Nasdaq (NASDAQ:NDAQ) reported net income of US$197 million in the fourth quarter of 2023, a drop of 17.92% compared to the same period last year. On the same basis of comparison, net revenue – which excludes transaction costs – totaled US$1.64 billion, an increase of 3.8%.
The results reflect the positive impact of the acquisition of Adenza, a provider of critical risk management, regulatory reporting and capital markets software for the financial services industry, acquired from a prominent software investment firm.
Revenue from market services alone, Nasdaq’s main segment that includes all securities transactions, rose 0.8% excluding transaction costs, to $247 million. Capital Platform Access Service revenue rose 10% to $461 million. The financial technology sector increased 73%, to US$399 million.
Adena Friedman, President and CEO, said “We delivered another strong year of operating performance against a dynamic economic and capital markets backdrop. We performed well across all aspects of our business in 2023, maintaining our leadership in U.S. listings, achieving a year of significant advancement for Verafin in our market expansion strategy, and introducing innovations in our products and services. We successfully completed the acquisition of Adenza, reinforcing our offering of critical technological solutions, and accelerating our strategic vision to be the fabric trust of the global financial system.”
The company has expanded beyond market-sensitive businesses such as commerce to become a large-scale data and analytics provider.
Strong demand for its solutions business in the quarter saw revenue increase 32.3% to $860 million compared to the previous year.
The solutions business was helped by a revenue increase in its financial technology business, which jumped to $399 million from $231 million a year ago.
This helped the exchange post an adjusted profit of $395 million, or 72 cents per share, compared with $317 million, or 64 cents per share, in the fourth quarter of the previous year.
Analysts were expecting 70 cents per share, according to figures compiled by Thomson Reuters.
The US IPO market has been in crisis for more than two years due to geopolitical pressures and the Federal Reserve’s aggressive interest rate hikes to curb inflation.
With analysts now seeing green lights in the IPO market with hopes of a soft landing for the U.S. economy, total Nasdaq listings rose to 28 in the fourth quarter from 18 a year ago, translating into an increase of 3 .8% in stock exchange data and service revenue listing.
“The muted IPO environment impacted annualized revenue growth,” said Sarah Youngwood, Nasdaq’s chief financial officer. “However, we are cautiously optimistic that we could see a rebound in IPOs combined with more normalized sales cycles as we move through 2024.”
The Nasdaq closed out 2023 with Softbank-backed Arm, solar energy company Nextracker and food delivery app Instacart as its biggest listings.
Nasdaq shares rose 3% to $60.20 in morning trading following the results. Year to date, the stock rose 3.6%.