive environment continues to evolve, it is imperative for financial institutions to continuously evaluate and re-evaluate capital allocation priorities, both for compliance and business resilience purposes and to strengthen their competitive differentiation to ensure long-term sustainable growth.  

On the regulatory side, financial institutions are responding to wide-ranging proposals, covering equity market structure, climate-related disclosures and new capital and risk management requirements, while simultaneously investing to accelerate their tech transformations, optimize systems and processes, and expand their offerings.

With this backdrop, banks are increasingly looking for partners – not vendors – to help them solve their most complex challenges across compliance, risk management, and regulatory reporting.  

“From fast-evolving global regulations to rapidly increasing pressures to modernize infrastructure, our clients are seeking trusted partners equipped to support them in this challenging environment. Nasdaq aspires to be that partner every day, and with Adenza, we can offer an even broader range of mission-critical solutions that enhance the liquidity, transparency, and integrity of the world’s financial system,” said Nasdaq Chair and CEO Adena Friedman.

The combination of Nasdaq and Adenza accelerates Nasdaq’s strategic pivot that began in 2017 under Friedman’s leadership and reaffirms Nasdaq’s dedication to solving more of the complex challenges in the financial system.

“The addition of Adenza accelerates our ambition to modernize and advance the world’s economies,” said Nasdaq Co-President Tal Cohen. “With Adenza, we will have a more complete suite of essential software and technology solutions that make managing risk and complying with regulation simpler and more efficient for our clients. With complementary capabilities and geographic footprints, we see a clear path to deepening our client relationships globally with leading end-to-end platforms across risk, trading, and regulatory reporting.”

What is Adenza

Adenza is a rapidly growing software company comprised of two well-respected global brands — Calypso and AxiomSL. Calypso serves capital markets participants with end-to-end treasury, risk, and collateral management software, and AxiomSL supports financial institutions with leading regulatory reporting and compliance software.

“When we combined AxiomSL and Calypso almost two years ago, we had a vision to create a truly unique software franchise that could help financial institutions across the globe manage their most complex trading, risk and regulatory reporting requirements,” said Holden Spaht, a Managing Partner at Thoma Bravo. “This acquisition is a clear validation of that strategy, and as part of Nasdaq, Adenza will be in a stronger position to build on its impressive momentum and serve an even larger global client base.”

Benefits of the combination

Following the closing of the transaction, Adenza joins Nasdaq’s Financial Technology division, which is split into two businesses: Regulatory Technology and Capital Markets Technology. The Regulatory Technology business is now comprised of Nasdaq’s suite of Anti-Financial Crime solutions as well as AxiomSL’s Regulatory Technology solutions. The Capital Markets Technology business combines Nasdaq’s Marketplace Technology and Calypso’s Capital Markets solutions.

“This is an exceptional opportunity to acquire a leading software company that enhances Nasdaq’s position at the heart of the global financial system,” said Friedman. “The acquisition of Adenza brings together two world-class franchises steeped in market infrastructure, regulatory, and risk management expertise at a time when financial institutions are navigating some of the most complex market dynamics in history.”

With Calypso and AxiomSL now part of Nasdaq’s product portfolio, Nasdaq can unlock new areas of growth, create opportunity and drive modernization. By combining Adenza’s capital markets, risk management, and regulatory technology solutions with Nasdaq’s market infrastructure and surveillance capabilities positions, Nasdaq can provide solutions across the entire trade lifecycle. Furthermore, Nasdaq’s strength in listed equities and equity options complements Adenza’s OTC derivatives, fixed income and foreign exchange capabilities. Together, Nasdaq now has a significantly bolstered suite of risk management capabilities that span a full range of asset classes.  

The joint capabilities also create a compelling flywheel effect for our clients, enabling Nasdaq to realize immediate cross-sell opportunities. Through the global and comprehensive set of combined solutions, Nasdaq can extend its relationships across the bank and broker community. There is also an opportunity to expand Nasdaq’s buy-side reach through Adenza’s loyal client base, and to deepen Nasdaq’s financial market infrastructure client relationships with new capital markets capabilities.

In addition to the strategic alignment between Nasdaq and Adenza, Adenza’s financial profile is highly attractive and is expected to enhance Nasdaq’s organic revenue growth rate and improve the company’s operating margins as the deal synergies are achieved. Nasdaq expects to realize $80 million of annual run-rate net expense synergies by the end of the second year following the acquisition and $100 million in revenue synergies over the long term. Nasdaq remains committed to reaching its leverage targets of 4.0x within 18 months and ~3.3x within 36 months following the closing.

The revenue synergy potential is driven by delivering on four key objectives: providing the expanded capabilities to Nasdaq’s existing customers, fueling Nasdaq and Adenza’s global expansion, driving two-way cross-sell opportunities and accelerating Adenza’s cloud conversion.

“Adenza has world-class products, a portfolio of mission-critical technology, an excellent leadership team, and a culture of innovation that aligns exceptionally well with Nasdaq,” said Cohen. “We look forward to working together in the months to come, ensuring a successful integration, and aligning our go-to-market approach to provide customers with more powerful solutions to address their needs across capital markets, regulatory, risk management, and regulatory compliance.”

Since the acquisition announcement, several Wall Street analysts have highlighted the compelling value-creation potential through both cost and revenue synergies. The acquisition is poised to “increase Nasdaq’s recurring revenue percentage, margin and organic growth, as well as broaden the company’s offerings, which can drive multiple expansion longer term,” according to Oppenheimer analyst Owen Lau. Rosenblatt Senior Analyst Andrew Bond also noted that the deal “significantly increases NDAQ’s addressable market around a number of products, brings a higher margin profile and will boost ARR [Annualized Recurring Revenue] as a percentage of total revenue to 60%.”

“Clearly, the Adenza integration will play a large role in supporting heightened and sustainable organic revenue growth for Nasdaq,” JP Morgan analysts wrote in an Oct. 18 note. “We continue to believe that Nasdaq’s ability to execute on these high-recurring, high-growth assets will drive an attractive equity story over the medium-term.”

A financial technology powerhouse

The combination of Nasdaq and Adenza will create a new financial technology powerhouse poised to lean into secular trends and solve clients’ most critical challenges across market infrastructure, surveillance, compliance, regulatory reporting and risk management.

“We are well-positioned to realize our ambition to modernize markets and become the trusted fabric of the world’s financial system,” said Cohen.

Forward-Looking Statements

This communication contains forward-looking information related to Nasdaq, Adenza and the acquisition of Adenza by Nasdaq that involves substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. When used in this communication, words such as “will”, “can”, “expected”, “enhances” and similar expressions and any other statements that are not historical facts are intended to identify forward-looking statements. Forward-looking statements in this communication include, among other things, statements about the benefits of the transaction; Nasdaq’s plans, objectives, expectations and intentions; and the financial condition, results of operations and business of Nasdaq and Adenza. Risks and uncertainties include, among other things, risks related Nasdaq’s ability to successfully integrate Adenza’s operations; Nasdaq’s ability to implement its plans, forecasts and other expectations with respect to Adenza’s business after the completion of the transaction and realize expected synergies; the ability to realize the benefits of the transaction, including the possibility that the expected benefits from the transaction will not be realized or will not be realized within the expected time period; the impact of Adenza’s business model on Nasdaq’s ability to forecast revenue results; disruption from the transaction making it more difficult to maintain business and operational relationships; risks related to diverting management’s attention from Nasdaq’s ongoing business operations; the negative effects of the consummation of the transaction on the market price of Nasdaq’s common stock or on Nasdaq’s operating results; significant transaction costs; unknown liabilities; the risk of litigation or regulatory actions related to the transaction; future levels of Nasdaq’s indebtedness, including additional indebtedness that was incurred in connection with the transaction; and the effect of the transaction on Adenza’s business relationships, operating results, and business generally.

Further information on these and other risks and uncertainties relating to Nasdaq can be found in its reports filed on Forms 10-K, 10-Q and 8-K and in other filings Nasdaq makes with the SEC from time to time, which are available at www.sec.gov. These documents are also available under the Investor Relations section of Nasdaq’s website at http://ir.nasdaq.com/investor-relations. The forward-looking statements included in this communication are made only as of the date hereof. Nasdaq and Adenza disclaim any obligation to update these forward-looking statements, except as required by law.