10-QPeriod: Q2 FY2018

NASDAQ, INC. Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 1, 2018For Securities:NDAQ

Summary

Nasdaq, Inc. reported solid financial results for the second quarter and the first six months of 2018, demonstrating revenue growth across its key segments. Total revenues, less transaction-based expenses, increased by 3.2% to $615 million for the quarter and 8.8% to $1,281 million for the first six months, driven by strong performance in Market Services, Information Services, and Market Technology. Net income attributable to Nasdaq rose by 11.0% to $162 million for the quarter and 8.0% to $339 million for the six-month period, reflecting improved operational efficiency and strategic initiatives, including a gain on the divestiture of certain businesses. The company continued its focus on shareholder returns, increasing its cash dividend per share and actively engaging in share repurchases. Nasdaq's balance sheet remains robust, with significant liquidity to support ongoing operations and strategic investments. The company is well-positioned to navigate the evolving financial market landscape, driven by its diversified business model and commitment to innovation.

Financial Highlights

56 data points
Beta

Revenue

$1.03B

59.9% Gross Margin

Net Income

$162.00M

15.8% Net Margin

EPS (Diluted)

$0.32

Total Assets

$15.14B

Cash & Equivalents

$322.00M

Free Cash Flow

$250.00M

Financial Statements
Beta
Revenue$1.03B
Cost of Revenue$412.00M
Gross Profit$615.00M
Operating Expenses$346.00M
Operating Income$269.00M
Interest Expense$37.00M
Net Income$162.00M
EPS (Basic)$0.33
EPS (Diluted)$0.32
Shares Outstanding (Basic)497.24M
Shares Outstanding (Diluted)502.20M

Key Highlights

  • 1Total revenues less transaction-based expenses grew by 3.2% year-over-year to $615 million in Q2 2018.
  • 2Net income attributable to Nasdaq increased by 11.0% to $162 million in Q2 2018, with diluted EPS rising to $0.97.
  • 3Market Services revenue increased 4.7% to $649 million in Q2 2018, showing growth in both Equity Derivative and Cash Equity Trading.
  • 4Information Services revenue saw a significant increase of 21.5% to $175 million in Q2 2018, primarily driven by growth in Market Data and Investment Data & Analytics.
  • 5The company recognized a pre-tax gain of $41 million from the divestiture of its Public Relations Solutions and Digital Media Services businesses in April 2018.
  • 6Nasdaq declared a cash dividend of $0.38 per share for Q2 2018, reflecting a commitment to shareholder returns.
  • 7Shareholder equity decreased to $5,542 million from $5,880 million at the end of 2017, impacted by share repurchases and dividends.

Frequently Asked Questions

Revenue growth was driven by increases across several segments. Market Services saw higher trading volumes in equity derivatives and cash equities. Information Services benefited from growth in proprietary market data products and the inclusion of eVestment's revenues. Market Technology also contributed positively with increased delivery and support revenues.

The divestiture in April 2018 resulted in a pre-tax gain of $41 million, positively impacting 'Other Revenues' and contributing to the overall net income. While this reduced 'Other revenues' compared to the prior year period, it aligns with Nasdaq's strategy of focusing on core operations.

Nasdaq's total debt obligations were $3,847 million as of June 30, 2018, a decrease from $4,207 million at the end of 2017. The company maintains compliance with its debt covenants and has sufficient liquidity through its credit facilities and operating cash flows to manage its financial obligations.

Nasdaq accounts for its investments in unconsolidated investees, like OCC and EuroCCP N.V., using the equity method. Net income from these investments contributed positively to the company's results, with $5 million recognized in Q2 2018. The company also continues to monitor developments regarding its OCC capital plan and associated dividends.