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Nasdaq (NDAQ) Beats on Earnings in Q2: Will Stock Gain?

Nasdaq, Inc . NDAQ posted second-quarter 2016 earnings of 91 cents per share, which beat the Zacks Consensus Estimate by 3.4%. The bottom line also improved 9.6% from 83 cents earned in the prior-year quarter.

Nasdaq Inc. (NDAQ) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Revenues increased 7.9% to a record $559 million and beat the Zacks Consensus Estimate of $545 million. The increase stemmed from a $24 million positive impact from acquisitions, a $14 million positive impact from operations and a $3 million positive impact from changes in foreign exchange rates.

The impressive results were driven by strong operational activities, strong listings and IPOs. Share buybacks also added to the upside.

Detailed Analysis

Segment-wise, in the second quarter, net exchange revenues at Market Services increased 2.6% from the year-ago quarter to $194 million. Revenues from Listing Services increased 3.0% to $68 million, while Information Services' revenues rose 4.7% to a $134 million, both on a year-over-year basis. Technology Solutions generated revenues of $163 million, up 20.7% year over year.

Nasdaq's order intakes more than doubled to $69 million. Additionally, total order value (the value of orders signed but not recognized as revenues) increased 8.6% to $769 million from $728 million in the prior-year quarter. New listings totaled 106, which included 50 IPOs.

Operating expenses in the quarter increased 6.7% year over year to $300 million. The rise was primarily due to higher expenses from the acquisitions closed in 2016 as well as $4 million spend on organic growth.

Financial Update

As of Jun 30, 2016, Nasdaq had cash and cash equivalents of $366 million. This is around 2.5% higher than $357 million at year-end 2015. Debt obligations at Nasdaq totaled $3.7 billion, 54.2% higher than nearly $2.4 billion at the end of 2015.

Nasdaq's total assets increased 15.6% to $15.1 billion as of Jun 30, 2016 from $11.9 billion at year-end 2015. Total equity inched up 1.8% to $5.7 billion from $5.61 billion at the end of 2015.

Capital Deployment

Nasdaq spent $16 million on buying back 0.3 million shares during the reported quarter. Subsequently through Jul 26, the company bought back another 0.1 million shares for $8 million. As of Jul 26, the company had $476 million remaining under its authorization.

Developments During the Second Quarter

During the quarter, Nasdaq completed the acquisition of International Securities Exchange, or ISE, which operates three electronic U.S. options exchanges, from Deutsche Börse Group and Boardvantage, Inc., a leading board portal solution provider specializing in leadership collaboration and meeting productivity. The company has achieved approximately $10 million in annualized run-rate cost synergies.

Zacks Rank

Nasdaq carries a Zacks Rank #3 (Hold).

NASDAQ INC Price, Consensus and EPS Surprise

NASDAQ INC Price, Consensus and EPS Surprise | NASDAQ INC Quote

Performance of Other Stocks from Finance Sector

The bottom line at The Travelers Companies, Inc. TRV and First American Financial Corporation FAF beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. RLI missed the same.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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