Tadawul Group Results: Diverging Performance Across Market

The preliminary financial results of Saudi Tadawul Group Holding Company for the first nine months of 2026 showed a 5.8% decline in operating revenue to SAR 909.3 million and a 34.6% fall in net profit to SAR 195.8 million. The results were affected by lower revenue from the Capital Markets and Post-Trade Services segments, despite 5.8% growth in Technology and Data Services.

With the group’s performance tied to trading activity, and diversification of revenue sources and investment in technology infrastructure becoming increasingly important, students from Al Yamamah University discussed the implications of these results and their impact on the sustainability of earnings and the future growth of the Saudi capital market, as follows:

Earnings quality and distinguishing operating performance from sustainable growth

Student Yazan Hamoud @Yazan Hamoud explained, “Saudi Tadawul Group’s earnings growth should not be measured by quarterly results alone, but by the group’s ability to sustain growth. He noted that the divergence between revenue and profit performance highlights the importance of distinguishing operating earnings from nonrecurring items, emphasizing that strong earnings in a single quarter are not enough to determine whether financial performance is sustainable.”

Sustainability of improvement and performance across the group’s companies

Student Rabiah Almugait @Rabiah Almugait said, “The improvement in Saudi Tadawul Group’s results and easing pressure on its profits are positive signs. However, the key question is whether this improvement is sustainable or driven by temporary factors.

She emphasized the importance of examining the performance and expenses of the group’s various segments, as well as market price levels, to understand the factors affecting financial results and assess the prospects for future improvement.”

Development costs and their impact on profitability

In this context, student Jana Alshahrani @Jana Alshahrani said, “Saudi Tadawul Group’s results underscore the importance of distinguishing revenue growth from actual improvements in operating performance. A decline in profits does not necessarily mean that growth opportunities have disappeared, just as investment in technology infrastructure does not eliminate operational challenges.

She noted that the main challenge is controlling operating costs and improving profit margins amid fluctuations in market activity. She also emphasized that the group’s competitive advantage does not make its profits independent of trading levels, making revenue diversification an important factor in strengthening financial performance.”

Diversifying activities to counter declining revenue

Student Dina Alarjani @Dina Alarjani explained, “The decline in operating revenue and net profit highlights the importance of diversifying the group’s activities, as lower revenue from the Capital Markets and Post-Trade Services segments weighs on overall results.

She believes that growth in Technology and Data Services is a positive development, but sustaining improvement requires continued development across the group’s segments, cost control, and strengthening the group’s ability to generate stable revenue amid fluctuations in trading activity.”

Revenue diversification and its impact on cash flows

Student Albatool Bedairi @Albatool Bedairi offered a financial perspective focused on the relationship between revenue diversification and liquidity, saying, “Developing technology and data services and financial products could support the group’s financial results and cushion the impact of lower trading activity.

Generating profits does not necessarily mean that cash flows have improved by the same amount, as this depends on the nature of revenue and expenses and on liquidity management policies. Therefore, she believes it is important to assess new investments based on their ability to generate sustainable cash flows, as well as their impact on profitability.”

Developing technology infrastructure to improve market efficiency

Student Jumana Alshehri @Jumana Alshehri said, “Investment in developing technology infrastructure is an important step in supporting the efficiency of the capital market, but its positive impact depends on the group’s ability to turn these investments into sustainable returns.

She explained that falling revenue and rising costs in some areas underscore the importance of continuing to develop services and improve operational efficiency, supporting the group’s growth and strengthening its ability to withstand future market fluctuations.”

A competitive advantage does not guarantee stable profits

Student Nada Asiri @nada Asiri said, “Despite its strong competitive advantage in operating the capital market, Saudi Tadawul Group’s profits remain tied to trading volumes and liquidity. A decline in market activity reduces revenue while a significant portion of operating costs remains in place.

She noted that diversifying revenue sources by developing derivatives and securities lending could help reduce reliance on traditional trading. Greater participation by foreign and institutional investors could also support liquidity and market growth, while technology investment represents a current cost that may help boost efficiency and accommodate larger listings in the future.”

Investing in technology to support long-term growth

Student @عمر الشيخ explained, “Saudi Tadawul Group’s competitive advantage does not guarantee stable profits, as its performance remains tied to activity levels in the capital market.

He believes that developing derivatives and securities lending and borrowing could deepen the market and broaden revenue sources. Greater participation by foreign and institutional investors could also support market activity, depending on the scale and continuity of their participation.

He added that investment in digital infrastructure could strengthen the group’s ability to keep pace with future listings and expansion, stressing the importance of turning these investments into sustainable growth while diversifying revenue and improving operational efficiency.”

Growth in technology and data strengthens diversification prospects

Student Haifa Almutairi @Haifa Almutairi said, “Saudi Tadawul Group’s results reflect a focus on investing in the future of the capital market, despite the current pressure on profitability.

She noted that the 5.8% decline in operating revenue, alongside a 13.4% drop in revenue from the Capital Markets segment, shows how exposed the group is to fluctuations in market activity. By contrast, 5.8% growth in Technology and Data Services is a positive sign of efforts to diversify income sources.

She also explained that higher operating expenses and depreciation costs associated with investments are currently weighing on profits, although digital infrastructure development could help prepare the market to accommodate new listings. She believes the actual returns on these investments will become clearer as activities continue to grow and liquidity improves in the future.”

Investment costs as a step toward sustainable growth

Student Dana Al-Sadoun @Dana Al-Sadoun said, “The 34.6% decline in net profit partly reflects the pressure associated with the group’s investment expansion.

She explained that higher depreciation and amortization costs related to developing digital infrastructure and the new headquarters are weighing on current financial results. However, this spending could help improve operating efficiency and prepare the market to accommodate larger listings and new financial products.

She stressed that the importance of these investments lies in their ability to support revenue growth and achieve long-term financial sustainability, in line with the objectives of Saudi Vision 2030.”

Non-trading revenue to cushion market fluctuations

Student Ahmed Aljadaan @AHMED ALJADAAN said, “Saudi Tadawul Group’s revenue is affected by liquidity levels and trading activity. The 14.6% decline in trading-related revenue in the third quarter reflects the sensitivity of the group’s business to market changes.

He also highlighted the importance of diversifying revenue sources, particularly through technology and data services and other activities not directly linked to trading, which could help stabilize revenue. He believes continued development of new products and services could cushion the impact of lower liquidity and limit the group’s reliance on traditional trading commissions.”

Institutional investment and development of financial products

Student Raneem Asiri @Raneem Asiri said, “Saudi Tadawul Group’s profits are affected by trading volumes and liquidity levels, as increased buying and selling activity supports the group’s revenue.

She explained that developing derivatives and securities lending could help attract new investors and diversify income sources. Greater participation by foreign and institutional investors could also support market activity over the long term.

She added that investment in technology infrastructure represents a current cost that could help improve trading efficiency and accommodate larger listings in the future, in line with the objectives of Saudi Vision 2030.”

Developing financial products to strengthen financial stability

Student Fahad Alruwaished @Fahad Alruwaished believes that “Saudi Tadawul Group’s competitive advantage does not shield it from market fluctuations, because a large portion of its revenue is tied to trading activity and day-to-day liquidity.

He noted that declines of 13.4% in Capital Markets revenue and 5.7% in Post-Trade Services revenue contributed to operating revenue falling to SAR 909.3 million in the first nine months of the year. This coincided with net profit falling to SAR 195.8 million and operating expenses rising.

He believes that developing financial products such as derivatives and securities lending, alongside growing the Technology and Data segment, which recorded 5.8% growth, is an important step toward deepening the market and diversifying revenue sources, thereby strengthening the group’s ability to withstand liquidity fluctuations.”

The success of investments is measured by returns, not spending

Student Thanaa Alshayib @Thanaa Alshayib said, “The absence of a direct competitor does not guarantee growth in Saudi Tadawul Group’s profits, because its revenue depends on trading activity, while a large portion of its costs persists even during periods of lower activity.

She stressed the importance of developing financial products and attracting foreign institutions, while distinguishing between a higher share of foreign ownership and increased actual market activity: a rise in ownership does not necessarily mean higher trading volumes.

She also noted that growth in Technology and Data Services could help reduce the group’s reliance on trading commissions. She believes the success of technology spending should not be measured by its size alone, but by its ability to generate recurring revenue and improve profits even when the market is quiet.”

Technology and revenue diversification to support future expansion

Student Dina Alarjani @Dina Alarjani believes that “Saudi Tadawul Group’s position as the primary operator of the capital market does not prevent its profits from remaining tied to trading activity and liquidity levels.

She explained that developing financial products and technology infrastructure is an important step toward diversifying revenue and preparing the market for further growth, even if it increases costs and depreciation expenses in the short term. She also noted that increased participation by foreign investors could boost liquidity over the long term, although the impact depends on their continued activity in the market.”

Turning investments into recurring revenue

Student Mohammad Alghaihab @Mohammad Alghaihab said, “Saudi Tadawul Group’s strong position in the market does not necessarily mean its profits will be stable, since a large portion of its revenue remains tied to trading volumes and liquidity.

He explained that the 5.8% decline in revenue, compared with a 34.6% drop in net profit, highlights how sensitive profits are to costs, especially given higher depreciation and operating expenses. However, he stressed that higher costs are not necessarily negative if they result from technology investments that help improve market efficiency in the future.

He believes the group’s real opportunity lies in reducing its reliance on trading commissions by expanding data and technology services and new investment products. He emphasized that the success of this approach should be measured by the investments’ ability to generate recurring revenue and improve cash flows.”

Enhancing the market’s appeal and diversifying income sources

Student Meshail Alanazi @Meshail ALANazi believes that “Saudi Tadawul Group’s strength depends not only on its position as market operator, but also on its ability to make the market more attractive to investors and diversify its income sources.

She explained that greater participation by foreign institutional investors and the development of financial products could help deepen the market and support sustainable revenue, while technology investments are an important step toward enabling future expansion and accommodating more listings.

She stressed that the main challenge is turning these investments into sustainable profit growth and reducing reliance on fluctuations in daily trading volumes.”

Tadawul Group profits fall to historic lows

Expert Abdulaziz Khrais said: “Tadawul Group recorded the lowest profits in its history, affected by several factors that are well known, foremost among them the decline in market trading over the past period and the sharp drop in IPOs and listings. There were no listings in the third quarter on either the Main Market or the Parallel Market, with the exception of one offering on the Sukuk Market, namely Riyad Bank’s sukuk.

Overall, results were below the average analyst forecasts, and the fourth-quarter results are unlikely to be much better amid geopolitical tensions, which may affect market trading.”

The structural dimensions of the financial results and operating leverage in the group’s future

In an analytical assessment, financial and economic analyst “Hamad Alsaeed” @Hamad Alsaeed added: “Tadawul Group’s nine-month results were affected by weaker market activity. Average trading value fell 11.1% and IPO activity slowed, while depreciation increased following the opening of the new headquarters and returns on guarantees and deposits declined after interest rates were cut at the end of 2025. As a result, net profit fell 34.6%.

The group is the sole operator of trading, depositary, and clearing services in the Kingdom, and its fees are subject to approval by the Capital Market Authority. Its growth therefore comes from the scale of activity and the instruments authorized by the Authority, with every regulatory change flowing exclusively through its infrastructure. This is what gives the 2026 reforms financial significance: abolishing the Qualified Foreign Investor regime and swap agreements, and developing securities lending, short selling, and derivatives, will bring flows that were previously outside the system into it.

Accordingly, the operating leverage that has weighed on this year’s profits is the same force that will magnify the impact of any improvement in liquidity, with the cost base now fully built out.