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Nasdaq (NDAQ - Free Report) reported third-quarter 2023 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate of 67 cents. The bottom line improved 4% year over year. The improvement was mainly driven by organic growth and solid results in the Solutions segment.
Nasdaq’s revenues of $940 million increased 6% year over year. The upside can primarily be attributed to a 5% impact from organic growth, including contributions from Solutions Businesses and the favorable impact of forex. It was partially offset by a $1 million decrease from the net impact of an acquisition and divestiture. The top line beat the Zacks Consensus Estimate of $929 million.
Annualized Recurring Revenue (ARR) increased 6% year over year. Annualized SaaS revenues increased 11% and represented 37% of ARR.
Revenues at Trading Services decreased 1% year over year to $236 million. The increase reflects organic decline and a $2 million negative impact from changes in FX rates.
Revenues at the Solutions business increased 9% year over year to $694 million, driven by an 8% impact of organic growth.
Anti-Financial Crime revenues increased 21% year over year, reflecting continued Verafin adoption by small and medium banks, an expansion with an existing Tier 2 financial institution, and Surveillance solutions customer growth, including Tier 3 banks and retail brokers.
Adjusted operating expenses were $449 million, up 7.7% from the year-ago period. The increase primarily reflects increased expenses associated with the continued investment in its people and businesses to drive long-term growth, higher computer operations and data costs and increased general and administrative expense. Our estimate for operating expenses was $453.9 million.
Operating margin of 52% contracted 100 basis points year over year.
The Nasdaq stock market welcomed 87 new company listings in the third quarter of 2023, including 39 initial public offerings. The number of listed companies was 4,086 at quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $5.3 billion as of Sep 30, 2023, up from $0.5 billion at 2022-end. Long-term debt increased to $9.7 billion as of Sep 30, 2023, from $4.7 billion at 2022 end.
Capital Deployment
Nasdaq returned $108 million to shareholders in the third quarter of 2023 through dividends.
The board of directors approved a dividend of 22 cents per share. The dividend will be paid out on Dec 22, 2023, to shareholders of record at the close of business on Dec 8, 2023.
As of Sep 30, 2023, $2 billion remained under the board-authorized share repurchase program.
Guidance
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.785 billion to $1.805 billion, compared with the prior expectation of $1.785 billion to $1.815 billion.
Nasdaq forecasts 2023 non-GAAP tax rate in the range of 24.5-25.5%.
CME Group Inc. (CME - Free Report) is slated to release third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for the third quarter is pegged at $2.21 per share, indicating an increase of 11.6% from the year-ago reported figure.
CME Group delivered an earnings surprise in the last two reported quarters of 2023.
MarketAxess Holdings (MKTX - Free Report) is scheduled to release third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for the third quarter is pegged at $1.49 per share, indicating a decrease of 5.7% from the year-ago reported figure.
MKTX delivered an earnings surprise in the last two reported quarters of 2023.
Cboe Global Markets, Inc. (CBOE - Free Report) is set to release third-quarter 2023 earnings on Nov 3. The Zacks Consensus Estimate for the third quarter is pegged at $1.82, indicating an increase of 4.6% from the year-ago reported figure.
CBOE delivered an earnings surprise in the last two reported quarters of 2023.
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Nasdaq's (NDAQ) Q3 Earnings Top, Expense View Tightened
Nasdaq (NDAQ - Free Report) reported third-quarter 2023 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate of 67 cents. The bottom line improved 4% year over year. The improvement was mainly driven by organic growth and solid results in the Solutions segment.
Nasdaq, Inc. Price, Consensus and EPS Surprise
Nasdaq, Inc. price-consensus-eps-surprise-chart | Nasdaq, Inc. Quote
Performance in Detail
Nasdaq’s revenues of $940 million increased 6% year over year. The upside can primarily be attributed to a 5% impact from organic growth, including contributions from Solutions Businesses and the favorable impact of forex. It was partially offset by a $1 million decrease from the net impact of an acquisition and divestiture. The top line beat the Zacks Consensus Estimate of $929 million.
Annualized Recurring Revenue (ARR) increased 6% year over year. Annualized SaaS revenues increased 11% and represented 37% of ARR.
Revenues at Trading Services decreased 1% year over year to $236 million. The increase reflects organic decline and a $2 million negative impact from changes in FX rates.
Revenues at the Solutions business increased 9% year over year to $694 million, driven by an 8% impact of organic growth.
Anti-Financial Crime revenues increased 21% year over year, reflecting continued Verafin adoption by small and medium banks, an expansion with an existing Tier 2 financial institution, and Surveillance solutions customer growth, including Tier 3 banks and retail brokers.
Adjusted operating expenses were $449 million, up 7.7% from the year-ago period. The increase primarily reflects increased expenses associated with the continued investment in its people and businesses to drive long-term growth, higher computer operations and data costs and increased general and administrative expense. Our estimate for operating expenses was $453.9 million.
Operating margin of 52% contracted 100 basis points year over year.
The Nasdaq stock market welcomed 87 new company listings in the third quarter of 2023, including 39 initial public offerings. The number of listed companies was 4,086 at quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $5.3 billion as of Sep 30, 2023, up from $0.5 billion at 2022-end. Long-term debt increased to $9.7 billion as of Sep 30, 2023, from $4.7 billion at 2022 end.
Capital Deployment
Nasdaq returned $108 million to shareholders in the third quarter of 2023 through dividends.
The board of directors approved a dividend of 22 cents per share. The dividend will be paid out on Dec 22, 2023, to shareholders of record at the close of business on Dec 8, 2023.
As of Sep 30, 2023, $2 billion remained under the board-authorized share repurchase program.
Guidance
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.785 billion to $1.805 billion, compared with the prior expectation of $1.785 billion to $1.815 billion.
Nasdaq forecasts 2023 non-GAAP tax rate in the range of 24.5-25.5%.
Zacks Rank
Nasdaq carries a Zacks Rank #3 (Hold) currently. 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 third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for the third quarter is pegged at $2.21 per share, indicating an increase of 11.6% from the year-ago reported figure.
CME Group delivered an earnings surprise in the last two reported quarters of 2023.
MarketAxess Holdings (MKTX - Free Report) is scheduled to release third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for the third quarter is pegged at $1.49 per share, indicating a decrease of 5.7% from the year-ago reported figure.
MKTX delivered an earnings surprise in the last two reported quarters of 2023.
Cboe Global Markets, Inc. (CBOE - Free Report) is set to release third-quarter 2023 earnings on Nov 3. The Zacks Consensus Estimate for the third quarter is pegged at $1.82, indicating an increase of 4.6% from the year-ago reported figure.
CBOE delivered an earnings surprise in the last two reported quarters of 2023.