01—Abstract
Summary
Summary of the 10-Q filed November 6, 2019. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported its financial results for the third quarter and the first nine months of 2019.
For the third quarter, total revenues increased by 5.3% to $1,096 milliona, and net income attributable to Nasdaq decreased by 8.0% to $150 million, or $0.90 per diluted share. For the first nine months, revenues increased by 0.4% to $3,197 million, while net income attributable to Nasdaq increased by 13.7% to $571 million, or $3.42 per diluted share. The company continued to execute on its strategic initiatives, including the acquisition of Cinnober in its Market Technology segment and the sale of its BWise software platform.
Nasdaq also returned capital to shareholders through dividends and share repurchases. Key operational highlights include strong performance in the Market Technology segment, with Annual Recurring Revenue (ARR) increasing by 17%b year-over-year. Information Services also showed robust growth, driven by Market Data, Index, and Investment Data & Analytics businesses.
The Nasdaq Stock Market maintained its leadership in U.S. IPOs. The company managed its debt effectively, issuing new notes and repaying existing debt, while maintaining compliance with all debt covenants. Overall, Nasdaq demonstrated resilience with segment growth and strategic capital allocation, despite some quarter-over-quarter fluctuations in net income.
02—Key points
Key Highlights
- Total revenues for Q3 2019 increased 5.3% year-over-year to $1,096 million, with a 0.4% increase for the first nine months to $3,197 million.
- Net income attributable to Nasdaq decreased 8.0% to $150 million ($0.90/share) in Q3 2019, but increased 13.7% to $571 million ($3.42/share) for the first nine months of 2019.
- Market Technology segment revenue grew 23.5% in Q3 and 23.2% year-to-date, with Annual Recurring Revenue (ARR) up 17% year-over-year.
- Information Services segment revenue saw a 10.6% increase in Q3 and 10.8% year-to-date, driven by Market Data, Index, and Investment Data & Analytics.
- Nasdaq returned $228 million to shareholders via dividends and $200 million via share repurchases in the first nine months of 2019.
- The company completed the acquisition of Cinnober for $219 million, strengthening its Market Technology segment.
- Nasdaq successfully repaid significant portions of its debt, including the 2020 Notes and its 2016 Credit Facility, while issuing new 2029 Notes.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Nasdaq, Inc. kept $0.14.
- Revenue$1.10B100.0%
- Cost of revenue−$464.0M42.3%
- Gross profit$632.0M57.7%
- Operating costs−$406.0M37.0%
- Operating income$226.0M20.6%
- Interest, other & tax−$76.0M6.9%
- Net income$150.0M13.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed November 6, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $1.10B$964.00M | +13.7% |
| Cost of Revenue | $464.00M$364.00M | +27.5% |
| Gross Profit | $632.00M$600.00M | +5.3% |
| Operating Expenses | $406.00M$354.00M | +14.7% |
| Operating Income | $226.00M$246.00M | −8.1% |
| Interest Expense | $29.00M$38.00M | −23.7% |
| Net Income | $150.00M$163.00M | −8.0% |
| EPS (Basic) | $0.30$0.33 | −8.1% |
| EPS (Diluted) | $0.30$0.32 | −7.2% |
| Shares Outstanding (Basic) | 493.00M492.68M | +0.1% |
| Shares Outstanding (Diluted) | 501.09M501.87M | −0.2% |
05—Questions
Frequently Asked Questions
How did Nasdaq's revenue performance trend in the third quarter and first nine months of 2019?
For the third quarter of 2019, Nasdaq's total revenues increased by 5.3% to $1,096 million compared to the same period in 2018. For the first nine months of 2019, total revenues saw a more modest increase of 0.4% to $3,197 million.
What was the net income and earnings per share performance?
Net income attributable to Nasdaq decreased by 8.0% to $150 million, or $0.90 per diluted share, in the third quarter of 2019. However, for the first nine months of 2019, net income attributable to Nasdaq increased by 13.7% to $571 million, or $3.42 per diluted share.
Which business segments showed the strongest revenue growth?
The Market Technology segment demonstrated strong growth with revenues up 23.5% in the third quarter and 23.2% year-to-date. The Information Services segment also performed well, with revenue increases of 10.6% in the third quarter and 10.8% year-to-date. Market Services also showed significant revenue growth of 17.7% in Q3, driven by derivative trading and clearing, though revenue less transaction-based expenses in this segment decreased slightly year-to-date.
What significant corporate actions did Nasdaq undertake during this period?
Nasdaq acquired Cinnober for $219 million to enhance its Market Technology offerings and completed the divestiture of its BWise software platform. The company also continued its capital return program, paying $228 million in dividends and repurchasing $200 million of its stock in the first nine months of 2019. Financially, Nasdaq managed its debt by issuing new notes and repaying existing ones.
06—Continue