Nasdaq Inc. Reports First Yearly Earnings Decline, Caution Among Firms Postponing IPOs

Nasdaq Inc. reported a decline in earnings for the first time in a year, indicating caution among firms waiting for the economy to stabilize before going public. Earnings fell to 63 cents a share from 69 cents a year ago, below the expected 65 cents. Revenue from Nasdaq’s data and listing segment, which includes its trading exchanges, remained flat compared to a year ago and also fell short of projections.

Nasdaq highlighted its pivot to steadier and more predictable revenue streams instead of focusing on its usual “listings leadership” in the US. Despite the challenging market conditions, Nasdaq saw 5% growth in annualized recurring revenue excluding recent acquisitions, driven by a 12% increase in financial crime and regulatory products. The company also raised its full-year operating expense guidance to account for increased technology investments.

The hesitation among companies to go public is likely due to ongoing global conflicts, such as the wars in Ukraine and Israel, as well as uncertainty about when the Federal Reserve will cut interest rates. The US economy experienced a slowdown in the first quarter due to cooling consumer and government spending and rising inflation. These factors seem to outweigh recent successful IPOs like Reddit, which has seen a 25% increase since its debut in March.

Nasdaq’s shares dropped about 1% in early trading in New York, despite being up nearly 6% for the year as of Wednesday’s closing price. Trading volume on Nasdaq’s exchanges remained flat year-on-year for the second consecutive quarter.