01—Abstract
Summary
Summary of the 10-K filed February 23, 2021. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc.'s 2020 10-K filing highlights a year of robust growth, driven by increased trading volumes amidst market volatility and strategic acquisitions.
The company successfully navigated the complexities of the COVID-19 pandemic, adapting its operations to remote work while ensuring business continuity. Nasdaq's diversified business model, spanning Market Services, Corporate Platforms, Investment Intelligence, and Market Technology, proved resilient. The company demonstrated strong revenue growth, particularly in its Market Services and Investment Intelligence segments, supported by an increase in listings and high demand for data and analytics.
Strategic initiatives, including investments in Market Technology and the acquisition of Solovis and Verafin, underscore Nasdaq's commitment to transforming into a higher-growth, more scalable platform. The company also continued to enhance its foundational marketplace businesses. Looking ahead, Nasdaq appears well-positioned to leverage its technology, global reach, and diversified offerings to capitalize on future market opportunities while managing evolving regulatory landscapes and competitive pressures.
02—Key points
Key Highlights
- Strong revenue growth in 2020, with 'revenues less transaction-based expenses' increasing by 14.5% year-over-year, driven by higher trading volumes and strategic acquisitions.
- Successful adaptation to the COVID-19 pandemic, with most employees transitioning to remote work while maintaining operational continuity and implementing safety measures.
- Strategic acquisitions of Solovis (Investment Intelligence) and Verafin (Market Technology) to enhance data analytics capabilities and anti-financial crime solutions, respectively.
- Significant growth in the Investment Intelligence segment, with revenues up 16.6%, largely due to increased demand for market data and index-related products, and the acquisition of Solovis.
- The Market Services segment saw a substantial increase in revenues (45.2%), boosted by higher trading volumes in both equity derivatives and cash equities, despite a slight decrease in market share.
- Continued investment in and focus on the Market Technology segment, with revenue growth and strategic partnerships (e.g., with Microsoft for its SaaS platform).
- Nasdaq maintained strong listing performance, attracting a significant portion of U.S. IPOs and growing its number of listed companies across its global markets.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Nasdaq, Inc. kept $0.17.
- Revenue$5.63B100.0%
- Cost of revenue−$2.72B48.4%
- Gross profit$2.90B51.6%
- Operating costs−$1.67B29.7%
- Operating income$1.23B21.9%
- Interest, other & tax−$301.0M5.4%
- Net income$933.0M16.6%
Where FY2020 revenue went
$5.63B- Cost of revenue: $2.72B, 48% of revenue
- Operating costs: $1.67B, 30% of revenue
- Net income: $933.0M, 17% of revenue
- Interest, other & tax: $301.0M, 5.4% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 23, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $5.63B$4.26B | +32.1% |
| Cost of Revenue | $2.72B$1.72B | +58.0% |
| Gross Profit | $2.90B$2.54B | +14.5% |
| Operating Expenses | $1.67B$1.52B | +9.9% |
| Operating Income | $1.23B$1.02B | +21.3% |
| Interest Expense | $101.00M$124.00M | −18.5% |
| Net Income | $933.00M$774.00M | +20.5% |
| EPS (Basic) | $1.89$1.56 | +20.9% |
| EPS (Diluted) | $1.86$1.54 | +20.5% |
| Shares Outstanding (Basic) | 493.25M494.79M | −0.3% |
| Shares Outstanding (Diluted) | 500.71M500.91M | 0.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Nasdaq's financial performance in 2020?
Nasdaq's financial performance in 2020 was primarily driven by increased trading volumes across its markets, particularly in Market Services, fueled by market volatility. Strategic acquisitions, such as Solovis and Verafin, and growth in its Investment Intelligence segment, notably in market data and index revenues, also significantly contributed to the company's revenue and income growth.
How did Nasdaq manage the operational challenges posed by the COVID-19 pandemic?
Nasdaq effectively managed the COVID-19 pandemic by transitioning a majority of its workforce to remote work, enhancing network capacity and monitoring, and implementing additional safety protocols for essential on-site personnel. The company also focused on business continuity, including proposing virtual trading crowd capabilities for Nasdaq PHLX.
What are Nasdaq's key growth strategies as outlined in the filing?
Nasdaq's growth strategy involves increasing investment in high-growth opportunity areas like Market Technology, Investment Intelligence (specifically analytics and ESG solutions), and anti-financial crime technology. They also focus on enhancing their foundational marketplace businesses (Market Services and Corporate Platforms) and optimizing slower-growth businesses through divestitures or efficiency improvements.
Can you explain the impact of acquisitions and divestitures mentioned in the filing?
In 2020, Nasdaq acquired Solovis (a portfolio management and analytics tool) and Verafin (an anti-financial crime management solutions provider), bolstering its Investment Intelligence and Market Technology segments, respectively. The company also discussed its strategy to divest from areas with less growth potential, such as the announced sale of its U.S. fixed income business.
06—Continue