Nasdaq’s fourth-quarter profit rides on lower-than-expected fintech performance

By Pritam Biswas and Laura Matthews

(Reuters) – Nasdaq reported higher fourth-quarter profit on Wednesday, helped by increased demand for the exchange operator’s financial technology products, which still fell short of some analysts’ expectations.

The company has been expanding outside its market-sensitive core activities of trading and listing to products that help financial institutions navigate compliance requirements and safeguard against financial crimes.

Revenue from Nasdaq’s financial technology business rose nearly 9.8% in the fourth quarter. However, the $438 million revenue from financial technology unit marginally missed analysts’ estimates of $441.2 million, per data compiled by LSEG.

The company’s shares, which rose 33% in 2024, were last down marginally at $80.91.

Analysts said the miss in financial technology revenues was weighing on the share price.

“Fintech was driving the growth, but it was actually below expectation for the quarter,” said Owen Lau, a senior analyst at Oppenheimer & Co. “The key metric driving the stock is (annualized recurring revenue) which is forward looking.”

Adena Friedman, chief executive officer at Nasdaq, told analysts on a call that the company is well-positioned to build on last year’s successes to deliver durable revenue growth in 2025 because of the solid economic backdrop.

That’s because along with U.S. consumer spending and relatively low unemployment supporting GDP growth, Friedman said inflation and interest rates are settling into a more predictable state, causing investors to feel more confident about deploying capital.

“Overall, the global economy is expected to grow with help from strength in the U.S. and other parts of the world, including South Asia,” she added. “These factors have contributed to creating a positive business environment to start the year.”

Hopes of a soft landing for the U.S. economy, strong equity markets and expectations of a friendlier regulatory environment for deals and offerings under the Trump administration breathed new life into the U.S. IPO market during the reported quarter.

Nasdaq stock market’s total listed companies rose a mere 0.7% to 4,075 as of Dec. 31, 2024, translating to a 1.6% increase in the company’s data and listing services revenue.

Software firm ServiceTitan and China’s self-driving vehicle company WeRide were some of the big names that listed its shares on Nasdaq during the October-December quarter.

“After several years of muted IPO activity, we expect more companies to list on public markets with an uptake beginning in the second quarter of 2025, setting up a strong half of the year,” said Friedman.

Net profit attributable to Nasdaq, on an adjusted basis, came in at $438 million, or 76 cents per share, in the fourth quarter ended Dec. 31, compared with $395 million, or 72 cents per share, a year earlier. That beat analysts’ expectation of 75 cents, according to estimates compiled by LSEG.

The company reported net revenue of $1.23 billion, up from $1.12 billion. (This story has been corrected to show broad product use across financial institutions, not just traders, in paragraph 2)

(Reporting by Pritam Biswas in Bengaluru and Laura Matthews in New York; Editing by Shounak Dasgupta)

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