01—Abstract
Summary
Summary of the 10-Q filed May 9, 2014. Cited figures are marked; the original filing is the authoritative source.
NASDAQ, INC. (NDAQ) reported a strong first quarter in 2014, with total revenues less transaction rebates, brokerage, clearance and exchange fees increasing by 26.6% to $529 milliona compared to the same period in 2013.
This growth was primarily driven by acquisitions, notably the TR Corporate Solutions businesses and eSpeed, which bolstered the Technology Solutions and Market Services segments, respectively. Net income attributable to NASDAQ OMX more than doubled, reaching $103 millionb ($0.59 per diluted share) from $42 million ($0.25 per diluted share) in the prior year's quarter. The company also demonstrated solid operational performance, with Market Services, Listing Services, Information Services, and Technology Solutions all showing revenue growth.
Despite increased operating expenses (up 5.2% to $345 millionc), largely due to integration costs from recent acquisitions and higher merger and strategic initiatives expenses, NASDAQ OMX maintained robust profitability. The company also highlighted its strong liquidity position, with $384 million in cash and cash equivalents and an available revolving credit commitment of $750 million. The company continues to prioritize shareholder returns through dividends and an ongoing share repurchase program.
02—Key points
Key Highlights
- Revenue growth of 26.6% to $529 million (excluding rebates/fees), driven by acquisitions and organic growth across segments.
- Net income more than doubled to $103 million, with diluted EPS rising to $0.59 from $0.25 year-over-year.
- Technology Solutions segment revenue increased by a significant 80.0%, largely due to the TR Corporate Solutions acquisition.
- Market Services segment revenue grew by 17.0%, boosted by fixed income trading (post-eSpeed acquisition) and cash equity trading.
- Listing Services saw a 5.5% increase in revenue, supported by a rise in the number of listed companies in the U.S.
- Operating expenses increased by 5.2% to $345 million, primarily reflecting costs associated with recent acquisitions.
- Strong liquidity maintained, with $384 million in cash and cash equivalents and an undrawn revolving credit facility of $750 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2014, Nasdaq, Inc. kept $0.11.
- Revenue$898.0M100.0%
- Cost of revenue−$369.0M41.1%
- Gross profit$529.0M58.9%
- Operating costs−$345.0M38.4%
- Operating income$184.0M20.5%
- Interest, other & tax−$81.0M9.0%
- Net income$103.0M11.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2014filed May 9, 2014Financial Statements
Q1 FY2014 against Q1 FY2013
| Line item | Q1 FY2014Q1 FY2013 | Change |
|---|---|---|
| Revenue | $898.00M$744.00M | +20.7% |
| Cost of Revenue | $369.00M$326.00M | +13.2% |
| Gross Profit | $529.00M$418.00M | +26.6% |
| Operating Expenses | $345.00M$328.00M | +5.2% |
| Operating Income | $184.00M$90.00M | +104.4% |
| Interest Expense | $30.00M$24.00M | +25.0% |
| Net Income | $103.00M$42.00M | +145.2% |
| EPS (Basic) | $0.20$0.09 | +134.6% |
| EPS (Diluted) | $0.20$0.08 | +136.0% |
| Shares Outstanding (Basic) | 508.79M497.11M | +2.3% |
| Shares Outstanding (Diluted) | 521.00M508.99M | +2.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in Q1 2014?
Revenue growth was primarily driven by acquisitions, specifically the TR Corporate Solutions businesses and eSpeed. Organic growth in areas like U.S. market data products, index licensing, and U.S. cash equity trading also contributed significantly.
How did the acquisitions impact the company's financial performance?
The acquisitions of TR Corporate Solutions and eSpeed significantly boosted revenues, particularly in the Technology Solutions and Market Services segments. However, they also led to an increase in operating expenses related to integration and strategic initiatives.
What is the company's current financial health and liquidity position?
NASDAQ OMX reported strong financial health with $384 million in cash and cash equivalents. The company also has a $750 million revolving credit commitment, indicating ample liquidity to meet its operational and financial obligations.
Are there any significant legal or regulatory matters that investors should be aware of?
The company is involved in ongoing litigation related to the Facebook IPO. Additionally, it is a defendant in a new lawsuit alleging market manipulation through high-frequency trading. While NASDAQ OMX believes these claims are without merit and intends to defend them vigorously, these could pose future risks.
06—Continue