Nasdaq, Inc. (Nasdaq:NDAQ) today reported strong revenue results
for the second quarter of 2016. Second quarter net revenues
were $559 million, up $41 million or 8% from $518 million in the
prior year period, driven by a $24 million positive impact from
acquisitions, a $14 million positive impact from operations, and a
$3 million positive impact from changes in foreign exchange rates.
“Nasdaq has experienced broad-based demand for our distinctive
technology, services and solutions, resulting in continued organic
growth from each of our business segments,” said Bob
Greifeld, CEO, Nasdaq. “Further, we are successfully
integrating the recently closed acquisitions, which we expect to
provide another lever of return for our shareholders as we drive
operational synergies and deliver ever increasing value for our
clients.”
Mr. Greifeld continued, “Material expansion in
the SMARTS surveillance product’s customer base, the acquisition of
the ISE, giving Nasdaq unique scale in U.S. options, exceptional
growth in Nordic listings, and the accelerating migration of
corporate customers onto the IR Insights platform stand out as
second quarter developments which will pay meaningful dividends in
future periods.”
Operating expenses were $385 million in the second quarter of
2016, up $84 million from $301 million in the second quarter of
2015. The increase primarily reflected higher merger and
strategic initiatives expense of $32 million, higher restructuring
charges of $31 million and $15 million in incremental expenses from
the acquisitions of Nasdaq CXC, formerly Chi-X Canada (February
2016), Marketwired (February 2016), and Boardvantage (May
2016). Non-GAAP operating expenses were $300 million in the
second quarter of 2016, up $19 million from $281 million in the
second quarter of 2015. This increase reflected $15 million in
incremental expenses from the acquisitions closed in 2016 as well
as $4 million in organic growth.
“During the quarter we were able to raise over $1 billion in
acquisition financing at favorable rates while also reducing FX
exposure. As I transition over the CFO responsibilities, I
believe the company’s capital and financial position are in
excellent condition,” said Ron Hassen, Principal Financial
Officer and Senior Vice President, Nasdaq.
“I’m excited to join the Nasdaq team at an especially
interesting time, and look forward to bringing new perspectives and
ideas that can contribute to execution of the company’s
strategy. In the near-term, this includes a particular focus
on ensuring that the acquisition integrations succeed in delivering
maximum benefits to clients and shareholders,” said Michael
Ptasznik, Chief Financial Officer and Executive Vice President,
Nasdaq.
Net income attributable to Nasdaq for the second quarter of 2016
was $70 million, or $0.42 per diluted share, compared with $133
million, or $0.77 per diluted share, in the prior year quarter.
On a non-GAAP basis, net income attributable to Nasdaq for
the second quarter of 2016 was $153 million, or $0.91 per diluted
share, compared with $143 million or $0.83 per diluted share, in
the second quarter of 2015, an increase of $10 million, or $0.08
per diluted share.
The company repurchased 256,808 shares for $16 million in the
second quarter of 2016 at an average price of $62.27, and an
additional 127,580 shares for $8 million in the third quarter of
2016 through July 26, 2016 at an average price of $62.19. As
of July 26, 2016, there was $476 million remaining under the board
authorized share repurchase program.
At June 30, 2016, the company had cash and cash equivalents of
$344 million and total debt of $3,731 million, resulting in net
debt of $3,387 million. This compares to net debt of $2,063
million at December 31, 2015.
1 Represents revenues less transaction-based expenses.
2 Refer to our reconciliation of U.S. GAAP to non-GAAP net
income, diluted earnings per share, operating income and operating
expenses included in the attached schedules.
BUSINESS HIGHLIGHTS
Market Services (35%
of total net revenues) - Net revenues were $194 million in
the second quarter of 2016, up $5 million when compared to the
second quarter of 2015. The increase primarily reflects an
increase in revenues from the Nasdaq CXC acquisition.
Equity Derivatives (8%
of total net revenues) – Net equity derivative trading and
clearing revenues were $46 million in the second quarter of 2016,
up $2 million compared to the second quarter of 2015. The
increase was primarily driven by higher U.S. industry trading
volumes and higher U.S. market share.
Cash Equities (11% of
total net revenues) – Net cash equity
trading revenues were $63 million in the second quarter of 2016, up
$1 million compared to the second quarter of 2015. This
increase reflects the inclusion of net revenues associated with our
acquisition of Nasdaq CXC and the positive impact of foreign
exchange, partially offset by lower U.S. and European market share
and lower U.S. average net capture.
Fixed Income, Currency and Commodities (4% of total net
revenues) – Net FICC trading and clearing revenues were
$21 million in the second quarter of 2016, down $3 million from the
second quarter of 2015, due to the negative impact of Nasdaq
Futures (NFX) trading incentives and a decline in U.S. fixed income
revenues, partially offset by higher European fixed income and
commodities revenues.
Access and Broker Services
(12% of total net revenues)
– Access and broker services revenues were $64 million in
the second quarter of 2016, up $5 million compared to the second
quarter of 2015, primarily driven by an increase in customer demand
for network connectivity.
Information Services (24% of total net revenues)
– Revenues were $134 million in the second quarter of
2016, up $6 million from the second quarter of 2015. The
increase reflects a $3 million organic increase primarily from
higher audit collections and higher consolidated and proprietary
data products revenue, partially offset by lower index licensing
and servicing revenues.
Data Products (19% of total net
revenues) – Data products revenues were
$107 million in the second quarter of 2016, up $8 million compared
to the second quarter of 2015 due to increased audit collections
and increased revenues from consolidated and proprietary data, as
well as the inclusion of revenues associated with the Nasdaq CXC
acquisition and the positive impact of changes in foreign exchange
rates.
Index Licensing and Services (5% of total net revenues)
– Index licensing and services revenues were $27 million
in the second quarter of 2016, down $2 million from the second
quarter of 2015. The revenue decline was primarily driven by
a decrease in the value of underlying assets associated with
Nasdaq-licensed ETPs.
Technology Solutions (29%
of total net revenues) – Revenues
were $163 million in the second quarter of 2016, up $28 million
from the second quarter of 2015. The increase primarily
reflects the inclusion of revenue from the acquisitions of
Marketwired and Boardvantage, as well as $8 million in organic
revenue growth primarily from market technology contracts.
Corporate Solutions (17% of total net revenues)
– Corporate solutions revenues were $94 million in the
second quarter of 2016, up $18 million from the second quarter of
2015. The increase was due to the inclusion of revenues from
the Marketwired and Boardvantage acquisitions.
Market Technology (12% of total net revenues) –
Market technology revenues were $69 million in the second quarter
of 2016, up $10 million from the second quarter of 2015. The
increase was driven primarily by growth in revenues from software
licensing and support, and surveillance products, as well as
increased revenues from change requests. New order intake was
$69 million for the second quarter of 2016, and the total order
value at June 30, 2016 was $769 million, up 9% from the prior year
period.
Listing Services (12% of
total net revenues) – Revenues
were $68 million in the second quarter of 2016, up $2 million
compared to the second quarter of 2015, primarily due to higher
revenues in the Nordics from an increase in the number of listed
companies due to new listings.
CORPORATE HIGHLIGHTS
- Nasdaq Futures continues to show consistent
growth. NFX, a U.S.-based futures and options market
for key energy benchmarks, has seen consistent growth and
marketplace traction since launch in late July 2015. NFX has
gained support from multiple sectors of the energy trading
community, including 17 prominent global Futures Commission
Merchants, and over 100 total firms have transacted on the
market. In July, open interest in NFX products rose to over
1,000,000 contracts for the first time.
- Nasdaq introduces the Nasdaq Financial Framework to
provide seamless technology functionality across the full trade
lifecycle: Nasdaq introduced the Nasdaq Financial
Framework, the company’s harmonized approach to delivering robust
end-to-end solutions to financial infrastructure providers globally
in an open environment. The framework is integrated across
all of Nasdaq’s business units and consists of a single operational
core that ties together the deep portfolio of Nasdaq technology
offerings across the trade lifecycle in an open framework whereby
exchange, clearinghouses, and central securities depositories can
easily integrate Nasdaq’s business applications with each other, as
well as other external solutions. The framework will also
allow market operators to easily leverage the latest in technology
developments including blockchain.
- The Nasdaq Stock Market led U.S. exchanges for IPOs in
2Q16. Nasdaq welcomed 106 new listings in the second
quarter of 2016, including 50 IPOs. In the U.S. market, The
Nasdaq Stock Market welcomed 73 new listings in the second quarter
of 2016, including 25 IPOs, representing 69% of all U.S. IPOs
during the period. Among U.S. ETPs, The Nasdaq Stock Market
led all U.S. listing exchanges with 38% of new ETP listings and
switches in the second quarter of 2016.
- The Nasdaq Stock Market maintains strong exchange
listing transfer momentum. Nasdaq also won 37
exchange listing transfers to its U.S. market in the first half of
2016, including a record 13 companies from NYSE, and 24
exchange-traded funds. Company transfers included Scripps Networks
Interactive, tronc (formerly Tribune Publishing), and OPKO Health,
among others. Since 2005, over $830 billion in market value
has chosen to switch to Nasdaq, including $43 billion in the first
six months of 2016.
- Nasdaq completes acquisitions of Boardvantage and
ISE. On May 2, 2016, Nasdaq completed the
acquisition of Boardvantage, a leading board portal solution
provider which also specializes in leadership collaboration and
meeting productivity tools. The deal expands Nasdaq’s
governance business within the Corporate Solutions segment, where
it is being integrated with the Director’s Desk business. On
June 30, 2016, Nasdaq completed the acquisition of ISE, an operator
of three electronic U.S. options exchanges. Nasdaq plans to
build on its robust offerings by providing greater breadth and
depth of products and services to participants, and the acquisition
is expected to allow Nasdaq to offer efficiencies for clients.
ABOUT NASDAQ
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing,
exchange technology, listing, information and public company
services across six continents. Through its diverse portfolio of
solutions, Nasdaq enables customers to plan, optimize and execute
their business vision with confidence, using proven technologies
that provide transparency and insight for navigating today's global
capital markets. As the creator of the world's first electronic
stock market, its technology powers more than 70 marketplaces in 50
countries, and 1 in 10 of the world's securities transactions.
Nasdaq is home to more than 3,700 listed companies with a market
value of $9.3 trillion and over 18,000 corporate clients. To learn
more, visit: nasdaq.com/ambition or business.nasdaq.com.
NON-GAAP INFORMATION
In addition to disclosing results determined in accordance with
U.S. GAAP, Nasdaq also discloses certain non-GAAP results of
operations, including, but not limited to, net income attributable
to Nasdaq, diluted earnings per share, operating income, and
operating expenses, that include certain adjustments or exclude
certain charges and gains that are described in the reconciliation
table of U.S. GAAP to non-GAAP information provided at the end of
this release. Management uses this non-GAAP information internally,
along with U.S. GAAP information, in evaluating our performance and
in making financial and operational decisions. We believe our
presentation of these measures provides investors with greater
transparency and supplemental data relating to our financial
condition and results of operations. In addition, we believe the
presentation of these measures is useful to investors for
period-to-period comparisons of results as the items described
below do not reflect ongoing operating performance.
These measures are not in accordance with, or an alternative to,
U.S. GAAP, and may be different from non-GAAP measures used by
other companies. Investors should not rely on any single financial
measure when evaluating our business. We recommend investors review
the U.S. GAAP financial measures included in this earnings release.
When viewed in conjunction with our U.S. GAAP results and the
accompanying reconciliation, we believe these non-GAAP measures
provide greater transparency and a more complete understanding of
factors affecting our business than U.S. GAAP measures alone.
We understand that analysts and investors regularly rely on
non-GAAP financial measures, such as non-GAAP net income
attributable to Nasdaq, non-GAAP diluted earnings per share,
non-GAAP operating income and non-GAAP operating expenses to assess
operating performance. We use these measures because they highlight
trends more clearly in our business that may not otherwise be
apparent when relying solely on U.S. GAAP financial measures, since
these measures eliminate from our results specific financial items,
such as those described below, that have less bearing on our
ongoing operating performance.
Amortization expense of acquired intangible assets: We amortize
intangible assets acquired in connection with various acquisitions.
Intangible asset amortization expense can vary from period to
period due to episodic acquisitions completed, rather than from our
ongoing business operations. As such, if intangible asset
amortization is included in performance measures, it is more
difficult to assess the day-to-day operating performance of the
businesses, the relative operating performance of the businesses
between periods and the earnings power of Nasdaq. Management does
not consider intangible asset amortization expense for the purpose
of evaluating the performance of our business or its managers or
when making decisions to allocate resources. Therefore, we
believe performance measures excluding intangible asset
amortization expense provide investors with a more useful
representation of our businesses’ ongoing activity in each
period.
Restructuring charges: Restructuring charges are associated with
our 2015 restructuring plan to improve performance, cut costs and
reduce spending and are primarily related to (i) the rebranding of
our company name from The NASDAQ OMX Group, Inc. to Nasdaq, Inc.,
(ii) severance and other termination benefits, (iii) costs to
vacate duplicate facilities, and (iv) asset impairment charges. We
exclude these restructuring costs because these costs do not
reflect future operating expenses and do not contribute to a
meaningful evaluation of Nasdaq’s ongoing operating performance or
a comparison of Nasdaq’s performance between periods.
Merger and strategic initiatives expense: We have pursued
various strategic initiatives and completed a number of
acquisitions in recent years which have resulted in expenses which
would not have otherwise been incurred. These expenses
include integration costs, as well as legal, due diligence and
other third party transaction costs. The frequency and the amount
of such expenses vary significantly based on the size, timing and
complexity of the transaction. Accordingly, we exclude these costs
for purposes of calculating non-GAAP measures which provide a more
meaningful analysis of Nasdaq’s ongoing operating performance or
comparisons of Nasdaq’s performance between periods.
Other significant items: We have excluded certain other charges
or gains that are the result of other non-comparable events to
measure operating performance. For the three months ended
June 30, 2016, other significant items include tax expense due to
an unfavorable tax ruling received during the three months ended
June 30, 2016, the impact of which related to prior periods, and
the release of a sublease loss reserve due to the early exit of a
facility. We believe the exclusion of such amounts, which
arise outside of the normal course of business, allow management
and investors to better understand the financial results of
Nasdaq.
Foreign exchange impact on revenue: In countries with
currencies other than the U.S. dollar, revenues and expenses are
translated using monthly average exchange rates. Certain
discussions in this release isolate the impact of year-over-year
foreign currency fluctuations to better measure the comparability
of operating results between periods. Operating results excluding
the impact of foreign currency fluctuations are calculated by
translating the current period’s results by the prior period’s
exchange rates.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Information set forth in this communication contains
forward-looking statements that involve a number of risks and
uncertainties. Nasdaq cautions readers that any
forward-looking information is not a guarantee of future
performance and that actual results could differ materially from
those contained in the forward-looking information. Such
forward-looking statements include, but are not limited to (i)
projections relating to our future financial results, growth,
trading volumes, products and services, order backlog, taxes and
achievement of synergy targets, (ii) statements about the closing
or implementation dates and benefits of certain acquisitions and
other strategic, restructuring, technology, de-leveraging and
capital return initiatives, (iii) statements about our integrations
of our recent acquisitions, (iv) statements relating to any
litigation or regulatory or government investigation or action to
which we are or could become a party, and (v) other statements that
are not historical facts. Forward-looking statements involve
a number of risks, uncertainties or other factors beyond Nasdaq’s
control. These factors include, but are not limited to,
Nasdaq’s ability to implement its strategic initiatives, economic,
political and market conditions and fluctuations, government and
industry regulation, interest rate risk, U.S. and global
competition, and other factors detailed in Nasdaq’s filings with
the U.S. Securities and Exchange Commission, including its annual
reports on Form 10-K and quarterly reports on Form 10-Q which are
available on Nasdaq’s investor relations website at
http://ir.nasdaq.com and the SEC’s website at www.sec.gov.
Nasdaq undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise.
NDAQF
|
Nasdaq, Inc. |
Condensed Consolidated Statements of
Income |
(in millions, except per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenues: |
|
|
|
|
|
|
|
Market Services |
|
$ |
532 |
|
|
$ |
572 |
|
|
$ |
478 |
|
|
Transaction-based
expenses: |
|
|
|
|
|
|
|
Transaction
rebates |
|
|
(256 |
) |
|
|
(283 |
) |
|
|
(216 |
) |
|
Brokerage, clearance
and exchange fees |
|
|
(82 |
) |
|
|
(88 |
) |
|
|
(73 |
) |
|
Total Market Services
revenues less transaction-based expenses |
|
|
194 |
|
|
|
201 |
|
|
|
189 |
|
|
|
|
|
|
|
|
|
|
Listing Services |
|
|
68 |
|
|
|
66 |
|
|
|
66 |
|
|
Information
Services |
|
|
134 |
|
|
|
133 |
|
|
|
128 |
|
|
Technology
Solutions |
|
|
163 |
|
|
|
134 |
|
|
|
135 |
|
|
|
|
|
|
|
|
|
|
Revenues less
transaction-based expenses |
|
|
559 |
|
|
|
534 |
|
|
|
518 |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
Compensation and
benefits |
|
|
164 |
|
|
|
152 |
|
|
|
144 |
|
|
Marketing and
advertising |
|
|
8 |
|
|
|
6 |
|
|
|
6 |
|
|
Depreciation and
amortization |
|
|
41 |
|
|
|
38 |
|
|
|
34 |
|
|
Professional and
contract services |
|
|
35 |
|
|
|
35 |
|
|
|
42 |
|
|
Computer operations and
data communications |
|
|
27 |
|
|
|
25 |
|
|
|
23 |
|
|
Occupancy |
|
|
19 |
|
|
|
20 |
|
|
|
21 |
|
|
Regulatory |
|
|
6 |
|
|
|
7 |
|
|
|
7 |
|
|
Merger and strategic
initiatives |
|
|
35 |
|
|
|
9 |
|
|
|
3 |
|
|
General, administrative
and other |
|
|
17 |
|
|
|
14 |
|
|
|
19 |
|
|
Restructuring
charges |
|
|
33 |
|
|
|
9 |
|
|
|
2 |
|
|
Total operating
expenses |
|
|
385 |
|
|
|
315 |
|
|
|
301 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
174 |
|
|
|
219 |
|
|
|
217 |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Interest expense |
|
|
(32 |
) |
|
|
(28 |
) |
|
|
(27 |
) |
|
Other investment
income |
|
|
2 |
|
|
|
1 |
|
|
|
- |
|
|
Net income from
unconsolidated investees |
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
|
146 |
|
|
|
195 |
|
|
|
192 |
|
|
Income tax
provision |
|
|
76 |
|
|
|
63 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
70 |
|
|
|
132 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Nasdaq |
|
$ |
70 |
|
|
$ |
132 |
|
|
$ |
133 |
|
|
|
|
|
|
|
|
|
|
Per share
information: |
|
|
|
|
|
|
|
Basic earnings per
share |
|
$ |
0.42 |
|
|
$ |
0.80 |
|
|
$ |
0.79 |
|
|
Diluted earnings per
share |
|
$ |
0.42 |
|
|
$ |
0.78 |
|
|
$ |
0.77 |
|
|
Cash dividends declared
per common share |
|
$ |
- |
|
|
$ |
0.57 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding for earnings per
share: |
|
|
|
|
|
|
|
Basic |
|
|
165.0 |
|
|
|
164.3 |
|
|
|
168.7 |
|
|
Diluted |
|
|
168.2 |
|
|
|
168.4 |
|
|
|
172.1 |
|
|
|
|
Nasdaq, Inc. |
Revenue Detail |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
2016 |
|
2016 |
|
2015 |
MARKET SERVICES
REVENUES |
|
|
|
|
|
Equity Derivative Trading
and Clearing Revenues |
$ |
103 |
|
|
$ |
101 |
|
|
$ |
97 |
|
Transaction-based expenses: |
|
|
|
|
|
Transaction rebates |
|
(53 |
) |
|
|
(48 |
) |
|
|
(49 |
) |
Brokerage, clearance and exchange
fees |
|
(4 |
) |
|
|
(5 |
) |
|
|
(4 |
) |
Total net equity derivative
trading and clearing revenues |
|
46 |
|
|
|
48 |
|
|
|
44 |
|
|
|
|
|
|
|
Cash Equity Trading
Revenues |
|
339 |
|
|
|
382 |
|
|
|
297 |
|
Transaction-based expenses: |
|
|
|
|
|
Transaction rebates |
|
(198 |
) |
|
|
(230 |
) |
|
|
(167 |
) |
Brokerage, clearance and exchange
fees |
|
(78 |
) |
|
|
(82 |
) |
|
|
(68 |
) |
Total net cash equity
trading revenues |
|
63 |
|
|
|
70 |
|
|
|
62 |
|
|
|
|
|
|
|
Fixed Income, Currency and
Commodities Trading and Clearing
Revenues |
|
26 |
|
|
|
26 |
|
|
|
25 |
|
Transaction-based expenses: |
|
|
|
|
|
Transaction rebates |
|
(5 |
) |
|
|
(5 |
) |
|
|
- |
|
Brokerage, clearance and exchange
fees |
|
- |
|
|
|
(1 |
) |
|
|
(1 |
) |
Total net fixed income,
currency and commodities trading and clearing
revenues |
|
21 |
|
|
|
20 |
|
|
|
24 |
|
|
|
|
|
|
|
Access and Broker Services
Revenues |
|
64 |
|
|
|
63 |
|
|
|
59 |
|
|
|
|
|
|
|
Total Net Market Services
revenues |
|
194 |
|
|
|
201 |
|
|
|
189 |
|
|
|
|
|
|
|
LISTING
SERVICES REVENUES |
|
68 |
|
|
|
66 |
|
|
|
66 |
|
|
|
|
|
|
|
INFORMATION SERVICES REVENUES |
|
|
|
|
|
Data Products
revenues |
|
107 |
|
|
|
105 |
|
|
|
99 |
|
Index Licensing and
Services revenues |
|
27 |
|
|
|
28 |
|
|
|
29 |
|
|
|
|
|
|
|
Total Information Services
revenues |
|
134 |
|
|
|
133 |
|
|
|
128 |
|
|
|
|
|
|
|
TECHNOLOGY SOLUTIONS REVENUES |
|
|
|
|
|
Corporate Solutions
revenues |
|
94 |
|
|
|
77 |
|
|
|
76 |
|
Market Technology
revenues |
|
69 |
|
|
|
57 |
|
|
|
59 |
|
|
|
|
|
|
|
Total Technology Solutions
revenues |
|
163 |
|
|
|
134 |
|
|
|
135 |
|
|
|
|
|
|
|
Revenues less
transaction-based expenses |
$ |
559 |
|
|
$ |
534 |
|
|
$ |
518 |
|
|
Nasdaq, Inc. |
Condensed Consolidated Balance
Sheets |
(in millions) |
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2016 |
|
2015 |
|
Assets |
(unaudited) |
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
344 |
|
|
$ |
301 |
|
|
Restricted cash |
|
22 |
|
|
|
56 |
|
|
Financial investments, at fair
value |
|
255 |
|
|
|
201 |
|
|
Receivables, net |
|
399 |
|
|
|
316 |
|
|
Default funds and margin
deposits |
|
3,411 |
|
|
|
2,228 |
|
|
Other current assets |
|
165 |
|
|
|
158 |
|
|
Total current
assets |
|
4,596 |
|
|
|
3,260 |
|
|
Property and equipment,
net |
|
332 |
|
|
|
323 |
|
|
Deferred tax
assets |
|
741 |
|
|
|
643 |
|
|
Goodwill |
|
6,236 |
|
|
|
5,395 |
|
|
Intangible assets,
net |
|
2,771 |
|
|
|
1,959 |
|
|
Other non-current
assets |
|
423 |
|
|
|
281 |
|
|
Total assets |
$ |
15,099 |
|
|
$ |
11,861 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable and accrued
expenses |
$ |
172 |
|
|
$ |
158 |
|
|
Section 31 fees payable to SEC |
|
160 |
|
|
|
98 |
|
|
Accrued personnel costs |
|
129 |
|
|
|
171 |
|
|
Deferred revenue |
|
275 |
|
|
|
127 |
|
|
Other current liabilities |
|
161 |
|
|
|
138 |
|
|
Default funds and margin
deposits |
|
3,411 |
|
|
|
2,228 |
|
|
Total current
liabilities |
|
4,308 |
|
|
|
2,920 |
|
|
Debt obligations |
|
3,731 |
|
|
|
2,364 |
|
|
Deferred tax
liabilities |
|
983 |
|
|
|
626 |
|
|
Non-current deferred
revenue |
|
199 |
|
|
|
200 |
|
|
Other non-current
liabilities |
|
161 |
|
|
|
142 |
|
|
Total liabilities |
|
9,382 |
|
|
|
6,252 |
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
Equity |
|
|
|
|
Nasdaq stockholders'
equity: |
|
|
|
|
Common stock |
|
2 |
|
|
|
2 |
|
|
Additional paid-in capital |
|
3,062 |
|
|
|
3,011 |
|
|
Common stock in treasury, at
cost |
|
(166 |
) |
|
|
(111 |
) |
|
Accumulated other comprehensive
loss |
|
(860 |
) |
|
|
(864 |
) |
|
Retained earnings |
|
3,679 |
|
|
|
3,571 |
|
|
Total equity |
|
5,717 |
|
|
|
5,609 |
|
|
Total liabilities and
equity |
$ |
15,099 |
|
|
$ |
11,861 |
|
|
|
|
Nasdaq, Inc. |
Reconciliation of U.S. GAAP Net Income,
Diluted Earnings Per Share, Operating Income and |
Operating Expenses to Non-GAAP Net Income,
Diluted Earnings Per Share, Operating Income, and Operating
Expenses |
(in millions, except per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
June
30, |
|
March
31, |
|
June
30, |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
U.S. GAAP net
income attributable to Nasdaq |
|
$ |
70 |
|
|
$ |
132 |
|
|
$ |
133 |
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of acquired
intangible assets (1) |
|
|
19 |
|
|
|
17 |
|
|
|
15 |
|
Restructuring charges (2) |
|
|
33 |
|
|
|
9 |
|
|
|
2 |
|
Merger and strategic initiatives
(3) |
|
|
35 |
|
|
|
9 |
|
|
|
3 |
|
Sublease loss reserve (4) |
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
Total non-GAAP adjustments |
|
|
85 |
|
|
|
35 |
|
|
|
20 |
|
|
|
|
|
|
|
|
Non-GAAP adjustment to the income
tax provision (5) |
|
|
(2 |
) |
|
|
(14 |
) |
|
|
(10 |
) |
Total non-GAAP adjustments, net of
tax |
|
|
83 |
|
|
|
21 |
|
|
|
10 |
|
|
|
|
|
|
|
|
Non-GAAP net
income attributable to Nasdaq |
|
$ |
153 |
|
|
$ |
153 |
|
|
$ |
143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP
diluted earnings per share |
|
$ |
0.42 |
|
|
$ |
0.78 |
|
|
$ |
0.77 |
|
Total adjustments from non-GAAP net
income above |
|
|
0.49 |
|
|
|
0.13 |
|
|
|
0.06 |
|
|
|
|
|
|
|
|
Non-GAAP
diluted earnings per share |
|
$ |
0.91 |
|
|
$ |
0.91 |
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
(1) Refer
to the non-GAAP information section of the earnings release for
further discussion of why we consider amortization expense of
acquired intangible assets to be a non-GAAP adjustment. |
|
(2) During
the first quarter of 2015, we performed a comprehensive review of
our processes, businesses and systems in a company-wide effort to
improve performance, cut costs, and reduce spending. For the three
months ended June 30, 2016 and March 31, 2016, restructuring
charges primarily related to severance costs and asset impairment
charges. For the three months ended June 30, 2015, restructuring
charges primarily related to severance costs and asset impairment
charges, partially offset by a credit of $10 million which
pertained to the release of a previously recorded sublease loss
reserve. In June 2015, as part of our real estate reorganization
plans, management decided to occupy this space. Restructuring
charges are recorded on restructuring plans that have been
committed to by management and are, in part, based upon
management’s best estimates of future events. Changes to the
estimates may require future adjustments to the restructuring
liabilities. Refer to the non-GAAP information section of the
earnings release for further discussion of why we consider
restructuring charges to be a non-GAAP adjustment. |
|
(3)
For the three months ended June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
International Securities Exchange, or ISE. For the three
months ended March 31, 2016 merger and strategic initiatives
expense primarily related to our acquisitions of Marketwired and
Nasdaq CXC Limited, formerly Chi-X Canada, as well as costs
incurred related to our subsequent acquisitions of ISE and
Boardvantage, Inc. For the three months ended June 30,
2015, merger and strategic initiatives expense primarily related to
certain strategic initiatives and our acquisition of Dorsey, Wright
& Associates, LLC. Refer to the non-GAAP
information section of the earnings release for further
discussion on why we consider merger and strategic initiatives to
be a non-GAAP adjustment. |
|
(4) The
credit of $2 million pertains to the release of a previously
recorded sublease loss reserve due to the early exit of a
facility. |
|
(5)
Includes the tax impact of each non-GAAP adjustment. In addition,
we recorded a $27 million tax expense due to an unfavorable tax
ruling received during the three months ended June 30, 2016,
the impact of which related to prior periods. |
|
Nasdaq, Inc. |
Reconciliation of U.S. GAAP Net Income,
Diluted Earnings Per Share, Operating Income and |
Operating Expenses to Non-GAAP Net Income,
Diluted Earnings Per Share, Operating Income, and Operating
Expenses |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
U.S. GAAP
operating income |
|
$ |
174 |
|
|
$ |
219 |
|
|
$ |
217 |
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of acquired
intangible assets (1) |
|
|
19 |
|
|
|
17 |
|
|
|
15 |
|
Restructuring charges (2) |
|
|
33 |
|
|
|
9 |
|
|
|
2 |
|
Merger and strategic initiatives
(3) |
|
|
35 |
|
|
|
9 |
|
|
|
3 |
|
Sublease loss reserve (4) |
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
Total non-GAAP adjustments |
|
|
85 |
|
|
|
35 |
|
|
|
20 |
|
|
|
|
|
|
|
|
Non-GAAP
operating income |
|
$ |
259 |
|
|
$ |
254 |
|
|
$ |
237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues less
transaction-based expenses |
|
$ |
559 |
|
|
$ |
534 |
|
|
$ |
518 |
|
|
|
|
|
|
|
|
U.S. GAAP
Operating margin (5) |
|
|
31 |
% |
|
|
41 |
% |
|
|
42 |
% |
|
|
|
|
|
|
|
Non-GAAP
operating margin (6) |
|
|
46 |
% |
|
|
48 |
% |
|
|
46 |
% |
|
(1) Refer
to the non-GAAP information section of the earnings release for
further discussion of why we consider amortization expense of
acquired intangible assets to be a non-GAAP adjustment. |
|
(2) During
the first quarter of 2015, we performed a comprehensive review of
our processes, businesses and systems in a company-wide effort to
improve performance, cut costs, and reduce spending. For the three
months ended June 30, 2016 and March 31, 2016, restructuring
charges primarily related to severance costs and asset impairment
charges. For the three months ended June 30, 2015, restructuring
charges primarily related to severance costs and asset impairment
charges, partially offset by a credit of $10 million which
pertained to the release of a previously recorded sublease loss
reserve. In June 2015, as part of our real estate reorganization
plans, management decided to occupy this space. Restructuring
charges are recorded on restructuring plans that have been
committed to by management and are, in part, based upon
management’s best estimates of future events. Changes to the
estimates may require future adjustments to the restructuring
liabilities. Refer to the non-GAAP information section of the
earnings release for further discussion of why we consider
restructuring charges to be a non-GAAP adjustment. |
|
(3)
For the three months ended June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
ISE. For the three months ended March 31, 2016 merger and
strategic initiatives expense primarily related to our acquisitions
of Marketwired and Nasdaq CXC Limited, formerly Chi-X Canada, as
well as costs incurred related to our subsequent acquisitions of
ISE and Boardvantage, Inc. For the three months ended
June 30, 2015, merger and strategic initiatives expense
primarily related to certain strategic initiatives and our
acquisition of Dorsey, Wright & Associates, LLC. Refer to
the non-GAAP information section of the earnings
release for further discussion on why we consider merger and
strategic initiatives to be a non-GAAP adjustment. |
|
(4)
The credit of $2 million pertains to the release of a previously
recorded sublease loss reserve due to the early exit of a
facility. |
|
(5) U.S.
GAAP operating margin equals U.S. GAAP operating income divided by
total revenues less transaction-based expenses. |
|
(6)
Non-GAAP operating margin equals non-GAAP operating income divided
by total revenues less transaction-based expenses. |
|
Nasdaq, Inc. |
Reconciliation of U.S. GAAP Net Income,
Diluted Earnings Per Share, Operating Income and |
Operating Expenses to Non-GAAP Net Income,
Diluted Earnings Per Share, Operating Income, and Operating
Expenses |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
U.S. GAAP
operating expenses |
|
$ |
385 |
|
|
$ |
315 |
|
|
$ |
301 |
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of acquired
intangible assets (1) |
|
|
(19 |
) |
|
|
(17 |
) |
|
|
(15 |
) |
Restructuring charges (2) |
|
|
(33 |
) |
|
|
(9 |
) |
|
|
(2 |
) |
Merger and strategic initiatives
(3) |
|
|
(35 |
) |
|
|
(9 |
) |
|
|
(3 |
) |
Sublease loss reserve (4) |
|
|
2 |
|
|
|
- |
|
|
|
- |
|
Total non-GAAP adjustments |
|
|
(85 |
) |
|
|
(35 |
) |
|
|
(20 |
) |
|
|
|
|
|
|
|
Non-GAAP
operating expenses |
|
$ |
300 |
|
|
$ |
280 |
|
|
$ |
281 |
|
|
|
|
|
|
|
|
(1) Refer
to the non-GAAP information section of the earnings release for
further discussion of why we consider amortization expense of
acquired intangible assets to be a non-GAAP adjustment. |
|
(2) During
the first quarter of 2015, we performed a comprehensive review of
our processes, businesses and systems in a company-wide effort to
improve performance, cut costs, and reduce spending. For the three
months ended June 30, 2016 and March 31, 2016, restructuring
charges primarily related to severance costs and asset impairment
charges. For the three months ended June 30, 2015, restructuring
charges primarily related to severance costs and asset impairment
charges, partially offset by a credit of $10 million which
pertained to the release of a previously recorded sublease loss
reserve. In June 2015, as part of our real estate reorganization
plans, management decided to occupy this space. Restructuring
charges are recorded on restructuring plans that have been
committed to by management and are, in part, based upon
management’s best estimates of future events. Changes to the
estimates may require future adjustments to the restructuring
liabilities. Refer to the non-GAAP information section of the
earnings release for further discussion of why we consider
restructuring charges to be a non-GAAP adjustment. |
|
(3)
For the three months ended June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
ISE. For the three months ended March 31, 2016 merger and
strategic initiatives expense primarily related to our acquisitions
of Marketwired and Nasdaq CXC Limited, formerly Chi-X Canada, as
well as costs incurred related to our subsequent acquisitions of
ISE and Boardvantage, Inc. For the three months ended
June 30, 2015, merger and strategic initiatives expense
primarily related to certain strategic initiatives and our
acquisition of Dorsey, Wright & Associates, LLC. Refer to
the non-GAAP information section of the earnings
release for further discussion on why we consider merger and
strategic initiatives to be a non-GAAP adjustment. |
|
(4)
The credit of $2 million pertains to the release of a previously
recorded sublease loss reserve due to the early exit of a
facility. |
|
Nasdaq, Inc. |
Quarterly Key Drivers Detail |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
2016 |
|
2016 |
|
2015 |
Market
Services |
|
|
|
|
|
Equity Derivative Trading
and Clearing |
|
|
|
|
|
U.S. Equity Options |
|
|
|
|
|
Total industry average daily volume
(in millions) |
|
14.1 |
|
|
|
15.3 |
|
|
|
13.9 |
|
Nasdaq PHLX matched market
share |
|
16.2 |
% |
|
|
16.1 |
% |
|
|
16.4 |
% |
The NASDAQ Options Market matched
market share |
|
7.1 |
% |
|
|
7.1 |
% |
|
|
6.8 |
% |
Nasdaq BX Options Market matched
market share |
|
1.0 |
% |
|
|
0.9 |
% |
|
|
0.8 |
% |
Nasdaq ISE Options Market matched
market share(1) |
|
0.2 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Total matched market share executed
on Nasdaq's exchanges |
|
24.5 |
% |
|
|
24.1 |
% |
|
|
24.0 |
% |
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic
options and futures |
|
|
|
|
|
Total average daily volume options
and futures contracts(2) |
|
439,520 |
|
|
|
452,178 |
|
|
|
399,900 |
|
|
|
|
|
|
|
Cash Equity
Trading |
|
|
|
|
|
Total U.S.-listed securities |
|
|
|
|
|
Total industry average daily share
volume (in billions) |
|
7.25 |
|
|
|
8.56 |
|
|
|
6.35 |
|
Matched share volume (in
billions) |
|
80.6 |
|
|
|
93.7 |
|
|
|
74.3 |
|
Matched market share executed on
NASDAQ |
|
14.0 |
% |
|
|
14.9 |
% |
|
|
15.8 |
% |
Matched market share executed on
Nasdaq BX |
|
2.3 |
% |
|
|
2.0 |
% |
|
|
1.9 |
% |
Matched market share executed on
Nasdaq PSX |
|
1.1 |
% |
|
|
1.0 |
% |
|
|
0.9 |
% |
Total matched market share executed
on Nasdaq's exchanges |
|
17.4 |
% |
|
|
17.9 |
% |
|
|
18.6 |
% |
Market share reported to the
FINRA/NASDAQ Trade Reporting Facility |
|
33.0 |
% |
|
|
31.9 |
% |
|
|
32.9 |
% |
Total market share(3) |
|
50.4 |
% |
|
|
49.8 |
% |
|
|
51.5 |
% |
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic
securities |
|
|
|
|
|
Average daily number of equity
trades |
|
447,231 |
|
|
|
506,790 |
|
|
|
424,915 |
|
Total average daily value of shares
traded (in billions) |
$ |
5.2 |
|
|
$ |
5.7 |
|
|
$ |
5.4 |
|
Total market share executed on
Nasdaq's exchanges |
|
63.7 |
% |
|
|
62.5 |
% |
|
|
67.7 |
% |
|
|
|
|
|
|
Fixed Income, Currency and
Commodities Trading and Clearing |
|
|
|
|
|
Total U.S. Fixed Income |
|
|
|
|
|
U.S. fixed income notional trading
volume (in billions) |
$ |
5,255 |
|
|
$ |
5,968 |
|
|
$ |
8,281 |
|
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic
fixed income |
|
|
|
|
|
Total average daily volume fixed
income contracts |
|
91,107 |
|
|
|
101,470 |
|
|
|
105,432 |
|
|
|
|
|
|
|
Nasdaq Commodities |
|
|
|
|
|
Power contracts cleared
(TWh)(4) |
|
455 |
|
|
|
420 |
|
|
|
329 |
|
|
|
|
|
|
|
Listing
Services |
|
|
|
|
|
Initial public offerings |
|
|
|
|
|
NASDAQ |
|
25 |
|
|
|
10 |
|
|
|
49 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic |
|
25 |
|
|
|
8 |
|
|
|
31 |
|
|
|
|
|
|
|
New listings |
|
|
|
|
|
NASDAQ(5) |
|
73 |
|
|
|
47 |
|
|
|
79 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic(6) |
|
33 |
|
|
|
14 |
|
|
|
38 |
|
|
|
|
|
|
|
Number of listed companies |
|
|
|
|
|
NASDAQ(7) |
|
2,868 |
|
|
|
2,852 |
|
|
|
2,828 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic(8) |
|
873 |
|
|
|
847 |
|
|
|
835 |
|
|
|
|
|
|
|
Information
Services |
|
|
|
|
|
Number of licensed exchange traded
products |
|
267 |
|
|
|
226 |
|
|
|
197 |
|
ETP assets under management (AUM)
tracking Nasdaq indexes (in billions)(9) |
$ |
108 |
|
|
$ |
105 |
|
|
$ |
108 |
|
|
|
|
|
|
|
Technology
Solutions |
|
|
|
|
|
Market
Technology |
|
|
|
|
|
Order intake (in millions)(10) |
$ |
69 |
|
|
$ |
22 |
|
|
$ |
31 |
|
Total order value (in
millions)(11) |
$ |
769 |
|
|
$ |
783 |
|
|
$ |
707 |
|
|
(1) For
the three and six months ended June 30, 2016, Nasdaq ISE Options
Market matched market share represents one day of trading
volume. |
(2)
Includes Finnish option contracts traded on EUREX Group. |
(3)
Includes transactions executed on NASDAQ's, Nasdaq BX's and Nasdaq
PSX's systems plus trades reported through the Financial Industry
Regulatory Authority/NASDAQ Trade Reporting Facility. |
(4)
Transactions executed on Nasdaq Commodities or OTC and reported for
clearing to Nasdaq Commodities measured by Terawatt hours
(TWh). |
(5) New
listings include IPOs, including those completed on a best efforts
basis, issuers that switched from other listing venues, closed-end
funds and separately listed exchange traded products, or ETPs. |
(6) New
listings include IPOs and represent companies listed on the Nasdaq
Nordic and Nasdaq Baltic exchanges and companies on the alternative
markets of Nasdaq First North. |
(7) Number
of listed companies for NASDAQ at period end, including separately
listed ETPs. |
(8)
Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic
exchanges and companies on the alternative markets of Nasdaq First
North at period end. |
(9)
Represents assets under management in licensed ETPs. |
(10) Total
contract value of orders signed during the period. |
(11)
Represents total contract value of orders signed that are yet to be
recognized as revenue. |
|
MEDIA RELATIONS CONTACT:
Allan Schoenberg
+1.212.231.5534
allan.schoenberg@nasdaq.com
INVESTOR RELATIONS CONTACT:
Ed Ditmire, CFA
+1.212.401.8737
ed.ditmire@nasdaq.com
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