10-QPeriod: Q3 FY2024

NASDAQ, INC. Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 29, 2024For Securities:NDAQ

Summary

Nasdaq, Inc. reported strong revenue growth in its third quarter and the first nine months of 2024, driven by significant expansion in its Financial Technology and Market Services segments. The company's total revenues increased by 31.0% and 21.6% respectively for these periods. This growth was substantially fueled by the integration of the Adenza acquisition, which bolstered the Financial Technology segment with its AxiomSL and Calypso solutions. Operating income saw a modest increase of 3.7% and 4.5% for the respective periods, reflecting higher operating expenses, particularly in compensation, technology, and amortization related to recent acquisitions. Diluted earnings per share decreased year-over-year, largely due to these increased expenses and a shift in tax rates, though non-GAAP measures show a more favorable trend. The company also returned capital to shareholders through dividends and share repurchases, indicating a continued focus on shareholder value.

Financial Highlights

54 data points
Beta

Revenue

$1.90B

60.3% Gross Margin

Net Income

$306.00M

16.1% Net Margin

EPS (Diluted)

$0.53

Total Assets

$30.56B

Cash & Equivalents

$266.00M

Free Cash Flow

$188.00M

Financial Statements
Beta
Revenue$1.90B
Cost of Revenue$756.00M
Gross Profit$1.15B
Operating Expenses$698.00M
Operating Income$448.00M
Net Income$306.00M
EPS (Basic)$0.53
EPS (Diluted)$0.53
Shares Outstanding (Basic)575.12M
Shares Outstanding (Diluted)579.02M

Key Highlights

  • 1Total revenues increased by 31.0% to $1.9 billion for the third quarter and 21.6% to $5.4 billion for the first nine months of 2024, largely driven by the Adenza acquisition's impact on the Financial Technology segment.
  • 2The Financial Technology segment revenue grew by 56.0% in Q3 and 68.9% year-to-date, highlighting successful integration and growth from acquired software solutions.
  • 3Market Services revenue saw a significant increase of 36.7% in Q3 and 13.6% year-to-date, boosted by strong performance in equity derivative and cash equity trading.
  • 4Operating income increased by 3.7% to $448 million in Q3 and 4.5% to $1.28 billion year-to-date, though operating expenses grew faster (37.3% Q3, 37.9% YTD) due to increased headcount, technology investments, and amortization.
  • 5Diluted EPS decreased by 11.3% to $0.53 for Q3 and 24.6% to $1.32 year-to-date, impacted by higher operating expenses and a change in the effective tax rate.
  • 6Shareholder returns remained a focus, with $138 million in dividends and $88 million in share repurchases during Q3 2024.
  • 7The company continues to manage its debt obligations prudently, with total debt decreasing to $9.86 billion from $10.45 billion at the end of the previous year.

Frequently Asked Questions

The primary drivers of Nasdaq's revenue growth were the strong performance of its Financial Technology and Market Services segments. The acquisition of Adenza significantly contributed to the Financial Technology segment's expansion, while increased trading volumes and market share in equity derivatives and cash equities fueled the Market Services segment's growth. Capital Access Platforms also showed positive growth, particularly in the Index business due to higher AUM.

The Adenza acquisition, completed in late 2023, had a substantial positive impact on revenue, particularly in the Financial Technology segment. It contributed significantly to the overall revenue increase for both the third quarter and the nine months ended September 30, 2024. However, it also led to increased operating expenses, including higher compensation, technology infrastructure costs, and amortization of acquired intangible assets, which affected profitability on a GAAP basis.

Nasdaq continues to prioritize shareholder returns, as evidenced by consistent dividend payments and ongoing share repurchase programs. The company returned $138 million to shareholders through dividends and $88 million in stock repurchases in Q3 2024. Management aims to balance strategic investments, acquisitions, debt repayment, and shareholder returns to support long-term growth and value.

Nasdaq is involved in a few ongoing legal and regulatory matters. The CFTC issued an order against a non-operational subsidiary, NFX, concerning past alleged violations, which resulted in an immaterial civil penalty. The European Commission conducted an inspection related to potential competition law concerns in the trading of Nordic financial derivatives. While Nasdaq is cooperating, the duration and outcome are uncertain. The company states that other legal proceedings are not expected to have a material adverse effect on its financial condition.