10-KPeriod: FY2019

NASDAQ, INC. Annual Report, Year Ended Dec 31, 2019

Filed February 25, 2020For Securities:NDAQ

Summary

Nasdaq, Inc. reported steady performance for the fiscal year ended December 31, 2019, with total revenues slightly declining to $4.262 billion from $4.277 billion in the prior year. The company's strategic focus continues to be on growth opportunities within its Market Technology and Information Services segments, while optimizing slower-growth businesses through divestitures. Notable strategic actions in 2019 included the acquisition of Cinnober Financial Technology AB to bolster the Market Technology segment and the divestiture of several non-core assets, including the BWise platform. The company's diversified business model, spread across Market Services, Corporate Services, Information Services, and Market Technology, demonstrated resilience. Despite a challenging market environment impacting trading volumes, Nasdaq successfully grew revenues in its Information Services and Market Technology segments. These segments are key drivers for future growth, supported by investments in data analytics, AI capabilities, and expanding their global reach. The company remains committed to innovation and adapting to evolving market trends, positioning itself for continued relevance in the global capital markets.

Financial Highlights

57 data points
Beta

Revenue

$4.26B

59.5% Gross Margin

Net Income

$774.00M

18.2% Net Margin

EPS (Diluted)

$1.54

Total Assets

$13.92B

Cash & Equivalents

$332.00M

Free Cash Flow

$836.00M

Financial Statements
Beta
Revenue$4.26B
Cost of Revenue$1.72B
Gross Profit$2.54B
Operating Expenses$1.52B
Operating Income$1.02B
Interest Expense$124.00M
Net Income$774.00M
EPS (Basic)$1.56
EPS (Diluted)$1.54
Shares Outstanding (Basic)494.79M
Shares Outstanding (Diluted)500.91M

Key Highlights

  • 1Total revenues for 2019 were $4.262 billion, a slight decrease from $4.277 billion in 2018, reflecting a strategic shift and divestitures.
  • 2The Market Technology segment showed strong revenue growth of 25.2% year-over-year, driven by the acquisition of Cinnober and increased software delivery projects.
  • 3Information Services revenue increased by 9.1%, fueled by growth in Market Data, Index, and particularly Investment Data & Analytics.
  • 4Nasdaq continued its strategy of optimizing slower-growth businesses through divestitures, including the sale of the BWise platform.
  • 5The company made strategic investments in growth areas, such as data analytics within Information Services and regulatory technology within Market Technology.
  • 6Diluted Earnings Per Share (EPS) increased significantly to $4.63 in 2019 from $2.73 in 2018, largely due to a gain on sale of investment security in 2018 and improved operational performance in 2019.
  • 7Total operating expenses increased slightly by 1.3% to $1.518 billion, with notable increases in general, administrative, and other expenses, and restructuring charges.

Frequently Asked Questions

Nasdaq's revenue streams are diversified across four segments: Market Services, Corporate Services, Information Services, and Market Technology. In 2019, Market Services revenue slightly decreased by 2.6% to $2.639 billion, impacted by lower trading volumes and volatility. Corporate Services revenue saw a modest increase of 1.8% to $496 million, driven by listing services and corporate solutions. Information Services revenue grew by 9.1% to $779 million, with strong performance in Market Data, Index, and Investment Data & Analytics. The Market Technology segment demonstrated significant growth of 25.2% to $338 million, largely due to the acquisition of Cinnober and expansion of software delivery projects.

In 2019, Nasdaq completed several strategic moves. The acquisition of Cinnober Financial Technology AB significantly boosted the Market Technology segment's revenue and capabilities. Conversely, the divestiture of non-core assets, such as the BWise enterprise governance, risk and compliance software platform, contributed to a more focused business model and generated proceeds. These actions reflect Nasdaq's strategy to invest in high-growth areas while optimizing or divesting less strategic businesses.

Nasdaq is strategically focusing its investments on areas with the highest growth potential. This includes expanding its data analytics capabilities within the Information Services segment, growing its Non-Financial Performance Metrics (NPM) business within Corporate Services, and further developing its Market Technology segment, including its regulatory technology offerings. The company aims to solve key client challenges and drive stockholder value through these strategic investments, while also sustaining its core marketplace platforms.

Nasdaq identified several key risks, including: 1. Economic conditions and market factors beyond its control that could negatively impact performance. 2. Intense competition across all business segments from other exchanges, technology providers, and alternative trading venues. 3. The critical reliance on technology systems and the potential for system limitations or failures, including cybersecurity threats. 4. The need for continuous innovation and successful introduction of new products and services to maintain competitiveness. 5. Fluctuations in trading and clearing volumes and market share, which directly impact revenues. 6. Regulatory changes and compliance burdens in the highly regulated financial industry. 7. Risks associated with integrating acquired businesses and realizing anticipated benefits.