By Manya Saini and Laura Matthews
(Reuters) -Nasdaq beat estimates for first-quarter revenue on Thursday, driven by strong demand for its financial technology products used by traders and investors to navigate the capital markets.
Revenue from its financial technology unit surged 71% to $392 million in the first quarter, while revenue from its index business jumped 53% to $168 million.
"Our performance underscores the durability of our business model and our ability to deliver growth across uncertain environments," said Adena Friedman, chief executive officer, at Nasdaq on an analysts' call.
Nasdaq's solutions business revenue rose 35% in the quarter, owing to the strong growth across its index and financial technology products. For market services, however, it fell 9% to $237 million, driven in part by declines in revenue from U.S. equity derivatives because of lower volatility, and U.S. cash equities.
Meanwhile, revenue in the capital access platforms division rose 15%, also owing to the strong performance of the index business.
The transatlantic exchange operator has expanded its business beyond trading and listing to create a more steady and sustainable source of revenue by offering products that focus on anti-financial crime and compliance.
Nasdaq, like its peers, has been on an acquisition spree to diversify its portfolio of technology and intellectual property after regulations in 2005 opened the equities trading market up to competition from brokers.
Net revenue in the first quarter jumped 22% to $1.12 billion. Analysts on average had expected $1.11 billion, according to LSEG data.
The company's adjusted profit of 63 cents per share in the three months ended March 31 missed analysts' expectations of 65 cents.
The push towards products and solutions helped offset a deceleration in trading activity in U.S. equities as markets took a breather following a period of prolonged volatility.
U.S. equity matched shares volumes declined to 116.7 billion in the first quarter from 121.8 billion a year earlier. U.S. equity options volumes fell to 773 million contracts from 811 million contracts.
Some of the biggest names that listed their shares on the Nasdaq exchange in New York during the quarter include AI-focused chip firm Astera Labs and biotech firm Kyverna Therapeutics.
Total new listings on the Nasdaq Stock Market in the quarter were 79, compared with 81 in the year-earlier period. Friedman said a healthy pipeline of companies are preparing to go public, but their timeline depends on continued strong economic and market performance.
Following the call, Nasdaq's shares were down 3.4% at $59.42 as the U.S. stock market extended its fall. "Usually, it doesn't help their index business, which was a key source of strength in the first quarter," said Owen Lau, senior analyst at Oppenheimer & Co.