10-QPeriod: Q3 FY2020

NASDAQ, INC. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 4, 2020For Securities:NDAQ

Summary

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 billion, 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 billion. 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.

Financial Highlights

55 data points
Beta

Revenue

$1.41B

50.6% Gross Margin

Net Income

$264.00M

18.7% Net Margin

EPS (Diluted)

$0.53

Total Assets

$14.83B

Cash & Equivalents

$584.00M

Free Cash Flow

-$64.00M

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$698.00M
Gross Profit$715.00M
Operating Expenses$389.00M
Operating Income$326.00M
Interest Expense$24.00M
Net Income$264.00M
EPS (Basic)$0.54
EPS (Diluted)$0.53
Shares Outstanding (Basic)492.51M
Shares Outstanding (Diluted)502.48M

Key Highlights

  • 1Revenue less transaction-based expenses increased by 12.0% to $2.115 billion for the nine months ended September 30, 2020.
  • 2Net income attributable to Nasdaq increased by 24.0% to $708 million for the nine months ended September 30, 2020.
  • 3Diluted EPS grew to $4.25 for the nine months ended September 30, 2020, a 24.3% increase year-over-year.
  • 4Market Services segment revenue showed substantial growth of 43.7%, driven by higher trading volumes in equity derivatives and cash equities.
  • 5The company maintained a strong liquidity position, with net cash provided by operating activities increasing by 30.9% to $817 million.
  • 6Nasdaq declared cash dividends totaling $1.45 per share for the first nine months of 2020, up 5.1% from the prior year.
  • 7The company's Market Technology segment saw a 5.0% revenue increase, supported by its SaaS offerings and a large customer base.

Frequently Asked Questions

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.

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.

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.

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.