Nasdaq profit beats expectations, helped by anti-financial crime unit
NASDAQ on Wednesday (Apr 19) reported first-quarter profits that beat Wall Street estimates as demand for its anti-financial crime software helped mitigate a hit to the exchange operator’s indexing business and a slump in initial public offerings.
Nasdaq expanded its regulatory technology footprint with its recent US$2.75 billion Verafin acquisition and has made the business a key pillar of its corporate structure, which last quarter was split into three divisions – anti-financial crime (AFC), market platforms and capital access platforms.
The exchange operator, which already has around 2,500 banks and credit unions using its AFC cloud-based platform to help detect, investigate, and report money laundering and financial fraud, said it signed up its first big Tier 1 bank, which holds over US$1 trillion in assets, in April.
“Getting to that first Tier 1 win has been a very important milestone for us because now that we can prove ourselves there, it will make it easier for other banks to say, ‘Okay, I’m not taking a risk here, I’m actually taking a proven solution,’“ Nasdaq chief executive Adena Friedman said on an analysts’ call.
Revenue from the AFC unit jumped nearly 17 per cent from a year earlier to US$84 million.
Net trading services revenues rose 1 per cent to US$267 million as rising interest rates, persistently high inflation and the banking crisis boosted volatility and trading levels.
Revenue from Nasdaq’s indexes, which are widely referenced by exchange-traded products and provide the company with licensing fees, slumped 9.8 per cent to US$110 million.
Excluding one-time items, Nasdaq earned 69 cents per share, three cents above analysts’ mean estimate, according to Refinitiv data.
Nasdaq’s main exchange hosted 40 IPOs in the quarter, versus 70 a year earlier, as market volatility kept private companies on the sidelines.
Net revenue, excluding transaction-based expenses, rose 2 per cent to US$914 million. REUTERS
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