Why a more profitable Nasdaq ended September with less cash than a year earlier

A stronger quarter and a thinner cash line

Nasdaq, Inc. runs the American stock exchange of the same name and sells market data, index licences and software to banks, brokers and other exchanges. In the third quarter of 2026, the three months to the end of September, it booked revenue of USD 2.4bn, up 20.9% from USD 2.0bn in the same quarter of 2025. Operating profit rose 24.9% to USD 732m. Net profit rose 27.7% to USD 540m. All figures are consolidated, in US dollars, under US accounting rules (US GAAP), so they cover the whole group.

On that evidence, this is a business that pays its own way with room to spare. The cash line points the other way. At the end of September 2026 the group held USD 365m in cash, against USD 470m a year earlier. That is a fall of USD 105m, or 22.3%, in a year when every profit measure went up.

The quarter was not merely bigger, it was also slightly better. The operating margin, the share of revenue left after running the business, widened from 29.6% to 30.6%, a gain of 1.0 pp. The net margin moved from 21.4% to 22.6%. So the cash did not fall because the business earned less on each dollar. Something else happened to the money.

A cash balance is a snapshot, not a scorecard

Profit and cash measure different things. Profit is booked when a sale is made and the costs that belong to it are matched against it. Cash is simply what sits in the bank on the last day of the period. Between them lies everything a company does with the money it earns: invoices not yet paid by customers, equipment and software bought up front, loans repaid, dividends and share buybacks.

In a manufacturer or a wholesaler, the usual reason for cash trailing growth is working capital. More sales mean more unpaid customer invoices and more stock on the shelves, and both absorb cash long before it comes back. That mechanism exists at Nasdaq too, since data and software customers are invoiced and pay later. But an exchange and software group carries no warehouse, and its revenue grows without much physical capacity to buy in advance. Depreciation and amortisation, the accounting charge for wear on past investment, barely moved, from USD 158m to USD 165m. That is not the picture of a company pouring money into new assets.

The balance sheet points to a different explanation. Total assets fell from USD 30.7bn to USD 27.4bn. Equity, what belongs to the shareholders, stayed almost exactly where it was, at USD 12.0bn against USD 12.0bn, a change of USD -24.0m. If assets shrank and equity did not, what the group owes to others must have shrunk by roughly the same amount. The equity ratio, equity as a share of total assets, rose 4.6 pp to 43.8%.

There is a further clue in the flat equity. A group that earns USD 540m in a single quarter and still ends the year with the same equity has sent money out of the business, or lost it somewhere outside the income statement. For a mature, listed company, the ordinary routes are dividends and share buybacks. The accounts do not split the outflows between debt repayment, payouts to shareholders and other uses. The financing section of the cash flow statement is the figure that would settle it.

What the numbers do support is narrower and still useful. The falling cash balance sits alongside a shrinking balance sheet, flat equity and a stronger equity ratio. That is the pattern of a company using its earnings to carry less on the balance sheet, rather than one being drained by its own growth. I would not treat the lower cash figure as strain. It looks more like a decision about where the money goes.

A small detail in the margins deserves a note. The EBITDA margin, operating profit before depreciation and amortisation as a share of revenue, was essentially unchanged at 37.5% against 37.6%. The improvement in the operating margin therefore came from depreciation growing more slowly than revenue, not from cheaper day-to-day operations. That is a quieter kind of gain, and it tends to last only as long as investment stays restrained.

The news flow offers some context on where future revenue could come from. Kurzy.cz reported in October 2026 that Anthropic had filed its listing prospectus with the US securities regulator and plans to trade on Nasdaq. New listings bring fees and trading volume to an exchange operator, but they belong to future quarters, not to this quarter's cash.

What to check in your own company

The Nasdaq quarter is a clean example of a question every owner should be able to answer: where did the profit go? You can answer it for your own business with last year's accounts and a quiet afternoon.

Start with net profit for the year. End with the change in your cash balance between the start and the end of that year. Then fill the gap in between, line by line: the change in what customers owe you, the change in stock, the change in what you owe suppliers, money spent on equipment and software, loans taken or repaid, and dividends paid. If the bridge does not close, the missing piece is usually the one you most need to understand.

Then sort the lines by kind. Some are choices: a dividend, an early loan repayment, a large purchase. Others are consequences: customers paying more slowly, stock building up because sales grew. A cash fall made of choices is a decision you took. A cash fall made of consequences is a decision the business took for you, and it will repeat next year if sales keep growing.

Finally, divide your closing cash by your average monthly fixed outgoings: salaries, rent, loan instalments. That tells you how many months the business could keep going if receipts stopped. Nasdaq can run its cash balance lean because it has a large, steady revenue base and access to credit markets. Most smaller companies cannot, and the same lower balance means something very different for them.

Nasdaq's third quarter shows a group that earned more and kept less in the bank, in a pattern that looks more like a choice than a strain. Profit tells you what a business earned. Cash tells you what it did with it, and only the bridge between them tells you whether that decision was yours.