10-KPeriod: FY2008

NASDAQ, INC. Annual Report, Year Ended Dec 31, 2008

Filed February 27, 2009For Securities:NDAQ

Summary

The NASDAQ OMX Group, Inc.'s 2008 10-K report details a year of significant strategic growth and integration, marked by major acquisitions that expanded its global footprint and product offerings. The company successfully integrated the operations of OMX AB, significantly growing its European presence, and also acquired the Philadelphia Stock Exchange (PHLX) and the Boston Stock Exchange (BSX). These moves broadened NASDAQ OMX's reach into derivatives markets and enhanced its U.S. equities and options trading capabilities. Despite these advancements, the report also highlights the ongoing impact of the global financial crisis, which presented challenges such as increased volatility, reduced trading volume in some areas, and a slowdown in initial public offerings (IPOs). The company emphasizes its robust technology infrastructure and disciplined management team as key strengths in navigating these market conditions.

Financial Highlights

29 data points
Beta

Revenue

$3.65B

40.0% Gross Margin

Net Income

$314.00M

8.6% Net Margin

EPS (Diluted)

$0.52

Cash & Equivalents

$374.00M

Free Cash Flow

$161.00M

Financial Statements
Beta
Revenue$3.65B
Cost of Revenue$2.19B
Gross Profit$1.46B
Operating Expenses$820.00M
Operating Income$640.00M
Interest Expense$97.00M
Net Income$314.00M
EPS (Basic)$0.55
EPS (Diluted)$0.52

Key Highlights

  • 1Significant expansion through strategic acquisitions: Completion of the OMX AB combination, acquisition of Philadelphia Stock Exchange (PHLX), and Boston Stock Exchange (BSX) in 2008.
  • 2Diversification into derivatives: Acquisitions bolstered NASDAQ OMX's position in U.S. equity options, with a combined market share of 17.3% by year-end 2008.
  • 3Global presence enhancement: The OMX combination expanded operations across Northern Europe and the Baltic region, while investment in NASDAQ Dubai targeted Middle Eastern markets.
  • 4Technology leadership: Continued investment in and leveraging of the INET trading platform for U.S. and European markets, with plans for further rollout.
  • 5Resilience amidst financial crisis: Despite market volatility and reduced IPO activity, the company reported total revenues of $3.65 billion and positive net income, driven by strong performance in its Market Services segment.
  • 6Focus on future growth: Plans include further technology integration, expansion of derivatives clearing services, and leveraging new market data products.
  • 7Robust listing business: NASDAQ remained a significant player in attracting new listings, including a substantial portion of U.S. IPOs in 2008, despite a challenging IPO market.

Frequently Asked Questions

The acquisitions of OMX AB, PHLX, and BSX significantly expanded NASDAQ OMX's revenue base and diversified its operations. While these acquisitions contributed positively to total revenues, they also increased operating expenses due to integration costs and expanded operations. The company's financial results for 2008 reflect the partial-year contributions of these acquired entities.

The primary challenge was the ongoing global financial and credit market crisis, which led to increased market volatility, reduced trading volumes in certain segments, and a significant slowdown in the initial public offering (IPO) market. The company also faced the complexities and costs associated with integrating multiple large acquisitions simultaneously.

NASDAQ OMX highlighted its strong technology infrastructure and its strategic acquisitions as positioning it well for the challenging economic environment of 2009. The company aimed to achieve cost and technology synergies from its acquisitions and leverage its diversified business model to navigate market downturns. Its focus was on efficiency and retaining its competitive edge through technological innovation.

The market data segment, which includes U.S. tape plans and proprietary data products, represented a significant revenue stream. It demonstrated growth in 2008, driven by U.S. market data products and the inclusion of European market data from the OMX acquisition. The company views this segment as a key area for continued development and revenue generation.