01—Abstract
Summary
Summary of the 10-Q filed August 6, 2014. Cited figures are marked; the original filing is the authoritative source.
NASDAQ, INC. (NDAQ) reported its financial results for the period ending June 30, 2014.
The company demonstrated solid revenue growth, driven by strong performance in its Information Services and Technology Solutions segments, bolstered by recent acquisitions. Operating income saw a significant increase, reflecting both revenue growth and disciplined expense management, though the latter was partially impacted by integration costs related to acquisitions and debt extinguishment expenses. Overall, the company's financial position remains robust, supported by healthy operating cash flows and a strong liquidity position.
NASDAQ is actively managing its capital structure, including debt repayment and opportunistic share repurchases, while continuing to invest in strategic initiatives and maintain a commitment to returning value to shareholders through dividends. Investors should note the ongoing integration of acquisitions and potential impacts from regulatory environments and market volatility.
02—Key points
Key Highlights
- Total revenues increased by 16.0% to $865 million for the three months ended June 30, 2014, compared to $814 million in the prior year period.
- Net income attributable to NASDAQ OMX increased by 14.8% to $101 million for the three months ended June 30, 2014, compared to $88 million in the prior year period.
- Diluted earnings per share increased by 13.5% to $0.59 for the three months ended June 30, 2014, compared to $0.52 in the prior year period.
- Operating expenses increased by 13.7% to $332 million, largely due to integration costs from recent acquisitions.
- The company completed the acquisition of the remaining 28% ownership interest in BWise Beheer B.V. on March 31, 2014.
- The company repaid $400 million of 4.00% senior unsecured notes in June 2014 and issued $500 million of 4.25% senior unsecured notes in May 2014.
- Cash flows from operating activities increased significantly by 50.2% to $383 million for the six months ended June 30, 2014, compared to $255 million in the prior year period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2014, Nasdaq, Inc. kept $0.12.
- Revenue$865.0M100.0%
- Cost of revenue−$342.0M39.5%
- Gross profit$523.0M60.5%
- Operating costs−$332.0M38.4%
- Operating income$191.0M22.1%
- Interest, other & tax−$90.0M10.4%
- Net income$101.0M11.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2014filed August 6, 2014Financial Statements
Q2 FY2014 against Q2 FY2013
| Line item | Q2 FY2014Q2 FY2013 | Change |
|---|---|---|
| Revenue | $865.00M$814.00M | +6.3% |
| Cost of Revenue | $342.00M$363.00M | −5.8% |
| Gross Profit | $523.00M$451.00M | +16.0% |
| Operating Expenses | $332.00M$292.00M | +13.7% |
| Operating Income | $191.00M$159.00M | +20.1% |
| Interest Expense | $30.00M$26.00M | +15.4% |
| Net Income | $101.00M$88.00M | +14.8% |
| EPS (Basic) | $0.20$0.18 | +13.2% |
| EPS (Diluted) | $0.20$0.17 | +13.5% |
| Shares Outstanding (Basic) | 508.01M499.12M | +1.8% |
| Shares Outstanding (Diluted) | 517.42M510.43M | +1.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth for NASDAQ in the second quarter of 2014?
Revenue growth was primarily driven by increases in Corporate Solutions revenues (due to the acquisition of TR Corporate Solutions businesses), fixed income trading revenues (from the acquisition of eSpeed), and Market Data Products revenues.
How has NASDAQ managed its debt obligations during this period?
NASDAQ repaid $400 million of its 4.00% senior unsecured notes and issued $500 million of new 4.25% senior unsecured notes. The company also utilized a portion of the proceeds from the new notes to repay part of its 2011 credit facility.
What is the company's outlook regarding future growth and potential risks?
The company notes that its performance is influenced by macroeconomic events, investor sentiment, regulatory environments, and technological advancements. While cautiously optimistic about global economic recovery, it acknowledges potential for market volatility. Key growth drivers include the IPO market and non-transactional businesses, while risks include competition, regulatory changes, and technological disruption.
Can you explain the increase in operating expenses?
The increase in operating expenses was primarily due to additional expenses associated with the recent acquisitions of the TR Corporate Solutions businesses and eSpeed, along with a loss on extinguishment of debt. These were partially offset by a decrease in merger and strategic initiatives expense.
06—Continue