It has been about a month since the last earnings report for Nasdaq (
NDAQ Quick Quote NDAQ - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nasdaq due for a breakout? 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 catalysts.
Nasdaq's Q4 Earnings Miss, Revenues Increase Y/Y Nasdaq reported fourth-quarter 2022 adjusted earnings per share of 64 cents, missed the Zacks Consensus Estimate of 65 cents by nearly 1.5%. The bottom line remained unchanged year over year. The improvement was mainly driven by organic growth and solid segmental performance. Performance in Detail
Nasdaq’s revenues of $906 million increased 2.3% year over year. The upside can primarily be attributed to $41 million positive impact from organic growth, including positive contributions from all segments. It was partially offset by an $18 million decrease from the impact of changes in FX rates and a $2 million decrease from the net impact of an acquisition and divestiture. The top line matched the Zacks Consensus Estimate.
Annualized Recurring Revenue (ARR) increased 8% year over year. Annualized SaaS revenues increased 13% and represented 36% of ARR. Adjusted operating expenses were $460 million, up 6% from the year-ago period. The increase was driven by increased expenses associated with the continued investment in people and businesses and higher travel costs. It was partially offset by lower marketing and advertising expense because of lower capital markets activity and changes in FX rates. Operating margin of 49% contracted 200 basis points year over year. In 2022, the Nasdaq Stock Market featured six of the largest ten U.S. IPOs by capital raised, attracted 74% of all proceeds raised through the U.S. IPOs and welcomed 14 listing switches. In the Nordic and Baltic regions, Nasdaq maintained its leadership positioning with 38 IPOs. Segment Details
Net revenues at
Solutions Businesses were up 3% from the year-ago quarter to $652 million. This upside was largely driven by 5% positive impact from organic growth and $1 million increase from an acquisition. It was partially offset by a $10 million decrease from the impact of changes in FX rates. Revenues at Trading Services increased 1% year over year to $253 million. The increase reflects 4% positive impact from organic growth, partially offset by an $8 million decrease from the impact of changes in FX rates. Full-Year Update
Adjusted earnings per share of $2.66 missed the Zacks Consensus Estimate of $2.68. The bottom line improved 5.6% year over year.
Total revenues increased 5% from the year-ago quarter to $3.58 billion and matched the Zacks Consensus Estimate. Financial Update
Nasdaq had cash and cash equivalents of $502 million as of Dec 31, 2022, up 27.7% from 2021-end level. Long-term debt decreased 1.6% from 2021-end level to $4.7 billion as of Dec 31, 2022.
Stockholder’s equity decreased 3.8% from 2021 end to $6.1 billion as of Dec 31, 2022. Capital Deployment
The company returned $1,016 million of cash to shareholders in 2022, including $633 million in share repurchases and $383 million in dividends.
As of Dec 31, 2022, there was $650 million remaining under the board authorized share repurchase program. Guidance
Nasdaq expects its 2023 non-GAAP operating expense guidance in the range of $1.77 billion to $1.85 billion.
The company forecast non-GAAP tax rate in the range of 24% to 26% in 2023. How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
At this time, Nasdaq has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nasdaq has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.