Nasdaq profit drops 10% as expenses rise

© Reuters. FILE PHOTO: The Nasdaq logo is displayed at the Nasdaq Market site in New York, U.S., May 2, 2019. REUTERS/Brendan McDermid/

(Reuters) - Nasdaq Inc posted a 10% drop in second-quarter profit on Wednesday hit by expenses, even as revenue saw an uptick as traders turned to investment-related products to beat market volatility.

The transatlantic exchange operator reported a 2.3% increase in total operating expenses, in line with other financial companies that have felt inflationary pressures, reflecting costs tied to higher compensation and benefits for employees.

The company's Nasdaq stock market hosted 38 IPOs in the reported quarter, compared with 135 stock market flotations a year earlier.

In the second quarter, there were 305 initial public offerings globally, raising $40.6 billion, down 65% from last year, according to data from EY, as the U.S. IPO market saw volumes shrink to a fraction of last year.

Net revenue, however, rose 6% to $893 million, primarily driven by a 10% growth in the company's solutions segment, which also houses anti-financial crime technology and environmental, social, and governance (ESG) advisory products.

Under Chief Executive Officer Adena Friedman, the stock exchange operator has looked to increasingly diversify its offerings and reposition itself as a leading financial technology company with an expanding footprint in the software sector, offering analytics, data and cloud services.

Last month, Nasdaq also said it planned to acquire ESG software provider Metrio for an undisclosed amount.

Nasdaq reported net income of $307 million, or $1.85 a share, for the quarter ended June 30, compared to $341 million, or $2.05 a share, a year ago.

Earlier this month, Nasdaq was also among large exchange groups that won a ruling against the Securities and Exchange Commission when a U.S. appeals court struck down the regulator's order that would have allowed some financial firms to have a say in how essential stock market data is priced and disseminated.