01—Abstract
Summary
Summary of the 10-Q filed August 5, 2019. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported its financial results for the second quarter and first six months ended June 30, 2019.
For the second quarter, total revenues were $1.061 billiona, an increase of 3.3% year-over-year, while net income attributable to Nasdaq was $174 million, up 7.4%. Diluted EPS was $1.04, a 7.2% increase. For the first six months, revenues were $2.100 billion, down 3.3%, but net income increased 24.2% to $421 million, and diluted EPS rose 24.8% to $2.52.
The company saw growth in its Information Services and Market Technology segments, with Market Technology's Annualized Recurring Revenue (ARR) increasing by 16%b year-over-year. Significant debt refinancing activities occurred, including the issuance of new notes and repayment of existing debt and credit facilities, contributing to lower interest expenses. Overall, Nasdaq demonstrated solid revenue growth in the second quarter driven by its Information Services and Market Technology segments.
While total revenues for the first six months saw a slight decline, net income and EPS experienced substantial growth, aided by lower interest expenses and a favorable tax rate. The company continued its commitment to returning capital to shareholders through dividends and share repurchases, while also making strategic investments like the acquisition of Cinnober, which contributed to the Market Technology segment's growth. Investors should note the company's ongoing efforts in debt management and its strategic focus on recurring revenue streams.
02—Key points
Key Highlights
- Total revenues for Q2 2019 increased by 3.3% to $1.061 billion, while net income attributable to Nasdaq grew by 7.4% to $174 million.
- Diluted EPS for Q2 2019 increased by 7.2% to $1.04.
- For the first six months of 2019, net income rose by 24.2% to $421 million, and diluted EPS increased by 24.8% to $2.52.
- Market Technology segment revenue increased by 19.7% in Q2 2019, with Annualized Recurring Revenue (ARR) up 16% year-over-year.
- Information Services segment revenue grew by 10.9% in Q2 2019.
- The company returned $150 million to shareholders through dividends in the first six months of 2019 and continued its share repurchase program, with $282 million remaining authorization as of June 30, 2019.
- Nasdaq completed significant debt refinancing activities, including issuing new notes and repaying existing debt and credit facilities, leading to a decrease in interest expense.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, Nasdaq, Inc. kept $0.16.
- Revenue$1.06B100.0%
- Cost of revenue−$438.0M41.3%
- Gross profit$623.0M58.7%
- Operating costs−$367.0M34.6%
- Operating income$256.0M24.1%
- Interest, other & tax−$82.0M7.7%
- Net income$174.0M16.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed August 5, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $1.06B$1.03B | +3.3% |
| Cost of Revenue | $438.00M$412.00M | +6.3% |
| Gross Profit | $623.00M$615.00M | +1.3% |
| Operating Expenses | $367.00M$346.00M | +6.1% |
| Operating Income | $256.00M$269.00M | −4.8% |
| Interest Expense | $31.00M$37.00M | −16.2% |
| Net Income | $174.00M$162.00M | +7.4% |
| EPS (Basic) | $0.35$0.33 | +7.1% |
| EPS (Diluted) | $0.35$0.32 | +7.2% |
| Shares Outstanding (Basic) | 496.79M497.24M | −0.1% |
| Shares Outstanding (Diluted) | 501.12M502.20M | −0.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in Q2 2019?
Revenue growth in Q2 2019 was primarily driven by the Information Services segment, which saw a 10.9% increase, and the Market Technology segment, which experienced a 19.7% revenue increase. This growth was supported by higher market data, index revenues, investment data & analytics, and the inclusion of revenues from the Cinnober acquisition in Market Technology.
How did Nasdaq manage its debt during this period?
Nasdaq actively managed its debt by issuing new notes (the 2029 Notes) and using the proceeds to repay existing debt (the 2020 Notes). Additionally, they repaid and terminated their 2016 Credit Facility using commercial paper proceeds. These actions contributed to a decrease in overall interest expense.
What is the significance of the Market Technology segment's ARR growth?
The 16% year-over-year increase in Annualized Recurring Revenue (ARR) for the Market Technology segment is significant as ARR is a key metric for SaaS and recurring revenues. This growth indicates a strengthening of Nasdaq's subscription-based business model within its technology offerings, providing more predictable revenue streams.
How did the company return capital to shareholders?
Nasdaq returned capital to shareholders through cash dividends and share repurchases. They declared a regular quarterly cash dividend of $0.47 per share in Q2 2019, a 7.0% increase from the prior quarter. In the first six months of 2019, $150 million was returned via dividends, and $50 million was used for share repurchases in Q2 2019, with $282 million remaining authorization.
06—Continue