Nasdaq, Inc. (NDAQ) receives Old York Operational Quality (A) Rating for fiscal year 2025
(A)| Financial | Market Technology & Data
Feb 24, 2026
By: Old York Financial
A Private Principal Research Report
the verdict
Old York Financial has assigned Nasdaq (NDAQ) an Operational Quality (A) Rating. Nasdaq has successfully completed its "Great Pivot," with Solutions Revenue (Software/Data) now making up 77% of its top line. While its business model is increasingly "Sovereign" in quality, the sheer weight of its acquisition-led balance sheet and a lower ROIC of 6.8% keep it firmly in the "A" tier. It is an elite technology platform currently paying off a very expensive mortgage.
the old york analysis
owner earnings: the recurring revenue engine We look past the GAAP noise and integration costs of the Adenza acquisition to find the true principal cash flow.
2025 Reported Net Income: $1.79 Billion
(+) Depreciation & Amortization: $632 Million
(–) Maintenance CapEx: ($266 Million)
= OLD YORK OWNER EARNINGS: $2.16 Billion
Analyst Note: Nasdaq’s "SaaS-ification" is working. Annualized Recurring Revenue (ARR) hit $3.1 Billion in 2025 (up 10%). For a principal, this is the gold standard of cash flow: predictable, automated, and high-margin. However, owner earnings are currently being heavily diverted to service the debt taken on to buy these recurring streams.
growth & market dominance
Net Revenue Growth (2025): 13.0% ($5.20 Billion).
Solutions Segment Growth: 12% (reaching $4.0B).
Adj. EPS Growth (2025): 24.0% ($3.48).
Analyst Note: Nasdaq is no longer just an exchange; it is a "Financial Crime & Regulatory" utility. Their Verafin unit (Financial Crime Tech) grew 22% organically in 2025. They are moving from a business that relies on "Market Volatility" to one that relies on "Bank Compliance", a much steadier master.
operational efficiency (the "efficiency" check)
ROIC (Return on Invested Capital): 6.8%
Old York Standard: Sovereign AAA typically requires >15%.
Analyst Note: This is the primary anchor on NDAQ's rating. To buy "Quality," Nasdaq had to pay a massive premium, which bloated the "Invested Capital" side of the equation ($29.7B average for 2025). While the 56% adjusted operating margins are elite, the return on the price paid for those margins is currently modest.
the fortress check
Pricing Power: HIGH. Between its proprietary Index business (Nasdaq-100 data) and its regulatory tech, NDAQ has "Subscription Moats." If a bank uses Verafin to catch money laundering, the cost of switching is a massive regulatory risk.
The "Index" Power: Index revenue grew 20% in 2025. As the QQQ remains the primary vehicle for "Growth" investing, Nasdaq collects a royalty on nearly $880 Billion in AUM. This is a capital-light royalty stream of the highest order.
Solvency: Total Debt stands at $8.06 Billion. Management is focused on deleveraging, having repaid $826M in 2025. The Debt/Common Equity ratio dropped to 77.4% (a 5-year low). The "Fortress" is under construction, but the walls are getting thicker.
final determination
Rating: Old York Quality (A)
Classification: The Regulatory & Index Royalty. Nasdaq is a superior business to its "Exchange" peers because it has successfully moved away from the "Trading Volume" casino and into the "Software & Data" toll-booth. It earns an "A" rather than an "AA" because its capital efficiency (ROIC) is lower than ICE's, and it is still digesting the largest acquisition in its history. For a principal, it is a high-visibility, high-margin asset that thrives as finance becomes more digital and more regulated.
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager. This report is for informational purposes only.
