10-KPeriod: FY2012

NASDAQ, INC. Annual Report, Year Ended Dec 31, 2012

Filed February 21, 2013For Securities:NDAQ

Summary

The NASDAQ OMX Group, Inc.'s 2012 10-K report details a financially stable global exchange operator navigating a challenging economic environment characterized by slow global recovery and uncertainty. The company's diversified business model, spanning market services, issuer services, and market technology, helped mitigate the impact of lower trading volumes experienced across the industry in 2012. Despite a 1.1% dip in "revenues less transaction rebates, brokerage, clearance and exchange fees" to $1.66 billion, NASDAQ OMX maintained operational efficiency, reducing operating expenses by 1.3% and demonstrating a commitment to cost management. The company continued its strategic growth through acquisitions, notably expanding its Corporate Solutions and Derivatives businesses. Investors can find assurance in the company's consistent dividend payments and active share repurchase programs, reflecting a commitment to shareholder returns. While acknowledging competitive pressures and regulatory changes, NASDAQ OMX remains focused on technological innovation and strategic positioning to drive future growth in evolving capital markets.

Financial Highlights

56 data points
Beta

Revenue

$3.12B

53.7% Gross Margin

Net Income

$352.00M

11.3% Net Margin

EPS (Diluted)

$0.68

Total Assets

$9.13B

Cash & Equivalents

$497.00M

Free Cash Flow

$507.00M

Financial Statements
Beta
Revenue$3.12B
Cost of Revenue$1.45B
Gross Profit$1.67B
Operating Expenses$984.00M
Operating Income$690.00M
Interest Expense$97.00M
Net Income$352.00M
EPS (Basic)$0.70
EPS (Diluted)$0.68
Shares Outstanding (Basic)504.76M
Shares Outstanding (Diluted)517.76M

Key Highlights

  • 1Revenues less transaction rebates, brokerage, clearance and exchange fees were $1,663 million in 2012, a slight decrease of 1.1% from $1,682 million in 2011, reflecting a challenging market environment.
  • 2Operating expenses decreased by 1.3% to $973 million in 2012, demonstrating effective cost management and restructuring efforts.
  • 3The company completed several strategic acquisitions, including NOS Clearing and the index business of Mergent, Inc., further diversifying its service offerings.
  • 4The NASDAQ Stock Market continued to be a leading venue for IPOs, attracting 72 IPOs in 2012, representing approximately 48% of total U.S. IPOs.
  • 5The company repurchased $275 million of its common stock in 2012, completing one share repurchase program and continuing another, signaling a commitment to shareholder value.
  • 6The company paid quarterly cash dividends of $0.13 per share throughout 2012, indicating a stable return to shareholders.
  • 7A program of voluntary accommodations up to $62 million was announced to address systems issues experienced during the Facebook IPO, with ongoing litigation and SEC investigation noted.

Frequently Asked Questions

In 2012, NASDAQ OMX reported revenues less transaction rebates, brokerage, clearance and exchange fees of $1.663 billion, a 1.1% decrease from 2011. Operating income was $690 million, down slightly from $696 million in 2011. Net income attributable to NASDAQ OMX was $352 million, a 9.0% decrease from $387 million in 2011. Diluted earnings per share were $2.04, down from $2.15 in 2011.

The decrease in total revenues less transaction rebates, brokerage, clearance and exchange fees was primarily driven by a decline in U.S. cash equity and derivative trading revenues, partially offset by increases in Corporate Solutions, Access Services, Market Data, and Global Index Group revenues. Operational revenue increases were $8 million, but this was offset by a $27 million unfavorable foreign exchange impact.

NASDAQ OMX successfully reduced its operating expenses by 1.3% to $973 million in 2012. This reduction was primarily due to decreased merger and strategic initiatives expense and general, administrative and other expense, partly offset by costs related to restructuring actions and increased professional and contract services. Restructuring charges amounted to $44 million.

NASDAQ OMX anticipates a challenging but potentially positive environment for 2013, driven by a gradual global economic recovery. The company is focused on diversifying earnings through its Corporate Solutions, Access Services, Market Technology, and Market Data segments, and is committed to cost savings and technological innovation. Key initiatives include the launch of new trading platforms and the strategic acquisition of Thomson Reuters' Investor Relations, Public Relations, and Multimedia Solutions businesses, subject to regulatory approval.

The company is involved in several legal proceedings and an SEC investigation related to the Facebook IPO in May 2012. While NASDAQ OMX believes these lawsuits are without merit and intends to defend them vigorously, an unfavorable outcome could have a material adverse effect. The company is cooperating fully with the SEC investigation.