Nasdaq Q2 2025: Profits Double on Strong Growth and Cost Cuts

When a company like Nasdaq, Inc. (NDAQ) releases its quarterly report, it offers a fascinating look into the health of the global capital markets. As a core pillar of the financial system, Nasdaq's performance is a bellwether for market activity and technological trends in finance. Let's dive into their latest 10-Q filing to see what the numbers from the second quarter of 2025 reveal.

The headline story is one of impressive growth and profitability. Nasdaq reported a net income of $452 million, a staggering 103% increase from the $222 million earned in the same quarter last year. This translated to a diluted earnings per share of $0.78, more than double the $0.38 from Q2 2024. But how did they achieve such a remarkable jump? It's a story of both revenue growth and sharp expense management.

Fueling the Growth Engine

Nasdaq’s revenue is best understood by looking at a metric called "revenues less transaction-based expenses." This figure strips out the high-volume, low-margin costs of trading, like rebates, giving us a clearer view of the company's core earnings power. This key metric grew by a healthy 12.7% to $1.31 billion for the quarter.

The growth was broad-based across Nasdaq's three main divisions:

• Market Services ($306 million, up 22.4%): This segment, which includes trading and clearing, benefited from a surge in market volatility and volume. Net revenues from U.S. Equity Derivative Trading jumped 26.6%, while Cash Equity Trading saw a 21.3% rise.
• Capital Access Platforms ($527 million, up 9.8%): This division, home to listings, data, and index services, saw a rebound in the IPO market with 79 new listings on The Nasdaq Stock Market, a significant increase from 39 in the prior year's quarter.
• Financial Technology ($464 million, up 10.3%): This increasingly important segment, which provides technology to banks and brokers, showed strong momentum, particularly in its Financial Crime Management Technology business, which grew nearly 20%.

To see how these diverse revenue streams flow through the company's costs to create profit, the following diagram provides a visual breakdown of the income statement for the first half of 2025.

The Bottom Line Boost

While strong revenue is great, Nasdaq's profit surge was supercharged by what happened on the expense side. Total operating expenses remained virtually flat compared to last year. A key reason for this was a dramatic drop in Restructuring charges, which fell from $56 million in Q2 2024 to just $9 million this quarter.

Furthermore, a couple of non-operating items provided a significant tailwind. The company recorded a $39 million net gain on divestitures from the sale of its Nasdaq Risk Modelling for Catastrophes business. An unusually low effective tax rate of 17.5%, down from 34.9% last year, also played a major role in converting pre-tax income into a much larger net profit.

A Look Ahead

Beyond the impressive quarterly numbers, the filing reveals a strong foundation for future performance. The company’s remaining performance obligations (RPOs)—a measure of contracted future revenue for its technology and insights businesses—stood at a massive $3.3 billion as of June 30, 2025. This large backlog provides significant visibility into future earnings.

In summary, Nasdaq's Q2 results paint a picture of a company firing on all cylinders. It successfully capitalized on robust market activity while benefiting from reduced restructuring costs and other one-time gains. With its continued pivot toward higher-margin, subscription-based technology and data services, backed by a formidable contract backlog, Nasdaq appears well-positioned to continue its growth trajectory in the evolving landscape of global finance.