01—Abstract
Summary
Summary of the 10-Q filed November 4, 2021. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported its third-quarter and nine-month financial results for the period ending September 30, 2021.
The company demonstrated solid revenue growth, particularly in its Market Technology and Investment Intelligence segments, driven by strategic acquisitions and organic expansion. Net income and diluted earnings per share saw a significant increase year-over-year, reflecting strong operational performance and effective cost management. Key strategic initiatives, including the acquisition of Verafin and the divestiture of the U.S. Fixed Income business, are reshaping Nasdaq's business profile towards higher-growth, technology-centric offerings.
The company also continued its commitment to shareholder returns through share repurchases and dividend payments, underscoring a focus on delivering value to investors. Nasdaq's robust performance indicates a positive trajectory, supported by its diversified business segments and strategic acquisitions.
02—Key points
Key Highlights
- Total revenues less transaction-based expenses increased by 17.2% for the three months and 19.8% for the nine months ended September 30, 2021, compared to the prior year periods.
- Operating income rose by 9.2% for the three months and 19.8% for the nine months ended September 30, 2021.
- Net income attributable to Nasdaq increased by 9.1% for the three months and 31.1% for the nine months ended September 30, 2021.
- Diluted earnings per share (EPS) grew by 7.0% for the three months and 30.1% for the nine months ended September 30, 2021.
- The Market Technology segment saw a significant 32.6% revenue increase in Q3 2021, primarily driven by the Verafin acquisition.
- The company returned $90 million to shareholders through dividend payments in Q3 2021 and continued its share repurchase program with $984 million remaining authorized as of September 30, 2021.
- Strategic acquisitions, notably Verafin, and divestitures, such as the U.S. Fixed Income business, are actively transforming Nasdaq's business mix towards technology and analytics.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Nasdaq, Inc. kept $0.21.
- Revenue$1.36B100.0%
- Cost of revenue−$519.0M38.2%
- Gross profit$838.0M61.8%
- Operating costs−$482.0M35.5%
- Operating income$356.0M26.2%
- Interest, other & tax−$68.0M5.0%
- Net income$288.0M21.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 4, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $1.36B$1.41B | −4.0% |
| Cost of Revenue | $519.00M$698.00M | −25.6% |
| Gross Profit | $838.00M$715.00M | +17.2% |
| Operating Expenses | $482.00M$389.00M | +23.9% |
| Operating Income | $356.00M$326.00M | +9.2% |
| Interest Expense | $33.00M$24.00M | +37.5% |
| Net Income | $288.00M$264.00M | +9.1% |
| EPS (Basic) | $0.57$0.54 | +6.2% |
| EPS (Diluted) | $0.56$0.53 | +6.3% |
| Shares Outstanding (Basic) | 503.08M492.51M | +2.1% |
| Shares Outstanding (Diluted) | 510.54M502.48M | +1.6% |
05—Questions
Frequently Asked Questions
What were the key drivers of Nasdaq's revenue growth in the reported period?
Revenue growth was primarily driven by strong performance in the Market Technology segment, significantly boosted by the acquisition of Verafin, and continued expansion in the Investment Intelligence segment. The Corporate Platforms segment also showed growth due to an increase in listed companies and adoption of IR & ESG services. Market Services revenues saw a decline due to the divestiture of the U.S. Fixed Income business and lower brokerage, clearance, and exchange fees.
How has the acquisition of Verafin impacted Nasdaq's financial results?
The acquisition of Verafin, completed in February 2021, significantly contributed to the growth in the Market Technology segment, particularly in Anti Financial Crime Technology revenues. It also led to an increase in compensation and benefits, computer operations and data communications expenses, and depreciation and amortization due to acquired intangible assets.
What is Nasdaq's strategy regarding shareholder returns?
Nasdaq is committed to returning value to shareholders through a combination of cash dividends and share repurchases. In Q3 2021, the company paid $90 million in dividends and had $984 million remaining under its share repurchase authorization as of September 30, 2021. The company also entered into an Accelerated Share Repurchase (ASR) agreement for $475 million.
What are the main risks and uncertainties facing Nasdaq, as indicated in the filing?
While specific risk factors are detailed in the company's 10-K, this 10-Q highlights potential impacts from regulatory matters, including an ongoing OFAC inquiry related to the Armenian Stock Exchange and a fine from the Swedish Financial Supervisory Authority (SFSA) concerning Nasdaq Clearing. The company also faces risks related to market volatility, competition, cybersecurity, and the successful integration of acquisitions.
06—Continue