01—Abstract
Summary
Summary of the 10-Q filed May 5, 2016. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported a significant improvement in its financial performance for the first quarter of 2016 compared to the same period in the prior year.
Net income attributable to Nasdaq surged to $132 milliona, or $0.78 per diluted share, from $9 million, or $0.05 per diluted share, in Q1 2015. This substantial growth was driven by increased revenues across multiple segments, particularly in Market Services and Information Services, alongside a considerable reduction in operating expenses, largely due to a substantial decrease in restructuring charges. The company also demonstrated active capital management, with increased debt issuance to fund strategic acquisitions, notably Chi-X Canada and Marketwired, which are expected to bolster its Market Services and Technology Solutions segments.
Furthermore, Nasdaq continued its commitment to shareholder returns by increasing its quarterly cash dividend. Investors should note the company's ongoing strategic investments and the positive financial turnaround, while remaining aware of the inherent risks in the financial services industry and market volatility.
02—Key points
Key Highlights
- Net income attributable to Nasdaq increased dramatically to $132 million ($0.78/diluted share) in Q1 2016 from $9 million ($0.05/diluted share) in Q1 2015.
- Total revenues less transaction-based expenses grew by 5.3% to $534 million in Q1 2016, driven by increases in Market Services, Information Services, and Technology Solutions.
- Operating expenses decreased by 34.4% to $315 million in Q1 2016, primarily due to significantly lower restructuring charges compared to the prior year.
- The company completed two significant acquisitions in Q1 2016: Chi-X Canada for $116 million and Marketwired for $111 million, expanding its Market Services and Technology Solutions segments respectively.
- Debt obligations increased to $2.565 billion as of March 31, 2016, partly due to drawing on new and existing credit facilities to fund acquisitions.
- Nasdaq declared a 28% increase in its quarterly cash dividend to $0.32 per share, reflecting confidence in its financial performance and commitment to shareholder returns.
- The company continues to actively manage its capital structure, including a share repurchase program with $500 million remaining authorization as of March 31, 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2016, Nasdaq, Inc. kept $0.15.
- Revenue$905.0M100.0%
- Cost of revenue−$371.0M41.0%
- Gross profit$534.0M59.0%
- Operating costs−$315.0M34.8%
- Operating income$219.0M24.2%
- Interest, other & tax−$87.0M9.6%
- Net income$132.0M14.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed May 5, 2016Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $905.00M$858.00M | +5.5% |
| Cost of Revenue | $371.00M$351.00M | +5.7% |
| Gross Profit | $534.00M$507.00M | +5.3% |
| Operating Expenses | $315.00M$480.00M | −34.4% |
| Operating Income | $219.00M$27.00M | +711.1% |
| Interest Expense | $28.00M$28.00M | 0.0% |
| Net Income | $132.00M$9.00M | +1366.7% |
| EPS (Basic) | $0.27$0.02 | +1500.0% |
| EPS (Diluted) | $0.26$0.02 | +1460.0% |
| Shares Outstanding (Basic) | 492.85M506.96M | −2.8% |
| Shares Outstanding (Diluted) | 505.11M518.03M | −2.5% |
05—Questions
Frequently Asked Questions
What was the primary driver behind Nasdaq's substantial net income increase in Q1 2016?
The primary driver behind the significant increase in net income was a combination of revenue growth across its various business segments, particularly in Market Services and Information Services, and a substantial decrease in operating expenses. The reduction in operating expenses was largely due to a significant decrease in restructuring charges compared to the first quarter of 2015.
How did Nasdaq fund its recent acquisitions?
Nasdaq funded its Q1 2016 acquisitions of Chi-X Canada and Marketwired by utilizing a combination of cash on hand and borrowings under its credit facilities, including drawing $110 million from its 2014 revolving credit commitment and $399 million from its new 2016 term loan facility.
What is Nasdaq's outlook regarding dividends and share repurchases?
Nasdaq demonstrated a commitment to shareholder returns by increasing its quarterly cash dividend by 28% to $0.32 per share. Additionally, as of March 31, 2016, the company had $500 million remaining under its authorized share repurchase program, indicating continued focus on returning capital to shareholders.
How did currency fluctuations impact Nasdaq's financial results in Q1 2016?
Foreign currency fluctuations had a mixed impact. While revenues less transaction-based expenses experienced an unfavorable impact of $2 million, operating expenses benefited from a favorable impact of $4 million. Overall, approximately 24.7% of revenues and 11.1% of operating income were derived from currencies other than the U.S. dollar, primarily the Euro and Swedish Krona.
06—Continue