Exchange operator Nasdaq has today reported a better-than-expected quarterly profit, boosted by strength in its trading business against a backdrop of high market volatility and a surge in initial public offerings.
The company posted an adjusted net income of $1.96 per share for the first quarter ended March 31, compared to estimates of $1.74 per share, according to IBES data from Refinitiv.
Increased market volatility and a new cohort of retail investors armed with mobile trading apps, helped drive a surge in trading volumes in the quarter.
Earlier this year, a multitude of mom-and-pop investors drove up prices of a handful of heavily shorted stocks, such as GameStop and AMC Entertainment Holdings, to punish hedge funds which had betted against those shares.
Nasdaq said it had welcomed 275 initial public offerings in the quarter, comprising 196 special purpose acquisition companies (SPACs) and 79 operating companies, including Bumble, Affirm and Playtika.
Revenue from Nasdaq’s market services unit, its biggest business, jumped 20% to $338m.
The investment intelligence segment, its biggest non-trading business which includes indexes, raked in $258 million in revenue, a jump of 22% from a year earlier, as investors poured into products related to the company’s indexes.
High demand for technology stocks that underpin the work-from-home environment helped drive indexing revenues up 40% to $29m on an annual basis.
Excluding transaction-based expenses, net revenue surged 21% to $851m.
Nasdaq’s latest earnings report comes a week after cryptocurrency exchange Coinbase Global started trading on the exchange operator, briefly becoming a $100-billion company after its stock market launch.
After its debut, Coinbase was more valuable than Nasdaq and New York Stock Exchange-owner Intercontinental Exchange put together.