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Why Is Nasdaq (NDAQ) Down 2.3% 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 lost about 2.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Q1 Earnings Top Estimates, Revenues Increase Y/Y
Nasdaq reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. The improvement was mainly driven by organic growth and solid results at the Solutions segment and the Trading Services segment.
Performance in Detail
Nasdaq’s revenues of $914 million increased 2% year over year. The upside can primarily be attributed to 4% positive impact from organic growth, including contributions from all segments. It was partially offset by an $11 million decrease from the impact of changes in FX rates and a $3 million decrease from the net impact of an acquisition and divestiture. The top line beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR.
Revenues at Trading Services increased 1% year over year to $267 million. The increase reflects 3% positive impact from organic growth, partially offset by a $4 million decrease from the impact of changes in FX rates.
Revenues at the Solutions segment increased 4% year over year to $646 million, driven by a 5% positive impact from organic growth, partially offset by a $7 million decrease from the impact of changes in FX rates.
Adjusted operating expenses were $436 million, up 1.8% from the year-ago period. The improvement primarily reflects increased expenses associated with the continued investment in our people and our businesses to drive long-term growth, partially offset by changes in FX rates. Our estimate was $457.4 million.
The operating margin of 52% remained unchanged year over year.
The Nasdaq stock market welcomed 81 new company listings in the first quarter of 2023, including 40 initial public offerings. The number of listed companies was 4,163 at the quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $373 million as of Mar 31, 2023, down 25.6% from the 2022-end level. Long-term debt increased 0.5% from the 2022-end level to $4.7 billion as of Mar 31, 2023.
Capital Deployment
Nasdaq returned $257 million to shareholders in the reported quarter, including $159 million in share repurchases and $98 million in dividends.
The board of directors approved a 10% hike in its dividend to 22 cents per share. The dividend will be paid out on Jun 30, 2023 to shareholders of record at the close of Jun 16, 2023.
As of Mar 31, 2023, $491 million remained under the board authorized share repurchase program.
Guidance
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion.
Nasdaq forecasts non-GAAP tax rate in the range of 24-26% in 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Nasdaq has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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.
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Why Is Nasdaq (NDAQ) Down 2.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have lost about 2.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
Nasdaq Q1 Earnings Top Estimates, Revenues Increase Y/Y
Nasdaq reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. The improvement was mainly driven by organic growth and solid results at the Solutions segment and the Trading Services segment.
Performance in Detail
Nasdaq’s revenues of $914 million increased 2% year over year. The upside can primarily be attributed to 4% positive impact from organic growth, including contributions from all segments. It was partially offset by an $11 million decrease from the impact of changes in FX rates and a $3 million decrease from the net impact of an acquisition and divestiture. The top line beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR.
Revenues at Trading Services increased 1% year over year to $267 million. The increase reflects 3% positive impact from organic growth, partially offset by a $4 million decrease from the impact of changes in FX rates.
Revenues at the Solutions segment increased 4% year over year to $646 million, driven by a 5% positive impact from organic growth, partially offset by a $7 million decrease from the impact of changes in FX rates.
Adjusted operating expenses were $436 million, up 1.8% from the year-ago period. The improvement primarily reflects increased expenses associated with the continued investment in our people and our businesses to drive long-term growth, partially offset by changes in FX rates. Our estimate was $457.4 million.
The operating margin of 52% remained unchanged year over year.
The Nasdaq stock market welcomed 81 new company listings in the first quarter of 2023, including 40 initial public offerings. The number of listed companies was 4,163 at the quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $373 million as of Mar 31, 2023, down 25.6% from the 2022-end level. Long-term debt increased 0.5% from the 2022-end level to $4.7 billion as of Mar 31, 2023.
Capital Deployment
Nasdaq returned $257 million to shareholders in the reported quarter, including $159 million in share repurchases and $98 million in dividends.
The board of directors approved a 10% hike in its dividend to 22 cents per share. The dividend will be paid out on Jun 30, 2023 to shareholders of record at the close of Jun 16, 2023.
As of Mar 31, 2023, $491 million remained under the board authorized share repurchase program.
Guidance
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion.
Nasdaq forecasts non-GAAP tax rate in the range of 24-26% in 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Nasdaq has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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.