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Nasdaq (NDAQ) Q3 Earnings Top Estimates, Expense Guidance Up

Zacks Equity Research
·3 min read
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Nasdaq, Inc. NDAQ reported third-quarter 2020 adjusted earnings per share of $1.53, which beat the Zacks Consensus Estimate of $1.45 by 5.5%. The bottom line increased 20.5% year over year.

The company witnessed growth in Market Services segment driven by increased trading volumes in U.S. equities and options as well as non-trading revenues driven by organic growth.

Shares gained 1.6% in the pre-market trading session, reflecting the outperformance.

Performance in Detail

Nasdaq’s revenues of $715 million increased 13% year over year. The upside was primarily attributable to a $29 million positive impact from organic growth in the Market Services segment, a $41 million positive impact from organic growth in the non-trading segments, a $4 million increase from the inclusion of revenues from acquisitions and a $9 million increase from favorable forex. The top line beat the Zacks Consensus Estimate of $690 million by 3.6%.

Adjusted operating expenses were $346 million in the reported quarter, up 9% from the year-ago period owing to $17 million organic increase.

Operating margin of 52% expanded 200 basis points year over year.

In the third quarter of 2020, The Nasdaq Stock Market welcomed 144 new U.S. listings, including 105 IPOs.

Nasdaq, Inc. Price, Consensus and EPS Surprise

Nasdaq, Inc. Price, Consensus and EPS Surprise
Nasdaq, Inc. Price, Consensus and EPS Surprise

Segment Details

Net revenues at Market Services were up 15% from the year-ago quarter to $259 million. This upside was due to higher revenues from equity derivative trading and clearing, cash equity trading as well as trade management services.

Revenues at Corporate Services increased 6% year over year to $132 million, driven by higher corporate solutions as well as listing services revenues.

Information Services revenues rose 20% year over year to $238 million. Higher market data revenues, index revenues as well as investment data & analytics revenues drove the upside.

Revenues at Market Technology increased 2% year over year to $86 million, driven by higher SaaS surveillance revenues and favorable forex.

Financial Update

Nasdaq had cash and cash equivalents of $584 million as of Sep 30, 2020, up 76% from the 2019-end level. As of Sep 30, 2020, long-term debt increased 5.4% from 2019-end level to $3.6 billion.

In the reported quarter, Nasdaq returned $115 million to shareholders via share repurchases and dividends. As of Sep 30, 2020, Nasdaq had $446 million remaining under its share repurchase authorization.

Guidance

Nasdaq expects 2020 non-GAAP operating expense in the range of $1.36 billion to $1.37 billion, compared with $1.33 billion to $1.36 billion guided earlier.

Non-GAAP tax rate is estimated to be in the range of 26% to 27% in 2020.

Dividend Update

The board of directors announced quarterly dividend of 49 cents per share. The dividend will be paid out on Dec 18 to shareholders of record as of Dec 4, 2020.

Zacks Rank

Nasdaq currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Q3 Releases

CME Group CME will release results on Oct 28. The Zacks Consensus Estimate for earnings stands at $1.41 per share.

Intercontinental Exchange ICE will release earnings on Oct 29. The Zacks Consensus Estimate for the same stands at 99 cents per share.

Cboe Global Markets CBOE will release earnings on Oct 30. The Zacks Consensus Estimate for the same stands at $1.07 per share.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Click to get this free report Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report CME Group Inc. (CME) : Free Stock Analysis Report Nasdaq, Inc. (NDAQ) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research