01—Abstract
Summary
Summary of the 10-Q filed November 3, 2023. Cited figures are marked; the original filing is the authoritative source.
Nasdaq, Inc. (NDAQ) reported its third-quarter 2023 financial results, demonstrating resilience despite a slight revenue decline year-over-year, primarily driven by a decrease in Market Platforms revenue.
However, this was largely offset by strong performance in the Capital Access Platforms and Anti-Financial Crime segments, leading to a 5.6% increase in revenues less transaction-based expenses for the quarter. Net income attributable to Nasdaq remained stable at $294 milliona, with diluted earnings per share at $0.60. The company highlighted significant strategic progress, including the completion of its acquisition of Adenza on November 1, 2023, a move expected to significantly expand its financial technology offerings.
Nasdaq also continued its commitment to shareholder returns, increasing its quarterly dividend by 10%b and repurchasing shares under its authorized program. Operationally, Nasdaq continues to focus on its strategic realignment into three core segments: Market Platforms, Capital Access Platforms, and Anti-Financial Crime. While Market Platforms saw a revenue decrease, driven by lower trading services volumes, Capital Access Platforms showed robust growth, particularly in Data & Listing Services and Index revenues.
The Anti-Financial Crime segment also posted strong year-over-year revenue growth, underscoring its increasing importance. The company's liquidity position remains strong, supported by operating cash flow and its revolving credit facility, positioning it well to manage its operations and pursue strategic initiatives.
02—Key points
Key Highlights
- Revenue less transaction-based expenses increased by 5.6% to $940 million for Q3 2023 compared to $890 million in Q3 2022, driven by growth in Capital Access Platforms and Anti-Financial Crime segments.
- Net income attributable to Nasdaq remained flat at $294 million for Q3 2023, with diluted EPS at $0.60.
- The acquisition of Adenza Holdings, Inc. was completed on November 1, 2023, for approximately $10.5 billion, expected to enhance Nasdaq's financial technology capabilities.
- The company returned $108 million to shareholders in Q3 2023 through dividend payments and continued share repurchases under its authorized program, which has $2 billion remaining.
- Market Platforms revenue decreased by 14.7% to $892 million, primarily due to lower trading services revenue impacted by reduced trading volumes and market share.
- Capital Access Platforms revenue grew 8.1% to $456 million, with notable increases in Data & Listing Services and Index revenues.
- Anti-Financial Crime segment revenue increased by 20.8% to $93 million, reflecting strong demand for fraud detection and anti-money laundering solutions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2023, Nasdaq, Inc. kept $0.20.
- Revenue$1.45B100.0%
- Cost of revenue−$511.0M35.2%
- Gross profit$940.0M64.8%
- Operating costs−$509.0M35.1%
- Operating income$431.0M29.7%
- Interest, other & tax−$137.0M9.4%
- Net income$294.0M20.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2023filed November 3, 2023Financial Statements
Q3 FY2023 against Q3 FY2022
| Line item | Q3 FY2023Q3 FY2022 | Change |
|---|---|---|
| Revenue | $1.45B$1.56B | −6.8% |
| Cost of Revenue | $511.00M$667.00M | −23.4% |
| Gross Profit | $940.00M$890.00M | +5.6% |
| Operating Expenses | $509.00M$492.00M | +3.5% |
| Operating Income | $431.00M$398.00M | +8.3% |
| Interest Expense | $101.00M$32.00M | +215.6% |
| Net Income | $294.00M$294.00M | 0.0% |
| EPS (Basic) | $0.60$0.60 | 0.0% |
| EPS (Diluted) | $0.60$0.59 | +1.7% |
| Shares Outstanding (Basic) | 491.32M491.23M | 0.0% |
| Shares Outstanding (Diluted) | 494.11M496.34M | −0.4% |
05—Questions
Frequently Asked Questions
What was the financial performance of Nasdaq in the third quarter of 2023?
For the third quarter of 2023, Nasdaq reported total revenues of $1,451 million, a 6.8% decrease compared to $1,557 million in the same period last year. Revenues less transaction-based expenses increased by 5.6% to $940 million. Net income attributable to Nasdaq remained stable at $294 million, and diluted earnings per share were $0.60, a slight increase from $0.59 in the prior year quarter.
What are the key strategic developments for Nasdaq following this report?
The most significant strategic development is the completion of the acquisition of Adenza Holdings, Inc. on November 1, 2023, for approximately $10.5 billion. This acquisition is expected to transform Nasdaq's offering in financial technology. Additionally, Nasdaq announced a new organizational structure with three divisions: Market Services, Capital Access Platforms, and Financial Technology (which will house Adenza).
How did Nasdaq's different business segments perform?
The Market Platforms segment saw a revenue decline of 14.7% to $892 million, largely due to lower trading services revenue. The Capital Access Platforms segment grew 8.1% to $456 million, driven by Data & Listing Services and Index revenues. The Anti-Financial Crime segment posted strong growth of 20.8%, reaching $93 million in revenue.
What is Nasdaq's approach to shareholder returns?
Nasdaq demonstrated its commitment to shareholder returns by increasing its regular quarterly cash dividend by 10% to $0.22 per share. Furthermore, the company has an active share repurchase program, with $2 billion remaining authorized capacity as of September 30, 2023, indicating continued efforts to return capital to shareholders.
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