Nasdaq Inc (NDAQ) Q4 2020 Earnings Call Transcript

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Nasdaq Inc (NDAQ 0.22%)
Q4 2020 Earnings Call
Jan 27, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Nasdaq Fourth Quarter 2020 Results. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Ed Ditmire, Vice President of Investor Relations. Please go ahead, sir.

Ed Ditmire -- Vice President, Investor Relations

Good morning, everyone, and thank you for joining us today to discuss Nasdaq's fourth quarter and full-year 2020 financial results. On the line are Adena Friedman, our CEO; Michael Ptasznik, our CFO; John Zecca, our Chief Legal and Regulatory Officer; Ann Dennison, our Chief Accounting Officer and incoming CFO; 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 FD.

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.

Adena T. Friedman -- President and Chief Executive Officer

Thank you, Ed. Good morning, everyone, and thank you for joining us. Before I begin my remarks, I would like to note that we're starting the New Year at the depth of the COVID crisis, and we continue to focus on maintaining our employee's health and safety, while executing on our critical role in facilitating capital raising, liquidity and price discovery in the economies in which we and our clients operate. While we manage through this very challenging environment, the rollout of the vaccines provide a new hope for 2021.

Throughout this health crisis, I have remained extremely proud of the resilience of Nasdaq's business, our team and our client community. Over the past year, we have deepened our partnerships with our clients and worked together with them to ensure the resiliency of the capital markets to handle unprecedented volumes and to facilitate near record levels of capital raising across our listed companies.

Capital markets and the role Nasdaq plays within them have never been more important as a critical source of funding and liquidity for innovation and job creation, including vaccine research and production, as well as for funding and liquidity needed to help companies weather through this very challenging period. We remain steadfast and unwavering in our commitments to our employees, our clients and our mission as we enter 2021.

My remarks today will focus on the following areas: Nasdaq's full-year 2020 and fourth quarter of 2020 financial and business performance; the progress we've made to drive Nasdaq forward along our strategic direction, and our ambitions for 2021 and beyond.

Turning to our results, I'm very pleased to report Nasdaq's strong financial performance for the fourth quarter and full-year of 2020. First, for the fourth quarter, we achieved $788 million in net revenues in the fourth quarter 2020, a 22% increase compared to the prior-year period, while non-GAAP earnings per share of $1.60 rose 24% compared to the fourth quarter of 2019.

Turning to the full-year of 2020, we generated total net revenues of $2.9 billion, including 10% organic revenue growth from our Solutions segment, along with 21% organic growth, a revenue increase from our Market Services segment due primarily to elevated trading volumes in US equities and options. Total organic revenue growth for the year was 14%.

In terms of the annualized recurring revenue, or ARR, and software-as-a-service, or SaaS revenue disclosures, we introduced at our November 2020 Investor Day, ARR ended the year at $1.58 billion in the fourth -- end of the year -- at $1.58 billion in the fourth quarter 2020, up 9% year-over-year and annualized SaaS revenue was $456 million, up 11% year-over-year. The strong development across these types of revenues creates the healthy core to build off of going forward independent of fluctuating trade volumes or market levels.

2020 was another year of robust execution for Nasdaq against the unique operating environment that none of us could have predicted a year ago. The strong results from the fourth quarter highlight the strength of Nasdaq's diversified product offering and business model, which allowed us to address the needs of our clients in a unique capital markets environment, including periods of elevated trading volumes, rising benchmark index valuations and a very strong period of new listings and capital formation.

Throughout the year, we also continued to invest organically and inorganically to advance our offerings, guided by our strategy to maximize opportunities as a technology and analytics provider, while also investing to sustain the strong competitive position of our core marketplace foundation. Because of this strong performance for the year and in particular the very strong finish in the fourth quarter, we enter 2021 with incredible momentum. We now have begun our fourth year since the 2017 announcement of our new vision for Nasdaq. Our full-year results illustrate how we can deliver on our strategy and more importantly, how our disciplined client-centric focus is creating value, not just for our clients, but for all of our stakeholders.

Now, I'm going to turn to specific highlights from our businesses, focusing mainly on fourth quarter results. Our Investment Intelligence segment delivered $247 million in net revenue during the fourth quarter, a 27% increase from the prior-year period, primarily driven by especially strong momentum in index licensing, as well as positive contributions from both Analytics and Market Data. We set new quarterly highs in both our index revenues of $97 million and end of period ETP assets under management tracking Nasdaq indexes of $359 billion.

As we noted in our Investor Day presentation, our Investment Intelligence segment has been repositioned for improved growth as we look to deepen our engagement with asset managers, asset owners and consultants, and the clients from our Market Data and index franchises. We are diligently focused on building out this business to be the essential partner to the investment community. As we move into 2021, we're making investments to ensure these growth engines have the fuel to continue performing in the long-term. For example, we're progressing our alternative investment workflow and data platform for asset owners with new capabilities, coupled with our integration with Solovis. And we will continue to advance our expansion of our increasingly parts of their indexes and trusted data products to new clients in new geographies.

Turning next to our Market Technology segment. We delivered $106 million in total net revenues for the fourth quarter, an 8% increase from the prior-year period. This was driven by higher SaaS revenues and changes in foreign exchange rates, while revenues from market infrastructure operator projects stayed -- remained flat. Over the course of 2020, I'm pleased to report Market Technology welcomed 29 new customers, of which 25 chose our SaaS products. As we stated in the previous investor calls, service implementations, change request projects, new order intake levels from our traditional market operator clients and funding for new markets initiatives have been adversely impacted by pandemic-related factors. In the second half of 2020, we have taken actions in particular dedicating more resources to mitigate project delays and to better deliver for our customers.

In a communication to our investors issued on January 12, we noticed -- we noted in one particular project, specifically an on-premise enterprise software delivery of a complex post-trade clearing and settlement solution for an exchange group, changes to our implementation timing and expected costs resulted in a significant discrete $25 million expense for the period. The expense resulted from taking a one-time reserve to reflect the expected losses on the approximately 13-year fixed price contract, the need for a reserve resulted from an updated detailed review of the implementation project with the client and with our internal technology and finance team. We expect an increased implementation spend from higher resourcing for the project and a longer project duration due partly to the aforementioned COVID-related impacts, but also due to our prior under appreciation of this one project's unique demand. While some of the issues are very specific to this one project, we will apply what we've learned to ensure future contracts fit with the profitability objectives of the Market Technology business.

As we examine the broader Market Technology business with our market infrastructure operator clients, we are starting to see improved sales opportunities as we exit 2020. However, we have not seen a full recovery to pre-COVID sales environment. Both new and existing market infrastructure operator clients recognize that we're operating in a unique period with unusually elongated sales cycles. But we are engaging -- they are engaging with us with incrementally more energy in the last few months to move forward with new projects and system upgrades. Additionally, our buy-side and sell-side technology business led by our SaaS-based trade execution and trade surveillance offerings, maintained strong momentum throughout 2020 with 13% revenue growth for the full-year and we enter 2021 with a position of strength in this segment of our business.

During the fourth quarter, we also announced an agreement to acquire Verafin, which provides more than 2,000 financial institutions in North America with a cloud-based platform to detect, investigate and report money laundering and financial fraud. A statistics from the United Nations notes that up to $2 trillion in laundered money flows through the financial system every year. As criminals continue to find sophisticated methods for moving funds undetected, robust, advanced anti-money laundering technology have become essential for financial institutions.

Once closed, Verafin will complement Nasdaq's established reg tech leadership to create a global SaaS leader focused on the $13 billion market for anti-financial crime technology solutions. Our long-term mission together with Verafin is to become the market's leading provider of anti-financial crime technology. Despite the challenges we faced in Market Technology in 2020, we remain highly confident in our strategy and in our ability to execute against new opportunities going forward.

Moving to our foundational marketplace businesses, our Market Services segment delivered net revenues of $291 million during the fourth quarter of 2020, an increase of 29% from the prior-year period. This area of our business maintained its strong competitive position across both the United States and Europe, while our US options business set a new quarterly trading volume record. The record fourth quarter helped to make 2020 the most active year for options trading ever, averaging 27.7 million contracts traded a day, a 58% increase over 2019. Nasdaq led the industry in multiply listed options for the 11th year in a row. In fact, for the first-time, Nasdaq was the largest options marketplace platform in the country for the year, including trading both index options and multiply listed options. Meanwhile, our European equities exchange complex set a new 10-year high on on-exchange market share in 2020.

Finally, our Corporate Platforms segment delivered revenue of $144 million in the fourth quarter, a 12% increase, boosted by particularly strong IPO and private market activity in our listings business, as well as increased demand for our IR Intelligence, ESG Services and board portal offerings. Our team successfully adopted all elements of the IPO process to a virtual environment, and as a result, for the eighth consecutive year, Nasdaq led the United States exchanges for IPOs in 2020 with 316, capitalizing on an incredibly busy year for new issues and with a 67% overall IPO win rate, including an 83% win rate for operating companies and a 53% win rate for SPACs. Also, for the second year in a row, Nasdaq ranked number one in the US in terms of IPO capital raised, with $80.9 billion, representing 52% of the industry total.

The fourth quarter was particularly strong in terms of activity. We welcomed 142 IPOs and this momentum is carried into 2021 with a particularly busy January. Meanwhile, our Nordic, Baltic and First North exchanges continue to attract new companies from across Europe, adding 67 new listings, including 45 IPOs in 2020. We also had 20 new companies switched their corporate listings to Nasdaq, including American Electric Power, AstraZeneca and Keurig Dr Pepper. These 20 transfers represent an aggregate $282 billion in global equity market capitalization. Across the entire Nasdaq listing business in both the US and the Nordics, our corporate issuer count rose 8% in 2020 setting us up in a strong position as we begin 2021.

On the private company side, our Nasdaq Private Market business set a new record for annual volume in 2020, facilitating 90 private company liquidity programs and with the fourth quarter -- and the fourth quarter was particularly busy with 49 transactions completed on the platform, a new quarterly record.

Demand for our IR Intelligence and Governance Solutions, particularly our ESG-related technology and consultative tools drove growth in our IR ESG Services sub-segment, which saw an 8% increase in the fourth quarter.

And lastly, during the period, we filed a new US listing proposal with the SEC that seeks to standardize forward level diversity disclosures, coupled with recommended minimum diversity standard through a hub or explained framework.

As I mentioned at the beginning of my remarks today, 2020 represented an important year regarding the progress we've made on our strategic journey. As we continue on that path, I would like to reiterate the core ambitions we outlined at our Investor Day in November. In Market Technology, our core ambition is to be the trusted Market Technology and anti-financial crime technology partner and our key 2021 initiatives for this segment are to deploy and drive adoption of SaaS Market Technology Solutions and to enhance our anti-financial crime business through the combination with Verafin.

In Investment Intelligence, our core ambition is to be the essential partner for the investment community and our key 2021 initiatives are to offer a full service alternative workflow platform for asset owners and to accelerate the expansion of indexes and cloud delivered data services to new clients and new geographies.

In Corporate Platforms, our core ambition is to be the leading provider of Capital Market Solutions to corporates and our key 2021 initiatives are to expand Nasdaq share of US corporate listing and to establish the leading end-to-end corporate ESG reporting workflow tool to complement our IR and Governance Solutions.

Lastly, in Market Services, our core ambition is to be the preeminent market operator for equities and equity derivatives in the US and Europe and our key 2021 initiatives are to continue to implement our multi-year migration of our derivatives markets to our next-generation platform, increasingly leveraging the cloud and to expand our suite of distinctive equity and equity derivative trading products and solutions. We look forward to updating you on our progress on these ambitions in the quarters to come.

As I wrap up, I will summarize by saying that our fourth quarter produced solid results for Nasdaq completing a successful 2020 for our Company. Moving forward into 2021, we remain relentlessly focused on advancing our strategic pivot to maximize opportunities as a technology and data analytics provider, while maintaining segment leadership in our foundational marketplace businesses in the US and Europe. We will officially celebrate Nasdaq's 50th anniversary next month. As we near this important milestone in our corporate history, I remain confident that we are moving the Company in the right direction as we build upon the strong momentum generated last year.

With that, I'll turn it over to Michael in a moment to review the financial details for his final earnings call before handing the mantle to Ann at the end of February. While we spent some time in our last earnings call and our Investor Day, reflecting on Michael's incredible career here at Nasdaq and at TMX, on this occasion of Michael's 73rd consecutive and final earnings call, I would like to thank Michael for his tremendous service to Nasdaq. We will miss him greatly, but we are well prepared for his transition as Ann Dennison steps into the role of CFO and Jeremy Skule expands his responsibilities to become our new Chief Strategy Officer.

Now, over to you, Michael.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Thank you for those kind remarks, Adena, and good morning, everyone. My commentary will primarily focus on our non-GAAP results and all comparisons will be to the prior-year period unless otherwise noted. Reconciliations of US GAAP to non-GAAP results can be found in our press release, as well as in a file located in the Financials section of our Investor Relations website at ir.nasdaq.com.

I will start by reviewing fourth quarter revenue performance as shown on Page 3 of the presentation and organic revenue growth on Pages 4 and 14. The $142 million increase in reported net revenue of $788 million is the net result of organic growth of $126 million, including a 27% organic increase in Market Services and a 16% organic increase in the Solutions segments, a $3 million positive impact from acquisitions and a $13 million positive impact from favorable changes in foreign exchange rates.

I will now review quarterly highlights within each of the reporting segments. I'll start with Investment Intelligence revenue, which increased $53 million, or 27%. Organic revenue growth during the period was 25%, primarily reflecting very strong growth in our Index business and positive contributions from each of the Market Data and Analytics businesses. Annualized recurring revenue, or ARR, was $516 million and increased 9% compared to the prior-year period. As a reminder, revenues related to index AUM and futures trading are not included in the ARR definition.

Fourth quarter 2020 operating margin of 65% increased 4 percentage points compared to the prior-year period, while the full-year 2020 margin of 64% rose 1 percentage point versus 2019.

Now, I note, looking forward to the first quarter of 2021 for Index. Trading activity of instruments, license to our indexes achieved certain thresholds earlier in the year that triggered an increase in licensing economics in the third and fourth quarters of 2020. While the confidentiality of our index agreements limits the detail we can provide on this, what we can say is that, as we begin 2021, the economics of some of the agreements reset for the new year and this will lead to approximately $7 million of lower revenue in the first quarter of 2021, compared to the fourth quarter of 2020. This assumes similar trading activity and product mix in the two periods.

Turning to Market Technology, revenue increased $8 million, or 8%. Organic revenue growth totaled $4 million, or 4% and there was a positive $4 million impact from changes in foreign exchange. The organic increase was driven primarily by higher SaaS revenues. ARR was $283 million and increased 9% compared to the prior-year period. The operating margin was a negative 1% in the period and was impacted by the previously mentioned $25 million reserve related to the expected loss on the Market Technology implementation project. Excluding the reserve, the operating margin was 23% in the fourth quarter of 2020 compared to 24% in the prior-year period and 16% for the full-year 2020, unchanged from 2019.

Corporate Platforms revenues increased $15 million, or 12%. Organic revenue growth totaled $13 million, or 10% and there was a $2 million positive impact from changes in foreign exchange. Organic revenue growth was primarily driven by an increase in US listings revenues, increases in ESG Services revenues and growth in Nasdaq Private Market. ARR was $470 million, and increased 9% compared to the prior-year period. During the fourth quarter of 2020, the operating margin of 31% for this segment was down from 35% in the prior-year period. The decrease in the operating margin was primarily due to higher variable compensation and marketing expenses during the period in support of a very strong IPO activity. For the full-year 2020, the Corporate Platforms operating margin was 36%, unchanged from 2019.

Market Services net revenues increased $66 million, or 29%. The organic revenue increase was $60 million, or 27% and there was a $6 million impact from changes in foreign exchange. The organic increase during the period primarily reflects increases in cash equities and US equities derivatives net revenues due to higher industry trading volumes. For the fourth quarter 2020, Market Services operating margin of 61%, increased 6 percentage points from 55% in the prior-year period and full-year 2020 margin of 62% was 5 percentage points higher than 2019, each comparison reflecting strong operating leverage on the higher trading revenues.

Now, earlier today, Nasdaq Clearing received the Swedish Financial Supervisory Authority's, or SFSAs, decision following their supervisory review initiated after the member default following the extreme market movement on our Nordic commodities market in September of 2018. The SFSA decided to issue a warning and an administrative fine of approximately $36 million. Nasdaq Clearing has been cooperating throughout the investigation with the regulator and maintains a constructive working relationship with the SFSA.

Immediately following the event and independent of the SFSA review, Nasdaq Clearing launched a comprehensive enhancement program to strengthen the resilience and robustness of the clearinghouse. We are comfortable that the program effectively addresses the observations made by the SFSA in their review. While the SFSA recognize the changes made by the clearinghouse, our initial review indicates that the findings appear to be disproportionate to the severity and impact of the incident and to the size of the commodities business that the clearinghouse serves. We are continuing to review the decision and evaluating our legal options and we'll communicate any next steps to our members and the broader public in due course.

Now, turning to Pages 9 and 14 to review expenses. Non-GAAP operating expenses increased $71 million to $406 million. The increase reflects a $53 million, or 16%, organic increase inclusive of the $25 million reserve related to Market Technology. Excluding the reserve, the organic increase was $28 million, or 8%, as compared to the total organic revenue growth of 20%. The increase was also due to a $6 million increase from the impact of acquisitions and a $12 million increase from the impact of changes in foreign exchange rates.

As noted in our January 12 press release, the full-year 2020 non-GAAP operating expenses of $1.41 billion were above the high-end of our prior guidance range due to three primary factors. First, higher performance compensation and variable expenses related to higher-than-expected fourth quarter 2020 revenues associated with elevated trading volumes, a quarterly record in assets under management in licensed ETPs and a multi-decade high in the number of Nasdaq IPOs. Second, the impact of changes in foreign exchange rates. And third, the $25 million reserve related to the expected loss of the Market Technology implementation project.

On that last item, I will spend a moment explaining the accounting aspect of the reserve. The accounting for highly customized software system delivery contracts, such as certain of our Market Technology contracts requires us to record a loss in the quarter when it becomes probable that costs will exceed future revenues from the contract. During the fourth quarter, as part of our regular review of significant implementation projects, we refined and revised our plans relating to a large-scale post-trade clearing implementation project for a specific client. In that process, it became probable that we would incur a loss over the remainder of that particular project in part due to the logistical implications of COVID-19. As a result, we recorded the $25 million reserve that reflects the expected loss.

Turning to Slide 10, we are initiating our 2021 non-GAAP operating expense guidance range of $1.55 billion to $1.62 billion. The expense guidance range at the midpoint reflects an approximate 3% organic increase compared to 2020 excluding the $25 million reserve on the Market Tech contract. An additional approximate 3% increase due to changes in foreign exchange rates, as well as expenses due to the net impact of M&A. The guidance does reflect the anticipated closing of Verafin acquisition in the first quarter of 2021.

Now, moving to operating profits and margins. Non-GAAP operating income increased $71 million in the fourth quarter 2020 and the non-GAAP operating margin of 48% was unchanged year-over-year. Excluding the impact of the $25 million reserve, the non-GAAP operating margin would have been 52% in the fourth quarter, up 400 basis points versus the prior year.

Net interest expense was $24 million in the fourth quarter 2020, a decrease of $2 million versus the prior-year period.

The non-GAAP effective tax rate was 25% for the fourth quarter of 2020 and 26% for the full-year 2020. For the full-year of 2021, we expect the non-GAAP tax rate to be between 25% and 27%.

Non-GAAP net income attributable to Nasdaq in the fourth quarter 2020 was $268 million, or $1.60 per diluted share, compared to $215 million, or $1.29 per diluted share in the prior-year period.

Turning to Slide 11, debt increased by $1.97 billion versus September 30, 2020, primarily due to bond issuances of $1.88 billion in December and an $89 million increase in our outstanding Eurobond book values caused by a stronger euro. The proceeds of the December offering are expected to be used to partially finance the Verafin acquisition, along with additional borrowings of approximately $500 million prior to the closing of the transaction. Our total debt-to-EBITDA ratio ended the period at 3.5 times, an increase from 2.4 times from the third quarter of 2020. During the fourth quarter 2020, the Company paid common stock dividends in the aggregate of $81 million and repurchased common stock in the amount of $36 million. And during 2020, the Company also repurchased common stock in the amount of $222 million.

Now, I'd like to provide a brief update on the acquisition of Verafin. We continue to progress through the regulatory approval process and expect Verafin to close in the first quarter of 2021. As a reminder, we are projecting in excess of $140 million in Verafin revenue for the full-year of 2021. This will need to be adjusted for both the actual closing date, as well as the impact of an accounting writedown of deferred revenue. We currently estimate this purchase price adjustment on deferred revenue to total $35 million, which will impact recognized revenues over the 12-month period following the close. The acquisition of Verafin is expected to deliver non-GAAP EPS accretion beginning in 2022 and increase thereafter. And I'll remind investors and analysts that Nasdaq's organic growth calculation reflects contributions from acquired businesses beginning 12 months after close, and as such, Verafin will be included in organic growth beginning in the first quarter of 2022.

Finally, as Adena mentioned, this will be my 73rd consecutive and last quarterly call before retirement. I want to take a moment to thank my incredible team and outstanding colleagues for all their extensive efforts, contributions and kindness during my time here at Nasdaq. I also want to thank Adena for her exceptional and principled leadership. It has been an honor and an education working for Adena and our esteemed Board of Directors. I also want to express my appreciation and gratitude to you, the investors and analysts with whom I've had the pleasure and privilege of working with over the years. And I especially want to thank my family for allowing me the time to pursue my career and I'm very much looking forward to be able to repay them some of that time, whether they want it or not, over the coming years.

As I said on the last call, I could not be more excited that Ann will be taking hold of the CFO reigns. I've so enjoyed working with her, she is a person of integrity, intelligence and initiative, who I am confident will serve this organization with excellence. Ann, I look forward to you breaking my quarterly record as CFO of an exchange group and I will definitely hologram into the Q2 2039 Investor Call when that occurs.

And with that, I'll turn it back to the operator for Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Rich Repetto with Piper Sandler. Your line is open.

Richard Repetto -- Piper Sandler -- Analyst

Yeah. Good morning. First, I want to congratulate both Michael and Jeremy as they move on to the next phases of their career, but both have deep roots in the exchange space. So, I congratulate both guys.

So, my question is mainly for Michael. I didn't fully understand, I guess, the drop in revenues. I think it was from Investment Intelligence. But the overriding question here is really for you, Adena. It's -- when you look at the organic growth rate, I know you adjusted it up for Verafin [Phonetic] a bit. But if you take, for example, in Investment Intelligence, the 5% to 8%, we've run at 18% and 25% the last two quarters. Is it still -- are these ranges still reasonable for the run rates you're experiencing, especially in Investment Intelligence?

Adena T. Friedman -- President and Chief Executive Officer

Sure. Why don't I -- I'll actually start with having Michael just make sure he clarifies the index revenue discussion that he had of the fourth quarter versus the first quarter. If you want to provide any clarification, Michael, and then I'll answer the broader question, Rich?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. Rich, the -- we can't get into too much detail, but basically the way the contract works is that, there are certain elevation points in the contract. And so, what we want to basically try to say is that, some of those resets at the beginning of each year. And so, depending on activity and on a comparable basis then Q1 of 2021, if it has the same mix and the same trading activity as compared to Q4, there will be a $7 million decrease in the run rate for that -- in the amount for that period in Q1.

Does that answer that question?

Richard Repetto -- Piper Sandler -- Analyst

Yes, yes.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Okay, great.

Adena T. Friedman -- President and Chief Executive Officer

Okay. Yeah. And then in terms of the broader question, Rich, we obviously are extremely proud of the growth that we've been experiencing in our Investment Intelligence segment. And we're so pleased by the level of investor interest in our indexes, and we do think that our index franchise generally does lean into the future of the economy. So we're very pleased with that. I think we also are seeing solid growth across Market Data and the Analytics businesses and that are more stable, but also just really, really strong.

So, whether or not, you're asking whether we would change our medium- to long-term outlook for the business, I think that we are maintaining our medium- to long-term outlook for the business on the back of the fact that index values can fluctuate. But I also agree that as we continue to perform and we continue to see progress in the business, we will, of course, continue to update our outlook for that business.

Richard Repetto -- Piper Sandler -- Analyst

Okay. Thank you very much.

Adena T. Friedman -- President and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Dan Fannon with Jefferies. Your line is open.

Daniel Fannon -- Jefferies & Company -- Analyst

Thanks. Good morning. My question is around the Market Tech segment. So if you could discuss the order intake, the decline kind of quarter-over-quarter and year-over-year? I know you've mentioned kind of COVID and some delays in implementation. So maybe discuss that?

And then in the context of the charge and then what that means as we think about the margin for that business going forward as you kind of restructure that contract and the progress and the growth in margin that you've talked about over a multi-year time period, does that accelerate this as you kind of reset the bar for some of the more unprofitable contracts?

Adena T. Friedman -- President and Chief Executive Officer

Okay, great. Thanks. So, on order intake, I would say that the primary driver of a lower order intake for 2020 has been the impact of the COVID situation. When we think about our engagement with our clients and particularly for those that are taking on some very significant projects with us, I think there are two things that come into play. First, is the fact that many of our market infrastructure operator clients have been really, really focused on managing the capacity and resiliency in this year, where they've all experienced very high volumes. And we're very proud of the fact that our technology has served them well, but they've been more focused on the here and the now and some of the projects that they have been planning to do and planning to work with us on early in the year were temporary to put on hold. So, we're starting to engage more productively with them as they start to think through the future going into 2021, but I definitely think that was part of it.

And then the second thing is that, when we're engaging with new clients, and we did sign -- as we mentioned, we did sign 29 new clients in 2020, but it is important in some cases, particularly with the larger ones that would drive the order intake number that they have a lot of engagement, including in-person engagement and that's been much harder this year. So, some of those projects again have just had elongated sales cycles. So, I think that it really has been a COVID impact on order intake primarily.

In terms of the margin going forward, I think the way to look at that particular situation was, it is an isolated situation. We have had actually -- we've signed over the last five years 38 new clients that would be in a similar situation where they have very -- they have large scale contracts. We do quarterly reviews. We have a Steering Board internally to track and monitor the projects and this is the only one in which we are seeing a situation where we have a loss. But in that particular case, we are recognizing that loss now, which then, for the remaining life of the contract means, we will not recognize a loss assuming it goes according to our expectations. I think, though, that -- but it doesn't necessarily accelerate the margin, it just -- it makes it so that this one isolated situation doesn't have a negative impact on the margin going forward.

I hope that answered your question, Dan.

Daniel Fannon -- Jefferies & Company -- Analyst

Yes. Thanks.

Adena T. Friedman -- President and Chief Executive Officer

Okay, great. Thank you.

Operator

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.

Brian Bedell -- Deutsche Bank -- Analyst

Great. Thanks. Good morning. Hey. Just a quick two-parter there. Just Listing Services, obviously, very strong, so just wanted to get a better handle on the -- I know there could be episodic movements in that line on a sort of quarterly basis in terms of how the revenues calculate. But given the very strong IPO environment that we've seen, maybe just a sort of an outlook as we come into '21 on the revenue side of that?

And then I missed part of the Verafin revenue expectation. If you could just clarify, Michael? I got the $35 million of deferred revenue, which -- if you could just clarify if that will be included in your adjusted results in a contra-revenue for '21 for Verafin and then reiterate the top line that you mentioned for Verafin in '21? And congratulations by the way, as well.

Adena T. Friedman -- President and Chief Executive Officer

Thank you. Yeah, great. Thanks, Brian. I'll answer the listings question and then I'll turn it over to Michael for the Verafin question. On the listing side, I think that if you think about the key drivers of recurring revenue in that business and much of the revenue is recurring in that business having -- we mentioned the fact that we had a net increase of 8% in terms of total listings on that business year-over-year, which then -- if that's the exit rate that becomes the entry rate for 2021. So -- and, as you know, we collect fees annually and we collect them in the beginning of the year. So, I think that that's one thing to think about in terms of the fundamental drivers of the business.

I think the second thing is that, as we look at our SaaS businesses, our IR Services, particularly our IR Technology and board portal business, as well as the one report system, those are all kind of what I would call reoccurring contracts. Many of them are multi-years, some of them -- many of them, of course, recur year-over-year. And so, if you have a higher exit rate for last year 2020 and therefore, you have a higher entry rate for 2021 that obviously increase our benefit. But you are right that there are some revenues, what we call our advisory service, including our ESG advisory services that are project-based. And so, that revenue is more that we might have a one-time project, we might have recurring projects, but that's part of the revenues a little less recurring. So, hopefully, it gives you a sense of how to think about the fundamental drivers of that business as we go into 2021.

Why don't we turn it over to Michael on the Verafin question?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. Thanks, Adena. So, on Verafin, we said consistent with what we said when we announced the transaction that the 2021 revenue we would anticipate to be in excess of $140 million. But there is a couple of adjustments. And the first adjustment is that, obviously, we'll have to adjust that for the timing of the closing, which we do anticipate to be in Q1. So, the $140 million is a full-year number. And so, we just have to prorate that accordingly for the amount and once we close the transaction.

Secondly, we currently estimate that the purchase price adjustment on the deferred revenue, which will be reflected in our results will come off of that $140 million or the pro-rated $140 million in the first year as well. And so, we estimate that there will be a $35 million reduction to that adjusted number in the first year of results.

Brian Bedell -- Deutsche Bank -- Analyst

And that eliminates for 2022, right? So we go back to the $140 million plus the 30% growth rate or whatever we have for Verafin in 2022?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. Well, it's technically over the first 12 months or so, and again, we're finalizing the adjustments. We'll be able to provide more updates on that in the next quarter results. So we'll be able to fine-tune that number a little better, but it's over the first 12 months. So, some of it could flow into 2022 but only really until the -- through Q1 since we expect the transaction to close in the first quarter.

Brian Bedell -- Deutsche Bank -- Analyst

Great. Great. Thanks very much and congrats again, Michael.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Thank you very much. Really appreciate, Brian.

Operator

Thank you. Our next question comes from Alex Kramm with UBS. Your line is open.

Alex Kramm -- UBS -- Analyst

Yeah. Hey. Good morning, everyone. I think just a few clean-up questions here on, I guess, Investment Intelligence. On the index business, can you just give us the breakdown between trading and AUM? And then on Market Data, specifically audit fees and why the sequential decline in that line? That's it for me. Thanks.

Adena T. Friedman -- President and Chief Executive Officer

Sure. So, I think on the index side, what we generally look at, Alex is, how much of the revenue is coming from AUM-driven versus other, and other as both the futures, trading, as well as the data that come -- the index data. So, when we kind of evaluate that business we would say about two-thirds of the revenue comes from AUM and about a-third of the revenue comes from the futures and the data.

The other thing we said in the past, is that, the futures revenue can be a range of 10% to 20% of the overall. And I think that if you look at the fourth quarter, it was -- those numbers are generally accurate and as, obviously, every quarter the futures revenue will fluctuate a little bit. But those types of ranges are the right way to look at it, including the fourth quarter.

In terms of the Market Data side, I think that what we call revenue from previously unreported usage, it was up $2 million year-over-year in the fourth quarter but was actually -- was lower for the year versus 2019. And so, the fact that continue to show a nice performance in Market Data even with the lower revenues from that particular activity, I think is a testament to the strength of the business.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. And just the actual number was $7 million for the quarter, Alex, in the Market Data and again a really -- it's coming from sales of the product to new clients. It's one of the big drivers of the Market Data business.

Alex Kramm -- UBS -- Analyst

Okay. And by the way, so you're not going to be more specific on the index breakdown? Last couple of quarters you gave us some pretty exact numbers, you're going to stop doing that?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. I think we said that last quarter that we wouldn't necessarily provide that on a regular basis going forward. And so, the two-thirds number is the number to keep in mind.

Alex Kramm -- UBS -- Analyst

Fair enough. Thanks, guys.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Thank you.

Adena T. Friedman -- President and Chief Executive Officer

Thank you.

Operator

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

Christopher Allen -- Compass Point Research & Trading -- Analyst

Yeah. Good morning, everyone. I just wanted to touch on the sequential strength in Market Technology. I know it usually have a seasonal impact from change requests. But a little bit surprised just given kind of the current environment, just from an activity perspective, or from your client activity perspective, and just some of the challenges of doing kind of one-off things. So, any color there would be helpful.

Adena T. Friedman -- President and Chief Executive Officer

I think that in terms of -- I mean, as you know, the change requests revenues and kind of the change requests and other revenues there do reflect some short-term work that we do for our clients, as well as other adjustments we make to agreements that can accrue to our benefit in a particular quarter. So, I think that those types of revenues just may do fluctuate. The fourth quarter tends to be a higher quarter for us as people plan for to-do things before the end of the year and as we frankly work with clients to try to get commitments out of them before the end of the year, so that tends to be a higher number for any particular -- and the fourth quarter tends to be the highest quarter. I'm not sure if there's any more color to give on that, Michael.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

No. I think if you look historically that is very consistent that the fourth quarter, from a seasonality standpoint, is the highest. And it really is driven by change requests, even if things are lighter this year relative to others in the full-year concept -- on a full-year basis relative to Q3, Q4 is always the highest quarter.

Christopher Allen -- Compass Point Research & Trading -- Analyst

Got it. Thank you.

Adena T. Friedman -- President and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Ari Gosh with Credit Suisse. Your line is open.

Ari Ghosh -- Credit Suisse -- Analyst

As you know, Michael, I just guess another quick one on Market Tech. I think you noted that in the segments you continue to see some impact as a result of the pandemic. I was wondering if you could maybe talk about -- you say, a specific region or client side that's getting more impacted as a result of this. And then any sense if that pressure is easing.

And then with regard to Verafin, again you have layered in this yet, but is there any sense or any color that you can provide if Verafin is facing similar pressures or there's anything unique about that business where maybe it's not as impacted just thinking about that run rate of 30% of revenue growth that you've seen there, should we expect that to continue? So, just any comment there [Phonetic] would be great. Thanks.

Adena T. Friedman -- President and Chief Executive Officer

Sure. Yeah. So, I think that if we look at the overall Market Tech business, we thought the market infrastructure operators and then we have our banks and brokers clients. And so, I think it's important as I mentioned in my comments that it's really in the market infrastructure operator segment that we saw a slowing of sales, as well as the elongation of some of the significant projects. And I think that as we think about our engagement with those clients, as I mentioned, also a lot of those clients really focus much of the year on their immediate needs to make sure that they were managing to capacity and resiliency and managing to current trading levels. And so, if they were planning to do some enhancements or changes or upgrades, they kind of put those plans on hold. I think also, they know that as they go forward with those plans, they want to be able to have the right focus from their customers and their customers are also dealing with these elevative trading volumes. So, to put on them an upgrade in the middle of that, I think was also something they were hesitant to do.

So, as we exited 2020 and we're starting to see more engagement from those clients saying, we can't put these things off forever and they're starting to engage with us, but I would have to say, it's still is not at the levels that we were experiencing before COVID at the beginning of last year. I think also some of the new markets clients that were very active and engaged with us are continuing to engage but some of them have hit funding issues or just as their looking at launching their products, they are waiting until more normalized environment. So, those are the things that are -- that's the color behind that.

On the banks and broker side, though, and this actually plays into the Verafin question, we actually continue to see nice healthy engagement, healthy growth. And also, it's a SaaS-based delivery. So it's a much easier thing for the clients to take and to integrate, whether it's our surveillance or our trade execution solutions. And so, they -- that business had a more, I would say, it's more of a normal environment, as well as some increased demand, particularly for surveillance as the clients went online, went to a remote setting and they had to add users to make sure that they had proper coverage.

I think that then plays into the Verafin question, which is, they are more aligned with the banks and brokers, where it's a SaaS-based, cloud-based delivery. So it's the light implementation for the client and they continue to have a lot of engagement with banks and brokers managing through their anti-financial crime program. So, they didn't see the same level of impact as we did see at the market infrastructure operator clients and I think that they had a solid end to the year. So, we feel good about their progress and their momentum going into 2021.

Ari Ghosh -- Credit Suisse -- Analyst

That's great. Thanks so much. And congrats, Michael.

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Thanks, Ari.

Operator

Thank you. [Operator Instructions] Our next question comes from Mike Carrier with Bank of America. Your line is open.

Michael Carrier -- Bank of America -- Analyst

Good morning and thanks for taking the question. Just on the expense guidance for '21, I guess, just three clarifications given such a strong year in '20. I think, Michael, you mentioned 3% from FX. Just wanted to guess the assumption around that. And then if we do get a -- into a backdrop where we see some slowdown in index and listing, just given the strong growth that you guys have seen. How much flexibility is there in the expense base related to maybe those businesses?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah. So, the 3% of FX is really a combination of both the -- well, the weakening of the dollar relative to the SEK and the euro. And we -- in the guidance that we provided, we're really looking at kind of current spot rates is how we develop those estimates. And that's where we come up with the delta there, but it has been fairly significant relative to the average for last year. And then there's always ability to make some level of adjustment. So I think it's important that we want to continue to invest in the business and continue to grow it for the future, which is where a lot of our investments are is to build out new products and capabilities. But, obviously, if there -- as you saw in the fourth quarter where we had some increases in marketing spend and some other comp-related items, that in periods where things were to slow down then there are certain factors that we'll adjust accordingly. But I don't want to take away from the required investment going forward.

Michael Carrier -- Bank of America -- Analyst

Okay. Thanks a lot.

Operator

Thank you. Our next question comes from Ken Hill with Loop Capital. Your line is open.

Kenneth Hill -- Loop Capital Markets -- Analyst

Hey. Good morning. I wanted to come back to the Corporate Platforms growth that was so strong in the quarter. I know you called out a number of items there but kind of thinking about particularly like the listings business going forward with IPOs getting so much attention. Also, from a SPAC activity perspective that's really picked up. Can you comment on what you're seeing there in your pipeline? And then maybe some of the impacts on SPACs and how that might kind of have impacts to your -- not only your trading and our listings business, but also maybe Nasdaq Private Market, how to think about that? Thanks.

Adena T. Friedman -- President and Chief Executive Officer

Sure. So, I think that it's worth noting that of the 316 IPOs that we had last year, I believe 184 were operating companies and we had -- we are actually very proud of the fact we had an 82% or 83% win rate for those listings, as well, and then the remainder were SPACs and as we go into 2021 we are continuing to see a very healthy activity level in terms of listings of both operating companies and SPACs -- particularly SPACs. But I think that when we look at our pipeline, we have a longer view of operating company potentials versus SPAC. SPACs tend to come to market quickly, tend to engage with us quickly and we don't have as much line of sight. So, we probably really only have some level of understanding of the demand for SPACs in the first quarter and then our line of sight really diminishes. I think with our operating companies who tend to have a little bit of a longer view.

So, my answer to the question is that, we have a very active pipeline in both SPACs and operating companies and I would say, SPACs for the next several weeks, probably. And in terms of, we just don't see beyond that and with operating companies, we certainly see a healthy pipeline through the first half of the year. And then we'll have to see how the markets continue to develop. But, as you know, the market and the performance of the market does have an impact on when companies tend to go out. So, assuming a benign market environment, we should have a pretty healthy first half.

Kenneth Hill -- Loop Capital Markets -- Analyst

Got it. Thanks. And just, I guess, anything to think about from a Nasdaq Private Market perspective as there are really so many companies coming public with SPACs?

Adena T. Friedman -- President and Chief Executive Officer

Well, I mean, for as many companies they are going public, there are still thousands of private companies. And as we said, even with a really active IPO environment last year, we had 90 Private Market programs and it was a record for us. So, I think that we should assume that there is just a lot of companies out there, some of them are ready for the public markets and some are preferring to stay private and the great thing is that Nasdaq has the ability to serve both of them.

Kenneth Hill -- Loop Capital Markets -- Analyst

Got it. Thanks very much.

Operator

Thank you. Our next question comes from Chris Harris with Wells Fargo. Your line is open.

Christopher Harris -- Wells Fargo Securities -- Analyst

Great. Thank you. As you mentioned Private Markets as being a contributor to the increase in Corporate Platforms revenue. Can you remind us what the revenues are in Private Markets today? And then should we assume that most of those revenues are variable or is there a recurring component to that, too?

Adena T. Friedman -- President and Chief Executive Officer

So, first of all, we don't disclose specific revenue related to Nasdaq Private Market. It is part of the listing sub-segment, but we don't separately disclose that. So, we can't make that available to you. But I would say that the nature of the revenue is primarily variable. You are correct, it's basically we get paid for the programs that we execute on behalf of our clients, the tender programs. So, it is not as recurring in nature as the listings businesses. But it's -- the quantum of that is -- it is a small percentage of our listings business overall just to say.

Christopher Harris -- Wells Fargo Securities -- Analyst

Got you. Thank you.

Operator

Our next question comes from Alex Blostein with Goldman Sachs. Your line is open.

Alexander Blostein -- Goldman Sachs -- Analyst

Great. Hey. Good morning, everybody. Question about Verafin, I guess, one clarification around how much in Verafin expenses do you guys have embedded in your 2021 opex guidance, obviously, taking account that it's a partial year? But also bigger picture, if you guys are getting a little closer to closing the transaction, can you provide some color on sort of customer feedback you're hearing? I know part of the rationale was some pretty compelling cross-selling opportunities. And what kind of growth do you guys expect for Verafin's revenue once the deal closes for, I guess, both revenues and expenses?

Adena T. Friedman -- President and Chief Executive Officer

Sure. So, Michael, do you want to take the first part?

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Yeah, sure. So, we're not breaking out that Verafin explicitly, but what I can do is, reiterate the comments we made when we announced the acquisition, which was that Verafin was operating at around a 26% EBITDA margin. And so, you can take that into account to estimate the amount that you would put toward Verafin and then obviously you have to adjust it for the year.

So, then Adena, the remainder?

Adena T. Friedman -- President and Chief Executive Officer

Sure. Yeah. So, the engagement with our clients actually their clients and our clients has been very positive. So, I think that if we think about the Tier 1 and Tier 2 banks that we serve with our anti-financial crime technology, particularly our surveillance technology, we've had a lot of good calls from clients saying, we want to learn more. Is this a product that could apply to us? How are you going to integrate that in with your Capital Markets offering, etc? So, those are great question to be getting from our customers before even close the deal. I think as we mentioned when we announced the deal, there is a journey to take with Verafin to continue to advance the product to get them ready to serve the largest banks in the world. But that is obviously our mission and our joint vision for the business. And so, that will be an area -- our significant area of investment and our primary area of investment is to continue to advance the platform to be able to serve the largest banks over time and that's a big part of why we bought it. So, it's great to know that our clients are very interested in engaging with us when we're ready.

I think the second thing on their clients is, I think they do appreciate us as a high integrity player, we have obviously a strong presence in the market. We have a strong balance sheet, we have the ability to really manage the business together and I think that they are very pleased with us as the partner to Verafin going forward.

Alexander Blostein -- Goldman Sachs -- Analyst

Great. Thanks.

Operator

Thank you. Our next question comes from Owen Lau with Oppenheimer. Your line is open.

Owen Lau -- Oppenheimer & Co. -- Analyst

Good morning and thank you for taking my question. Could you please talk about the traction of cybernetics on the buy-side surveillance and the latest development of the Market Abuse Regulation in Europe? Is it still on track compared to your original expectation? Any more color would be very helpful? Thank you.

Adena T. Friedman -- President and Chief Executive Officer

Sure. Yeah. With the Market Abuse or what we call MARs, that is definitely been -- it has been over the last few years, actually a good catalyst for our sales of our surveillance solutions to the brokerage community, and also as the buy-side has been managing through that change, it also definitely opens doors to conversations in sales for the cybernetics or what we're now calling our buy-side surveillance solution. We are making good traction with the buy-side surveillance solution in terms of sales, and it's been, I would say, that we've had a relatively good momentum year there. But it's still a very small part of our business. So -- and it a small acquisition, and it continues to be an area where we are making sure we're tailoring it to the needs of the buy-side, I would say, that the original product was -- is a great product, but wasn't quite tailored to what the buy-side specific needs were. So, we've spent the last couple of years really engaging with customers and making sure that we have a solution that really meets their needs, and now we've had more sales momentum. But it continues to be small, but we're optimistic there.

Owen Lau -- Oppenheimer & Co. -- Analyst

Thank you.

Operator

Thank you. And that's all the time we have for questions today. I'd like to turn the call back to Adena Friedman for any closing remarks.

Adena T. Friedman -- President and Chief Executive Officer

Great. Thank you. Well, in closing, Nasdaq's fourth quarter and full-year 2020 performance was solid, and we are starting 2021 with strong momentum. Our leadership team remains focused on executing our technology-led strategy to deliver for our stakeholders. And I look forward to our continued discussions throughout the year on the progress that we will be making against the strategic priorities. So, thank you very much for your time today.

Operator

[Operator Closing Remarks]

Duration: 59 minutes

Call participants:

Ed Ditmire -- Vice President, Investor Relations

Adena T. Friedman -- President and Chief Executive Officer

Michael Ptasznik -- Executive Vice President, Corporate Strategy and Chief Financial Officer

Richard Repetto -- Piper Sandler -- Analyst

Daniel Fannon -- Jefferies & Company -- Analyst

Brian Bedell -- Deutsche Bank -- Analyst

Alex Kramm -- UBS -- Analyst

Christopher Allen -- Compass Point Research & Trading -- Analyst

Ari Ghosh -- Credit Suisse -- Analyst

Michael Carrier -- Bank of America -- Analyst

Kenneth Hill -- Loop Capital Markets -- Analyst

Christopher Harris -- Wells Fargo Securities -- Analyst

Alexander Blostein -- Goldman Sachs -- Analyst

Owen Lau -- Oppenheimer & Co. -- Analyst

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