10-QPeriod: Q1 FY2021

NASDAQ, INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 5, 2021For Securities:NDAQ

Summary

Nasdaq, Inc. reported strong financial performance for the first quarter of 2021, with total revenues of $1,652 million, a significant increase from $1,353 million in the same period last year. This growth was driven by robust performance across all segments, particularly Market Services and Investment Intelligence. The company successfully completed the acquisition of Verafin for $2.75 billion, which is expected to enhance its anti-financial crime solutions and contribute to the Market Technology segment. Despite increased operating expenses, largely due to the Verafin acquisition and strategic initiatives, Nasdaq delivered a substantial increase in net income attributable to Nasdaq to $298 million, up from $203 million in Q1 2020, and diluted earnings per share rose to $1.78 from $1.22. Nasdaq also demonstrated a commitment to shareholder returns, repurchasing $162 million in common stock and increasing its quarterly cash dividend by 10% to $0.54 per share. The company announced its intention to sell its U.S. Fixed Income business, aligning with its strategy to focus on its technology and analytics capabilities. Overall, Nasdaq presented a positive financial outlook, characterized by strong revenue growth, strategic acquisitions, and a continued focus on shareholder value.

Financial Highlights

56 data points
Beta

Revenue

$1.65B

51.5% Gross Margin

Net Income

$298.00M

18.0% Net Margin

EPS (Diluted)

$0.59

Total Assets

$18.49B

Cash & Equivalents

$774.00M

Free Cash Flow

$352.00M

Financial Statements
Beta
Revenue$1.65B
Cost of Revenue$800.00M
Gross Profit$851.00M
Operating Expenses$486.00M
Operating Income$365.00M
Interest Expense$29.00M
Net Income$298.00M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)494.13M
Shares Outstanding (Diluted)501.28M

Key Highlights

  • 1Total revenues increased by 22.1% to $1,652 million for Q1 2021, driven by strong performance in Market Services and Investment Intelligence.
  • 2Net income attributable to Nasdaq rose by 46.8% to $298 million, with diluted EPS increasing to $1.78 from $1.22 year-over-year.
  • 3Acquisition of Verafin for $2.75 billion completed in February 2021, aimed at strengthening anti-financial crime solutions.
  • 4Commitment to shareholder returns demonstrated through $162 million in share repurchases and a 10% increase in the quarterly dividend to $0.54 per share.
  • 5Announcement to sell the U.S. Fixed Income business aligns with Nasdaq's strategic focus on technology and analytics.
  • 6Market Technology segment revenue increased by 23.5% to $100 million, boosted by the Verafin acquisition and growth in anti-financial crime solutions.
  • 7Investment Intelligence segment revenue grew by 22.3% to $258 million, driven by strong performance in Market Data, Index, and Analytics businesses.

Frequently Asked Questions

The acquisition of Verafin for $2.75 billion in February 2021 significantly impacted Nasdaq's financials. It contributed to an increase in operating expenses, particularly in compensation and benefits, computer operations, and merger and strategic initiatives. This acquisition also led to a substantial increase in goodwill and acquired intangible assets on the balance sheet. The Market Technology segment revenue saw a significant increase, partly due to Verafin's contribution.

Nasdaq is returning capital to shareholders through share repurchases and dividends. In Q1 2021, the company repurchased approximately $162 million of its common stock and declared a quarterly cash dividend of $0.54 per share, representing a 10% increase from the previous quarter. The board of directors has a policy of providing regular and growing dividends.

Nasdaq has announced its intention to sell its U.S. Fixed Income business. This strategic decision is aimed at concentrating resources and capital to maximize its potential as a leading technology and analytics provider to the global capital markets. The transaction is expected to close later in 2021, subject to regulatory approvals and other customary conditions.

The significant increase in Net income from unconsolidated investees, primarily from its equity method investment in OCC, was driven by elevated U.S. industry trading volumes during the first quarter of 2021. This led to higher equity earnings from the OCC, contributing to Nasdaq's overall non-operating income.