01—Abstract
Summary
Summary of the 10-Q filed August 4, 2021. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported solid financial results for the second quarter and first six months of 2021.
Revenue growth was primarily driven by strong performance in the Market Technology and Investment Intelligence segments, boosted by the recent acquisition of Verafin and increased demand for data and analytics. The company also saw positive contributions from its Corporate Platforms segment, largely due to increased listing services. While Market Services revenue saw a slight decline year-over-year due to lower cash equity trading volumes, the segment's profitability improved.
Nasdaq continued to return capital to shareholders through dividends and a significant share repurchase program, including an Accelerated Share Repurchase (ASR) agreement, signaling confidence in its financial position and future prospects. The company also completed the divestiture of its U.S. Fixed Income business, allowing it to focus on its core technology and analytics offerings.
02—Key points
Key Highlights
- Total revenues less transaction-based expenses increased by 21.0% to $846 million for the three months ended June 30, 2021, and by 21.2% to $1,697 million for the six months ended June 30, 2021.
- Net income attributable to Nasdaq increased by 41.5% to $341 million for the three months ended June 30, 2021, and by 43.9% to $639 million for the six months ended June 30, 2021.
- Diluted earnings per share rose by 41.4% to $2.05 for the three months ended June 30, 2021, and by 43.4% to $3.83 for the six months ended June 30, 2021.
- The Market Technology segment revenue grew by 39.3% year-over-year for the quarter, significantly boosted by the acquisition of Verafin.
- The company repurchased approximately $248 million of its common stock during the three months ended June 30, 2021, and authorized an increase to its share repurchase program to $1.5 billion.
- Nasdaq completed the sale of its U.S. Fixed Income business in June 2021, recognizing a pre-tax gain of $84 million.
- Equity method investment income, primarily from OCC, increased significantly, contributing positively to net income.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2021, Nasdaq, Inc. kept $0.24.
- Revenue$1.41B100.0%
- Cost of revenue−$566.0M40.1%
- Gross profit$846.0M59.9%
- Operating costs−$470.0M33.3%
- Operating income$376.0M26.6%
- Interest, other & tax−$35.0M2.5%
- Net income$341.0M24.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed August 4, 2021Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $1.41B$1.40B | +1.0% |
| Cost of Revenue | $566.00M$699.00M | −19.0% |
| Gross Profit | $846.00M$699.00M | +21.0% |
| Operating Expenses | $470.00M$384.00M | +22.4% |
| Operating Income | $376.00M$315.00M | +19.4% |
| Interest Expense | $33.00M$26.00M | +26.9% |
| Net Income | $341.00M$241.00M | +41.5% |
| EPS (Basic) | $0.69$0.49 | +41.5% |
| EPS (Diluted) | $0.68$0.48 | +41.4% |
| Shares Outstanding (Basic) | 492.26M492.30M | 0.0% |
| Shares Outstanding (Diluted) | 499.31M498.22M | +0.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in this quarter?
Revenue growth was primarily driven by strong performance in the Market Technology segment, significantly boosted by the acquisition of Verafin, and growth in the Investment Intelligence segment, including market data and index revenues. The Corporate Platforms segment also contributed positively with increased listing services.
How did the acquisition of Verafin impact the financial results?
The acquisition of Verafin in February 2021 had a substantial positive impact, particularly on the Market Technology segment's revenue, which grew by 87.9% for the quarter. The acquisition also contributed to the increase in operating expenses, notably in compensation and benefits, and merger and strategic initiatives.
What is the company's strategy regarding capital allocation and shareholder returns?
Nasdaq is actively returning capital to shareholders through regular cash dividends and a robust share repurchase program. The company increased its share repurchase authorization to $1.5 billion and entered into an Accelerated Share Repurchase (ASR) agreement, signaling confidence in its financial health and commitment to shareholder value.
How does the divestiture of the U.S. Fixed Income business affect Nasdaq's strategy?
The sale of the U.S. Fixed Income business aligns with Nasdaq's corporate strategy to concentrate resources and capital on its core strengths as a technology and analytics provider to the global capital markets. The company recognized an $84 million pre-tax gain from this divestiture.
06—Continue