01—Abstract
Summary
Summary of the 10-Q filed August 3, 2012. Cited figures are marked; the original filing is the authoritative source.
NASDAQ OMX Group, Inc. reported mixed financial results for the second quarter of 2012, with total revenues less transaction rebates, brokerage, clearance, and exchange fees increasing slightly by 2.2% to $424 milliona.
This growth was primarily driven by increases in Market Data, Access Services, and Market Technology revenues. However, operating income saw a notable increase of 10.8% to $175 millionb, largely due to a significant 3.1% decrease in operating expenses driven by cost-saving initiatives and favorable foreign exchange rates. Despite these improvements, net income attributable to NASDAQ OMX saw a modest 1.1% increase to $93 million, and diluted earnings per share rose slightly to $0.53.
A significant factor impacting profitability was the recognition of $28 millionc in intangible asset impairment charges and $17 million in restructuring charges during the quarter, which offset revenue gains. The company also highlighted ongoing litigation and an SEC investigation related to the Facebook IPO, which is expected to incur significant additional expenses.
02—Key points
Key Highlights
- Total revenues less transaction rebates, brokerage, clearance, and exchange fees increased by 2.2% to $424 million for the second quarter of 2012 compared to the prior year.
- Operating income increased by 10.8% to $175 million, primarily driven by a 3.1% decrease in operating expenses due to cost efficiencies and favorable foreign exchange.
- Net income attributable to NASDAQ OMX was $93 million, a slight increase of 1.1% from the prior year's $92 million.
- Diluted earnings per share improved to $0.53 from $0.51 in the prior year's second quarter.
- The company recorded significant non-cash charges including $28 million in intangible asset impairment and $17 million in restructuring charges during the quarter.
- Cash and cash equivalents decreased to $491 million from $506 million at the end of 2011.
- NASDAQ OMX initiated a quarterly cash dividend of $0.13 per share, reflecting a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2012, Nasdaq, Inc. kept $0.11.
- Revenue$815.0M100.0%
- Cost of revenue−$388.0M47.6%
- Gross profit$427.0M52.4%
- Operating costs−$252.0M30.9%
- Operating income$175.0M21.5%
- Interest, other & tax−$82.0M10.1%
- Net income$93.0M11.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2012filed August 3, 2012Financial Statements
Q2 FY2012 against Q2 FY2011
| Line item | Q2 FY2012Q2 FY2011 | Change |
|---|---|---|
| Revenue | $815.00M$837.00M | −2.6% |
| Cost of Revenue | $388.00M$422.00M | −8.1% |
| Gross Profit | $427.00M$415.00M | +2.9% |
| Operating Expenses | $252.00M$257.00M | −1.9% |
| Operating Income | $175.00M$158.00M | +10.8% |
| Interest Expense | $24.00M$31.00M | −22.6% |
| Net Income | $93.00M$92.00M | +1.1% |
| EPS (Basic) | $0.18$0.17 | +5.8% |
| EPS (Diluted) | $0.18$0.17 | +3.9% |
| Shares Outstanding (Basic) | 508.06M529.94M | −4.1% |
| Shares Outstanding (Diluted) | 520.37M541.55M | −3.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the second quarter of 2012?
Revenue growth was primarily driven by increases in Market Data revenues ($9 million), Access Services revenues ($7 million), and Market Technology revenues ($3 million), along with an increase in other market services revenues.
What significant charges impacted the company's profitability in this quarter?
The company recorded significant non-cash charges, including $28 million in intangible asset impairment charges related to technology, customer relationships, and trade names, as well as $17 million in restructuring charges associated with workforce reductions and facility consolidation.
How is the company managing its capital and shareholder returns?
The company generated $318 million in net cash from operating activities in the first six months of 2012. During the second quarter, it repurchased $175 million of its common stock under its share repurchase program and initiated a quarterly cash dividend of $0.13 per share, demonstrating a commitment to returning capital to shareholders.
What is the company's stance on the legal and regulatory issues related to the Facebook IPO?
NASDAQ OMX is vigorously defending against multiple lawsuits related to the Facebook IPO and is cooperating with the SEC's investigation. While the company believes the lawsuits are without merit, it anticipates significant expenses in defending these actions and implementing necessary technical changes. The outcome of these matters is currently unpredictable.
06—Continue