Nasdaq, Inc. (NDAQ) Cash Flow Statement

The OCF/NI ratio of 1.40 in Q2 2026, though down from 1.99 in Q4 2024, still demonstrates that cash conversion remains healthy. This suggests that the company is generating sufficient cash to fund its strategic initiatives, including the integration of Adenza, without over-reliance on external financing. However, the declining trend in OCF/NI from 2.26 in Q1 2024 to 1.40 in Q2 2026 warrants monitoring, as it may indicate rising working capital needs or changes in revenue mix.

The near-match of purchases and sales suggests a strategy of maintaining portfolio size while potentially adjusting duration or credit exposure. This activity is consistent with a bank that is not accumulating securities but rather using them for liquidity management. The net cash outflow from investments was minimal, indicating that the securities portfolio is not a significant use of capital, allowing more cash to be directed toward loan growth and shareholder returns.

The increase in provisions, which are non-cash charges, does not directly impact cash flow but signals growing credit risk in the loan portfolio. The cash flow statement shows no significant deposit inflows, implying that loan growth may be funded by other liabilities or capital. This could strain liquidity if deposit funding does not keep pace, and investors should monitor the loan-to-deposit ratio in the balance sheet.

The combined capital return of $529 million in Q2 2026 represents 74% of operating cash flow, which is sustainable given the OCF/NI ratio above 1. However, the pace of buybacks has increased significantly from $21 million in Q4 2024, suggesting management's confidence in future cash generation. This aggressive return of capital, coupled with the debt taken on for Adenza, may limit financial flexibility if cash flows deteriorate.

The absence of large deposit swings implies that Nasdaq's funding is not heavily reliant on rate-sensitive deposits, which is typical for an exchange operator. This stability reduces funding risk but also means that loan growth must be funded by other means, such as long-term debt or retained earnings. The lack of deposit growth may also indicate that the company is not aggressively pursuing retail deposits, consistent with its business model.