01—Abstract
Summary
Summary of the 10-Q filed May 4, 2023. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported stable total revenues of $1,533 milliona for the first quarter of 2023, largely in line with the prior year, but showed growth in its Anti-Financial Crime segment and Marketplace Technology.
Net income attributable to Nasdaq increased by 6.3% to $302 millionb, resulting in diluted earnings per share of $0.61, up from $0.57 in the prior year. The company continued to return capital to shareholders, with $98 million in dividends paid and $159 million in share repurchases during the quarter. Management highlighted strong performance in IPOs on The Nasdaq Stock Market and leading volumes in equity options trading.
The company is also progressing with its restructuring plan, expecting significant annual run-rate operating efficiencies by 2025. Key financial shifts include a decrease in 'Revenues less transaction-based expenses' for the Market Platforms segment, largely due to a decrease in transaction rebates and higher brokerage, clearance and exchange fees, while the Capital Access Platforms segment saw a slight decline in revenue.
Expenses increased due to higher compensation and benefits, computer operations, and occupancy costs, the latter impacted by lease asset impairments. Despite these pressures, the company maintains a healthy liquidity position with sufficient cash flow to meet its operational and financial commitments.
02—Key points
Key Highlights
- Total revenues remained stable at $1,533 million, with a notable 16.7% increase in the Anti-Financial Crime segment.
- Net income attributable to Nasdaq increased by 6.3% to $302 million, with diluted EPS rising to $0.61 from $0.57.
- The company returned $98 million to shareholders via dividends and repurchased $159 million of its stock.
- Market Platforms segment revenue decreased slightly by 0.7% to $1,032 million, impacted by lower cash equity trading revenues, though Marketplace Technology showed a 10.6% increase.
- Capital Access Platforms segment revenue saw a marginal decrease of 0.7% to $416 million, with Data & Listing Services growing but offset by a decline in Index revenues.
- Operating expenses increased by 3.1% to $502 million, driven by higher compensation, cloud initiatives, and occupancy costs, including lease asset impairments.
- The company's liquidity remains strong, with $373 million in cash and cash equivalents and $6,842 million in total cash, cash equivalents, and restricted cash.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2023, Nasdaq, Inc. kept $0.20.
- Revenue$1.53B100.0%
- Cost of revenue−$619.0M40.4%
- Gross profit$914.0M59.6%
- Operating costs−$502.0M32.7%
- Operating income$412.0M26.9%
- Interest, other & tax−$110.0M7.2%
- Net income$302.0M19.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed May 4, 2023Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $1.53B$1.53B | −0.1% |
| Cost of Revenue | $619.00M$643.00M | −3.7% |
| Gross Profit | $914.00M$892.00M | +2.5% |
| Operating Expenses | $502.00M$487.00M | +3.1% |
| Operating Income | $412.00M$405.00M | +1.7% |
| Interest Expense | $36.00M$32.00M | +12.5% |
| Net Income | $302.00M$284.00M | +6.3% |
| EPS (Basic) | $0.62$0.57 | +8.8% |
| EPS (Diluted) | $0.61$0.57 | +7.0% |
| Shares Outstanding (Basic) | 489.93M495.14M | −1.1% |
| Shares Outstanding (Diluted) | 494.77M501.74M | −1.4% |
05—Questions
Frequently Asked Questions
How did Nasdaq's revenue perform in the first quarter of 2023 compared to the prior year?
Nasdaq's total revenues were largely stable, reporting $1,533 million for the first quarter of 2023, a slight decrease of 0.1% from $1,535 million in the prior year. While the Market Platforms and Capital Access Platforms segments experienced minor revenue declines, the Anti-Financial Crime segment showed robust growth of 16.7%.
What is the company's profitability and how is it returning capital to shareholders?
Net income attributable to Nasdaq increased by 6.3% to $302 million, resulting in diluted earnings per share of $0.61, up from $0.57 in the first quarter of 2022. Nasdaq demonstrated its commitment to shareholder returns by paying $98 million in dividends and repurchasing $159 million worth of its common stock during the quarter.
Are there any significant changes in Nasdaq's cost structure?
Operating expenses increased by 3.1% to $502 million. Key drivers for this increase include higher compensation and benefits, increased costs related to cloud initiatives (computer operations and data communications), and a significant rise in occupancy expenses, which were impacted by $17 million in asset impairment charges related to vacating leased office spaces. Restructuring charges of $18 million were also recorded due to the divisional alignment program.
What is the outlook for Nasdaq's business segments?
Nasdaq is strategically realigning its business segments into Market Platforms, Capital Access Platforms, and Anti-Financial Crime. The Anti-Financial Crime segment showed strong revenue growth. The Marketplace Technology business within Market Platforms also performed well. Management expects to realize approximately $30 million in annual run-rate operating efficiencies by 2025 from its ongoing restructuring initiatives.
06—Continue