Looking back on financial exchanges & data stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Moody's (NYSE: MCO) and its peers.
Financial exchanges and data providers operate trading platforms and sell market information. They enjoy relatively stable revenue from trading fees and subscriptions, increasing demand for data analytics, and expansion opportunities in emerging markets. Challenges include regulatory oversight of market structure, competition from alternative trading venues, and substantial technology investments needed to maintain low-latency trading infrastructure and data security.
The 10 financial exchanges & data stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.1%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10% since the latest earnings results.
Best Q2: Moody's (NYSE: MCO)
Founded in 1900 during America's railroad boom when investors needed reliable information on bond risks, Moody's (NYSE: MCO) provides credit ratings, risk assessment tools, and analytical solutions that help organizations evaluate financial risks and make informed investment decisions.
Moody's reported revenues of $1.90 billion, up 4.5% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ Investor Services segment estimates and a solid beat of analysts’ EBITDA estimates.
Moody's scored the biggest analyst estimates beat but had the slowest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 1.2% since reporting and currently trades at $493.16.
Morningstar (NASDAQ: MORN)
Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ: MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.
Morningstar reported revenues of $605.1 million, up 5.8% year on year, outperforming analysts’ expectations by 1.4%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 20.3% since reporting. It currently trades at $227.
Is now the time to buy Morningstar? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Tradeweb Markets (NASDAQ: TW)
Founded in 1996 as one of the pioneers in electronic bond trading, Tradeweb Markets (NASDAQ: TW) builds and operates electronic marketplaces that connect financial institutions for trading across rates, credit, equities, and money markets.
Tradeweb Markets reported revenues of $513 million, up 26.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ EPS estimates and transaction volumes in line with analysts’ estimates.
As expected, the stock is down 21.4% since the results and currently trades at $108.68.
Read our full analysis of Tradeweb Markets’s results here.
Intercontinental Exchange (NYSE: ICE)
Starting as an energy trading platform in 2000 before acquiring the iconic New York Stock Exchange in 2013, Intercontinental Exchange (NYSE: ICE) operates global financial exchanges, clearing houses, and provides data services and mortgage technology solutions to financial institutions and corporations.
Intercontinental Exchange reported revenues of $2.54 billion, up 9.8% year on year. This print met analysts’ expectations. Taking a step back, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a slight miss of analysts’ Exchanges segment estimates.
The stock is down 13.9% since reporting and currently trades at $159.96.
FactSet (NYSE: FDS)
Founded in 1978 when financial data was still primarily delivered through paper reports, FactSet (NYSE: FDS) provides financial data, analytics, and technology solutions that investment professionals use to research, analyze, and manage their portfolios.
FactSet reported revenues of $596.9 million, up 6.2% year on year. This number beat analysts’ expectations by 0.6%. Aside from that, it was a slower quarter as it logged full-year EPS guidance meeting analysts’ expectations and a significant miss of analysts’ EPS estimates.
The stock is down 15.5% since reporting and currently trades at $283.84.
Read our full, actionable report on FactSet here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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