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Nasdaq (NDAQ) Surpasses Q4 Earnings and Revenue Estimates

Zacks Equity Research

Nasdaq NDAQ reported fourth-quarter 2019 adjusted earnings per share of $1.29, beating the Zacks Consensus Estimate of $1.27 by nearly 1.6%. The bottom line increased 2.4% year over year.

Nasdaq witnessed growth in non-trading revenues. Strategic acquisitions contributed to revenues in the quarter. The company continued to deliver solid growth in its expanded technology and analytics offerings while benefiting from rising equities market share and a dynamic trading and IPO environment.

Nasdaq, Inc. Price, Consensus and EPS Surprise

Nasdaq, Inc. Price, Consensus and EPS Surprise

Nasdaq, Inc. price-consensus-eps-surprise-chart | Nasdaq, Inc. Quote

Performance in Detail

Nasdaq’s revenues of $646 million increased 0.2% year over year. The upside was primarily attributable to a $22 million positive impact from organic growth in the non-trading segments and a $15 million increase from the inclusion of revenues from acquisitions, partially offset by a $21 million organic decrease in Market Services revenues, a $10 million negative impact from divestitures and a $5 million unfavorable impact from changes in exchange rates. Organic revenues grew 8%. The top line beat the Zacks Consensus Estimate by 0.8%.

Adjusted operating expenses were $335 million, up 2% from the year-ago period owing to an $8 million organic expense increase and a $1 million increase from the net impact of acquisitions and divestitures, partially offset by a $4 million favorable impact from changes in foreign exchange rates.

Operating margin of 49% expanded 100 basis points year over year.

In the U.S. market, Nasdaq witnessed 107 new listings, including 50 IPOs. Nasdaq's European exchanges added 17 new listings, including 12 IPOs, and added 53 new listings including 34 IPOs in 2019.

Segment Details

Net revenues at Market Services were down 9.6% from the year-ago quarter to $225 million. This downside was largely due to lower revenues from equity derivative trading and clearing.

Revenues at Corporate Services increased 4.9% year over year to $129 million, driven by higher listings services revenues as well as corporate solutions revenues.

Information Services revenues rose 3.7% year over year to $194 million. Higher index revenues and investment data & analytics revenues drove the upside.

Revenues at Market Technology increased 28.9% year over year to $98 million, largely riding on Cinnober acquisition and organic growth.

Financial Update

Nasdaq had cash and cash equivalents of $332 million as of Dec 31, 2019, down 39.1% from 2018-end level. As of Dec 31, 2019, long-term debt increased 1.3% from 2018-end level to $3 billion.

Capital Deployment

The company paid out $305 million in dividend and spent $200 million in share buybacks during the fourth quarter.

As of Dec 31, 2019, Nasdaq had $632 million remaining under its share repurchase authorization.

Dividend Update

The board of directors announced quarterly dividend of 47 cents per share.

Guidance

Nasdaq provided 2020 non-GAAP operating expense guidance in the range of $1.31 billion to $1.36 billion.

Non-GAAP tax rate is estimated to be in the range of 25.5% to 27.5% in 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.

Performance of Other Investment Managers

Of the insurance industry players that have reported fourth-quarter results so far, RLI Corp. RLI, Brown & Brown, Inc. BRO and The Travelers Companies, Inc. TRV beat the respective Zacks Consensus Estimate for earnings.

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