01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported steady performance for the fiscal year ended December 31, 2019, with total revenues slightly declining to $4.262 billiona 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.
02—Key points
Key Highlights
- Total revenues for 2019 were $4.262 billion, a slight decrease from $4.277 billion in 2018, reflecting a strategic shift and divestitures.
- The Market Technology segment showed strong revenue growth of 25.2% year-over-year, driven by the acquisition of Cinnober and increased software delivery projects.
- Information Services revenue increased by 9.1%, fueled by growth in Market Data, Index, and particularly Investment Data & Analytics.
- Nasdaq continued its strategy of optimizing slower-growth businesses through divestitures, including the sale of the BWise platform.
- The company made strategic investments in growth areas, such as data analytics within Information Services and regulatory technology within Market Technology.
- Diluted 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.
- Total operating expenses increased slightly by 1.3% to $1.518 billion, with notable increases in general, administrative, and other expenses, and restructuring charges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Nasdaq, Inc. kept $0.18.
- Revenue$4.26B100.0%
- Cost of revenue−$1.72B40.5%
- Gross profit$2.54B59.5%
- Operating costs−$1.52B35.7%
- Operating income$1.02B23.9%
- Interest, other & tax−$243.0M5.7%
- Net income$774.0M18.2%
Where FY2019 revenue went
$4.26B- Cost of revenue: $1.72B, 40% of revenue
- Operating costs: $1.52B, 36% of revenue
- Net income: $774.0M, 18% of revenue
- Interest, other & tax: $243.0M, 5.7% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.26B$4.28B | −0.4% |
| Cost of Revenue | $1.72B$1.75B | −1.6% |
| Gross Profit | $2.54B$2.53B | +0.4% |
| Operating Expenses | $1.52B$1.50B | +1.3% |
| Operating Income | $1.02B$1.03B | −1.1% |
| Interest Expense | $124.00M$150.00M | −17.3% |
| Net Income | $774.00M$458.00M | +69.0% |
| EPS (Basic) | $1.56$0.92 | +69.3% |
| EPS (Diluted) | $1.54$0.91 | +69.6% |
| Shares Outstanding (Basic) | 494.79M496.05M | −0.3% |
| Shares Outstanding (Diluted) | 500.91M503.07M | −0.4% |
05—Questions
Frequently Asked Questions
What were Nasdaq's primary revenue drivers in 2019, and how did they perform compared to the previous year?
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.
How did Nasdaq's strategic acquisitions and divestitures in 2019 impact its financial performance?
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.
What is Nasdaq's outlook on future growth, and where is it focusing its investments?
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.
What are the main risks that Nasdaq identified in its 2019 10-K filing?
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.
06—Continue