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Why Is Nasdaq (NDAQ) Down 1.6% 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 1.6% 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 & Revenues Top Estimates, Rise Y/Y
Nasdaq reported fourth-quarter 2023 adjusted earnings per share of 72 cents, beating the Zacks Consensus Estimate by 2.9%. The bottom line improved 12.5% 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 $1.1 billion increased 23% year over year. The upside can primarily be attributed to a 7% impact from organic growth, net benefit from acquisitions and divestitures, including Adenza, and a $4 million increase from the impact of changes in FX rates. The top line beat the Zacks Consensus Estimate by 5%.
Annualized Recurring Revenue (ARR) increased 29% year over year. Annualized SaaS revenues increased 23% and represented 35% of ARR.
Market Services net revenues were $247 million, up 1%. The increase reflects $1 million in organic growth and a $1 million positive impact from changes in FX rates.
Revenues at the Solutions business increased 32% year over year to $860 million, reflecting growth from the Capital Access Platforms and Financial Technology divisions. Organic growth was 9%.
Adjusted operating expenses were $504 million, up 9.6% from the year-ago period. The increase primarily reflects the inclusion of $35 million of Adenza operating expenses, expenses associated with the continued investment to drive long-term growth, higher computer operations and data costs and higher depreciation. Our estimate for operating expenses was $479.5 million.
Operating margin of 55% expanded 600 basis points year over year.
The Nasdaq stock market welcomed 100 new company listings in the fourth quarter of 2023, including 28 initial public offerings. The number of listed companies was 4,044 at quarter end.
Full-Year Highlights
For 2023, the company reported adjusted earnings per share of $2.82, up 6% year over year. The figure also beat the Zacks Consensus Estimate of $2.80.
Net revenues were $3.9 billion, up 9% year over year and reflected an organic increase of 5%. Solutions revenues increased 13%, with organic growth of 7%. Market Services net revenues were flat on a reported and organic basis. ARR was $2.6 billion. Net revenues beat the Zacks Consensus estimate of $3.8 billion.
Operating margin of 53% expanded 100 basis points year over year.
The Nasdaq stock market welcomed 100 new company listings, including 28 initial public offerings. The number of listed companies was 4,044 at quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $473 million as of Dec 31, 2023, down from $524 million at 2022-end. Long-term debt increased to $10.2 billion, as of Dec 31, 2023, from $4.7 billion at 2022 end.
Nasdaq generated $1.7 billion in cash flow from operations.
Capital Deployment
Nasdaq returned $127 million to shareholders in the fourth quarter of 2023 through dividends and $11 million in share buyback.
The board of directors approved a dividend of 22 cents per share. The dividend will be paid out on Mar 28, 2023, to shareholders of record at the close of business on Mar 14, 2024.
As of Dec 31, 2023, $1.9 billion remained under the board-authorized share repurchase program.
Guidance
Nasdaq expects 2024 non-GAAP operating expenses to be in the range of $2.105 billion to $2.185 billion.
Nasdaq forecasts 2024 non-GAAP tax rate in the range of 24.5-26.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, 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.
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 1.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Nasdaq (NDAQ - Free Report) . Shares have lost about 1.6% 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 & Revenues Top Estimates, Rise Y/Y
Nasdaq reported fourth-quarter 2023 adjusted earnings per share of 72 cents, beating the Zacks Consensus Estimate by 2.9%. The bottom line improved 12.5% 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 $1.1 billion increased 23% year over year. The upside can primarily be attributed to a 7% impact from organic growth, net benefit from acquisitions and divestitures, including Adenza, and a $4 million increase from the impact of changes in FX rates. The top line beat the Zacks Consensus Estimate by 5%.
Annualized Recurring Revenue (ARR) increased 29% year over year. Annualized SaaS revenues increased 23% and represented 35% of ARR.
Market Services net revenues were $247 million, up 1%. The increase reflects $1 million in organic growth and a $1 million positive impact from changes in FX rates.
Revenues at the Solutions business increased 32% year over year to $860 million, reflecting growth from the Capital Access Platforms and Financial Technology divisions. Organic growth was 9%.
Adjusted operating expenses were $504 million, up 9.6% from the year-ago period. The increase primarily reflects the inclusion of $35 million of Adenza operating expenses, expenses associated with the continued investment to drive long-term growth, higher computer operations and data costs and higher depreciation. Our estimate for operating expenses was $479.5 million.
Operating margin of 55% expanded 600 basis points year over year.
The Nasdaq stock market welcomed 100 new company listings in the fourth quarter of 2023, including 28 initial public offerings. The number of listed companies was 4,044 at quarter end.
Full-Year Highlights
For 2023, the company reported adjusted earnings per share of $2.82, up 6% year over year. The figure also beat the Zacks Consensus Estimate of $2.80.
Net revenues were $3.9 billion, up 9% year over year and reflected an organic increase of 5%. Solutions revenues increased 13%, with organic growth of 7%. Market Services net revenues were flat on a reported and organic basis. ARR was $2.6 billion. Net revenues beat the Zacks Consensus estimate of $3.8 billion.
Operating margin of 53% expanded 100 basis points year over year.
The Nasdaq stock market welcomed 100 new company listings, including 28 initial public offerings. The number of listed companies was 4,044 at quarter end.
Financial Update
Nasdaq had cash and cash equivalents of $473 million as of Dec 31, 2023, down from $524 million at 2022-end. Long-term debt increased to $10.2 billion, as of Dec 31, 2023, from $4.7 billion at 2022 end.
Nasdaq generated $1.7 billion in cash flow from operations.
Capital Deployment
Nasdaq returned $127 million to shareholders in the fourth quarter of 2023 through dividends and $11 million in share buyback.
The board of directors approved a dividend of 22 cents per share. The dividend will be paid out on Mar 28, 2023, to shareholders of record at the close of business on Mar 14, 2024.
As of Dec 31, 2023, $1.9 billion remained under the board-authorized share repurchase program.
Guidance
Nasdaq expects 2024 non-GAAP operating expenses to be in the range of $2.105 billion to $2.185 billion.
Nasdaq forecasts 2024 non-GAAP tax rate in the range of 24.5-26.5%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, 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.
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.