- Net revenues2 were a
record $585 million in the third quarter of 2016, up 11%
year-over-year.
- Third quarter 2016 diluted EPS was $0.77.
Non-GAAP3 diluted
EPS for the third quarter 2016 was $0.91.
- Subscription and recurring revenues in the third
quarter of 2016 were a record and represented 75% of total net
revenues. Information Services, Technology Solutions, and
Listing Services segments each achieved quarterly record net
revenues.
- At September 30, 2016, the company had achieved
$23 million in annualized run-rate cost synergies for the
acquisitions completed in 2016 out of a targeted $60 million
expected upon completion of integration.
- During the third quarter of 2016, Nasdaq
repurchased $55 million of its common stock. Total
repurchases from the beginning of the year through September 30,
2016 were $100 million.
NEW YORK, Oct. 26, 2016 (GLOBE NEWSWIRE) --
Nasdaq, Inc. (Nasdaq:NDAQ) today reported strong financial results
for the third quarter of 2016. Third quarter net revenues
were $585 million, up $56 million or 11% from $529 million in the
prior year period, driven primarily by a $58 million positive
impact from acquisitions. Organic revenue growth in the
non-trading segments4 in the
third quarter of 2016 was offset by a contraction in trading
revenues when compared to an especially volatile trading
environment in the prior-year period.
"The third quarter's strong financial results
showcase how the complementary nature of Nasdaq's business mix can
deliver against a variety of macro backdrops. While our
marketplaces were subject to lower volatility and industry volumes
compared to the prior year period, the company's non-trading
segments expanded to new record levels," said Bob Greifeld, CEO, Nasdaq.
Mr.
Greifeld continued, "The Information Services,
Technology Solutions, and Listing Services segments were especially
strong in the third quarter, but more importantly they each
represent areas where we have found attractive opportunities to
invest and where our technology leadership can be leveraged
effectively to benefit our clients and create new opportunities for
growth."
Operating expenses were $352 million in the third
quarter of 2016, up $54 million from $298 million in the third
quarter of 2015. The increase primarily reflects incremental
expenses from the acquisitions of Nasdaq CXC, formerly Chi-X Canada
(February 2016), Marketwired (February 2016), Boardvantage (May
2016), and ISE (June 2016).
Non-GAAP operating expenses were $317 million in
the third quarter of 2016, up $41 million from $276 million in the
third quarter of 2015. This increase primarily reflects $29
million in incremental operating expenses from the acquisitions
closed in 2016 as well as $13 million due to organic growth.
"During the third quarter, the company made
significant progress integrating our recent acquisitions, moving
the synergy achievement up to $23 million on a run rate basis,
which contributed to meaningful accretion to our non-GAAP results,"
said Michael Ptasznik, Chief Financial
Officer and Executive Vice President, Nasdaq.
Mr.
Ptasznik continued, "We also saw an attractive
opportunity to return $55 million to shareholders through the share
buyback program in the third quarter. I'm pleased to say that
in addition to executing on several acquisition opportunities this
year, the company has returned 54% of our non-GAAP net income
year-to-date to shareholders through dividends and buybacks."
Net income attributable to Nasdaq for the third
quarter of 2016 was $131 million, or $0.77 per diluted share,
compared with $138 million, or $0.80 per diluted share, in the
prior year quarter. On a non-GAAP basis, net income
attributable to Nasdaq for the third quarter of 2016 was $154
million, or $0.91 per diluted share, compared with $151 million, or
$0.88 per diluted share, in the third quarter of 2015.
The company repurchased 800,938 shares for $55
million in the third quarter of 2016 at an average price of
$68.19. As of September 30, 2016, there was $429 million
remaining under the board authorized share repurchase program.
At September 30, 2016, the company had cash and
cash equivalents of $257 million and total debt of $3,709 million,
resulting in net debt of $3,452 million. This compares to net
debt of $2,063 million at December 31, 2015.
1 Represents
revenues from our Information Services, Technology Solutions, and
Listing Services segments, as well as our Trade Management Services
business, formerly referred to as Access and Broker Services.
2 Represents
revenues less transaction-based expenses.
3 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.
4 Represents
revenues from our Information Services, Technology Solutions, and
Listing Services segments.
BUSINESS
HIGHLIGHTS
Market Services (36% of total
net revenues) - Net revenues were $213 million in the
third quarter of 2016, up $13 million when compared to the third
quarter of 2015. The increase primarily reflects an increase
in revenues from the ISE and Nasdaq CXC acquisitions, partially
offset by declines in trading volumes as compared to multi-year
high industry trading volumes experienced in the third quarter of
2015.
Equity Derivatives
(11%
of total net revenues) - Net equity derivative
trading and clearing revenues were $67 million in the third quarter
of 2016, up $16 million compared to the third quarter of
2015. The increase is primarily due to the inclusion of
revenues from our acquisition of ISE in June 2016 and higher market
share at The NASDAQ Options Market and Nasdaq PHLX, partially
offset by lower industry trading volumes.
Cash Equities (10%
of total net
revenues) - Net cash equity trading revenues were $59
million in the third quarter of 2016, down $8 million compared to
the third quarter of 2015. This decrease reflects lower
matched market share, lower industry trading volumes and lower U.S.
average net capture, partially offset by the inclusion of net
revenues associated with the acquisition of Nasdaq CXC.
Fixed Income and Commodities
Trading and Clearing1 (3% of
total net revenues) - Net fixed income and
commodities trading and clearing (FICC) revenues were $18 million
in the third quarter of 2016, down $5 million from the third
quarter of 2015, due to declines in commodities and U.S. fixed
income revenues and the impact of trading incentives on Nasdaq
Futures (NFX) revenues.
Trade
Management Services
(12% of total
net revenues)
- Trade management services revenues were $69 million
in the third quarter of 2016, up $10 million compared to the third
quarter of 2015, due to the inclusion of revenue from the
acquisition of ISE and an increase in customer demand for network
connectivity.
1 Our FICC
business was formerly referred to as fixed income, currency and
commodities trading and clearing.
Information Services (23% of
total net revenues) - Revenues were $137 million in
the third quarter of 2016, up $5 million from the third quarter of
2015.
Data Products
(18% of total net
revenues) - Data
products revenues were $109 million in the third quarter of 2016,
up $6 million compared to the third quarter of 2015 primarily due
to growth in proprietary data products revenues, the inclusion of
revenues from the acquisitions of ISE and Nasdaq CXC, as well as
higher audit collections.
Index Licensing and Services
(5% of total net revenues) - Index licensing and
services revenues were $28 million in the third quarter of 2016,
down $1 million from the third quarter of 2015. The revenue
decline was primarily due to a decrease in the value of underlying
assets associated with non-ETP Nasdaq-licensed products and lower
fees associated with derivative products licensing Nasdaq indices,
due to lower volumes.
Technology Solutions
(29% of total
net revenues)
- Revenues were $167 million in the third quarter of
2016, up $36 million from the third quarter of 2015. The
increase primarily reflects the inclusion of revenues from the
acquisitions of Marketwired and Boardvantage, as well as $13
million in organic revenue growth in our Market Technology
business.
Corporate Solutions (16% of
total net revenues) - Corporate solutions revenues
were $94 million in the third quarter of 2016, up $22 million from
the third quarter of 2015. The increase was due to the
inclusion of revenues from the Marketwired and Boardvantage
acquisitions.
Market Technology (13% of
total net revenues) - Market technology revenues were
$73 million in the third quarter of 2016, up $14 million from the
third quarter of 2015. The increase was driven primarily by
growth in revenues from software licensing and support as well as
surveillance products.
Listing Services (12%
of total net revenues)
- Revenues were $68 million in the third quarter of
2016, up $2 million compared to the third quarter of 2015 primarily
due to higher revenues in the Nordics due to new company
listings.
CORPORATE
HIGHLIGHTS
- NFX growth continues
Nasdaq's commodities expansion. NFX, a U.S.-based
derivatives market for key energy benchmarks, has seen increasing
traction since launch in July 2015. During the month of
September 2016, open interest in NFX products reached a record 1.2
million contracts, and during the third quarter of 2016, trading
volume of 8.9 million contracts increased 16% from 7.7 million
contracts in the second quarter of 2016. Since its July 2015
inception, 118 firms have traded on NFX.
- The Nasdaq Stock Market
leads U.S. exchanges for IPOs and switches. In
the U.S. market, The Nasdaq Stock Market welcomed 79 new listings
in the third quarter of 2016, including 31 IPOs such as Trade Desk,
Apptio and Nutanix. During the third quarter of 2016, 74% of
all U.S. IPOs were listed on Nasdaq. In addition, The Nasdaq
Stock Market welcomed 16 switches thus far in 2016 with an
aggregate market capitalization of $42 billion, including IHS
Markit. Nasdaq announced 24 new exchange-traded products
(ETP) listings and one switch in the third quarter, bringing
Nasdaq's total ETP listings to 295, up 48% from the third quarter
of 2015.
- Corporate Solutions
launches Nasdaq Influencers while Nasdaq IR Insight sees continued
strong adoption. Nasdaq has seen strong adoption of
the next generation IR platform with 86% of companies upgraded
since January. Additionally, Nasdaq's Corporate Solutions
business launched Nasdaq Influencers, a new solution for
communications and marketing professionals to discover and connect
with the most relevant thought leaders in their industry and
uncover new opportunities to share their news and information,
insights and recommendations as well as drive brand identity and
awareness.
- Nasdaq sees strong growth
in number of ETPs and assets tracking Nasdaq
indexes. The number of ETPs licensed to Nasdaq
indexes increased to 289 at September 30, 2016 versus 267 at June
30, 2016, including several non-U.S. product launches in China,
Taiwan, and Australia. Two new Nasdaq-100 ETPs were listed in
Hong Kong with BMO and BlackRock and one in Taiwan with Fubon Asset
Management. Additionally, BetaShares launched a series of
Global Ex-Australia hedged ETPs based on Nasdaq indexes.
Overall AUM in exchange traded products (ETPs) benchmarked to
all Nasdaq indexes increased 15% to $118 billion as of September
30, 2016 compared to September 30, 2015.
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 $10.0 trillion and approximately 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 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,
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. For the three months ended September 30, 2015, other
significant items include an insurance recovery for litigation
arising from the Facebook IPO in May 2012. 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.
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."
NDAQF
Nasdaq,
Inc. |
Condensed Consolidated
Statements of Income |
(in millions, except
per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2016 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
Market Services |
$ |
557 |
|
|
$ |
532 |
|
|
$ |
542 |
|
Transaction-based
expenses: |
|
|
|
|
|
Transaction rebates |
|
(265 |
) |
|
|
(256 |
) |
|
|
(256 |
) |
Brokerage, clearance and
exchange fees |
|
(79 |
) |
|
|
(82 |
) |
|
|
(86 |
) |
Total Market Services revenues
less transaction-based expenses |
|
213 |
|
|
|
194 |
|
|
|
200 |
|
|
|
|
|
|
|
Listing Services |
|
68 |
|
|
|
68 |
|
|
|
66 |
|
Information
Services |
|
137 |
|
|
|
134 |
|
|
|
132 |
|
Technology
Solutions |
|
167 |
|
|
|
163 |
|
|
|
131 |
|
|
|
|
|
|
|
Revenues
less transaction-based expenses |
|
585 |
|
|
|
559 |
|
|
|
529 |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
Compensation and
benefits |
|
168 |
|
|
|
164 |
|
|
|
150 |
|
Marketing and
advertising |
|
8 |
|
|
|
8 |
|
|
|
6 |
|
Depreciation and
amortization |
|
46 |
|
|
|
41 |
|
|
|
34 |
|
Professional and contract
services |
|
40 |
|
|
|
35 |
|
|
|
33 |
|
Computer operations and data
communications |
|
28 |
|
|
|
27 |
|
|
|
23 |
|
Occupancy |
|
23 |
|
|
|
19 |
|
|
|
22 |
|
Regulatory |
|
8 |
|
|
|
6 |
|
|
|
7 |
|
Merger and strategic
initiatives |
|
12 |
|
|
|
35 |
|
|
|
4 |
|
General, administrative and
other |
|
19 |
|
|
|
17 |
|
|
|
11 |
|
Restructuring
charges |
|
- |
|
|
|
33 |
|
|
|
8 |
|
Total
operating expenses |
|
352 |
|
|
|
385 |
|
|
|
298 |
|
|
|
|
|
|
|
Operating income |
|
233 |
|
|
|
174 |
|
|
|
231 |
|
|
|
|
|
|
|
Interest income |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Interest expense |
|
(37 |
) |
|
|
(32 |
) |
|
|
(28 |
) |
Other investment
income |
|
- |
|
|
|
2 |
|
|
|
- |
|
Net income from unconsolidated
investees |
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
199 |
|
|
|
146 |
|
|
|
206 |
|
Income tax
provision |
|
68 |
|
|
|
76 |
|
|
|
68 |
|
|
|
|
|
|
|
Net
income attributable to Nasdaq |
$ |
131 |
|
|
$ |
70 |
|
|
$ |
138 |
|
|
|
|
|
|
|
Per
share information: |
|
|
|
|
|
Basic earnings per
share |
$ |
0.79 |
|
|
$ |
0.42 |
|
|
$ |
0.83 |
|
Diluted earnings per
share |
$ |
0.77 |
|
|
$ |
0.42 |
|
|
$ |
0.80 |
|
Cash dividends declared per
common share |
$ |
0.32 |
|
|
$ |
- |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
Weighted-average common shares
outstanding for earnings per
share: |
|
|
|
|
|
Basic |
|
165.6 |
|
|
|
165.0 |
|
|
|
166.9 |
|
Diluted |
|
169.5 |
|
|
|
168.2 |
|
|
|
171.5 |
|
|
|
|
|
|
|
Nasdaq, Inc. |
Revenue Detail |
(in millions) |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
September
30, |
|
June
30, |
|
September
30, |
|
2016 |
|
2016 |
|
2015 |
MARKET
SERVICES REVENUES |
|
|
|
|
|
Equity
Derivative Trading and Clearing Revenues |
$ |
164 |
|
|
$ |
103 |
|
|
$ |
109 |
|
Transaction-based
expenses: |
|
|
|
|
|
Transaction rebates |
|
(90 |
) |
|
|
(53 |
) |
|
|
(53 |
) |
Brokerage, clearance and
exchange fees |
|
(7 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Total
net equity derivative trading and clearing revenues |
|
67 |
|
|
|
46 |
|
|
|
51 |
|
|
|
|
|
|
|
Cash
Equity Trading Revenues |
|
302 |
|
|
|
339 |
|
|
|
349 |
|
Transaction-based
expenses: |
|
|
|
|
|
Transaction rebates |
|
(171 |
) |
|
|
(198 |
) |
|
|
(202 |
) |
Brokerage, clearance and
exchange fees |
|
(72 |
) |
|
|
(78 |
) |
|
|
(80 |
) |
Total
net cash equity trading revenues |
|
59 |
|
|
|
63 |
|
|
|
67 |
|
|
|
|
|
|
|
Fixed
Income and Commodities Trading and Clearing
Revenues |
|
22 |
|
|
|
26 |
|
|
|
25 |
|
Transaction-based
expenses: |
|
|
|
|
|
Transaction rebates |
|
(4 |
) |
|
|
(5 |
) |
|
|
(1 |
) |
Brokerage, clearance and
exchange fees |
|
- |
|
|
|
- |
|
|
|
(1 |
) |
Total
net fixed income and commodities trading and clearing
revenues |
|
18 |
|
|
|
21 |
|
|
|
23 |
|
|
|
|
|
|
|
Trade
Management Services Revenues |
|
69 |
|
|
|
64 |
|
|
|
59 |
|
|
|
|
|
|
|
Total
Net Market Services revenues |
|
213 |
|
|
|
194 |
|
|
|
200 |
|
|
|
|
|
|
|
LISTING
SERVICES REVENUES |
|
68 |
|
|
|
68 |
|
|
|
66 |
|
|
|
|
|
|
|
INFORMATION SERVICES REVENUES |
|
|
|
|
|
Data
Products revenues |
|
109 |
|
|
|
107 |
|
|
|
103 |
|
Index
Licensing and Services revenues |
|
28 |
|
|
|
27 |
|
|
|
29 |
|
|
|
|
|
|
|
Total
Information Services revenues |
|
137 |
|
|
|
134 |
|
|
|
132 |
|
|
|
|
|
|
|
TECHNOLOGY SOLUTIONS REVENUES |
|
|
|
|
|
Corporate Solutions revenues |
|
94 |
|
|
|
94 |
|
|
|
72 |
|
Market
Technology revenues |
|
73 |
|
|
|
69 |
|
|
|
59 |
|
|
|
|
|
|
|
Total
Technology Solutions revenues |
|
167 |
|
|
|
163 |
|
|
|
131 |
|
|
|
|
|
|
|
Revenues
less transaction-based expenses |
$ |
585 |
|
|
$ |
559 |
|
|
$ |
529 |
|
|
|
|
|
|
|
Nasdaq, Inc. |
Condensed Consolidated Balance
Sheets |
(in millions) |
|
|
|
|
|
September 30, |
|
December 31, |
|
2016 |
|
2015 |
Assets |
(unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
257 |
|
|
$ |
301 |
|
Restricted cash |
|
19 |
|
|
|
56 |
|
Financial investments, at fair
value |
|
238 |
|
|
|
201 |
|
Receivables, net |
|
349 |
|
|
|
316 |
|
Default funds and margin
deposits |
|
3,323 |
|
|
|
2,228 |
|
Other current assets |
|
160 |
|
|
|
158 |
|
Total current assets |
|
4,346 |
|
|
|
3,260 |
|
Property and equipment,
net |
|
342 |
|
|
|
323 |
|
Deferred tax assets |
|
768 |
|
|
|
643 |
|
Goodwill |
|
6,206 |
|
|
|
5,395 |
|
Intangible assets, net |
|
2,740 |
|
|
|
1,959 |
|
Other non-current assets |
|
406 |
|
|
|
281 |
|
Total assets |
$ |
14,808 |
|
|
$ |
11,861 |
|
|
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued
expenses |
$ |
159 |
|
|
$ |
158 |
|
Section 31 fees payable to
SEC |
|
27 |
|
|
|
98 |
|
Accrued personnel costs |
|
175 |
|
|
|
171 |
|
Deferred revenue |
|
216 |
|
|
|
127 |
|
Other current liabilities |
|
134 |
|
|
|
138 |
|
Current portion of debt
obligations |
|
20 |
|
|
|
- |
|
Default funds and margin
deposits |
|
3,323 |
|
|
|
2,228 |
|
Total current liabilities |
|
4,054 |
|
|
|
2,920 |
|
Debt obligations |
|
3,689 |
|
|
|
2,364 |
|
Deferred tax liabilities |
|
980 |
|
|
|
626 |
|
Non-current deferred
revenue |
|
191 |
|
|
|
200 |
|
Other non-current
liabilities |
|
140 |
|
|
|
142 |
|
Total liabilities |
|
9,054 |
|
|
|
6,252 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
Equity |
|
|
|
Nasdaq stockholders'
equity: |
|
|
|
Common stock |
|
2 |
|
|
|
2 |
|
Additional paid-in
capital |
|
3,046 |
|
|
|
3,011 |
|
Common stock in treasury, at
cost |
|
(169 |
) |
|
|
(111 |
) |
Accumulated other
comprehensive loss |
|
(882 |
) |
|
|
(864 |
) |
Retained earnings |
|
3,757 |
|
|
|
3,571 |
|
Total equity |
|
5,754 |
|
|
|
5,609 |
|
Total liabilities and
equity |
$ |
14,808 |
|
|
$ |
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 |
|
|
September
30, |
|
June
30, |
|
September
30, |
|
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
U.S.
GAAP net income attributable to Nasdaq |
|
$ |
131 |
|
|
$ |
70 |
|
|
$ |
138 |
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of
acquired intangible assets (1) |
|
|
23 |
|
|
|
19 |
|
|
|
15 |
|
Merger and strategic
initiatives (2) |
|
|
12 |
|
|
|
35 |
|
|
|
4 |
|
Restructuring
charges (3) |
|
|
- |
|
|
|
33 |
|
|
|
8 |
|
Sublease loss
reserve (4) |
|
|
- |
|
|
|
(2 |
) |
|
|
- |
|
Insurance
recovery (5) |
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
Total non-GAAP
adjustments |
|
|
35 |
|
|
|
85 |
|
|
|
22 |
|
|
|
|
|
|
|
|
Non-GAAP adjustment to the
income tax provision (6) |
|
|
(12 |
) |
|
|
(2 |
) |
|
|
(9 |
) |
Total non-GAAP adjustments,
net of tax |
|
|
23 |
|
|
|
83 |
|
|
|
13 |
|
|
|
|
|
|
|
|
Non-GAAP
net income attributable to Nasdaq |
|
$ |
154 |
|
|
$ |
153 |
|
|
$ |
151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP diluted earnings per share |
|
$ |
0.77 |
|
|
$ |
0.42 |
|
|
$ |
0.80 |
|
Total adjustments from
non-GAAP net income above |
|
|
0.14 |
|
|
|
0.49 |
|
|
|
0.08 |
|
|
|
|
|
|
|
|
Non-GAAP
diluted earnings per share |
|
$ |
0.91 |
|
|
$ |
0.91 |
|
|
$ |
0.88 |
|
|
|
|
|
|
|
|
(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 September 30, 2016 and June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
ISE. For the three months ended September 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 expense to be a non-GAAP
adjustment. |
|
(3) 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. In June 2016, we
completed our 2015 restructuring plan. For the three months ended
June 30, 2016, restructuring charges primarily related to severance
costs, asset impairment charges and other charges. For the three
months ended September 30, 2015, restructuring charges primarily
related to facility-related costs associated with the consolidation
of leased facilities, severance costs and other charges.
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. |
|
(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) In March 2015, we
established a loss reserve of $31 million for litigation arising
from the Facebook IPO in May 2012, which was recorded in general,
administrative and other expense. The reserve was intended to
cover the estimated amount of a settlement of class-action
litigation initiated on behalf of investors in Facebook common
stock on the date of its IPO. The reserve also covered the
cost of re-opening Nasdaq's voluntary accommodation program to
allow any Nasdaq member that did not file for compensation in 2013
to submit a claim during the second quarter of 2015, subject to the
conditions and limitations that were applicable to claims filed in
2013. The re-opened accommodation program is now
closed. The insurance recovery recognized during the three
months ended September 30, 2015 primarily represented amounts
reimbursed by applicable insurance coverage. |
|
(6) Includes the tax impact of
each non-GAAP adjustment. In addition, in June 2016 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 |
|
|
September
30, |
|
June
30, |
|
September
30, |
|
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
U.S.
GAAP operating income |
|
$ |
233 |
|
|
$ |
174 |
|
|
$ |
231 |
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of
acquired intangible assets (1) |
|
|
23 |
|
|
|
19 |
|
|
|
15 |
|
Merger and strategic
initiatives (2) |
|
|
12 |
|
|
|
35 |
|
|
|
4 |
|
Restructuring
charges (3) |
|
|
- |
|
|
|
33 |
|
|
|
8 |
|
Sublease loss
reserve (4) |
|
|
- |
|
|
|
(2 |
) |
|
|
- |
|
Insurance
recovery (5) |
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
Total non-GAAP
adjustments |
|
|
35 |
|
|
|
85 |
|
|
|
22 |
|
|
|
|
|
|
|
|
Non-GAAP
operating income |
|
$ |
268 |
|
|
$ |
259 |
|
|
$ |
253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
less transaction-based expenses |
|
$ |
585 |
|
|
$ |
559 |
|
|
$ |
529 |
|
|
|
|
|
|
|
|
U.S.
GAAP Operating margin (6) |
|
|
40 |
% |
|
|
31 |
% |
|
|
44 |
% |
|
|
|
|
|
|
|
Non-GAAP
operating margin (7) |
|
|
46 |
% |
|
|
46 |
% |
|
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, 2016 and June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
ISE. For the three months ended September 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 expense to be a non-GAAP
adjustment. |
|
(3) 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. In June 2016, we
completed our 2015 restructuring plan. For the three months ended
June 30, 2016, restructuring charges primarily related to severance
costs, asset impairment charges and other charges. For the three
months ended September 30, 2015, restructuring charges primarily
related to facility-related costs associated with the consolidation
of leased facilities, severance costs and other charges.
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. |
|
(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) In March 2015, we
established a loss reserve of $31 million for litigation arising
from the Facebook IPO in May 2012, which was recorded in general,
administrative and other expense. The reserve was intended to
cover the estimated amount of a settlement of class-action
litigation initiated on behalf of investors in Facebook common
stock on the date of its IPO. The reserve also covered the
cost of re-opening Nasdaq's voluntary accommodation program to
allow any Nasdaq member that did not file for compensation in 2013
to submit a claim during the second quarter of 2015, subject to the
conditions and limitations that were applicable to claims filed in
2013. The re-opened accommodation program is now
closed. The insurance recovery recognized during the three
months ended September 30, 2015 primarily represented amounts
reimbursed by applicable insurance coverage. |
|
(6) U.S. GAAP operating margin
equals U.S. GAAP operating income divided by total revenues less
transaction-based expenses. |
|
(7) 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 |
|
|
September
30, |
|
June
30, |
|
September
30, |
|
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
U.S.
GAAP operating expenses |
|
$ |
352 |
|
|
$ |
385 |
|
|
$ |
298 |
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of
acquired intangible assets (1) |
|
|
(23 |
) |
|
|
(19 |
) |
|
|
(15 |
) |
Merger and strategic
initiatives (2) |
|
|
(12 |
) |
|
|
(35 |
) |
|
|
(4 |
) |
Restructuring
charges (3) |
|
|
- |
|
|
|
(33 |
) |
|
|
(8 |
) |
Sublease loss
reserve (4) |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
Insurance
recovery (5) |
|
|
- |
|
|
|
- |
|
|
|
5 |
|
Total non-GAAP
adjustments |
|
|
(35 |
) |
|
|
(85 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
Non-GAAP
operating expenses |
|
$ |
317 |
|
|
$ |
300 |
|
|
$ |
276 |
|
|
|
|
|
|
|
|
(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 September 30, 2016 and June 30, 2016, merger and strategic
initiatives expense primarily related to our acquisition of
ISE. For the three months ended September 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 expense to be a non-GAAP
adjustment. |
|
(3) 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. In June 2016, we
completed our 2015 restructuring plan. For the three months ended
June 30, 2016, restructuring charges primarily related to severance
costs, asset impairment charges and other charges. For the three
months ended September 30, 2015, restructuring charges primarily
related to facility-related costs associated with the consolidation
of leased facilities, severance costs and other charges.
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. |
|
(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) In March 2015, we
established a loss reserve of $31 million for litigation arising
from the Facebook IPO in May 2012, which was recorded in general,
administrative and other expense. The reserve was intended to
cover the estimated amount of a settlement of class-action
litigation initiated on behalf of investors in Facebook common
stock on the date of its IPO. The reserve also covered the
cost of re-opening Nasdaq's voluntary accommodation program to
allow any Nasdaq member that did not file for compensation in 2013
to submit a claim during the second quarter of 2015, subject to the
conditions and limitations that were applicable to claims filed in
2013. The re-opened accommodation program is now
closed. The insurance recovery recognized during the three
months ended September 30, 2015 primarily represented amounts
reimbursed by applicable insurance coverage. |
|
Nasdaq, Inc. |
Quarterly Key Drivers Detail |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
September
30, |
|
June
30, |
|
September
30, |
|
2016 |
|
2016 |
|
2015 |
Market
Services |
|
|
|
|
|
Equity
Derivative Trading and Clearing |
|
|
|
|
|
U.S. Equity
Options |
|
|
|
|
|
Total industry average daily
volume (in millions) |
|
13.8 |
|
|
|
14.1 |
|
|
|
16.0 |
|
Nasdaq PHLX Options Market
matched market share |
|
16.0 |
% |
|
|
16.2 |
% |
|
|
15.8 |
% |
The NASDAQ Options Market
matched market share |
|
8.5 |
% |
|
|
7.1 |
% |
|
|
6.7 |
% |
Nasdaq BX Options Market
matched market share |
|
0.8 |
% |
|
|
1.0 |
% |
|
|
0.9 |
% |
Nasdaq ISE Options Market
matched market share(1) |
|
12.0 |
% |
|
|
0.2 |
% |
|
|
- |
|
Nasdaq GMNI Options Market
matched market share(1) |
|
1.8 |
% |
|
|
0.0 |
% |
|
|
- |
|
Nasdaq MCRY Options Market
matched market share(1) |
|
0.2 |
% |
|
|
0.0 |
% |
|
|
- |
|
Total matched market share
executed on Nasdaq's exchanges |
|
39.3 |
% |
|
|
24.5 |
% |
|
|
23.4 |
% |
|
|
|
|
|
|
Nasdaq
Nordic and Nasdaq Baltic options and futures |
|
|
|
|
|
Total average daily volume
options and futures contracts(2) |
|
291,410 |
|
|
|
439,520 |
|
|
|
335,361 |
|
|
|
|
|
|
|
Cash
Equity Trading |
|
|
|
|
|
Total
U.S.-listed securities |
|
|
|
|
|
Total industry average daily
share volume (in billions) |
|
6.59 |
|
|
|
7.25 |
|
|
|
7.32 |
|
Matched share volume (in
billions) |
|
71.0 |
|
|
|
80.6 |
|
|
|
88.2 |
|
Matched market share executed
on NASDAQ |
|
13.4 |
% |
|
|
14.0 |
% |
|
|
15.7 |
% |
Matched market share executed
on Nasdaq BX |
|
2.6 |
% |
|
|
2.3 |
% |
|
|
2.1 |
% |
Matched market share executed
on Nasdaq PSX |
|
0.9 |
% |
|
|
1.1 |
% |
|
|
1.0 |
% |
Total matched market share
executed on Nasdaq's exchanges |
|
16.9 |
% |
|
|
17.4 |
% |
|
|
18.8 |
% |
Market share reported to the
FINRA/NASDAQ Trade Reporting Facility |
|
33.5 |
% |
|
|
33.0 |
% |
|
|
31.0 |
% |
Total market share(3) |
|
50.4 |
% |
|
|
50.4 |
% |
|
|
49.8 |
% |
|
|
|
|
|
|
Nasdaq
Nordic and Nasdaq Baltic securities |
|
|
|
|
|
Average daily number of equity
trades |
|
394,181 |
|
|
|
447,231 |
|
|
|
405,614 |
|
Total average daily value of
shares traded (in billions) |
$ |
4.4 |
|
|
$ |
5.2 |
|
|
$ |
4.4 |
|
Total market share executed on
Nasdaq's exchanges |
|
62.4 |
% |
|
|
63.7 |
% |
|
|
69.7 |
% |
|
|
|
|
|
|
Fixed
Income and Commodities Trading and Clearing |
|
|
|
|
|
Total U.S.
Fixed Income |
|
|
|
|
|
U.S. fixed income notional
trading volume (in billions) |
$ |
4,816 |
|
|
$ |
5,255 |
|
|
$ |
7,397 |
|
|
|
|
|
|
|
Nasdaq
Nordic and Nasdaq Baltic fixed income |
|
|
|
|
|
Total average daily volume
fixed income contracts |
|
73,422 |
|
|
|
91,107 |
|
|
|
116,563 |
|
|
|
|
|
|
|
Nasdaq
Commodities |
|
|
|
|
|
Power contracts cleared
(TWh)(4) |
|
321 |
|
|
|
455 |
|
|
|
385 |
|
|
|
|
|
|
|
Listing
Services |
|
|
|
|
|
Initial
public offerings |
|
|
|
|
|
NASDAQ |
|
31 |
|
|
|
25 |
|
|
|
35 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic |
|
5 |
|
|
|
25 |
|
|
|
7 |
|
|
|
|
|
|
|
New
listings |
|
|
|
|
|
NASDAQ(5) |
|
79 |
|
|
|
73 |
|
|
|
80 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic(6) |
|
10 |
|
|
|
33 |
|
|
|
9 |
|
|
|
|
|
|
|
Number of
listed companies |
|
|
|
|
|
NASDAQ(7) |
|
2,872 |
|
|
|
2,868 |
|
|
|
2,850 |
|
Exchanges that comprise Nasdaq
Nordic and Nasdaq Baltic(8) |
|
875 |
|
|
|
873 |
|
|
|
835 |
|
|
|
|
|
|
|
Information Services |
|
|
|
|
|
Number of licensed exchange
traded products |
|
289 |
|
|
|
267 |
|
|
|
210 |
|
ETP assets under management
(AUM) tracking Nasdaq indexes (in billions)(9) |
$ |
118 |
|
|
$ |
108 |
|
|
$ |
103 |
|
|
|
|
|
|
|
Technology
Solutions |
|
|
|
|
|
Market
Technology |
|
|
|
|
|
Order intake (in
millions)(10) |
$ |
49 |
|
|
$ |
69 |
|
|
$ |
83 |
|
Total order value (in
millions)(11) |
$ |
738 |
|
|
$ |
769 |
|
|
$ |
738 |
|
|
|
|
|
|
|
(1) For the three months ended
June 30, 2016, Nasdaq ISE Options Market, Nasdaq GMNI Options
Market, and Nasdaq MCRY Options Market matched market share
represents trading volume which commenced on June 30, 2016. |
(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 AUM 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
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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