Nasdaq registers 29% rise in market technology revenues in Q4 2019

Maria Nikolova

The market technology segment registered revenues of $98 million in the fourth quarter of 2019, up $22 million, or 29%, from the fourth quarter of 2018.

Nasdaq Inc (NASDAQ:NDAQ) today reported financial results for the fourth quarter and full year 2019.

For the fourth quarter of 2019, the company marked net revenues of $646 million, up $1 million from $645 million in the prior year period. Net revenues reflected a $22 million positive impact from organic growth in the non-trading segments, a $15 million increase from the inclusion of revenues from acquisitions, partially offset by a $21 million organic decrease in Market Services revenues, a $10 million negative impact from divestitures and a $5 million unfavorable impact from changes in exchange rates.

For 2019, net revenues were $2,535 million, an increase of $9 million from $2,526 million in the prior year. The full year increase in net revenues included a $112 million positive impact from organic growth in the non-trading segments, partially offset by a $29 million organic decrease in Market Services, a $39 million negative net impact from acquisitions and divestitures and a $35 million unfavorable impact from changes in foreign exchange rates.

GAAP operating expenses were $386 million in the fourth quarter of 2019, down $18 million from $404 million in the fourth quarter of 2018. The decrease primarily reflects lower general, administrative and other expense, lower professional and contract services expense, lower merger and strategic initiatives expense and lower depreciation and amortization expense, partially offset by higher compensation expense and restructuring charges in the fourth quarter of 2019.

Non-GAAP operating expenses were $335 million in the fourth quarter of 2019, an increase of $5 million, or 2%, compared to the fourth quarter of 2018. This reflects an $8 million organic expense increase and a $1 million increase from the net impact of acquisitions and divestitures, partially offset by a $4 million favorable impact from changes in foreign exchange rates.

Among the highlights for the fourth quarter of 2019 is the solid performance of the Market Technology segment, which registered revenues of $98 million in the final quarter of 2019, up $22 million, or 29%, from the year-ago period. The increase reflects the impact of the acquisition of Cinnober, which added $13 million in revenues, or 17%, as well as organic growth of $9 million, or 12%. The organic growth was primarily driven by an increase in change request revenues and software as a service (SaaS) surveillance revenues and an increase in the size and number of software delivery projects.

In 2019, Nasdaq signed seven new market infrastructure operator and New Market clients for its core matching, surveillance and post trade systems, as well as 18 new buy-side and sell-side customers. Annualized recurring revenue, or ARR, totaled $260 million in the fourth quarter of 2019, an increase of 17% year over year. Development and deployment of the next generation Nasdaq Financial Framework solution continues on schedule and the company continued to grow its sell-side, Nasdaq-hosted execution platform offering with four new firms in 2019 (two in the fourth quarter), including three Tier 1 global banks.

Nasdaq introduced artificial intelligence capabilities to improve surveillance patterns on the U.S. stock market. Nasdaq, through a collaboration of its Market Technology business and U.S. market surveillance unit, launched the use of AI for surveillance patterns on The Nasdaq Stock Market. The initiative enhances Nasdaq’s market surveillance functionality to improve detection of malicious activity. Over time, Nasdaq’s Market Technology business expects to offer these new detection capabilities for surveillance to its exchange and regulator customers as well as its banks and broker customers.

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