By Laura Matthews and Pritam Biswas
(Reuters) -Nasdaq on Wednesday reported third-quarter profit that beat Wall Street estimates, helped by stronger demand for its indexes and anti-financial crime products.
The company has been expanding beyond market-sensitive businesses like trading to become a full-scale data and analytics provider. The diversification has helped it offset a prolonged slump in the initial public offering (IPO) market.
Index revenues at Nasdaq grew 15%, while revenue from its anti-financial crime unit, which offers solutions for detecting financial fraud, jumped 21% to $93 million in the third quarter.
"Nasdaq continues to make progress on strategic objective to capitalize on the key megatrends shaping the financial system ... delivering broad-based growth across our businesses," Nasdaq CEO Adena Friedman said on an analysts' call.
The company's solutions businesses revenue rose 9% to $694 million in the quarter compared to a year earlier, while its trading business reported a 1% decline to $236 million.
That helped the company post an adjusted profit of 71 cents per share. Analysts on average had expected 68 cents per share, according to LSEG IBES data.
Net revenue in the quarter rose 6% to $940 million, compared with the same period in 2022.
Listings at Nasdaq are yet to gather pace despite the IPO market beginning to show "green shoots," underscoring risks to recovery even as hopes of a soft landing for the U.S. economy grow.
A total of 87 companies listed on the Nasdaq Stock Market in the quarter, compared with 98 a year earlier.
Nasdaq's data and listing services revenues grew 5%, and in the third quarter it welcomed several marquee IPOs such as Softbank-backed Arm and grocery delivery app Instacart (NASDAQ:CART), and benefited from some notable listing switches such as DoorDash (NASDAQ:DASH).
Friedman said looking ahead, the exchange remains "well positioned to capture new listings activity" because of a strong pipeline of companies committed to Nasdaq.
Arm and Instacart were among the big names that debuted on the Nasdaq during the quarter, aiming for rich valuations.
Nasdaq's shares rose nearly 4% to $52.07 in morning trading after the results. Year to date, Nasdaq's stock has lost 15.2%.