All right. Thank you everyone for joining us at NASDAQ's Marketsite Global Headquarters today. Whether you're or whether you're participating virtually for our NASDAQ 2020 Investor Day. My name is Ed Dittmeier. I'm Vice President of Investor Relations at NASDAQ.
We thank in person guests for following all the COVID protocols. To use the restrooms during the day, please exit on my left and make a left down the hallway. You'll see a corridor of restrooms on your right. A couple other logistics, we'll have a little bit of a pause on some of the handoffs between speakers today to sanitize our clickers and things like that. Appreciate everyone's patience.
We also have a few video segments. And I'll just ask the in person attendees to understand there's a 5 to 10 second delay on the starting of those videos to help them sync with the virtual participants. During the Q and A periods, we'll be able to take questions from both in person attendees and from virtual attendees. For in person attendees, to avoid sharing microphones, I'll repeat all in room questions so that virtual attendees can hear the question clearly before our management answers. For virtual participants, please use the ON24 platform to enter your questions and we'll work to get them incorporated into the Investor Day.
Thank you in advance. Let me take a moment to read our standard disclosure. The investor presentation is on our Web site. These presentations materials, including the webcast of the Investor Day, will remain available on the Investor Relations section of the Web site. You can find our reconciliations of all non GAAP financial measures referred to in the presentation today, in the back of our presentation and on our Investor Relations 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 would 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 within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning the factors that could cause actual results to differ materially are available in our press release and periodic reports filed with the SEC. All forward looking statements speak only as of today, November 10, 2020, and NASDAQ assumes no obligation to update or revise any forward looking statements.
Now on the agenda today, what we're going to do is first, we're going to have Adena talk about the strategy and direction of the company. Then Lars Ottersgaard is going to talk about Marketech and Lauren Dillard is going to talk about Investment Intelligence. We're then going to have a 10 minute Q and A for Lars and Lauren to answer questions about their business. We're then going to have a 10 minute break, come back and Nelson Griggs is going to talk about the corporate business. Tal Cohen and Bjorn Seibbern are going to talk about our market services business.
We'll have a second 10 minute Q and A session, where you can ask questions on the corporate and market services business. We'll then have our second 10 minute break. Our current CFO, Michael Ptasznik and our next CFO, Anne Dennison, will walk you through the financials and capital. And then we'll have Michael, Anne and Adena up for a final Q and A session to end the day. We're going to kick this off next with a short video and then I'm going to hand it over to Adena Friedman, our CEO.
They call them moonshubs. Ideas so grand, they seem impossible. Improbable.
Hello. I am Macintosh.
Unthinkable. We're betting our future on our vision of the information highway.
50 years ago, we took our own moon shot, and it opened the world to possibilities, to what if and who knows, and that's amazing. At NASDAQ, we're anything but 50 years old. We're 50 years experienced, 50 years enlightened,
our spirit. This will be the largest video screen in the world.
It's what gets us out of bed every day. When we look back at our 50 years,
we see that we've been looking forward the entire time.
This organization has reshaped the market in ways, I think, beyond any other.
Because innovation matters. New technologies break barriers. And when you build upon trusted foundations with groundbreaking ideas and pioneering technologies, it breathes life into global economies. And that's the backbone of progress.
Nasdaq is committed to creating inclusive, prosperous economies.
In 50 years, we've learned that greatness is among us. It's in markets, technology, and people. It's in what we do, and how we get there. It can come from anywhere and lead to anything. But to realize that greatness, the full potential in economies of all stages, companies of all sizes, and people of all backgrounds, that's a shot.
And we'll never stop taking them.
All right. Well, welcome, everyone, and thank you all very much for coming in person or online. I'm Adena Friedman, the CEO of NASDAQ. And you just saw a preview of our 50th anniversary video that we are showing to all of you today. We're very excited about celebrating that in February of next year.
Well, today, I'm going to spend some time with you to talk about our strategy in terms of where we've come from over the last 2 to 3 years to make sure that we are really have been able to lean into our strategic pivot to provide technology to the global capital markets. And then also to talk about how we're positioned successfully to continue to drive our strategy forward in terms of our competitive position, as well as our positioning in some key growth areas. And then thirdly, to make sure that you in some key growth areas. And then thirdly, to make sure that you understand that we have a clear direction to continue to unlock growth for the years ahead. So these are the 3 key themes that you're going to hear about throughout the morning.
I'm going to give you a high level overview of those themes with my own presentation. And then each of the business unit leaders will walk into that. So where we've come from, how we're positioned today and where we're going over the next 4 to 5 years. See here. Hold on one second.
There we go.
I see that. There we go.
Okay. Well, first, we want to make sure that you understand how we're positioned today. So who is NASDAQ today? NASDAQ today is a significantly scaled global technology company that serves the capital markets with almost $3,000,000,000 of annual revenue and as well as approximately 70% of our revenue that comes from non trading sources, which then provides more stability and predictability in our business results. We have a strong operating leverage with 50 plus percent EBITDA margin, and we're building a strong track record of return on invested capital and double digit total shareholder return.
So now, before I go forward, I do want to give a little bit of a heads up to all of you. We are changing 2 of our business unit names. So our Global Information Services business going forward will be called our Investment Intelligence business. It will have all of the same composition. So it's just a name change, but we hope that the nomenclature will better reflect the breadth and depth of the services it provides to our community.
There are still 3 sub segments within our intelligence organization, our business, and that's our analytics, our index and our data businesses. And then also, our corporate services businesses are going to are being renamed corporate platforms, and there will be 2 sub segments, our listings platform and our IR and ESG platform. So also, when we look at the 3 non trading segments, we've always called them non trading segments, but we've actually renamed them too. So, it's collectively market technology, our investment intelligence business and our corporate platforms business are now going forward what we call our solutions segments. Well, as we drive our business forward, we steer our strategy through our vision, our mission and our purpose.
Throughout our history and certainly most recently through the COVID crisis, our people are driven by our broader mission and purpose. It serves as the foundation of our culture and it motivates our team to go the to help navigate through the unchartered waters of the markets today. To help navigate through the unchartered waters of the markets today. Our vision to reimagine markets to realize the potential of tomorrow describes successfully serve as a foundation for every working economy around the world. Our mission describes the key assets and capabilities that we apply to achieve our vision, and our purpose serves as the underpinning of our values to champion inclusive growth and prosperity around the world.
As we apply our mission, vision and purpose to our businesses, and we are organized across 4 key business segments. Our market technology business is the technology that powers over 130 markets and 200 leading broker dealer firms around the world. Our Investment Intelligence segment provides trusted data, popular indices and powerful analytics to thousands of investment managers and hundreds of millions of retail investors to help them achieve their investment objectives. Our corporate platforms help thousands of companies access the public capital markets and help them navigate those markets with outstanding IR and ESG intelligence and capabilities. And then our market services business is a complex of marketplaces both in the U.
S. And Europe that deliver connectivity, liquidity and price discovery that minimizes market friction and maximizes investor access. So, at the last Investor Day, we talked about some areas where we want to progress and improve to deliver more results for our clients and for our shareholders. And we do think that we've delivered solid progress against these 5 key areas, but we still have plenty of opportunity to enhance our performance and our capabilities. I'm most proud of the fact that we've really moved to become a client oriented firm, where we always look from an outside services that meet their needs both today and tomorrow.
But we still have a lot of progress in terms of our transition to a SaaS or a
SaaS delivered organization. And we're going to spend a fair amount of time,
I'm going to spend a fair amount of time, metric going forward and how we are going to allow you to measure us against that in the years ahead. Let's see. Okay. But, well, we talk about we've made progress, but how is it showing up in our results? Well, the first thing I want to point out is where highlight some of the key growth businesses.
Most notably, we've reallocated our capital investment and our resources to our strongest growth businesses, our market technology and our investment intelligence businesses. Today, they are nearly 50% larger today than they were in 2016 before we initiated our strategic pivot. And the market technology business has grown 44% over that period through a combination of organic work and investments as well as the acquisition of Cinnober. We've also repositioned the Investment Intelligence business, so that today more than 50% of the revenues comes from our analytics and our index businesses, up from the mid-30s in 2016. And we freed up over $500,000,000 of capital by divesting of businesses and other assets that really minimally contributed to our bottom line and we're really not growing as organizations.
So we've changed the way we invest organically to multiply the capital going to the market technology and investment intelligence businesses and opportunities. And I think that's shown up in our results. But if we kind of broaden out and look at the entire corporation, we believe that we've been able to accelerate growth while improving our shareholder returns. So we've materially improved our key financial metrics foundational to value creation. We've added capabilities in our growth areas.
We've maintained our investment and sustained our investment in our foundational marketplace businesses and we've trimmed some non core businesses. We've doubled the organic growth coming from our solutions segments, which are market technology, investment intelligence and our corporate platforms businesses. And we've increased our operating margins by 400 basis points, not from cost cutting, but instead from reorienting our segments and investment areas to deliver growth. And ultimately, we've ourselves as a technology provider and therefore how you can measure us going forward. So, I'm going to spend a couple of minutes walking through some of these slides.
We are going to be providing you going forward corporate wide measures of both our SaaS revenue as SaaS revenue and SaaS revenue as a percentage of ARR as well as our ARR as a company going forward. So starting with a chart on the left hand side. As I mentioned earlier, more than 70% of our revenue comes from non trading revenue sources. So if we dive further into those non trading revenues, going forward, we're going to provide you corporate wide annualized recurring revenue, which currently stands at $1,500,000,000 and has grown 11% annually since 2016. As a subset of our ARR, we're going to measure our progress in growing our SaaS revenue streams.
Currently, our SaaS revenue stands at $440,000,000 15% of total revenues and 29% of our ARR. These metrics represent many, but not all of our key growth areas. So I just want to make sure you understand. The metrics provide investors with a deeper view into the predictable revenue streams that underpin our company. But there are some really critical revenues that are not included that are certainly critical to our business success.
Most notably, our non subscription but highly recurring index revenue streams, our allocation of shared tape data and trading revenues from our leading marketplaces. To our SaaS revenues, we are disclosing our enterprise wide SaaS revenues for the first time. So we want to make it clear that today, Nasdaq has significant SaaS based products across our solutions segments, not just in market. Okay. Sorry about that.
So hopefully everyone can hear me now. I'm going to go ahead and backtrack a little bit to make sure we cover some of these new metrics in a little bit more detail. So, you guys get to hear it twice. So, if we move over to how we're measuring ourselves as a technology company today and into the future, we are going to offer and provide 2 new measures of our business going forward. The first is the annualized recurring revenue at the corporate level as well as SaaS revenue at the corporate level and the percentage of SaaS to ARR.
So, the first thing I would mention is, on the left hand side of the chart, we point out the fact that more than 70% of our revenues comes from non trading sources. And when we break that down further, you can see that about $1,500,000,000 of our revenue is in annualized recurring revenues. And as a subset of our ARR, we measure we're measuring our progress in growing our SaaS revenue streams. Currently, they stand at $440,000,000 or about 15% of total revenue and 29% of our ARR. These metrics represent many, but not all of our key growth areas, but they provide investors a deeper view into the more predictable revenue streams that underpin the company.
And as I mentioned, though, there are revenues that are not in ARR that are critical for our business success. And most notably, of course, our trading revenues from our leading marketplaces. But as we of course, our trading revenues from our leading marketplaces. But as we do want you to understand that as we're evolving as a technology company, these metrics are clearly becoming more important to you and more important for us to measure going forward. We also want to make sure we dive a little bit deeper into the SaaS revenue streams.
So, the first thing I would mention is that we are disclosing our enterprise wide SaaS revenues for the first time. We want to make it clear that we have significant SaaS based products across all of our solution segments, not just in Market Tech. But in Market Tech, they comprise our world leading trade surveillance technology as well as our execution technologies to broker dealers and an increasing number of our core market tech products are being able to be delivered in a SaaS format. Within Investment Intelligence, essentially the entire analytics sub segment is SaaS delivered, that's eVestment, Salovis, Clondal and our Nasdaq fund network. And then within our corporate platforms business, our board collaboration tools, our IR intelligence tools and our ESG reporting tools are all SaaS delivered.
So, through a combination of organic and acquisition growth, we our SaaS revenues are growing have been growing twice as fast as our ARR over the last since 2016. And they now contribute $440,000,000 to our total annualized revenue, which is about just about 30% of our ARR, and we expect that to be able to grow to as much as 50% by 2025. So, we've talked about where we've come from. And now you can see, I want to talk about how we're positioned in the sizable market opportunities that we operate in today. So, but first, I want to make sure you understand how do we how does the whole business work together?
We really believe that all of the businesses really collaborate together to create a better value proposition for our shareholders and for our clients. So, I'm just going to give you a couple of examples. The strength of our IR and ESG services for our companies around the world, we have 8,500 companies around the world who take advantage of our services. Well, they then that has become a true differentiator in terms of companies choosing to list on NASDAQ in the U. S.
So, with we have about an 80% win rate of operating companies choosing to list on NASDAQ in the U. S. The result of that, of course, is a growing number of issuers on our platform, which then gives us more opportunity to deliver open and close auction capabilities and other services on the trading side, which is a big value creator to us and our shareholders, but also gives our market participants even more reason to connect to us. Well, that technology that underpins our markets is also the same technology that we deliver to markets around the world. The fact that we can deliver markets with the level of reliability, speed, consistency and throughput in the most competitive asset classes in the world gives our Marketech clients confidence that we can deliver equal caliber services to them as they power their markets as well.
So, those are just a couple of examples, but there are others that include the impact of our benchmark indices on our listing value proposition, the benefit of our trading relationships with the world's largest broker dealers and the doors that they open to market tech for our surveillance and trade execution technologies, it's just a flywheel effect that of our overall platform that drives our success. Well, if we want to leverage our premier capital markets platform and the network's effects across our clients, we want to make sure that we're leaning into key trends. And our goal is to increase the impact on the financial industry in the years ahead. Our client what we do is we take a client first approach to identifying the trends and technologies that are going to catalyze change in the industry in the coming years. And then we examine our clients' biggest challenges and opportunities in terms of how they're allocating their capital and prioritizing their capital investments in the coming periods.
So, we then determine, well, which of the trends and the technologies are best suited for our strengths and delivering a long term growth opportunity if we execute well. And then we look at that and say, okay, which business initiatives then lean into the trends, make sure that we are in fact delivering solutions that our clients are looking for today and tomorrow, and that we can deliver in a technology and data centric way so that we can scale them over time and deliver returns to our shareholders. So, these are the key initiatives that you're going to hear about this morning and each of the business units will be going into more detail on them in their segments. But what we've also been able to do by making this transition is to make sure that we are increasing our opportunity within a broader total addressable market and serviceable addressable market in each of our segments. So, I'll just give you a couple of examples.
In market technology, as we broaden our range of trading and risk management solutions to the broker dealers, including anti financial crime technology across that serving the industry, we now have a $7,000,000,000 serviceable addressable market, which is giving us a much more much longer runway to growth and expansion. And in the analytics business within our Investment Intelligence segment, our acquisitions of eVestment, Salovis and Quandl have introduced a whole new range of opportunities within a $7,000,000,000 serviceable addressable market. So, as we continue to add capabilities over time, we're going to unlock more ability for us to tap into that growing total addressable market as well. But, okay, so we positioned ourselves well within a growing segment or growing attractive markets, but what gives us the confidence that we're going to win? Well, it's a combination of these key strengths to our clients that gives us a unique differentiator and a unique value proposition.
So, for example, today, we have the most successful we are the most successful provider of trade surveillance technology in the industry. Broker dealers, they trust us. Our clients trust us as an independent, high integrity provider with a world class global brand and a technology savvy that brings advanced data first approach, coupled with deep market expertise to solving the challenges they face in rooting out nefarious market behaviors. Well, because of the trust and partnership approach we have with our clients, they're now asking us, coming to us and saying, please broaden the scope of services that you can offer as we look at our broader risk management and anti financial crime needs. And so our early response to that demand has been a partnership with Caspian, which is really an AI first provider of investigations capabilities in the AML space.
So, we've earned the opportunity to win in addressing a much larger market opportunity by the approach we've taken with our clients and the approach that we've taken with our products. So, if I look at it going forward, it really now going forward really comes down to our ability to execute. So, let's talk about that. So, we have a clear strategy to continue to expand our presence in the financial industry. Now, let's talk about our execution in the coming years.
So, the first thing I want to do is take a little bit of a step back and look back and understand our current position and where we're going forward in the context of our history. Over the last 14 years, we've moved from being a single U. S. And innovative equities exchange to being a global technology provider to the capital markets. While we've pivoted effectively to expand our opportunities as that technology and analytics provider, And now we're moving to broaden our platform ecosystem to deliver more value.
We will focus on SaaS delivery to continue to drive scale and efficiency into our platform. And so what we're I mean, we want to continue to build on our core with new focus areas that will expand our market presence in anti FinCrime, in alternative asset management workflows and analytics and in ESG corporate ESG solutions. So how are we executing on that pivot on that evolution? We start by sustaining our market leading performance and client focus in our core marketplace business. It is and will always be our foundation.
It creates trust and confidence among our clients, and it gives us natural reasons to expand our relationships with our clients going forward. Then we want to have a continuous program of reallocating and rebalancing our capital to the strongest areas of growth. We want to have a clear vision to be the premier provider of fast delivered services across market tech, our investment intelligence segments and our corporate platforms, while also continuing to amplify our role as a marketplace provider. So our end goal is to continue to accelerate our performance for our clients and for our shareholders. Well, what does this mean for each of the business units?
So, each business has a clear mandate. So, in addition to the core services that we deliver with pride every day, each business has strategic initiatives driving future growth and expansion. And they you'll hear more from each of our business unit heads as to what those initiatives are and how they see our success going forward. But our execution primarily comes down to organic growth. However, we as we have done in the last 3 years, we will consider acquisitions that amplify and or accelerate our strategic ambitions, particularly related to our highest growth ambitions and initiatives.
Sorry about that. Here we go. All right. If we go back, there we go. So, as we consider acquisitions that could catalyze and accelerate our growth, we've decided to evolve our investment criteria.
At the last Investor Day, we implemented a rigorous 3 to 5 year return on invested capital ROIC requirement on organic and inorganic investments, which was a move to establish a high level of focus on how and where we're using our capital. We now have driven Nasdaq's overall ROIC to 11% and we will remain committed to maintaining enterprise wide ROIC of at least 10% or more going forward at NASDAQ. Moving forward, our criteria for our internal organic investments will remain unchanged. But as we consider acquisitions, we will take a 3 pronged approach to evaluating them for NASDAQ and their fit. The first, each acquisition must align tightly with our strategy and our culture.
In particular, we're seeking acquisitions that accelerate our evolution as a SaaS based technology and analytics provider to the industry. We've become a much more focused growth oriented team and we spend the vast majority of our time every day together identifying and executing on organic efforts to maximize how we use every element of Nasdaq to deliver for our customers. So today, we really see acquisitions more as one of multiple ways for us to execute our strategy. They are a means to an end, not the end themselves. So when we consider acquisition targets, we ask ourselves, do we have the confidence and the commitment in our ability to deliver both the strategic and the financial objectives that we are seeking to achieve with the deal?
And how can we target how can the target enhance our performance and valuation potential? Ultimately, we seek opportunities to enhance our total shareholder return. And as we move forward, we'll deliver on clear and consistent financial requirements. Each acquisition must provide earnings accretion and adequate ROIC, but the timeframes may vary based on their significance and impact to our strategy. And we're introducing a new commitment to maintain a strong enterprise wide ROIC of at least 10% for NASDAQ as a whole over the medium to long term as we execute both our organic and inorganic initiatives.
Well, getting back to the overall financial profile of Nasdaq and our expectations, our core performance metrics remain consistent from the last Investor Day. Our solutions segment has the potential to deliver 5% to 7% growth CAGR over the coming 3 to 5 year period, and we maintain our goal to achieve double digit annualized total shareholder return. We're adding a new metric for our investors to measure us on going forward, which is a 5 year ambition for SaaS revenue to increase as a percentage of our ARR from about just about 30% today
to up
to 50% in 2025. We've proven ourselves to be strong executioners for our clients and for our shareholders in the early years of our strategic pivot. For the coming several years, we intend to build on our strengths, deepen our relationships with our customers, deliver on our strategy and continue our strong track record of performance for our shareholders. And we really look forward to the journey. Well, thank you very much.
And now I'm going to invite Lars Ottersgaard, who's our Executive Vice President and Head of our Market Technology Division to come on up and talk and do a deeper dive into the market technology strategy and plan. Thank you very
much.
So Lars Ottersgaard, EBP, Head in the Market Technology division of NASDAQ since 2008. I'm going to talk about how we're progressing going after our big opportunities that we see in market technology and how we are transforming our business into a SaaS operation. So how we've done so far and where we go from here. Let me first level set on where NASDAQ market technology is today. We are a growing and stable and recurring business with a long and stable customer base.
We have nearly US350 $1,000,000 revenue as a technology business within an exchange group. This is very unique. And as you saw in Adena's previous pictures, how that is helping us market technology with our business in the marketplace as part of this group. We are not coming from outside of the industry. We are part of this industry.
We're a scale provider. Our SaaS and ARR business is now almost 80% of our business, the ARR that is. Our SaaS is 35% of our total revenue. So who are the clients that we are serving? We have 3 customer segments that we are addressing.
The market infrastructure operators, which is exchanges, clearinghouses, depositories and regulators over the world. Here, we provide technology that span across the entire value chain of the operations. On the buy side and sell side, we have execution platforms and risk capabilities that we provide as services to our clients today, and we are a big player in the anti financial crime area with a world leading position with our trade surveillance capabilities. In our new market space, this is a new and exciting opportunity that we talked a lot about in the last Investor Day 2 years ago. It's still an exciting and growing opportunity for us.
But this is a long term play. This is how we see other markets forming that are not the traditional financial markets industry. There's a growing interest for our capabilities in this business area, and we look forward to grow it over time. What I want to talk about today now after a level setting is how we are how we're progressing and transforming to SaaS, what market opportunities we see in front of us and how we grow our SAM, our service addressable market and finally, our expectations on my business going forward. Let's look at the transformation journey and how we're progressing there today.
So this all started actually back in 2016. We started to build what you hear a lot of today, the NASDAQ Financial Framework. A common technology stack, a common platform for all of our capabilities to be delivered across all of our markets, including our own that you will hear more about from Thales and Bjorn later today. This platform that we started the building in 2016 are now ready for use, and we have it in production in several places in the markets across several of our technologies and our solutions, both for our enterprise on premise clients, but also and more importantly, as the baseline for all our SaaS solutions going forward. So what is important with this platform thinking?
Well, it's important to have all your applications on one single platform. That will help us enable us to give new values to our clients. You can easier adapt to cloud services. It functions also as our base for our SaaS solutions, and it is a help for our enterprise software clients to modernize. We are packaging this Nasdaq Financial Framework in more, should I say, value generating platforms.
You have a marketplace platform, anti crime, anti financial crime platform, etcetera. They are all interconnected. As we are using the same underlying Nasdaq Financial Framework platform, it will be much easier to connect the ecosystems in the marketplace. It's also important for our traditional enterprise clients as having the same underlying platform technology for the on prem technology that we further on will provide in cloud or SaaS services will make it much easier for them in an evolutionary move go from their traditional on prem technology to our solution services. So how have we progressed since our last Investor Day some key achievements?
Well, we have done well. When I look at the plan that we laid out back in 2016 and further outlined in 2018 in the Day, there's a lot of ticks in the boxes here. The capital that I would like to highlight especially. We completed the acquisition of Cinnober Financial Technology. That has strengthened our position as the world's leading provider in the MIO markets to come.
We added very capable technicians. We got a new number of clients and some new products into our portfolio. The really important part here is that in the full integration that is completed, all clients with very, very few exceptions have been embracing this and like the journey that they now come to join the NFF journey. We also come far in adopting the technologies to our underlying NFF technology platforms. The other part I would like to address is what Adena previously touched on is how we are moving our already strong position in the anti financial crime space beyond the transaction surveillance and into the AML space.
We've done that by a minority investment in Caspian and a very important partnership where we together we're going to this journey for a broader capabilities in AML. This is unlocking a large SAM for us to address. So with all this, how did our performance look last period? So we outlined a number of growth expectations. We said that we would grow mid to high senior digit in the market infrastructure operator space, double digit in the sell side, buy side area and a very high growth in the relatively small segment on new markets.
I can tick them all off. And bottom line or top line, we said that we're going to grow 8% to 11% CAGR. And in the last 3 years, 2017 to year to date 2020, we have had a CAGR revenue growth 9%. That is the organic growth. Including the acquisition that you saw on the first page, we grew 12% CAGR.
So let me now move on to the position in the marketplace and how we are growing our SAM. So first, let me explain this a little bit busy shot, but what I tried to show here is how we very carefully, but aggressively moved our capabilities over time. We don't want to jump to a place where we don't have unique value or capabilities. So we always start where we are strong. So in the very old days, we started with a trading platform.
We then advanced into the full cycle of the value chain step by step clearing, depositor technology, risk technology, etcetera. We do the same now in the anti financial crime. We started with a very strong position as a surveillance transaction surveillance company moving into AML, and we will go further beyond that. So this is our approach for the last 10 years. This is our approach that we'll continue to take going forward.
So how have this resulted in our growing SAM? This is actually my favorite picture of the whole presentation. This is where I look at my opportunities going forward. So back in 2018 at the Investor Day, we didn't really use the term SAM, but I talked about the business opportunity ahead, which at time was US3 $1,000,000,000 But we talked about how I wanted to go after a US22 $1,000,000,000 TAM. I'm so happy to say that with the investments we have made and the changes to our portfolio and our advancements to becoming a SaaS company, I now have an addressable market, a SAM, of USD 7,000,000,000.
So it has more than doubled in the last 2 years. And I don't see any reason why we can't continue to grow our opportunity going forward. It's also exciting to see that all of those areas we're operating in are growing as investment areas too. So it's not that we are investing in areas that are declining. This is growth space that we are addressing.
But just growing your SAM is not enough if you don't also win business. So why do we win? First of all, a proven track record. We have won more than 70 clients since last Investor Day. We continue to get a lot of rewards for our innovative technologies and our ability to deliver those technologies.
But I think the 3 bottom line comments are the most important. We are trusted in the marketplace. We have a strong and proven track record of delivering high quality to clients. Many of them have been clients for more than 20 years. We have the best products in the market.
I know that's maybe a statement that our legal counsel don't like, but I think they are the best in the market. And we have innovation. We really look for innovation. NASDAQ has always been innovative company and we continue to work in the forefront of technology and development. So I see we are in a very strong position to go after this now growing sand and continue to win business in the marketplace.
But with that, I think we should listen to one of our clients or couple of our clients what they think and not only what I think. Company by its core. Today, we provide technology to more than 250 clients in more than 50 countries across all types of markets in Europe.
The partnership between SGX and NASDAQ is more than a decade now. We are a multi asset exchange. Our business is vertically integrated, and we have a very strong growth in our business.
And we
have a very strong growth in our business. And we have a very strong growth in our business.
Digital channels and retail. NASDAQ's MergeCall technology allows us to bring new products and opportunities to our customers.
So with that, I would like to look a little bit more into the future, how we see the future develop and how we will capture this opportunity across the different segments. Starting with the MIO space. We continue to migrate our clients to NFF and to SaaS. We are already the number one provider of solutions worldwide with more than 130 clients all over the world in more than 50 market places. As I mentioned before, many of those clients has been our partners and clients for more than 20 years.
But we also add new clients, new brands every year as they go. And we have an obligation to help those clients develop in their positions in the marketplace. And we will do that in 3 ways. We're going to help them become flexible through our platform based microservices architecture that I mentioned earlier, the NFF and the way we are developing architecture going forward. We will help them leverage new technologies by, for example, moving them to cloud for scalability, flexibility and connectivity.
And we will help them by providing not only our technology, but also our know how by SaaS services, also underlined by the same technology, the Nasdaq Financial Framework that will make it seamless to integrate what they still have on prem, what they have chosen to put in cloud or what we provide as a SaaS provider. With that, we expect to have a growth of mid single digit CAGR for the 3 to 5 years to come. We'll then move to the fastest growing segment of our business in dollar numbers counted, the sell and buy side business. We are a services competitor. We don't deliver legacy on premise enterprise software in this segment.
We are delivering all of our capability here as services and SaaS. We have had a good growth and progress in our trade execution platform and our risk capabilities. But there's one area that Adena talked about that I would dig a little bit deeper into, and that is the very strong position we have in the transaction surveillance and the anti financial crime space and how we're now moving beyond our history there and broadening our capability. In the world today, US4.4 trillion dollars are laundered. It's a big problem for the industry.
Only 1% of all that money is being seized or blocked. One of the reasons is the complexity and difficulties to monitor and manage and find all these problems. And actually, only 1.5% of all alerts that is found in the world are becoming suspicious activity reports. So it's a highly inefficient way we are operating today. And with those volumes, it's not about manual work, which is unfortunately still large part of this, it has to become technology driven.
The industry is spending about $42,000,000,000 every year in trying to become good at this. Today, around $13,000,000,000 is spent on technology. But as I said, this has to be handled with technology, it cannot be manual. So the share of the spend will grow on the technology side. So we see a growth of US13 $1,000,000,000 spending at 14% to 70% spend CAGR in the years to come.
That's the market opportunity going in where we are, already existing with our transaction surveillance and where we're moving with our NO. NO. But it's also a fact that the company has understood that fighting this problem cannot be done in silos, which has been the historical way of operating. The decisions are going to be consolidated, and they're looking for stronger partners that can help them cross those silos and not niche solutions in every single part of the businesses. That's where we come in with our brand, with our knowledge and with our already strong footprint in this space.
So I think we are really strongly positioned to capture a continued double digit growth in this segment of our business. With that, let's talk a little bit about new markets. So the new markets, this is a long term play. I definitely see this still, as maybe I said 2 years ago, maybe my biggest opportunity. It is still something I believe really strongly and it will grow over time.
But this is about changing business models and this is about new completely new digital asset capabilities in the marketplace. So this will take time. But we are seeing a very healthy pipeline, and we have today 15 clients in this space. We are working directly, we're also looking actively to work with partners like R3, Microsoft and Amazon in this space. And I see some very interesting proof points on what SaaS can do for us.
Our marketplace surveillance has up to 2020 only been an enterprise software opportunity or offering. In 2020, we made it a SaaS solution and we have already gained 8 clients and seen a very good uptick on this platform and this solution. So how will all this transition into financial outlook? As I said in the beginning, 35% of my total revenue is SaaS oriented today. That's going to grow to more than 50% of my total revenue in 2025.
Our ARR is going to grow with at or faster than our organic growth that I still see to be in the range of 8% to 11% CAGR. As SaaS is becoming a larger and larger part of my business, it will help with the market technology margins over time. But I also say that we are also introducing a new KPI that we think are extremely important for how to grow technology business. That's the rule of 40. If you take the revenue growth and add it with the EBITDA, you get the number.
Our ambition is to have that number more than SEK40 percent, and that's what we strive for. That is a KPI that we will keep a lot of focus on. Obviously, we will continue to focus a lot on our very high retention rate that we experienced. So let me summarize this presentation in 3 bullets to remember. We have a very strong and solid position in across a broad and exciting clients segment.
We developed our portfolio, meaningfully solutions that grow our SAM. We more than doubled our SAM to US7 $1,000,000,000 in the last 2 years and we intend to continue that growth going forward. We are well on the way to transform our business from an enterprise software company to a majority SaaS business that will help us with improved margins and addressing new marketplaces as we go forward. So thank you. With that, I would like to hand over to Lauren Dillard, Executive Vice President for our Investment Intelligence Business Unit.
All right. Thank you, Lars. I'm Lauren Dillard, and I'm the Executive Vice President over our Investment Intelligence division. I'm delighted to be with you here today. I'm going to cover 3 key areas, how we've transformed this business, and I don't just mean in name alone, how we're positioned to capitalize on market trends and then also how we are positioned for sustained growth.
First, let's just take a look at the numbers of investment intelligence at a glance. There are a lot of very important numbers on this page, the number of our clients, of course, our operating margin, we are a scaled business. But I'd actually draw your attention to 2 key metrics on this slide. First of all, like Lars, we are now showing our ARR. So, we have over half of our revenue in ARR.
This is an important metric for us. But a takeaway from this slide and something I will continue to come back to actually throughout my presentation is around the revenue mix our business. So we do have 3 units within our business, index, market data and our analytics business. And important to our transformation has been the mix of this revenue. So, we now have more than 50% of our revenue from index and analytics, which is a growth area for us.
So, I will keep coming back to this. That's the takeaway from this slide. So, before we get into our transformation, let's just level set on what Investment Intelligence is as a unit. We have a distinct and unique index franchise. This includes everything from ideation and research to supporting marketing and distribution, smart beta products, thematic indexes and of course importantly, our Nasdaq 100 franchise.
We have over 100 products around the world tracking to the NASDAQ 100. 2nd, our market data business. This is a mature and big business. Importantly, this business, we've launched a cloud data service. This is actually accessing new clients around the world.
So, we'll talk to that when we talk about our sustained growth. And last, our analytics division. This was a core off of our eVestment acquisition, which we had done just shortly before the last Investor Day. And we've built around that intelligence. That is the leading institutional intelligence for consultants, asset owners, asset managers.
We've added workflow solutions to cover both the public and the private markets, which is important to our growth. In addition, within analytics, we have our NASDAQ fund network, which we continue to expand our transparency as well as our alternative data. So that's what our unit looks like. So now let's talk about how we've transformed this business. So since we were here last, we've made several key acquisitions or investments.
We've made our eVestment acquisition. We added on Quandl, which is the marketplace for alternative data. And then this year, we added Slovus. Silovus is a cloud based multi asset class portfolio management and risk solution. It's targeted to asset owners, so foundations, pensions, endowments that can look at their portfolio across their private and public investments.
This is a post investment. So, if eVestment is the pre investment tool for research and diligence, this is the post investment tool. So, this is an important expansion off of our eVestment franchise. In addition, we've made targeted organic investments. We've made more than these 3.
I highlight these 3 because they both were important from our transformation to date, but also are important for our transformation going forward. We built out analytics to cover the private markets. This is private equity, private real estate, private credit. We'll talk about this as we expand our growth. We've expanded our index franchise.
We'll continue to. And I spoke about the cloud data service. So, we've made some key investments. What has it meant from a numbers perspective? Our repositioning is driving higher organic growth.
Let's take a minute on this because this is important. Adena mentioned in 2016, just about a third of our revenue was from outside market data. We're now at over 53% of our revenue mix from index and analytics. So, the revenue mix has changed, but importantly, that has meant that our organic revenue growth has almost doubled. So, our repositioning is driving higher organic revenue growth.
So this is what the numbers look like, what has it meant from a client perspective. We have a broad and diverse client base, 600 index clients are ETF issuers taking our data, 900 market data clients, 3,000 over 3,000 investors, consultants, asset owners. So these are big numbers. But what's more important than these numbers is actually who our clients serve. It's the 100 of millions of retail investors using our data in the market for our asset owner clients.
It's the pensioners. It's the charitable foundations. It's the retirees. That's who we actually serve. We serve our clients so they can serve their beneficiaries.
Let's take a look at that. There's a video.
The world of institutional investing represents close to $80,000,000,000,000 in assets, and it includes some of the largest institutions in the world. But ultimately, it's not about institutions. It's about people, teachers, first responders, seniors, students. These are some of the direct beneficiaries of institutional investing. But in a way, all of us benefit when there's more clean water, greater access to medical treatment, economic development and financial security for retirees.
Outcomes like these are made possible when pensions, foundations, endowments and other investors work with consultants and asset managers to meet their investment objectives. Our job is to create transparency through data to power institutional investing. So asset owners and investment consultants across the world have more data on long only, hedge fund and private funds for investment. And post investment, they have better data on their portfolio's performance, liquidity and risk across asset classes. Transparency into the institutional landscape also helps managers meet evolving investment objectives, so they understand what matters to asset owners now and how they may allocate differently in the future.
We're eVestment and Salovis, institutional solutions from NASDAQ.
Okay. So, now that we've been reminded who we all work for, let's talk just a little bit about how we see the market trends. So, there are some key market trends that are fundamentally changing the dynamics of the investment community. I'm going to spend a little bit of time on each and set the backdrop for how we're positioned for growth. On the left, continued growth and passive investing.
I probably don't need to spend much time on this. I think everyone's familiar with this. But I will say importantly, we do see passive investing outside the U. S. To be increasing.
This is important as we think about our growth. The second trend, increased allocation to alternative asset classes, again, private equity, private real estate, private credit. We've been operating in a very low rate environment. Asset owners are seeking yields. They're increasing their allocations.
All of our proprietary data shows this, other data shows this, increasing their alternative allocations, which means there's complexity, there's a need for better data, better benchmarking, understanding manager research. So, this is a market trend we are focused on. The last two trends you could actually bucket together. There's an IBM report that says that 80% of the world's data has been created in the last 2 to 3 years from just the rapid digitalization that's occurred. So, the data was there, but now it's important to see the insights and intelligence.
So, this drives our alternative data. This drives also just the need for investors to be able to manage through the data. 10 years ago, on our eVestment platform, our ESG questionnaire had 10 questions, one universe, 10 questions. In August, at the end of August, we launched a new questionnaire, actually at the response from asset managers asking us to help manage the data, 60 questions, we already have 3,500 strategies that have completed those 60 questions. It just shows the just magnitude of the data that's out there.
So, these are the trends we're focused on. There's some numbers that support these trends. And I won't get into the growth. This is a key indicator. It is certainly not the only indicator, but AUM growth is a tailwind.
I spoke to passive. Again, we are seeing this outside the U. S. As well. The middle alternatives shows the increased allocations.
We actually saw in our eVestment data that increased allocations to alternatives even happened over the period of COVID, so Q2. But let's spend just a minute on active, because this is important. It is growing. It's the largest part of this market. It's growing at a lower rate, but it is growing.
But importantly, that means investors and asset managers need even more intelligence on how to position themselves, how to understand what their universe is, where they're falling out of RFPs. So this growth is important because you have to it's a competitive market for this growth. So, these are the trends that were sort of set our backdrop for our business as we go forward.
So let's talk about how
we're positioned for sustained growth moving forward.
Before I do that,
I just want to restate our mission because it drives everything we do. I mean, actually read these words because they're just that important. We are the leading provider of data and technology to power the intelligence for the investment community. This is what we do every day. This is what our businesses are focused on and this is our priority.
So, let's talk about our priorities across index, market data and analytics. Let's start with the first priority, index. We will continue to expand our geographical footprint and our suite of offerings. 1st, we're going to expand off of our Nasdaq 100 suite. I think everyone probably saw in the last month, Invesco launched an innovation suite, which expands their products that track to our Nasdaq 100.
We're going to continue to do this around the world. That actually takes us into our second point, expand our global reach across Asia, Europe and Latin America. In 2016, we had just about 30 products tracking to our indexes across Asia. Now we have over 80, 80 products tracking to our indexes. So that shows just the demand.
We have to reach the client demand there. 3rd, continue to expand our thematic indexes. This would be off of our suite of cybersecurity, cloud, biotech. Just this past year, we launched the water index and our partners at CME are launching futures on that water index. We will continue to look at thematic indexes.
And last, ESG. I don't think you're going to have a presentation without ESG. This is really important as we continue to work with our clients to make sure that we are offering indexes that actually satisfy the investment outcomes that they have and that their clients have for their ESG objectives because I think we all know it means something different for everyone. So, if we can achieve these priorities, we will continue to drive high single to double digit growth, assuming there's a benign market backdrop. So, that's priority number 1.
Let's move to priority number 2. This is market data. So, in our market data business, we are going to reach our new global clients and continue to grow our cloud delivery This past year, we launched the Nasdaq cloud delivery service. This was important for us. This reduces time for clients to get our data.
It lowers their infrastructure costs. It moves their time from weeks or maybe months to hours, if not days for setup. The team likes to call it on demand finance. We're seeing that all around the world and now we can react to it. So, we've seen global expansion in Asia.
I don't think I need to talk about the rise of the investing community there, but we're seeing retail online brokers there in Europe, here of course. Now we can reach them quickly where they were born in the cloud. And last, there is an expansion of new customers. These would be media customers taking our data or things like financial literacy apps, Rakunzl. We power the data for financial literacy app that actually teaches a whole new generation of investors about the market.
This is completely aligned with our purpose and vision and mission that Adena outlined. If we can achieve these, this is a big business. We expect it to grow low single digits, but we have clear objectives here. Let's move to priority number 3, our analytics business. So, we're going to be offering new insights and technology to meet what we see as evolving investor needs.
So what do we actually do for our investors with insights? We collect data, we aggregate data, whether that's portfolio information for Slovus, whether that's positions, that's team, that's track record, that's universe. We aggregate that data. We actually have intelligence facts. You understand how you rank, where you fell out of RFPs.
You can look at your portfolio. We do predictive analytics. Our market lens tool can show where allocations for asset owners are actually moving around the world. We can show where your portfolio, you're over allocated. This is we offer these to asset owners and asset managers.
It's a big client base. I think that's really important. So, we have some clear objectives here. We've now expanded our suite of solutions. Filovis is geared at those asset owners.
It's post investment. We're going to offer that full suite of solutions to the close to 1,000 asset owner clients we have. 2nd, we're going to expand our private markets capabilities. Mentioned this, this has been part of our transformation to date. We have built out analytics.
We have 5,000 general partners that we track, a forward calendar, manager research. There's a need for data for benchmarking here as well as workflow tools. The workflow tools have not caught up with the maturing of this industry, this space specifically, and we are focused on expanding our private market capability. And last, extending asset coverage and new data sets. We have our alternative data set business.
As you can imagine, when COVID happened, the need for different alternative data sets were immediate, supply chain, consumer spends. We've launched and expanded our NASDAQ fund network to cover unit investment trusts, collective investment trusts. We just see investors dealing with a more complex universe of tools. If we can actually achieve our priorities here, which we will, we'll have high single to double digit growth across our analytics business. So, I've gone through the priorities.
So, now what does that mean from an overall numbers perspective? Okay. So, Lars said his TAM slide was his favorite. I actually think this is my favorite slide and here's why. It shows the transformation of the investment intelligence business in a very clear way.
When we stood up here in front of you last time in 2018, 45 percent of our division was from analytics and index. Now, we're at over 50%. If we can achieve the priorities that we outlined, We'll be at over 60% from our index and analytics business. We'll have consistent ARR. We'll have an expanded private markets suite of offering of data analytics and workflow tools, we will have had our structural expansion of index and we will be looking at 5% to 8% organic growth CAGR.
This is actually revised from 5% to 7%. So looking forward, we really are continuing to evolve our revenue mix with strong growth. So let me summarize. We are a scaled but high growth business. We have repositioned this business to be focused on our index and analytics business.
We have strong demand globally for our unique index franchise. We have a mature market data business, but this cloud offering is exciting as we reach new geographies and new customers. And we will continue to have new insights and new workflow solutions for just the broadening need for our investor clients across public and private markets. So, thank you. And I think I'm going to turn it to Ed, because I think we're going to answer questions.
Yes. Let's bring Lars back up.
And I
think I need to clean this.
Thank you. I joined you. Yes. I'll just put
Okay. And we're going to start off taking a question from a virtual participant, Alex Blostein from Goldman Sachs said, can you please discuss your outlook for Marketech segment operating margins over the next 3 years, taking into account the evolution of the MarketTech business towards SaaS and the investments you need to make to achieve these growth rates?
Thank you. So I will not go into actual numbers. All I can say that SaaS experienced a higher margin than our enterprise software business. And as our business mix continues to evolve over to SaaS business, we will see improved margins over the 3 years to come. I'll also say that I come back to the rule of 40, which I find really interesting and important for us as a KPI that as we look for continued growth, we also look for the margin combined with that growth going forward.
Okay. We're going to take a question from the room. Jeremy?
Jeremy Campbell, Barclays. So as you think in each of your segments here with clients searching for efficiencies or
new ways to do things in this whole COVID work from home,
Some of this is inevitably going to persist as we hopefully lap this thing next year. Just wondering what parts of your businesses you've seen impact or increased demand for clientele or if you're seeing engagement with clients that you never engage with maybe critical.
Great. I'm just going to summarize the question for our online participants. Jeremy Gamble from Barclays asked if there were portions of our business where we are seeing increased engagement or new opportunities as a result of the unique conditions of COVID and the pandemic and its implications?
I'll start. I'll start with the most obvious, which is index. Obviously, we feel like we have a whole suite of index franchises that sort of represents the modern industrial way we are living, which was indicative of as you see asset flows into the indexes as well as our new launches. 35 of the Nasdaq 100 current companies would have been in our next gen index that we launched. So, I think you're seeing behavior there.
Obviously, we believe as a technology company that the rapid digitalization that we see, especially when we're working for asset owners and asset managers isn't going to go away. If they had a roadmap, if they needed intelligence, if they needed to understand what's going on in the market, we found in some cases that was accelerated. And across our market data business, specifically, clearly the rise of on demand finance or the retail online brokers and powering the market data for those was something we saw. So that kind of covers all three of our segments.
And from a Marketech perspective, I would say, I sit in 2 areas. 1 is that this whole situation has shown that working remote and the volatility and the volumes in the market that came through this has actually pushed people to really embrace our strategy going forward. So moving into cloud, being more dynamic flexible is definitely something that is being has changed dramatically, the attitude to that during these years. Meaning, also taking service instead of running it all in house at home is becoming more and more appropriate as we go forward. If we then look at the surveillance business and the whole anti financial crime business, there's the volumes, the activity in the market is driving this to be an even bigger challenge and therefore, also an opportunity for us.
I think it is it has been giving us the it's showing us that we're on the right path in our strategy.
I have another question from a virtual participant. Chris Harris from Wells Fargo asks, in Marketech, as SaaS revenues grow, what does this mean for the growth rate of Nasdaq's Marketech segment overall over time?
I think I gave the my expectations in the coming 3 to 5 years to be 8% to 11% CAGR, and that is definitely driven by SaaS. So I don't think I would go further than that. But yes, it will help our growth over time.
May I take a question from the room here?
I guess I'll take it. It's Graham, yes. Just coming back to Florence business, can you just talk about the passive and alternative trends? You said those were the highest growth areas. Is the passive just the index play or the other things you can do in passive?
Same question, I guess, on the alternatives. I feel like you give a little more detail like where exactly you'll capitalize on those trends.
And Alex Graham from UBS asked about the index and analytics business in particular and what's driving the higher growth expectations in that business?
So, on index specifically, let me start with that, that was the first part of your question. I mean, we put up passive allocation numbers. Obviously, our indexes track to assets as they move there. We are seeing passive outside the U. S.
In a rapid clip. As mentioned in our Asia numbers, we've more than doubled our products there, now at over 80. So, that's the passive trend. For alternatives, and again, I think you're referring to the allocation increases there. I mean, the specifics there and I spent 20 years in that industry is the technology tools, the data, the accessibility to data, the benchmarking, a lot of that is sort of going through a maturation cycle that I would say is behind in that space.
And we have analytics. We can show valuation bridges. As mentioned, we've 5,000 GPs that we track the performance for forward calendars. So, as you're an asset owner, increasing your allocations, which is what was shown on that market trend slide, you are putting into your portfolio more complicated investing. So, we want to be able to show those investors and that was the thesis around adding Salovis to our workflow suite, both their public portfolio as well as their private portfolio and the analytics.
And we have joint clients that have already expressed the ability and the ease, frankly, of their burden as they're dealing with that data. So that's I think gets to your question, it's workflow and data as it relates to analytics. And on index, it's our suite of franchises, whether it's smart beta or thematic indexes. Other analytics opportunities in passive. Well, I mean, arguably, you could say that as we launch ESG indexes, some of them are overlays.
That is an analytics extension to our indexes. So, there is a bit of how we create our indexes to service that. I guess that's how I would call if you want to call it analytics. And of course, we have our futures revenue in that business as well.
Okay, great. Question from the room.
I'd like to understand the impact of cybercrime and the role of cybercrime in your businesses and how you can what are the risks and what are the opportunities for you to gather new revenues, provide new services around cybercrime?
Okay. The question is, if we see specific opportunities related to the trend of cybercrime and how we can help people respond to that?
From a market tech perspective, we don't offer cybercrime technology as such. But I think this is one of the benefits of being part of the NASDAQ Group. All our technology, everything we build, everything we provide to clients, we have very rigid requirements on from a cyber security perspective. So I think we are top notch high grade. That means that buying from us is probably a rather safe way of buying technology than from potentially smaller companies that don't have the same body mass behind it.
So I think it's improving our solution across the board.
Yes. I would add, I mean, from Investment Intelligence, we don't have a cyber crime solution per se, but I do agree we're a trusted partner with our data and, of course, years of dealing with the regulators.
I just thought I would let you one other thing. Within Marketech, though, as we work with our clients and think about providing more of a managed service provider as opposed to employee software provider, particularly in emerging markets where they have to compete for talent like everyone else, they have to manage our infrastructure like everyone else. So, it's becoming more and more complex. If they work with us in terms of bringing as we bring markets to the cloud, as we manage our clients in terms of bringing their markets to the cloud, as well as become more of a managed service provider, we can have we can provide our expertise in cybercrime to them. So, I think it's a way for us to help sell more of the managed service provision and managed services that we have going forward, particularly as our clients start to embrace the cloud as a delivery service for their markets.
Ted, I should answer. We have a cybersecurity index that has products to it too. Just for the plug in.
I think we have one more time for one more question on this section. We have a question from an investor. Marketech has seen some headwinds in 2020 due to COVID and implementation challenges related to that. Lars, can you discuss a pathway to those roadblocks being removed for this business? And is this factored into your forward medium term outlook at all?
Yes. I'll start with the last part. Yes, the outlook I'm giving is based on all the facts I have to date. So that answer
is yes on that.
When it comes to the impact, it has primarily been impact on the enterprise software side of our business because there you have a lot of on premises and people working together. In the SaaS business, this impact is definitely limited. There is main challenge has been in meeting the clients and prospecting and finding new clients in the marketplace. But I think it's remarkable how the marketplace is also adapting to that. We have some great examples where we have sold systems for clients where we actually haven't met the clients physically yet.
The whole chain has gone from a discussion over Zoom and mail to contract even implementation and launch without having physically met. So I think this is something we learn to live with. And I think it's something that we are proud of our ability to handle and therefore, I see an opportunity and this also for us as a technology provider.
I think we might have time for one more question in this section. Any questions in the room?
So just, Warren, I guess, on the solutions, the slowest and divestment, as we kind
of think about the Venn diagram, how much overlap
do they have for versus kind of an unlocking and cross selling as an enterprise based solution?
Yes. I'm just going
to repeat the question. The question was within Investment Intelligence, how much overlap in the product set do we have in terms of offering an enterprise solution?
Yes. Thank you. There were overlapping asset owner clients. Slovis' client base was primarily in the U. S.
Across family offices, endowments, foundations, smaller pensions. EVestment has a much larger asset owner client base and it is around the world. So, one of the just natural synergies we saw was that we had this large group of asset owners that was utilizing our intelligence and then now we have a post investment solution. So, that was important to us and we do that was my number one on analytics was taking that solution set to our clients. So, we and to what Adena said, we had a lot of outside in feedback.
So, we work really closely with the clients on how the API should work and what data is important. And then now we also, of course, can provide our private market data into Slovus. So, that was important. That client overlap is important as it relates to asset owners.
Okay. Thank you. It's time now. We're going to get to our first break, and we're going to restart the presentation with our Corporate Platforms businesses at 1005 Sharp. Okay?
Thank you. Okay, everyone. I'm going to welcome you back to our Investor Day. I'm going to introduce our next speaker. Nelson Griggs is going to talk to us about our Corporate Platform segment.
Thank you.
Well, thanks, Ed. I'm Nelson Griggs. I run the Corporate Platforms business. So I'd like to start by beginning a brief overview on the Corporate Platforms business and some of the financial metrics. So we are about 88% of our revenue is reoccurring, and we have some improving financial metrics that you'll see here.
And as Adena had mentioned, our growing corporate client base across all of our product clients were up to over 8,500 clients leveraging NASDAQ services. So we start by taking a look at who we serve today. I'd just like to review a bit that
we got to
press that that we really serve key decision makers inside corporates with very strategic products in a landscape where you're seeing these roles overlap quite a bit, which really plays to our strength. And one example of that is a new addition is the Corporate Sustainability Officer, works very closely with Investor Relations, works closely with the Corporate Secretary. So it's a natural for us to be serving all these clients and we're very unique in this in the marketplace this way. And when you think about the uniqueness of our offering, it really is the ability for last 5 years, we've been telling this enhanced lifecycle story to corporates. So this is from private to public, from the startups to Apple.
What we're able to go into, it's very differentiated is we compete against a point solutions here and we have this holistic story. And we think about the success of that, it's really translate into a lot of results. So if we look at the listing business particularly, we have had this strong listing win rate, 77% over the last 3 years in the operating companies. But one metric of success for us is we have a lot of the larger listings. So now half of the $500,000,000 raises and upward choosing NASDAQ and we've had over $1,000,000,000,000 of market cap in the last 5 years switched from New York Stock Exchange to NASDAQ.
And that has had some nice financial results, if I'll review later. Think about our IR and our ESG businesses. What has been effective with this business line is really returning to growth. So these businesses are now operating very efficiently. We're under one roof with the listings and the IR, ESG businesses.
And what's unique about this is the service addressable market is not just NASDAQ companies. So over 55% of revenue does come from companies on other markets and across the globe. And what is driving this ability to tap into new markets is we're focused today on the very strategic products with advanced technology, data and advisory services. So when we take a moment to look at the SAM, the service addressable market inside this business unit, today it's about a $210,000,000 revenue business, but the opportunity we're finding is much greater than that. It's about $1,500,000,000 TAM and this is with our current services and we find new opportunities within areas such as ESG, which I'll talk a bit more in a moment.
So about a 7% upside to what the current revenue is today. And now I'm going to turn it a bit to how we've successfully repositioned the business. So what's very unique about NASDAQ is today we have the largest business across all the exchange franchises focused on corporates. And this does not go unnoticed by our clients. They look at us as having a unique passion in this business, scale businesses and help them achieve their strategic outcomes and a lot of expertise that we can bring to the table to help them meet their goals.
And what got us to this point was really a pivot that we went through, which was to exit some businesses that were not quite as strategic, such as press release distribution, webcast, web hosting. And over the last handful of years, we've had some small target acquisitions to help us focus on the boardroom, help us focus on areas such as ESG, and we bring together a suite of services that help get to these higher level outcomes that corporations are looking to achieve. So when we look at our path from an internal and external perspective, we really had, if you recall back to the Analyst Day 2 years ago, we brought together the listings and the corporate that time, the Corporate Solutions business. And we have a unified team. It's focused.
It's aligned. Aligned. This mattered a lot internally as we thought about how we restructure ourselves and how we deliver to clients. But more importantly, as clients look at us and how they want to work with us, we now have this all under one umbrella delivering these solutions to clients. So what is the results been and what are some of the key metrics?
I think I just obviously highlight here return to growth. So the previous 3 year period before last Analyst Day, these businesses returned by 1% annual CAGR and now we've returned to about a 4% growth rate. So I think there's a lot of opportunity we have to get here 2 years in our world is feels like a lifetime, but it's pretty short when you think about bringing together these two business units and how we can deliver for clients. So we're very excited what lies ahead for us. So we do believe we have clear priorities to continue our growth, our growth crack.
And I'm going to go through each one of those right now. We love this listing cycle story, lifecycle story with our listed clients. We have a path we believe to continue our market share gains. When we look at the IR and the Board and ESG businesses, there's lots of opportunity to reach new markets and grow our wallet share within the 8,500 client base. And then we've been nimble enough when new opportunities come across such as ESG to really capitalize on that.
So now I'll go through these in a bit more detail. Yes, some work out here. Okay. So, look at the listing business for just a moment. So, one area I mentioned last Analyst Day, we were achieving about a 15% win rate with the largest IPO to go to market.
Today, that's 50% and growing. On the switches, we've been ramping up. So every 3 year period, we're showing here from almost $300,000,000,000 of switches, dollars 500,000,000,000 $600,000,000,000 These larger companies today are now coming to NASDAQ. And the benefit of that to us is really twofold. One, we're getting a larger revenue per client now with these larger listings.
And with the growing listing base, we have a lot more opportunity to make sure they're aware of all of our services that we do offer today, so growing that wallet share. So across the IR business, really a 3 IR and ESG, really a 3 pillar approach here. We have spent a lot of time on focusing on the products. So this first one on really retaining and expanding the base has to come with product excellence and we're repositioning our client success team inside NASDAQ. And that's that under one umbrella going to clients with a unified solution.
The 8,500 clients, lots of opportunity. We're tracking very closely now how many products they take from us and our ability to expand with inside that client base is significant. And then we think about new capabilities, I will talk about ESG in a moment. We've also introduced new services as the move in corporates to work directly with the buy side, the opportunities around advanced targeting, we brought new solutions to the marketplace, which we'll continue to do. So ESG, we're going to kick it off with a quick video.
The world is changing. And at NASDAQ, we're leading the way with environmental, social and governance initiatives. You have ESG program goals and we can help you achieve them by delivering the technology, data and advisory services you need. As a company committed to sustainable business practices and a leader in navigating the ESG landscape, we stand ready to serve as your trusted advisor, your advocate and your software and analytics provider. Impact, social sentiment, employee culture and governance practices.
Shareholders are taking notice. Customer demands and employee expectations are evolving and investor focus is shifting to companies at the forefront of ESG, companies that are driving value by attracting long term capital, new customers and top talent. NASDAQ is prepared to help you build your ESG program, collect, manage and disseminate your ESG data, manage and strengthen your corporate governance, facilitate boardroom collaboration, identify, prioritize and engage your stakeholders, get recognized by investors for your ESG the complexities of this new stakeholder focused economy to establish, strengthen, govern and share your ESG narrative with the world. The change is here and so are we. NASDAQ, rewrite tomorrow.
So next year, I'll start my 20th year at NASDAQ. And I love all the businesses. I love our listing business. I love the IR business. Really have never had such excitement around a new practice under ESG.
I cannot my team and I can't get out of meetings without talking about this topic. As one of those you've heard my other colleagues talk about when clients come to you and ask you to help, you feel like you have a great opportunity. And that's a bit where we are with ESG. So this slide here comes to you over 100 and 100 of meetings that we've had on ESG over the last 4 or 5 years. And we've started to finally develop products to help really deliver for our clients.
So what we know about the U. S. Landscape is that clients are many clients are different stages on the journey here. Some have been at this for 10, 15 years, some are just starting today. And why they look to NASDAQ is we have we're a public company ourselves, we're on this journey.
We have unique heritage with the Nordic markets. They trust us today to deliver these services around Investor Relations, around governance. So they want to know how we can help here. And we have invested. So we brought in some unique outside talent through some acquisitions, but we've also developed a unique base inside NASDAQ to help clients really succeed here.
So when we think a bit about what we are doing today and where we can go with this, we start with a foundation around ESG advisory, whether you're building or expanding your program. We have tools to help them think about improving their board effectiveness and how they're thinking about things like assessments, etcetera, through that through our CB acquisition. And then One Report is a fantastic new opportunity where the complexity around corporates today where they're reporting to all the different agencies to the buy side, which is really evolving. This tool allows you to publish once and distribute to many. So across the landscape, when we go sit with the sustainability officer, CEO, IRO, they're all asking about this topic.
And we have some unique expertise to really help them deliver on this. And the size of the market, we believe is very large. Today with our own current products around $500,000,000 we believe is the opportunity. Today, we're at a very small base, so lots of opportunity to grow here. The $5,000,000,000 is through a combination of studies, but that'd be really getting the whole NASDAQ flywheel going.
So you heard Lauren talk about her approach on the investor side, we combine this together and thinking about what's going on corporates, investors, the market under ESG is extremely large and growing. So today we're servicing 300 clients in some form or aspect. The acquisition we have done are definitely over performing our expectations. This is in light of doing them during COVID. So I think we look at this space, this is something you're going to hear a lot more about from our group in the coming months years.
So we're as we think through, we all again have our favorite slides. I think we look at this one to say we love the fact we're going to continue on our 3% to 5% growth rate. The core businesses are performing very, very well. And then we'll put out there an internal marker today of about a $50,000,000 business in ESG by 2025. But again, it's early days there.
So we're looking at a lot of opportunity and we're thrilled about it. So today, I think we have a really terrific story. We tell a great life cycle story. The results are showing that clients are understanding what we bring to the table. The deep relationships we're creating, the service we're offering are world class.
And as we have find new opportunities to catalyze more growth for our clients in areas like ESG, we can deliver for them and really put together some unique capabilities. So thanks very much. Appreciate it. I think I invite up Tal Cohen and Bjorn Sibran of our market service business. Thanks.
Thank you, Nelson. I'm Tal Cohen, Executive Vice President of North American Markets. Bjorn Siblin is going to be joining me virtually in just a moment. Let's get started. I'll start by providing an overview of our business.
Market services encompasses our transaction and trade management services businesses in North America and in Europe. And as you can see, we have well diversified revenue streams across equities, derivatives, FIC and trade management services. On the slide, we also highlight the strong operating margins we generate and the markets in which we hold the leadership position. ARR is predominantly made up of our Trade Management Services business. Okay.
So here are the topics I'm going to take us through today. And I'm going to start by talking about our role within NASDAQ and our position in the marketplace. Market services is a foundational business and we're a key contributor to the long term success and growth of NASDAQ's other business units. How do we do it? We do so by generating strong operating results and then can fund key strategic initiatives across the entire franchise.
Our robust technology in high performing markets really solidify our position as a best in class market operator, which is a solid proof point for our Market Tech business. Bank and broker clients often cite that as a key reason for their trust in Nasdaq as a technology provider. And when it comes to investors and issuers, our client focused approach to product development enables us to enhance the trading experience for investors and importantly demonstrate the quality of our markets in Nasdaq's corporate clients. Let's turn to where we operate our markets.
There we go.
We operate 28 markets across a broad set of asset classes in North America and in Europe. And in many instances, asset class. So how do we do this? Our leadership is built on 5 key pillars of comprehensive and complementary capabilities that enable us to capitalize on secular trends and fuel future growth. If you look at the 2nd box, our best in class technology platform combined with our growing ESG capabilities allow us not only to serve today's customers, but future customers.
And of course, the growing popularity and relevancy of our proprietary indices, the NASDAQ 100, which you've heard a lot about and OMX S30, helps set us apart from the competition. So let's talk about how these capabilities translate into resilient operating results. There we go. Irrespective of market conditions, we're able to generate strong operating results, as you can see here. That's in large part because of our ability to run markets cost effectively and efficiently.
And if you look at 2020, our year to date results there, it really serves to highlight the operating leverage we enjoy in our business during volatile times. Internally, within NASDAQ, we like to say market services is a strong business during normal times and a really great business during volatile times. I'll now turn to how we've developed the complete marketplace complex and share with you how we plan to enhance and grow our business. Given ever changing customer needs and shifts in secular trends, we take a holistic approach to how we compete and win. As you can see, our value proposition cuts across 5 dimensions.
I'll touch on the first and third as I haven't focused on just yet. In the first, we take advantage of the fact that we operate 3 U. S. Exchanges in equities and 6 U. S.
Options exchanges. That allows us to offer differentiated pricing and future mix across and amongst those exchanges. We can also offer across asset class pricing to members on the same options and equities medallion. That increases the value and the relevancy of each of our markets. And we cultivate superior market quality as a function and really as a consequence of our systems performance and the broad pricing and product mix we're able to offer.
So then the question becomes, how do we sustain this position and grow? We will do so by focusing on the following 3 strategic priorities to catalyze that growth. I'm now going to move on to the 1st strategic priority. We leverage NASDAQ's financial framework or NFF, which you've heard a lot about today, to advance the market ecosystem of the future. I'll share some of the benefits that we accrue, what we've accomplished to date and the roadmap ahead.
NFF places us onto a common technology platform, which really increases our scale, enables us to lower the total cost of operating each of those markets over time. It also enables us to implement enhancements more quickly and accelerate the pace of innovation as it's built on a microservices The first market that we moved on to NFF was NASDAQ fixed income in late 2018. More recently, this September, we moved our 1st U. S. Options market, BX, onto NFF in September.
And that was a major milestone. It went smoothly and it was seamless from a customer perspective and really gave us the confidence to move forward. So looking into 2021, we're going to migrate our 1st Nordics derivative market on to NFF. And longer term, the goal is to migrate all 9 of our derivative markets, 6 in the U. S, 3 in Europe onto NFF.
And that puts us on a pace to migrate 1 to 2 markets a year. NFS is also an enabler for us to go to the cloud and move into the cloud. And we acknowledge this is going to be a multiyear journey. So we started to work closely with potential cloud partners to address questions that we may have on performance or regulatory matters, but just as important to ask questions about how we're going to unlock key client benefits such as increased customer choice and greater flexibility. And that takes me to our 2nd strategic priority.
And I'm really excited about these initiatives because they underscore the growth potential in our business. I'm going to handle the first two and then I'm going to hand off to Bjorn for the 3rd. In the first, we're looking to advance the execution capabilities we offer the buy side either by building unique products like NELO, the midpoint extended life order or by partnering with and investing in innovative new market players such as Pure Stream, an ATS that's due to launch in 2021, which we're a co lead investor in and providing technology to and we're really excited about that. With now the NASDAQ 100 becoming one of the most relevant and popular indices for both retail and institutional investors, we have a great opportunity to expand our proprietary product franchise in options. And we're doing so by introducing a new volatility index by the name of VoloQ.
We recently launched a VoloQ futures contract in partnership with CME this past October and it's going well. And we have plans to launch the VolQ options contract on our own markets in the first half of twenty twenty one. And now, I'm going to do the virtual hand off to Bjorn.
Thanks, Tal. I'm joining live from Stockholm. It's been a beautiful day here in Stockholm. Todd talked about strengthening our leading market position. I will also cover that, but just from a European point of view.
In Europe, we have many ways to strengthen our leading market position. I look at this as we can grow in 2 ways. We can expand our product and services towards our existing customer base in the Nordics. What we launched last year, microwave services, is a great example. Microwave service gives faster and easier access mainly for the London community when they trade our Nordic markets.
This is a good example of how we have expanded our offering towards our existing base when they trade the Nordic markets. Another way for us to expand is expand in targeted areas into Europe. That could be offerings around equities, equity derivatives, power trading, etcetera. A good example is large block scale services for equity. We have a very strong market share on Nordic trading, but we do even better around large blocks and trading in the Nordics.
And we can take that large and scale block offering from the Nordics into Europe. We have opportunities to offering that large scale block services not only on Nordic equities, but also on a later stage on European equities. This is a good example of how we potentially can expand our offering into Europe in targeted areas. Now let me turn to our 3rd priority, ESG and sustainability. I love to talk about ESG.
Brings a lot of opportunities. It's incredibly important to many of our clients and to NASDAQ, and ESG will stay high on the agenda in the future. Some of the ESG activities are still at a very early stage for us, but some of them we have been active on for a longer time. Adena and Nelson mentioned our ambitions to be a key partner for corporates around ESG, advising, helping corporates, communicating and displaying the ESG effort. Another ESG opportunity is around what we do towards the investor landscape, and this is what you see on this slide.
Green bond listing is a good example and let me spend a little bit time on a couple of examples. Green bonds listings, we listed the 1st green bonds in Sweden back in 2015 and we were one of the 1st exchanging listing green bonds in Europe. We have built a very, very strong position around green bond listings and we have now more than 200 bonds this with a loss. We have a strong position and our ambition is to be one of the leading exchanges around green bond listings. It benefits our issuers and it benefits the investor community.
Another part that I'm very proud about around what we do around ESG is the product we launched last year, NASDAQ's Global Sustain Bond Network. The idea concept here is to build the network, the platform where it's easy to get data around sustainable bond and create transparency for the investor community. We have now more than 4,000 bonds on our platform and we launched it last year, so we are very happy with where we are. We have more than 70 issues around the globe using our platform. The ambition here is clear.
We want to be the leading network platform around sustainable bonds and creating data and transparency for the investor community. Let me turn to next slide. So looking 5 years ahead, the patient for market service is to continue to be preeminent market operator and a clear market leader. We have been leading a leading market operator for many years and will continue to be that for the future years. Tal and I and our team plan and expect to execute on following in the 5 years ahead.
Number 1, to maintain our leading position in key markets and market segments. That is U. S. Equities, it is U. S.
Options, it is Nordic Equities and Nordic Derivatives. Number 2, migrate NASDAQ derivative markets by 2025. It shows our leadership around technology, as Thor talked about and Lars talked about, but it also benefits our customers. And think about it, it will be cheaper and easier for our customers to access our derivative markets if they have connected to our derivative market in the U. S, it will be so much easier to connect in European markets because we are running on the same tech stack, the same platform, it's easier.
And finally, of course, from a NASDAQ point of view, for us to be on the same platform for our derivative markets in U. S. And Europe, it will create scalability and efficiency, but of course, make it easier and cheaper for us to run and operate our derivative markets. Thirdly and finally, the goal for 2025, we expect to have 5% to 8% of the revenue that will come from our new trading offerings and products. To put a little bit flavor around that revenue goal, let me mention a couple of examples.
We have in the past been great launching new trading offerings and products within market services. An example is a recent example, we launched mini futures on OMX S30, that is the leading index in Sweden, earlier this year, and we expanded our footprint by offering Norwegian derivative trading to our investor community and trading community. This is just a couple of examples of the new products and services that we have launched and we have similar examples for our U. S. Market.
Let me turn to the last slide. In summary, you have heard about different opportunities from Tal and I. It is clear that we will continue to enhance our strong position as preeminent market operator, but let me highlight 3 things. Number 1, market services plays a foundational role for NASDAQ, supporting NASDAQ's overall strategy. Our very strong position in U.
S. And in the Nordics supports our Listing business, it supports our Market Technology business, and it supports our data and index business. Number 2, we can and will continue to strengthen our equity franchise with innovative solutions and new technology. Our move to NASDAQ Financial Framework for our derivatives markets is a very good example. And third and finally, we have significant opportunities around ESG to develop a marketplace for sustainable investment and funding.
And with that, I will now open up for questions.
Great. Let me
ask Nelson to return to the stage. And so we're going to start a Q and A session on both the Corporate Platforms and Market Services business. Let me start off first with Jeremy Campbell, Barclays.
So I think one of the challenges for ESG is that there's a lot of noise, either corporates don't know how to navigate it or you have many different scoring systems that yield different results for the same type of company. I know you guys spoke a little bit about helping corporate navigate. I'm wondering if you can give us any sense of what the competition looks like there. And then 2, there's opportunity to help cut through that noise and find a signal from an investor base as well?
Yes. Let me just repeat the question for our virtual participants. The question was on the corporate needs for ESG, what opportunities we might have to find signals and information and other ways to kind of add to the offerings over time?
Yes. So, at NASDAQ, we have declared kind of the corporates as our North Star. How do we help them navigate this? As you said, it's the complexity is not getting smaller, it's actually getting larger for corporates. So we do feel quite frankly that is the opportunity for us is to help them think through that.
And within that world, they're really most of the competitors, I'd say, are kind of niche competitors. There's no one has a very scaled large business there. So that's where we look at that and say these clients can trust us. We've built expertise. It's not something that's happened overnight.
This has been a 3 year kind of journey to get to this point. So and then clients are asking us for it. So that's kind of the base where we feel the corporates. We have that amazing opportunity that does transpire into what Bjorn has talked about. And ultimately what Lauren is talking about too is she's got the investor side.
So as the investments going on and asking a lot of the investor managers what is their what they're looking for, what's their mandate. The providers are saying here is how we operate. Bring those worlds together, that's kind of the nirvana for corporates to be able to say, here's what the investors are looking for, here's what we do, making sure the information is not being scraped, but actually delivered as we think it should be delivered. And I think that's a quite a large journey to get there. As far as finding signals, that's probably a little better question for Lauren to address.
But clearly talk about this, one of the things we're doing today at NASDAQ is working very, very closely as business units. So the ESG focus, although it may be on corporates today, we get together regularly from Lawrence Group, the Orange Group, the brand team to make sure we can capitalize on this.
But I
don't know if you want to address the sales question. Is that something?
Yes, I think we'll why don't we ask Tal and to see if there's any elements that they want to add to that question?
So I'm happy to start. So first of all, I think DSD agenda have been high underwriter for quite many years in the Nordics. Some would even argue that the Nordics are the leading countries around ESGs. We launched our leading index, Nestor GOMEX is 30, ESG combined a couple of years ago with clear customer demand. So the discussion on ESG and the need from both corporate and investor is high on the agenda.
We have a couple of initiatives. I mentioned the green bond listing is which is something that corporates wants to list green bonds with us. So we have quite many initiatives that is driven sometimes by the corporate, sometimes by the Innovista community and this is something we coordinate across NASDAQ.
Great. I'm going to take a question, an online question right now from Rich Repetto. Tal, you've certainly been in the sweet spot in regards to elevated U. S. Equity and U.
S. Options volumes in 2020. Do you see these volumes as sustainable? And do you think the businesses are and also can you answer expound a little bit about how these businesses are foundational to the broader Nasdaq strategy?
Sure. I'm going to unpack that because there's a lot there. So, in terms of just overall volumes in the marketplace, we've all seen the composition in the market where retail has come in and been a large part of the increase. And so, just let me share our thoughts on retail and then I'll move on to the greater market. So, it's hard to tell if retail is here to stay.
But what we have gleaned from the Robinhoods and the others in the world is that it's mostly new investors and younger investors. And so our focus is on investor education and promoting policies around investor protection. And if we do that, then perhaps we can ensure that we engender the longevity of these investors. And then I And then I'll transition to options for a second because options is even seeing more growth than equities this year. It's up 100%, a lot of that 50%, but 100% on the retail side.
And so a lot of that people will look at and say, well, what's the reason for that? Is that structural or cyclical? I'll name just 1 or 2 structural items that I think are really interesting. A lot of names recently and will continue to do so came out of what we call the non penny program into the penny program. And when that happened, we've tightened spreads and increased liquidity and names like Zoom and others that are frequently traded and highly traded.
Once you squeeze that spread, you've engendered greater liquidity. So those types of movements in the market, I think, are going to be structural. And I also think the investor education that we're seeing from the retail brokers with the retail community, because in this volatility in this environment, it's important to have tools where you can hedge risk and manage risk. And that's what options allow you to do. So I think as long as we see volatility and uncertainty in the markets, that will sustain in options.
And then the second part of the question
Yes, the next part was expand a little bit about and please, Bjorn, feel free to add to this as well, how Nasdaq's market services plays into the broader Nasdaq strategy?
Yes, absolutely. So, we're excited about that because we feel like we're right in the engine room, right in the middle of everything that happens. You noted in my remarks that we serve as a proof point for market technology. We share a lot of the same customers. So I'll work closely with like Lars and his team to make introductions and talk to customers from a market tech perspective.
Of course, the market data that goes into Lauren's business comes off of our business. So she's very interested in the market quality that I'm going to generate in my business. So I'm all about execution quality, market quality, then that then adds the value to our market data business. And of course, Nelson and I work really closely together. Even in a pitch where he's talking to a prospect, he might bring myself or a member of my team to talk about what we're doing in the markets.
He might want me to talk about the open or the close. He might want to talk about how we engender the market share that we do in NASDAQ listed names where we're number 1. Those are all really important items where I'm teaming up with all of my peers almost on a daily basis around how we run our business. And then of course, Bjorn and I, if we're not talking every day about our businesses, it's every other day.
Yes. So let me just add a couple of comments to what Tal said. We are also in the center of the Nordic markets running the exchanges in the Nordics. And we have this year so far welcomed more than 50 new companies to NASDAQ in the Nordics. We are the leading SME exchange actually in Europe.
So we have a strong position. A key part of key reason for that is also that we have such a strong liquidity in our order books and we have a market share on around 77% lit and auction volume. That is all times high within the last 2 3 years. So a very strong position. We have actually gained market share during the last couple of years.
So we have a very strong position. And just one reflection around the retail participation. The retail participation have all the time been relatively strong, very strong in Sweden and in the Nordic countries. So we have also benefited from that. And when we see so many companies joining us, being listed with us, a big part of that trading in the SMEs is coming from retail.
So we also benefit from the momentum of the retail, but it has been relatively strong for quite a long time in the Nordics.
Okay, great. Let me take next question here. Sal?
Yes. I lost off with that, Martin. Are there
a few opportunities, threats, digital assets and cryptocurrencies? Are you attacking business? And
I'm just going to repeat the question. The
So, I'll start by answering that. So, we think about it in 2 ways. 1, as a provider of technology and Lars and his teams think about the surveillance technology, the matching engine technology, the full suite of technology, we can offer effectively a NASA class that's trying to mature. That's what we have here. We have an asset class that's trying to mature, find its footing, and so we can provide technology and more integrity into those markets.
And then the second would be on my side, where from a transaction perspective, we're thinking about our North Star and new markets that we might want to open up. And so what goes into that for us is really a framework of evaluating, is the market mature enough? Do we want to put our brand in front of this? How do we think of digital assets? Do we think about it as a platform or an asset class?
And if so, what part of this ecosystem do we think we can supercharge? Now, we tried a number of months ago with the SEC to put forth a futures product that we thought on Bitcoin. And so we're actively looking at different products, actively looking at how to build a complex ecosystem because that's what you need to kind of supercharge that as an asset class because it's still in its early days. So we're thinking about it, we're evaluating it. And then finally, we have taken minority investments in platforms, so digital asset platforms.
That's the third way that we've been involved, through our Marketech business, our venture business and then considering new products from the transaction business.
Great. I'm going to take a question from a virtual participant. Ken Hill from Loop Capital asked Nelson, you mentioned that a majority of your IR and ESG segment clients are listed on other exchanges or in the private markets. How would you compare these customers to customers that are NASDAQ listed? Do they use as many products as a NASDAQ listed company?
And if there is a difference, is there a specific opportunity there?
Yes, I would say that the NASDAQ clients are more of a natural entree for us. But as the brand has grown over the last 10 years that NASDAQ is actually in these businesses, Investor Relations, Governance, ESG, the opportunity outside of NASDAQ clients is growing at a pretty rapid pace. So the synergies I mentioned, we're kind of 2 years into this bringing the organizations together. So the cross selling opportunities, the educational opportunities, we're still, I'd say, in the early days there of the opportunity, but there's definitely the potential to grow outside of the NASDAQ traditional ecosystem.
Alex?
Yes. I actually have 2 topics. One is a follow-up to ESG. Given the, I guess, outcome final of the U. S.
Election, any views how that may change kind of the demand for some of the Eastern services? Maybe you can contrast how European clients today are consuming some of the new service for the corporate side and how that may change in the U. S? And then secondly, just on the market services side, can you give us an update on the trade management opportunities? I don't think you spoke a lot about that, but obviously, it takes stable business, hasn't grown much.
Any new initiatives to maybe accelerate that business again? And any threats you would outline to market businesses going away as I run it? So I'm
just going to repeat the questions here. First, Alex asked on the corporate front, do you think there's any implication from the recent U. S. Elections in terms of ESG demand by corporates in light of kind of differences of where the European market is today and where the U. S.
Corporate issuer is today?
Yes. I don't think the election, if it's a more progressive agenda, it certainly could catalyze a bit more growth. But this has been at least 3, 4 years in the U. S. Where clients are asking us this because their investors are asking them.
I think that's really a driver is the demand on the investor side and then also corporate's internal, it's not just to solve for the investors, but it's to solve for employees and customers as well. So I think clients are looking at this today and have looked at it for a handful of years about how they would move down this path regardless of what happens in an election cycle. And that is, as you suggest, Alex, comes from what we saw 10 years ago in your 50 years ago or Buurenseas as those clients have been further down that curve. So I think it's just a natural progression here in the U. S.
For but I don't think the election has a huge impact on it. And but I don't think the election has a huge impact on it.
And then for market services, a little bit about trade management services. How do you view that in the context of your business? And what are your expectations moving forward there?
Yes, it's a good question. So trade management services is has become a fairly mature business. And I'll just note the recent volatility in markets, we've actually seen an increase in consumption and uptake in service is just in the last 6 months. And then we incrementally offer new services from time to time as it warrants it. But what we're really focused on is the cloud and how the cloud takes a business like trade management services and we can disrupt ourselves and it enables us to offer new services, more flexibility and really democratize access.
And so what do I mean by that? Right now, trade management services is dominated by those that can, those that actually have the wherewithal to invest in that kind of infrastructure. What the cloud allows us to do is welcome new clients, smaller clients, newer clients that can't make that upfront investment. So, while we're seeing this business incrementally grow, it's a strong business and we have a center of gravity in Carteret as it stands right now because we not only offer when you think about Carteret, don't think about it as just individual markets. We offer 10, 11, 12 markets in the SIP right in Carteret.
So all of that access is required for that And that will incrementally grow. But given that center of gravity, we have this opportunity to reshape the landscape and invite new customers that we don't know or haven't met yet today. And that just allows us to be on the front foot and hopefully grow trade management services over the years to come.
Great. Let me see if there's any next questions here. I'm going to go to a virtual question here from Brian Bedell at Deutsche Bank. Tal, can you talk about your strategy to address new competition in U. S.
Equities, in particular, the members exchange? Their share remains very low today. But how do you view the trade off between pricing and market share moving forward? Yes.
I was going to see if I can bring up the slide that might aid us here. Yes. So let me just talk about the current environment, just to level set. So the current environment, U. S.
Equities is really competitive. We have 13 exchanges right now before 3 new entrants and 30 plus dark pools. So NASDAQ over the last 2 decades has been shaped by competition. And so new entrants, we're always concerned. We always take that seriously.
And we want to be on our game when we see new entrants. But it's important to realize that it is a fairly competitive landscape. I'll also say in terms of corollary, it's different than what you saw with BaaS and Direct Edge because if you remember in 2,006 and 2,007, effectively the market was a duopoly at that time. And then finally, the type of competition we're engaged in today is not just pricing, as I heard pricing come up and I'll address But with enhanced disclosure and transparency rules, best acts and execution quality are front and center. So we think about that a lot in addition to pricing.
Okay. So, then how do we compete? Because that's important. I noted the 5 dimensions in which we compete. And that in part is because I operate 3 U.
S. Equity exchanges where I can offer different pricing and different futures amongst that. So it gives me optionality. And on a pricing front, we iterate through or LTSC or NYC or Cboe, we're thinking about pricing and how to optimize between our capture and our market share. And we do that both in options and in equities.
And we're always looking for that right balance. So, we want to be fairly disciplined, but we don't want to give an inch when it comes to market share. And so, we'll be balanced, we'll be competitive. We feel like we have a best in class technology platform. We feel like we're really close to our customers.
We feel like the product that we're developing and putting into the marketplace addresses needs. And then lastly, I'm just going to turn this question around and say, we see 2 opportunities here. 1 is to grow the pie by going after the OTC part of the market, which is offering newer solutions, different solutions and growing the pie. And if MeMex or others are successful in bringing retail flow or more retail flow onto exchange, then perhaps we can earn our fair share. So we see the challenges, we recognize them, we understand we're ready to compete, but we also see opportunities in the near future with OTC and the opportunity for these markets to welcome new order flow.
Okay. We have time for one more question. If we don't have one in the room, I'm going to go to Shane.
Yes. Can I
ask, obviously, today and the moving of today and the moving of your IT businesses into SaaS modules, which is obviously about price and cost? Can you talk about cloud more generally and what it means for competition, maybe what it means for your ability to innovate, change the margin profile and do other things. And I'm not just talking about SaaS, but I'm talking about sort of cloud plus.
Yes. So I'm going to repeat the question. The question from Shane was on the benefits of cloud broadly, in particular in combination with our SaaS initiatives. How do you view the benefits in terms of innovation, efficiency? Where do you see the balance in those opportunities?
Yes. So I'll start, but I'll also invite maybe Lars and Brad to chime in. So because there's a broader initiative here. So once again, I think for us to adopt cloud is important for our market tech clients to see. So Lars and I are working together on NFF, and we want to make sure that we're advancing it because if we're able to operate our markets on the cloud, obviously, that's going to mean a lot for our Market Tech business.
So then what do I how do I think about cloud and what does it enable for our businesses? And I touched on this briefly, but when I think about cloud, it's a game changer where it democratizes access into our markets and offers a different kind of experience. But the question is how do we bridge that from where we are today, where we're the center of gravity in Carteret, Secaucus and Mala and how do we think about that in the competitive landscape. But what the cloud does allow me to do is welcome customers to tomorrow, which I might not be able to do with today's existing infrastructure. Let me give you one small example.
If you have a new proprietary trading firm looking to test strategies and understanding how those strategies work in the marketplace, what they'll typically do is they want to connect to the market that's cheapest, that's easiest to connect to and that can iterate quickly with them in terms of like what have we learned, how do we solve this, how do we move forward. Us being able to provide environments like that in the cloud where we can spin things up really quickly and do it at a really low fixed cost allows us to invite new market participants, which is good for the overall market, which is good for the overall market, because now we're allowing more participants to engage without that high fixed cost. So that's a game changer, I think, because a lot of firms today look at U. S. Equities and they make a decision on where they want to go.
They say, should I go into the U. S, Canada, Europe or Asia? Where should I start? Well, if the fixed costs are really high, you take that into consideration. So if we can bring that down, offer the opportunity to iterate quickly, we can actually, I think, grow the market here in the U.
S. Brad, do you want to?
Yes. Brad Peterson, I'm CTO and CIO at NASDAQ. And the other thing that is really interesting about our technology business and our firm together is we have a global operations capability. So we are global. We run markets.
And most technology companies don't have that. When they go from an enterprise software solution to a SaaS, they have to learn how to operate. So we have this ability and we've gone as you heard from a domestic firm to being global. So when you think about all of our customers struggling with running critical infrastructure in their countries, they often don't have scale. So we've seen in the U.
S, the dark pools or a lot of our customers have actually come to us, some of the most demanding markets and what we call our execution platform, we now run it for our customers. So we're doing that today in the Carteret data center or in Secaucus. But you look at that, you say the next generation is and for most of our new Market Tech customers, we're running their platform in the cloud. So they start in the cloud, most fintech companies start in the cloud. So we have both that experience of critical operations, 7x24 coverage.
And then the last one is we've been running a lot of our surrounding systems in the cloud for years. So you hear all the pricing analysis that Tal does, that's done out of our cloud environment, our revenue management system. That when all the markets picked up in March, February March, we were able to burst that, that's all cloud based. And we ingested across all of our markets that information, those messages, and we were able to process that without adding huge capacity and then you can over time scale that back if we do go into a lower volume time. So we have the cloud experience, we have the critical operations experience and a lot of our customers are saying, it's really hard to find good infrastructure people.
So we see that trend coming in our direction.
Okay, great. I think we're going to end the Q and A section here. As a reminder, we now have a second break and we're going to restart the Investor Day presentation at 11:10 on the dot. So look forward to continuing with you then. I want to thank Bjorn and Nelson and Thao.
Thank you.
This morning, early before my family, from this dream she was trying to show me how her life could move from the darkness. She said to get better. So I put a bowler where I should have put a helmet and I crashed
Okay. I want to welcome everyone back to our Investor Day. Next, we're going to have our CFO, Michael Ptasznik and our next CFO, Ann Dennison, go through our financial and capital items. And then after they're done, we're going to bring both of our CFOs and Adena back to the stage and we're going to have a Q and A session for the CEO and CFO aspects of our business. All right.
Thank you. Michael?
Thanks very much, Ed, and good morning, everybody. As Ed just said, I am Michael Potaszek, CFO of NASDAQ, at least I will be for the next three and a half months. Announced that after 30 plus years in business, plus also 19 as CFO of an exchange group that I will be retiring at the end of February. So just to put perspective, when I started my career during the Reagan administration, I had a full head of hair and I was 6 foot 3 at the time. So I figured I'd better get out before it's too late.
So no, it's been wonderful. And actually what makes it easier to be able to announce my retirement is that Ann Dennison will be taking on the position. Ann and I have worked together for the last four and a half years. And it's been a real pleasure working with Ann. I've taken full credit for everything that she's done.
And it's about time that she gets to take some of that credit herself. So she's going to be great. I'm very excited for her. I'm very excited for management team and for all of NASDAQ. I also just want to take a moment also to thank Ed and Neil for the great job that they did in pulling together today's presentation and organizing us all through a virtual way.
Ed and I joke around a lot, but it is I'm very lucky that I've had, I think, the one of the best, if not the best IR team around. It's been a real pleasure working with these guys. They do bring not just work in communicating with you guys, with the investors, but they also bring back your perspectives into all of our discussions internally. And so it's really fantastic to be able to work with such a great team. And so thank you for that.
And did I read that appropriately? Okay, good. And I just also want to add one last shout out to the great MarketSite team who and the AV team who's put on the presentation today and been able to do this again in this virtual world and physical and virtual world and doing it in a way. And so and yes, guys, I will increase the budget so you can buy that extra microphone that you've been asking for. And so well played on your part.
Okay, with that, we're going to jump into the presentation. So Anne and I are actually going to split this. I'm going to take a look back at our strong performance model, how we leverage our and how we leverage our durable operating model to drive further growth. And Anne is going to look forward at our future performance objectives and our capital allocation strategy and the valuation opportunities that we see ahead of us. We're going to look back at the outlooks that we set at last Investor Day.
You can see that we have either met or exceeded those key performance targets that we set. We've achieved 8% growth versus our target of 5% to 7% for what was our non trading or now our solutions segments. And in addition to that, our expenses came in around 4%. Now we did set a target. We said it was approximately 3%, but we did say at the time that that could fluctuate up or down depending on certain market conditions and also depending on their growth.
So given the fact that we came in at a higher growth target, we feel that that 4% is very much in line with our targets. And importantly, we've also improved our enterprise ROIC. We're up 200 basis points from 2017 and we're now at 11 percent. We've also been very focused on taking action to enhance our ESG performance. So this is us as a listed issuer in addition to the initiatives that you heard about earlier today from Nelson and Bjorn and Lorne.
So we are very focused on all three elements, environmental, social and governance. And it's important to us not because it's just the right thing to do, but it's better for us because it enhances our ability to serve our clients better, to attract talent to the organization, especially the new generations coming in, to reduce operational risk as well as to expand our shareholder base. And we all know that ESG is becoming a bigger, bigger factor with investors as part of their criteria. We want to make sure that we're seen as one of the leading organizations with respect to our own practices. And what's nice is that you can see on the right hand side of this slide that you are now we are now getting some of that recognition.
I might buy you guys a clicker also. Okay. So the results of all those efforts has been to generate strong financial performance. Looking back to 2016 when Adena came on as CEO at the end of 'sixteen, beginning of 'seventeen, we have achieved 5% revenue growth across revenue CAGR across all of our businesses. Combine that with our cost discipline and the scalability in the organization, we've been able to achieve a 500 basis point margin operating margin improvement and that all adds up to a 14% CAGR in non GAAP EPS over that period.
Ultimately, this has resulted in delivering on our most important financial objective, double digit total shareholder return. So the strong financial performance combined with the early execution of the strategic pivot moving us more into the businesses such as Fintech and Information Business Services, has resulted in a 22% TSR, almost double our U. S. Peers and the S and P 500. Now, we're going to review our operating model.
Okay. We look to leverage the cash generation from our durable and resilient operating model to drive further growth. Model has 4 components and I'm going to walk you through those on the following slides. The first component, we have an excellent base business, very resilient across different market conditions. As Adena mentioned, 73% of our revenue comes from non trading is high recurring non trading revenue.
We also benefit during those periods of uncertainty, not that we've had any of those lately. And with the additional revenue that we received from the trading side of the business and the transactional side. And so that really balances out those periods where there may be some slowdowns in certain aspects, we get the benefit from those uncertain times on the transactional side. The result of all that can be seen on the right hand side of the graph where we have less EBITDA volatility relative to most of our peers. The second component that resiliency results in strong and sustainable cash generation.
Over the last 12 months, we have about $1,000,000,000 we've generated about $1,000,000,000 in free cash flow and that represents a 13% CAGR over the last 4 years. What's really important is how we use that cash. So number 1, it's enabled us to invest almost $600,000,000 in organic investments, which is our number one priority. Number 2, it's helped fund $1,200,000,000 in acquisitions in higher growth businesses. And the rest of that funding came from, as Adena said, the sale of about $500,000,000 worth of businesses in lower growth, lower margin, less strategic assets.
In addition, we've been able through that period to be able to return $2,100,000,000 to shareholders through dividends and buybacks and we've been able to reduce our debt by about $300,000,000 putting us in a stronger balance sheet position which Ann will discuss in just a few moments. So this brings us to the 3rd component, our capital allocation process. Along with the strategic pivot, we've instilled an annual discipline of reviewing all of our businesses and how we should prioritize the allocation of our capital and our resources. So we're no longer just spreading peanut butter. And the way we're looking at our assets, we are making sure that we invest in those that have the highest growth and return opportunities.
And we are putting our money behind that those decisions. And so it makes it's common sense, but a lot of organizations don't do it and those that do, do end up with higher shareholder return. The result of that, as you can see here, is that we've approximately doubled the percentage of our investment in our higher growth platforms going from roughly 30% of the total organic spend to 60%. This brings us to our 4th component, disciplined investing, focusing on delivering shareholder returns. So this applies organically as we just looked at as well as inorganically through our acquisitions which have primarily been in Marketech and Investment Intelligence.
In addition, it also applies to our venture investing program, where we have invested with $63,000,000 in leading edge technologies and capabilities, which is really we see it as an extension of our R and D program. Overall, the focus has been on investments that are very much in line with the secular growth trends that Adena talked about earlier in the presentation. This includes areas like FinCrime, Private Equity, The results have been to enhance our growth, drive scale and position us for further valuation upside. With that, I'll turn it over to Ann to walk you through the rest of the presentation.
Another weird thing in the context of COVID, cleaning the clicker in between. Michael is a hard act to follow both from a presentation perspective, but also in the CFO role. I am excited to be part of this amazing capital strategy and performance objectives. So, let's kick it off with discussion on capital strategy and performance objectives. So I'm going to start with discussion on revenues.
We continue to target very strong organic growth across our solution segments. The targets here on the left hand side of this slide should be familiar. These are consistent with what we've shared in the past, with the one exception that we've raised the top end of the range for investment intelligence to 8% from 7%. Overall, for our solutions segments in the aggregate, we're targeting 5% to 7% growth over the medium term. And we also have the ambition of raising the contribution part of our business model, as we see this as an opportunity to drive scalability and efficiency and to better serve our clients' needs.
Okay. So with that, now let's take the revenue outlook and put that into the broader context of what we want to deliver. We are managing our business to maximize the impact of revenue growth by maintaining strong operating leverage and reinvesting capital to deliver outstanding returns. We know from experience that if we hit the targets we've set for ourselves in the solution segments, revenues of 5% to 7% and we manage expenses and we reinvest in the business, we have the best opportunity to drive for our very important performance objective of double digit TSR for our shareholders. I want to note here the change in the way we're describing expense targets.
So, we've changed our description to an average annual growth between 2% 4%. We used to say 3% on average with variations above and below depending on revenues. I want to stress that this is not a change to philosophy or how we think about expenses. This is purely a change in description to better align with how we think about the relationship between revenue growth and expense growth. So now let's switch over and talk about the balance sheet.
We are in an incredibly strong place from a balance sheet perspective. And this position has served us well, especially in the unique circumstances of 2020. And as we look ahead, we are well positioned to make both inorganic and organic investments to drive our ambitions forward. Our weighted average cost of debt at 2.5% is the lowest in our history. And we've taken steps in the aggregate to reduce to extend, excuse me, the maturity schedule of our borrowings.
And also thirdly, within the context of maintaining an investment grade rating, we have high capacity to utilize debt for
investment. So, with
that as a backdrop, let's talk about capital strategy. Our business model supports strong capital generation and our capital deployment strategy is critical to executing and accelerating our ambitions. And we want to be transparent about the 4 elements of our plan. So in the first element, we want to invest to drive growth and shareholder return. As Adena discussed earlier, we've evolved our criteria for evaluating inorganic investments.
So now we're targeting a return greater than weighted average cost of capital over the medium to long term. I think it's worth noting that when we originally set our targets back in 2018, the 10 year treasuries were about 200 bps higher. And this evolution really gives us the flexibility to consider highly strategic investments that will have a long term returns. We remain focused on ROIC, targeting greater than 10% for organic investments and for enterprise ROIC over the medium to long term. Then for the other elements of the plan, we plan to continue to grow dividends as earnings and cash flow grow.
We plan to execute our share buyback program to principally offset dilution and we plan to maintain our issuer our investment grade issuer status. Now, let's switch and talk about what we see as a valuation opportunity in front of us. So the metrics you see on this page, we believe these are valuation drivers and that they're telling us we're continuing to head in the right direction. And we are focused on them. Over the long term, we believe that the best way for us to drive value is to continue to deliver on key metrics in 3 ways.
1, by continuing to drive strong top line growth 2, by increasing our targets of both SaaS and ARR as part of our business model and 3, by continuing to drive strong shareholder returns. So, what does that mean for value or what do we see as the opportunity? As we continue to deliver strong performance and accelerate our strategy, we see opportunity to drive value. First off, starting on the right hand side of the page, on a free cash flow yield basis, we are less expensive than the average company in the S and P. And then if we move back over to the left, as we continue to execute, we see opportunity relative to our exchange peers as we're right in the middle of the pack.
And 3rd, as we continue to pivot the business towards our market technology and investment intelligence, and at the same time, the investment community sees the results that we're putting forward and the journey that we're on. We see further opportunity relative to the tech and info services sectors valuations. So to sum it up, we have a strong track record.
We have
a great operating model. We have a consistent capital allocation strategy and we're focused on driving the business forward with well aligned targets. And with that, I think we're going to move to Q and A.
So we're going to open up our final Q and A session with our finance and CEO teams. Let me go first to Jeremy Campbell from Barclays.
Hey, guys. Thanks for taking today.
Especially the update on capital
priorities and how you guys think about it. But, Dina, maybe just after unpacking everything we did today, as you kind of look at your offering and your strategic priorities going forward, sort of white space you'd like to fill in either from a buy versus fill scenario that we might look for next call it intermediate?
Yes. So I
think that there are oh, yes.
Thank you. I'm just going to repeat the question. Jeremy asked, understanding NASDAQ's evolution and what it does today, are there any particular white spaces that NASDAQ isn't in today that we're excited to move into either organically or through M and A?
Sure. Well, I think that there 1st of all, I would say that we do have a broad range of opportunities to continue what we've been doing for the last 3 years. For instance, the journey to the cloud, the journey in terms of continuing to broaden our market tech offerings and market tech clients, the continuation of our efforts across both traditional asset management and alternatives. But if I sort of point to 3 areas where we are really looking to lean in beyond what we do today, The first is in the anti FinCrime space, and I think you heard a lot about that today, because we're moving more into the AML KYC area beyond trade surveillance. And we are doing that at the demand of our clients.
And we're very excited. It's a huge opportunity. It's a big growth area. Our broker dealers are struggling every day to find ways to combat crime in that space. And the more we can provide technology as opposed to people to be able to solve those problems, we really do think that we are a trusted provider and we can win there.
I think the second is in broadening the workflow capabilities in the alternative asset management area. Lauren came from that space. As she mentioned, she had 20 years at Carlyle. I spent 3 years there. And we understand the challenges that our clients have.
And the fact that the space is maturing so fast, there's so much money going into it, but the technology is way behind. And there's I would say that there are providers in the space, but none of them are really the winning combination. So when we look at continuing to broaden out those workflows, we will as we do with Salovis, as we've been combining those 2 with combining that with eVestment, we'll continue to build that and also look for partnerships and potential acquisitions there. And then the third is ESG. I think ESG primarily really will be an organic approach because there's really no scale players that are serving the corporates today.
But we did make a very small acquisition in the OneReport system. And we've having a having a one place to put their reporting to be able to report it out to the multitude of rating agencies and investors. So, that is just the beginning. But we also will look for other opportunities potentially to expand in terms of how issuers issue corporate bonds and other ESG oriented products as well as of course in our index base. So, I'd say primarily organic, but the potential to find some small tuck ins that could be helpful.
I have a question from a virtual participant. Simon Klinch from Atlantic Equity says, the ROIC enterprise target that you're establishing of above 10%. How do you consider that target in the context of the improvement that you've done in recent years? How do you think about the trends in your business that support its development versus the impacts of other things that you're thinking about?
Sure. I think the first thing we would mention is some of the increase in ROIC over the last 3 years has been by divesting of some of those lower margin, lower growth businesses, which has then allowed us to allocate capital into the higher growth, higher margin businesses. And then it's catalyzed and doubled our growth rate, right? So to me, that reallocation of time, resources, frankly, technology skills, as well as capital has really allowed us to lean in, in areas that can drive higher ROIC. So, now we're at that 11%.
We want to at least to maintain that. So, we're trying to say, let's at least make sure we're always delivering our investors at least a 10% plus ROIC as we look at the next dollar that we're investing, the next dollar we're investing. If we continue to do this in a way, especially with the scalability of the SaaS delivery, over time, as we scale our SaaS products, we should be able to continue to accelerate that RIC. But we need to scale some of those efforts in Market Tech. We need to make sure also that we're never under investing in those products because we want them always to be growers for us.
So we balance out that scale with the investment. And that's why that rule of 40, particularly in Lars' business, but generally as we look at these SaaS oriented businesses, becomes kind of a marker for us to consider. And then we'll see how much further we can take it to continue to drive up our ROIC over time.
I have another question from a virtual participant. Ari Ghosh from Credit Suisse asks, when you think about the evolving acquisition criteria and the idea that you're allowing for some investments that take a little bit longer to hit ROIC targets. How should we think about the kind of tactical acquisitions, things that are more about cost synergies? And how should you think about that in terms of NASDAQ's evolution?
That it's an important distinction. So, I would say with tactical strategies where we can extract cost synergies, we should continue to be able to drive to that 10% ROIC over a reasonable period of time as we have been and as we've proven to be able to do with ISC and others. But as we look at the growth areas where we can lean in on our provider of SaaS services, we can become a bigger and more important partner to the industry in the areas particularly that I mentioned a few minutes ago. I think that we want to give ourselves more flexibility to be able to deliver a strong ROIC over a reasonable period of time, but also looking at it in the broader context of NASDAQ's overall return on invested capital as opposed to looking at each individual deal in terms of just giving us more ability to execute on those acquisition targets.
Let me see if there's additional questions in the room. All right. I'm going to go back to the virtual list of which there are many. Rich Repetto from Sandler O'Neill asks, as you've considered evolving the way you're looking at kind of next opportunities inorganically, how should we read the kind of changes if perhaps you don't find material acquisitions, how do you think about your leverage context absent large investments, etcetera?
Well, I think as Anne mentioned, we are at or maybe I'm not sure which of you. We are at a pretty low leverage ratio today as compared to where we've been over the last actually 15 years. So, we do have flexibility. I think that if we are not able to find acquisition targets that drive our strategy forward and deliver on the financial results that we're expecting, then we would look at some opportunistic capital returns to shareholders. But I would say also having maintaining that flexibility over the longer term, because maybe there are opportunities there right in front of us, but it might be there a year from now or 2 years from now.
We don't want to tap our leverage so much that we don't have the flexibility to execute on those at the time that they're available. But certainly, as we look at our strong cash flows, we would look to do some opportunistic returns. But I would have to say, our first and foremost interest and objective in leveraging our both our balance sheet and our cash flow is to drive investments. We are a growth company. We see a long runway of opportunity for us to continue to grow, both organically.
And we do see some white space. We've really identified areas of white space where we think if we lean in from a partnership perspective, investing in startups, as well as potentially some acquisitions over time, we can really unlock an enormous amount of opportunity for our shareholders to get a return.
Shane, question?
From
a business risk perspective, what do you see as being the big risks from a
a
So I'll just repeat the question. Shane asked, what kind of competitive risks do you think are most important and how do you think of those?
Yes. Well, you're right that we haven't really focused in on competition because we focus 1st of all, we focus first and foremost on our clients. So, if we're doing the right thing for our customers and we're serving them every day and we're well connected with them, they will take us a lot further than if we just look to the left and the right and look at our competition, because then you're only doing better than the guy next to you or gal next to you as opposed to really serving the long term needs of your customers. So, we tend to really hone in on the customer as our kind of first and foremost in developing and executing our strategy. Having said that, we know how to compete.
I mean, we have been in competitive markets, we've been in competitive spaces our entire lives. We were born as a competitor to the incumbent, right? So, that is in our DNA, where we know exactly what we need to do every single day, never to stand still and always to stay ahead of anyone who is there to challenge us. So, when we look at our constant competition in trading is there. Obviously, as Tal mentioned, there are growing players, but we also know that we're really well positioned in those competitive marketplaces because of the way we manage performance, price, client relationships, connectivity and all the other elements that really drive that business.
I think when it looks when it comes to our market technology business, we've really emerged as the premier platform provider to the industry, to market operators and now to broker dealers in the surveillance space and growing more and more into execution engines and other things. So we see a lot of niche smaller, but frankly not as scaled or not nearly as focused providers of technology to the industry. So, and I think that's why we win every single day there. I think when we look at our analytics business, there's I would say, eVestment actually has emerged again, it's 25 years of building a network effect. So we then get to attach the LOVEST to that network effect.
And we can continue to be that scale provider to of investment analytics to management community. But we now see a chance for us to grow and expand that because there aren't really no premier scale players that really own that market today in the alternative space. So, we are excited about that. And then, we will look at the corporates, gosh, as you know, we compete vigorously with our guys on the street for every listing, but we're winning 80% of the operating companies and at least 50% of the SPAC. So we do feel like we're really well positioned.
So I don't see I don't sit there and worry about competitive threats every day. I just know that we have to compete every day to win. Sure.
Yes. Just Shane is adding to his question. What do we think about regulatory risks as we stand here today?
Yes. I would say that, I never want to say never, but generally speaking, the regulatory environment can actually be a help to us. So for instance, when regulation increased in Europe around market manipulation, it obviously drove sales of our surveillance technologies. Also within our own markets, we're a highly regulated business. So putting more regulation on the industry in terms of behaviors and investor protections can actually be accrue to our benefit because our market model is built around having fairness, integrity, regulation.
However, there's always elements out there that you just don't know what might come around the corner. I don't see any areas of regulation around the corner that's going to fundamentally change our business or fundamentally change our success or our opportunities. But there's always like little things. We manage our relationship with the SEC very carefully. We manage our relationship with ESMA very carefully.
And so we're very proactive in making sure they understand the benefits of what we have to offer.
We're going to take a question from Kyle Voigt from KBW. When you first announced the strategic pivot, a large part of it including evaluating your collection of businesses, which eventually led to a few divestitures. As you look at your collection of assets today, are you still considering divesting assets in order to further accelerate your shift towards SaaS and other high growth areas?
So, we do an annual review of all of the businesses and we say, okay, which businesses do we want to continue to lean in on or lean in harder on in terms of investment dollars, which businesses are we looking to sustain our investment dollars and which businesses do we think we should reduce our investment dollars. And then once we look at those areas, we say, well, if we're not willing to invest, is it because they're just in a lull where we know we can be well positioned without another dollar investment right now, or we say, is this really the right business for us to be in? So that's an annual review. And we have, in addition to the larger divestitures you've seen, we've done a couple of smaller ones like we've we've done some smaller moves that are just less visible to continue to recalibrate and reallocate our capital, and we do that every year.
Alex?
Yes. Just maybe similar to Jeremy's question, but you differentiate between the sand and the TAM. So just curious, it seems like there's plenty of opportunities in your sand, but what are the areas where you may actually see other opportunities and to go out to that even bigger TAM, I guess, that would all be inorganic or how do you feel about those Sure.
Yes, just repeat the question. Alex Graham from UBS talked about that we have a sizable SAM or serviceable addressable market. But how do we think about unlocking larger proportions of the total addressable market? Do we see that more as organic or inorganic?
Yes. I think that for the most part to go beyond our TAM into the larger TAM, and I can give you a couple of examples, it probably would require us to acquire a way in or maybe to partner with a firm that has, for instance, an offering that we can leverage our distribution channel through. So, but I would give you an example. I think that when you look at the That's where a lot of the money is being spent. But there's a lot of older technology that services that part of the industry.
That would probably either have to be something where we'd acquire a way into a new technology that would be a disruptor. But I think to go in organically, there would be a massive investment. So we'd have to really make a big decision if we're going to address it organically. What was the I mean, certainly in the investment management area, I think that the broader TAM is really on LMS and other areas of the managing the workflows for the asset management industry. And that's a pretty well established field of players.
So again, I would say, to go in organically, there would be a little bit harder, but that's more what I would say, the very traditional part of asset management workflow technologies. And then if you look at the corporate side, I think that there, we actually really do think that we could I think the ESG opportunities are actually quite large over the long term and there's really no one there. So, it allows us to really have a nice organic runway. Growing that TAM would have to be that we would look at more of the C suite capabilities and we could potentially do that organically. But as you know, we've been divesting in areas that we're not strategic in.
So, I think we're good to focus on the same we have.
Okay, great. I have a question from Patrick O'Shaughnessy from Raymond James. The question is, in light of your capital priorities, in light of the fact that you attempted to acquire the Oslo Vorse and in light of the fact that there's a lot of M and A going on in the European exchange industry. How do you see that fitting into the NASDAQ core, the European Exchange Complex in particular? And just please think about talk about why that's very important to NASDAQ.
Sure. Well, we're very proud and invested in being in the Nordic markets and being established market operator in the Nordic. So, the first thing I would say is, we've established scale, not by rolling up Europe, but by connecting Europe to the U. S, right? So, 8 years ago, we put the European markets onto INET.
Now, we're basically migrating all of the derivatives markets onto a unified platform. And we're making it so that we can actually lift that into a cloud environment over time that will then create even more efficiency for both the U. S. And Europe. So, we have the ability to continue to drive scale by having our U.
S. And European markets from a technology perspective as connected as possible. The other thing I would say is that our Nordic markets, the expertise we have across trading and clearing, settlement, commodities, as well as futures, fixed income areas, those are all great levels of market expertise that we then basically apply into our Marketech business. So, a lot we have almost 900 or more than 900 employees in our Nordic country or actually just in Stockholm alone. They work very closely together with Marketech.
They provide advisory services out to our Marketech clients for revenue. They also can help us become true experts in certain areas that then allow us to grow and expand our business to the MIOs that we serve with technology. So people I don't think people realize this how interconnected the market tech and the market services organizations are in the Nordics. So it is and it's also honestly one of the growthiest areas of Europe, right? I mean, that region of Europe is innovative, it's technology oriented, it's great talent base.
It's a really it's an important part of who we are. But however, and when we looked at expanding, our clients were the ones who drove us to consider Oslo and we would have liked to have had that. I mean, it would have been a good integration, it would have been a good strategy for us to kind of complete the ecosystem in the Nordic countries. But as we looked at the other ones that were the other exchanges that were coming out, there's just not the same synergy with our Nordic client base. It's harder to, frankly, achieve synergies as we've seen with Bours Italian and never really integrating with the LSE.
And so, it just wasn't it doesn't really fit with the way we consider our investment criteria today and nor is it leaning into those areas that we talked about are key growth areas for
us. Just one small add just going back to the Nordics. Nordics, those countries are leaders within the ESG space and that's why Bjorn talked a little bit about that today and we think that we can leverage that and take some of that leadership and
then bring it against
North America. Great. Jeremy Gamble from
Barclays.
Yes. I think well, actually, I'm going to let Michael answer that because he's been leading all of our corporate wide as Head of Corporate Strategy as well. He's been leading all of our corporate wide ESG initiatives.
So I'm
going to let you answer that, Michael.
Yes. So we think that there's benefits by connecting the different pieces, right? But the focus will be the starting point is really the corpus. From that corporate work, plus also the work that Lauren's team is doing in investment and the information that they're getting, we think that that can create new information and opportunities that then we can create new indices off of, whether it's coming out of the investment data, whether it's coming out of some of the corporate information and so or our Nordic business where they have over 500 clients already reporting on their ESG metrics. So that gives us gold source data opportunities.
Now it's going to take a long time or a while for us to build that out. But it does create, I think, a differentiated product that we can leverage into some of our other aspects. And then we have this virtuous circle amongst the different products that we have. So we can leverage across the corporates, the trading side as well as the information side and bring it all
enormous amount of demand. So, we're onboarding the clients right as fast as we can. We have an enormous amount of demand. So, we're onboarding clients, frankly, as fast as we can. And then, as we get a bigger data set that allows us to look at over across on an anonymized basis trends and other things that could be relevant to our investment management clients.
Our investment managers are delivering an enormous amount of information to eVestment now. Now, you also look at trends there. And that then can inform us to say, well, what indices might be most relevant? How do we want to make sure we're delivering product investment products that people want? And also maybe partnering with our eVestment clients on that as well.
So, I personally feel like there's a good long virtuous circle, but we're starting at a small base. So, we don't want to overpromise early, to be honest with you. So, we're trying to just say, let's make sure each of us delivers what we can do now and then create that virtuous circle over time.
I was going to overpromise because I'm leaving, but it did.
Exactly. Okay.
I have a question from Owen Lau. As you think of in 2025, your goal of having as much as 50% of the ARR revenue coming from SaaS businesses, talk a little bit about the implications you see. So first, Adena, what kind of possibilities or what does that bring to our business and how we serve customers? And then I'll ask our CFOs what kind of how it supports our financial metrics and objectives?
Sure. Well, I would say, strategically, it gives us a much more scalable and flexible way to deliver services to customers. So, I think that we've talked a lot with all of you over the last 3 years really about how that's allowing us to create more opportunities for us to market tech. But we've had a significant investment to make in transitioning our on prem software delivered services to a SaaS based marketplace type of service that we can deliver in the cloud and in a really flexible way. That continued migration of our existing clients over time to get them to embrace our next gen technology and then ultimately to make it so it's cloud enabled or allow us to be a service provider, a managed service provider to them is a longer term path.
But it obviously is one of those areas that we truly believe will lift our margins in the market tech space. But as we continue to scale across investment intelligence as well as the core platforms, and we just continue that runway of growth, it allows us to continue to drive to that scale that we're looking for, which supports our ROIC, but potentially over the longer term could allow us to continue to increase our opportunity for ROIC as we continue to scale. The one thing I would say though is we're always going to want to innovate and invest in this platform. So there's always that balance between driving growth and making sure we're always going to be there as a long term provider that the clients want as well in addition to making sure that we leverage those platforms to generate scale. So, it's going to be a balance.
And I think the only thing we could add to that is that I think, those companies that do continue to drive more and more SaaS, more recurring revenue, I think there's recognition of just the quality of that of those earnings. And so we think that that's going to continue to benefit the pivot and where we see the valuation opportunities on top of that. Great.
A question from Brian Bedell from Deutsche Bank. Brian asks, given that you're expanding some of your addressable markets and you're progressing your business model towards things like SaaS models that give you additional opportunity, Considering a relatively stable organic growth outlook, is there anything that you're particularly concerned about? Any revenue headwinds that you considered as you look forward to the next 3 to 5 years?
I think that we have to start by saying, assuming we have a relatively normalized market environment, I think that we feel extremely well positioned and we see we always have little things that we're always managing through, but there's nothing significant that I look out and say, wow, that's going to create a major headwind. I think that we obviously always have to work within the market environment we're operating in, which is why we're also giving you the differentiated metrics, right? Because our ARR and our SaaS based metrics are really driven by different longer term trends and some of our other businesses might have more variation based on the beta environment. And so, we wanted to make sure we kind of gave you even more transparency we have before to understand what really is driving into those longer term industry trends and what are the frankly great businesses we have that just have a little bit more beta component to them. But we don't see any absent that kind of a market event, I think that we feel like we have a really good and good business with a long term growth profile for sure.
Question from Alex Kramm, UBS. Just a
couple of follow ups. One, a rough number across the whole organization
Sure. All right. Go for it. Good luck.
Let me just I'm going
to repeat the questions in 2 parts. So I'm going to give you the
first one.
Yes, that would
be great actually.
And then
the second. The first question is you've disclosed the revenue from ESG products in corporate platforms today. Could you give more information on the revenue contribution of ESG to overall NASDAQ? And do you expect areas of exposure in other businesses to have as strong a growth outlook as corporate platform sees for that business?
Sure. I think the first thing we haven't disclosed is that we're kind of in the 5,000,000 range today, hoping to get to 50,000,000 by 2025, just on the new services. If you add in the fact that we also have a governance platform, as well as some of the new areas that we're focusing on in terms of the green bond platform, the sustainable bond network. And then over time, growing our ESG index platform, I think that we see a chance to say we have governance tools today, which is part of ESG. We have our new ESG services There's other areas within across the business.
And we should be able to get to more like $150,000,000 or so kind of 2% to 3% of our is it 2%, 3%?
It's close to up to 5%.
Up to 5% of revenue. We've been discussing this by 2025. So, I think that it's just a matter of I wasn't doing the math right. It was just a matter of making sure you understand that includes our governance services today, in addition to all the new services we have. We think we could actually get to 5%.
And so that's a marker out there, an ambition, but not something that we can sit there and tell you and take off every single step to get there. But that's exactly what we've been driving
towards. Great. And then the second question was when Market Technology explained that they wanted to get over 50% of segment revenues from SaaS Software by 2025, Alex did notice that the non SaaS revenue was still growing. Can you explain why you think that, that can persist or even grow?
Well, the first thing to note is we have with our established market infrastructure operator providers, we have a lot of long term contracts. So, that's the first thing is you got to move our way through 5, 7 or 10 year agreements. So, that's the first thing. The second thing is some of the post trade technologies, particularly our CSD technology, is going to be harder to move into a pure SaaS mode. We've actually, I mean, just in recent years, delivered a really well product high CSD solution.
And we're in the mode of deploying it to a lot of new clients over with long term contracts. So, I think that that will be probably later in our migration
to figure out how to migrate something like that
into a SaaS mode. SaaS mode. And then, I would say, and what was the clearing solution, our next gen clearing solution is actually going to be deliverable in SaaS and in the cloud. So, we have the ability to move those maybe faster, but again, there's long term agreements. So, it's really more the migration of our clients and the timing of that in addition to some of those post trade services being having a longer runway, I would say, to move to SaaS.
Great. Well, I think we should probably wrap up at this point. On my behalf, I want to thank everyone for participating. I also want to thank the NASDAQ management team for taking the time to articulate clearly the many interesting things going on here. I want to also give a special thanks to Michael for helping us with what will be his last Investor Day at NASDAQ.
And it's been really a pleasure working for him and with him. And I'll turn it over to Adena for closing remarks.
Sure. Well, the first thing I do want to say is, Michael, no, I want to say, Michael came into the organization 4 years ago and it's like he's been here for 20. So, it's been an incredible partnership. And we're very fortunate to have him through February, because I think it's really making it to the transition to Anne has been already and will be really smooth. And Anne is incredibly ready for the role.
I'm so excited to have a chance to work more closely with Anne going forward. We have I know we have we just have a great partnership today. It's going to be hard. He also brings a lot of humor to everything. But I do think that I'm really looking forward to all of you getting to know Anne better.
You'll see her in some upcoming investor conferences. You'll see her obviously come February 28 or March 1. She is our CFO and I'm really excited for you all to get to know her better. So, Michael, thank you.
Thank you.
I thank all of you for coming, whether in person or online. We hope that you have a better, deeper understanding of Nasdaq today, where we're going in the future and how we're going to continue to deliver long term sustainable growth and returns to our shareholders. And we're super excited to continue to serve all of you in the years to come. So, thank you.