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Nasdaq (NDAQ) Beats on Q1 Earnings, Trims Expense Guidance

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Nasdaq, Inc. (NDAQ - Free Report) reported first-quarter 2018 adjusted earnings per share of $1.24, beating the Zacks Consensus Estimate of $1.18. The bottom line also improved 31% year over year.

Nasdaq, Inc. Price, Consensus and EPS Surprise

 

Improved revenues, higher volumes, lower tax incidence and a solid market share aided this upside. The company witnessed revenue improvement across all its segments.

Performance in Detail

Nasdaq’s revenues recorded $666 million, improving 15% year over year. The top line surpassed the Zacks Consensus Estimate of $644 million, primarily owing to 9% organic growth, a $17-million favorable impact on the back of changes in forex rates and a $15-million impact from acquisitions.

Adjusted operating expenses were $353 million in the reported quarter, up 15% from the year-ago quarter. This includes a $19-million increase from acquisitions, an $18-million organic expense rise and a $10-million unfavorable impact from the changes in foreign exchange rates.

Nasdaq projects 2018 non-GAAP operating expense in the range of $1.295-$1.335 billion, down from the earlier guided range of $1.375-$1.415 billion. This primarily reflects the closing of the divestitures of the Public Relations Solutions and Digital Media Services businesses in April.

Segment wise, net revenues at Market Services increased 14.7% from the year-ago quarter to $250 million. This upside was driven by improved revenues from equity derivatives, cash equity trading, fixed income and commodities trading plus clearing and trade management services.

Revenues at Corporate Services grew 7.5% year over year to $172 million, mainly owing to a rise in Corporate Solutions revenues and Listings Services revenues.

Information Services revenues rose 26.1% year over year to $174 million. Higher revenues at Data Products as well as Index Licensing and Services drove the upside.

Revenues at Market Technology improved 7.7% year over year to $70 million on the back of higher change request revenues and software as a service revenues besides a favorable impact from the changes in foreign exchange rates. Market Technology order intake totaled $55 million.

Financial Update

Nasdaq had cash and cash equivalents of $429 million as of Mar 31, 2018, up 7.5% from 2017-end level. As of Mar 31, 2018, long-term debt decreased 15.3% over 2017-end level to $3.2 billion.

Dividend and Share Repurchase Update

During the quarter under review, the company bought back shares worth $99 million and paid $63 million in dividends. As of Mar 31, 2018, the company had $627 million shares remaining under its repurchase authorization.

On Mar 28, 2018, the company hiked its quarterly dividend by 16% to 44 cents per share.

Business Highlights

O Apr 16, 2018, Nasdaq closed the sale of its Public Relations Solutions and Digital Media Services businesses to West Corporation.

Our Take

Nasdaq’s results encourage with a solid performance. Growth looks impressive as the company remains focused on expansion through acquisitions and organic initiatives, which enable entry and opening up of cross-selling opportunities into new markets. The top line should also benefit from the company’s consistent focus on its strategy to accelerate non-transaction revenue base including technology, listing and information revenues.

Zacks Rank

Nasdaq 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 Companies From Finance Sector

Among other players from the finance sector that have reported first-quarter earnings so far, the bottom line of American Express Company (AXP - Free Report) and Alliance Data System Corporation beat the respective Zacks Consensus Estimate while that of The Travelers Companies, Inc. (TRV - Free Report) missed the same.

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