Nasdaq’s First Profit Drop in a Year: A Signal of Caution from Firms Amid Global Conflicts and Economic Uncertainty

Nasdaq Inc. reported a decrease in profit for the first time in a year, indicating caution among firms waiting for the economy to stabilize before going public. Earnings fell to 63 cents a share from 69 cents a year ago, below the expected 65 cents. Despite this, revenue from Nasdaq’s data and listing segment, which includes its trading exchanges, remained flat compared to a year ago and also fell short of projections.

The hesitation among companies to go public is likely due to ongoing global conflicts, such as the wars in Ukraine and Israel, as well as uncertainty about when the Federal Reserve will cut interest rates. The US economy experienced a slowdown in the first quarter due to cooling consumer and government spending and rising inflation. These factors seem to outweigh recent successful IPOs like Reddit, which has seen a 25% increase since its debut in March.

Nasdaq highlighted its pivot to steadier and more predictable revenue streams instead of focusing on its usual “listings leadership” in the US. This shift was driven by 12% increase in financial crime and regulatory products, resulting in 5% growth in annualized recurring revenue excluding recent acquisitions. The company also raised its full-year operating expense guidance to account for increased technology investments.

Only 27 companies went public on the exchange in the first quarter of this year, down from 40 in the same period last year. The earnings statement did not include any commentary on IPOs for the first time since the third quarter of 2022. Nasdaq’s shares dropped about 1% in early trading in New York