Yahoo Finance

Sarah Youngwood

Thank you, Adena, and good morning, everyone. In the first quarter of 2025, Nasdaq delivered one of our strongest quarters on record with 24% EPS growth and record free cash flow. Starting with quarterly results on slide 11.
We reported net revenue of $1.2 billion, up 12.5% with solutions revenue of $947 million, up 11%. Operating expense was $555 million, up 7%, leading to an operating margin of 55% and EBITDA margin of 58%, both up 2 percentage points.This resulted in net income of $456 million and diluted EPS of $0.79, up 24%.
Slide 12 shows the drivers of our 12.5% net revenue growth for the quarter. We generated 9.5 percentage points of alpha driven by new and existing clients, product innovation, as well as excellent market services execution in this volatile market.
Meanwhile, beta factors contributed 3 percentage points of growth this quarter, driven by higher valuation in NASDAQ indices and higher overall volumes in both index derivatives and market services.
As shown on slide 13m we had ARR growth of 9% and above all quarters of last year, which were between 7% and 8%. This quarter's 9% included 12% ARR growth in fintech and SaaS revenue growth of 14%. SaaS as a percentage of ARR increased 2 percentage points to 37% compared to the first quarter of 2024.
Let's review division results, starting on slide 14. In Capital Access Platforms, we delivered revenue of $515 million, up 11% and with ARR growth of 5%. Data and listings revenue was up 4% with ARR up 6%. Revenue growth was primarily driven by data due to the positive impact of new sales, higher usage and pricing.
Within listing, the benefit of new listings and pricing was offset by delistings and lower amortization of prior period initial listing fees. The revenue headwind from delistings and amortization of initial listing fees in the first quarter was consistent with our previous comments.
Index revenue was up 26% in the quarter, mainly driven by record average ETP AUM of $662 billion. This is due in large part to strong net inflows with more than half of the quarterly revenue growth driven by alpha factors. ETP AUM included $86 billion of net inflows in the last 12 months, including $27 billion in the first quarter, which reflects tremendous recognition and resiliency in the context of the Nasdaq 100 market performance down 8% during the first quarter.
Volume-based license revenue was also a strong contributor to revenue growth, given the high level of volatility with record derivative contract volumes, up 28%. And we surpassed the revenue share threshold we have in place with our partner CME in March, earlier in the year than we have historically.
In Workflow & Insights, revenue and ARR growth were both up 4% for the quarter. The increase was driven primarily by analytics, mainly investment and data link with continued demand from hedge funds, asset managers, asset owners and consultants and a focus on differentiated data as our clients seek alpha.
Corporate Solutions also grew modestly due to the pricing and improved gross retention. Quarterly operating margin for the division was 60%, up 2 percentage points. As we look to the full year 2025, we continue to expect Capital Access Platforms to deliver 2025 revenue growth within its medium-term growth outlook range of 5% to 8%, with subdivision revenue growth expected to be consistent with our prior comments provided in January.
Moving to Financial Technology on slide 15. Revenue was $432 million, up 10% with ARR growth of 12%. The difference between quarterly revenue growth and ARR growth in fintech and capital markets technology is driven by the impact of lower Calypso on-prem subscription revenue due to the tough comp of 23% revenue growth in the first quarter of 2024.
Meanwhile, ARR growth remains solid across the subdivisions with the benefit of 40 new clients, 92 upsells and two cross-sells in the quarter. While we closed two cross-sell deals this quarter, cross sales continue to represent over 15% of the Financial Technology divisions pipeline, with strength across all three subdivisions.
Financial client management technology revenue and ARR growth both increased 21% for the quarter, with 35 new SME clients and one cross-sell with a Tier 2 client as well as an upsell with an existing Tier 2 client.
Net revenue retention was 113%, reflecting strong client engagement, including the continued adoption of the Gen AI entity research Copilot and targeted typology analytics. Regulatory Technology revenue increased 10% for the quarter with ARR growth of 11% as well as five new clients and 49 upsells.
Capital Markets Technology delivered 7% revenue growth for the quarter, with ARR up 9%. And with 42 upsells and one crosssell in the quarter. Financial Technology operating margin was 46%, flat versus the prior year quarter.
Looking ahead to our 2025 revenue growth expectations for Financial Technology. The uncertainty in the global macro and regulatory environment is causing some delays in large decisions and client readiness. These delays will likely have some effect on revenue and ARR growth in Q2.
Additionally, as a reminder, Calypso benefited from a strategic renewal in 2Q '24, which created a difficult growth comparison for the upcoming quarter. That being said, we are seeing continued strong demand for our FinTech solutions, which is showing up in a solid 2025 pipeline. Clients continue to engage with us, underscoring the mission-critical nature of our solutions, and we continue to be the partner of choice in competitive situation.
Therefore, we remain confident in our ability to deliver full year 2025 revenue growth within the medium-term outlook for both the division and the subdivision with Financial Client Management Tech and Capital Markets Tech at the low end of their ranges and with Regtech well within its range.
Wrapping up the division with Market Services on slide 16. We had record net revenue of $281 million, reflecting growth of 19%. This included record quarterly net revenues in US options, including index options as well as in US cash equities.
Growth was primarily driven by the increase in market-wide volumes across all asset classes but also included higher capture in both US cash equities and European equity derivatives, higher market share in available on-exchange trading volumes in US cash equities and higher US state plan revenue.
Our trading businesses have executed well during this period of significant market activity. In North America, we reached a record of more than 430 billion messages in the second day in Q1. This compares to around 200 billion messages per day, which we referenced at Investor Day in early 2024.
Our clients increasingly rely on us during periods of extraordinary market conditions and as such, give us persistent market share leadership and premium capture. This is only possible because of the major investments we've made to modernize and scale our trading infrastructure.
To normalize Alpha/Beta computations for market volatility in US equity options and US cash equities, we're including an average daily volume provision to our methodology, in which half of the net revenue generated from above threshold volume is attributed to Alpha. These thresholds are set 10% above the trailing three-year industry average daily volume.
As noted on page 12, the addition of this new provision to Alpha/Beta methodology would not have materially changed any alpha, beta splits in the projects we have reported. Market Services operating margin was 62%, up 5 percentage points highlighting the strong operating leverage of this platform.
Moving to expenses on slide 17. We had operating expenses of $555 million, up 7%, driven by strong investments in technology and people to support revenue and drive innovation and growth, employee-related cost increases and other increases largely due to inflation.
This resulted in an operating margin and EBITDA margin both up 2 percentage points at 55% and 58%, respectively. We are narrowing our non-GAAP expense guidance for the year to a range of $2.265 billion to $2.325 billion from $2.245 billion to $2.325 billion. FX was a very small benefit this quarter. But given current volatility in FX rates, we are once again treating it as a neutral versus 2024 rates in the narrowed guidance range.
As Adena noted, we have actioned over $100 million of our efficiency programs at the end of the first quarter and we remain on track to action the $440 million by the end of the year as well as realize a 2 percentage point benefit to our full year 2025 expense growth. As we look to Q2, we expect slightly higher expense growth than the first quarter due to the timing of our annual compensation cycle. We maintain our 2025 non-GAAP tax rate guidance of 22.5% to 24.5%.
Turning to capital allocation on slide 18. Nasdaq generated free cash flow of $674 million in the first quarter. This high level of cash flow enabled us to support deleveraging our dividend and share repurchases. We paid a dividend of $0.24 per share or $138 million in the quarter, representing a 32% annualized payout ratio.
And this morning, we announced a 13% increase to our quarterly dividend to $0.27 per share, which will be payable in June. In our continued commitment towards deleveraging, we repurchased $279 million in notional value of debt for a net cash purchase price of $257 million, resulting in a gross leverage ratio of 3.4 times at the end of the quarter, down from 3.6 times at the end of 2024.
As a result of our focused deleveraging, we recently received a one notch upgrade to our credit rating by Moody's to Baa1. Given the attractive buying opportunity in our stock, we repurchased 1.6 million shares of our common stock for roughly $115 million in the first quarter, and we have since completed the employee-related repurchases in April.
As we continue to execute against our compelling organic growth strategy, we remain focused on reducing our leverage and now expect to reach a 3.3 times gross leverage ratio in 2Q or 3Q, depending on FX. We intend to pay down the $400 million remaining on the June 2025 bonds at maturity primarily with cash on hand.
Beyond that, we will remain opportunistic regarding any additional debt or share repurchases. Our capital priorities remain unchanged since the close of the Adenza transaction. We are focused on delivering what we committed to shareholders, which is investing for organic growth, delevering, expanding the dividend and repurchasing shares. We have an incredible organic growth path in front of us, and that is where we are focused.
In closing, Nasdaq delivered a standout first quarter marked by double-digit revenue growth across all three divisions and our highest year-over-year ARR increase since the first quarter of 2022. We demonstrated strong operating leverage and made meaningful progress on our capital strategy, including reinvesting in the business, reducing debt and buying back shares.
As we move into Q2, I echo Adena's comments on the dynamic macroenvironment and a critical role Nasdaq played in sustaining market resilience. In times like this, financial institutions around the world rely on us for our mission-critical technology and actionable insights. Our central role in the global financial ecosystem and the trust our clients place in us, reinforce our ability to continue delivering sustainable growth and long-term shareholder value.
With that, let's open the line to Q&A.

Question and Answer Session

Operator

(Operator Instructions) Simon Clinch, Redburn Atlantic.

Simon Clinch

Hi everyone, thanks for taking my question. Maybe, Adena, I was wondering if you could reflect on the strength that you've seen in the index business you have and with the sort of building of this next-generation platform. And if you could perhaps talk about how the business and the structural drivers are different today versus the last time we went through a market downturn in 2022 when your growth was still very resilient. I was just kind of curious as what differences might be this time around and how you might therefore think about the resiliency of the business of that index segment today versus that last period.

Adena Friedman

Great. Thanks, Simon. Yes, just as a reminder to everyone, in 2022, we saw a decline in market values of the Nasdaq 100 of around 33%, but the index business in that year grew 6%. So it does really -- I think that year was a good testament, as you said, to the resilience of the business.
But as we look at how we've expanded that business since then, I mean, we've really executed against a very defined strategy of bringing new products to market and really expanding the index franchise beyond the Nasdaq 100, which I think we're continuing to do quite successfully growing our international clientele and also expanding into the institutional clientele.
And that, I think, is continuing to accrue to our benefit. So Simon, I think it's a great question because 50% of the inflows in the quarter, the $27 billion of inflows in the quarter were from non-Nasdaq 100 products. So -- or I should say we're into non-Nasdaq 100 products. And I think that shows that we're really continuing to diversify the business.
And as we also talked about, there are three really key levers that you should look at in the index business. There is, of course, market values. And I think that does create basically as one of the key drivers, and that's really kind of shows up in the beta that we show in our alpha beta comparison.
But we also have new product launches and inflows into those products as well as our derivatives volumes as well as data revenue. So I think that because of the fact we do have multiple vectors of performance and drivers in the business, it allows us to continue to perform even when market values might be swinging one way or the other.
And so that obviously showed up on the 26% growth in the business even with an 8% decline in market values in the first quarter. But of course, as we go forward, it is a very dynamic environment. We are still seeing inflows in April, so we're very excited about that. But the market will perform, and we'll have to see how that drives the business forward. But the balance that we have there now and the size and scale of it is really exciting to us.

Simon Clinch

That's great. Thank you very much.

Operator

Craig Siegenthaler, Bank of America.

Craig Siegenthaler

Good morning, Adena, Sarah. Hope everyone is doing well. So we saw the announcement last month that Nasdaq plans to open an office where I think effectively our regional headquarters in Dallas, Texas. This looks like a reaction to the BlackRock Citadel back Texas Stock Exchange and a similar announcement from ICE, which I think already went live three weeks ago.
So I'm really curious what do you expect to accomplish from this move? How will this link up also with your Nasdaq exchanges in New York or actually Secaucus and Carteret. Thank you.

Adena Friedman

Sure. Thanks, Craig. Well, first of all, just to ground everyone, we have 700 clients across Nasdaq in Texas. And that includes banks, brokers, investors, corporate clients. That does include 200 or so listed clients.
So as we are thinking about expanding our presence in Texas, it's really because, frankly, the clientele we have has really expanded through all the work that we've done in the fintech division and the growth of that business. in addition to, of course, our listings business. So the regional headquarters is really a reflection of making sure we have a great local presence in Texas to serve that broad base of clientele.
And when we think about our listed companies there, we have -- I mean, just amazing companies that really they want to have, of course, a local presence that they can come to and people that they can interact with in Texas, and we have a great team in Texas to support them. but they also want to have access to global capital flows, and they want to have access to the really unique benefits that we provide as a listing exchange.
And I think those unique benefits are really driving the fact we have an overall win rate of over 80%, and we've continued to really expand our switch program, 7 switches in the quarter. So our view is that that companies that are public companies that are based in Texas, they want to have that great local presence, they also want to have access to a global market, and we can provide both. And so that's really the driver of our decision to expand our presence there.
But at the end of the day, we take every competitor seriously, but we do think we have an incredible value proposition to offer any company, including all of our clients in Texas.

Craig Siegenthaler

Thank you.

Operator

Alexander Blostein, Goldman Sachs.

Alexander Blostein

Hey, good morning. Thank you for the question as well. I was hoping we can touch on your acquisition priorities from here. The balance sheet is deleveraging really nicely. You guys made great progress since the Adenza acquisition. I think in one of the recent conferences you talked about, maybe a little bit more openness to pursuing growth inorganically again. So maybe expand on that a bit. What is the probability of deals you're seeing out there obviously, macro uncertainty could present pretty compelling valuation opportunities, but the balance is still relatively levered relative to kind of where you guys want to be.
So just a broader question on M&A. And as part of that, just remind us your sort of earnings accretion targets when you're pursuing deals. Thanks.

Adena Friedman

Sure. Well, so Alex, we're not evaluating deals. We're really focusing on organic growth. I think that as Sarah said, we have an incredible growth story. We have great opportunities for continued to sustain organic growth within the business. We have work to do to continue to drive to the returns and the accretion that we committed to our shareholders with the Adenza deal.
So the deleveraging, the share buybacks, those are things that we're going to be committed to doing in our capital plan in addition to continuing to increase our dividend as we did announce today as well. So I think that, that's really our focus. I mean, our team is laser-focused on delivering for our clients, laser-focused on driving the organic growth, and we really haven't been evaluating M&A.

Alexander Blostein

Lound and clear. Thank you.

Operator

Patrick Moley, Piper Sandler.

Patrick Moley

Yes, good morning, thanks for taking the question. So I just had one on the overall sales cycle environment. You mentioned the macro headwinds that you're seeing and how that's driving delays in customer decision-making, but you did not adjust down any of the revenue guidance ranges, particularly in financial technology.
So just hoping you can walk us through the dynamic there and what specifically you're seeing that gives you confidence that you're going to be able to come in within the guidance ranges that you laid out at the beginning of the year? Thanks.

Adena Friedman

Sure, sure. I'll take it by each of the subdivisions within fintech. Starting with financial crime management technology, we're really -- we're having great robust conversations with clients. We actually showed an acceleration of sales to the SMB clientele in the first quarter this year versus last year. We're not seeing any changes in the way that our clients are engaging with us as they're considering our solutions.
And as we are -- and we're continuing to move up market, we're definitely -- we're just having a lot of progress there in driving towards deals and concluding those deals. So that business remains very robust, and it feels very, very healthy. I think within the RegTech business, the surveillance products, honestly, are very high demand with four new clients in the quarter.
But generally, we've had really good sales for the last year there, and we're continuing to have a lot of active dialogue. If you think about it, higher activity levels and, frankly, more regulatory scrutiny on market performance, and I would say, making sure that we are helping our clients manage through any sort of market risks from a market manipulation perspective is really accruing to the benefit of that business globally.
And I think within AxiomSL, we are seeing some changes in how clients are implementing the technology, how quickly they're doing it just because some regulatory requirements are shifting back in time. And -- but we continue to have a lot of opportunities. Our pipeline continues to be very, very healthy as we've been engaging with clients on the needs that they have to expand their regulatory needs over time.
I think within the capital markets tech, that market modernization megatrend is something that is really driving a lot of benefit to us. We've really been able to show the scalability of our platform, the modern way that people can implement that platform. And we just announced an expansion of our AWS partnership today to really drive our clients into that modernization for a complete suite of infrastructure capabilities to support that modernization. So that trend feels very strong.
And then with trade management services in terms of connectivity services, that business because of all the market activities has continued to be a great grower. And we did double the size of our data center last year, which is also helping us grow there.
And then within Calypso, I think we mentioned back in early March, we're seeing some decisions have to go further up the chain inside the companies and it's causing some delays, but the overall demand characteristics within Calypso remains strong. And just a reminder, I mean, some of the things we do within that platform are incredibly important especially during times like this one, like our collateral management module, which we really believe is like the best in the world is something that is of such high demand. I mean everyone needs to be able to move collateral as efficiently and effectively as possible, manage risk. The risk calculations are so important within that platform.
So I think clients really understand why Calypso is a differentiated solution, why they really need to have that kind of technology to manage risk. It's just a matter of sometimes the larger decisions have to go further up the chain, and that's what we've been experiencing with our clients.
So at the end of the day, kind of the diversification of our fintech business, the breadth of our clients, our client relationships, the strategic nature of what we do, I think, is really keeping that ballast really strong as we're managing through these uncertain times.

Patrick Moley

Okay, thank you.

Operator

Benjamin Budish, Barclays.

Benjamin Budish

Hi, good morning and thank you for taking the question. I wanted to ask about the Verafin growth algorithm. During the prepared remarks, you talked about expanded use of AI features, I think, co-pilot features. In the presentation you talked about prices partly a driver. Just curious as we think through the next year or two, how much of the growth is coming from SMB sales moving up market?
And can you comment on the European opportunity? Any signs of anti-US sentiment, anything like that? Just curious how those pieces fit in price in terms of the next few years?

Adena Friedman

Sure. Yes. So the AI features are really helping us show how valuable the platform is to our clients. We don't specifically charge for those features. They're embedded in the solution, but they really just add to the value and ROI that we can deliver to our clients. So as we talk to them about the value of the solution or the increased value of the solution as they do contract renewals, we definitely will demonstrate that the automation that they're going to be able to bring to their workflows helps them be able to solve these problems with fewer resources over time.
That's really kind of the way that we would communicate that to them. And in general, though, if we think about the business and the growth drivers of the business, the strongest part of our business has always been the SMB space, where we're really gaining strength is in the Tier 1 and Tier 2 clients, and we're continuing to show progress there.
Really happy to see the upsell that we gave to -- we were able to secure with one of our Tier 2 clients because I think it just shows that, that land and expand strategy is something that we really believe is something that will accrue to our benefit over time. But that upsell movement will continue to be a slow-moving train just because the sales cycles are generally longer. And we also don't start showing the ARR until we actually implement and the implementation cycles or longer, but it has been -- the demand there continues to be very, very high.
As we move to Europe, we are engaging very constructively. We've had engagements with our clients throughout the first quarter and in April, or I should say, client prospects, and they are signing up with us to start to run POC so we can show that our solution is differentiated. We have found that they're as interested as ever, frankly, in just finding a solution that works I think that -- and that really can drive down their criminal behaviors, but also deliver the ROI that I mentioned. And so the engagement has been really healthy.
But that's going to take time. I do want to say, again, sales cycles are long, -- so we don't anticipate that being a real contributor this year, but we're hoping that we can start to show some contribution from our global expansion next year and the year after that starts to be another lever of growth for us over time.

Benjamin Budish

Great, thank you so much.

Adena Friedman

Thank you.

Operator

Ashish Sabadra, RBC.

Ashish Sabadra

Thanks for taking my question. I just wanted to drill down further on the prior comments around delays. And I was just wondering how should we think about like the impact to revenues in 2Q, if you could provide any further detail by segment. And then in terms of trajectory, should we expect growth to improvement to 3Q or is it going to be more back-end loaded? Thanks.

Adena Friedman

Sure. Well, we don't provide specific outlook by quarter. I think we wanted to make sure though that we just reminded people that we had a very strong growth in our capital markets technology and particularly in Eclipse to last year because of some strategic renewals, particularly a large strategic renewal in the second quarter of last year that's creating kind of a year-over-year comp concern or changing in the comp -- I would say, challenging comp for Q2.
And then as we're looking at the way that we've been engaging with clients, the clients because they're going up -- particularly for larger decisions because they're going up further up the chain and getting approval of some of those sales are taking a bit longer. So we think that, that could impact some growth in Q2.
But generally speaking, for the year, as we said, we continue to believe that -- and feel strongly that we have great growth levers across the FinTech division, that we're confident in our medium-term outlook and being able to achieve that within the year. And we also believe that the clients at the end of the day, they need us to help them manage through these uncertain times, and they trust us to be a partner to them through all economic cycles. And so we continue to have very, very healthy engagement with our clients.

Ashish Sabadra

That's very helpful color. Thank you.

Operator

Kyle Voigt, KBW.

Kyle Voigt

Hi, good morning. So you mentioned it a few times on the call already, but wondering if you could expand upon the AWS partnership or enhanced partnership, I guess, that was announced this morning. And hoping you could help us understand if your infrastructure users migrate to this newer offering over time, what that would functionally mean for the composition of your marketplace technology revenues, the length of sales cycles and the kind of overall revenue pie or addressable market that you're targeting?

Adena Friedman

Great, thank you. This is as you're pointing out, it is a long-term relationship. And as we're working with market infrastructure providers around the world, they have a few challenges -- they have a few challenges they're really trying to address. One is the fact that they have to have incredible scalability, right. Obviously, the market volumes have come up across many markets around the world. So that scalability is something that they're really focused on.
Second, they want to be able to organize their data in a way that allows them to bring more functionality and AI capabilities into their markets over time. And they know that that's going to be a driver of growth for them. I think third, they obviously have to maintain hyper-resilient, hypersecure infrastructure. And they want to be able to be adaptable, right?
So -- and they want to be able to bring in foreign investors, so they have to be adaptable in terms of their technology and the way that their markets work, having it be more standardized, having connectivity be more streamlined and being more adaptable and being able to bring new products or new asset classes or new capabilities into their market.
So we can help them from a solutions provider in that adaptability in the modernization and also in driving more standardization across markets. AWS, as a partner to us can then drive work with them together to kind of create modern infrastructure that underpins all of that. So that means that they want to be able to have the benefits of cloud, the security benefits, the scalability benefits, the modern data capabilities and they want to have a really highly functional system, but they also have data sovereignty needs. They're highly regulated, and they have to really think about that resilience.
So what we're working with AWS on is really creating an infrastructure that has a hybrid cloud component for those latency-sensitive, data-sensitive workloads where they can bring AWS into their existing data centers through a hybrid cloud capability with high-speed connectivity to an availability zone that allows them then to do a lot of the other workloads outside their data centers in a much more scalable, much more efficient and effective infrastructure.
And then have also connectivity across markets. So we're going to be working with AWS to create connectivity across markets to allow for investors to be able to spend capital flows more efficiently and effectively and faster across markets. So it really creates a much more of an interwoven market ecosystem over the long term. And that really becomes more of like kind of a managed service offering to our clients as opposed to a deployed software solution, which is what we primarily provide today.
But it will take time. These are big decisions. These are big moves. And we are engaged and we announced this part of our announcement this morning that we have two clients already with Johannesburg Exchange and BMV in Mexico, engaging with us on how to install and implement this technology as fast as they can to really get the benefits of the connectivity, the scalability, the security, et cetera.
And so we are very excited about that. And we're also going to be moving our Nordic markets into this infrastructure subject to regulatory approval as kind of a first market to go in this kind of new construct. So excited about it long term, though, and it is a partnership. So we are looking at this as how do we -- as everyone win as we are implementing it from a financial perspective as well.

Operator

Dan Fannon, Jeffreys LLC.

Dan Fannon

Thanks. Good morning. A question on expenses. So you raised the low end of the guide after I think first quarter came in better than expected. I'm curious as what drove the change. I think you mentioned FX, but just other things that might have driven the low end to move up that amount?

Sarah Youngwood

It's exactly what you said. We had a very strong first quarter revenue and we actually are continuing to have a very strong rigor on expense. But as you know, we continue to also recognize that we have very strong performance in the first quarter. And therefore, we certainly yielded a lot to the shareholders there, but there was a little piece there that was added to the expense.

Operator

Brian Bedell, Deutsche Bank.

Brian Bedell

Oh great, thanks. Good morning. Thanks for taking my question. Maybe just go back to the question on the uncertainty and the delay in decision making. Maybe just focusing though on Axiom. And I think, Adena, you mentioned obviously, on the US regulatory side, some potential rollback of regulations. But if you can talk about to what extent your global business on the global nature of Axiom is maybe potentially offsetting some of those headwinds.
And also maybe just pivoting on beyond the RegTech, but just your view on crypto market growth globally. And to what extent you see that as an incremental growth driver for both RegTech and Calypso and also Verafin versus where your views were before the change in the administration and potentially a higher regulatory backdrop on crypto?

Adena Friedman

Okay, great, thanks. Yeah. So I'll start with the first question on AxiomSL. So as you said, it is really a global business. And I was talking to the team and I said, well, how many changes do we -- regulatory changes that we process within the system every year. And they say it's literally thousands of regulatory changes we process, meaning that we are so diversified and so broad, and we manage across more than 100 regulators and thousands of rules, it's incredible, actually.
But you're right that within -- there are some changes to the timing of certain regulations, new regulations that are coming out. There is still some indecision on Basel III end game here in the United States. And so those are the types of things where we have clients who signed up to make sure that they're ready for Basel outside the United States, but some of those have have pushed out their requirements to push out in time. So they're taking a little longer to do the implementation themselves.
But generally, I would say every client knows they have to get ready for this regulatory change, whether they're here or outside the United States, it's just they're waiting to see some of what the clarity is here in the US as we're working with them. But beyond that one regulation, that one regulatory change, it is a consistent engagement with clients in a few ways.
One, they might be expanding their businesses or changing their businesses. They might be looking at making sure that they also -- what we're finding is the upsells are driven by more and more of the regulatory reporting going into AxiomSL, meaning, they might use us for some of their markets or some of the geographies, but not all of them, and we've been able to work with them just to expand across all their geographies.
And also, as you said, moving over to crypto. As we think about a new regulatory paradigm for crypto, it really is an interesting opportunity for us. We already provide market tech to crypto markets, right, to trading, clearing, salmon technology, surveillance. I mentioned that we had a crypto market, take (inaudible) but crypto is definitely a growth driver for surveillance. And as we get into more of a regulated market and banks potentially having crypto be bankable, that becomes an opportunity, as you mentioned, for Verafin, it becomes an opportunity for AxiomSL, Calypso.
One thing that we really are thinking about is how do we actually also create even more efficiency and collateral management with using new tokenized capabilities to move collateral more seamlessly across the system. So there is a lot of interesting opportunities that exist in an environment where crypto becomes a regulated asset that can be actually adopted by more of the industry. And we do see that as a good potential for us. But that's still something that still needs to play out in the US regulatory landscape here.

Brian Bedell

That's great color. Thank you.

Operator

Alex Kramm, UBS.

Alex Kramm

Yeah, hey, good morning, everyone. Just a quick one on Capital Markets specifically in the first quarter. Obviously, you had made those comments in March about Calypso. But if I look at the ARR additions from 4Q to 1Q, $25 million, I think, still pretty respectable and definitely better than what we thought.
So just maybe flesh out a little bit what else happened in the quarter? Was it really strength in the legacy businesses? Or did Calypso actually still have a pretty good showing and you're more worried about what's to come versus what actually happened in the 1Q. So maybe just a little bit more color there. Thank you.

Adena Friedman

Yeah. I think the comments that we made at the beginning of March were really about ongoing sales conversations with clients that wouldn't have had a big effect on Q1. And really more of effect on kind of looking at timing of signings of certain deals that are really getting close to getting signed. But also remember, as you said, I don't like calling on legacy businesses, but our market tech and our TMS, our trade management services businesses are really leaning into two different trends, right?
One trend is just the modernization markets that I've been mentioning. And the second trend more acute trend is really the need for connectivity services, connections, cabinets, capabilities that our market participants have as they're managing their experience here in the US markets. And so I think both of those were good growth drivers. Also, as I mentioned, we expanded our data center in the middle of last year. So that's also given us a chance to meet some latent demand that has been sitting with our clients for quite some time and just expanding their presence with us.
And so I think that's also helping. But frankly, we feel good, Alex, that the pipeline for Calypso -- the pipeline for our market tech businesses remains very robust. And we're very excited about the fact that they see us as a great partner, but there has been some -- a small number of conversations where people are just taking longer to make decisions.

Alex Kramm

Thank you.

Operator

Owen Lau, Oppenheimer.

Owen Lau

Hi, good morning. Thank you for taking my question. Could you please give us more color on the IPO environment so far. Additionally, have you started hearing that foreign companies are more inclined to list on foreign exchanges versus US exchanges, given what's going on with tariffs and some of the recent capital flight to non-US markets. Thanks.

Adena Friedman

Great, thanks, Owen. Well, first of all, we did have -- we had more -- I think it was like double the number of IPOs in the first quarter as we had compared to last year. But it is still an environment where people are -- the larger deals, in particular, where there were some companies that were really looking for coming out in the second quarter are now waiting for good reasons. There's a lot of volatility and investors need to have an appetite for risk in order to be able to underwrite the risk of a new listing.
So I think that we are seeing a lot of companies ready. We continue to have a lot of pitches, a lot of great conversations. But at the same time, I think companies will be patient to make sure they're walking into the right market environment.
So we're hopeful that if we can see a more uncertain -- I mean, some of this uncertainty be resolved and have a little bit more of a certain environment going into the second half of the year that we could have those companies feel more confident coming out.
In terms of the global companies, we're not seeing changes in the conversations with global companies, Owen. I do think they understand the power of the US markets, the power of US retail in the long run in terms of thinking about how they want to have an opportunity at least to maximize the market values.
But those conversations, it's not like we're having those conversations with hundreds of companies. It's really with a small number of companies that are thinking about diversifying or thinking about coming to market in the US instead of elsewhere.
But I also want to point out that our Swedish market and our Nordic markets are also experiencing really good demand. And we had a good quarter in terms of new listings in our Nordic markets as well. So I think that every market has a unique value proposition, it's really going to be up to the companies to say, where are clients? How does our brand resonate around the world? How do we want to think about the US investor base and they're making those decisions for over the long term, not the short term.

Owen Lau

Got it. Thanks a lot.

Operator

Thank you. That concludes our Q&A session. I would now like to turn the conference back to Adena Friedman, Chair and CEO, for closing remarks.

Adena Friedman

Great. Thank you. Well, as we continue to execute in a dynamic environment, our diversified business model, the role we play with our -- to our clients as a trusted partner and the mission-critical nature of our solutions positions us well to deliver growth, profitability, and free cash flow generation.
Well, thank you all very much for joining, and have a great day.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.