Exchange operator Nasdaq beats profit estimates on trading boost

A man walks past the Nasdaq MarketSite in New York’s Times Square, August 23, 2013. — Reuters pic

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NEW YORK, April 21 — Exchange operator Nasdaq Inc reported a better-than-expected quarterly profit today, boosted by strength in its trading business against a backdrop of high market volatility and a surge in initial public offerings.

The company posted an adjusted net income of US$1.96 (RM8.07) per share for the first quarter ended March 31, compared to estimates of US$1.74 per share, according to IBES data from Refinitiv.

Increased market volatility and a new cohort of retail investors armed with mobile trading apps, helped drive a surge in trading volumes in the quarter.

Earlier this year, a multitude of mom-and-pop investors drove up prices of a handful of heavily shorted stocks, such as GameStop Corp and AMC Entertainment Holdings, to punish hedge funds which had betted against those shares.

Nasdaq said it had welcomed 275 initial public offerings in the quarter, comprising 196 special purpose acquisition companies (SPACs) and 79 operating companies, including Bumble , Affirm and Playtika.

Revenue from Nasdaq’s market services unit, its biggest business, jumped 20 per cent to US$338 million.

The investment intelligence segment, its biggest non-trading business which includes indexes, raked in US$258 million in revenue, a jump of 22 per cent from a year earlier, as investors poured into products related to the company’s indexes.

High demand for technology stocks that underpin the work-from-home environment helped drive indexing revenues up 40 per cent to US$29 million year-over-year.

Excluding transaction-based expenses, net revenue surged 21 per cent to US$851 million.

Nasdaq’s latest earnings report comes a week after cryptocurrency exchange Coinbase Global started trading on the exchange operator, briefly becoming a US$100-billion company after its stock market launch. After its debut, Coinbase was more valuable than Nasdaq and New York Stock Exchange-owner Intercontinental Exchange put together. — Reuters