Nasdaq today reported financial results for the first quarter of 2019.
First quarter 2019 net revenues were $634 million, down $32 million from $666 million in the prior year period. The decrease in net revenues reflected a positive $22 million, or 3%, impact from organic growth and a positive $11 million impact from the inclusion of revenues from the acquisitions of Cinnober and Quandl, more than offset by a $50 million negative impact from the divestiture of the Public Relations Solutions and Digital Media Services businesses and a $15 million unfavorable impact from changes in foreign exchange rates.
“I am pleased that we delivered solid revenue growth in the Market Technology and Information Services segments during the first quarter of 2019, even as capital market conditions presented certain headwinds in the form of lower industry trading and IPO volumes,” said Adena Friedman, President and CEO, Nasdaq. “At the same time, we are leveraging our leadership role in the U.S. equities markets to propose structural improvements to modernize the marketplaces to benefit both issuers and investors, and we look forward to constructive dialogue with critical stakeholders in the periods ahead.”
Information Services (31% of total net revenues) – Revenues were $193 million in the first quarter of 2019, up $19 million, or 11%, from the first quarter of 2018.
Here is a brief breakdown:
Market Data (16% of total net revenues) – Market data revenues were $100 million in the first quarter of 2019, unchanged compared to the first quarter of 2018, primarily due to an increase in U.S. tape plan revenues from under-reported data usage offset by an unfavorable impact from changes in foreign exchange rates of $2 million.
Investment Data & Analytics (6% of total net revenues) – Investment data & analytics revenues were $39 million in the first quarter of 2019, up $15 million from the first quarter of 2018 primarily due to an increase in eVestment revenues resulting from an $11 million purchase price adjustment on deferred revenue in the first quarter of 2018, as well as organic growth.
Market Technology (12% of total net revenues) – Revenues were $77 million in the first quarter of 2019, up $17 million, or 28%, from the first quarter of 2018. The change is primarily due to an increase in the size and number of software delivery projects, an increase in software as a service surveillance revenues, and the acquisition of Cinnober, which added $10 million in revenue, partially offset by an unfavorable impact from changes in foreign exchange rates of $3 million.
Nasdaq continues seeing strong client traction in its Market Technology business. New order intake totaled $54 million during the first quarter of 2019, including a new contract with the OCC to replace its legacy clearing system and a contract signed with Deutsche Bank to operate a new U.S. single dealer platform utilizing Nasdaq’s market technology infrastructure. Nasdaq also experienced continued strong growth in its SMARTS surveillance business with new customers in various customer classes including broker-dealers and the buy side. Other highlights during the period include the launch of a new pari-mutuel betting platform using Nasdaq Longitude technology by Tabcorp Holdings Limited, Australia’s leading wagering operator, and the completion of the integration between Symbiont and the Nasdaq Financial Framework to enable interoperability between business applications and the Symbiont Assembly for smart contracts.
With regards to the equities market:
Cash Equity Trading (11% of total net revenues) – Net cash equity trading revenues were $69 million in the first quarter of 2019, down $5 million from the first quarter of 2018. Net U.S. cash equities revenues were unchanged year over year. In Europe, the decrease primarily reflects lower industry trading volumes and an unfavorable impact from changes in foreign exchange rates of $3 million.
Equity Derivative Trading and Clearing (11% of total net revenues) – Net equity derivative trading and clearing revenues were $72 million in the first quarter of 2019, down $6 million compared to the first quarter of 2018. The decrease primarily reflects lower U.S. industry trading volumes and a lower European net capture rate.
Listing Services (11% of total net revenues) – Listing services revenues were $71 million in the first quarter of 2019, down $1 million from the first quarter of 2018. The change primarily reflects the run-off of fees earned from listing of additional shares and an unfavorable impact from changes in foreign exchange rates of $2 million, partially offset by higher annual listing fees due to an increase in the number of listed companies.
The Nasdaq Stock Market led U.S. exchanges for IPOs in the first quarter of 2019 with an 88% win rate, while the Nasdaq Private Market increased its reach into servicing private equity funds. In the U.S. market, The Nasdaq Stock Market welcomed 59 new listings in the first quarter of 2019, including 37 IPOs. Highlights from the first quarter included the Lyft Inc, Futu Holdings Ltd. and New Fortress Energy LLC IPOs as well as the listing switch of Sanofi to The Nasdaq Stock Market. Nasdaq’s Nordic, and Baltic exchanges and First North added 9 new listings including 4 IPOs, bringing total Nordic-listed companies at March 31, 2019 to 1,018, an increase of 3% from March 31, 2018. Additionally, Nasdaq Private Market signed a partnership agreement with iCapital Network Partners to create a secondary marketplace for private funds through the NPM platform, enabling advisors to offer liquidity solutions to high net worth clients with private equity investments.
