01—Abstract
Summary
Summary of the 10-K filed March 1, 2017. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Nasdaq 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.
- The 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.
- Significant investment in technology is evident, including the launch of the Nasdaq Financial Framework and continued development in blockchain-enabled solutions like Nasdaq Linq.
- Corporate Services saw growth, bolstered by acquisitions like Marketwired (public relations) and Boardvantage (governance), alongside its existing Investor Relations offerings.
- Information 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).
- The 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.
- Nasdaq'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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Nasdaq, Inc. kept $0.03.
- Revenue$3.70B100.0%
- Cost of revenue−$1.43B38.6%
- Gross profit$2.28B61.4%
- Operating costs−$1.44B38.9%
- Operating income$836.0M22.6%
- Interest, other & tax−$730.0M19.7%
- Net income$106.0M2.9%
Where FY2016 revenue went
$3.70B- Operating costs: $1.44B, 39% of revenue
- Cost of revenue: $1.43B, 39% of revenue
- Interest, other & tax: $730.0M, 20% of revenue
- Net income: $106.0M, 2.9% of revenue
Kept 2.9% as net incomeNet income $106.0M · 2.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 1, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $3.70B$3.40B | +8.8% |
| Cost of Revenue | $1.43B$1.31B | +8.8% |
| Gross Profit | $2.28B$2.09B | +8.9% |
| Operating Expenses | $1.44B$1.37B | +5.1% |
| Operating Income | $836.00M$720.00M | +16.1% |
| Interest Expense | $135.00M$111.00M | +21.6% |
| Net Income | $106.00M$428.00M | −75.2% |
| EPS (Basic) | $0.21$0.85 | −75.0% |
| EPS (Diluted) | $0.21$0.83 | −74.8% |
| Shares Outstanding (Basic) | 495.55M501.86M | −1.3% |
| Shares Outstanding (Diluted) | 506.40M513.85M | −1.4% |
05—Questions
Frequently Asked Questions
What were the key acquisitions made by Nasdaq in 2016 and how did they impact the business?
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.
How did Nasdaq's market share perform in its key trading segments in 2016?
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.
What is Nasdaq's approach to technological innovation and what are some key initiatives mentioned?
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.
What are the primary risks and challenges Nasdaq faces according to the 10-K?
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.
06—Continue