01—Abstract
Summary
Summary of the 10-K filed February 21, 2013. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Revenues 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.
- Operating expenses decreased by 1.3% to $973 million in 2012, demonstrating effective cost management and restructuring efforts.
- The company completed several strategic acquisitions, including NOS Clearing and the index business of Mergent, Inc., further diversifying its service offerings.
- The NASDAQ Stock Market continued to be a leading venue for IPOs, attracting 72 IPOs in 2012, representing approximately 48% of total U.S. IPOs.
- The company repurchased $275 million of its common stock in 2012, completing one share repurchase program and continuing another, signaling a commitment to shareholder value.
- The company paid quarterly cash dividends of $0.13 per share throughout 2012, indicating a stable return to shareholders.
- A 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Nasdaq, Inc. kept $0.11.
- Revenue$3.12B100.0%
- Cost of revenue−$1.45B46.3%
- Gross profit$1.67B53.7%
- Operating costs−$984.0M31.5%
- Operating income$690.0M22.1%
- Interest, other & tax−$338.0M10.8%
- Net income$352.0M11.3%
Where FY2012 revenue went
$3.12B- Cost of revenue: $1.45B, 46% of revenue
- Operating costs: $984.0M, 32% of revenue
- Net income: $352.0M, 11% of revenue
- Interest, other & tax: $338.0M, 11% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 21, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $3.12B$3.44B | −9.2% |
| Cost of Revenue | $1.45B$1.75B | −17.3% |
| Gross Profit | $1.67B$1.69B | −0.9% |
| Operating Expenses | $984.00M$994.00M | −1.0% |
| Operating Income | $690.00M$696.00M | −0.9% |
| Interest Expense | $97.00M$119.00M | −18.5% |
| Net Income | $352.00M$387.00M | −9.0% |
| EPS (Basic) | $0.70$0.73 | −5.0% |
| EPS (Diluted) | $0.68$0.72 | −5.1% |
| Shares Outstanding (Basic) | 504.76M529.00M | −4.6% |
| Shares Outstanding (Diluted) | 517.76M540.03M | −4.1% |
05—Questions
Frequently Asked Questions
What was NASDAQ OMX's financial performance in 2012?
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.
What were the key drivers of revenue change in 2012?
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.
How did NASDAQ OMX manage its expenses in 2012?
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.
What is the company's outlook for 2013, and what strategies are in place?
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.
Are there any significant legal or regulatory issues impacting the company?
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.
06—Continue