Andrew Bond: Hey, good morning. Could you update us on any new plans or strategies Nasdaq is exploring in digital assets since you’ve aborted custody offering? Obvious tailwinds following the spot ETF approvals and a lot of new large institutional players that you’re familiar with becoming more active in the space. So how’s Nasdaq positioning itself now?
Adena Friedman: Sure. Thanks, Andrew. Yeah, so we are really proud to partner with BlackRock and Valkyrie as they brought their Bitcoin ETFs to Nasdaq. And it really does give investors an opportunity to express a view on the trend of Bitcoin without having — in a highly regulated marketplace and without having to go and actually buy Bitcoin. So we do think it creates more accessibility for retail investors to have a position at Bitcoin. I think that in terms of the broader digital asset space though, as you know, we are a tech provider to the industry. We continue to provide technology to cryptocurrency exchanges, both trading, clearing, and as well as surveillance. And actually, as we’ve been working with some traditional exchanges, they want to make sure that they’re kind of future proof.
So for instance, with one of the CSD clients that we sold to this year, one of the key things is to make sure that they could move towards digital assets in their settlement system. And so we are, all of our technology can support digital assets in terms of trading, clearing settlement, surveillance. And that gives us a chance to work with the traditional exchanges and crypto exchanges. In terms of our specific crypto custody solution, we have built it. We are ready to provide that to exchanges and providers and custodians around the world. So that is now a technology offering that we can offer to clients around the world. But we have made a conscious choice not to launch a custody solution, being a custodian ourselves. I think that we feel that there are several out there that they’re operating well, but it’s also a very capital-intensive business.
And our view is that we are better served being a market operator for the ETFs and other instruments like that, as well as being a technology provider to the industry.
Andrew Bond: Thanks, Adena.
Operator: Thank you. One moment for our next question. And I show our next question comes from the line of Alexander Blostein from Goldman Sachs. Please go ahead.
Alexander Blostein: Hey, good morning. Thanks for squeezing me here. So just a quick follow up again on Adenza. Over the last couple of years, it sounded like they went through a pretty meaningful improvement in their technology stack, and there’s probably a bit of CapEx around it. So as you move forward, do you think they’re largely done? Are there still kind of things that might be on a heavier lifting side that needs to get implemented that they’re not part of Nasdaq? And maybe just talk to your overall CapEx expectations for 2024.
Adena Friedman: Sure. So I would say that, we’ll take Calypso and AxiomSL separately. AxiomSL did do a significant rewrite of their technology a few years ago. So we feel very good about kind of how they’re positioned. But, and then Calypso actually, they are super flexible and very modular. So they kind of have this continuum of investment in Calypso. And they’ve been able to, because of that, they’ve actually been much more able to, both of them are focused on just bringing in new modules very quickly and iterating on their technology. So we feel really good about the tech foundation. And I think we said that at the time of signing. And now that we’ve closed on a deal, we’ve looked under the hood, it is a great technology and it’s very modular and kind of platform-based.
I think the area that we can really help focus them is on how do we really optimize the cloud implementation to make it so that it’s as efficient as possible for them and their clients. And so we have a lot of expertise there. We’ve had a long history of cloud deployed solutions. And so we do actually think that’s an area where we can help them invest to make it so that that can be even more effectively and efficiently delivered. But that’s not a significant capital investment as much as that’s just continuing innovation. They have been investing in R&D, so that has been a hallmark of their business. And so we are really pleased to see that. And we will continue that, but that’s not something where there’s a big CapEx requirement right now.
We really do see it as a continuum of innovation. In terms of our CapEx across the year, I think, I don’t know if they have any specific things that you want to mention there.
Sarah Youngwood: No, we don’t have, like, any particular trends, so you’re not going to see, like, a particular acceleration or something of note. We’re continuing to invest in the business, and we’ll come back and give you a lot of, like, color at Investor Day on the type of returns and the type of breakdowns of our investments. And we have very much a cash on cash view as to what it gives us and in addition to, of course, the investments that are foundational in the business.
Operator: Thank you. And I show our last question comes from the line of Brian Bedell from Deutsche Bank. Please go ahead, sir.
Brian Bedell: Great. Thanks very much for taking my questions. Most of them have been asked and answered. But a couple more. One just on the Verafin. I think, Sarah, you mentioned if I heard correctly, Verafin growth in the quarter year-over-year of 25% against the legacy regulatory tech segment of 17%. And then I missed something you said about the surveillance part of that. So I just wanted to clarify, was that 25% at Verafin and there was some offset at the surveillance business? And then as you look at that legacy business going forward, do you see Verafin as sort of a core 20%-ish type of program?
Sarah Youngwood: So what I said is that, the 25% indeed is the growth for Verafin. And together with surveillance, you end up at 17%. So that’s a 6% for surveillance. That is due to a timing of bookings in 2022 that had been an impact on the year-on-year growth for the fourth quarter. So it’s really just timing in the prior year period.
Adena Friedman: For surveillance.
Sarah Youngwood: For surveillance.
Adena Friedman: I think, as you know, Brian — as you know, Brian, we have a kind of an 18% to 23% kind of expectation across CSD. Now, as we move to reg tech and we integrate that with AxiomSL, we’re going to be providing kind of a view and I think it’s — I always look at it as 10% to 14% across fintech, all told. And that will incorporate Verafin and surveillance along with market tech and the Adenza products.
Brian Bedell: Right. Great. Thanks for that. And then just one last one on operating leverage, given your expense guidance. Just I guess the level of confidence on the operating leverage, clearly it looks like it’s a good 3 percentage points or more below your [8% to 11%] (ph) solutions revenue guide, but how do you think of the Adenza revenue dynamics versus ARR at Adenza influencing that? I guess the punch line question here is, are you still managing that operating leverage against reported revenue or would you look at ARR as a better guide for that operating leverage dynamic?
