10-QPeriod: Q3 FY2015

NASDAQ, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 4, 2015For Securities:NDAQ

Summary

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.

Financial Highlights

56 data points
Beta

Revenue

$871.00M

60.7% Gross Margin

Net Income

$138.00M

15.8% Net Margin

EPS (Diluted)

$0.27

Total Assets

$11.77B

Cash & Equivalents

$290.00M

Free Cash Flow

$34.00M

Financial Statements
Beta
Revenue$871.00M
Cost of Revenue$342.00M
Gross Profit$529.00M
Operating Expenses$298.00M
Operating Income$231.00M
Interest Expense$28.00M
Net Income$138.00M
EPS (Basic)$0.28
EPS (Diluted)$0.27
Shares Outstanding (Basic)500.71M
Shares Outstanding (Diluted)514.36M

Key Highlights

  • 1Revenues 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.
  • 2For 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.
  • 3Operating 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.
  • 4Net 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.
  • 5The company completed the acquisition of Dorsey, Wright & Associates, LLC for $226 million in January 2015, which is expected to enhance its Information Services segment.
  • 6Nasdaq's share repurchase program continued, with $310 million spent in the first nine months of 2015 to repurchase common stock.
  • 7Cash 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.

Frequently Asked Questions

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.

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.

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.

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.