What To Watch For In NASDAQ’s Q1 Earnings

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NASDAQ (NASDAQ:NDAQ) is scheduled to announce its first quarter earnings on Wednesday, April 26th. The previous year saw revenue growth of around 9%, primarily due to non-trading businesses. The revenues from non-trading segements grew at a rapid pace in 2016, aided by the acquisitions of Marketwired and Boardvantage and enhanced data and technology offerings. We estimate around 5% growth in NASDAQ’s non-trading revenues for the entire year, and believe that the Q1 results will reflect similar growth. The market services segment, which contributed around 37% of NASDAQ’s overall revenues, grew around 7% in the previous year. However, we anticipate lower revenue growth due to declines in cash equity and fixed income trading volumes.

Non-trading businesses including information, technology and listing services, which account for nearly 60% of the overall revenue, are likely to drive growth with increased demand for data and technology-related products and services. In-house products such as IR Insights and Influencer have attracted a lot of customers since launch in 2016 and we expect increased adoption in the near term as well.

A concern is the significant drop in cash equity trading volumes. Much of this can be attributed to a tough year-on-year comparison due to the volatility seen in the global economy at the beginning of 2016, which was driven by uncertainty around oil prices, a slowdown in China and slow GDP growth in the U.S. at the time. However, declining market share due to tough competition from new exchanges such as IEX, and the fact that the company’s offerings remain limited to equity products, could weigh on its results. The prior year saw over 100 basis points decline in the cash equity market share.

Please refer to the full Trefis analysis for Nasdaq

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