01—Abstract
Summary
Summary of the 10-Q filed August 8, 2013. Cited figures are marked; the original filing is the authoritative source.
NASDAQ, INC. (NDAQ) reported its financial results for the second quarter and first six months ended June 30, 2013.
The company experienced a notable increase in revenue, driven primarily by growth in its Technology Solutions segment, bolstered by recent acquisitions. However, operating expenses also rose significantly, impacting operating income and net income, which saw a decrease compared to the prior year period. The company made substantial investments in acquisitions, notably eSpeed and the TR Corporate Solutions businesses, which contributed to an increase in goodwill and intangible assets.
Liquidity remains stable, supported by cash generated from operations and access to credit facilities. The company's balance sheet reflects the impact of these strategic investments, with increased assets and liabilities.
Investors should note the ongoing legal proceedings related to the Facebook IPO, which resulted in a settlement with the SEC and a monetary penalty, as well as ongoing litigation and arbitration demands. Overall, NDAQ is navigating a period of significant investment and integration, with mixed financial results reflecting these strategic initiatives.
02—Key points
Key Highlights
- Total revenues less transaction rebates, brokerage, clearance and exchange fees increased by 5.6% to $451 million for the second quarter and 3.3% to $869 million for the first six months of 2013 compared to the prior year periods.
- The Technology Solutions segment showed strong revenue growth, increasing by 41.8% in Q2 and 28.0% in the first six months of 2013, largely driven by acquisitions and increased market technology revenues.
- Operating expenses increased significantly by 15.9% in Q2 and 25.3% in the first six months of 2013, impacting profitability.
- Net income attributable to NASDAQ OMX decreased by 5.4% to $88 million in Q2 and by 27.0% to $130 million in the first six months of 2013.
- The company completed significant acquisitions, including eSpeed for $1.2 billion and the TR Corporate Solutions businesses for $390 million, leading to substantial increases in goodwill and intangible assets.
- Cash and cash equivalents decreased by $118 million to $379 million at June 30, 2013, primarily due to net cash used in investing activities for acquisitions.
- NASDAQ settled with the SEC regarding systems issues during the Facebook IPO, agreeing to implement preventative measures and paying a $10 million penalty.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Nasdaq, Inc. kept $0.11.
- Revenue$814.0M100.0%
- Cost of revenue−$363.0M44.6%
- Gross profit$451.0M55.4%
- Operating costs−$292.0M35.9%
- Operating income$159.0M19.5%
- Interest, other & tax−$71.0M8.7%
- Net income$88.0M10.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed August 8, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $814.00M$815.00M | −0.1% |
| Cost of Revenue | $363.00M$388.00M | −6.4% |
| Gross Profit | $451.00M$427.00M | +5.6% |
| Operating Expenses | $292.00M$252.00M | +15.9% |
| Operating Income | $159.00M$175.00M | −9.1% |
| Interest Expense | $26.00M$24.00M | +8.3% |
| Net Income | $88.00M$93.00M | −5.4% |
| EPS (Basic) | $0.18$0.18 | −3.6% |
| EPS (Diluted) | $0.17$0.18 | −1.9% |
| Shares Outstanding (Basic) | 499.12M508.06M | −1.8% |
| Shares Outstanding (Diluted) | 510.43M520.37M | −1.9% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the second quarter of 2013?
Revenue growth was primarily driven by an increase in Technology Solutions revenues, up 41.8%, due to contributions from recent acquisitions and growth in Market Technology revenues. Listing Services and Information Services also saw modest revenue increases.
How did the company's major acquisitions impact its financial position?
The acquisitions of eSpeed and the TR Corporate Solutions businesses significantly increased total assets, with goodwill and intangible assets rising considerably. These acquisitions also contributed to higher operating expenses and integration-related costs.
What is the current status of the legal proceedings related to the Facebook IPO?
NASDAQ has settled with the SEC's Division of Enforcement, agreeing to implement preventative measures and paying a $10 million penalty. However, the company is still involved in consolidated civil litigation and a member organization arbitration related to the Facebook IPO, which it intends to defend vigorously.
How has the company managed its liquidity and debt?
Liquidity remains stable, supported by cash from operations. The company issued new debt (2021 Notes) to help fund acquisitions and utilized its revolving credit facility. Overall debt obligations increased, but the company remained in compliance with its debt covenants.
06—Continue