Acquisitions, Organic Growth Lead To A Profitable Q1 For NASDAQ

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NASDAQ, Inc (NASDAQ:NDAQ) announced its Q1 results on Wednesday, April 27, reporting a 5% year on year (y-o-y) rise in revenues. The management said that it is focused on both organic growth and expansion through acquisitions. In line with this strategy, of the total 5% growth in revenues, 2 percentage points are attributable to the series of acquisitions undertaken by NASDAQ in recent years (including Dorsey Wright, Markertwired, Thomson Reuters Corporate Solutions and eSpeed).

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The company saw growth in all its diversified revenue streams; while non-transaction revenues together grew by 4%, transaction revenues rose 6% as compared to the year-ago period.

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Information service revenues were up 6% y-o-y to $133 million, owing to the acquisitions of Dorsey Wright and Chi-X Canada. Technology solutions benefited from the launch of a new product, NASDAQ IR Insight, and the acquisition of Marketwired, the leading global provider of news distribution services and analytics. Moreover, the company is in the process of completing the acquisition of Broadvantage, which will further help NASDAQ’s technology solutions revenues. In terms of listings revenue, the exchange operator managed to grow 3% to $66 million, owing to 10 new listings in the U.S. and 14 new listings in the Nordic region.

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Market services grew by 6% on an annual basis, led by cash equities. Cash equity revenues witnessed a growth of 13% y-o-y, even as NASDAQ’s share of U.S. cash equity market dropped. This growth in revenues can be attributed to higher industry-wide volumes and the expansion of its equities footprint in North America through the acquisition of Chi-X Canada. On the other hand, U.S. equity derivatives failed to show growth, declining 10% y-o-y due to a fall in market share. However, European markets remained resilient, rising 12% y-o-y to 0.45 million contracts traded per day. Consequently, equity derivatives revenue fell 13% to $101 million.

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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for Nasdaq

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