Day, ladies and gentlemen, and welcome to the Nasdaq Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I will now turn the call over to your host Ed Dittmeier, Vice President, Investor Relations.
Please go ahead.
Good morning, everyone, and thanks for joining us today to discuss Nasdaq's Q2 2015 earnings results. On the line are Bob Greifeld, our CEO Lee Schaevel, our CFO our Co Presidents, Adena Friedman and Hans Olejakomsen Ed Knight, our General Counsel and other members of the management team. After prepared remarks, we'll open up to Q and 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 and A may relate to future events and expectations and as such constitute forward looking statements 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 now will turn the call over to Bob. Thank you, Ed.
Good morning, everyone, and thank you for joining us today to discuss Nasdaq's Q2 2015 results. We are very pleased with our performance in the Q2 and with the continued strong momentum being generated across all our businesses. We again delivered record results for our shareholders in terms of non GAAP operating profit, pre tax income, net income and EPS. Non GAAP revenue was $518,000,000 with improving organic growth and a continuation of especially strong performance across our foundational businesses, listing services and Cash Equity. In addition to our solid organic growth performance, we also maintained our focus on running this business as effectively and efficiently as possible, which as you've heard me say before will always be a hallmark of this organization.
As such, we continue to see operating margins move in a positive direction, up year over year and remaining at multi year highs. This is indeed encouraging and indicative of the team's focus and strong execution. Lee will go into greater detail on the numbers in a few minutes. When I look across our franchise today, there are a multitude of positive developments including strong performance in our core business, marked progress with acquisitions and a number of important product and initiatives we have in our pipeline. I would like to highlight a few areas where our intense customer focus continues to be the fuel that drives this organization forward and enables us to consistently perform at a very high level.
Let me provide you with a few examples. 1 of the more important undertakings for NASDAQ and our customers is our new energy's futures market, NASDAQ Futures Exchange, NFX. NFX will begin trading tomorrow. We started this based upon a strong dialogue with our customers and our customers' desire for a more efficient and cost effective alternative that has been the driving force behind the design and execution of our solution. As a result of the work we have done, we have a broad coalition of partners who have become members and connected to the service and includes 16 FCMs.
We also have a large number of market makers over a dozen and we have a half dozen ISVs which will provide the front end trading software support. Because of our efficient model and our ability to lever our technology, pricing will be a clear differentiator. In some cases, we will be less than half of what our competitors charge. Horizontal clearing will be other key differentiator. We are partnering with OCC and this will allow our customers to have greater control and choice in their clearing operations.
NFX is a clear continuation of our strategy to expand our capabilities in core businesses that do more for our customers and will drive new growth opportunities. I look forward to reporting to you more about the progress with NFX in the quarters to come. Another good example of where our strong commitment to our clients has enabled us to drive new opportunities is NASDAQ Private we are the leading venue for IPOs with a 70% win rate. We also in addition saw our continued strong progress in NASDAQ Private Market during the quarter. We added 25 companies to NPM in the 2nd quarter expanding the user base by a third.
NPM now has over 100 customers worldwide including leading companies such as Pinterest, DocuSign and Business Insider to name a few and it is still very early days. Through the NPM platform, we enable companies to meet their liquidity, capital table management and other corporate needs. We're looking to further enhance our platform through new and innovative ways by piloting a blockchain technology initiative partnering with Chayn for the clearance and settlement of these transactions. Equally important, NPM enables us to cultivate relationships with these early stage growth companies and their investors much earlier in their life cycle and will open doors to other opportunities in our Listings and Corporate Solutions businesses. Acquisitions have been strategically important to expanding our portfolio and improving our ability to serve clients.
Let me provide you with a few highlights. Our index business, part of our Information Services segment has really been one of the foundational businesses for NASDAQ over the years and has been a growth driver as we have expanded our indices beyond NASDAQ listed benchmark products. In particular, NASDAQ has spent the past 5 years working with our ETF sponsor partners and with investors to develop and launch outcome oriented smart beta index products, most notably our dividend achiever ETFs, buyback ETFs and our bullet shares ETFs. In response to ever growing investor interest in the smart beta investment strategies, in January, we added to our businesses, Dorsey Wright. I am happy to report that this business was immediately accretive to our earnings and more importantly continues to outperform our growth and return expectations contributing meaningfully to our Information Services segment record revenues during the quarter.
Assets under management in DWA license exchange traded products have risen over 75% since our late January closing of the acquisition. Around that time on the Q4 2014 earnings call, we said we expected $5,000,000 per quarter in incremental revenue from DWA, but growth has still has since driven that 2nd quarter contribution to north of $8,000,000 in the quarter. We are also working on multiple fronts to accelerate this already strong growth in this business by increasing our investment in new product development and sales capability. Another key area of our business where our intense focus on our clients' needs is beginning to bear fruit is corporate solutions. We prefer to compete in spaces where our investments and expertise in technology can be levered for superior client solutions and clear competitive advantages.
Over the past year, we've invested heavily in new product development. And today our Nasdaq IR Insights next gen IR desktop product a centerpiece of the corporate product suite will enable us to transform this space and deliver a significantly enhanced experience for our clients. We have been showing this product to customers most recently at the Annual NHERI Conference in Chicago and testing it in the field with a growing list of some of our most important clients and the response has been overwhelmingly positive. We are also releasing for the first time the market in our peer insight version of IR Insights this month, a product with functionality of the full IR platform. While this product satisfies the needs of a certain segment of the customer base, it will also allow many customers and prospects to experience most of the commonly used functionalities and see our new user interface.
More people getting more exposure to these compelling solutions. More broadly, the work we're doing internally with corporate solutions to improve and expand further help us drive growth with encouraging trends in terms of improving retention rates and new sales leads. So if you look at our progress and the path we are on in Corporate Solutions is a great example of our intense focus to understand our customer needs and then apply that with technology and expertise to introduce products that exceed our customers' expectations. E speed is another business where we have made significant progress to improve our product menu and capabilities to expand the opportunities for our customers. We are in the process of expanding the offering to cover the treasury bond market over a securities complete life cycle from the when issued market that precedes the primary issuance to the on the run market to the rolled products that help users move from 1 on the run issue to the next to the off the run market and finally the short shorts markets with bonds less than 18 months expiration will trade like bills.
In all cases, we believe electronic trading of these product classes will enhance transparency, provide reliability and resiliency and dovetail with regulator and customer priorities in terms of regulation and clearing. As we progress along with this menu expansion phase, we're also positioning ourselves to take advantage of the potentially significant volume upticks as the Fed signals a rate tightening cycle. Finally, I want to talk a little about our blockchain initiative, which is another example of our maniacal focus on how to lever new and innovative technologies to develop efficient and effective client centric solutions. As a technology company and the inventor of electronic trading, NASDAQ is in the business of innovating, developing and adapting new technologies with the goal of delivering global capital market efficiency. We believe that blockchain technology holds great promise in allowing capital markets to operate more efficiently, while simultaneously providing greater transparency and security, all of which are fundamental to the public interest.
We are currently exploring the use of blockchain technology in NASDAQ Private Market. We're targeting initial release of this technology in the Q4 of 2015. We also plan to announce further blockchain initiatives in the future. The application of blockchain technology within Nasdaq's private market aims to modernize, streamline and really secure cumbersome administrative functions and simplify the overwhelming challenges private companies face with manual ledger record keeping. We see many applications beyond private markets.
It is early days, but we see blockchain technology is holding great potential to provide increased efficiencies to the broad financial sector and all its members. We are taking significant, but measured steps so that we are certainly positioned to be a central part of this disruptive technology. In closing, the results we delivered this quarter as well as those examples that I outlined here today illustrate our strong focus, our ability to execute and to run this business both efficiently and effectively. They are the essential elements that drive our performance and the results we deliver. We are very pleased with our performance this quarter and it's certainly an exciting time to be here at NASDAQ with NFX, Nasdaq IR Insight, Dorothy Wright and all the other products and initiatives we have in our pipeline.
We are poised to continue to grow this franchise for months quarters to come. And with that, I'll turn the call over to Lee.
Thanks, Bob. The following comments will focus on our non GAAP results. Reconciliations of GAAP to non GAAP results can be found in the attachments to our press release and in the presentation that's available on our website at ir. Nasdaq.com. I want to start off as I did the last few quarters by highlighting the impact the stronger dollar had on our results as it obscures in many cases solid organic growth that we saw in the business.
Revenues of $518,000,000 were reduced by $29,000,000 from the prior year quarter as a result of the stronger dollar. And excluding foreign exchange and acquisition impacts, revenues were up $16,000,000 or 3% with 3% organic growth both across the non trading segments as well as in Market Services. Operating income growth was 6% was 6% excluding the impact of foreign exchange. In order to provide greater understanding of these effects on the business units, we continue to provide a schedule of the FX impact presentation. I'll start by reviewing 2nd quarter revenue performance relative to the prior year quarter as shown on page 3 of the presentation.
The 1% or $5,000,000 decline in reported net revenue of $518,000,000 consisted of organic growth trading segments of $10,000,000 or 3 percent from growth in listings, information services and market technology and $8,000,000 in revenues from the DWA acquisition, partially offset by a $15,000,000 impact of FX for a net $3,000,000 increase in reported revenues. And organic growth in market services, net revenues of $6,000,000 or 3%, the result of higher cash equity revenues, partially offset by lower equity derivative and FICC trading revenue, coupled with a $14,000,000 FX headwind for a net $8,000,000 reported decline. And if we move to page 4 in the presentation, we show how organic growth breaks down historically between Transaction, Information Services, Technology Solutions and Listing Services segments, which had 3% organic growth this quarter, steady with the prior quarter and the volume sensitive market services segment at 3% organic growth for the quarter. On the bottom of this page, we reiterate our views on the medium term organic growth outlook for the non transactional segments. As I've said in the past, these views were meant to reflect multi year cross cycle periods and actual growth in shorter periods can be above or below these ranges.
I'm now going to go over some highlights within each of our reporting segments. All comparisons will be made to prior year period unless otherwise noted. Information Services on page 5 saw a $1,000,000 or 1 percent operational gain, and $8,000,000 increase from the DWA acquisition, partially offset by $4,000,000 of FX headwinds for a $5,000,000 net increase in reported revenues, while the operating margin came in at 70%. Data Products revenues saw a 2% operational increase as growth in tape plan and proprietary revenues and the inclusion of DWA more than offset a $6,000,000 decline in audit collections. Index licensing and services saw a 32% increase due principally to the inclusion of DWA revenues and secondarily to higher revenues from exchange traded products licensed to NASDAQ indexes on higher assets under management.
Assets under management and exchange traded products licensed to NASDAQ indexes rose 13% to $108,000,000,000 at the end of the quarter due to both organic growth and acquired DWA assets under management. Technology Solutions, as shown on page 6, saw unchanged revenues operationally, which compounded with $8,000,000 in FX headwinds resulted in an $8,000,000 reported decline, though the operating margin rose to 14% from 11% in the prior year period and operating income rose 19%. Market Technology revenues saw a 2% operational increase due in particular to growth in smart surveillance product revenues and new order intake was $31,000,000 in the Q2. New order activity continues to be healthy with many new contracts in smarts and BWise and several advanced discussions in the more binary large deal segment. The period end backlog finished at $707,000,000 up about 7% year over year.
Corporate Solutions revenue saw a narrowing 1% operational decline as we continue progress through the late stages of the integration and customer transitions the acquisition of the Thomson Reuters corporate businesses. We are seeing stabilizing revenues as we continue to complete the migrations and integration through year end with clear signs of progress in terms of positive net subscription sales in the 1st 2 quarters of 2015, positive market reaction to the next gen IR Insights platform and margin improvement year over year. But we continue to experience competitive pressures in select products. Overall, we continue to be optimistic on the intermediate growth opportunity for the business. As I previously noted, the segment operating margin of 14% was a material improvement compared to the prior year period's 11%, helping drive 19% growth in operating income year over year.
Looking forward, we see ourselves as remaining on track to deliver significant year over year improvement in the Technology Solutions margin in 2015, exit the year in the mid to high teens level and continue working to realize our higher medium term profitability goals. Listing services on page 7 saw a $9,000,000 or 15 percent operational increase in revenues, driven by pricing changes and an increased issuer base, partially offset by $3,000,000 of FX headwinds, resulting in a 10% reported increase in revenues. Operating margin of 44% was up from 42% in the prior year. The U. S.
Issuer base has 4% more companies at the end of the quarter compared with the prior year period, while in the Nordics the count is 7% higher with a 14% higher local currency market capitalization. Market services on Page 8 saw $1,000,000 or 3 percent operational increase in net revenues, which more than which was more than offset by $14,000,000 negative FX impact, resulting in a reported revenue decline of 4%. Operating margin, however, rose to 53% from 51% in the prior year period. Equity Derivatives Trading and Clearing net revenues saw a 6% operational decrease due to lower U. S.
Equity Options market share, partially offset by organic growth in Nordic Equity Derivatives Revenues. Cash equities trading net revenues saw a 20% operational as higher U. S. Cash equity average capture and increased U. S.
And Nordic industry volumes were partially offset by lower market share. Fixed income, currency and commodities trading and clearing net revenues saw a 13% operational decline from the prior year with principally volume driven declines in most fixed product categories and the scheduled end of revenues associated with an e Speed technology license customer. And access and broker services saw a 3% operational increase. Turning to pages 9 and 14 to review the income statement and expenses. Operating expenses increased by $9,000,000 or 3 percent on an operational basis, more than offset by an $18,000,000 in FX impact, resulting in a $1,000,000 or 3% reported decline.
Included in 2nd quarter non GAAP operating expenses were over 5,000,000 related to discrete legal expenses as well as some start up costs for the NASDAQ Entrepreneurial Center in San Francisco. In the first half of twenty fifteen, operating expenses have seen 0 organic growth compared to the first half of last year, due in large part to the restructuring actions we detailed in the Q1 of 2015. Non GAAP operating income in the Q2 of 2015 rose 6% on an operational basis, but this was partially offset by foreign exchange resulting in a 2% reported increase. Non GAAP operating margin came in at 46%, up from 45% in the prior period. Net interest expense was $26,000,000 in the Q2 of 2015, a decrease of $3,000,000 versus the prior year, mainly due to the favorable impact of foreign exchange related to our euro denominated debt.
We also recorded non operating income related to our equity method ownership interest in OCC. The non GAAP effective tax rate for the 2nd quarter was 33% at the lower end of our 2015, 33% to 35% effective tax rate guidance range for the year, which we still think is the best projection for full year 2015 effective tax rate. Non GAAP net income was $143,000,000 or $0.83 per diluted share compared to 100 and $31,000,000 or $0.76 per diluted share in the Q2 of 2014. The $0.07 increase in our non GAAP EPS represents core organic EPS growth of $0.04, dollars 0.04 due to lower taxes, dollars 0.02 due to acquisitions and $0.01 due to non operating expenses, partially offset by $0.04 impact of changes in the foreign exchange rates. Moving on to the balance sheet, cash flow and capital.
Please turn to slides 11 and 12. EBITDA leverage ratio declined to 2.2 from 2.3 times in the Q1 of 2015 due to both a slight decline in our debt level and increased trailing 12 month EBITDA. I'd like to take a moment to review the 2nd quarter highlights in our evolving capital deployment. On capital return in April, we announced a 67% increase in the quarterly dividend and $25,000,000 in share buybacks, bringing the total shareholder return payout ratio to 47 percent of non GAAP net income. The Dorsey Wright acquisition is performing above expectations with a healthy return on investment and significant accretion.
And we continue to invest steadily in promising organic initiatives like NFX within the context of a $30,000,000 to $40,000,000 projected research and development budget for 2015. So we're pleased to be finding attractive capital deployment and return opportunities across a variety of channels and we'll continue to look to put capital we generate to work wherever we see the highest returns to
Ed. Operator, can we open the line up to Q and A?
Thank Our first question comes from Rich Repetto with Sandler O'Neill. Your line is open.
Yes. Good morning, Bob. Good morning, Lee. How are you, Rich? Doing good, Bob.
Bob. The one question, if I got the one. But you had a significant increase in the equity U. S. Equity revenue catch.
I know it was lower volume and mix shift, but you also did pricing tweaks. And I guess I'm just trying to balance, but that's positive. The market share is down to about 18 point 5%. And I guess in the past you talked about maintaining market share because of the overall enterprise importance of having significant share. So how do you balance off again market share?
You're doing well with the revenue capture if it can stay that high. But is there some market share that you're going to have to defend and that will that you will need to adjust the revenue capture down?
All right. So let me say 2 things. 1, we always seek to balance share versus capture. And I'd make the general statement that our capture rate is probably at the high end of our expectations and our share is slightly below our expectations. So you probably see us have a little redress of the balancing.
But overall, I say we're pleased with the balance that we have today. With respect to the second part of your question, it's important to recognize that with Tape C, we are by far and away the largest trading venue in those share in those stocks and that's what we pay particular attention to.
Okay. That's helpful. Thanks, Bob.
Our next question comes from Rob Rushdaw with CLSA. Your line is open.
Hi, good morning. Just a question on the Corporate Solutions business. It looks like you had pretty good incremental margins there. I'm wondering if you can update us on how much of the projected cost savings you've gotten there? And if you can give us a little bit more color on what drove the sequential increase in revenues if there are any puts and takes there?
Yes. So in terms of where we stand on projected cost savings, I would describe it as we are ahead of plan as we've said in the past and achieving the cost savings in the overall business. But we still have yet to complete the full transition and so are still bearing some duplicative costs on multiple platforms. In terms of the improvement this quarter, I think we've continued to see the benefit of some revenue momentum within the business as well as cost savings that we've been able to achieve as a function of just ongoing integration, some of the restructuring efforts that we've taken in the past quarter and then some also business mix shifts in the quarter relative to the prior year that generated higher margins.
So I think it's a combination of all of the above that have driven us to that improvement. And I would say that while we're on track for our cost savings, it's important to recognize that we still have been focused on effectiveness first with this business. And I think Adena and team are doing a great job to get us to that effective stage. And then there would be more of a maniacal focus on cost efficiency. But right now, we're making sure that we're delivering the best product to our customers possible in the best possible way and obviously focused on spending a lot of time, effort and money with our NextGen platform, which I said in my prepared remarks, we're happy that's really moving from the beta stage to a production stage for a limited set of our customers.
Okay. Great. Thanks for the color.
Our next question comes from Chris Allen with Evercore. Your line
is open. Good morning, guys.
How are you doing?
Good. Just within the Technology Solutions segment, I'm just wondering maybe if you could give us a little bit more color just in terms of how to think about the trajectory of revenue going forward. Maybe within Corporate Solutions like how long is the sales cycle for the next generation IR platform? And within market technology, the order backlog looks good. A big chunk of that is Borsa Istanbul.
Just wondering when is that going to be coming online?
Okay. So one, I'd say the important thing is that we see increasing acceptance from the customers of the product set. As I said in my prepared comments, the response has been overwhelming and that will always proceed in increasing revenue. So we're doing all the right things.
So in terms of the sales cycle for an IR client, it can honestly be as short as a month or as long as 4. I think that it just depends on how ready they are to make a decision and whether or not they do a very thorough analysis or whether they understand that we have the best solution right off the bat. And so it really depends. We also we will be spending most of 2016 making sure we upgrade our clients to the new platform in addition to selling new clients with the new platform. So that will be a transition period for us.
In terms of market technology, the Vorsasys Cymbolis project is on track, but we will not be completing that project until the second half of next year. So that's when you'll start to see the revenue come online.
Yes. And Chris, this is Lee. Just to add to that, from an accounting standpoint, there are some changes in revenue recognition rules that are coming into play that we expect under the current accounting rules we may begin to recognize some of that revenue in 2017. But I want to make it clear look apart from how what happens from an accounting standpoint, this is very substantial from a cash flow standpoint for us. There's real value that may not be fully reflected in the GAAP results.
And we're happy to kind of talk more about the significance. It is one of the largest market technology contracts that we've signed in the business. So it has meaningful effect. And then in terms of ongoing growth across Technology Solutions, we continue to support the mid single digits growth across Technology Solutions as a whole. I think it's important to recognize that for the remainder of 2015, as we finalize the integration in Corporate Solutions that we are expecting stable, but not significant growth in revenues within that business, recognizing that we're, as Bob said, focused on effectiveness first within that business.
But longer term, we continue to be very optimistic about the achievement of those growth targets in that business.
Thank you.
Our next question comes from Ashley Saraiya with Credit Suisse. Your line is open.
Good morning.
How are you doing?
Doing well. Just wanted to I heard your comments on capital management, but how are you thinking about doing smaller deals out there similar to a Dorsey or a merchant that you've had a lot of success with?
Great question. So one is we continue to see a deal market where the valuations are frothy. Some could argue are irrational. So we're not going to participate at that level. But there is a lot of deals that we do look at.
We have a firm discipline in place in terms of how we evaluate these transactions. To the extent there's better value on the smaller end where we can lever our branding and our distribution capability, those are particularly attractive to us. So the answer is yes. We'd like to do more of those type deals, but the pricing has to be right and the situation really has to represent in many ways a perfect storm of opportunity with a core value being that we're leveraging our mothership in some fundamental way.
Our next question comes from Brian Bedell with Deutsche Bank. Your line is open.
Hi, good morning folks.
How are you doing?
Bob, maybe can you
talk a little bit more about the NFX game plan starting up tomorrow, maybe some goals in terms of market share, intermediate to longer term revenue contribution and some again, some maybe just highlight some differences versus the NLX initiative and whether you may retool the NLX initiative based on what you might be seeing at NFX in the future?
Yes. Great question. So let me start by saying that NLX I think had a strong quarter, not visible, obviously, in the financials and the market share, but with respect to engage with our customers, we had one of the large banks come live for the first time on Enelx just last week and on discussions with the proposed members of IntellX 2.0 continues. And we're also happy to have come to a successful conclusion with our partners on 1.0. So that's there.
We're still excited by their prospects. With respect to NFX, I think a key differentiator is you've had a broad base of support. And I have to say the support has gone somewhat viral from the natural providers of liquidity to the major banks, to the FCMs, to the market making firms, you name it, they all seem to be wanting to be involved with this initiative. So that's been I think relatively easier than Enel X straightforward. As I said, we certainly were the spark, the catalyst, but we were touching a nerve that obviously the customers wanted us to.
And they're anxious to have some competition in this space. And you know in our options business, we have a revenue per contract in the teens call it $0.16 or $0.18 We see in this world that the revenue per contract is about $1.38 to $1.42 We can come in at half that price and obviously be quite happy with the margin we'll get. And as important as that is the fact that OCC OCC represent a horizontal clearing alternative similar to NLX with LCH. And when we talk to our customers, there's not one customer we run into says, boy, I really like being in a vertical monopoly. So we're trying to address the customer need there.
So we're enjoying broad customer support. It's also important to recognize that the structure of NFX strongly encourages people to be active participants I think in a more fulsome way than we had with the original Analect. So we think that will yield a positive outcome. So we're all excited here about day 1. We want to start slow and then build from there.
That's helpful. Do you have
a sense of what kind of market share you would try to be achieving to get scale to build liquidity in the products?
Yes. I think our traditional measure is you need about 10 percent market share to have a reasonable depth and liquidity in your book. And so that's our target over the next 18 months to get to the 10% number.
Great. I think, Paul, do you want
to add anything to that?
No. Within 18 to 24 months, we
I said 18, not 24.
We can assemble then.
Yes.
Yes. But if I should get one thing we have already seen the last couple of weeks that even the utilities in this market have also been very keen to be connected to the market. So it's not only the usual market participants, it is also utilities, big utilities in U. S. Who want to be part of this new venture.
Yes. It definitely has a viral aspect to it. As good as our sales pitch is, there's definitely a viral aspect to this effort.
Great. Thanks so much for that color.
Our next question comes from Kyle Voigt with KBW. Your line is open.
Hi. Thanks for taking my question. I guess on if I can turn to the listings business, it looks like you're experiencing really solid growth there with revenue up about 15% year on year on a constant currency basis. Yes, can you just give us some more info as to what exactly you're changing on the pricing side? Now is it tweaking both the initial and annual listing fees?
I guess I'm just trying to better understand the sustainability of the revenue growth here as we're looking out over the next couple of years?
Thanks. Yes. So I'll say a couple things and turn it over to Adena. So one is I would also highlight on the listing side the strong performance in the Nordics and that gets overlooked a little bit I think too much. And it really has been remarkable the success we've had there.
With respect to the U. S, we are here at the market site today and it's been a wonderful week. We had the PayPal spin out happen and then yesterday Blue Buffalo had obviously a very successful IPO and we're also very happy to win Pure Storage a week or so ago. And as we said before, we have a 70% win rate. So we have a high degree of issuance.
We have an increased win rate and that certainly is contributing to our performance.
So in terms of the pricing change, we announced the pricing change in the fall and it was primarily the benefit the benefit of that pricing change. The most notable change really is at the top end of our fees where we are now allowing issuers to opt in to an all inclusive fee, which means that they will no longer be subject to any listing of additional shares fees or any other And we And we did see significant opt in to that pricing level and we will continue to offer that opt in over the next 2 years. So we've just seen a lot of success in the adoption of the fees that we put out for the firms and frankly a lot of support for that all inclusive fee.
Our next question comes from Chris Harris with Wells Fargo. Your line is open.
Thanks. Good morning. Chris, how are you today? Hey, doing well, Bob. Follow-up on Corporate Solutions.
Thanks for the detail on the sales cycle for NextGen IR. Just wondering if you guys could clarify when exactly you are planning to launch that? Is that still I think I remember it being Q4. And along with that when you guys do launch, are you anticipating making any pricing changes given the positive feedback you've been getting from potential customers?
So I would say one, we have a version of the product coming out in the July August timeframe, which will address in a comprehensive way a very small subset of the users. So that's a good experience for us and a good ramp in terms of we get to test underlying technology, get some user response. Meantime, we'll be working on the full production release and your data is correct. So we expect to have a product in place that should address 85% of the market by the end of this year. So we're excited about that.
I think in the beginning, the pricing is not our focus. It's to make sure it's the best product, but we certainly think we have upside to both the revenue side and probably as importantly I think with the new product deployment once we get beyond the dual cost structure, we'll have a simpler way to deploy this product which represent improved margins over time.
Thanks.
Our next question comes from Mike Carrier with Bank of America Merrill Lynch. Your line is open.
Thanks guys. Just a question on the Information Services segment. So I guess like 2 parts. Just on the Index Licensing and Services, obviously you've seen some good traction there. I'm just wanted to get the outlook particularly with DWA in that business in terms of what you see or where you see the growth coming from?
And then Lee maybe just on the data part of the business given that we do have some of the audit adjustments each
strategic direction we have. So we certainly believe that passive investing represented by indexing will continue to grow as a percent of assets under management. But then we also think within that category smart beta will grow even faster and that we recognize that passive investing has somewhat of a natural ceiling because you're bound by a set of predetermined rules. So smart beta allows you to put some more intelligence into the passive space and witness not just the DWI acquisition, but obviously dividend achievers and some internal products that we're developing. So that certainly represents looking to Dana put some pressure on her a double digit growth opportunity over time right?
I would agree based on the overall growth of Far Beta.
Go ahead, Lee.
Yes. So Michael, I'm glad you asked the question. Just to kind of there were a lot of moving pieces in the Information Services business. And so as you noted, there was a $6,000,000 change in the overall audit revenues year over year that the audit revenues were down $6,000,000 in this quarter. And I think it's important to understand, if you want to try to get to kind of a clear organic growth for the quarter year over year and you take the operating impact that is ex FX increase of 9,000,000 dollars and you take out the DWA impact of $8,000,000 for the quarter, but then also keep audit flat from the year over year period, our information services revenue would have been up $7,000,000 or 6%, which is very consistent with the revenue growth guidance that we have given for that segment.
And I think that's a reasonable basis as we look out over the longer term for that. I do think that from an audit revenue standpoint, we're seeing kind
of a
stabilization in that revenue. And so we may have from quarter to quarter some upside or downside, but I think the level that we're at right now is a good baseline to use. Okay. Thanks a lot.
Our next question comes from Ken Worthington with JPMorgan. Your line is open.
Hi, good morning. On NASDAQ Private Market, are there metrics that you're seeing that show that the 100 or so companies that are signed up are utilizing the services offered? So either metrics on kind of secondary transactions or capital raise or something on access to liquidity? And then what are the next steps for NPM?
Sure. Great question. So I'd say one, let's start with the initial focus and that's cap table management. So we have clear metrics on how many customers are using that, how sophisticated their use is of cap table. And that's kind of our first foray into the customers.
Then the 2nd stage, we run liquidity programs for them and we track 1, the size of the liquidity program and then 2, how often they're running it. And then as we evolve over time, it's going to be how broad the participation is in those liquidity programs. Typically, they are employee programs today, but we certainly see the ability to evolve to accredited investors or early stage VC firms participating in some of those liquidity programs. So we definitely are, 1, excited about the progress in a short period of time, definitely see this market evolving and we definitely pay very close attention to what I call the non financial metrics, which you are looking at now kind of referencing
Thank you.
Great. Thank you.
Thank you. I'm showing no further questions. I will now turn the call back over to Bob Greifield for closing remarks.
Another great quarter for NASDAQ, record earnings on a number of measurements, so we're proud of that. But I also say we're most proud of the fact that we are again well positioned in each of our businesses and I think are taking the lead in innovating in a number of those businesses in our pipeline. Our new products coming are I think incredibly strong. So we are fundamentally excited about our prospects going forward. We appreciate your support and look forward to getting back together with you next quarter.
Thank you.
Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect and everyone have a great day.