01—Abstract
Summary
Summary of the 10-Q filed August 2, 2023. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. reported its financial results for the second quarter and first half of 2023.
Total revenues for the second quarter were $1.43 billiona, a decrease of 7.7% year-over-year, while revenues less transaction-based expenses increased by 3.6% to $925 million. For the first six months of 2023, total revenues were $2.97 billion, down 3.9%, but revenues less transaction-based expenses grew 3.0% to $1.84 billion. The company's net income attributable to Nasdaq for the second quarter decreased by 13.0% to $267 million, resulting in diluted earnings per share of $0.54.
For the first half of the year, net income attributable to Nasdaq was $568 millionb, a 3.7% decrease, with diluted EPS of $1.15. A significant development during the quarter was the announcement of Nasdaq's agreement to acquire Adenza Holdings, Inc. for $10.5 billion.
This acquisition is expected to be transformative for Nasdaq, bolstering its offerings in risk management and regulatory software. The company also continued its capital return program, declaring a cash dividend of $0.22c per share and maintaining an active share repurchase program with $491 million remaining authorization.
02—Key points
Key Highlights
- Total revenues decreased by 7.7% to $1.43 billion in Q2 2023 compared to Q2 2022, but revenues less transaction-based expenses increased by 3.6% to $925 million.
- Net income attributable to Nasdaq for Q2 2023 was $267 million, a decrease of 13.0% year-over-year, with diluted EPS of $0.54.
- Nasdaq announced a definitive agreement to acquire Adenza Holdings, Inc. for $10.5 billion, a significant strategic move to expand its presence in risk management and regulatory software.
- The Capital Access Platforms segment showed resilience with a 3.8% revenue increase in Q2 2023, driven by Data & Listing Services and Workflow & Insights.
- The Anti-Financial Crime segment continued its strong growth trajectory, with revenues up 18.7% in Q2 2023.
- Operating expenses increased by 12.9% in Q2 2023, largely due to higher merger and strategic initiatives expenses related to the Adenza acquisition and increased restructuring charges.
- The company returned $109 million to shareholders through dividend payments in Q2 2023 and has $491 million remaining under its share repurchase authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2023, Nasdaq, Inc. kept $0.19.
- Revenue$1.43B100.0%
- Cost of revenue−$508.0M35.5%
- Gross profit$925.0M64.5%
- Operating costs−$543.0M37.9%
- Operating income$382.0M26.7%
- Interest, other & tax−$115.0M8.0%
- Net income$267.0M18.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2023filed August 2, 2023Financial Statements
Q2 FY2023 against Q2 FY2022
| Line item | Q2 FY2023Q2 FY2022 | Change |
|---|---|---|
| Revenue | $1.43B$1.55B | −7.7% |
| Cost of Revenue | $508.00M$659.00M | −22.9% |
| Gross Profit | $925.00M$893.00M | +3.6% |
| Operating Expenses | $543.00M$481.00M | +12.9% |
| Operating Income | $382.00M$412.00M | −7.3% |
| Interest Expense | $36.00M$32.00M | +12.5% |
| Net Income | $267.00M$307.00M | −13.0% |
| EPS (Basic) | $0.54$0.62 | −12.9% |
| EPS (Diluted) | $0.54$0.62 | −12.9% |
| Shares Outstanding (Basic) | 490.78M492.24M | −0.3% |
| Shares Outstanding (Diluted) | 493.63M496.58M | −0.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decrease in the Market Platforms segment?
The Market Platforms segment experienced a 13.9% revenue decrease in Q2 2023. This was primarily driven by a significant decline in Trading Services revenue, which was down 16.8%, largely due to lower transaction-based expenses and brokerage, clearance, and exchange fees, reflecting a decrease in trading volumes and market share in certain areas.
How is the announced acquisition of Adenza expected to impact Nasdaq's financial position?
The acquisition of Adenza for $10.5 billion is a major strategic initiative. Nasdaq financed a significant portion of the cash consideration through issuing $5.016 billion in senior unsecured notes. This will increase Nasdaq's debt levels and associated interest expense but is expected to significantly expand its footprint in the financial technology sector, particularly in risk management and regulatory software, potentially driving future revenue growth and profitability.
What is the status of Nasdaq's share repurchase program and dividend payments?
Nasdaq returned $109 million to shareholders through dividend payments in the second quarter of 2023, increasing the quarterly dividend to $0.22 per share. Additionally, the company has $491 million remaining under its existing share repurchase program, indicating a continued commitment to returning capital to shareholders.
What are the key risks highlighted in the financial statements or related discussions?
While not explicitly detailed in the provided summary points, investors should be aware of potential risks such as the integration challenges and financing costs associated with the Adenza acquisition, potential regulatory scrutiny within the financial services industry, fluctuations in global market activity impacting trading volumes, and cybersecurity threats. The company also faces ongoing legal and regulatory matters, though it currently believes these will not be material to its financial results.
06—Continue