01—Abstract
Summary
Summary of the 10-K filed February 24, 2014. Cited figures are marked; the original filing is the authoritative source.
For the fiscal year ending December 31, 2013, NASDAQ OMX Group, Inc. demonstrated robust growth, driven by strategic acquisitions and performance across its diversified business segments.
The company reported increased revenues, largely attributable to the acquisitions of the TR Corporate Solutions businesses and the eSpeed platform, which bolstered the Technology Solutions and Market Services segments, respectively. Despite a slight decrease in operating income, the company maintained a strong financial position, with a significant increase in net income and diluted earnings per share. NASDAQ OMX also highlighted its leading positions in various markets, including being the largest single cash equities market in the U.S. and operating a significant portion of European exchanges.
Key strategic initiatives included integration of acquired businesses and investment in technology to enhance service offerings and maintain competitiveness. The company navigated a dynamic market environment marked by intense competition and evolving regulatory landscapes, particularly in Europe. NASDAQ OMX maintained its commitment to returning capital to shareholders through dividends and share repurchases, underscoring a focus on shareholder value while managing operational and market risks.
02—Key points
Key Highlights
- NASDAQ OMX reported a 13.2% increase in revenues (less transaction rebates, brokerage, clearance, and exchange fees) to $1.9 billion in 2013, driven by acquisitions and growth in Information Services and Technology Solutions.
- The company's Technology Solutions segment saw a significant 58.1% revenue increase, largely due to the acquisition of Thomson Reuters' Corporate Solutions businesses.
- Net income attributable to NASDAQ OMX grew by 9.4% to $385 million, with diluted earnings per share rising 10.3% to $2.25.
- The NASDAQ Stock Market remained the largest single cash equities market in the U.S. by listed companies and share value traded, listing 2,637 companies with a $7.0 trillion market capitalization.
- The company completed significant acquisitions in 2013, including the TR Corporate Solutions businesses and the eSpeed platform, strengthening its service offerings and market presence.
- Despite increased operating expenses (up 22.7%) primarily due to acquisitions and associated integration costs, the company maintained operating income at $688 million.
- NASDAQ OMX continued its dividend payments, declaring $0.13 per share quarterly, and had $215 million remaining under its authorized share repurchase program as of year-end 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Nasdaq, Inc. kept $0.12.
- Revenue$3.21B100.0%
- Cost of revenue−$1.32B41.0%
- Gross profit$1.90B59.0%
- Operating costs−$1.21B37.6%
- Operating income$688.0M21.4%
- Interest, other & tax−$303.0M9.4%
- Net income$385.0M12.0%
Where FY2013 revenue went
$3.21B- Cost of revenue: $1.32B, 41% of revenue
- Operating costs: $1.21B, 38% of revenue
- Net income: $385.0M, 12% of revenue
- Interest, other & tax: $303.0M, 9.4% of revenue
Kept 12% as net incomeNet income $385.0M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 24, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $3.21B$3.12B | +2.9% |
| Cost of Revenue | $1.32B$1.45B | −9.0% |
| Gross Profit | $1.90B$1.67B | +13.2% |
| Operating Expenses | $1.21B$984.00M | +22.7% |
| Operating Income | $688.00M$690.00M | −0.3% |
| Interest Expense | $111.00M$97.00M | +14.4% |
| Net Income | $385.00M$352.00M | +9.4% |
| EPS (Basic) | $0.77$0.70 | +10.0% |
| EPS (Diluted) | $0.75$0.68 | +10.3% |
| Shares Outstanding (Basic) | 500.80M504.76M | −0.8% |
| Shares Outstanding (Diluted) | 513.80M517.76M | −0.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of NASDAQ OMX's revenue growth in 2013?
Revenue growth was primarily driven by the acquisition of the TR Corporate Solutions businesses, which significantly boosted the Technology Solutions segment, and the acquisition of the eSpeed platform, which contributed to the Market Services segment. Additionally, the Information Services segment saw growth, particularly in U.S. market data products and index licensing.
How did the acquisitions impact the company's financial performance?
The acquisitions of TR Corporate Solutions and eSpeed in 2013, along with other acquisitions in prior years, contributed to increased revenues and expanded the company's service offerings. However, these acquisitions also led to higher operating expenses due to integration costs and increased personnel, impacting operating income slightly.
What is NASDAQ OMX's competitive position in the market?
NASDAQ OMX holds a leading global position as an exchange group. In the U.S., it operates The NASDAQ Stock Market, the largest single cash equities market. The company also has a significant presence in European markets through NASDAQ OMX Nordic and NASDAQ OMX Baltic. It faces intense competition across its business segments, including from other exchanges and technology providers.
What is the company's outlook for 2014 and what are the key challenges?
The company anticipates a challenging but stable environment in 2014, with continued competition and evolving regulatory landscapes. Key challenges include adapting to regulatory changes in Europe (MiFID II, EMIR), ongoing competition from market consolidations (ICE acquiring NYSE Euronext, BATS merging with Direct Edge), and the need for continued technology investment. The company believes its diversified business model and cost management efforts position it well to navigate these conditions.
06—Continue