01—Abstract
Summary
Summary of the 10-K filed February 28, 2018. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported strong performance for the fiscal year ended December 31, 2017.
The company demonstrated robust revenue growth, largely driven by strategic acquisitions like eVestment and an expanded Market Technology segment. Nasdaq continues to focus on its core businesses while investing in high-growth areas, aligning with its strategy to reimagine markets and accelerate economic progress. The company's diversified business model, spanning Market Services, Corporate Services, Information Services, and Market Technology, proved resilient.
While facing competitive pressures and evolving market dynamics, Nasdaq successfully navigated the landscape by emphasizing innovation, particularly in areas like blockchain and machine intelligence. The strategic divestiture of certain Corporate Solutions businesses also signals a focused approach to optimizing its portfolio for future growth.
02—Key points
Key Highlights
- Strategic Acquisitions: The acquisition of eVestment in 2017 significantly strengthened Nasdaq's Information Services segment with enhanced data analytics capabilities.
- Market Technology Growth: Investment in the Nasdaq Financial Framework and the acquisition of Sybenetix bolstered the Market Technology segment, with a focus on blockchain and machine intelligence.
- Resilient Market Services: Despite competitive pressures, Nasdaq maintained strong market share in equity derivative trading and clearing, and demonstrated resilience in cash equity trading.
- Corporate Services Divestiture: Nasdaq entered into an agreement to sell its Public Relations Solutions and Digital Media Services businesses, signaling a strategic focus on core offerings.
- Listing Services Strength: The Nasdaq Stock Market led U.S. exchanges in IPOs for the fifth consecutive year, attracting significant new listings and switches from competitors.
- Increased Dividends and Share Buybacks: The company returned value to shareholders through increased cash dividends and continued share repurchases.
- Focus on Future Trends: Nasdaq's strategic review identified key trends like the Marketplace Economy, Data Explosion, and Evolution of Investment Management as drivers for future opportunities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Nasdaq, Inc. kept $0.18.
- Revenue$3.95B100.0%
- Cost of revenue−$1.54B38.9%
- Gross profit$2.41B61.1%
- Operating costs−$1.42B36.0%
- Operating income$991.0M25.1%
- Interest, other & tax−$262.0M6.6%
- Net income$729.0M18.5%
Where FY2017 revenue went
$3.95B- Cost of revenue: $1.54B, 39% of revenue
- Operating costs: $1.42B, 36% of revenue
- Net income: $729.0M, 18% of revenue
- Interest, other & tax: $262.0M, 6.6% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 28, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.95B$3.70B | +6.6% |
| Cost of Revenue | $1.54B$1.43B | +7.6% |
| Gross Profit | $2.41B$2.28B | +5.9% |
| Operating Expenses | $1.42B$1.44B | −1.4% |
| Operating Income | $991.00M$836.00M | +18.5% |
| Interest Expense | $143.00M$135.00M | +5.9% |
| Net Income | $729.00M$106.00M | +587.7% |
| EPS (Basic) | $1.46$0.21 | +584.4% |
| EPS (Diluted) | $1.43$0.21 | +582.5% |
| Shares Outstanding (Basic) | 499.09M495.55M | +0.7% |
| Shares Outstanding (Diluted) | 508.76M506.40M | +0.5% |
05—Questions
Frequently Asked Questions
What were Nasdaq's key strategic priorities outlined in the 2017 report?
Nasdaq's key strategic priorities included increasing investment in high-growth areas such as Market Technology and Information Services (particularly data analytics), maintaining investment in core businesses like trading and listings, and optimizing slower-growth businesses. They also aimed to leverage technology to solve client challenges and embrace emerging technologies like blockchain and machine intelligence.
How did recent acquisitions impact Nasdaq's financial performance?
The acquisitions of eVestment (in Information Services) and Sybenetix (in Market Technology) in 2017, along with ISE in 2016, significantly contributed to revenue growth and expanded service offerings. The eVestment acquisition, in particular, enhanced Nasdaq's data analytics and content provider capabilities.
What are the main risks facing Nasdaq according to the filing?
Key risks highlighted include intense competition from other exchanges and market participants, potential system limitations or failures, the need to continuously innovate and adapt to rapid technological changes, regulatory changes and compliance burdens, and cybersecurity threats. Economic conditions and market volatility also pose significant risks to their business performance.
What is Nasdaq's outlook for its different business segments?
For 2018, Nasdaq anticipated continued benefits in Market Services and Data Products if market volatility persists. The Market Technology segment was expected to see meaningful contributions from new platforms leveraging blockchain and cloud capabilities. Corporate Services growth was seen as dependent on a positive economic outlook, while European transactional businesses faced uncertainty due to evolving regulations like MiFID II.
06—Continue