Nasdaq announced better-than-expected quarterly results, in terms of both revenues and profits. The largest initial public offering (IPO) of the year also begins trading on Nasdaq today. Adina Friedman, President and CEO of Nasdaq, expressed her enthusiasm for the return of investor interest in the IPO market, with the launch of the largest IPO of the year on Nasdaq.
Friedman points to 10% growth in overall earnings, with a 29% increase in the index sector and a 16% increase in financial technology, a strategic focus sector for Nasdaq. Despite a difficult 2023, the IPO market is showing slow growth. Investors' appetite for the risks associated with IPOs appears to be increasing, although Friedman predicts slow progress throughout the year, as monetary policy and other geopolitical factors keep investors risk averse.
Friedman reveals that Nasdaq expects IPO activity to accelerate in 2025, based on discussions with pipeline companies. She highlights Nasdaq's ability to gain market share and stresses the importance of working with companies well before they go public, helping them manage their liquidity in the private markets and improving their governance practices.
Nasdaq had a 72% success rate in selecting companies for IPOs in the last quarter, positioning itself as the preferred venue for IPOs. Friedman also discusses Nasdaq's diversification into new activities, including the sale of technology to other exchanges and risk management, the fight against financial crime and regulatory compliance.
Turning to the wider economy, Friedman, who also sits on the board of the New York Federal Reserve, notes the resilience of the US economy, with inflation normalising and GDP growth still robust. She points out that Federal Reserve policy must navigate between economic growth and the impact of the cost of capital on the population.
In conclusion, Friedman highlights the impact of the cost of capital on the IPO environment, explaining that high interest rates can reduce the value placed on companies' future cash flows, making IPOs more difficult. A moderation in interest rates could, however, act as a catalyst for future IPOs.

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