01—Abstract
Summary
Summary of the 10-Q filed May 5, 2021. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported strong financial performance for the first quarter of 2021, with total revenues of $1,652 milliona, 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 billionb, 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 millionc 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.
02—Key points
Key Highlights
- Total revenues increased by 22.1% to $1,652 million for Q1 2021, driven by strong performance in Market Services and Investment Intelligence.
- Net income attributable to Nasdaq rose by 46.8% to $298 million, with diluted EPS increasing to $1.78 from $1.22 year-over-year.
- Acquisition of Verafin for $2.75 billion completed in February 2021, aimed at strengthening anti-financial crime solutions.
- Commitment to shareholder returns demonstrated through $162 million in share repurchases and a 10% increase in the quarterly dividend to $0.54 per share.
- Announcement to sell the U.S. Fixed Income business aligns with Nasdaq's strategic focus on technology and analytics.
- Market Technology segment revenue increased by 23.5% to $100 million, boosted by the Verafin acquisition and growth in anti-financial crime solutions.
- Investment Intelligence segment revenue grew by 22.3% to $258 million, driven by strong performance in Market Data, Index, and Analytics businesses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2021, Nasdaq, Inc. kept $0.18.
- Revenue$1.65B100.0%
- Cost of revenue−$800.0M48.5%
- Gross profit$851.0M51.5%
- Operating costs−$486.0M29.4%
- Operating income$365.0M22.1%
- Interest, other & tax−$67.0M4.1%
- Net income$298.0M18.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed May 5, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $1.65B$1.35B | +22.0% |
| Cost of Revenue | $800.00M$652.00M | +22.7% |
| Gross Profit | $851.00M$701.00M | +21.4% |
| Operating Expenses | $486.00M$426.00M | +14.1% |
| Operating Income | $365.00M$275.00M | +32.7% |
| Interest Expense | $29.00M$26.00M | +11.5% |
| Net Income | $298.00M$203.00M | +46.8% |
| EPS (Basic) | $0.60$0.41 | +47.2% |
| EPS (Diluted) | $0.59$0.41 | +45.9% |
| Shares Outstanding (Basic) | 494.13M494.59M | −0.1% |
| Shares Outstanding (Diluted) | 501.28M500.33M | +0.2% |
05—Questions
Frequently Asked Questions
What was the impact of the Verafin acquisition on Nasdaq's financials?
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.
How is Nasdaq returning capital to shareholders?
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.
What is Nasdaq's strategy regarding its U.S. Fixed Income business?
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.
What drove the significant increase in Net income from unconsolidated investees?
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.
06—Continue