NDAQ — Q3 2026 Financial Report Analysis

Software and index fees carried the quarter; trading revenue nearly stalled

Nasdaq's third quarter of 2026 (July to September) produced net revenue of $1,481 million, up 13% from a year earlier, and GAAP diluted earnings per share of $0.96, up 31%. Almost all of the growth came from two places: the index business, whose revenue rose 39% as money kept pouring into funds that track Nasdaq indexes, and the Financial Technology software segment, up 16%. Market Services, the trading business, grew just 2% even though U.S. options volumes rose 14% across the industry. These results come from the earnings release (Exhibit 99.1 to the 8-K filed October 22, 2026). The full 10-Q has not been filed yet, so management's line-by-line explanations of each revenue line are not available.

The numbers

"Net revenue" is total revenue minus transaction-based expenses: the rebates Nasdaq pays traders for sending orders, plus regulatory and clearing fees it collects and passes straight on. Nasdaq reports its margins on net revenue.

"Organic" growth strips out currency moves and businesses bought or sold during the year. Here the difference is small because Nasdaq sold several small businesses (Solovis, Nasdaq Fund Secondaries, the Metrio platform). Operating margin is the share of net revenue left after running the business, before interest and tax. The release gives prior-year ARR only as a growth rate, not a dollar figure, and does not give prior-year cash flow.

Segment performance

Capital Access Platforms: Index did most of the work

Index revenue comes mainly from fees on exchange-traded products (ETPs), such as the funds that track the Nasdaq-100. Those fees are charged as a share of the assets in the funds. Average ETP assets tracking Nasdaq indexes rose 43% to $1.108 trillion, so a 39% revenue increase is about what you would expect. Period-end assets reached a record $1.160 trillion, up $331 billion from a year earlier. $141 billion of that increase was net new money (a record for a twelve-month period, including $49 billion in Q3). $190 billion came from rising markets. Nasdaq also launched 32 new index products in the quarter, half of them outside the U.S.

Data & Listing Services grew 10%. Listings activity was mixed. Nasdaq says it won 8 of the 10 largest operating-company IPOs of the quarter and 79% of eligible new listings, but the count of Nasdaq operating-company IPOs fell to 15 from 46 a year earlier. Total listed companies on The Nasdaq Stock Market rose to 4,726 from 4,359, but that total includes 1,292 exchange-traded products (1,000 a year ago), so most of the increase was new funds rather than new companies.

Capital Access Platforms ARR grew only 8%, to $1,411M, while segment revenue grew 20%. The gap shows that most of this segment's growth came from asset-linked index fees, not from subscription contracts.

Financial Technology: subscriptions growing faster than revenue

This is the software Nasdaq sells to banks, brokers and regulators. It is the business Nasdaq points to when it argues it is now mainly a technology company rather than a stock exchange. ARR by unit:

The release calls this record organic ARR growth for the segment, and says every sub-unit grew revenue by double digits for the third quarter in a row. Sales counts back that up: 54 new clients, 135 upsells and 5 cross-sells (selling a second product to an existing client), with cloud-based products making up 85% of new annual contract value. Verafin signed 3 enterprise (large-bank) deals in the quarter, for 12 so far in 2026, against 9 in all of 2025.

Compared with the previous quarter, FinTech revenue edged down to $529M from $539M in Q2, with Capital Markets Technology down to $303M from $321M. Q2 had included higher upfront Calypso license revenue, which is booked when a deal is signed and swings from quarter to quarter. The release doesn't explain Q3's sequential dip. ARR, which leaves out one-time license fees, kept rising, so the quarter-to-quarter drop looks like timing rather than a slowdown.

Market Services: volumes up, revenue barely moved

Trading net revenue rose just 2% to $309M, below Q2's $340M. Nasdaq still calls it a record for a third quarter. The volume data in the release explains part of it:

• U.S. options: industry volume rose 14% to 63.8 million contracts a day, but Nasdaq's combined matched market share slipped to 28.1% from 28.5% (and from 29.1% in Q2).
• U.S. cash equities: industry share volume fell 4% to 16.9 billion shares a day. Nasdaq's matched share rose to 14.1% from 13.7%, and the release mentions "near record capture," meaning the net fee Nasdaq keeps per share traded.
• Nordic equities: average daily value traded rose to $5.3B from $4.5B, and Nasdaq's share rose to 75.0% from 72.8%.

The release doesn't split Market Services net revenue by product, so it can't show whether options revenue grew less than options volume, as it did in Q2. The 10-Q will.

Gross Market Services revenue jumped 26% to $1,221M, but that figure is misleading. The "brokerage, clearance and exchange fees" line, which includes regulatory fees Nasdaq collects and passes on, rose to $289M from just $6M a year ago. Net revenue removes it.

What the headline numbers hide

• GAAP EPS (+31%) grew faster than non-GAAP EPS (+18%). Non-GAAP figures leave out costs Nasdaq considers outside normal operations. The biggest is $121M a quarter of amortization: the accounting write-down of intangible assets from past acquisitions, mainly the 2023 purchase of Adenza (AxiomSL and Calypso). That charge was about the same both years, so it doesn't explain the gap. The gap came from items that shrank or turned positive this year. Restructuring charges fell from $12M to zero (the Adenza restructuring is finished). Merger costs fell to $6M from $9M. A $16M favorable legal settlement cut general and administrative expenses to $2M from $22M. Income from investments Nasdaq doesn't control rose to $38M from $24M. Other income was $11M vs zero. Without the settlement, GAAP operating income would have grown about 22% rather than 25%.
• Buybacks added roughly 3 points to EPS growth. Diluted shares fell 2.7% to 563.3 million. Non-GAAP net income rose 15% ($588M vs $511M), and non-GAAP EPS rose 18%. Nasdaq bought back $323M of stock in the quarter and paid $173M in dividends.
• Tax was a headwind, not a tailwind. The GAAP effective tax rate rose to about 23.1% from about 20.0% (tax of $162M on pre-tax income of $701M, against $106M on $529M). Underlying profit therefore grew faster than net income.
• Interest was flat. Interest expense was $86M vs $87M. Total debt (short- plus long-term) fell to $8,740M from $9,004M at the end of 2025.
• Cash conversion was solid. Operating cash flow of $521M was 97% of net income ($539M), and covered the $496M returned to shareholders. Receivables rose 24% since December to $1,171M. Part of that likely reflects the larger pass-through fee volumes in Market Services, but the release doesn't break it down.
• Guidance went up on costs. Nasdaq raised its 2026 non-GAAP operating expense guidance to $2.550–$2.580 billion from $2.530–$2.570 billion in July, and kept its 22.5%–24.5% non-GAAP tax rate range. Non-GAAP expenses so far are $1,887M, so the new range implies $663M–$693M for Q4, above Q3's $638M. The release doesn't say what drives the increase. The LeveL Markets acquisition, which closed early in Q4, is likely part of it.

Did last time's read hold up?

Our Q2 2026 analysis flagged four things to watch:

• "Market-linked revenue could reverse." Not in Index: it grew even faster (39% vs 38%), and new money made up a bigger share of the asset growth (43% of the twelve-month increase, against about 30% in Q2). Trading did cool, with Market Services growth falling from 11% to 2%.
• "Watch options capture and market share." Share kept slipping, to 28.1% from 29.1% in Q2. Without a product split we can't yet confirm capture, but flat net trading revenue on 14% higher industry options volume points the same way.
• "Software is the steadier engine." It held up. FinTech ARR growth sped up from 16% to 18%.
• Portfolio changes. The Nasdaq Fund Secondaries sale closed in Q3, as expected.

Takeaway: Nasdaq's software contracts are now growing faster than its software revenue (FinTech ARR +18% vs revenue +16%), so its most predictable business is speeding up. The trading business, the part most people associate with Nasdaq, grew 2% in a quarter of high options volume. Today's earnings growth leans on index fees tied to market levels and on contracted software, not on trading.

Outlook

Management guidance (non-GAAP): 2026 operating expenses of $2.550–$2.580 billion (raised from $2.530–$2.570 billion) and a tax rate of 22.5%–24.5% (unchanged). Nasdaq gives no revenue guidance. Other things it flagged for the coming months:

• The LeveL Markets acquisition closed early in Q4. LeveL is the third-largest U.S. alternative trading system (an off-exchange trading venue) by volume. It sits in Nasdaq's new Digital Liquidity Networks unit, which focuses on digital assets.
• The Nasdaq Stock Market is on track to start 23-hours-a-day, 5-days-a-week trading on December 6, 2026.

Our read:

• Index revenue is still a bet on market levels. New money is a larger share of growth than in Q2, but $190 billion of the year's $331 billion asset increase still came from rising prices. A broad sell-off would cut this line quickly, even if investors kept adding to the funds.
• FinTech should keep growing by double digits. ARR growing 18% with record enterprise wins at Verafin supports that. The thing to watch is Regulatory Technology. Its ARR grew 13.9%, the slowest in the segment, and in Q2 the 10-Q listed price increases first among its growth drivers.
• Margins likely ease in Q4. The raised cost guidance implies Q4 non-GAAP expenses 4%–9% above Q3. Without faster revenue, the 57% non-GAAP margin is more likely to dip than rise.
• The Q3 10-Q should explain the flat Market Services result and the sequential dip in Capital Markets Technology. We'll update this report if it changes the picture.