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Nasdaq Beats Third Quarter Estimates on Strength in Indexing Business

Net income rose to $264 million, or $1.58 per share — $1.53 on an adjusted basis — with growth from indexing and increased trading volumes.

Image source: Nasdaq earnings presentation, Oct. 21, 2020.

By John McCrank and Niket Nishant

(Reuters) – Nasdaq Inc on Wednesday reported third-quarter profits that topped Wall Street views, helped by strength in the transatlantic exchange operator’s indexing business and a surge in trading volumes.

Nasdaq reported an adjusted quarterly profit of $1.53 per share, versus estimates of $1.46 per share, according to IBES data from Refinitiv.

Net income rose to $264 million, or $1.58 per share, from $150 million, or 90 cents per share, a year earlier.

The profit beat came largely from growth in indexing, Daniel Fannon, an analyst at Jefferies, said in a note.

Strong demand for technology stocks during the pandemic has benefited the tech-heavy Nasdaq 100 Index, but the company has many other indexes and licensing deals.

Revenue from information services, which includes indexing, rose 20% to $238 million.

Net revenue rose 13% to $715 million, with market services net revenues up 15%, due to elevated trading volumes.

Increased market volatility and a new cohort of retail investors led to the higher volumes, Nasdaq Chief Executive Officer Adena Friedman said on a call with analysts.

“We are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher trading environment,” she said.

Friedman also said Nasdaq is in talks with the state legislature and the governor of New Jersey, where the exchange processes trades, over a proposed state tax on financial transactions.

Nasdaq, along with other exchanges and large brokers, have threatened to leave the state over the proposed tax.

If the tax is imposed, “we have to do the responsible thing and find an environment that doesn’t introduce oppression,” she said.

Separately, Nasdaq said its chief financial officer, Michael Ptasznik, will retire Feb. 28, and Senior Vice President Ann Dennison will replace him.

Reporting by John McCrank in New York and Niket Nishant in Bengaluru; Editing by Shailesh Kuber and Lisa Shumaker.


Source: Reuters

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