Good day, ladies and gentlemen, and welcome to the Nasdaq Second Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Ed Ditmire, Vice President of Investor Relations. Sir, you may begin.

Good morning, everyone, and thank you for joining us today to discuss Nasdaq's second quarter 2019 financial results. On the line are: Adena Friedman, our CEO; Michael Ptasznik, our CFO; Ed Knight, our Chief Legal and Policy Officer; and other members of the management team. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material non-public information and complying with disclosure obligations under SEC regulation update. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I will now turn the call over to Adena.

Thank you, Ed. Good morning everyone and thank you for joining us. My remarks today will focus on the following areas. First, we will review the company's second quarter 2019 results; second, we will review the segment level trends and update you on our important initiatives and recent acquisitions; and lastly, I will review some organizational changes and touch upon an early initiatives related to total markets, our comprehensive market structure blueprint before turning it over to Michael to review the financials. Turning to our results, I'm pleased to report Nasdaq's solid financial performance for the second quarter of 2019. We delivered net revenues of $623 million including 4% organic revenue growth. After taking into consideration the net impact of the divestitures and recent acquisitions as well as an unfavorable change in the FX rates, our total net revenue grew 1% for the quarter. Our achievements in the period were driven by 10% overall revenue increase in the non-trading segments with 8% organic growth driven by our Market Technology, Index, and Investment Data & Analytics businesses. Our foundational marketplace businesses, Market Services and Corporate Services delivered a steady quarter in aggregate as we maintained a strong competitive position in our largest U.S. and European market and the forward businesses delivered moderate organic growth. Notably in both the second quarter of 2019, and in the first six months of 2019, the organic revenue growth rate in our non-trading segments remains consistent with our longer term expectations of 5% to 7%. Turning to the segment specific highlights from the second quarter, our Market Technology segment delivered strong growth in the second quarter with net revenue of $79 million, a 20% increase in the same period in 2018 including both organic expansion and the impact of the Cinnober acquisition. Results reflected an increase…

Thank you, Adena. Good morning everyone. My commentary will primarily focus on our non-GAAP results and all comparisons will be for the prior year period unless otherwise noted. Reconciliations of U.S. GAAP to non-GAAP results can be found in the attachments to our press release and in the presentation that's available on our website at ir.nasdaq.com. I will start by reviewing second quarter revenue performance as shown on Page 3 of the presentation and organic revenue growth on Pages 4 and 14. The $8 million increase in reported net revenue of $623 million was a net result of organic growth of $24 million or 4% including 8% organic growth in the non-trading segments and an $11 million positive impact from the inclusion of revenues from the acquisitions of Cinnober and Quandl. This is partially offset by $70 million negative impact from the April 2018 divestiture of the public relations solutions and media -- digital media services businesses and the divestiture of BWise in March of 2019 and a $10 billion unfavorable impact from the changes in foreign exchange rates. I will now review quarterly highlights within each of our reporting segments. I'll start with Information Services which as reflected on Page 5 and 14 saw a $19 million or 11% increase in revenue. This was driven by $19 million or 11% organic growth, $7 million of which was the result of investments purchase price adjustment on deferred revenues in Q2 2018. Excluding this adjustment, organic growth would have been $12 million or 7% primarily due to continued organic development of Investment Data & Analytics as well as Index revenues. The operating margin was down one point year-over-year at 63% due to certain product and operational investments that we've made to support future growth. Market Technology revenue as shown on Pages…

Thank you. [Operator Instructions]. Our first question comes from Richard Repetto with Sandler O'Neill. Your line is now open.

Yes, hi Adena, hi Michael. I guess first one quick thing just wanted to shout out to Tom Wittman. You forgot to mention Adena besides being a skilled practitioner, market practitioner he was a straight shooter as well. So we'll miss Tom.

And he is here, so he got to listen to that, so I will pass to him, thank you.

Thank you.

I'm sure he has a smile on his face.

He does.

Anyway, so first question on this ARR the new metric for Market Technology. So if it's $247 million and it covers the vast majority, I think you said the vast majority of the revenue then like the $240 million, if you look at most estimates though the $320 million expectations for this year and higher than that for next year. So what's the gap between the $247 million recurring revenue ARR and sort of whatever $320 million to $350 million estimates annualized for the next couple of years?

Yes, so the 70% -- it represents about 78% of the Market Technology revenues in the second quarter. The differences will be things like change requests and implementation or delivery of new build-outs. So really what this is it becomes the service revenue, the maintenance fees, and also the SaaS revenue that received from the smart business is another example.

In our ongoing licensees.

In the ongoing licensees, yes.

So in a build period, Rich, we have certain delivery fees that we charge but that also of course have cost associated with it. So those fees are not -- those fees are not included. And then the change request fees which are kind of shorter-term changes that we make to the software to support our clients. Those are not -- those are not included but 78% of -- as you said --

Vast majority, yes.

We would say vast majority, yes.

Okay, that helps. Thank you. And my follow-up, semi related. It's a regulatory question and we appreciate, I think the market appreciates the total Markets Initiative. But I was just trying to see if you can give us like at least your status update, now looks like things are quiet and we're given a lot of attention to U.S. equities but it look like Chairman Clayton offered a pretty balanced statement in regards to sort of the fee guidance that the trading and markets division and it seems like the access fee pilot and the -- sort of the litigation things have everything on pause. Has there been any movement or would you say that the relationship say with the SEC in the trading and market side is been more open recently or how would you characterize the status, I guess?

Sure. I think overall, I think it is important to recognize that I think we've said this before that we have a very good and comprehensive relationship with the SEC. We submit 100s of rule filings every year to them and they approve 100s of rule filings every year. And we work with almost every division within the SEC on a regular basis. I think that we do however as we all know have certain areas of debate with the SEC around market structure. And I would say, Rich, that there has been a lot of dialogue with the SEC both at the commissioner level and at the staff level and we have been expressing our views and also making sure that they have data to support our views. They have been asking a lot of really good questions. I think that the total market roadmap or blueprint does help frame out some of the larger market structure issues that we are hopeful that the SEC will start to tackle. And it also I think put some of the initiatives that they've been seeking to do into a broader context. And then we've also been engaging very extensively with our customers and with the industry in general to understand their point of view around some of the key elements of market structure that we outlined in total market. So the dialogue has definitely picked up. I think that there has been much more of a back and forth in terms of really trying to understand each other. But at the same time, we will continue to manage these debates as we see fit in terms of making sure that the markets are as accessible and successful as possible for investors and that's our number one goal.

Thank you. And our next question comes from Michael Carrier with Bank of America. Your line is now open.

You guys have made good progress in certain areas like the Market Tech, the Index and Analytics, there's obviously some areas that you guys mentioned like fixed income that's been a bit more challenging. I guess just looking at the $85 million to $95 million in the R&D spend, can you maybe provide like an update on what's in there maybe some of the details which ones you've seen some revenue traction associated with the initiatives which ones are still at losses. Maybe like an average time of the initiatives that have been in place, just kind of an update on some of the new things that are taking place?

Sure, yes. So it is a combination of things and I kind of rattled them off quickly in my script. So you've got the investment we're making in the Nasdaq financial framework included in there that's both -- that's at least the amounts as expense. And then the other that you have in there is Nasdaq private market, as we mentioned we're continuing to see a pickup in activity there and we have new initiatives to go into the private equity space, private equity funds. And so we continue to see very, very big opportunity in the Nasdaq private markets and good growth in that business. But that does continue to be an investment area for us. And then additionally the banks and brokers strategy that we have with applying some of our market technology beyond surveillance but applying trading technology, post rate technology into the banks and brokers, we now just signed our fourth client to provide them a host of trading solutions, so that's picking up steam but that area of investment is also in there. The fourth sorry the fourth area is in the buy-side surveillance. So that one is in very early days. We did do a very small acquisition to supplement that and that also was included in the ongoing costs now in that area and we definitely see very good momentum but it is a very small -- kind of a small and upstart type of model of upstarting with essentially four clients and moving into a much bigger space and we have good sales in that area to continue to develop. And then another area is Quandl and the whole analytics hub integration, the alternative data space that is also early days as we have said that in terms of really frankly understanding the overall demand for alternative data, continuing to find new supply and then finding demand for that data across the industry. The Yahoo Finance implementation of some of the supply chain data does come out of Quandl and we have continued growth in some of the other data streams that they've created. So we feel good about the growth but in all of those areas remain investment areas as they graduate, they graduate out of that program once they become kind of self-sufficient at least break-even to profitable endeavors. And so that's why we will always give you that R&D number, so that you kind of know which areas are our major areas of investment for us.

Thank you. And our next question comes from Ken Worthington with JPMorgan. Your line is now open.

Hi good morning. Proceeding the receipt approval for non-transparent ETF Fidelity and T. Rowe have refiled their offerings for active funds. Can you talk about how you feel you're positioned versus Arca and Bats to sort of win listings in trading of new ETFs as they're launched? And are you taking any special steps to cater to these firms that are listing these new products?

Sure, no problem. So we actually have -- we have been a leader from the very beginning as these new what I would call actively managed ETFs are being formed. We partnered with a firm several years ago to develop a program to support these non-transparent ETFs. And so we do understand them well, we understand that they do require some specific market maker support and we do believe our market is well-positioned to lift those types of ETF. We continue to have very good growth overall in our ETF listings and we're very proud of the fact that we have well over 300 ETFs, I think it's at least probably in the high 300s listed on Nasdaq today. And so we do feel Ken that we're really well-positioned competitively to be able to bring those types of ETFs to Nasdaq.

Okay. And are you doing anything special on the non-transparent side versus the transparent side.

As I mentioned several years ago, we actually worked with a firm that was developing a new construct for non-transparent ETFs and we did work with them specifically to build-out a market maker sponsorship program to support them, so yes.

Thank you. And our next question comes from Ben Herbert with Citi. Your line is now open.

Hey good morning. Thanks for taking the question. Just wanted to get additional thoughts on the pipeline into the sell-side on Market Tech, you mentioned I think the surveillance win this last quarter and the recent fourth broker dealer. But just how is that pipeline shaping up and kind of where you feel penetration is at this point? Thanks.

Sure. So well the first thing to mention is that in our surveillance business that's -- we've done I think a great job of working with broker/dealers to expand that product to be able to support all asset classes as well as both exchanges OCX and OTC, and so that's been a great area of expansion for us as we've gone from firm to firm to take them from maybe -- maybe they only use that for equities and then they move to fixed income and then they move to commodities et cetera. We also have global penetration in that -- in that business and we have a global sales force that supports it. So we continue to see very strong demand characteristics. But we have over 150 clients who use that service today. In terms of the matching technology, post stream technology that we're at the very beginning of that strategy and that's why that that effort fits within our R&D initiatives because we've built out sales organization and we've continued to adapt our technology as well as kind of doing it on a hosted basis. So we -- in some instances, we also bring in market surveillance expertise to support them. And so we continue to make sure that we have a good pipeline of opportunity there. As I've mentioned on the last call, it does take time to get some of these contracts signed. The banks definitely go through very thorough contracting process as you probably know but we are very, very excited about the level of opportunity and demand that we see. It's just a matter of making sure we systematically get our clients from interest to signing a contract. And as I mentioned we do have a fourth client that just signed up.

Great, thanks. And then maybe just one quick follow-up would be on Slide 19, we can see the dollar amount on the ARR but would you be able to provide maybe last four quarters of the growth rate?

Sure. I think that we know that year-over-year, it was at a growth rate of year-over-year, second quarter our growth rate of 16%. But we're happy to make sure we provide you more information on the growth rate.

Thank you. And our next question comes from Alex Kramm with UBS. Your line is now open.

Hey good morning everyone. Just actually following-up on this ARR number for a second. You just mentioned the 16% again but I think that's not on organic number, so maybe you can give me an organic number if you have it handy? And then related to that, if you look at the year-over-year and maybe just splitting hairs a little bit but the percentage of recurring is actually down year-over-year which doesn't seem consistent with the story, you want to be telling in terms of more SaaS based growth. So maybe you could just flush it out, a little bit I know the numbers are small but if you think about it over time, do you think this recurring percentage is going to be approaching 90, 95 or is this kind of the range it's going to be in?

So I think the number is going to fluctuate and it's going to depend on the types of installations that we have in any specific quarter, the change requests et cetera. So there you will see fluctuations. Over longer period of time as we continue to build that more of a SaaS platform and a platform as a service with NFF, the intention of the idea would be that more of the business would continue to become part of the annualized recurring revenue base. So over a longer period, you will see that, you won't necessarily see that next quarter or the quarter thereafter, it depends on the specific fluctuations of those individual quarters. With respect to the organic growth rate, we're not going to break out the organic growth rate. The focus of this measure really is to try and provide some information that we've been -- that people have asked us with respect to what is that recurring revenue base of the business going forward and to say and what percentage of the business is reflective of recurring revenue as opposed to these more one-offs or change request type revenue. So I think this is the new measure for us that we've been, we just launched today, we'll continue to take a look at it. We think it sends some good positive information because it does talk about the fact that the recurring revenue in the business does continue to grow and as our model continues to change more towards a platform as a service or a SaaS type model. And the fact that it doesn't represent as we've mentioned earlier 78% or 80% of the revenue is, I think the key metrics that we want to focus on for now.

Okay, fair enough. Thank you. And then secondly obviously a few weeks ago a decline Deutsche Bank announced some restructuring. So just wondering how you view that as a as a service provider, I think historically you have said on the market data side that banks are actually the largest payer of market data and related services. Also you struck a deal with them; I think it was on March on some outsourcing of some trading solutions. So maybe a little bit too specific. But just wondering how you view that as clearly not a good sign for the industry as a service provider for yourself?

Sure. Well I do think that the first thing I would say is it's pretty early days in understanding the impact that the changes in Deutsche Bank is going to have in general within the U.S. In terms of the way that they trade, they tend to trade on behalf of customers, so that trading will either be transferred to another firm, if there is ultimately an acquisition of the business from Deutsche Bank or probably move over to other clients, I mean other service providers. I think in terms of some of the recurring revenues or kind of the other parts of our business, we're still working actually pretty closely with Deutsche Bank to understand, how they're going to continue to take certain services, how they might transition their services to other service providers. And so it's very early days for us but we are working very closely with them to understand the overall impact. I also would say we have as you know hundreds of clients that we serve with our trading, thousands of clients we serve with our data and connectivity services. So we don't feel this is going to have an outsized impact. It's just something that we're managing through.

Thank you. And our next question comes from Dan Fannon with Jefferies. Your line is now open.

Thanks. Good morning. I know you talked about the multi-year change in the Tech margin or the Market Tech margin. I guess given you do have an acquisition and maybe some synergies coming out, can you talk maybe near-term about if we've seen the bottom and we should kind of be building from here or any kind of path towards we no longer term higher. But I guess any kind of roadblocks or any kind of milestones as we think about more in the intermediate time period?

Well I think that we are trying to give you some view into our overall long-term view of the business. And I think we also are trying to give you a little bit more transparency into some of the drivers of our business but they are I also as Michael has been saying, we have a period of investment, we want to make sure we're investing in our future. It's not just the investment in the Nasdaq financial framework itself but it's also investing in some new verticals like the new markets like I mentioned with getting into new, new industries with our technology as well as into the broker/dealers as well as into the buy-side for surveillance. So there are investment areas that are ongoing. I also believe that we see very good demand characteristics across the business and we do see scalability in what we're creating. And so over time those things should generate the benefits for shareholders as we've been mentioning. But it is an evolution and it's not something that is going to be a step function from one quarter to the next, it's going to be over time.

Thank you. And our next question comes from Alex Blostein with Goldman Sachs. Your line is now open.

Hi, good morning everyone. So thanks for additional disclosure on ARR, another couple of follow-ups here. But I promise they're all related, I guess how should we think about the organic growth going forward. I know you don't want to get into the specifics so it's kind of what's organic versus non-organic but on a forward basis as we think about this call it, 80-ish percent of Market Tech revenues, should we think of that growth being at the upper end of the kind of 8% to 11% target that you set out for the segment overall. And then maybe if you guys could help us understand the underlying customer base of that bucket today by revenue contribution maybe between like buy-side, sell-side and market operator. So kind of like other changes that would be helpful just to provide some more context behind it? Thanks.

So I think the way to think about the overall revenue growth, it's -- the overall revenue growth for the businesses in that 8% to 11% target for the three to five year period and that's the way to think about it. And as I said the mix should change over time or more of that will be coming from Annualized Recurring Revenue as we continue to convert the platform over which built into this now with respect to what's driving it relative to the overall mix of the business because it's typically in our market infrastructure operator business or the core exchange and clearinghouses et cetera, that's where we will have more of that change requests or delivery type contracts. We'll see more of those fluctuations which wouldn't be necessarily Annualized Recurring Revenue. So if you look at the overall mix of the business relative to the mix of the ARR revenue, more of that will be coming from our smarts business which is more of -- which is a SaaS business. And so from a relationship standpoint, more of that -- less of that will be coming from the MIOs and more of it will be coming from the SaaS when you compare it to the overall mix of the total business which I think we provided in another slide. Does that help answer the question?

Yes, it does. And just like the contributions by bucket -- or now, what that looks like today buy-side, sell-side exchange operators?

So we are not giving that level of granularity to that figure. I think that we're looking at how we can grow across all of our clients. And so we do see this as kind of a broader metric to help you just understand overall how we are bringing the business forward. But we're not -- we don't provide that level of disclosure.

And let's remember the part of this is the change from what we used to have which was that backlog which at one point of time when the business is all about the market infrastructure operators and building out that client base which was these large contracts as we moved the business that backlog was less of a relevant factor and we felt that this is more reflective of the type and nature of the business going forward.

Thank you. And our next question comes from Chris Allen with Compass Point. Your line is now open.

Good morning everyone. Thanks for taking the question. I was wondering if you can give a little bit more color just on the impact on the change in accounting for vacation accrual just how much that's been historically and just from an R&D perspective, it sounds like the pace of investment has been pretty steady across a couple of things. Is there any specific areas going to be ramping up as we look into the back half of next year or into 2020?

So on the first question, the first part of the question I'd say approximately $3 million or so in for Q3 would have been the impact.

And then on the second question, Chris, I say we've been operating under a relatively steady, steady level of investment and we try to make sure we review those investments every six months in a very deep dive and we continue to look at how we're going to essentially ramp up certain areas or moderate certain areas to try to make sure that we stay relatively consistent but we do want to give ourselves the flexibility, if we see a great opportunity to continue to invest and grow certain investments if we need to.

Thank you. And our next question comes from Ken Hill with Rosenblatt Securities. Your line is now open.

Hey good morning everyone. I wanted to ask about the listing services business, I know during the quarter we saw the MIC make some changes in some of the smaller companies particularly like the biotech stocks where you guys did pretty well. I was hoping you could talk a little bit about the overall environment here in the U.S. and from a competitive standpoint but also how you -- what you're hearing from companies today in the market?

Sure. Well I think that we are extremely pleased that about 97% of all new healthcare companies do list on Nasdaq and that continued, if you look at the first half of the year that number is consistent. I think that as a result we're always, we are very competitive and we are always looking for ways that we can compete better and listings that are maybe traditionally going to the other guys and they are obviously always looking at ways they can compete as well. We do feel like we provide a pretty unique value proposition for healthcare companies in particular because of the Nasdaq biotech index in addition to some very deep, IR intelligence capabilities we have to support that segment. And those types of things in addition to the great marketing and the great market itself are the reasons why we think that we will continue to be the home to the vast, vast majority of healthcare companies. In general the listing environment continues to be very robust as we look at the pipeline of companies that have filed S-1s as well as our success in attracting those pipeline of companies to Nasdaq. And we definitely see a pretty I mean at least it's always subject to market conditions things could change. But at least as of right now, I would say we see a very robust calendar going through the fall.

Okay. On a related basis I think yesterday you guys had an announcement out of record first half for Nasdaq private market, so I was hoping I think we are kind of six years in now on that one. So maybe talk a little bit about how you're monetizing those efforts maybe a little bit more and maybe what services you might expect to kind of grow from those companies using Nasdaq private markets going forward?

Great, thank you. So with private market, it has been I would say an evolution not a revolution. And so, it is several years in and we are continuing to see a real evolution of how companies are managing their liquidity in the private markets. So when we first launched, we only today -- we only cover company-sponsored tenders. So the job of NPM is to make sure we partner with the company to understand how they want to manage their liquidity. There is liquidity that occurs outside the confines of a company-sponsored tender and that's not the area that we've historically played in. So when we look at company-sponsored tenders historically they also really, they usually set the price found the investors and then just asked us essentially to facilitate that transfer of ownership and electronic mechanism as opposed to spending a lot of dollars on lawyers and a lot more time trying to get paperwork to be signed and pushed across. So we have electronified that that transfer process. We've electronified the data room, made more information available et cetera. However what we're seeing today is some continued evolution. Number one, we've been launching some auction price discovery events and processes with some of our clients today. So they actually are using the platform to find the right price for that private -- that private company transaction. And that's a new, new phenomenon that we're starting to see pickup in the market. The second is they're starting to use us to help them find investors. And that's also a new phenomenon. And then the third is to understand that companies over time maybe want to have a more, I would say a high integrity way to allow their investors to transact with each other. And that's another opportunity that we're considering. So there are ways that we can evolve that. I think the other area that's also been kind of a long investment and it will have a long tail to it though is the development of liquidity in private equity funds. And we announced our partnership with iCapital a few months ago to allow for broker/dealer distributors of private equity funds to use our platform to facilitate secondary transactions there. And we have also been working with GPs to start to think about using our platform for GP sponsored secondaries as well. So there are some really interesting developments there. But it's long-term play which is why it is in our R&D bucket.

Thank you. And our next question comes from Kyle Voigt of KBW. Your line is now open.

Hi. Good morning maybe that the Oslo deals behind you, just wondering if we have an update on the M&A environment in the public markets we're seeing continued increase in asset valuations within the sector. Just wondering if you're seeing similarly frothy valuations in the private markets. And then, if you can just give us an update on M&A more broadly, do you think there's other scale deals like Oslo out there or is likely the near-term focus going to be on Market Tech and data?

Sure. Yes, so I think we were disappointed that we didn't win the Oslo deal to be honest I think that it was a very logical expansion of our Nordic business. And I think we would have been able to provide enormous amount of benefit to our clients in the Nordics. So for that reason we were disappointed. I think that however it does. There are always opportunities out there. We are very focused on organic growth as a primary driver of growth in our business. And I think you can hear that in all of the conversations we're having. But we do look at ways that we can either catalyze growth in those businesses like a Cinnober deal or expand our capabilities in certain areas where we have strategic focus and that would be something like Quandl or eVestment. And so we will continue to evaluate those types of opportunities. In terms of you said scale opportunities, I think that we just like with Oslo there are always going to be things like that where there might be an opportunity for us to drive scale through a big synergy type deal. But we again are really not -- we're not hunting for those, we're finding those occasionally as we manage through an organic strategy.

Thank you. [Operator Instructions]. Our next question comes from Chris Harris with Wells Fargo. Your line is now open.

Thanks. So you guys are now at your leverage target. So should we just be assuming now that your debt balances remain flattish from here and related to that, all of a sudden the 3.9% Eurobond seems expensive given where interest rates are in Europe? So are there additional opportunities for you to potentially refinance debt early given how low interest rates are?

So we're pleased that we've hit our target that we had set a while ago. And it does show the cash flow that this business can generate and we can leverage up for deals and then within a fairly short period of time, we are able to pay down that leverage. And so our intention is to maintain our investment grade status and continue with the other elements of our capital plan including increasing the dividend as earnings grow over time and using our buybacks primarily to offset in dilution that we have from any of our equity programs. So that's the way we plan on the debt. And the debt will fluctuate depending on the situations that we're looking at with respect to investment opportunities et cetera. But the investment grade status will be sort of the guiding factor that that sets that. With respect to other opportunities, so we are pleased that we are able to take advantage of the lower interest rates. We also have our -- have our commercial paper program which has provided us with some benefits as well. And we'll continue to take a look at our debt going forward. We have -- we feel pretty good about the maturity curve that we have right now in front of us as we get -- as we start to think about our 2021 and the other opportunities we'll assess those in future periods but there's no immediate plans I can talk of or mention right now.

Thank you. And our next question comes from Patrick O'Shaughnessy with Raymond James. Your line is now open.

Hey good morning. So fixed income is obviously a really interesting area right now. I think particularly when you look at the PE multiples of trading platforms that specialize in that area, what do you see as obstacles for Nasdaq to turn its fixed income franchise?

So we are looking at that very closely, Patrick. And I think that there are a couple things. We are sitting in a business in the U.S. Treasuries at least that has been subject to a lot of competition over many years. Whereas if you look at some of the other asset classes in fixed income, they're hitting -- they're facing the idea of electronification for the first time or they're starting to see an evolution into electronic, more electronic trading. And there are fewer platforms out there that really serve that function. In the U.S. Treasuries business, it's been a highly competitive highly electronic trading environment for a long time. And so I think that it's really for us it's a matter of how do we make sure that we are evolving our platform to meet the evolving needs of the broker/dealer community because right now we sit as a broker/dealer, dealer-to-dealer platform. And what we're seeing is more the broker/dealers wanting to have more control over how orders get routed or where they get routed as opposed to an anonymous central them in order book. And so we are looking at how we continue to partner with them to find ways to leverage our platform for more. I would say targeted liquidity. And I think that's something that we have to understand what are all the moving pieces around that because there are certain clients who really like to use the Cloud and they want to maintain an egalitarian type of model and there are others that want to have more control over routing. So that's an area that we're really focused on. And I do think that with our new technology platform, we have a lot more flexibility to be able to understand how to meet their…

Thank you. And ladies and gentlemen, this concludes our question-and-answer session for today's call. I would now like to turn the call back over to Adena Friedman for any further remarks.

Great, thank you. In closing, we are very encouraged by our solid second quarter and how it serves to reinforce that both the logic underlying our strategic pivot and our ability to execute on our new direction are becoming more and more clear. And we do also remain very focused on delivering against our priorities and in particular helping our clients reimagine markets to realize the potential of tomorrow. So thank you very much for your time today and we look forward to continuing the conversation in the coming months. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program and you may all disconnect. Everyone have a wonderful day.