Nasdaq Sales Beat Estimates With Boost From ‘Marquee IPOs’

Nasdaq Inc. reported sales that beat expectations after the initial public offering market picked up last quarter.

(Bloomberg) — Nasdaq Inc. reported sales that beat expectations after the initial public offering market picked up last quarter. 

The exchange operator’s third-quarter sales rose by about 6% to $940 million, surpassing the average analyst estimate of $931.6 million — the fastest pace in a year, but the slowest third quarter growth since 2019. Much of the outperformance was driven by the Nasdaq’s Capital Access Platforms unit, which includes its listing services division.

“We experienced some improvement in the IPO environment by welcoming marquee IPOs,” Chief Executive Officer Adena Friedman said in a statement Wednesday. Nasdaq’s exchanges have been selected for 84% of public listings in the first nine months of this year including four of the five largest initial offerings.

The Capital Access Platform division grew its sales by about 8%, while index revenues jumped 15% due to strong performance in Nasdaq-100 linked exchange traded funds and $5 billion in net inflows during the period. 

Companies have been tempted back to the listing market after the S&P 500’s 14% gain this year, with blockbuster IPOs from ARM Holdings Plc., Instacart — incorporated as Maplebear Inc. — and Birkenstock Holdings Plc.

Nasdaq expects initial offerings to pick up early next year. Only 107 companies have filed in the US this year compared to 212 in 2022, according to data compiled by Bloomberg. Companies remain wary of equity offerings amid fears of an economic slowdown, higher-for-longer interest rates and heightening geopolitical tensions.

“We do actually have a really good pipeline of companies,” Friedman said on the company’s earnings call, adding that the “majority” are looking to list in the first half of 2024. 

Arm has climbed 2.5% since its trading debut last month, while Instacart has slumped 18% and Birkenstock lost 15%.

Nasdaq’s stock has dropped about 19% this year due to investor skepticism of its proposed $10.5 billion deal for Adenza, the firm’s largest ever take over. The exchange confirmed it will close the acquisition later this quarter after it passed the antitrust review process. 

The Adenza tie-up, along with Nasdaq’s $2.8 billion acquisition of Verafin in 2021, should add to the firm’s recurring revenue streams. Verafin added 47 new clients this quarter, helping its anti-financial crime unit grow sales by 21% to $93 million, the company said. 

“Given the earnings beat and negative sentiment around the stock in recent periods, we would not be surprised to see the stock react positively,” Citigroup Citigroup Global Markets Inc. Managing Director Chris Allen said in a note on Wednesday after the results.

Nasdaq’s shares were trading about 1.1% higher at 9:02 a.m. in premarket trading in New York. 

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