NASDAQ vs NYSE: What's the Diff?

01/19/25 Benchmarks for Operators

Jan 19, 2025

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I was recently in Zimbabwe for a safari, cruising along what could generously be called a highway (more like an elephant path), when I spotted a billboard celebrating the launch of the country’s new stock exchange. As of now, the Zimbabwe Stock Exchange (ZSE) is home to 63 companies, including household names like Delta Corporation (no, not Delta Airlines) and Econet Wireless, with a collective market cap of approximately $2 billion.

It got me thinking: How many stock exchanges exist worldwide? I (embarrassingly) didn’t know Canada had an exchange until internet playboy Dan Bilzerian listed a cannabis company —and then went bankrupt. From commodities to energy, I realized there are more than 60 major stock exchanges around the globe. These include the London Stock Exchange (LSE), Deutsche Börse in Germany, and the Toronto Stock Exchange (TSX) in Canada, all serving as platforms for companies to list shares and access liquidity.

The two largest and most influential stock exchanges, by market capitalization, are the United States' NASDAQ and NYSE. These exchanges are especially relevant to CFOs and operators in the SaaS and tech sectors, representing more than 40% of total global market cap. This post provides a succinct overview of their differences, costs, and reputational factors, with insights for those contemplating IPO strategies.

NYSE: The Establishment

The New York Stock Exchange is synonymous with "blue chip." For over two centuries, it’s been the stage for titans of industry, including household names like Berkshire Hathaway and Coca Cola. Walking into the NYSE feels like stepping into a temple of commerce: grand Romanesque architecture, heavy security, and echoes of Wall Street’s golden age.

While the number of designated market makers (DMMs) has dwindled from hundreds to just five over the last decade, pushed out by lightspeed electronic systems and algorithms, the NYSE still exudes gravitas. You might not catch brokers shouting orders anymore, but you will see Jim Cramer making suspect picks or the folks from CNBC’s Squawk Box roaming about.

Here’s a picture of me doing a podcast there (security must have had the day off):

NASDAQ: The Innovator

If the NYSE represents tradition, the NASDAQ embodies innovation. If Henry Ford listed on the NYSE, it’s no wonder Elon lists Tesla on the NASDAQ. It was the first electronic stock exchange, established in 1971, and remains a hub for high-growth, tech-driven companies. From its fully automated trading systems, to its neon-lit headquarters overlooking Times Square, the NASDAQ feels more Silicon Valley than Wall Street. The exchange is home to modern giants like Apple, Amazon, and Google, cementing its reputation as the go-to platform for cutting-edge firms.

Here’s a picture of my ugly mug there:

Before we cover differentiators, it’s important to know how each makes money so you understand the incentives at play.

The Business Behind an Exchange

Both exchanges are publicly traded (how meta!), for-profit businesses.

The NYSE is owned by the larger Intercontinental Exchange (ICE).
- ICE: A global financial powerhouse headquartered in Atlanta, Georgia. It operates multiple financial markets, clearinghouses, and data services across nine different asset classes, including commodities, fixed income, and equities.
  - NYSE Ownership: ICE acquired the New York Stock Exchange in 2013 for $8.2 billion, adding the world’s largest equities platform to its diverse portfolio.
  - Global Reach: ICE runs more than a dozen regulated exchanges and marketplaces worldwide, including the NYSE, ICE Futures (energy and commodities markets), and ICE Clear (clearinghouses for derivatives and risk management).
  - Data-Driven Revenue: ICE has evolved into a data-as-a-service (DaaS) business, leveraging vast amounts of market data to power analytics and compliance tools for institutional clients.
  - Breakdown of ICE's revenue streams:
    1. Exchanges: This is ICE's largest revenue segment, which includes various exchange-related services and products
    2. Fixed Income and Data Services: Provides fixed income pricing, reference data, indices, analytics, and execution services
    3. Mortgage Technology: Offers a comprehensive, end-to-end technology platform for the mortgage industry. This TAM expansion came via it’s acquisitions of Ellie Mae in 2020 and Black Knight in 2023

NASDAQ: Operates under NASDAQ Inc., one of the largest exchange operators globally. It trades under the NDAQ ticker.
- Market Leadership: NASDAQ holds the #1 market share in U.S. equity options trading, cementing its dominance in high-volume, high-velocity, tech-driven markets.
- Strategic Pivot: Since 2017, NASDAQ has aggressively diversified into financial technology, transforming itself from a pure-play exchange into a fintech powerhouse. Its offerings now include advanced trading platforms, compliance solutions, and analytics tools (source: Peak One Analytics).
- IPO Leadership: For several years running, NASDAQ has led the U.S. market in IPO win rates, attracting high-growth companies with its tech-forward reputation.
- Breakdown of Nasdaq's revenue streams:
  1. Capital Access Platforms: Includes Data and Listing Services, Index revenues, and Workflow and Insights revenues
  2. Financial Technology: Comprises Financial Crime Management Technology, Regulatory Technology, and Capital Markets Technology
  3. Market Services: This is Nasdaq's largest revenue stream, which includes transaction-based revenues from trading
  4. Other Revenues: A small portion of miscellaneous revenue sources

TL:DR: Both exchanges have matured past being simply trading venues; they are technology and data platforms. They’ve transformed into DaaS (Data as a Service) businesses. Data isn’t just a byproduct—it’s a high-margin revenue stream driving modern trading and investment strategies.

OK, so why would you want to go with one over the other?

Differentiators for Listing

Brand Alignment

An IPO is very much a marketing event. It’s a chance to cement yourself as one of the big dogs. And many software companies use it as a way to cement their positioning upstream with enterprise clients
NYSE: Words that come to mind include “established,” “prestigious,” and “stable.” Founded in 1792, it’s older than inventions like the telegraph.
- NYSE-listed companies tend to benefit from a perception of reliability, which appeals to institutional investors and long-term stakeholders.
- For industries like energy, finance, and industrials, the NYSE offers a reputation aligned with legacy and tradition.
NASDAQ: Words like “modern,” “forward-looking,” and “cutting-edge” define this exchange. It’s a child of the tech era, having been born in 1971, post-electricity.
- Its emphasis on speed and automation makes it particularly appealing to firms that prioritize a tech-forward image.

Cost

NASDAQ:
- Generally charges lower listing fees, making it a more attractive option for smaller-cap or newly public companies.
- The initial listing fee for NASDAQ can range from $50,000 to $295,000, depending on the number of shares listed. Annual fees are similarly cost-effective, starting as low as $50,000.
- NASDAQ’s competitive pricing often appeals to high-growth firms with limited resources or those seeking to optimize budgets.
NYSE:
- Known for its premium pricing, NYSE’s listing fees are higher, reflecting the prestige and the infrastructure provided. Initial listing fees typically range from $150,000 to $500,000, with annual fees reaching up to $500,000 for the largest companies.
- The premium is a rounding error for large-cap firms that value brand perception and access to a broader institutional investor base.

Liquidity

NASDAQ:
- NASDAQ operates as a dealer market, meaning trades are executed through a network of dealers and market makers. This results in higher trading activity for tech and high-growth stocks, which often attract retail investors and traders looking for volatility.
- The dealer model allows for more liquidity in smaller trades, which benefits high-frequency traders.
NYSE:
- The NYSE operates as an auction market, with trades facilitated by a designated market maker (DMM) who ensures order stability and minimizes price swings.
- This system often results in lower volatility, making it a better fit for companies seeking a more stable investor base.

Media Visibility

NASDAQ:
- NASDAQ’s iconic Times Square billboard offers unmatched visual PR opportunities for IPOs. Companies listing on NASDAQ often see their logos splashed across one of the most visible screens in the world, creating buzz and excitement.
- The exchange’s tech-first reputation resonates strongly with retail investors, amplifying awareness for consumer-facing brands.
NYSE:
- The NYSE provides unparalleled media access, with financial networks like CNBC and Bloomberg broadcasting live from the trading floor.
- Ringing the opening bell at the NYSE remains one of the most symbolic moments for newly public companies, offering a sense of gravitas and historical significance.

Technology and Support

And finally, you also get some tech thrown in – like investor research tools, ways to monitor your trading volume, and sell side industry coverage aggregation. These can cost hundreds of thousands of dollars per year if you want the “Cadillac of systems”.

Summary of Key Differentiators:

Brand Alignment: NYSE = prestige, NASDAQ = innovation.
Cost: NASDAQ is more affordable for smaller firms; NYSE commands a premium for its legacy.
Liquidity & Volatility: NASDAQ attracts high-volume, volatile trades; NYSE emphasizes stability.
Media Visibility: NASDAQ excels in retail visibility; NYSE dominates institutional PR.
Technology & Support: Both offer robust tools, but NASDAQ is tech-first, while NYSE combines tech with human oversight.
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Largest Technology(ish) Players by Market Cap (estimates)

NASDAQ:

Apple (AAPL): $3.68 trillion
Nvidia (NVDA): $3.54 trillion
Microsoft (MSFT): $3.15 trillion
Alphabet (GOOGL): $2.36 trillion
Amazon (AMZN): $2.36 trillion
Meta Platforms (META): $1.48 trillion
Tesla (TSLA): $1.30 trillion
Broadcom (AVGO): $1.10 trillion
Netflix (NFLX): $370 billion
Adobe (ADBE): $200 billion

NYSE:

Oracle (ORCL): $250 billion
Alibaba Group (BABA): $220 billion
Accenture (ACN): $200 billion
ServiceNow (NOW): $217 billion
Salesforce (CRM): $180 billion
SAP SE (SAP): $150 billion
Uber (UBER): $143 billion
Shopify (SHOP): $133 billion
Sony (SONY): $130 billion
IBM (IBM): $120 billion

For more on the NASDAQ vs NYSE check out my friend Peak One Analytics

TL;DR: Multiples are UP week-over-week.

Top 10 Medians:

EV / NTM Revenue = 16.7x (UP 0.6x w/w)
CAC Payback = 28 months
Rule of 40 = 53%
Revenue per Employee = $391K

Figures for each index are measured at the Median

Median and Top 10 Median are measured across the entire data set, where n = 110
Population Sizes:
- Security: 17
- Database and Infra: 14
- Backoffice: 16
- Marcom: 16
- Marketplace: 15
- Fintech: 16
- Vertical SaaS: 16

Revenue Multiples

Revenue multiples are a shortcut to compare valuations across the technology landscape, where companies may not yet be profitable. The most standard timeframe for revenue multiple comparison is on a “Next Twelve Months” (NTM Revenue) basis.

NTM is a generous cut, as it gives a company “credit” for a full “rolling” future year. It also puts all companies on equal footing, regardless of their fiscal year end and quarterly seasonality.

However, not all technology sectors or monetization strategies receive the same “credit” on their forward revenue, which operators should be aware of when they create comp sets for their own companies. That is why I break them out as separate “indexes”.

Reasons may include:

Recurring mix of revenue
Stickiness of revenue
Average contract size
Cost of revenue delivery
Criticality of solution
Total Addressable Market potential

From a macro perspective, multiples trend higher in low interest environments, and vice versa.

Multiples shown are calculated by taking the Enterprise Value / NTM revenue.

Enterprise Value is calculated as: Market Capitalization + Total Debt - Cash

Market Cap fluctuates with share price day to day, while Total Debt and Cash are taken from the most recent quarterly financial statements available. That’s why we share this report each week - to keep up with changes in the stock market, and to update for quarterly earnings reports when they drop.

Historically, a 10x NTM Revenue multiple has been viewed as a “premium” valuation reserved for the best of the best companies.

Efficiency Benchmarks

Companies that can do more with less tend to earn higher valuations.

Three of the most common and consistently publicly available metrics to measure efficiency include:

CAC Payback Period: How many months does it take to recoup the cost of acquiring a customer?

CAC Payback Period is measured as Sales and Marketing costs divided by Revenue Additions, and adjusted by Gross Margin.
Here’s how I do it:
Sales and Marketing costs are measured on a TTM basis, but lagged by one quarter (so you skip a quarter, then sum the trailing four quarters of costs). This timeframe smooths for seasonality and recognizes the lead time required to generate pipeline.
Revenue is measured as the year-on-year change in the most recent quarter’s sales (so for Q2 of 2024 you’d subtract out Q2 of 2023’s revenue to get the increase), and then multiplied by four to arrive at an annualized revenue increase (e.g., ARR Additions).
Gross margin is taken as a % from the most recent quarter (e.g., 82%) to represent the current cost to serve a customer

Revenue per Employee: On a per head basis, how much in sales does the company generate each year? The rule of thumb is public companies should be doing north of $450k per employee at scale. This is simple division. And I believe it cuts through all the noise - there’s nowhere to hide.

Revenue per Employee is calculated as: (TTM Revenue / Total Current Employees)

Rule of 40: How does a company balance topline growth with bottom line efficiency? It’s the sum of the company’s revenue growth rate and EBITDA Margin. Netting the two should get you above 40 to pass the test.

Rule of 40 is calculated as: TTM Revenue Growth % + TTM Adjusted EBITDA Margin %

A few other notes on efficiency metrics:

Net Dollar Retention is another great measure of efficiency, but many companies have stopped quoting it as an exact number, choosing instead to disclose if it’s above or below a threshold once a year. It’s also uncommon for some types of companies, like marketplaces, to report it at all.
Most public companies don’t report net new ARR, and not all revenue is “recurring”, so I’m doing my best to approximate using changes in reported GAAP revenue. I admit this is a “stricter” view, as it is measuring change in net revenue.

Operating Expenditures

Decreasing your OPEX relative to revenue demonstrates Operating Leverage, and leaves more dollars to drop to the bottom line, as companies strive to achieve +25% profitability at scale.

The most common buckets companies put their operating costs into are:

Cost of Goods Sold: Customer Support employees, infrastructure to host your business in the cloud, API tolls, and banking fees if you are a FinTech.
Sales & Marketing: Sales and Marketing employees, advertising spend, demand gen spend, events, conferences, tools.
Research & Development: Product and Engineering employees, development expenses, tools.
General & Administrative: Finance, HR, and IT employees… and everything else. Or as I like to call myself “Strategic Backoffice Overhead.”

All of these are taken on a Gaap basis and therefore INCLUDE stock based comp, a non cash expense.

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