01—Abstract
Summary
Summary of the 10-Q filed November 7, 2013. Cited figures are marked; the original filing is the authoritative source.
NASDAQ, INC. (NDAQ) reported its third-quarter and year-to-date financial results for the period ending September 30, 2013.
The company saw revenue growth driven primarily by its Technology Solutions and Information Services segments, largely influenced by recent acquisitions, specifically eSpeed and the Thomson Reuters Corporate Solutions businesses. While overall revenues showed an increase, operating expenses also rose due to integration costs and higher compensation, impacting operating income for the nine-month period. Despite increased operating expenses, NASDAQ demonstrated strong cash flow from operations.
The company successfully managed its debt, issuing new notes and repaying existing ones, while maintaining a solid liquidity position. Investors should note the significant impact of acquisitions on the balance sheet and income statement, as well as ongoing integration efforts. The company also addressed the financial implications of the Facebook IPO system issues, including a settlement with the SEC and ongoing litigation, which have led to specific charges and provisions.
02—Key points
Key Highlights
- Revenue increased by 22.8% in Q3 2013 and 9.7% for the nine months ended September 30, 2013, driven by Technology Solutions and Information Services, largely due to acquisitions.
- Acquisitions of eSpeed and Thomson Reuters Corporate Solutions businesses significantly impacted financial results, contributing to an increase in goodwill and intangible assets.
- Operating expenses increased by 25.6% in Q3 2013 and 25.5% for the nine months ended September 30, 2013, driven by higher compensation, professional services, and integration costs related to acquisitions.
- Despite higher operating expenses, cash flow from operating activities remained strong at $337 million for the nine months ended September 30, 2013.
- The company successfully managed its debt, issuing $811 million in 3.875% Senior Unsecured Notes due 2021 and repaying $191 million in debt obligations during the nine-month period.
- NASDAQ settled an SEC investigation related to the Facebook IPO for $10 million and continued to incur expenses related to ongoing litigation and a voluntary accommodation program.
- Diluted earnings per share decreased to $0.66 in Q3 2013 from $0.52 in Q3 2012, and for the nine months decreased to $1.43 from $1.53 in the prior year, reflecting higher operating expenses and interest costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Nasdaq, Inc. kept $0.14.
- Revenue$805.0M100.0%
- Cost of revenue−$299.0M37.1%
- Gross profit$506.0M62.9%
- Operating costs−$304.0M37.8%
- Operating income$202.0M25.1%
- Interest, other & tax−$89.0M11.1%
- Net income$113.0M14.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed November 7, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $805.00M$746.00M | +7.9% |
| Cost of Revenue | $299.00M$334.00M | −10.5% |
| Gross Profit | $506.00M$412.00M | +22.8% |
| Operating Expenses | $304.00M$242.00M | +25.6% |
| Operating Income | $202.00M$170.00M | +18.8% |
| Interest Expense | $32.00M$24.00M | +33.3% |
| Net Income | $113.00M$89.00M | +27.0% |
| EPS (Basic) | $0.23$0.18 | +28.3% |
| EPS (Diluted) | $0.22$0.17 | +26.9% |
| Shares Outstanding (Basic) | 502.01M498.71M | +0.7% |
| Shares Outstanding (Diluted) | 516.31M511.56M | +0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in this quarter?
Revenue growth was primarily driven by the Technology Solutions and Information Services segments. This growth was significantly boosted by the recent acquisitions of eSpeed and the Thomson Reuters Corporate Solutions businesses, which contributed to increased revenues from Corporate Solutions and market data products.
How have the recent acquisitions impacted the company's financial position?
The acquisitions, particularly eSpeed and the Thomson Reuters Corporate Solutions businesses, have significantly increased NASDAQ's total assets, goodwill, and intangible assets. These acquisitions also led to higher operating expenses due to integration costs, increased compensation, and depreciation/amortization expenses related to the acquired assets.
What is the company's liquidity and debt situation?
NASDAQ maintained a healthy liquidity position with $300 million in cash and cash equivalents as of September 30, 2013. The company successfully raised $811 million through the issuance of 3.875% Senior Unsecured Notes due 2021 to fund acquisitions and general corporate purposes. Overall debt obligations increased, but the company remained in compliance with all debt covenants.
What are the ongoing financial implications of the Facebook IPO issues?
NASDAQ settled an SEC investigation related to the Facebook IPO's system issues with a $10 million penalty. The company also incurred $62 million in expenses for a voluntary accommodation program for qualifying members and continued to face legal defense costs related to ongoing litigation from retail investors and trading firms. The total announced value of valid submitted claims for the accommodation program was $41.6 million, though this may vary.
06—Continue