01—Abstract
Summary
Summary of the 10-Q filed November 4, 2020. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported strong financial performance for the nine months ended September 30, 2020.
Revenue less transaction-based expenses grew by 12.0% to $2.115 billiona, primarily driven by a significant increase in Market Services revenue, up 43.7% year-over-year. This growth was fueled by elevated trading volumes in equity derivatives and cash equities, influenced by market volatility and sector rotations related to the COVID-19 pandemic. Net income attributable to Nasdaq surged by 24.0% to $708 million, with diluted Earnings Per Share (EPS) rising to $4.25.
The company demonstrated effective cost management, with operating expenses increasing by only 5.9% to $1.199 billionb. Nasdaq also maintained a healthy cash position, with net cash provided by operating activities increasing by 30.9% to $817 million.
The company continued to return capital to shareholders through dividends and share repurchases. Despite ongoing market uncertainties, Nasdaq appears well-positioned due to its diversified business segments and strong market share.
02—Key points
Key Highlights
- Revenue less transaction-based expenses increased by 12.0% to $2.115 billion for the nine months ended September 30, 2020.
- Net income attributable to Nasdaq increased by 24.0% to $708 million for the nine months ended September 30, 2020.
- Diluted EPS grew to $4.25 for the nine months ended September 30, 2020, a 24.3% increase year-over-year.
- Market Services segment revenue showed substantial growth of 43.7%, driven by higher trading volumes in equity derivatives and cash equities.
- The company maintained a strong liquidity position, with net cash provided by operating activities increasing by 30.9% to $817 million.
- Nasdaq declared cash dividends totaling $1.45 per share for the first nine months of 2020, up 5.1% from the prior year.
- The company's Market Technology segment saw a 5.0% revenue increase, supported by its SaaS offerings and a large customer base.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Nasdaq, Inc. kept $0.19.
- Revenue$1.41B100.0%
- Cost of revenue−$698.0M49.4%
- Gross profit$715.0M50.6%
- Operating costs−$389.0M27.5%
- Operating income$326.0M23.1%
- Interest, other & tax−$62.0M4.4%
- Net income$264.0M18.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed November 4, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $1.41B$1.10B | +28.9% |
| Cost of Revenue | $698.00M$464.00M | +50.4% |
| Gross Profit | $715.00M$632.00M | +13.1% |
| Operating Expenses | $389.00M$406.00M | −4.2% |
| Operating Income | $326.00M$226.00M | +44.2% |
| Interest Expense | $24.00M$29.00M | −17.2% |
| Net Income | $264.00M$150.00M | +76.0% |
| EPS (Basic) | $0.54$0.30 | +76.9% |
| EPS (Diluted) | $0.53$0.30 | +75.6% |
| Shares Outstanding (Basic) | 492.51M493.00M | −0.1% |
| Shares Outstanding (Diluted) | 502.48M501.09M | +0.3% |
05—Questions
Frequently Asked Questions
How did Nasdaq's revenue perform in the first nine months of 2020?
For the nine months ended September 30, 2020, Nasdaq's revenue less transaction-based expenses increased by 12.0% to $2.115 billion, compared to $1.889 billion for the same period in 2019. This growth was primarily driven by the Market Services segment.
What was the impact of COVID-19 on Nasdaq's financial results?
Nasdaq reported that while COVID-19 created market volatility, it did not have a significant negative impact on its business operations, financial condition, liquidity, or cash flows as of September 30, 2020. Elevated trading volumes in Market Services, partly due to the pandemic, contributed positively to revenue. However, the Market Technology segment experienced some logistical challenges affecting revenue growth.
How is Nasdaq managing its debt obligations?
Nasdaq has actively managed its debt by refinancing existing notes with lower interest rates and extending maturity dates. For example, they issued new senior unsecured notes in 2020 and used proceeds to repay existing debt, reducing overall borrowing costs. The company stated it was in compliance with all debt covenants as of September 30, 2020.
What is Nasdaq's strategy for returning capital to shareholders?
Nasdaq is committed to returning capital to shareholders through regular cash dividends and share repurchases. For the nine months ended September 30, 2020, cash dividends declared per common share increased by 5.1% to $1.45. The company also had $446 million remaining under its share repurchase program as of September 30, 2020.
06—Continue