Nasdaq Earnings Preview: What We’re Watching

January 30th, 2012 by Trefis Team
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Nasdaq OMX (NASDAQ:NDAQ) is going to announce its fourth quarter earnings on Wednesday, February 1, 2012. Last quarter, the company benefited from the increase in trading volume and reported an all time high revenues of $438 million. In the fourth quarter, however, the company will be hard-pressed to match the third quarter’s trading surge as fears over the debt crisis in Europe coupled with the slowdown during the holidays weighed on the trading revenues. Nasdaq OMX provides trading, exchange technology, securities listing and public company services and competes with CME Group (NASDAQ:CME), NYSE Euronext (NYSE:NYX), IntercontinentalExchange (NYSE:ICE) and CBOE Holdings (NASDAQ:CBOE).

See our full analysis of Nasdaq OMX

Technology services to be in focus

Nasdaq is turning its focus on providing more value added services beyond the execution of trades for its members which could result in a stable source of revenue unlike the trading related revenues which remain volatile in the current economic environment. The recent acquisition of RapiData LLC, a leading provider of machine-readable economic news to trading firms and financial institutions, will help Nasdaq to broaden its trading related service offering at a time when stock volumes are down.

Last quarter, Nasdaq’s access services revenue grew 33% over the third quarter of 2010 driven by increased demand for these services and the acquisition of FTEN, a low latency pretrade risk management product. FTEN recently received patent for technology that allows customers to reduce systemic risk by aggregating, normalizing and analyzing data. We expect continued product innovation to drive Nasdaq’s fourth quarter revenues.

In addition, we will also be watching closely the company’s plan to expand clearing services in Europe. See Nasdaq Enters Currency Dog Fight in Europe Clearing Non-Deliverable Forwards

We have a price estimate of $25.84 on Nasdaq OMX’s stock, about the same as the current market price.

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