WEBVTT - Nasdaq CEO Adena Friedman Talks Earnings Season

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Joining us now is NASVAC chair and CEO Adina Friedman. Adina,

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<v Speaker 2>thank you so much for joining. It's great to be here.

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<v Speaker 2>So many highlights in this from IPOs, coming back to

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<v Speaker 2>your other fintech businesses which are find fascinating, but for

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<v Speaker 2>me to switching to the Nasdaq for certain companies like Walmart,

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<v Speaker 2>coming over your numbers a record one point two trillion

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<v Speaker 2>dollars enlisting transfers. With everybody wanting to become a tech company,

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<v Speaker 2>how many inbounds are you getting for more companies to

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<v Speaker 2>make a Walmart move and become listed on the Nasdaq.

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<v Speaker 1>Well, first of all, thank you so much. It's great

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<v Speaker 1>to be here. And we are really proud of the

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<v Speaker 1>results that we delivered for the quarter and for the

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<v Speaker 1>year with twelve percent growth overall and eleven percent growth

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<v Speaker 1>in our solutions businesses, with every part of our business contributing,

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<v Speaker 1>including our listening's business. And when it comes to transfers

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<v Speaker 1>from the New York stocking change to NASSAC, we really

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<v Speaker 1>focus on several different key differentiators for US. First is

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<v Speaker 1>we are the home to great innovative tech companies, but

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<v Speaker 1>innovators across every sector, and I think that's what's really

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<v Speaker 1>come to everyone's attention, is that everyone is becoming much

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<v Speaker 1>more techl enabled technology is becoming an integral part of

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<v Speaker 1>their innovation story. But you can innovate across industries, and

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<v Speaker 1>these innovative growth companies gravitate to Nasdaq, including Walmart, which

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<v Speaker 1>we were so excited. It's such an amazing, amazing company

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<v Speaker 1>with an amazing leadership. But we also have the index business.

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<v Speaker 1>So we closed the year with eight hundred and eighty

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<v Speaker 1>two billion dollars in our index business, ninety nine billion

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<v Speaker 1>dollars of inflos just in the year. And what that

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<v Speaker 1>does is it allows us, through our partners, to become

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<v Speaker 1>investors in these great companies through the NASOQ one hundred

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<v Speaker 1>Index franchise, and in the case of some companies, we

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<v Speaker 1>could be as much as a four percent owner of

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<v Speaker 1>their shares, which creates a really nice long term passive ownership.

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<v Speaker 1>In addition to the fact, we also have market quality.

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<v Speaker 1>We've invested so much in our technology to drive market

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<v Speaker 1>modernization shows up in the quality of our markets and

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<v Speaker 1>their level participation we have, which is actually become a

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<v Speaker 1>real differentiator for US and particularly these megacap companies. And

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<v Speaker 1>then of first last week, we have all these great

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<v Speaker 1>marketing assets that we do to help promote their brand

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<v Speaker 1>as an innovative growth company. And so all of those

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<v Speaker 1>things combined has really created a great opportunity for us

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<v Speaker 1>to talk to Shopify talk and to Kimberly Clark and

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<v Speaker 1>to Thompson Writers in addition to Walmart and bring them

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<v Speaker 1>to NAZAC in twenty twenty five.

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<v Speaker 3>So your first time over five billion dollars in revenue.

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<v Speaker 3>It's a record solutions sales growth, record index inflows. And

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<v Speaker 3>the one part that I keep thinking about is the concentration.

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<v Speaker 3>I've been thinking about it since I read your piece

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<v Speaker 3>on LinkedIn. Actually more is that a risk that you're

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<v Speaker 3>worried about that there's so much concentration risk and these

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<v Speaker 3>aiivy companies.

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<v Speaker 1>Well, I think the first thing is what we have

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<v Speaker 1>to actually seen is returns start to come be more

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<v Speaker 1>broad based. With interest rates coming down, small cap companies

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<v Speaker 1>over the last couple of years, they've had as much

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<v Speaker 1>as forty percent of their data income have to be

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<v Speaker 1>spent on interest expense. So as the interest rates are

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<v Speaker 1>coming down, the cost of capitals coming down. It is

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<v Speaker 1>allowing them to invest more in their business and deliver

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<v Speaker 1>more for their shareholders. And you are seeing a broader

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<v Speaker 1>based return profile with large cap and small cup companies

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<v Speaker 1>as we go into twenty twenty six, which we're encouraged by.

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<v Speaker 1>But we also do have these great megacap companies that

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<v Speaker 1>are delivering the future of technology to every industry, and

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<v Speaker 1>I think that as a result, the investment that they've

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<v Speaker 1>been making is critically important, very large still though not

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<v Speaker 1>even it's about you know, if you look at all

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<v Speaker 1>of the hyperscalers and the semiconductor companies that I've really

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<v Speaker 1>been investing heavily here, it represents about less than seventy

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<v Speaker 1>percent of their annual cash flows and aggregate, so imagine

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<v Speaker 1>how cash arts of these companies are. So there's a

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<v Speaker 1>huge ballast of cash capabilities in addition to having very

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<v Speaker 1>large scale investors like Blackstone be an underwriter of these

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<v Speaker 1>types of investments, and I do think the public capital

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<v Speaker 1>markets are going to play a bigger role. This investment

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<v Speaker 1>is a change in the infrastructure of our economy, and

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<v Speaker 1>more and more of the industry experts are going to

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<v Speaker 1>be coming in and delivering against that opportunity. So we

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<v Speaker 1>see the capital markets playing a bigger and bigger role

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<v Speaker 1>going forward.

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<v Speaker 3>Can I just follow up on your LinkedIn piece, which

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<v Speaker 3>I thought was fascinating. I think your core argument is

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<v Speaker 3>that this is not some kind of flimsy stock bubble.

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<v Speaker 3>This is a generational sea change like the railroads or

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<v Speaker 3>the Internet. But with the Internet it was both, you know,

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<v Speaker 3>an industrial shift and a bubble, right, Because I was

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<v Speaker 3>looking at the Nasdaq high March of two thousand and

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<v Speaker 3>it took fifteen years to get back there. Okay, now

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<v Speaker 3>we're six x that, But is it possible that we

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<v Speaker 3>have the same kind of delayed, you know, revenue problem

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<v Speaker 3>that we had then.

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<v Speaker 1>So first I would say I was at NASAK back then,

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<v Speaker 1>and so I've actually lived through that experience. And a

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<v Speaker 1>big difference here is that the companies that are underwriting

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<v Speaker 1>the risk and the opportunity are very large scale, well

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<v Speaker 1>capitalized companies. Number Two, when you look at certainly the

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<v Speaker 1>Nasaka one hundred today, the minimum market cap on the

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<v Speaker 1>Nazak one hundred today is about thirty to forty billion dollars,

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<v Speaker 1>whereas back then it was like five billion dollars. And also,

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<v Speaker 1>as you said, the revenue generation. If you look at

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<v Speaker 1>companies that are coming public, these are revenue generating, very

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<v Speaker 1>strong companies that have strong business momentum. KPIs all of

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<v Speaker 1>those things. And so as much as I do think

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<v Speaker 1>that there's going to be a lot of investment here,

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<v Speaker 1>I also think that they're going to be winners and

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<v Speaker 1>losers of course, or as these trends come through. I

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<v Speaker 1>believe that the underpinning of this investment cycle has much

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<v Speaker 1>more capital and much more ballast that underpins it as

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<v Speaker 1>we move forward, and it's a long term trend. It's

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<v Speaker 1>the future of our economy that we are underwriting right now.

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<v Speaker 2>One of the things that's also really transformed in markets.

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<v Speaker 2>I think how much your index business has grown is

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<v Speaker 2>also a testament to this. It's just a wider participation

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<v Speaker 2>of investors, more retail investors, more.

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<v Speaker 1>Happy to jump in the market.

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<v Speaker 2>But a strange kind of like I don't know, step

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<v Speaker 2>child has arisen with it, and that is the prediction markets.

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<v Speaker 2>We had a guest on Amy We've Silverman of RBC

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<v Speaker 2>who framed it as a threat that maybe prediction markets

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<v Speaker 2>grow and people go into there unless into equity markets.

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<v Speaker 2>How are you viewing kind of the booming. I guess

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<v Speaker 2>asset class. I don't know what we want to call it.

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<v Speaker 2>Of prediction markets.

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<v Speaker 1>Well, I think first of all, we are very clear

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<v Speaker 1>that we view regulation as an important ballast and an

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<v Speaker 1>important underpinning of markets really just for the purpose of

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<v Speaker 1>investor protection and all the things that it comes with,

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<v Speaker 1>the guardrails that are really necessary to make sure that

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<v Speaker 1>investors have a sustainable, lasting experience. When you are putting

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<v Speaker 1>your savings to work and you are a true investor,

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<v Speaker 1>the equities markets are an amazing opportunity to find to

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<v Speaker 1>find returns. When you are looking at this more as

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<v Speaker 1>a way to spend your afternoon, that's a different you know,

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<v Speaker 1>it's a different investor type, it's a different use of capital.

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<v Speaker 1>But also even then, the rules have to be clear,

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<v Speaker 1>and I think that's where we've been engaging with regulators

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<v Speaker 1>to understand, you know, how are they thinking about shaping

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<v Speaker 1>the rules. The safety c and the SEC are working

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<v Speaker 1>together better than we've ever seen before, because a lot

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<v Speaker 1>of these prediction markets te kind of in between, and

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<v Speaker 1>so it's a really a matter of how do we

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<v Speaker 1>make sure that the rules of a road are clear so.

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<v Speaker 3>That investors are protected Adeena, great having you with us

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<v Speaker 3>on set today. Really appreciate you joining us Adena. Friedman

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<v Speaker 3>there the CEO of the Nasdaq,