01—Abstract
Summary
Summary of the 10-Q filed November 4, 2015. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported its third-quarter and nine-month results for the period ending September 30, 2015.
For the quarter, the company saw an increase in revenues less transaction-based expenses, driven by growth in cash equity trading and data products. However, operating expenses also rose, largely due to restructuring charges, impacting overall profitability. For the nine-month period, revenues less transaction-based expenses remained relatively flat year-over-year, with significant increases in Listing Services and Information Services offset by declines in Market Services and Technology Solutions.
The company incurred substantial restructuring charges during this period, which significantly reduced net income compared to the prior year. Despite these challenges, Nasdaq continued its strategic initiatives, including the acquisition of Dorsey, Wright & Associates, LLC, and ongoing share repurchase programs, demonstrating a focus on long-term growth and shareholder returns.
02—Key points
Key Highlights
- Revenues less transaction-based expenses increased by 6.4% to $529 million for the three months ended September 30, 2015, compared to the same period in 2014.
- For the nine months ended September 30, 2015, revenues less transaction-based expenses were $1,554 million, a slight increase of 0.3% from the prior year.
- Operating expenses for the nine months ended September 30, 2015, increased significantly by 11.5% to $1,079 million, largely due to $160 million in restructuring charges.
- Net income attributable to Nasdaq for the nine months ended September 30, 2015, decreased by 14.6% to $280 million, compared to $328 million in the prior year, primarily due to restructuring charges.
- The company completed the acquisition of Dorsey, Wright & Associates, LLC for $226 million in January 2015, which is expected to enhance its Information Services segment.
- Nasdaq's share repurchase program continued, with $310 million spent in the first nine months of 2015 to repurchase common stock.
- Cash dividends declared per common share increased to $0.65 for the nine months ended September 30, 2015, from $0.43 in the same period of 2014.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Nasdaq, Inc. kept $0.16.
- Revenue$871.0M100.0%
- Cost of revenue−$342.0M39.3%
- Gross profit$529.0M60.7%
- Operating costs−$298.0M34.2%
- Operating income$231.0M26.5%
- Interest, other & tax−$93.0M10.7%
- Net income$138.0M15.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed November 4, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $871.00M$818.00M | +6.5% |
| Cost of Revenue | $342.00M$321.00M | +6.5% |
| Gross Profit | $529.00M$497.00M | +6.4% |
| Operating Expenses | $298.00M$290.00M | +2.8% |
| Operating Income | $231.00M$207.00M | +11.6% |
| Interest Expense | $28.00M$29.00M | −3.4% |
| Net Income | $138.00M$123.00M | +12.2% |
| EPS (Basic) | $0.28$0.24 | +13.7% |
| EPS (Diluted) | $0.27$0.24 | +12.7% |
| Shares Outstanding (Basic) | 500.71M505.76M | −1.0% |
| Shares Outstanding (Diluted) | 514.36M519.47M | −1.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the third quarter of 2015?
The primary drivers of revenue growth in the third quarter of 2015 were increases in cash equity trading revenues (up 17.9% to $349 million) and data products revenues (up 12.0% to $103 million), contributing to an overall 6.4% increase in revenues less transaction-based expenses.
What caused the significant increase in operating expenses during the first nine months of 2015?
The significant increase in operating expenses during the first nine months of 2015 was primarily driven by $160 million in restructuring charges related to a company-wide review of processes and businesses, along with increased compensation and benefits expense and computer operations and data communications expense.
How did the acquisition of Dorsey, Wright & Associates, LLC impact the company's financials?
The acquisition of Dorsey, Wright & Associates, LLC (DWA) for $226 million in January 2015 was integrated into the Information Services segment. It contributed to the increase in Data Products revenues and Index Licensing and Services revenues for the period. The acquisition was funded through cash on hand and $100 million borrowed under the company's revolving credit facility.
What is the company's outlook on managing its debt obligations?
Nasdaq's debt obligations remained substantial, totaling $2.4 billion at the end of the nine-month period. However, the company reported compliance with all debt covenants and indicated that its operations and available credit commitments are expected to provide sufficient cash to fund operating expenses, capital expenditures, debt repayments, and dividends in the near term. They also continued to actively manage their debt through repayments and utilization of their credit facility.
06—Continue