Nasdaq Reports Fourth Quarter 2016 With Record Revenues(1); Announces Segment Realignment and Rebranding of Fixed Income
(Thomson Reuters ONE) -
* Net revenues were a record $599 million in the fourth quarter of 2016, up
12% year-over-year. Subscription and recurring revenues(2) in the fourth
quarter of 2016 represented 75% of total net revenues.
* Revenues in non-trading segments(3) in the fourth quarter of 2016 grew 11%,
including organic revenue growth of 5%(4).
* At December 31, 2016, the company achieved $38 million in annualized run-
rate cost synergies for the acquisitions completed in 2016 out of a targeted
$60 million expected upon completion of integration.
* Fourth quarter GAAP 2016 diluted loss per share was $1.35. Non-GAAP diluted
EPS was $0.95. GAAP diluted EPS declined $2.23 from the fourth quarter of
2015, while non-GAAP diluted EPS increased $0.06, or 7%.
* Non-GAAP results exclude $646 million in pre-tax charges primarily related
to the write-off of the eSpeed trade name.
* Nasdaq realigned reporting segments to better reflect client orientation. A
new Corporate Services segment incorporates Listing Services and Corporate
Solutions while Market Technology is now a stand-alone segment.
NEW YORK, Jan. 31, 2017 (GLOBE NEWSWIRE) -- Nasdaq, Inc. (Nasdaq:NDAQ) today
reported financial results for the fourth quarter of 2016. Fourth quarter net
revenues were $599 million, up $63 million or 12% from $536 million in the prior
year period, driven primarily by a $54 million positive impact from
acquisitions. Organic growth in non-trading segments was 5%(4) as compared to
the fourth quarter of 2015.
"As Nasdaq's new CEO, I'm excited to have the privilege to lead one of the best
businesses in the world as we pursue our mission to help our clients more
efficiently and effectively navigate the global capital markets," said Adena
Friedman, President and CEO, Nasdaq. "Positioned at the intersection of
technology and the capital markets, Nasdaq's objective is to support businesses,
capital formation and job creation that serves as a catalyst for global economic
growth. The relentless focus on our partnership with investors, corporations,
exchanges, banks and broker dealers will continue to serve as the cornerstone of
our evolving and advancing service, product and technology offerings as well as
provide the foundation and infrastructure that powers global markets."
Ms. Friedman continued, "Looking at the fourth quarter 2016, I'm pleased with
the strong underlying performances across the majority of our businesses, as
reflected in our growth and record revenues. We also took strategic steps to
better align our business segments, management, resources and clients. While
this had an impact on our quarterly results, we feel it puts us in a stronger
position to execute on the market opportunities in front of us."
"Looking ahead to this year, we will remain focused on the successful
integration of our acquisitions to ensure their full potential is delivered to
our clients and shareholders, the commercialization of important new
technologies that advance our clients ambitions and the ongoing and steady
progression of our competitive position around the globe with the goal of
delivering double digit total shareholder returns," Ms. Friedman concluded.
(1) Represents revenues less transaction-based expenses.
(2) Represents revenues from our Corporate Services, Information Services and
Market Technology segments, as well as our Trade Management Services business,
formerly referred to as Access and Broker Services.
(3) Represents revenues from our Corporate Services, Information Services and
Market Technology segments.
(4) Refer to our reconciliations of U.S. GAAP to non-GAAP net income (loss),
diluted earnings (loss) per share, operating income and operating expenses, and
total variance impact included in the attached schedules.
GAAP operating expenses were $386 million in the fourth quarter of 2016, up $96
million from $290 million in the fourth quarter of 2015. The increase primarily
reflects incremental operating expenses from the acquisitions closed in 2016, an
insurance recovery recorded in the fourth quarter of 2015 and increased merger
and strategic initiative costs.
Non-GAAP operating expenses were $324 million in the fourth quarter of 2016, up
$39 million from $285 million in the fourth quarter of 2015. This increase
primarily reflects $29 million of incremental operating expenses from the
acquisitions closed in 2016 as well as $14 million due to organic growth,
partially offset by a $4 million favorable impact of changes in foreign exchange
rates.
SEGMENT REALIGNMENT AND FIXED INCOME REPOSITIONING - Following Nasdaq's changes
to the leadership team, culminating with the transition of the CEO role to Adena
Friedman, the company is implementing several changes:
* To better reflect client orientation and how management views the
businesses, Nasdaq is realigning its segment reporting to integrate the
Listing Services and Corporate Solutions businesses into a single Corporate
Services segment. Market Technology is now reported as a separate reporting
segment.
* Nasdaq is evolving its fixed income strategy under new leadership. The
repositioning is designed to enhance the customer experience and will bring
the company's U.S. and European fixed income products and services together
under a single brand called Nasdaq Fixed Income led by John Shay.
* Nasdaq has made the decision to end its NLX interest rate futures business.
Nasdaq will be working with customers to manage the wind down of open
positions in an orderly manner.
DISCUSSION OF NON-GAAP ITEMS - The following items were excluded from our fourth
quarter 2016 GAAP results to arrive at non-GAAP results. These items totaled
$646 million, or $2.27 per share after tax, and primarily reflect a non-cash
charge of $578 million due to the write-down of the eSpeed trade name, following
the rebranding of the U.S. Treasury business in conjunction with new leadership
and an evolution of the strategy to better respond to continued business
challenges. Other items include $23 million in amortization expense related to
acquired intangible assets, $20 million in merger and strategic initiatives
costs, $12 million in accelerated expense due to the retirement of the company's
former CEO for equity awards previously granted and $12 million in other
charges. Refer to our GAAP to non-GAAP reconciliations for additional detail
regarding the above charges.
"While there was an unusual level of charges in the fourth quarter of 2016,
including those associated with the eSpeed rebranding and other items, the vast
majority of these were non-cash in nature, and the company was successful in
generating strong free cash flow excluding Section 31 fees of $584 million in
2016," said Michael Ptasznik, Chief Financial Officer and Executive Vice
President, Nasdaq.
Mr. Ptasznik continued, "During the period, the company set a new revenue high
and continued making steady progress on integrating the 2016 acquisitions,
including achieving total synergy realization of $38 million on a run-rate basis
at December 31, 2016."
On a GAAP basis, net loss attributable to Nasdaq for the fourth quarter of 2016
was $224 million, or a loss of $1.35 per diluted share, compared with net income
of $148 million, or $0.88 per diluted share, in the prior year quarter.
On a non-GAAP basis, net income attributable to Nasdaq for the fourth quarter of
2016 was $161 million, or $0.95 per diluted share, compared with $150 million,
or $0.89 per diluted share, in the fourth quarter of 2015.
During 2016, the company repurchased 1.5 million shares for a total cost of $100
million. As of December 31, 2016, there was $429 million remaining under the
board authorized share repurchase program.
At December 31, 2016, the company had cash and cash equivalents of $403 million
and total debt of $3,603 million, resulting in net debt of $3,200 million. This
compares to net debt of $2,063 million at December 31, 2015.
2017 EXPENSE GUIDANCE(1) - The company is initiating 2017 non-GAAP operating
expense guidance of $1,260 to $1,310 million.
BUSINESS HIGHLIGHTS
Market Services (37% of total net revenues) - Net revenues were $220 million in
the fourth quarter of 2016, up $25 million when compared to the fourth quarter
of 2015. The increase primarily reflects an increase in revenues from the ISE
and Nasdaq CXC acquisitions, partially offset by lower market share in our U.S.
equity derivatives and U.S. cash equities businesses.
Equity Derivatives (12% of total net revenues) - Net equity derivative
trading and clearing revenues were $68 million in the fourth quarter of
2016, up $20 million compared to the fourth quarter of 2015. The increase
is primarily due to the inclusion of revenues from our acquisition of ISE in
June 2016.
Cash Equities (10% of total net revenues) - Net cash equity trading revenues
were $62 million in the fourth quarter of 2016, down $4 million compared to
the fourth quarter of 2015. This decrease reflects lower matched market
share and lower U.S. average net capture, partially offset by the inclusion
of net revenues associated with the acquisition of Nasdaq CXC.
Fixed Income and Commodities Trading and Clearing (3% of total net revenues)
- Net fixed income and commodities trading and clearing (FICC) revenues were
$20 million in the fourth quarter of 2016, unchanged from the fourth quarter
of 2015. Higher energy, commodity and clearing revenues were offset by
lower U.S. fixed income revenues.
Trade Management Services (12% of total net revenues) - Trade management
services revenues were $70 million in the fourth quarter of 2016, up $9
million compared to the fourth quarter of 2015, due to the inclusion of
revenue from the acquisition of ISE and Nasdaq CXC and an increase in
customer demand for network connectivity.
Corporate Services (28% of total net revenues) - Revenues were $167 million in
the fourth quarter of 2016, up $24 million compared to the fourth quarter of
2015 primarily due to the inclusion of revenues from the Marketwired and
Boardvantage acquisitions.
Corporate Solutions (16% of total net revenues) - Corporate solutions
revenues were $98 million in the fourth quarter of 2016, up $23 million from
the fourth quarter of 2015. The increase was due to the inclusion of $21
million of revenues from the Marketwired and Boardvantage acquisitions and
$2 million of organic revenue growth.
Listing Services (12% of total net revenues) - Listing Services revenues
were $69 million in the fourth quarter of 2016, up $1 million from the
fourth quarter of 2015. The increase was primarily due to higher revenues
in the Nordics as a result of new listings.
(1) U.S. GAAP operating expense guidance is not provided due to the inherent
difficulty in quantifying certain amounts due to a variety of factors including
the unpredictability in the movement in foreign currency rates, as well as
future charges or reversals outside of the normal course of business.
Information Services (22% of total net revenues) - Revenues were $135 million in
the fourth quarter of 2016, up $8 million from the fourth quarter of 2015.
Data Products (17% of total net revenues) - Data products revenues were $105
million in the fourth quarter of 2016, up $7 million compared to the fourth
quarter of 2015 primarily due to growth in proprietary data products
revenues and the inclusion of revenues from the acquisitions of ISE and
Nasdaq CXC.
Index Licensing and Services (5% of total net revenues) - Index licensing
and services revenues were $30 million in the fourth quarter of 2016, up $1
million from the fourth quarter of 2015. The revenue increase primarily
reflects the inclusion of revenues from the acquisition of ISE.
Market Technology (13% of total net revenues) - Revenues were $77 million in the
fourth quarter of 2016, up $6 million from the fourth quarter of 2015. The
increase primarily reflects organic revenue growth during the period.
CORPORATE HIGHLIGHTS
* Market Technology order intake totaled $276 million in 2016, including $136
million in the fourth quarter. The 2016 order intake included expanding
relationships with existing clients, such as the contract extensions with
HKEX Group, ASX, ICAP, SIX Group, Borse Dubai and Boursa Kuwait, as well as
new sales to customers such as NYIAX and Affinity Capital Exchange, among
others. The new sales achieved in 2016 enable Nasdaq to expand the types of
markets and clients we serve, including examples such as digitalized
advertising futures and loyalty points-backed securities.
* The Nasdaq Stock Market leads U.S. exchanges for IPOs and switches. In the
U.S. market, The Nasdaq Stock Market welcomed 283 new listings during 2016,
including 91 IPOs such as Nutanix, trivago, First Hawaiian Bank and
Extraction Oil & Gas. Our success culminated with 73% of all U.S. IPOs and
87% of technology IPOs listing on The Nasdaq Stock Market during 2016. In
2016, The Nasdaq Stock Market also welcomed 20 company switches with
combined market capitalization of $61 billion.
* Nasdaq sees strong ETP traction including both AUM tracking Nasdaq indexes
and the number of ETPs listed on The Nasdaq Stock Market. Overall assets
under management (AUM) in ETPs benchmarked to all Nasdaq indexes increased
9% to $124 billion as of December 31, 2016 compared to December 31, 2015,
including $54 billion, or 42%, tracking smart beta indexes. The Nasdaq
Stock Market announced 70 new ETP listings and 52 ETP switches in 2016,
bringing total ETP listings on The Nasdaq Stock Market to 328 at the end of
the fourth quarter of 2016 and representing a 50% increase versus the fourth
quarter of 2015. For the year, 38% of new ETP listings and switches across
all U.S. exchanges listed on The Nasdaq Stock Market.
* NFX growth continues Nasdaq's commodities expansion. NFX, a U.S.-based
derivatives market for key energy benchmarks, has seen increasing traction
since launch in July 2015. In January 2017, open interest in NFX products
reached a record 1.6 million contracts across key product segments including
natural gas and power options and futures. During the fourth quarter of
2016, average daily volume (ADV) of 170,000 contracts increased 22%
sequentially from 139,000 contracts per day in the third quarter of 2016.
Since its July 2015 inception, 140 firms have traded on NFX.
* Nasdaq launches Trading Insights leveraging machine intelligence. Nasdaq
Trading Insights, a product suite combining proprietary data with advanced
analytics and machine learning to provide insights for U.S. listed stocks on
The Nasdaq Stock Market, launched on November 1, 2016. The initial rollout
includes three initial solutions designed to help traders better understand
how they perform in the market, how the market behaves, and how they can
adjust their strategies to be more successful.
* Nasdaq develops next generation technology for holistic surveillance and
monitoring. The solution addresses the complete surveillance landscape,
including trade surveillance, electronic communications and audio
communications across all asset classes through the integration of trade
surveillance alerts with natural language processing and machine
intelligence-based technology used to detect potentially collusive behaviors
across communications channels. The enhanced solution allows for proactive
discovery through intelligent analysis of data sources to provide smarter
detection, more relevant contextual data and ranking and scoring of alerts.
ABOUT NASDAQ
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing, exchange
technology, listing, information and public company services across six
continents. Through its diverse portfolio of solutions, Nasdaq enables customers
to plan, optimize and execute their business vision with confidence, using
proven technologies that provide transparency and insight for navigating today's
global capital markets. As the creator of the world's first electronic stock
market, its technology powers more than 85 marketplaces in 50 countries, and 1
in 10 of the world's securities transactions. Nasdaq is home to approximately
3,800 listed companies with a market value of $10.1 trillion and approximately
18,000 corporate clients. To learn more, visit: nasdaq.com/ambition or
business.nasdaq.com.
NON-GAAP INFORMATION
In addition to disclosing results determined in accordance with U.S. GAAP,
Nasdaq also discloses certain non-GAAP results of operations, including, but not
limited to, net income attributable to Nasdaq, diluted earnings per share,
operating income, and operating expenses, that include certain adjustments or
exclude certain charges and gains that are described in the reconciliation table
of U.S. GAAP to non-GAAP information provided at the end of this release.
Management uses this non-GAAP information internally, along with U.S. GAAP
information, in evaluating our performance and in making financial and
operational decisions. We believe our presentation of these measures provides
investors with greater transparency and supplemental data relating to our
financial condition and results of operations. In addition, we believe the
presentation of these measures is useful to investors for period-to-period
comparisons of results as the items described below do not reflect ongoing
operating performance.
These measures are not in accordance with, or an alternative to, U.S. GAAP, and
may be different from non-GAAP measures used by other companies. Investors
should not rely on any single financial measure when evaluating our business. We
recommend investors review the U.S. GAAP financial measures included in this
earnings release. When viewed in conjunction with our U.S. GAAP results and the
accompanying reconciliations, we believe these non-GAAP measures provide greater
transparency and a more complete understanding of factors affecting our business
than U.S. GAAP measures alone.
We understand that analysts and investors regularly rely on non-GAAP financial
measures, such as non-GAAP net income attributable to Nasdaq, non-GAAP diluted
earnings per share, non-GAAP operating income and non-GAAP operating expenses to
assess operating performance. We use these measures because they highlight
trends more clearly in our business that may not otherwise be apparent when
relying solely on U.S. GAAP financial measures, since these measures eliminate
from our results specific financial items, such as those described below, that
have less bearing on our ongoing operating performance.
Amortization expense of acquired intangible assets: We amortize intangible
assets acquired in connection with various acquisitions. Intangible asset
amortization expense can vary from period to period due to episodic acquisitions
completed, rather than from our ongoing business operations. As such, if
intangible asset amortization is included in performance measures, it is more
difficult to assess the day-to-day operating performance of the businesses, the
relative operating performance of the businesses between periods and the
earnings power of Nasdaq. Management does not consider intangible asset
amortization expense for the purpose of evaluating the performance of our
business or its managers or when making decisions to allocate resources.
Therefore, we believe performance measures excluding intangible asset
amortization expense provide investors with a more useful representation of our
businesses' ongoing activity in each period.
Restructuring charges: Restructuring charges are associated with our 2015
restructuring plan to improve performance, cut costs and reduce spending and are
primarily related to (i) the rebranding of our company name from The NASDAQ OMX
Group, Inc. to Nasdaq, Inc., (ii) severance and other termination benefits,
(iii) costs to vacate duplicate facilities, and (iv) asset impairment charges.
We exclude these restructuring costs because these costs do not reflect future
operating expenses and do not contribute to a meaningful evaluation of Nasdaq's
ongoing operating performance or comparison of Nasdaq's performance between
periods.
Merger and strategic initiatives expense: We have pursued various strategic
initiatives and completed a number of acquisitions in recent years which have
resulted in expenses which would not have otherwise been incurred. These
expenses include integration costs, as well as legal, due diligence and other
third party transaction costs. The frequency and the amount of such expenses
vary significantly based on the size, timing and complexity of the transaction.
Accordingly, we exclude these costs for purposes of calculating non-GAAP
measures which provide a more meaningful analysis of Nasdaq's ongoing operating
performance or comparisons in Nasdaq's performance between periods.
Asset impairment charges: Intangible assets that have indefinite lives are
reviewed for impairment at least annually, or when indicators of impairment are
present. For the quarter ended December 31, 2016, we recorded a pre-tax, non-
cash asset impairment charge of $578 million related to the eSpeed trade name.
The impairment charge was the result of a decline in operating performance and
the rebranding of the trade name due to a strategic change in the direction of
our Fixed Income business.
Other significant items: We have excluded certain other charges or gains that
are the result of other non-comparable events to measure operating performance.
For 2016, other significant items primarily included accelerated expense due to
the retirement of the company's former CEO for equity awards previously granted
, a regulatory fine received by our exchange in Stockholm and Nasdaq Clearing,
the release of a sublease loss reserve due to the early exit of a facility, and
the impact of the write-off of an equity method investment, partially offset by
a gain resulting from the sale of a percentage of a separate equity method
investment. For 2015, other significant items included income from our equity
investment in The Options Clearing Corporation, or OCC, where we were not able
to determine what our share of OCC's income was for the year ended December
31, 2014 until the first quarter of 2015, when financial statements were made
available to us. As a result, we recorded other income in the first quarter of
2015 relating to our share of OCC's income for the year ended December
31, 2014. Significant adjustments also included the reversal of a value added
tax refund. The insurance recovery recognized during the three months ended
December 31, 2015 represents amounts reimbursed by applicable insurance coverage
which offsets the loss reserve that was recorded in March 2015 associated with
litigation arising from issues related to the Facebook IPO.
Foreign exchange impact: In countries with currencies other than the U.S.
dollar, revenues and expenses are translated using monthly average exchange
rates. Certain discussions in this release isolate the impact of year-over-year
foreign currency fluctuations to better measure the comparability of operating
results between periods. Operating results excluding the impact of foreign
currency fluctuations are calculated by translating the current period's results
by the prior period's exchange rates.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information set forth in this communication contains forward-looking statements
that involve a number of risks and uncertainties. Nasdaq cautions readers that
any forward-looking information is not a guarantee of future performance and
that actual results could differ materially from those contained in the forward-
looking information. Such forward-looking statements include, but are not
limited to (i) projections relating to our future financial results, total
shareholder returns, growth, trading volumes, products and services, order
backlog, taxes and achievement of synergy targets, (ii) statements about the
closing or implementation dates and benefits of certain acquisitions and other
strategic, restructuring, technology, de-leveraging and capital return
initiatives, (iii) statements about our integrations of our recent acquisitions,
(iv) statements relating to any litigation or regulatory or government
investigation or action to which we are or could become a party, and (v) other
statements that are not historical facts. Forward-looking statements involve a
number of risks, uncertainties or other factors beyond Nasdaq's control. These
factors include, but are not limited to, Nasdaq's ability to implement its
strategic initiatives, economic, political and market conditions and
fluctuations, government and industry regulation, interest rate risk, U.S. and
global competition, and other factors detailed in Nasdaq's filings with the U.S.
Securities and Exchange Commission, including its annual reports on Form 10-K
and quarterly reports on Form 10-Q which are available on Nasdaq's investor
relations website at http://ir.nasdaq.com and the SEC's website at www.sec.gov.
Nasdaq undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
WEBSITE DISCLOSURE
Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing
material non-public information and for complying with SEC Regulation FD and
other disclosure obligations. These disclosures will be included on Nasdaq's
website under "Investor Relations."
+--------------------------------------------------------------+
| Media Relations Contact: Investor Relations Contact: |
| |
| + Allan Schoenberg + Ed Ditmire, CFA |
| |
| + +1.212.231.5534 + +1.212.401.8737 |
| + allan.schoenberg(at)nasdaq.com + ed.ditmire(at)nasdaq.com |
+--------------------------------------------------------------+
Nasdaq, Inc.
Condensed Consolidated Statements of Income (Loss)
(in millions, except per share amounts)
Three Months Ended Year Ended
----------------------------------------------- ---------------------------
December September December December December
31, 30, 31, 31, 31,
2016 2016 2015 2016 2015
--------------- --------------- --------------- --------------- -----------
Revenues: (unaudited) (unaudited) (unaudited) (unaudited)
Market
Services $ 594 $ 557 $ 524 $ 2,255 $ 2,084
Transaction-
based
expenses:
Transaction
rebates (286 ) (265 ) (249 ) (1,092 ) (983 )
Brokerage,
clearance and
exchange fees (88 ) (79 ) (80 ) (336 ) (330 )
--------------- --------------- --------------- --------------- -----------
Total Market
Services
revenues less
transaction-
based expenses 220 213 195 827 771
Corporate
Services 167 162 143 635 562
Information
Services 135 137 127 540 512
Market
Technology 77 73 71 275 245
--------------- --------------- --------------- --------------- -----------
Revenues
less
transaction-
based
expenses 599 585 536 2,277 2,090
--------------- --------------- --------------- --------------- -----------
Operating
Expenses:
Compensation
and benefits 180 168 149 664 590
Professional
and contract
services 43 40 39 153 148
Computer
operations and
data
communications 31 28 26 111 107
Occupancy 24 23 22 86 85
General,
administrative
and other 22 19 (12 ) 72 65
Marketing and
advertising 7 8 9 30 28
Depreciation
and
amortization 45 46 35 170 138
Regulatory 14 8 6 35 27
Merger and
strategic
initiatives 20 12 4 76 10
Restructuring
charges - - 12 41 172
--------------- --------------- --------------- --------------- -----------
Total
operating
expenses 386 352 290 1,438 1,370
--------------- --------------- --------------- --------------- -----------
Operating
income 213 233 246 839 720
Interest
income 1 1 1 5 4
Interest
expense (37 ) (37 ) (28 ) (135 ) (111 )
Asset
impairment
charges (578 ) - - (578 ) -
Other
investment
income - - - 3 -
Net income
(loss) from
unconsolidated
investees (3 ) 2 - 2 17
--------------- --------------- --------------- --------------- -----------
Income (loss)
before income
taxes (404 ) 199 219 136 630
Income tax
provision
(benefit) (180 ) 68 71 28 203
--------------- --------------- --------------- --------------- -----------
Net income
(loss) (224 ) 131 148 108 427
Net loss
attributable
to
noncontrolling
interests - - - - 1
--------------- --------------- --------------- --------------- -----------
Net income
(loss)
attributable
to Nasdaq $ (224 ) $ 131 $ 148 $ 108 $ 428
--------------- --------------- --------------- --------------- -----------
Per share
information:
Basic earnings
(loss) per
share $ (1.35 ) $ 0.79 $ 0.90 $ 0.65 $ 2.56
--------------- --------------- --------------- --------------- -----------
Diluted
earnings
(loss) per
share $ (1.35 ) $ 0.77 $ 0.88 $ 0.64 $ 2.50
--------------- --------------- --------------- --------------- -----------
Cash dividends
declared per
common share $ 0.32 $ 0.32 $ 0.25 $ 1.21 $ 0.90
--------------- --------------- --------------- --------------- -----------
Weighted-
average common
shares
outstanding
for earnings
(loss) per
share:
Basic 165.8 165.6 164.6 165.2 167.3
Diluted ((1)) 165.8 169.5 168.9 168.8 171.3
(1) Due to the net loss for the quarter ended December 31, 2016, the diluted earnings
(loss) per share calculation excludes 5.7 million of employee stock awards as they were
anti-dilutive.
Nasdaq, Inc.
Revenue Detail
(in millions)
Three Months Ended Year Ended
----------------------------------------------- --------------------------
December September December December December
31, 30, 31, 31, 31,
2016 2016 2015 2016 2015
--------------- --------------- --------------- --------------- ----------
MARKET
SERVICES
REVENUES (unaudited) (unaudited) (unaudited) (unaudited)
Equity
Derivative
Trading and
Clearing
Revenues $ 173 $ 164 $ 109 $ 541 $ 432
Transaction-
based
expenses:
Transaction
rebates (97 ) (90 ) (56 ) (288 ) (223 )
Brokerage,
clearance
and exchange
fees (8 ) (7 ) (5 ) (25 ) (21 )
--------------- --------------- --------------- --------------- ----------
Total net
equity
derivative
trading and
clearing
revenues 68 67 48 228 188
Cash Equity
Trading
Revenues 326 302 331 1,349 1,315
Transaction-
based
expenses:
Transaction
rebates (185 ) (171 ) (191 ) (785 ) (756 )
Brokerage,
clearance
and exchange
fees (79 ) (72 ) (74 ) (309 ) (306 )
--------------- --------------- --------------- --------------- ----------
Total net
cash equity
trading
revenues 62 59 66 255 253
Fixed Income
and
Commodities
Trading and
Clearing
Revenues 25 22 23 99 98
Transaction-
based
expenses:
Transaction
rebates (4 ) (4 ) (2 ) (19 ) (4 )
Brokerage,
clearance
and exchange
fees (1 ) - (1 ) (2 ) (3 )
--------------- --------------- --------------- --------------- ----------
Total net
fixed income
and
commodities
trading and
clearing
revenues 20 18 20 78 91
Trade
Management
Services
Revenues 70 69 61 266 239
--------------- --------------- --------------- --------------- ----------
Total Net
Market
Services
revenues 220 213 195 827 771
--------------- --------------- --------------- --------------- ----------
CORPORATE
SERVICES
REVENUES
Corporate
Solutions
revenues 98 94 75 363 298
Listings
Services
revenues 69 68 68 272 264
--------------- --------------- --------------- --------------- ----------
Total
Corporate
Services
revenues 167 162 143 635 562
--------------- --------------- --------------- --------------- ----------
INFORMATION
SERVICES
REVENUES
Data
Products
revenues 105 109 98 427 399
Index
Licensing
and Services
revenues 30 28 29 113 113
--------------- --------------- --------------- --------------- ----------
Total
Information
Services
revenues 135 137 127 540 512
--------------- --------------- --------------- --------------- ----------
MARKET
TECHNOLOGY
REVENUES 77 73 71 275 245
--------------- --------------- --------------- --------------- ----------
Revenues
less
transaction-
based
expenses $ 599 $ 585 $ 536 $ 2,277 $ 2,090
--------------- --------------- --------------- --------------- ----------
Nasdaq, Inc.
Condensed Consolidated Balance Sheets
(in millions)
December 31, December 31,
2016 2015
--------------- --------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 403 $ 301
Restricted cash 15 56
Financial investments, at fair value 245 201
Receivables, net 429 316
Default funds and margin deposits 3,301 2,228
Other current assets 167 158
--------------- --------------
Total current assets 4,560 3,260
Property and equipment, net 362 323
Deferred tax assets 717 643
Goodwill 6,027 5,395
Intangible assets, net 2,094 1,959
Other non-current assets 390 281
--------------- --------------
Total assets $ 14,150 $ 11,861
--------------- --------------
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 175 $ 158
Section 31 fees payable to SEC 108 98
Accrued personnel costs 207 171
Deferred revenue 162 127
Other current liabilities 129 138
Default funds and margin deposits 3,301 2,228
--------------- --------------
Total current liabilities 4,082 2,920
Debt obligations 3,603 2,364
Deferred tax liabilities 720 626
Non-current deferred revenue 171 200
Other non-current liabilities 144 142
--------------- --------------
Total liabilities 8,720 6,252
--------------- --------------
Commitments and contingencies
Equity
Nasdaq stockholders' equity:
Common stock 2 2
Additional paid-in capital 3,104 3,011
Common stock in treasury, at cost (176 ) (111 )
Accumulated other comprehensive loss (979 ) (864 )
Retained earnings 3,479 3,571
--------------- --------------
Total Nasdaq stockholders' equity 5,430 5,609
--------------- --------------
Total liabilities and equity $ 14,150 $ 11,861
--------------- --------------
Nasdaq, Inc.
Reconciliation of U.S. GAAP Net Income (Loss) , Diluted Earnings (Loss) Per
Share, Operating Income and
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share,
Operating Income, and Operating Expenses
(in millions, except per share amounts)
(unaudited)
Three Months Ended Year Ended
------------------------------------ -----------------------
December September December December December
31, 30, 31, 31, 31,
2016 2016 2015 2016 2015
----------- ------------ ----------- ----------- -----------
U.S. GAAP net
income (loss)
attributable to
Nasdaq $ (224 ) $ 131 $ 148 $ 108 $ 428
Non-GAAP
adjustments:
Amortization
expense of
acquired
intangible
assets ((1)) 23 23 15 82 62
Restructuring
charges ((2)) - - 12 41 172
Merger and
strategic
initiatives ((3)) 20 12 4 76 10
Asset impairment
charges ((4)) 578 - - 578 -
Regulatory
matter ((5)) 6 - - 6 -
Executive
compensation ((6)) 12 - - 12 -
Income from OCC
equity
investment ((7)) - - - - (13 )
Reversal of value
added tax
refund ((8)) - - - - 12
Sublease loss
reserve ((9)) 1 - - (1 ) -
Loss reserve and
insurance
recovery ((10)) - - (26 ) - -
Other ((11)) 6 - - 6 -
----------- ------------ ----------- ----------- -----------
Total non-GAAP
adjustments 646 35 5 800 243
Non-GAAP
adjustment to the
income tax
provision ((12)) (261 ) (12 ) (3 ) (287 ) (90 )
----------- ------------ ----------- ----------- -----------
Total non-GAAP
adjustments, net
of tax 385 23 2 513 153
Non-GAAP net
income
attributable to
Nasdaq $ 161 $ 154 $ 150 $ 621 $ 581
----------- ------------ ----------- ----------- -----------
U.S. GAAP diluted
earnings (loss)
per share $ (1.35 ) $ 0.77 $ 0.88 $ 0.64 $ 2.50
Adjustment to GAAP
loss per share to
include fully
diluted
weighted average
shares 0.03 - - - -
Total adjustments
from non-GAAP net
income above 2.27 0.14 0.01 3.04 0.89
----------- ------------ ----------- ----------- -----------
Non-GAAP diluted
earnings per share $ 0.95 $ 0.91 $ 0.89 $ 3.68 $ 3.39
----------- ------------ ----------- ----------- -----------
Weighted-average
diluted common
shares
outstanding
for earnings
(loss) per share: 169.3 169.5 168.9 168.8 171.3
(1) Refer to the non-GAAP information section of the earnings release for further
discussion of why we consider amortization expense of acquired intangible assets
to be a non-GAAP adjustment.
(2) During the first quarter of 2015, we performed a comprehensive review of our
processes, businesses and systems in a company-wide effort to improve
performance, cut costs, and reduce spending. In June 2016, we completed our 2015
restructuring plan. For the year ended December 31, 2016 and the three months
ended December 31, 2015, restructuring charges primarily related to severance
costs, asset impairment charges, facility-related costs associated with the
consolidation of leased facilities and other charges. For the year ended December
31, 2015, restructuring charges primarily related to the rebranding of our trade
name, severance costs, facility-related costs associated with the consolidation
of leased facilities and other charges. Restructuring charges are recorded on
restructuring plans that have been committed to by management and are, in part,
based upon management's best estimates of future events. Changes to the estimates
may require future adjustments to the restructuring liabilities. Refer to the
non-GAAP information section of the earnings release for further discussion of
why we consider restructuring charges to be a non-GAAP adjustment.
(3) For the three months ended December 31, 2016 and September 30, 2016, merger
and strategic initiatives expense primarily related to our acquisitions of
International Securities Exchange, or ISE, Boardvantage, Inc and Marketwired
L.P. and to certain strategic initiatives. For the year ended December
31, 2016, merger and strategic initiatives expense primarily related to our
acquisition of ISE. For the three months and year ended December 31, 2015,
merger and strategic initiatives expense primarily related to certain strategic
initiatives and our acquisition of Dorsey, Wright & Associates, LLC. Refer to
the non-GAAP information section of the earnings release for further discussion
on why we consider merger and strategic initiatives expense to be a non-GAAP
adjustment.
(4) For the three months and year ended December 31, 2016, we recorded a pre-tax,
non-cash asset impairment charge of $578 million related to our eSpeed trade
name. The impairment was the result of a decline in operating performance and
the rebranding of the eSpeed trade name due to a strategic change in the
direction of our overall Fixed Income business. Refer to the non-GAAP
information section of the earnings release for further discussion of why we
consider asset impairment charges to be a non-GAAP adjustment.
(5) During 2016, the Swedish Financial Supervisory Authority, or SFSA, completed
their investigation of the cybersecurity risk management process at our Nordic
exchange, Nasdaq Stockholm AB, and clearinghouse, Nasdaq Clearing AB. In December
2016, we were issued a $6 million fine as a result of findings in connection with
this investigation. We have appealed the SFSA's decision, including the amount
of the fine. This charge is included in regulatory expense in the Condensed
Consolidated Statements of Income (Loss) for the three months and year ended
December 31, 2016.
(6) For the three months and year ended December 31, 2016, we recorded $12
million in accelerated expense due to the retirement of the company's former CEO
for equity awards previously granted.
(7) We record our investment in The Options Clearing Corporation, or OCC, as an
equity method investment. Under the equity method of accounting, we recognize our
share of earnings or losses of an equity method investee based on our ownership
percentage. As a result of a new capital plan implemented by OCC, we were not
able to determine what our share of OCC's income was for the year ended December
31, 2014 until the first quarter of 2015, when OCC financial statements were made
available to us. Therefore, we recorded other income of $13 million in the first
quarter of 2015 relating to our share of OCC's income for the year ended December
31, 2014.
(8) We previously recorded receivables for expected value added tax, or VAT,
refunds based on an approach that had been accepted by the tax authorities in
prior years. The tax authorities have since challenged our approach, and the
revised position of the tax authorities was upheld in court during the first
quarter of 2015. As a result, in the first quarter of 2015, we recorded a charge
of $12 million for previously recorded receivables based on the court decision.
(9) For the three months ended December 31, 2016, we established a sublease loss
reserve on space we currently occupy due to excess capacity. The credit of $1
million for the year ended December 31, 2016, pertains to the release of a
previously recorded sublease loss reserve due to the early exit of a facility
partially offset by a sublease loss reserve charge recorded on space we currently
occupy due to excess capacity.
(10) In March 2015, we established a loss reserve of $31 million for litigation
arising from the Facebook IPO in May 2012, which was recorded in general,
administrative and other expense. The reserve was intended to cover the
estimated amount of a settlement of class-action litigation initiated on behalf
of investors in Facebook common stock on the date of its IPO. The reserve also
covered the cost of re-opening Nasdaq's voluntary accommodation program to allow
any Nasdaq member that did not file for compensation in 2013 to submit a claim
during the second quarter of 2015, subject to the conditions and limitations that
were applicable to claims filed in 2013. The re-opened accommodation program is
now closed. The insurance recovery recognized during the three months ended
December 31, 2015 represents amounts reimbursed by applicable insurance coverage
which offsets the loss reserve that was recorded in March 2015.
(11) Other charges primarily include the impact of the write-off of an equity
method investment, partially offset by a gain resulting from the sale of a
percentage of a separate equity method investment. We recorded the net loss in
net income (loss) from unconsolidated investees in the Condensed Consolidated
Statements of Income (Loss) for the three months and year ended December
31, 2016.(12) For the three months ended December 31, 2016, September 30, 2016
and December 31, 2015 and for the year ended December 31, 2016, the non-GAAP
adjustment to the income tax provision primarily includes the tax impact of each
non-GAAP adjustment. For the year ended December 31, 2016, the non-GAAP
adjustment to the income tax provision includes the tax impact of each non-GAAP
adjustment and in addition, we recorded a $27 million tax expense due to an
unfavorable tax ruling received during the three months ended June 30, 2016, the
impact of which related to prior periods.
(12) For the three months ended December 31, 2016, September 30, 2016 and
December 31, 2015 and for the year ended December 31, 2016, the non-GAAP
adjustment to the income tax provision primarily includes the tax impact of each
non-GAAP adjustment. For the year ended December 31, 2016, the non-GAAP
adjustment to the income tax provision includes the tax impact of each non-GAAP
adjustment and in addition, we recorded a $27 million tax expense due to an
unfavorable tax ruling received during the three months ended June 30, 2016, the
impact of which related to prior periods.
Nasdaq, Inc.
Reconciliation of U.S. GAAP Net Income (Loss) , Diluted Earnings (Loss) Per
Share, Operating Income and
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share,
Operating Income, and Operating Expenses
(in millions)
(unaudited)
Three Months Ended Year Ended
------------------------------------ -----------------------
December September December December December
31, 30, 31, 31, 31,
2016 2016 2015 2016 2015
----------- ------------ ----------- ----------- -----------
U.S. GAAP
operating income $ 213 $ 233 $ 246 $ 839 $ 720
Non-GAAP
adjustments:
Amortization
expense of
acquired
intangible
assets ((1)) 23 23 15 82 62
Restructuring
charges ((2)) - - 12 41 172
Merger and
strategic
initiatives ((3)) 20 12 4 76 10
Regulatory
matter ((4)) 6 - - 6 -
Executive
compensation ((5)) 12 - - 12 -
Reversal of value
added tax
refund ((6)) - - - - 12
Sublease loss
reserve ((7)) 1 - - (1 ) -
Loss reserve and
insurance
recovery ((8)) - - (26 ) - -
----------- ------------ ----------- ----------- -----------
Total non-GAAP
adjustments 62 35 5 216 256
----------- ------------ ----------- ----------- -----------
Non-GAAP operating
income $ 275 $ 268 $ 251 $ 1,055 $ 976
----------- ------------ ----------- ----------- -----------
Revenues less
transaction-based
expenses $ 599 $ 585 $ 536 $ 2,277 $ 2,090
U.S. GAAP
Operating
margin( (9)) 36 % 40 % 46 % 37 % 34 %
Non-GAAP operating
margin( (10)) 46 % 46 % 47 % 46 % 47 %
(1) Refer to the non-GAAP information section of the earnings release for further
discussion of why we consider amortization expense of acquired intangible assets
to be a non-GAAP adjustment.
(2) During the first quarter of 2015, we performed a comprehensive review of our
processes, businesses and systems in a company-wide effort to improve
performance, cut costs, and reduce spending. In June 2016, we completed our 2015
restructuring plan. For the year ended December 31, 2016 and the three months
ended December 31, 2015, restructuring charges primarily related to severance
costs, asset impairment charges, facility-related costs associated with the
consolidation of leased facilities and other charges. For the year ended December
31, 2015, restructuring charges primarily related to the rebranding of our trade
name, severance costs, facility-related costs associated with the consolidation
of leased facilities and other charges. Restructuring charges are recorded on
restructuring plans that have been committed to by management and are, in part,
based upon management's best estimates of future events. Changes to the estimates
may require future adjustments to the restructuring liabilities. Refer to the
non-GAAP information section of the earnings release for further discussion of
why we consider restructuring charges to be a non-GAAP adjustment.
(3) For the three months ended December 31, 2016 and September 30, 2016, merger
and strategic initiatives expense primarily related to our acquisitions of ISE ,
Boardvantage, Inc and Marketwired L.P. and to certain strategic initiatives. For
the year ended December 31, 2016, merger and strategic initiatives expense
primarily related to our acquisition of ISE. For the three months and year ended
December 31, 2015, merger and strategic initiatives expense primarily related to
certain strategic initiatives and our acquisition of Dorsey, Wright & Associates,
LLC. Refer to the non-GAAP information section of the earnings release for
further discussion on why we consider merger and strategic initiatives expense to
be a non-GAAP adjustment.
(4) During 2016, the SFSA completed their investigation of the cybersecurity risk
management process at our Nordic exchange, Nasdaq Stockholm AB, and
clearinghouse, Nasdaq Clearing AB. In December 2016, we were issued a $6 million
fine as a result of findings in connection with this investigation. We have
appealed the SFSA's decision, including the amount of the fine. This charge is
included in regulatory expense in the Condensed Consolidated Statements of Income
(Loss) for the three months and year ended December 31, 2016.
(5) For the three months and year ended December 31, 2016, we recorded $12
million in accelerated expense due to the retirement of the company's former CEO
for equity awards previously granted.
(6) We previously recorded receivables for expected VAT refunds based on an
approach that had been accepted by the tax authorities in prior years. The tax
authorities have since challenged our approach, and the revised position of the
tax authorities was upheld in court during the first quarter of 2015. As a
result, in the first quarter of 2015, we recorded a charge of $12 million for
previously recorded receivables based on the court decis
Unternehmensinformation / Kurzprofil:
Datum: 31.01.2017 - 14:13 Uhr
Sprache: Deutsch
News-ID 521010
Anzahl Zeichen: 65587
contact information:
Town:
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Kategorie:
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