- First quarter 2018 net revenues1 were
$666 million, a 15% increase compared to the first quarter of
2017.
- Organic growth in net revenues during the first
quarter totaled 9%, with positive contribution from all four
segments.
- First quarter 2018 GAAP diluted EPS was $1.05
compared to $0.99 in the first quarter of 2017, while non-GAAP
diluted EPS2 was
$1.24, an increase of 31% from the first quarter of 2017.
- During the first quarter of 2018, the company
repurchased common shares valued at $99 million. Dividends
paid and share repurchases totaled $162 million in the first
quarter, and on March 28, 2018, the company announced a 16%
increase in the quarterly dividend to $0.44 per share.
- As announced on April 16, 2018, the company
achieved another milestone in its strategic pivot by completing the
sale of the Public Relations Solutions and Digital Media Services
businesses. The company plans to return the after-tax
net proceeds of the sale to shareholders through additional equity
repurchases and expects to continue to balance our investment
activities toward Market Technology and Information Services.
NEW YORK, April 25, 2018 (GLOBE NEWSWIRE) --
Nasdaq, Inc. (Nasdaq:NDAQ) today reported financial results for the
first quarter of 2018.
First quarter 2018 net revenues were $666 million,
up $85 million, or 15%, from $581 million in the prior year
period. The first quarter increase in net revenues included
$55 million, or 9%, impact from organic growth, a $17 million
favorable impact from changes in foreign exchange rates and a $13
million impact from acquisitions.
"We achieved strong results in the first quarter
of 2018 through a combination of solid organic growth in our
recurring revenues, as well as by maximizing the benefits of higher
industry volumes with strong market share," said Adena Friedman, President and CEO, Nasdaq.
"Across all of our businesses, we delivered growth through a
continued focus on executing for our clients."
Mrs. Friedman
continued, "I am also encouraged by the early progress against our
2018 execution priorities. This includes advancing our
strategic pivot as an analytics and technology partner, including
the recently completed sale of the Public Relations Solutions and
Digital Media Services businesses, which allows us to focus our
Corporate Services business on the most strategic services and
solutions to our corporate clients. In addition, we
continue to expand our pipeline of opportunities in our 'markets
economy' technology strategy, and build momentum around our
competitive position across several core businesses. While
industry macro conditions have been developing positively, we
remain focused on structurally advancing our capabilities to
deliver over the long term for clients and shareholders, across a
broad range of environmental backdrops."
GAAP operating expenses were $393 million in the
first quarter of 2018, an increase of $58 million from $335 million
in the first quarter of 2017. The increase primarily reflects
higher compensation and benefits expense, depreciation and
amortization expense and merger and strategic initiatives
expense.
Non-GAAP operating expenses were $353 million in
the first quarter of 2018, an increase of $47 million, or 15%,
compared to the first quarter of 2017. This reflects a $19
million increase from acquisitions, an $18 million organic expense
increase, including an increase in compensation expense tied to the
strong revenue growth in the period, and a $10 million unfavorable
impact from changes in foreign exchange rates.
"With the re-balancing of our organic investments
to focus more on our higher growth opportunities, we believe we are
optimizing our resource allocation to support our new strategic
direction," said Michael Ptasznik, Executive
Vice President and Chief Financial Officer, Nasdaq.
"At the same time, we've become more transparent around our capital
plan to drive returns for shareholders. Consistent with our
capital deployment framework, we recently announced a 16% increase
in the quarterly dividend to $0.44 per share, and have planned
equity repurchases funded by the after-tax proceeds from the
divestiture."
On a GAAP basis, net income for the first quarter
of 2018 was $177 million, or $1.05 per diluted share, compared to
$168 million, or $0.99 per diluted share, in the first quarter of
2017.
On a non-GAAP basis, net income for the first
quarter of 2018 was $209 million, or $1.24 per diluted share,
compared with $162 million, or $0.95 per diluted share, in the
first quarter of 2017. Non-GAAP EPS in the first quarter of
2018 increased 31% versus the prior year period, with U.S. tax
reform contributing $0.14 per share, or 15 percentage points, of
the increase to non-GAAP EPS year over year.
At March 31, 2018, the company had cash and
cash equivalents of $405 million and total debt of $4,115 million,
resulting in net debt of $3,710 million. This compares to net debt
of $3,830 million at December 31, 2017. Share repurchases
totaled $99 million during the first quarter of 2018. As of
March 31, 2018, there was $627 million remaining under the
board authorized share repurchase program.
UPDATING 2018 NON-GAAP
EXPENSE GUIDANCE3
The company is lowering its 2018 non-GAAP
operating expense guidance to $1,295 to $1,335 million versus prior
expense guidance of $1,375 to $1,415 million, largely to reflect
the closing of the divestiture of the Public Relations Solutions
and Digital Media Services businesses in April.
BUSINESS
HIGHLIGHTS
Market Services (38% of
total net revenues) - Net revenues were $250 million in
the first quarter of 2018, up $32 million when compared to the
first quarter of 2017.
Equity Derivatives (12% of
total net revenues) - Net equity derivative trading and
clearing revenues were $78 million in the first quarter of 2018, up
$10 million compared to the first quarter of 2017. The
increase primarily reflects higher U.S. trading volumes partially
offset by lower U.S. market share and average net capture rate.
Cash Equities (11% of total
net revenues) - Net cash equity trading revenues were $74
million in the first quarter of 2018, up $13 million from the first
quarter of 2017. This increase primarily reflects higher U.S.
and European cash equities revenues from higher industry trading
volume and market share in both geographies, as well as a $3
million favorable impact from changes in foreign exchange
rates.
Fixed Income and Commodities
Trading and Clearing (4% of total net revenues) - Net
fixed income and commodities trading and clearing revenues were $23
million in the first quarter of 2018, up $4 million from the first
quarter of 2017, due to $2 million of organic growth primarily
related to higher NFX net revenues and a $2 million favorable
impact from changes in foreign exchange rates.
Trade Management Services
(11% of total net revenues) - Trade management services
revenues were
$75 million in the first quarter of 2018, up $5 million compared to
the first quarter of 2017, primarily due to an increase in revenues
from customer demand for third-party connectivity and co-location
services.
Corporate Services (26% of
total net revenues) - Revenues were $172 million in the
first quarter of 2018, up $12 million compared to the first quarter
of 2017.
Corporate Solutions (15% of
total net revenues) - Corporate solutions revenues were
$100 million in the first quarter of 2018, up $5 million from the
first quarter of 2017 primarily due to $3 million of organic growth
in public relations and board and leadership revenues, as well as a
$2 million favorable impact from changes in foreign exchange
rates.
Listing Services (11% of
total net revenues) - Listing services revenues were $72
million in the first quarter of 2018, up $7 million from the first
quarter of 2017. The change primarily reflects a $5 million
organic increase, resulting from client adoption of our
all-inclusive annual listing fee program offset by the run-off of
fees earned from listing of additional shares, and a $2 million
favorable impact from changes in foreign exchange rates.
Information Services (26% of
total net revenues) - Revenues were $174 million in the
first quarter of 2018, up $36 million from the first quarter of
2017.
Data Products (20% of total
net revenues) - Data products revenues were $133 million
in the first quarter of 2018, up $25 million compared to the first
quarter of 2017, primarily due to a $13 million impact from the
acquisition of eVestment net of an $11 million purchase price
adjustment on deferred revenue during the period, an $8 million
organic growth impact and a $4 million favorable impact from
changes in foreign exchange rates.
Index Licensing and Services
(6% of total net revenues) - Index licensing and services
revenues were $41 million in the first quarter of 2018, up $11
million from the first quarter of 2017 primarily due to higher
assets under management (AUM) in exchange traded products (ETPs)
linked to Nasdaq indexes and higher licensing revenues from futures
trading volume related to the Nasdaq 100 Index.
Market Technology (10% of
total net revenues) - Revenues were $70 million in the
first quarter of 2018, up $5 million from the first quarter of
2017. The increase primarily reflects organic growth of $3
million, primarily due to higher software as a service revenues and
higher change request revenues, as well as a $2 million favorable
impact from changes in foreign exchange rates. New order
intake totaled $55 million in the first quarter of 2018 while the
backlog totaled $735 million at March 31, 2018, up 4% from
March 31, 2017.
CORPORATE
HIGHLIGHTS
- Nasdaq completed the sale
of its Public Relations Solutions and Digital Media Services
businesses to West Corporation. On April 16, 2018,
the company announced the completion of the sale of its Public
Relations Solutions and Digital Media Services businesses to West
Corporation, a global leader in technology-enabled services, for
approximately $335 million, subject to adjustments. Through a
multi-year partnership with West, Nasdaq will continue to provide
eligible Nasdaq-listed clients with seamless access to public
relations, webcasting and webhosting products and services as part
of the terms of the transaction. The completion of the
transaction will enable Nasdaq's Corporate Solutions business to
focus its efforts on strengthening technology, data and analytics
capabilities within its investor relations, governance, risk and
compliance solutions.
- Market Services delivered
record quarterly net revenues of $250 million in the first quarter
of 2018 through a combination of strong competitive position,
stable pricing and rising industry volumes. Market
Services net revenue of $250 million in the first quarter featured
record quarterly revenue contribution from equity
derivatives. While industry volumes in cash equities and
equity derivatives markets were at multi-year highs in the first
quarter of 2018, Nasdaq's record equity derivatives revenues
reflected the enlarged market share resulting from the successful
integration of ISE. Nasdaq's quarterly cash equities revenues
were the highest since early 2016 reflecting increased market
share4 over
recent periods, the successful integration of Nasdaq Canada, and
generally stable pricing trends.
- Market Technology order
intake totaled $55 million during the first quarter of 2018 while
total order backlog totaled $735 million at March 31,
2018. Order intake totaled $55 million in the first
quarter of 2018. New client relationships during the quarter
included an agreement with Depósito Central de Valores (DCV),
Chile's central securities depository, for post trade technology,
as well as several agreements with non-financial market and
cryptocurrency customers. Nasdaq also experienced growth in
its SMARTS surveillance business through new customers and expanded
relationships. For instance, Hong Kong Exchanges and Clearing
Limited will adopt significant technology innovations coming out of
the SMARTS lab, including the use of machine intelligence for
surveillance.
- Nasdaq saw record ETP
assets under management tracking Nasdaq indexes. Overall
AUM in ETPs benchmarked to Nasdaq's proprietary index families
increased to a record $173 billion as of March 31, 2018, up
25% compared to March 31, 2017. The March 31, 2018
total AUM included $73 billion, or 42%, tracking smart beta
indexes. At March 31, 2018, the number of ETPs tracking
Nasdaq-licensed indexes rose to 328 compared to 306 at
March 31, 2017.
- The Nasdaq Stock Market led
U.S. exchanges for IPOs in the first quarter of 2018 with a 63% win
rate, while strong Nordic listings growth continues.
In the U.S. market, The Nasdaq Stock Market welcomed 62 new
listings in the first quarter of 2018, 37 of which were IPOs.
Highlights from the first quarter included the two largest
IPO's5, Dropbox and
iQIYI, as well as Bilibili, Zscaler and Xcel Energy, a switch from
the NYSE. Nasdaq's Nordic, Baltic and First North exchanges
experienced 15 new listings including 13 IPOs and 2 upgrades from
First North to Main Market, and the total of Nordic-listed
companies on Nasdaq exchanges at March 31, 2018 increased 8% to
986, from March 31, 2017.
ABOUT NASDAQ
Nasdaq (Nasdaq:NDAQ) is a leading global provider
of trading, clearing, exchange technology, listing, information and
public company services. 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 90 marketplaces in 50
countries, and 1 in 10 of the world's securities transactions.
Nasdaq is home to approximately 3,900 total listings with a market
value of approximately $13 trillion. To learn more, visit
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 reconciliations, 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
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.
Performance measures excluding intangible asset amortization
expense therefore provide investors with a more useful
representation of our businesses' ongoing activity in each
period.
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 generally 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 comparison in Nasdaq's performance
between periods.
Other significant items: We
have excluded certain other charges or gains, including certain tax
items, that are the result of other non-comparable events to
measure operating performance. We believe the exclusion of such
amounts allows management and investors to better understand the
ongoing financial results of Nasdaq. For the three months ended
March 31, 2018 and December 31, 2017, other significant items
included a sublease loss reserve charge recorded on space we
currently occupy due to excess capacity.
Significant tax items: The
adjustment to the income tax provision includes the tax impact of
each non-GAAP adjustment in addition to the following items:
- The impact of the newly enacted U.S. tax
legislation is related to the Tax Cuts and Jobs Act which was
enacted on December 22, 2017. For the three months ended March 31,
2018, we recorded an increase to tax expense of $5 million, which
reflects the reduced federal tax benefit associated with state
unrecognized tax benefits. For the three months ended December 31,
2017, we recorded a decrease to tax expense of $89 million, which
reflected the estimated impact associated with the enactment of
this act. The decrease in tax expense primarily related to the
remeasurement of our net U.S. deferred tax liability at the lower
U.S. federal corporate income tax rate. These amounts may be
refined in the future as new information becomes available.
- Excess tax benefits related to employee
share-based compensation of $5 million for the three months ended
March 31, 2018, $10 million for the three months ended December 31,
2017 and $23 million for the three months ended March 31, 2017
reflect the recognition of income tax effects of share-based awards
when awards vest or are settled. This item is subject to volatility
and will vary based on the timing of the vesting of employee
share-based compensation arrangements and fluctuation in our stock
price.
- For the three months ended December 31, 2017, we
recorded a decrease to tax expense of $6 million, which reflects
the impact of amending our assertion regarding the indefinite
reinvestment of earnings of certain subsidiaries outside the
U.S.
Foreign exchange impact: 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, total
shareholder returns, 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 allocation
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.
WEBSITE
DISCLOSURE
Nasdaq intends to use its website, ir.nasdaq.com,
as a means for disclosing material non-public information and for
complying with SEC Regulation FD and other disclosure obligations.
These disclosures will be included on Nasdaq's website under
"Investor Relations."
1 Represents
revenues less transaction-based expenses.
2 Refer to
our reconciliations of U.S. GAAP to non-GAAP net income, diluted
earnings per share, operating income and operating expenses,
included in the attached schedules.
3 U.S.
GAAP operating expense is not provided due to the inherent
difficulty in quantifying certain amounts due to a variety of
factors including the unpredictability in the movement in foreign
currency rates, as well as future charges or reversals outside of
the normal course of business.
4 U.S.
GAAP operating expense is not provided due to the inherent
difficulty in quantifying certain amounts due to a variety of
factors including the unpredictability in the movement in foreign
currency rates, as well as future charges or reversals outside of
the normal course of business.
5 As
measured by "day one" market capitalization.
MEDIA RELATIONS
CONTACTS:
Joseph Christinat
+1.646.441.5121
joseph.christinat@nasdaq.com
Will Briganti
+1.212.231.5012
william.briganti@nasdaq.com
INVESTOR RELATIONS
CONTACT:
Ed Ditmire, CFA
+1.212.401.8737
ed.ditmire@nasdaq.com
-NDAQF-
|
Nasdaq,
Inc. |
Condensed Consolidated Statements of Income |
(in
millions, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
March
31, |
|
December
31, |
|
March
31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
Revenues: |
|
|
|
|
|
Market
Services |
$ |
735 |
|
|
$ |
611 |
|
|
$ |
606 |
|
Transaction-based expenses: |
|
|
|
|
|
Transaction rebates |
|
(348 |
) |
|
|
(285 |
) |
|
|
(301 |
) |
Brokerage, clearance and exchange fees |
|
(137 |
) |
|
|
(104 |
) |
|
|
(87 |
) |
Total
Market Services revenues less transaction-based expenses |
|
250 |
|
|
|
222 |
|
|
|
218 |
|
Corporate Services |
|
172 |
|
|
|
169 |
|
|
|
160 |
|
Information Services |
|
174 |
|
|
|
156 |
|
|
|
138 |
|
Market
Technology |
|
70 |
|
|
|
83 |
|
|
|
65 |
|
Revenues less transaction-based expenses |
|
666 |
|
|
|
630 |
|
|
|
581 |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
Compensation and benefits |
|
197 |
|
|
|
181 |
|
|
|
161 |
|
Professional and contract services |
|
37 |
|
|
|
43 |
|
|
|
36 |
|
Computer operations and data communications |
|
32 |
|
|
|
34 |
|
|
|
30 |
|
Occupancy |
|
25 |
|
|
|
25 |
|
|
|
23 |
|
General, administrative and other |
|
22 |
|
|
|
17 |
|
|
|
19 |
|
Marketing and advertising |
|
9 |
|
|
|
9 |
|
|
|
7 |
|
Depreciation and amortization |
|
53 |
|
|
|
49 |
|
|
|
45 |
|
Regulatory |
|
8 |
|
|
|
8 |
|
|
|
8 |
|
Merger
and strategic initiatives |
|
10 |
|
|
|
24 |
|
|
|
6 |
|
Total
operating expenses |
|
393 |
|
|
|
390 |
|
|
|
335 |
|
Operating income |
|
273 |
|
|
|
240 |
|
|
|
246 |
|
Interest income |
|
2 |
|
|
|
2 |
|
|
|
2 |
|
Interest expense |
|
(38 |
) |
|
|
(36 |
) |
|
|
(37 |
) |
Net
income from unconsolidated investees |
|
2 |
|
|
|
5 |
|
|
|
4 |
|
Income before income taxes |
|
239 |
|
|
|
211 |
|
|
|
215 |
|
Income
tax provision (benefit) |
|
62 |
|
|
|
(35 |
) |
|
|
47 |
|
|
|
|
|
|
|
Net income attributable to
Nasdaq |
$ |
177 |
|
|
$ |
246 |
|
|
$ |
168 |
|
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
Basic
earnings per share |
$ |
1.06 |
|
|
$ |
1.47 |
|
|
$ |
1.01 |
|
Diluted earnings per share |
$ |
1.05 |
|
|
$ |
1.45 |
|
|
$ |
0.99 |
|
Cash
dividends declared per common share |
$ |
0.82 |
|
|
$ |
0.38 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
Weighted-average common shares outstanding
for earnings per share: |
|
|
|
|
|
Basic |
|
166.9 |
|
|
|
166.9 |
|
|
|
166.5 |
|
Diluted |
|
169.0 |
|
|
|
169.7 |
|
|
|
170.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nasdaq,
Inc. |
Revenue
Detail |
(in
millions) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March
31, |
|
December
31, |
|
March
31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
MARKET SERVICES
REVENUES |
|
|
|
|
|
|
Equity Derivative Trading and Clearing
Revenues |
$ |
231 |
|
|
$ |
192 |
|
|
$ |
191 |
|
|
Transaction-based expenses: |
|
|
|
|
|
|
Transaction rebates |
|
(137 |
) |
|
|
(115 |
) |
|
|
(113 |
) |
|
Brokerage, clearance and exchange fees |
|
(16 |
) |
|
|
(14 |
) |
|
|
(10 |
) |
|
Total net equity derivative trading
and clearing revenues |
|
78 |
|
|
|
63 |
|
|
|
68 |
|
|
Cash Equity Trading
Revenues |
|
402 |
|
|
|
321 |
|
|
|
320 |
|
|
Transaction-based expenses: |
|
|
|
|
|
|
Transaction rebates |
|
(208 |
) |
|
|
(167 |
) |
|
|
(183 |
) |
|
Brokerage, clearance and exchange fees |
|
(120 |
) |
|
|
(89 |
) |
|
|
(76 |
) |
|
Total net cash equity trading
revenues |
|
74 |
|
|
|
65 |
|
|
|
61 |
|
|
Fixed Income and Commodities Trading and
Clearing Revenues |
|
27 |
|
|
|
25 |
|
|
|
25 |
|
|
Transaction-based expenses: |
|
|
|
|
|
|
Transaction rebates |
|
(3 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
|
Brokerage, clearance and exchange fees |
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
Total net fixed income and
commodities trading and clearing revenues |
|
23 |
|
|
|
21 |
|
|
|
19 |
|
|
Trade Management Services
Revenues |
|
75 |
|
|
|
73 |
|
|
|
70 |
|
|
Total Net Market Services
revenues |
|
250 |
|
|
|
222 |
|
|
|
218 |
|
CORPORATE SERVICES
REVENUES |
|
|
|
|
|
|
Corporate Solutions
revenues |
|
100 |
|
|
|
99 |
|
|
|
95 |
|
|
Listings Services
revenues |
|
72 |
|
|
|
70 |
|
|
|
65 |
|
|
Total Corporate Services
revenues |
|
172 |
|
|
|
169 |
|
|
|
160 |
|
INFORMATION SERVICES
REVENUES |
|
|
|
|
|
|
Data Products revenues |
|
133 |
|
|
|
119 |
|
|
|
108 |
|
|
Index Licensing and Services
revenues |
|
41 |
|
|
|
37 |
|
|
|
30 |
|
|
Total Information Services
revenues |
|
174 |
|
|
|
156 |
|
|
|
138 |
|
MARKET TECHNOLOGY
REVENUES |
|
70 |
|
|
|
83 |
|
|
|
65 |
|
Revenues less transaction-based
expenses |
$ |
666 |
|
|
$ |
630 |
|
|
$ |
581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nasdaq,
Inc. |
Condensed Consolidated Balance Sheets |
(in
millions) |
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
Assets |
|
(unaudited) |
|
|
Current assets: |
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
405 |
|
|
$ |
377 |
|
|
Restricted cash |
|
|
24 |
|
|
|
22 |
|
|
Financial investments, at fair value |
|
|
224 |
|
|
|
235 |
|
|
Receivables, net |
|
|
486 |
|
|
|
356 |
|
|
Default funds and margin deposits |
|
|
4,026 |
|
|
|
3,988 |
|
|
Other
current assets |
|
|
205 |
|
|
|
235 |
|
|
Assets
held for sale |
|
|
268 |
|
|
|
297 |
|
Total current assets |
|
|
5,638 |
|
|
|
5,510 |
|
Property and equipment, net |
|
|
384 |
|
|
|
400 |
|
Deferred tax assets |
|
|
416 |
|
|
|
393 |
|
Goodwill |
|
|
6,549 |
|
|
|
6,586 |
|
Intangible assets, net |
|
|
2,432 |
|
|
|
2,468 |
|
Other non-current assets |
|
|
371 |
|
|
|
374 |
|
Total assets |
|
$ |
15,790 |
|
|
$ |
15,731 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
237 |
|
|
$ |
177 |
|
|
Section 31 fees payable to SEC |
|
|
128 |
|
|
|
128 |
|
|
Accrued personnel costs |
|
|
111 |
|
|
|
170 |
|
|
Deferred revenue |
|
|
386 |
|
|
|
161 |
|
|
Other
current liabilities |
|
|
161 |
|
|
|
85 |
|
|
Default funds and margin deposits |
|
|
4,026 |
|
|
|
3,988 |
|
|
Short-term debt |
|
|
960 |
|
|
|
480 |
|
|
Liabilities held for sale |
|
|
27 |
|
|
|
45 |
|
Total current liabilities |
|
|
6,036 |
|
|
|
5,234 |
|
Long-term debt |
|
|
3,155 |
|
|
|
3,727 |
|
Deferred tax liabilities |
|
|
600 |
|
|
|
602 |
|
Non-current deferred revenue |
|
|
106 |
|
|
|
126 |
|
Other non-current liabilities |
|
|
168 |
|
|
|
162 |
|
Total liabilities |
|
|
10,065 |
|
|
|
9,851 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
Equity |
|
|
|
|
Nasdaq stockholders' equity: |
|
|
|
|
|
Common
stock |
|
|
2 |
|
|
|
2 |
|
|
Additional paid-in capital |
|
|
2,926 |
|
|
|
3,024 |
|
|
Common
stock in treasury, at cost |
|
|
(289 |
) |
|
|
(247 |
) |
|
Accumulated other comprehensive loss |
|
|
(1,060 |
) |
|
|
(862 |
) |
|
Retained earnings |
|
|
4,146 |
|
|
|
3,963 |
|
Total Nasdaq stockholders' equity |
|
|
5,725 |
|
|
|
5,880 |
|
Total liabilities and equity |
|
$ |
15,790 |
|
|
$ |
15,731 |
|
|
|
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 |
|
|
March
31, |
|
December
31, |
|
March
31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
U.S. GAAP net income attributable to
Nasdaq |
|
$ |
177 |
|
|
$ |
246 |
|
|
$ |
168 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
Amortization expense of acquired intangible assets
(1) |
|
|
28 |
|
|
|
25 |
|
|
|
23 |
|
Merger and strategic initiatives (2) |
|
|
10 |
|
|
|
24 |
|
|
|
6 |
|
Sublease loss reserve (3) |
|
|
2 |
|
|
|
2 |
|
|
|
- |
|
Total non-GAAP adjustments |
|
|
40 |
|
|
|
51 |
|
|
|
29 |
|
Non-GAAP adjustment to the income tax provision
(4) |
|
|
(8 |
) |
|
|
(21 |
) |
|
|
(12 |
) |
Impact of newly enacted U.S. tax legislation (5) |
|
|
5 |
|
|
|
(89 |
) |
|
|
- |
|
Excess tax benefits related to employee share-based
compensation (6) |
|
|
(5 |
) |
|
|
(10 |
) |
|
|
(23 |
) |
Total non-GAAP adjustments, net of tax |
|
|
32 |
|
|
|
(69 |
) |
|
|
(6 |
) |
Non-GAAP net income attributable to
Nasdaq |
|
$ |
209 |
|
|
$ |
177 |
|
|
$ |
162 |
|
U.S. GAAP diluted earnings per
share |
|
$ |
1.05 |
|
|
$ |
1.45 |
|
|
$ |
0.99 |
|
Total adjustments from non-GAAP net income above |
|
|
0.19 |
|
|
|
(0.41 |
) |
|
|
(0.04 |
) |
Non-GAAP diluted earnings per
share |
|
$ |
1.24 |
|
|
$ |
1.04 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
Weighted-average diluted common
shares outstanding for earnings per
share: |
|
|
169.0 |
|
|
|
169.7 |
|
|
|
170.2 |
|
|
|
|
|
|
|
|
(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) For the three months ended March 31, 2018, merger and
strategic initiatives expense is primarily related to costs
associated with the sale of our Public Relations Solutions and
Digital Media Services businesses within our Corporate Solutions
business. For the three months ended December 31, 2017,
merger and strategic initiatives expense is primarily related to
our acquisitions of eVestment, Inc. and International Securities
Exchange, or ISE, as well as costs associated with sale of for our
Public Relations Solutions and Digital Media Services businesses
within our Corporate Solutions business. For the three months
ended March 31, 2017, merger and strategic initiatives expense
primarily related to our acquisitions of ISE and Boardvantage,
Inc. Refer to the non-GAAP information section of the
earnings release for further discussion on why we consider merger
and strategic initiatives expense to be a non-GAAP adjustment. |
|
(3) For the three months ended March 31, 2018 and for the
three months ended December 31, 2017, we established a sublease
loss reserve on space we currently occupy due to excess
capacity. |
|
(4) The non-GAAP adjustment to the income tax provision
primarily includes the tax impact of each non-GAAP adjustment. For
the three months ended December 31, 2017, we recorded a decrease to
tax expense of $6 million, which reflects the impact of amending
our assertion regarding the indefinite reinvestment of earnings of
certain subsidiaries outside the U.S. |
|
(5) The Tax Cuts & Jobs Act was enacted on December
22, 2017. For the three months ended March 31, 2018, we recorded an
increase to tax expense of $5 million, which reflects the reduced
federal tax benefit associated with state unrecognized tax
benefits. For the three months ended December 31, 2017 we recorded
a decrease to tax expense of $89 million, which reflected the
estimated impact associated with the enactment of this act. The
decrease in tax expense primarily related to the remeasurement of
our net U.S. deferred tax liability at the lower U.S. federal
corporate income tax rate. The amounts referred above may be
refined in the future as new information becomes available. |
|
(6) Excess tax benefits related to employee share-based
compensation of $5 million for the three months ended March 31,
2018, $10 million for the three months ended December 31, 2017 and
$23 million for the three months ended March 31, 2017 reflect the
recognition of income tax effects of share-based awards when awards
vest or are settled. Refer to the non-GAAP information section of
the earnings release for further discussion on why we consider
excess tax benefits related to employee share-based compensation to
be a non-GAAP adjustment. |
|
|
|
|
|
|
|
|
|
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 |
|
|
|
March
31, |
|
December
31, |
|
March
31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
|
U.S. GAAP operating income |
|
$ |
273 |
|
|
$ |
240 |
|
|
$ |
246 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Amortization expense of acquired intangible assets
(1) |
|
|
28 |
|
|
|
25 |
|
|
|
23 |
|
|
Merger and strategic initiatives (2) |
|
|
10 |
|
|
|
24 |
|
|
|
6 |
|
|
Sublease loss reserve (3) |
|
|
2 |
|
|
|
2 |
|
|
|
- |
|
|
Total non-GAAP adjustments |
|
|
40 |
|
|
|
51 |
|
|
|
29 |
|
|
Non-GAAP operating income |
|
$ |
313 |
|
|
$ |
291 |
|
|
$ |
275 |
|
|
Revenues less transaction-based
expenses |
|
$ |
666 |
|
|
$ |
630 |
|
|
$ |
581 |
|
|
U.S. GAAP operating margin
(4) |
|
|
41 |
% |
|
|
38 |
% |
|
|
42 |
% |
|
Non-GAAP operating margin
(5) |
|
|
47 |
% |
|
|
46 |
% |
|
|
47 |
% |
|
|
|
|
|
|
|
|
|
(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) For the three months ended March 31, 2018, merger and
strategic initiatives expense is primarily related to costs
associated with the sale of our Public Relations Solutions and
Digital Media Services businesses within our Corporate Solutions
business. For the three months ended December 31, 2017,
merger and strategic initiatives expense is primarily related to
our acquisitions of eVestment, Inc. and ISE, as well as costs
associated with the sale of our Public Relations Solutions and
Digital Media Services businesses within our Corporate Solutions
business. For the three months ended March 31, 2017, merger
and strategic initiatives expense primarily related to our
acquisitions of ISE and Boardvantage, Inc. Refer to the non-GAAP
information section of the earnings release for further discussion
on why we consider merger and strategic initiatives expense to be a
non-GAAP adjustment. |
|
|
|
(3) For the three months ended March 31, 2018 and for the
three months ended December 31, 2017, we established a sublease
loss reserve on space we currently occupy due to excess
capacity. |
|
|
|
(4) U.S. GAAP operating margin equals U.S. GAAP operating
income divided by total revenues less transaction-based
expenses. |
|
|
|
|
|
|
|
|
|
(5) 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 |
|
|
|
March
31, |
|
December
31, |
|
March
31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
|
U.S. GAAP operating expenses |
|
$ |
393 |
|
|
$ |
390 |
|
|
$ |
335 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Amortization expense of acquired intangible assets
(1) |
|
|
(28 |
) |
|
|
(25 |
) |
|
|
(23 |
) |
|
Merger and strategic initiatives (2) |
|
|
(10 |
) |
|
|
(24 |
) |
|
|
(6 |
) |
|
Sublease loss reserve (3) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
- |
|
|
Total non-GAAP adjustments |
|
|
(40 |
) |
|
|
(51 |
) |
|
|
(29 |
) |
|
Non-GAAP operating expenses |
|
$ |
353 |
|
|
$ |
339 |
|
|
$ |
306 |
|
|
|
|
(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) For the three months ended March 31, 2018, merger and
strategic initiatives expense is primarily related to costs
associated with the sale of our Public Relations Solutions and
Digital Media Services businesses within our Corporate Solutions
business. For the three months ended December 31, 2017,
merger and strategic initiatives expense is primarily related to
our acquisitions of eVestment, Inc. and ISE, as well as costs
associated with the sale of our Public Relations Solutions and
Digital Media Services businesses within our Corporate Solutions
business. For the three months ended March 31, 2017, merger
and strategic initiatives expense primarily related to our
acquisitions of ISE and Boardvantage, Inc. Refer to the non-GAAP
information section of the earnings release for further discussion
on why we consider merger and strategic initiatives expense to be a
non-GAAP adjustment. |
|
|
|
(3) For the three months ended March 31, 2018 and for the
three months ended December 31, 2017, we established a sublease
loss reserve on space we currently occupy due to excess
capacity. |
|
|
|
|
|
Nasdaq,
Inc. |
|
Quarterly Key Drivers Detail |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March
31, |
|
December
31, |
|
March
31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2017 |
|
|
Market Services |
|
|
|
|
|
|
|
Equity Derivative Trading and
Clearing |
|
|
|
|
|
|
|
U.S. equity options |
|
|
|
|
|
|
|
Total
industry average daily volume (in millions) |
|
19.6 |
|
|
|
15.3 |
|
|
|
14.6 |
|
|
|
Nasdaq
PHLX matched market share |
|
16.0 |
% |
|
|
18.4 |
% |
|
|
17.1 |
% |
|
|
The
Nasdaq Options Market matched market share |
|
10.1 |
% |
|
|
8.6 |
% |
|
|
9.5 |
% |
|
|
Nasdaq
BX Options matched market share |
|
0.5 |
% |
|
|
0.5 |
% |
|
|
0.7 |
% |
|
|
Nasdaq
ISE Options matched market share |
|
8.4 |
% |
|
|
8.9 |
% |
|
|
9.5 |
% |
|
|
Nasdaq
GEMX Options matched market share |
|
4.6 |
% |
|
|
4.9 |
% |
|
|
5.6 |
% |
|
|
Nasdaq
MRX Options matched market share |
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
|
Total
matched market share executed on Nasdaq's exchanges |
|
39.7 |
% |
|
|
41.5 |
% |
|
|
42.5 |
% |
|
|
Nasdaq Nordic and Nasdaq Baltic options and
futures |
|
|
|
|
|
|
|
Total
average daily volume options and futures contracts (1) |
|
354,744 |
|
|
|
313,920 |
|
|
|
338,463 |
|
|
|
|
|
|
|
|
|
|
|
Cash Equity Trading |
|
|
|
|
|
|
|
Total U.S.-listed securities |
|
|
|
|
|
|
|
Total
industry average daily share volume (in billions) |
|
7.62 |
|
|
|
6.36 |
|
|
|
6.84 |
|
|
|
Matched share volume (in billions) |
|
88.6 |
|
|
|
72.7 |
|
|
|
74.7 |
|
|
|
The
Nasdaq Stock Market matched market share |
|
14.9 |
% |
|
|
14.1 |
% |
|
|
14.0 |
% |
|
|
Nasdaq
BX matched market share |
|
3.3 |
% |
|
|
3.3 |
% |
|
|
2.7 |
% |
|
|
Nasdaq
PSX matched market share |
|
0.9 |
% |
|
|
0.7 |
% |
|
|
0.9 |
% |
|
|
Total
matched market share executed on Nasdaq's exchanges |
|
19.1 |
% |
|
|
18.1 |
% |
|
|
17.6 |
% |
|
|
Market
share reported to the FINRA/Nasdaq Trade Reporting Facility |
|
33.6 |
% |
|
|
35.2 |
% |
|
|
34.9 |
% |
|
|
Total
market share (2) |
|
52.7 |
% |
|
|
53.3 |
% |
|
|
52.5 |
% |
|
|
Nasdaq Nordic and Nasdaq Baltic
securities |
|
|
|
|
|
|
|
Average daily number of equity trades executed on Nasdaq's
exchanges |
|
651,405 |
|
|
|
564,397 |
|
|
|
507,647 |
|
|
|
Total
average daily value of shares traded (in billions) |
$ |
6.0 |
|
|
$ |
5.4 |
|
|
$ |
5.0 |
|
|
|
Total
market share executed on Nasdaq's exchanges |
|
69.6 |
% |
|
|
71.2 |
% |
|
|
65.0 |
% |
|
|
|
|
|
|
|
|
|
|
Fixed Income and Commodities Trading and
Clearing |
|
|
|
|
|
|
|
Fixed Income |
|
|
|
|
|
|
|
U.S.
fixed income notional trading volume (in billions) |
$ |
5,156 |
|
|
$ |
4,030 |
|
|
$ |
5,041 |
|
|
|
Total
average daily volume of Nasdaq Nordic and Nasdaq Baltic fixed
income contracts |
|
132,225 |
|
|
|
130,645 |
|
|
|
112,004 |
|
|
|
Commodities |
|
|
|
|
|
|
|
Power
contracts cleared (TWh) (3) |
|
272 |
|
|
|
284 |
|
|
|
379 |
|
|
|
|
|
|
|
|
|
|
Corporate Services |
|
|
|
|
|
|
|
Initial public offerings |
|
|
|
|
|
|
|
The
Nasdaq Stock Market |
|
37 |
|
|
|
49 |
|
|
|
17 |
|
|
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic |
|
13 |
|
|
|
28 |
|
|
|
11 |
|
|
|
Total new listings |
|
|
|
|
|
|
|
The
Nasdaq Stock Market (4) |
|
62 |
|
|
|
84 |
|
|
|
42 |
|
|
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (5) |
|
15 |
|
|
|
36 |
|
|
|
16 |
|
|
|
Number of listed companies |
|
|
|
|
|
|
|
The
Nasdaq Stock Market (6) |
|
2,969 |
|
|
|
2,949 |
|
|
|
2,890 |
|
|
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (7) |
|
986 |
|
|
|
984 |
|
|
|
910 |
|
|
|
|
|
|
|
|
|
|
Information Services |
|
|
|
|
|
|
|
Number
of licensed exchange traded products (ETPs) |
|
328 |
|
|
|
324 |
|
|
|
306 |
|
|
|
ETP
assets under management (AUM) tracking Nasdaq indexes (in
billions) |
$ |
173 |
|
|
$ |
167 |
|
|
$ |
138 |
|
|
|
|
|
|
|
|
|
|
Market Technology |
|
|
|
|
|
|
|
Order
intake (in millions)(8) |
$ |
55 |
|
|
$ |
115 |
|
|
$ |
47 |
|
|
|
Total
order value (in millions)(9) |
$ |
735 |
|
|
$ |
747 |
|
|
$ |
709 |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes Finnish option contracts traded on
Eurex. |
|
|
(2) Includes transactions executed on The Nasdaq Stock
Market's, Nasdaq BX's and Nasdaq PSX's systems plus trades reported
through the Financial Industry Regulatory Authority/Nasdaq Trade
Reporting Facility. |
|
|
(3) Transactions executed on Nasdaq Commodities or OTC and
reported for clearing to Nasdaq Commodities measured by Terawatt
hours (TWh). |
|
|
(4) 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 ETPs |
|
|
(5) 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. |
|
|
(6) Number of total listings on The Nasdaq Stock Market at
period end, including 376 ETPs as of March 31, 2018, 373 as of
December 31 2017 and 332 as of March 31, 2017. |
|
|
(7) Represents companies listed on the Nasdaq Nordic and
Nasdaq Baltic exchanges and companies on the alternative markets of
Nasdaq First North at period end. |
|
|
(8) Total contract value of orders signed during the
period. |
|
|
(9) Represents total contract value of orders signed that
are yet to be recognized as revenue. Total order value for the
three months ended March 31, 2017 and for the three months ended
December 31, 2017 were restated as a result of the adoption of ASU
2014-09, "Revenue from Contracts with Customers". |
|
|
|
|
|
|
|
|
|
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Nasdaq via Globenewswire
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