01—Abstract
Summary
Summary of the 10-Q filed November 6, 2018. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc.'s third-quarter 2018 report shows stable revenue but a slight decrease in net income and EPS compared to the prior year's quarter.
Total revenues were largely flat, while operating income saw a modest decline. The company has been actively engaged in strategic initiatives, including the divestiture of its Public Relations Solutions and Digital Media Services businesses in April 2018 and the pending acquisition of Cinnober. These activities, along with acquisitions from 2017, impact year-over-year comparisons.
Despite a slight dip in quarterly net income, the nine-month performance reflects growth, indicating resilience in Nasdaq's diversified business segments. From an investor's perspective, key takeaways include the continued strength in Information Services and Market Technology segments, offsetting a slight softness in Market Services and Corporate Services. The company's commitment to returning capital to shareholders is evident through consistent dividend payouts and an ongoing share repurchase program.
While operational expenses saw an increase, particularly in compensation and amortization, these are being managed within the context of strategic investments and business evolution. The company maintains a healthy liquidity position and compliance with debt covenants, signaling financial stability.
02—Key points
Key Highlights
- Total revenues for the three months ended September 30, 2018, were $964 million, a slight decrease of 0.1% from $965 million in the same period of 2017. For the nine months ended September 30, 2018, total revenues increased by 7.5% to $3,141 million from $2,929 million in the prior year.
- Net income attributable to Nasdaq for the third quarter of 2018 was $163 million, a decrease of 4.1% from $170 million in the third quarter of 2017. Diluted EPS also decreased to $0.97 from $1.00.
- The company successfully divested its Public Relations Solutions and Digital Media Services businesses in April 2018, recognizing a pre-tax net gain of $33 million.
- Nasdaq announced a pending all-cash acquisition of Cinnober in September 2018 for approximately $190 million, which is expected to be included in its Market Technology segment.
- Information Services segment revenue saw significant growth, increasing by 19.3% to $179 million in the third quarter of 2018, driven by strong performance in Index and Investment Data & Analytics.
- Market Technology segment revenues increased by 9.7% to $68 million in the third quarter of 2018, reflecting growth in delivery, support, and SaaS revenues.
- The company repurchased $394 million of its common stock during the first nine months of 2018, demonstrating a commitment to shareholder returns, alongside declared cash dividends totaling $208 million for the same period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, Nasdaq, Inc. kept $0.17.
- Revenue$964.0M100.0%
- Cost of revenue−$364.0M37.8%
- Gross profit$600.0M62.2%
- Operating costs−$354.0M36.7%
- Operating income$246.0M25.5%
- Interest, other & tax−$83.0M8.6%
- Net income$163.0M16.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed November 6, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $964.00M$969.00M | −0.5% |
| Cost of Revenue | $364.00M$362.00M | +0.6% |
| Gross Profit | $600.00M$603.00M | −0.5% |
| Operating Expenses | $354.00M$341.00M | +3.8% |
| Operating Income | $246.00M$262.00M | −6.1% |
| Interest Expense | $38.00M$34.00M | +11.8% |
| Net Income | $163.00M$170.00M | −4.1% |
| EPS (Basic) | $0.33$0.34 | −2.9% |
| EPS (Diluted) | $0.32$0.33 | −3.0% |
| Shares Outstanding (Basic) | 492.68M500.08M | −1.5% |
| Shares Outstanding (Diluted) | 501.87M510.01M | −1.6% |
05—Questions
Frequently Asked Questions
What was Nasdaq's overall financial performance in the third quarter of 2018?
In the third quarter of 2018, Nasdaq reported total revenues of $964 million, largely flat compared to the prior year's quarter. Net income attributable to Nasdaq was $163 million, a decrease of 4.1% from $170 million in Q3 2017, with diluted EPS falling to $0.97 from $1.00.
What are the key strategic initiatives Nasdaq undertook during this period?
Nasdaq completed the divestiture of its Public Relations Solutions and Digital Media Services businesses in April 2018 and announced the pending acquisition of Cinnober in September 2018 for approximately $190 million, which will be integrated into its Market Technology segment. These moves indicate a focus on refining its business portfolio.
How did Nasdaq's different business segments perform?
The Information Services segment showed robust growth of 19.3% in Q3 2018, and the Market Technology segment grew by 9.7%. Market Services revenues were up slightly by 0.9%, while Corporate Services saw a 4.0% increase. The 'Other revenues' category saw a significant decrease due to the prior year's divestitures.
What is Nasdaq's approach to returning capital to shareholders?
Nasdaq continues to prioritize shareholder returns. During the first nine months of 2018, the company paid cash dividends totaling $208 million and repurchased $394 million of its common stock under its share repurchase program, signaling a commitment to enhancing shareholder value.
06—Continue