July 25, 2018 / 11:09 AM / 5 months ago

Nasdaq's tech focus helps drive 11 percent profit rise

(Reuters) - Nasdaq Inc’s (NDAQ.O) quarterly profit rose 11 percent, led by contributions from its non-trading operations, which include providing technology and analytics services to other companies, such as cryptocurrency marketplaces, the exchange operator said on Wednesday.

FILE PHOTO: A woman passes by the Nasdaq Market Site in Times Square in New York City, U.S., February 7, 2018. REUTERS/Brendan McDermid/File Photo

Nasdaq has been diversifying beyond its core stock-based transaction business to focus more on high-growth areas such as market technology and information services. The strategic shift included the sale of the company’s public relations and digital media services businesses, which were completed in April, and the $705 million acquisition of investment analytics provider eVestment, finalized in October.

Nasdaq also sells its technology to other companies for things like trading and market surveillance and now counts five cryptocurrency exchanges among its clients, Chief Executive Adena Friedman said.

“It’s still evolving very quickly. It’s an unregulated space and so the role that we would expect ourselves to play right now is to be a technology partner to those exchanges,” Friedman said in an interview.

Nasdaq has no plans to open its own cryptocurrency exchange, but is looking into listing bitcoin futures and potentially crypto-based exchange-traded funds, if regulators decide to allow them, she said.

Separately, Nasdaq is interested in starting a “venture exchange” where small and emerging companies could trade without all of the regulatory burdens typically associated with securities exchanges, Friedman said.

A bill is currently working its way through the U.S. Congress that would authorize the creation of such exchanges.

“We certainly would be a participant in that,” she said.

Revenue from Nasdaq’s non-trading operations, which include market data sales, listings, and software applications delivered over the internet, rose a combined 15 percent over a year ago to $372 million.

The New York-based company’s market services segment, made up of stock, fixed-income and derivatives trading, had a 7 percent increase in revenue to $237 million, not including transaction-based expenses, such as $308 million in rebates paid out by the exchange to brokers.

Net income rose to $162 million, or 97 cents per share, in the second quarter ended June 30, from $146 million, or 87 cents per share, a year earlier.

Excluding one-time items, Nasdaq earned $1.18 per share, beating analysts’ average estimate by a penny, according to Thomson Reuters I/B/E/S.

Net revenue rose 3 percent to $615 million.

Reporting by John McCrank in New York and Diptendu Lahiri in Bengaluru; Editing by Supriya Kurane and Susan Thomas

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