We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Nasdaq (NDAQ) Up 4.4% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 4.4% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Nasdaq's Q3 Earnings Top, Expense View Tightened
Nasdaq 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.
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%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Nasdaq has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Nasdaq (NDAQ) Up 4.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have added about 4.4% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Nasdaq's Q3 Earnings Top, Expense View Tightened
Nasdaq 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.
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%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Nasdaq has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.
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.