10-KPeriod: FY2016

NASDAQ, INC. Annual Report, Year Ended Dec 31, 2016

Filed March 1, 2017For Securities:NDAQ

Summary

Nasdaq, Inc.'s 2016 10-K filing showcases a company actively expanding its global reach and service offerings through strategic acquisitions and organic growth. The company operates across four key segments: Market Services, Corporate Services, Information Services, and Market Technology. Significant acquisitions in 2016, such as ISE, Marketwired, and Boardvantage, have broadened Nasdaq's capabilities, particularly in options trading, corporate solutions, and data analytics. Despite facing intense competition and a fluctuating market environment, Nasdaq demonstrated revenue growth and aimed to leverage its diverse business model for future expansion. The report highlights Nasdaq's commitment to technological innovation, including blockchain initiatives and the development of its Financial Framework. The company also emphasizes its robust regulatory framework and compliance efforts across its global operations. Investors should note the company's strategic focus on adapting to evolving market dynamics and regulatory landscapes, with an outlook for continued investment in technology and a diversified product portfolio to drive long-term value.

Financial Highlights

56 data points
Beta

Revenue

$3.70B

61.4% Gross Margin

Net Income

$106.00M

2.9% Net Margin

EPS (Diluted)

$0.21

Total Assets

$13.41B

Cash & Equivalents

$403.00M

Free Cash Flow

$642.00M

Financial Statements
Beta
Revenue$3.70B
Cost of Revenue$1.43B
Gross Profit$2.28B
Operating Expenses$1.44B
Operating Income$836.00M
Interest Expense$135.00M
Net Income$106.00M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)495.55M
Shares Outstanding (Diluted)506.40M

Key Highlights

  • 1Nasdaq reported revenue growth in 2016, driven by strategic acquisitions (ISE, Marketwired, Boardvantage) and organic expansion across its four segments: Market Services, Corporate Services, Information Services, and Market Technology.
  • 2The company processed a significant market share in U.S. equity options (31.6%) and U.S. cash equities (17.4%), indicating a strong presence in core trading activities.
  • 3Significant investment in technology is evident, including the launch of the Nasdaq Financial Framework and continued development in blockchain-enabled solutions like Nasdaq Linq.
  • 4Corporate Services saw growth, bolstered by acquisitions like Marketwired (public relations) and Boardvantage (governance), alongside its existing Investor Relations offerings.
  • 5Information Services, comprising Data Products and Index Licensing, showed resilience, with growth in data products and a substantial increase in assets under management for ETPs tracking Nasdaq indexes ($124 billion).
  • 6The company navigated a complex regulatory environment, including ongoing compliance with MiFID II/MiFIR in Europe and U.S. regulations, while also facing a $6 million fine from the SFSA related to governance issues in its Nordic operations.
  • 7Nasdaq's outlook for 2017 anticipated continued market volatility and regulatory changes, with a strategy focused on organic growth, strategic acquisitions, and leveraging technology to meet evolving customer needs.

Frequently Asked Questions

In 2016, Nasdaq completed several significant acquisitions, including ISE (International Securities Exchange) which expanded its options trading capabilities, Marketwired (a global newswire operator) which bolstered its Public Relations offerings within Corporate Services, and Boardvantage (a provider of collaboration tools for boards) which strengthened its Governance solutions. These acquisitions aimed to diversify Nasdaq's revenue streams, expand its market reach, and enhance its product and service portfolio.

In the U.S. equity options market, Nasdaq's exchanges achieved a combined matched market share of 31.6%. For U.S. cash equity trading, the company's exchanges collectively held a 17.4% matched market share. These figures indicate Nasdaq's significant position in both derivatives and cash equity trading.

Nasdaq is heavily invested in technological innovation. Key initiatives mentioned include the development of Nasdaq Linq, a blockchain-enabled solution for equity management, and the launch of the Nasdaq Financial Framework, a new architecture designed to integrate various technology offerings across the trade lifecycle. The company is also exploring blockchain services integration into its core framework.

Nasdaq faces several key risks and challenges, including intense competition from other exchanges and trading venues, adverse economic conditions impacting trading volumes and listings, regulatory changes and scrutiny, system limitations or failures, and the need to continuously introduce new products and technologies to maintain its competitive position. The company also highlighted risks associated with integrating acquired businesses and potential reputational damage.