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Why Is Nasdaq (NDAQ) Up 14.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 14.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nasdaq due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Beats on Q3 Earnings, Cuts Expense View
Nasdaq reported third-quarter 2022 adjusted earnings per share of 68 cents, beating the Zacks Consensus Estimate of 65 cents by 4.6%. The bottom line improved 15% year over year.
The improvement was mainly driven by solid results in both segments.
Performance in Detail
Nasdaq’s revenues of $890 million increased 6% year over year. The upside can primarily be attributed to a $77 million impact of organic growth, partially offset by a $22 million decrease from the impact of changes in FX rates and a $3 million decrease due to the net impact of acquisitions and divestitures. The top line missed the Zacks Consensus Estimate by 0.1%.
Annualized recurring revenue (ARR) increased 8% year over year. Annualized SaaS revenues increased 13% and represented 35% of ARR.
Adjusted operating expenses were $417 million, up 5% from the year-ago period. The increase was due to an organic increase of 10%, partially offset by a $19 million decrease from the impact of changes in FX rates and a $1 million decrease from the net impact of acquisition and divestitures.
The Nasdaq stock market welcomed 98 new company listings in the third quarter of 2022, including 35 IPOs. The number of listed companies was 4,296 at quarter end.
Segment Details
Net revenues at Market Services were up 4% from the year-ago quarter to $305 million, driven by an 8% positive impact from organic growth, partially offset by an $11 million decrease from the impact of changes in FX rates.
Revenues at the Solutions segments increased 8% year over year to $584 million, driven by a 10% positive impact from organic growth and a $1 million increase from acquisitions, partially offset by an $11 million decrease from the impact of changes in FX rates.
Financial Update
Nasdaq had cash and cash equivalents of $352 million as of Sep 30, 2022, down 16.6% from the 2021-end level. Long-term debt decreased 5% from the 2021-end level to $4.6 billion as of Sep 30, 2022.
Stockholder’s equity decreased 8.1% from 2021 end to $5.9 billion as of Sep 30, 2022.
Capital Deployment
NDAQ bought back shares worth $663 million in the first nine months of 2022. As of Sep 30, 2022, there was $293 million remaining under authorization.
The board approved a quarterly dividend of 20 cents per share. The dividend will be paid out on Dec 16, 2022 to shareholders of record on Dec 2, 2022.
Guidance
Nasdaq expects 2022 non-GAAP operating expenses in the range of $1.70 billion to $1.72 billion, down from the prior expectation of $1.71 billion to $1.74 billion.
NDAQ forecasts a non-GAAP tax rate in the range of 24% to 25% in 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Nasdaq has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Nasdaq has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Nasdaq (NDAQ) Up 14.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 14.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nasdaq due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Beats on Q3 Earnings, Cuts Expense View
Nasdaq reported third-quarter 2022 adjusted earnings per share of 68 cents, beating the Zacks Consensus Estimate of 65 cents by 4.6%. The bottom line improved 15% year over year.
The improvement was mainly driven by solid results in both segments.
Performance in Detail
Nasdaq’s revenues of $890 million increased 6% year over year. The upside can primarily be attributed to a $77 million impact of organic growth, partially offset by a $22 million decrease from the impact of changes in FX rates and a $3 million decrease due to the net impact of acquisitions and divestitures. The top line missed the Zacks Consensus Estimate by 0.1%.
Annualized recurring revenue (ARR) increased 8% year over year. Annualized SaaS revenues increased 13% and represented 35% of ARR.
Adjusted operating expenses were $417 million, up 5% from the year-ago period. The increase was due to an organic increase of 10%, partially offset by a $19 million decrease from the impact of changes in FX rates and a $1 million decrease from the net impact of acquisition and divestitures.
The Nasdaq stock market welcomed 98 new company listings in the third quarter of 2022, including 35 IPOs. The number of listed companies was 4,296 at quarter end.
Segment Details
Net revenues at Market Services were up 4% from the year-ago quarter to $305 million, driven by an 8% positive impact from organic growth, partially offset by an $11 million decrease from the impact of changes in FX rates.
Revenues at the Solutions segments increased 8% year over year to $584 million, driven by a 10% positive impact from organic growth and a $1 million increase from acquisitions, partially offset by an $11 million decrease from the impact of changes in FX rates.
Financial Update
Nasdaq had cash and cash equivalents of $352 million as of Sep 30, 2022, down 16.6% from the 2021-end level. Long-term debt decreased 5% from the 2021-end level to $4.6 billion as of Sep 30, 2022.
Stockholder’s equity decreased 8.1% from 2021 end to $5.9 billion as of Sep 30, 2022.
Capital Deployment
NDAQ bought back shares worth $663 million in the first nine months of 2022. As of Sep 30, 2022, there was $293 million remaining under authorization.
The board approved a quarterly dividend of 20 cents per share. The dividend will be paid out on Dec 16, 2022 to shareholders of record on Dec 2, 2022.
Guidance
Nasdaq expects 2022 non-GAAP operating expenses in the range of $1.70 billion to $1.72 billion, down from the prior expectation of $1.71 billion to $1.74 billion.
NDAQ forecasts a non-GAAP tax rate in the range of 24% to 25% in 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Nasdaq has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Nasdaq has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.