Nasdaq Profit Beats Estimates on IPO Rush, Investment Products Demand

Nasdaq Profit Beats Estimates on IPO Rush, Investment Products Demand
The Nasdaq digital billboard in Times Square, New York, on Dec. 10, 2020. (Kena Betancur/AFP via Getty Images)

Nasdaq Inc. on Wednesday reported a nearly 16 percent jump in fourth-quarter profit that topped Wall Street estimates, buoyed by the frenetic pace of U.S. initial public offerings and strong demand for its investment-related products.

Technology, healthcare and financial technology companies led the IPO rush during the quarter, that included the stellar debut of Rivian Automotive Inc. on the exchange that valued the electric vehicle maker at over $100 billion.

Tech-heavy Nasdaq in 2021 eclipsed rival New York Stock Exchange to host the new listings of 1,000 companies, representing $181 billion in capital raised. Of the total listings, 752 were IPOs, including chipmaker GlobalFoundries Inc. and fintech Coinbase Global.

Nasdaq reported an adjusted profit of $1.93 per share for the quarter ended Dec. 31. Analysts were expecting $1.78 per share, according to IBES data from Refinitiv.

Even as the transatlantic exchange operator's bourses remain its core business, Nasdaq has pushed into the software sector to reposition itself as a financial technology company offering analytics, data, and cloud services.

The company's revenue from solutions segment surged 19 percent to $581 million. Its investment analytics products that help customers research across multiple asset classes to make investment decisions have become key growth drivers.

It also launched a cloud-based data management platform geared towards investment management firms during the quarter.

The company's net revenue came in 12 percent higher at $885 million from $788 million a year ago. Market services revenue rose 5 percent to $303 million over the same period.

In line with other financial institutions that have seen expenses rise amid inflationary pressures, Nasdaq also saw a 15 percent increase in operating expenses primarily due to higher employee compensation and benefits.

By Manya Saini and John McCrank