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Nasdaq's (NDAQ) Q4 Earnings and Revenues Surpass Estimates
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Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2020 adjusted earnings per share of $1.60, beating the Zacks Consensus Estimate of $1.47 by nearly 8.8%. The bottom line increased 24% year over year.
The improvement was primarily driven by organic growth, favorable changes in foreign exchange rates, margin expansion and solid segmental performance.
Nasdaq’s revenues of $788 million increased 22% year over year. The upside was primarily attributable to a $126 million positive impact from organic growth, a $13 million increase from the impact of favorable changes in foreign exchange rates and a $3 million increase from the inclusion of revenues from acquisitions. The top line beat the Zacks Consensus Estimate by 5.3%.
Adjusted operating expenses were $406 million, up 21% from the year-ago period owing to an increase of $53 million in organic expense. Excluding the reserve related to the Market Technology implementation project of $25 million, the organic increase was $28 million, or 8%. The $28 million increase was primarily driven by performance-linked compensation and other variable expenses resulting from higher-than-expected revenues during the period. The remainder of the $53 million increase reflects a $12 million increase due to unfavorable changes in foreign exchange rates and a $6 million increase from the impact of acquisitions.
Operating margin of 51% expanded 200 basis points year over year.
The Nasdaq Stock Market welcomed 316 IPOs in 2020, representing $81 billion in capital raised, the first among the U.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised. New listings in 2020 included 20 companies switching their listings from NYSE to join Nasdaq. In the fourth quarter of 2020, the Nasdaq Stock Market welcomed 199 new U.S. listings with 142 IPOs, including Airbnb, Wish and Array Technologies.
Segment Details
Net revenues at Market Services were up 29% from the year-ago quarter to $291 million. This upside was largely due to higher revenues from equity derivative trading and clearing, cash equity trading, fixed income and commodities trading and clearing, trade management services.
Revenues at Corporate Services increased 12% year over year to $144 million, driven by higher listings services revenues as well as IR & ESG revenues.
Investment Intelligence revenues rose 27% year over year to $247 million. Higher market data, index and analytics revenues drove the upside.
Revenues at Market Technology increased 8.2% year over year to $106 million, largely due to higher SaaS revenues as well as a $4 million favorable impact from changes in foreign exchange rates.
Full-Year Update
Adjusted earnings per share of $6.18 surpassed the Zacks Consensus Estimate of $6.04. The bottom line also improved 2% year over year.
Total revenues increased 15% from the year-ago quarter to $2.9 billion and beat the Zacks Consensus Estimate of $2.86 billion.
Financial Update
Nasdaq had cash and cash equivalents of $2.7 billion as of Dec 31, 2020, up 726.8% from 2019-end level. Long-term debt increased 84.9% from 2019-end level to $5.5 billion as of Dec 31, 2020.
Capital Deployment
As of Dec 31, 2020, Nasdaq had $410 million remaining under its share repurchase authorization.
Dividend Update
The board of directors announced quarterly dividend of 49 cents per share.
Guidance
Nasdaq provided 2021 non-GAAP operating expense guidance in the range of $1.55 billion to $1.62 billion. The midpoint of the 2021 guidance indicates 3% increase due to organic growth, as well as the impacts of foreign exchange rates and merger and acquisition activity, including the Verafin acquisition, which is expected to close in the first quarter of 2021.
Non-GAAP tax rate is estimated to be in the range of 25% to 27% in 2021.
CME Group Inc. (CME - Free Report) is slated to release fourth-quarter earnings on Feb 10.
Intercontinental Exchange Inc. (ICE - Free Report) is scheduled to release fourth-quarter earnings on Feb 4.
Cboe Global Markets, Inc. (CBOE - Free Report) is set to release fourth-quarter earnings on Feb 5.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Nasdaq's (NDAQ) Q4 Earnings and Revenues Surpass Estimates
Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2020 adjusted earnings per share of $1.60, beating the Zacks Consensus Estimate of $1.47 by nearly 8.8%. The bottom line increased 24% year over year.
The improvement was primarily driven by organic growth, favorable changes in foreign exchange rates, margin expansion and solid segmental performance.
Nasdaq, Inc. Price, Consensus and EPS Surprise
Nasdaq, Inc. price-consensus-eps-surprise-chart | Nasdaq, Inc. Quote
Performance in Detail
Nasdaq’s revenues of $788 million increased 22% year over year. The upside was primarily attributable to a $126 million positive impact from organic growth, a $13 million increase from the impact of favorable changes in foreign exchange rates and a $3 million increase from the inclusion of revenues from acquisitions. The top line beat the Zacks Consensus Estimate by 5.3%.
Adjusted operating expenses were $406 million, up 21% from the year-ago period owing to an increase of $53 million in organic expense. Excluding the reserve related to the Market Technology implementation project of $25 million, the organic increase was $28 million, or 8%. The $28 million increase was primarily driven by performance-linked compensation and other variable expenses resulting from higher-than-expected revenues during the period. The remainder of the $53 million increase reflects a $12 million increase due to unfavorable changes in foreign exchange rates and a $6 million increase from the impact of acquisitions.
Operating margin of 51% expanded 200 basis points year over year.
The Nasdaq Stock Market welcomed 316 IPOs in 2020, representing $81 billion in capital raised, the first among the U.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised. New listings in 2020 included 20 companies switching their listings from NYSE to join Nasdaq. In the fourth quarter of 2020, the Nasdaq Stock Market welcomed 199 new U.S. listings with 142 IPOs, including Airbnb, Wish and Array Technologies.
Segment Details
Net revenues at Market Services were up 29% from the year-ago quarter to $291 million. This upside was largely due to higher revenues from equity derivative trading and clearing, cash equity trading, fixed income and commodities trading and clearing, trade management services.
Revenues at Corporate Services increased 12% year over year to $144 million, driven by higher listings services revenues as well as IR & ESG revenues.
Investment Intelligence revenues rose 27% year over year to $247 million. Higher market data, index and analytics revenues drove the upside.
Revenues at Market Technology increased 8.2% year over year to $106 million, largely due to higher SaaS revenues as well as a $4 million favorable impact from changes in foreign exchange rates.
Full-Year Update
Adjusted earnings per share of $6.18 surpassed the Zacks Consensus Estimate of $6.04. The bottom line also improved 2% year over year.
Total revenues increased 15% from the year-ago quarter to $2.9 billion and beat the Zacks Consensus Estimate of $2.86 billion.
Financial Update
Nasdaq had cash and cash equivalents of $2.7 billion as of Dec 31, 2020, up 726.8% from 2019-end level. Long-term debt increased 84.9% from 2019-end level to $5.5 billion as of Dec 31, 2020.
Capital Deployment
As of Dec 31, 2020, Nasdaq had $410 million remaining under its share repurchase authorization.
Dividend Update
The board of directors announced quarterly dividend of 49 cents per share.
Guidance
Nasdaq provided 2021 non-GAAP operating expense guidance in the range of $1.55 billion to $1.62 billion. The midpoint of the 2021 guidance indicates 3% increase due to organic growth, as well as the impacts of foreign exchange rates and merger and acquisition activity, including the Verafin acquisition, which is expected to close in the first quarter of 2021.
Non-GAAP tax rate is estimated to be in the range of 25% to 27% in 2021.
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 Releases
CME Group Inc. (CME - Free Report) is slated to release fourth-quarter earnings on Feb 10.
Intercontinental Exchange Inc. (ICE - Free Report) is scheduled to release fourth-quarter earnings on Feb 4.
Cboe Global Markets, Inc. (CBOE - Free Report) is set to release fourth-quarter earnings on Feb 5.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>