FX Rates Beat Down Nasdaq’s Q1 Revenue

Wednesday, 19/04/2023 | 13:26 GMT by Solomon Oladipupo
  • Nasdaq's constituent business segments reported single-digit growth.
  • Verafin onboarded first global Tier 1 bank in April 2023.
Nasdaq

Nasdaq released its first quarter 2023 financial results on Wednesday, reporting $914 million in net revenues. The figure represents a 2% or increase of $22 million from the $892 million generated during the same period last year.

However, the American exchange and global financial markets infrastructure provider’s initial performance were much better. Nasdaq said it initially generated an increase of 4% or $36 million in its net revenue, owing to organic growth and positive contributions from all its business segments.

However, this figure was partially offset by a decrease of $11 million from the impact of changes in FX rates during the period. Furthermore, Nasdaq’s acquisition and divestiture during the period yanked off $3 million from the net revenues.

In a separate release, the exchange operator disclosed that it intends to pay a quarterly dividend of $0.22 per share, which is an increase of 10% from the previous quarter. The firm added that "the dividend is payable on June 30, 2023, to shareholders of record at the close of business on June 16, 2023."

How Nasdaq Business Segments Performed

During Q1 2023, the solutions businesses and trading services that make up Nasdaq’s business reported a single-digit growth rate partially offset by changes in FX rates. While the former returned 4% growth or $646 million, the latter earned $267 million or an increase of 1% from the prior year period.

“Trading Services net revenues reflect strong growth from North American trading partially offset by a decline in European trading,” Nasdaq noted.

In terms of operating expenses, Nasdaq’s recorded an increase of 3% in the cost of running its business. The cost, when accounted for in line with the Generally Accepted Accounting Principles (GAAP), rose to $15 million during the first three months of 2023.

“The increase primarily reflects higher restructuring expenses associated with the launch of our divisional alignment program in the fourth quarter of 2022 and higher occupancy expense due to lease asset impairment charges in the first quarter of 2023 driven by a reduction in our real estate footprint, partially offset by lower merger and strategic initiatives expense and changes in FX rates,” Nasdaq explained.

Other Q1 Updates from Nasdaq

Meanwhile, during the first three months of 2023, Nasdaq bought back $159 million worth of its common shares. This leaves Nasdaq with $491 million worth of common stock to be acquired under the firm’s share repurchase programme as of March 31, 2023.

Furthermore, Verafin, Nasdaq’s fraud detection and anti-money laundering software subsidiary, signed its first global Tier 1 bank in April. Additionally, the subsidiary onboarded its first Tier 2 client during the first quarter of the year. However, Nasdaq did not disclose the names of the new clients.

“These signings further underscore Verafin’s progress with large bank clients, as its solutions seek to displace legacy platforms and manual processes with a cloud-based and market-proven solution,” Nasdaq explained.

In addition, during Q1 2023, Nasdaq maintained its listings leadership in the United States and led all exchanges in total multiply-listed options traded. Moreover, the exchange said it is doubling down on its cloud migration strategy with plans to migrate a second options exchange by the end of 2023.

“Nasdaq delivered a solid financial performance during the first quarter of 2023, driven by momentum across our divisions,” noted Adena Friedman, Nasdaq's Chair and CEO.

Friedman explained that the publicly traded company’s investments in proprietary data and the migration of its markets and Sofware-as-a-Service solutions to the cloud “uniquely positions us to harness the potential of advanced AI to improve the liquidity, transparency, and integrity of the financial system in the coming years.”

Maoz Tenenbaum leaves Leverate; Cornerstone's revenue; read today's news nuggets.

Nasdaq released its first quarter 2023 financial results on Wednesday, reporting $914 million in net revenues. The figure represents a 2% or increase of $22 million from the $892 million generated during the same period last year.

However, the American exchange and global financial markets infrastructure provider’s initial performance were much better. Nasdaq said it initially generated an increase of 4% or $36 million in its net revenue, owing to organic growth and positive contributions from all its business segments.

However, this figure was partially offset by a decrease of $11 million from the impact of changes in FX rates during the period. Furthermore, Nasdaq’s acquisition and divestiture during the period yanked off $3 million from the net revenues.

In a separate release, the exchange operator disclosed that it intends to pay a quarterly dividend of $0.22 per share, which is an increase of 10% from the previous quarter. The firm added that "the dividend is payable on June 30, 2023, to shareholders of record at the close of business on June 16, 2023."

How Nasdaq Business Segments Performed

During Q1 2023, the solutions businesses and trading services that make up Nasdaq’s business reported a single-digit growth rate partially offset by changes in FX rates. While the former returned 4% growth or $646 million, the latter earned $267 million or an increase of 1% from the prior year period.

“Trading Services net revenues reflect strong growth from North American trading partially offset by a decline in European trading,” Nasdaq noted.

In terms of operating expenses, Nasdaq’s recorded an increase of 3% in the cost of running its business. The cost, when accounted for in line with the Generally Accepted Accounting Principles (GAAP), rose to $15 million during the first three months of 2023.

“The increase primarily reflects higher restructuring expenses associated with the launch of our divisional alignment program in the fourth quarter of 2022 and higher occupancy expense due to lease asset impairment charges in the first quarter of 2023 driven by a reduction in our real estate footprint, partially offset by lower merger and strategic initiatives expense and changes in FX rates,” Nasdaq explained.

Other Q1 Updates from Nasdaq

Meanwhile, during the first three months of 2023, Nasdaq bought back $159 million worth of its common shares. This leaves Nasdaq with $491 million worth of common stock to be acquired under the firm’s share repurchase programme as of March 31, 2023.

Furthermore, Verafin, Nasdaq’s fraud detection and anti-money laundering software subsidiary, signed its first global Tier 1 bank in April. Additionally, the subsidiary onboarded its first Tier 2 client during the first quarter of the year. However, Nasdaq did not disclose the names of the new clients.

“These signings further underscore Verafin’s progress with large bank clients, as its solutions seek to displace legacy platforms and manual processes with a cloud-based and market-proven solution,” Nasdaq explained.

In addition, during Q1 2023, Nasdaq maintained its listings leadership in the United States and led all exchanges in total multiply-listed options traded. Moreover, the exchange said it is doubling down on its cloud migration strategy with plans to migrate a second options exchange by the end of 2023.

“Nasdaq delivered a solid financial performance during the first quarter of 2023, driven by momentum across our divisions,” noted Adena Friedman, Nasdaq's Chair and CEO.

Friedman explained that the publicly traded company’s investments in proprietary data and the migration of its markets and Sofware-as-a-Service solutions to the cloud “uniquely positions us to harness the potential of advanced AI to improve the liquidity, transparency, and integrity of the financial system in the coming years.”

Maoz Tenenbaum leaves Leverate; Cornerstone's revenue; read today's news nuggets.

About the Author: Solomon Oladipupo
Solomon Oladipupo
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About the Author: Solomon Oladipupo
Solomon Oladipupo is a journalist and editor from Nigeria that covers the tech, FX, fintech and cryptocurrency industries. He is a former assistant editor at AgroNigeria Magazine where he covered the agribusiness industry. Solomon holds a first-class degree in Journalism & Mass Communication from the University of Lagos where he graduated top of his class.
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