Nasdaq Chief Executive Adena Friedman said that the migration of their first market to AWS is on track and that new customers of their market technology business are increasingly using SaaS (software as a service) solutions instead of on-premises installations.
Friedman said in the July 20 earnings call, “We’re pretty excited about the progress we’re making with AWS.”
Today @Nasdaq announces its second quarter 2022 financial results.
Read more here: https://t.co/E9YVdjjaKO pic.twitter.com/lFqcGgchNe
— Nasdaq (@Nasdaq) July 20, 2022
Last November, Nasdaq announced a multi-year partnership with AWS to gradually migrate its North American markets to the cloud provider, starting with the US options market Nasdaq MRX. Over the last 10 years, Nasdaq has moved its surrounding systems that support trading to a public cloud environment, but the trading systems themselves and the matching engines have been on-premises.
AWS has committed to creating a private local zone within Nasdaq’s primary Carteret data center in New Jersey, and Nasdaq MRX is scheduled to migrate to the cloud in the fourth quarter of this year.
Adena Friedman, Nasdaq
“We’re on track with MRX, and what we’ve learned really helps us ensure that we’re optimizing performance as we bring AWS infrastructure into the data center as we scale it out,” Friedman said. “Over the next two years we will expand the data center with Equinix and expand our performance by working with AWS.”
Equinix and AWS will double both the size and power of the data center, due for completion in 2024, and make it easier for Nasdaq customers to migrate to the cloud in the new AWS Local Zone. MRX will migrate to AWS Outposts and the new Fusion platform.
“We moved MRX to Fusion and tested that in an on-premises environment with clients as a base,” added Friedman. “We will start testing with our customers in the new environment in the fall to make sure we’re performing the same.”
Friedman said SaaS revenue now accounts for 35% of the company’s total annual recurring revenue, marking a new high.
The market infrastructure technology business generated $56 million in net income in the second quarter as the company improved its ability to collaborate with customers on the ground. Notably, Nasdaq has completed phase one deliveries for all four of its largest deployments, which are due by the end of the quarter.
New relationships announced during the quarter included Brazilian broker XP, which launched a digital asset trading platform using Nasdaq technology, delivered as a SaaS solution in the cloud. Additionally, Climate Impact X (CIX), a Singapore-based carbon credits marketplace and exchange, will use Nasdaq’s cloud-based SaaS technology to power its spot trading platform, which is set to launch in early 2023 for financial institutions and institutional investors.
Friedman continued that the overall sentiment from customers at Nasdaq’s recent annual Technology of the Future conference was that they saw the benefits of cloud deployments as they considered changes in their operating models and looked for new ways to to differentiate their offerings.
That’s what she added the most new customers are entering into SaaS-based contracts that are more scalable over the long term, although many customers are still working on-premises.
“We’re really encouraged by the SaaS alignment of the new distribution,” Friedman said. “As we move forward and get more customers in a SaaS format, we will have fewer change requests but more stable and consistent revenue.”
Source: Nasdaq.
financial performance
Friedman said markets, investors and corporate clients all experienced heightened levels of volatility in the second quarter, but Nasdaq’s strategic vision and ability to execute remains clear. She added, “The strength and quality of our businesses puts us in an excellent position to manage this momentum.”
Nasdaq reported record net sales of $893 million in the second quarter of this year, up 6% from the same period last year, which Friedman says demonstrates the group’s ability to capitalize on new opportunities across diverse operating environments.
She highlighted the index business, which posted revenue growth of $17 million, or 16%, compared to the year-ago period. This was driven by positive net inflows of $71 billion over the last 12 months, including $25 billion in the difficult market seen in the first half of this year.
The Market Services segment had net revenue of $310 million in the second quarter, which Friedman said was driven by maximizing opportunities presented by robust levels of activity through strong market share and consistent pricing strategies.
“The sheer volume traded on the Nasdaq exchanges is up 22% compared to the same quarter last year,” she added.
In late June, the Nasdaq’s close set a record for the number of shares traded during the 2022 recomposition of the Russell US indices, as 3.3 billion shares were worth nearly $64 billion from last year’s event.
“The new cross-closing record is a testament to the investments we have made in our technology and the results of the trust the team has diligently built with all investors, even during some of the most volatile market periods on record” , said Friedman .
On the Nordic and Baltic stock markets, the value of shares traded in the first half of 2022 was the second highest since 2008.
Source: Nasdaq.
Friedman said that in the second half of 2022, Nasdaq will focus on three pillars of liquidity, namely modernizing marketplaces through technology; integrity through its solution to combating financial crime; and transparency.
Transparency means leveraging the ability to provide ESG solutions, specifically providing advisory services to companies, along with data aggregation and reporting capabilities to enable them to share their ESG and climate strategies and progress with investors.
In June, Nasdaq completed the acquisition of Metrio, which is expanding its ESG solution for corporate reporting.
“ESG advice is actually the most in-demand part of the business, but it’s moving more and more into reporting,” Friedman said. “We’re seeing more and more companies using OneReport and Metrio to collect ESG data and feed it to the rating agencies, and that will be the long-term growth driver for us.”
In addition, Nasdaq owns Puro.earth, a marketplace for carbon removal in Europe, which today accounts for only a small portion of the group’s sales.
“We see Puro.earth as a 10 to 5 year plan to build a really successful marketplace there,” Friedman said.
SUBSCRIBE TO NEWSLETTER
And get exclusive articles on securities markets
Comments are closed.