10-Q: Nasdaq Reports Strong Q1 2026 Financial Performance

Nasdaq, Inc. announced robust financial results for the first quarter of 2026, with significant revenue growth across key segments and improved profitability.

Summary

• Nasdaq reported total revenues of $2.137 billion for the first quarter of 2026, a 2.0% increase compared to $2.096 billion in the same period of 2025.
• Revenues less transaction-based expenses grew by 13.8% to $1.407 billion, driven by strong performance in Capital Access Platforms and Financial Technology segments.
• Operating income saw a substantial increase of 20.1% to $657 million, up from $547 million in Q1 2025.
• Net income rose by 31.4% to $519 million, resulting in diluted earnings per share of $0.91, a 33.3% increase from $0.68 in the prior year.
• The company's Financial Technology segment delivered 20% revenue growth and 18% ARR growth.
• Market Services generated record net revenues, driven by strong volumes and market share in U.S. cash equities and equity derivatives.
• Nasdaq extended its listing leadership, securing 7 of the top 10 largest operating company IPOs in the U.S. with a 71% win rate.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, with significant growth in key financial metrics, market leadership, and strategic segment performance, despite minor headwinds in one segment.

Positives

• Strong revenue growth in Capital Access Platforms (11.4%) and Financial Technology (19.7%).
• Significant increase in operating income (20.1%) and net income (31.4%).
• Diluted earnings per share increased by 33.3% to $0.91.
• Record net revenues in Market Services due to strong volumes and market share.
• Continued leadership in U.S. IPOs, with a 71% win rate for eligible operating companies.
• Index business saw net inflows of $79 billion over the last twelve months, with $6 billion in Q1 2026.
• ETP AUM reached $836 billion as of March 31, 2026, with average ETP AUM hitting a record $877 billion in Q1.
• Financial Technology segment achieved 20% revenue growth and 18% ARR growth.
• Increased cash dividend declared per common share by 12.5% to $0.27.
• Share repurchase program remains active with $2.9 billion remaining authorization as of March 31, 2026.

Negatives

• Market Services segment revenue decreased by 8.1% to $1.047 billion, primarily due to a significant decrease in brokerage, clearance and exchange fees.
• Transaction rebates increased by 23.9%, impacting net revenues.
• Working capital decreased to $(17) million from $42 million in the prior quarter, excluding default funds and margin deposits.
• The effective tax rate increased to 23.4% from 19.1% in the prior year period, partly due to a prior period tax benefit.

Risks

• Deterioration of revenues in any business segment could affect the availability of internally-generated funds.
• Changes in regulatory and working capital requirements could impact liquidity.
• An increase in expenses could affect the availability of internally-generated funds.
• Operating covenants in credit facilities could limit total borrowing capacity.
• Credit rating downgrades could limit access to additional debt.
• A significant decrease in the market price of common stock could impact external funding.
• Volatility or disruption in public debt and equity markets could affect external funding.
• Potential for goodwill impairment charges in the future due to prolonged economic weakness or significant declines in operating results.
• The European Commission's antitrust investigation into Nasdaq and Deutsche Börse regarding financial derivatives trading, listing, and clearing could lead to fines or other remedies.
• Cybersecurity risks and the ability to effectively manage AI in products and offerings.

Future Outlook

The company expects to continue investing in activities and product development to support long-term growth. They anticipate meeting ongoing obligations and executing capital deployment strategies through a combination of current cash, operating cash flows, borrowing capacity, and access to additional financing. Future dividend declarations are subject to board approval, with a policy to provide regular and increasing dividends.

Management Comments

• "Nasdaq is a leading technology platform that powers the worlds economies. We architect the infrastructure of the worlds most modern markets, power the innovation economy, and build trust in the financial system."
• "We empower economic opportunity by designing and deploying the technology, data, and advanced analytics that enable our clients to capture opportunities, navigate risk, and strengthen resilience."
• "Our business performance can be positively or negatively impacted by a number of factors, including general economic conditions, the accelerated pace of technological change, the geopolitical environment, current or expected inflation, interest rate fluctuations, the threat or imposition of broad-based tariffs, market volatility, changes in investment patterns and priorities, regulatory changes, pandemics and other factors that are generally beyond our control."
• "We believe our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations."

Industry Context

StockSavvy.ai notes that Nasdaq's performance in Q1 2026 reflects continued strength in its core market infrastructure and technology services, aligning with broader industry trends of increasing demand for data, analytics, and financial technology solutions. The company's focus on innovation, particularly in AI, and its robust listing business position it well within the evolving financial landscape.

Comparison to Industry Standards

• Nasdaq's IPO win rate of 71% for eligible U.S. operating companies, direct listings, and SPAC combinations in Q1 2026 significantly outperforms industry averages, which can fluctuate but are generally lower.
• The company's ETP AUM of $836 billion and record average ETP AUM of $877 billion in Q1 2026 demonstrate a leading position in the exchange-traded product market, competing with global index providers and ETF issuers.
• The 20% revenue growth in the Financial Technology segment, particularly in areas like financial crime management and regulatory technology, aligns with strong growth trends observed across the fintech sector, driven by increasing regulatory scrutiny and the need for advanced fraud detection solutions.
• Record net revenues in Market Services, driven by strong volumes and market share in U.S. cash equities and equity derivatives, indicate Nasdaq's ability to capture market activity effectively compared to other exchanges like the NYSE or Cboe.

Legal Proceedings

• The European Commission is conducting a formal antitrust investigation into Nasdaq and Deutsche Börse regarding potential competition law concerns related to the trading, listing, and clearing of financial derivatives in the European Economic Area, stemming from a cooperative arrangement with Eurex announced in 1999.

Stakeholder Impact

• Shareholders: Increased diluted EPS and a 12.5% increase in cash dividends declared per common share indicate positive returns.
• Employees: Increased headcount to 9,613 employees supports revenue growth and innovation, with share-based compensation continuing.
• Customers: Continued investment in technology and data solutions aims to enhance client capabilities in capturing opportunities and navigating risk.
• Regulators: Ongoing cooperation with the European Commission regarding the antitrust investigation and compliance with various financial regulations.

Next Steps

• Continue to invest in activities and product development to support long-term growth.
• Manage capital deployment strategy by balancing internal investments, debt repayments, shareholder returns, and potential acquisitions.
• Wind down commodities clearing and trading services by the end of the second quarter of 2026.
• The board of directors will continue to declare quarterly dividends, with the intention to provide regular and increasing dividends.

Key Dates

Recommendation

While the Q1 2026 results are strong with significant growth in net income and EPS, and continued market leadership, the slight decline in Market Services revenue and the ongoing European Commission antitrust investigation introduce some uncertainty. The company's strategic investments and dividend increases are positive, but a 'hold' recommendation allows for further observation of these factors and broader market conditions.

Keywords

Nasdaq, SEC Filing, 10-Q, Quarterly Report, Financial Results, Market Services, Capital Access Platforms, Financial Technology, Earnings, Revenue, Net Income, EPS, Stock Exchange, Derivatives, IPOs, ETPs, ARR