(Jan 25): Transatlantic-exchange operator Nasdaq Inc reported fourth-quarter profits on Wednesday, slightly below Wall Street estimates, as global economic uncertainty weighed on global asset values, dragging down indexing and initial public offering revenues.
Excluding one-time items, like M&A expenses, Nasdaq earned 64 cents per share, a penny off analysts' mean estimate, according to Refinitiv data.
The miss was mainly due to an 11% decline in index revenue, which led to Nasdaq's overall solutions business reporting organic growth of 5% for the quarter, below the company's recent 7%-10% annual growth forecast, Jefferies analyst Daniel Fannon said in a note to clients.
Nasdaq's indexes are widely referenced by exchange-traded products (ETPs), which provide the exchange operator with licensing fees. Stocks and ETPs generally saw sharp declines in 2022, driven by a rapidly rising interest rates, stubbornly high inflation, recession fears, Russia's war against Ukraine, and China's Covid measures.
Those same investor concerns torpedoed the IPO market, with Nasdaq's main exchange hosting 18 IPOs in the fourth quarter, compared with 195 in the year-earlier quarter.
"Uncertainty still lingers across the global economy and market-driven headwinds and if they persist throughout the year, that could impact our near-term growth outlook across listings and index in 2023," Nasdaq chief executive officer Adena Friedman said on a call with analysts.
Around 200 companies are waiting to go public on Nasdaq, she said.
Under Friedman, Nasdaq has diversified more into business lines less affected by market fluctuations, such as anti-financial crime software and ESG services, with recurring revenue making up around three-quarters of the total.
Net revenue, excluding transaction-based expenses, rose 2% from a year earlier to US$906 million.
"The general view inside of Nasdaq right now is that we continue to have really strong client interactions across all the businesses that comprise our annualised recurring revenue," Friedman said.