How Will Nasdaq’s Non-Trading Businesses Perform In The Next 2 Years?

by Trefis Team
Nasdaq OMX Group
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NASDAQ (NASDAQ:NDAQ) has seen impressive growth in recent years. The company’s non-trading business segments – including Corporate Services, Market Technology, and Information Services, saw 8% annual revenue growth and helped the exchange operator perform strongly despite a somewhat less volatile period leading to low trading volume and business. Increased demand for data and technology-related products and services is likely to continue in the near term, and should help sustain the growth momentum for these segments.

Nasdaq generated $1.6 billion in non-trading revenues for 2017, and we expect its revenues to increase by around 3% annually over the next two years. We have created an interactive dashboard which shows our forecasts for the company’s revenues. You can modify the different revenue drivers to see how changes impact the company’s expected revenues.

Nasdaq’s Segment Revenue Growth

Apart from trading, Nasdaq generates revenue from three primary streams – Information Services, Market Technology, and Corporate Services. Information Services, comprising of Data products and Index licensing revenues, generated $588 million in 2017. The company launched several new products in the past few years, including IR Insight, which incorporates news, recommendations, and trackers on a single platform.  A second noteworthy product is Nasdaq Influencers, wherein marketing professionals from different companies can connect with industry peers to promote their brands and share insights and recommendations. This, coupled with the acquisition of eVestment, contributed to the Information Services segment’s strong performance. With further uptake of these services, we expect 2% annual growth in the revenue.

Due to an increase in revenues from software, licensing, and support, as well as surveillance products, the Market technology segment has seen impressive growth. We expect it to grow by 4% annually.

Corporate Services, comprising of Corporate solutions and Listing revenues, generated $656 million in 2017. The growth in this segment is primarily attributed to the acquisition of Boardvantage and Marketwired. Moreover, Nasdaq has continued to be a preferred exchange for listing technology-related stocks. We expect the segment to continue growing at 2% annually.

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