Nasdaq, Inc.
Jul 27, 2016

Nasdaq Reports Second Quarter 2016 Earnings; Delivers Record Net Revenues(1)

NEW YORK, July 27, 2016 (GLOBE NEWSWIRE) -- Nasdaq, Inc. (Nasdaq:NDAQ) today reported strong revenue results for the second quarter of 2016.  Second quarter net revenues were $559 million, up $41 million or 8% from $518 million in the prior year period, driven by 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.

"Nasdaq has experienced broad-based demand for our distinctive technology, services and solutions, resulting in continued organic growth from each of our business segments," said Bob Greifeld, CEO, Nasdaq.  "Further, we are successfully integrating the recently closed acquisitions, which we expect to provide another lever of return for our shareholders as we drive operational synergies and deliver ever increasing value for our clients."

Mr. Greifeld continued, "Material expansion in the SMARTS surveillance product's customer base, the acquisition of the ISE, giving Nasdaq unique scale in U.S. options, exceptional growth in Nordic listings, and the accelerating migration of corporate customers onto the IR Insights platform stand out as second quarter developments which will pay meaningful dividends in future periods."

Operating expenses were $385 million in the second quarter of 2016, up $84 million from $301 million in the second quarter of 2015.  The increase primarily reflected higher merger and strategic initiatives expense of $32 million, higher restructuring charges of $31 million and $15 million in incremental expenses from the acquisitions of Nasdaq CXC, formerly Chi-X Canada (February 2016), Marketwired (February 2016), and Boardvantage (May 2016).  Non-GAAP operating expenses were $300 million in the second quarter of 2016, up $19 million from $281 million in the second quarter of 2015. This increase reflected $15 million in incremental expenses from the acquisitions closed in 2016 as well as $4 million in organic growth.

"During the quarter we were able to raise over $1 billion in acquisition financing at favorable rates while also reducing FX exposure.  As I transition over the CFO responsibilities, I believe the company's capital and financial position are in excellent condition," said Ron Hassen, Principal Financial Officer and Senior Vice President, Nasdaq.

"I'm excited to join the Nasdaq team at an especially interesting time, and look forward to bringing new perspectives and ideas that can contribute to execution of the company's strategy.  In the near-term, this includes a particular focus on ensuring that the acquisition integrations succeed in delivering maximum benefits to clients and shareholders," said Michael Ptasznik, Chief Financial Officer and Executive Vice President, Nasdaq.

Net income attributable to Nasdaq for the second quarter of 2016 was $70 million, or $0.42 per diluted share, compared with $133 million, or $0.77 per diluted share, in the prior year quarter.  On a non-GAAP basis, net income attributable to Nasdaq for the second quarter of 2016 was $153 million, or $0.91 per diluted share, compared with $143 million or $0.83 per diluted share, in the second quarter of 2015, an increase of $10 million, or $0.08 per diluted share.

The company repurchased 256,808 shares for $16 million in the second quarter of 2016 at an average price of $62.27, and an additional 127,580 shares for $8 million in the third quarter of 2016 through July 26, 2016 at an average price of $62.19.  As of July 26, 2016, there was $476 million remaining under the board authorized share repurchase program.

At June 30, 2016, the company had cash and cash equivalents of $344 million and total debt of $3,731 million, resulting in net debt of $3,387 million.  This compares to net debt of $2,063 million at December 31, 2015.

Represents revenues less transaction-based expenses.

Refer to our reconciliation of U.S. GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses included in the attached schedules.

BUSINESS HIGHLIGHTS

Market Services (35% of total net revenues) - Net revenues were $194 million in the second quarter of 2016, up $5 million when compared to the second quarter of 2015.  The increase primarily reflects an increase in revenues from the Nasdaq CXC acquisition.

Equity Derivatives (8% of total net revenues) - Net equity derivative trading and clearing revenues were $46 million in the second quarter of 2016, up $2 million compared to the second quarter of 2015.  The increase was primarily driven by higher U.S. industry trading volumes and higher U.S. market share.

Cash Equities (11% of total net revenues) - Net cash equity trading revenues were $63 million in the second quarter of 2016, up $1 million compared to the second quarter of 2015.  This increase reflects the inclusion of net revenues associated with our acquisition of Nasdaq CXC and the positive impact of foreign exchange, partially offset by lower U.S. and European market share and lower U.S. average net capture.

Fixed Income, Currency and Commodities (4% of total net revenues) - Net FICC trading and clearing revenues were $21 million in the second quarter of 2016, down $3 million from the second quarter of 2015, due to the negative impact of Nasdaq Futures (NFX) trading incentives and a decline in U.S. fixed income revenues, partially offset by higher European fixed income and commodities revenues.

Access and Broker Services (12% of total net revenues) - Access and broker services revenues were $64 million in the second quarter of 2016, up $5 million compared to the second quarter of 2015, primarily driven by an increase in customer demand for network connectivity.

Information Services (24% of total net revenues) - Revenues were $134 million in the second quarter of 2016, up $6 million from the second quarter of 2015.  The increase reflects a $3 million organic increase primarily from higher audit collections and higher consolidated and proprietary data products revenue, partially offset by lower index licensing and servicing revenues.

Data Products (19% of total net revenues) - Data products revenues were $107 million in the second quarter of 2016, up $8 million compared to the second quarter of 2015 due to increased audit collections and increased revenues from consolidated and proprietary data, as well as the inclusion of revenues associated with the Nasdaq CXC acquisition and the positive impact of changes in foreign exchange rates.

Index Licensing and Services (5% of total net revenues) - Index licensing and services revenues were $27 million in the second quarter of 2016, down $2 million from the second quarter of 2015.  The revenue decline was primarily driven by a decrease in the value of underlying assets associated with Nasdaq-licensed ETPs.

Technology Solutions (29% of total net revenues) - Revenues were $163 million in the second quarter of 2016, up $28 million from the second quarter of 2015.  The increase primarily reflects the inclusion of revenue from the acquisitions of Marketwired and Boardvantage, as well as $8 million in organic revenue growth primarily from market technology contracts.

Corporate Solutions (17% of total net revenues) - Corporate solutions revenues were $94 million in the second quarter of 2016, up $18 million from the second quarter of 2015.  The increase was due to the inclusion of revenues from the Marketwired and Boardvantage acquisitions.

Market Technology (12% of total net revenues) - Market technology revenues were $69 million in the second quarter of 2016, up $10 million from the second quarter of 2015.  The increase was driven primarily by growth in revenues from software licensing and support, and surveillance products, as well as increased revenues from change requests.  New order intake was $69 million for the second quarter of 2016, and the total order value at June 30, 2016 was $769 million, up 9% from the prior year period.

Listing Services (12% of total net revenues) - Revenues were $68 million in the second quarter of 2016, up $2 million compared to the second quarter of 2015, primarily due to higher revenues in the Nordics from an increase in the number of listed companies due to new listings.

CORPORATE HIGHLIGHTS

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 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,700 listed companies with a market value of $9.3 trillion and over 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 reconciliation, 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 a 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 of Nasdaq's performance between periods.

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 the three months ended June 30, 2016, other significant items include 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, and the release of a sublease loss reserve due to the early exit of a facility.  We believe the exclusion of such amounts, which arise outside of the normal course of business, allow management and investors to better understand the financial results of Nasdaq.

Foreign exchange impact on revenue:  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, 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.

NDAQF

 
Nasdaq, Inc.
Condensed Consolidated Statements of Income
(in millions, except per share amounts)
(unaudited)
        
  Three Months Ended 
  June 30, March 31, June 30, 
   2016    2016    2015   
Revenues:       
Market Services $532  $572  $478  
Transaction-based expenses:       
Transaction rebates   (256)  (283)  (216) 
Brokerage, clearance and exchange fees  (82)  (88)  (73) 
Total Market Services revenues less transaction-based expenses  194   201   189  
        
Listing Services  68   66   66  
Information Services  134   133   128  
Technology Solutions  163   134   135  
        
Revenues less transaction-based expenses   559   534   518  
         
Operating Expenses:        
Compensation and benefits  164   152   144  
Marketing and advertising  8   6   6  
Depreciation and amortization  41   38   34  
Professional and contract services  35   35   42  
Computer operations and data communications  27   25   23  
Occupancy  19   20   21  
Regulatory  6   7   7  
Merger and strategic initiatives   35   9   3  
General, administrative and other  17   14   19  
Restructuring charges  33   9   2  
Total operating expenses   385   315   301  
        
Operating income   174   219   217  
        
Interest income  1   1   1  
Interest expense  (32)  (28)  (27) 
Other investment income  2   1   -  
Net income from unconsolidated investees  1   2    1  
              
Income before income taxes   146   195   192  
Income tax provision  76   63    60  
        
Net income   70   132    132  
        
Net loss attributable to noncontrolling interests  -   -   1  
        
Net income attributable to Nasdaq  $70  $132  $133  
        
Per share information:         
Basic earnings per share $0.42   $0.80  $0.79  
Diluted earnings per share $0.42  $0.78   $0.77  
Cash dividends declared per common share $-  $0.57  $0.25   
        
Weighted-average common shares outstanding for earnings per share:       
Basic  165.0   164.3   168.7  
Diluted  168.2   168.4   172.1  
  


Nasdaq, Inc.
Revenue Detail
(in millions)
(unaudited)
      
 Three Months Ended
 June 30, March 31, June 30,
 2016 2016 2015
MARKET SERVICES REVENUES      
Equity Derivative Trading and Clearing Revenues$103  $101  $97 
Transaction-based expenses:     
Transaction rebates (53)  (48)  (49)
Brokerage, clearance and exchange fees (4)  (5)  (4)
Total net equity derivative trading and clearing revenues 46   48   44 
      
Cash Equity Trading Revenues 339   382   297 
Transaction-based expenses:     
Transaction rebates (198)  (230)  (167)
Brokerage, clearance and exchange fees (78 )  (82)  (68)
Total net cash equity trading revenues 63   70   62 
       
Fixed Income, Currency and Commodities Trading and Clearing Revenues  26   26   25 
Transaction-based expenses:     
Transaction rebates (5)  (5)  - 
Brokerage, clearance and exchange fees -   (1)  (1)
Total net fixed income, currency and commodities trading and clearing revenues 21   20   24 
      
Access and Broker Services Revenues 64   63   59 
       
Total Net Market Services revenues 194   201   189 
      
LISTING SERVICES REVENUES  68   66   66 
      
INFORMATION SERVICES REVENUES     
Data Products revenues 107   105    99 
Index Licensing and Services revenues 27   28   29 
      
Total Information Services revenues 134   133   128 
      
TECHNOLOGY SOLUTIONS REVENUES     
Corporate Solutions revenues 94   77   76 
Market Technology revenues 69   57   59 
      
Total Technology Solutions revenues  163   134   135 
      
Revenues less transaction-based expenses$ 559  $534  $518 
 


Nasdaq, Inc.
Condensed Consolidated Balance Sheets
(in millions)
     
 June 30, December 31, 
  2016 2015 
Assets(unaudited)   
Current assets:    
Cash and cash equivalents$344  $301  
Restricted cash 22   56  
Financial investments, at fair value 255   201  
Receivables, net 399   316  
Default funds and margin deposits 3,411   2,228  
Other current assets 165   158  
Total current assets 4,596    3,260  
Property and equipment, net 332   323  
Deferred tax assets 741   643  
Goodwill 6,236   5,395  
Intangible assets, net 2,771   1,959  
Other non-current assets 423   281  
Total assets$15,099  $11,861  
     
Liabilities    
Current liabilities:    
Accounts payable and accrued expenses$172  $158  
Section 31 fees payable to SEC 160   98  
Accrued personnel costs 129   171  
Deferred revenue 275   127  
Other current liabilities 161   138  
Default funds and margin deposits 3,411   2,228  
Total current liabilities 4,308   2,920  
Debt obligations 3,731   2,364  
Deferred tax liabilities 983   626  
Non-current deferred revenue 199   200  
Other non-current liabilities 161   142  
Total liabilities 9,382   6,252  
     
Commitments and contingencies    
Equity    
Nasdaq stockholders' equity:    
Common stock 2   2  
Additional paid-in capital 3,062   3,011  
Common stock in treasury, at cost (166 )  (111) 
Accumulated other comprehensive loss (860)   (864) 
Retained earnings 3,679   3,571  
Total equity 5,717   5,609  
Total liabilities and equity$15,099  $11,861  
  


Nasdaq, Inc.
Reconciliation of U.S. GAAP Net Income, Diluted Earnings 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 
   June 30,   March 31,    June 30, 
   2016   2016   2015 
       
U.S. GAAP net income attributable to Nasdaq $70  $132   $133 
       
Non-GAAP adjustments:       
       
Amortization expense of acquired intangible assets (1)  19   17   15 
Restructuring charges (2)  33   9   2 
Merger and strategic initiatives (3)  35   9   3 
Sublease loss reserve (4)  (2)   -   - 
Total non-GAAP adjustments  85   35   20 
       
Non-GAAP adjustment to the income tax provision (5)  (2 )  (14)  (10)
Total non-GAAP adjustments, net of tax  83   21   10 
       
Non-GAAP net income attributable to Nasdaq $153  $153   $143 
       
       
U.S. GAAP diluted earnings per share $0.42  $0.78  $0.77 
Total adjustments from non-GAAP net income above  0.49   0.13   0.06 
       
Non-GAAP diluted earnings per share $0.91  $0.91  $0.83 
       
(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. For the three months ended June 30, 2016 and March 31, 2016, restructuring charges primarily related to severance costs and asset impairment charges. For the three months ended June 30, 2015, restructuring charges primarily related to severance costs and asset impairment charges, partially offset by a credit of $10 million which pertained to the release of a previously recorded sublease loss reserve. In June 2015, as part of our real estate reorganization plans, management decided to occupy this space. 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 June 30, 2016, merger and strategic initiatives expense primarily related to our acquisition of International Securities Exchange, or ISE.  For the three months ended March 31, 2016 merger and strategic initiatives expense primarily related to our acquisitions of Marketwired and Nasdaq CXC Limited, formerly Chi-X Canada, as well as costs incurred related to our subsequent acquisitions of ISE and Boardvantage, Inc.  For the three months ended June  30, 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 to be a non-GAAP adjustment.
 
(4) The credit of $2 million pertains to the release of a previously recorded sublease loss reserve due to the early exit of a facility.
 
(5) Includes the tax impact of each non-GAAP adjustment. 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, Diluted Earnings 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
  June 30, March 31, June 30,
  2016  2016 2015
       
U.S. GAAP operating income $174  $219  $217 
       
Non-GAAP adjustments:      
       
Amortization expense of acquired intangible assets (1)  19    17   15 
Restructuring charges (2)  33   9   2 
Merger and strategic initiatives (3)  35   9   3 
Sublease loss reserve (4)  (2)  -   - 
Total non-GAAP adjustments  85   35   20 
       
Non-GAAP operating income $259  $254  $ 237 
       
       
Revenues less transaction-based expenses $559  $534  $518 
       
U.S. GAAP Operating margin (5)  31%  41%  42%
       
Non-GAAP operating margin (6)  46%  48%  46%
 
(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. For the three months ended June 30, 2016 and March 31, 2016, restructuring charges primarily related to severance costs and asset impairment charges. For the three months ended June 30, 2015, restructuring charges primarily related to severance costs and asset impairment charges, partially offset by a credit of $10 million which pertained to the release of a previously recorded sublease loss reserve. In June 2015, as part of our real estate reorganization plans, management decided to occupy this space. 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 June 30, 2016, merger and strategic initiatives expense primarily related to our acquisition of ISE.  For the three months ended March 31, 2016 merger and strategic initiatives expense primarily related to our acquisitions of Marketwired and Nasdaq CXC Limited, formerly Chi-X Canada, as well as costs incurred related to our subsequent acquisitions of ISE and Boardvantage, Inc.  For the three months ended June  30, 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 to be a non-GAAP adjustment.
 
(4)  The credit of $2 million pertains to the release of a previously recorded sublease loss reserve due to the early exit of a facility.
 
(5) U.S. GAAP operating margin equals U.S. GAAP operating income divided by total revenues less transaction-based expenses.
 
(6) Non-GAAP operating margin equals non-GAAP operating income divided by total revenues less transaction-based expenses.
 


Nasdaq, Inc.
Reconciliation of U.S. GAAP Net Income, Diluted Earnings 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
  June 30 , March 31, June 30,
  2016 2016 2015
       
U.S. GAAP operating expenses $385  $315  $301 
       
Non-GAAP adjustments:      
       
Amortization expense of acquired intangible assets (1)  (19)  (17)  (15)
Restructuring charges (2)  (33)  (9)  (2)
Merger and strategic initiatives (3)  (35)  (9)  (3)
Sublease loss reserve (4)  2   -   - 
Total non-GAAP adjustments  (85)  (35)  (20)
       
Non-GAAP operating expenses $300  $280  $281 
       
(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. For the three months ended June 30, 2016 and March 31, 2016, restructuring charges primarily related to severance costs and asset impairment charges. For the three months ended June 30, 2015, restructuring charges primarily related to severance costs and asset impairment charges, partially offset by a credit of $10 million which pertained to the release of a previously recorded sublease loss reserve. In June 2015, as part of our real estate reorganization plans, management decided to occupy this space. 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 June 30, 2016, merger and strategic initiatives expense primarily related to our acquisition of ISE.  For the three months ended March 31, 2016 merger and strategic initiatives expense primarily related to our acquisitions of Marketwired and Nasdaq CXC Limited, formerly Chi-X Canada, as well as costs incurred related to our subsequent acquisitions of ISE and Boardvantage, Inc.  For the three months ended June  30, 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 to be a non-GAAP adjustment.
 
(4)  The credit of $2 million pertains to the release of a previously recorded sublease loss reserve due to the early exit of a facility.
 


Nasdaq, Inc.
Quarterly Key Drivers Detail
(unaudited)
      
 Three Months Ended
 June 30, March 31, June 30,
 2016 2016  2015
Market Services     
Equity Derivative Trading and Clearing     
U.S. Equity Options     
Total industry average daily volume (in millions) 14.1   15.3   13.9 
Nasdaq PHLX matched market share  16.2%  16.1%  16.4%
The NASDAQ Options Market matched market share 7.1%  7.1%  6.8%
Nasdaq BX Options Market matched market share 1.0%  0.9%  0.8%
Nasdaq ISE Options Market matched market share(1) 0.2%  0.0%  0.0%
Total matched market share executed on Nasdaq's exchanges 24.5%  24.1%  24.0%
      
Nasdaq Nordic and Nasdaq Baltic options and futures     
Total average daily volume options and futures contracts(2) 439,520   452,178   399,900 
      
Cash Equity Trading     
Total U.S.-listed securities     
Total industry average daily share volume (in billions) 7.25   8.56   6.35 
Matched share volume (in billions) 80.6   93.7   74.3 
Matched market share executed on NASDAQ 14.0%  14.9%  15.8%
Matched market share executed on Nasdaq BX 2.3%  2.0%  1.9%
Matched market share executed on Nasdaq PSX 1.1%  1.0%  0.9%
Total matched market share executed on Nasdaq's exchanges 17.4%  17.9%  18.6%
Market share reported to the FINRA/NASDAQ Trade Reporting Facility 33.0%   31.9%  32.9%
Total market share(3) 50.4%  49.8%  51.5%
      
Nasdaq Nordic and Nasdaq Baltic securities     
Average daily number of equity trades 447,231   506,790    424,915 
Total average daily value of shares traded (in billions)$5.2  $5.7  $5.4 
Total market share executed on Nasdaq's exchanges 63.7%  62.5%  67.7%
      
Fixed Income, Currency and Commodities Trading and Clearing     
Total U.S. Fixed Income     
U.S. fixed income notional trading volume (in billions)$5,255  $5,968  $8,281 
      
Nasdaq Nordic and Nasdaq Baltic fixed income     
Total average daily volume fixed income contracts 91,107   101,470   105,432 
      
Nasdaq Commodities     
Power contracts cleared (TWh)(4) 455   420   329 
      
Listing Services     
Initial public offerings     
NASDAQ 25   10   49 
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 25   8   31 
      
New listings     
NASDAQ(5) 73   47   79 
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(6) 33   14   38 
      
Number of listed companies     
NASDAQ(7) 2,868   2,852   2,828 
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(8) 873   847   835 
      
Information Services     
Number of licensed exchange traded products 267   226   197 
ETP assets under management (AUM) tracking Nasdaq indexes (in billions)(9)$108  $105  $108 
      
Technology Solutions     
Market Technology     
Order intake (in millions)(10)$69  $22  $31 
Total order value (in millions)(11)$769  $783  $707 
 
(1) For the three and six months ended June 30, 2016, Nasdaq ISE Options Market matched market share represents one day of trading volume.
(2) Includes Finnish option contracts traded on EUREX Group .
(3) Includes transactions executed on NASDAQ's, Nasdaq BX's and Nasdaq PSX's systems plus trades reported through the Financial Industry Regulatory Authority/NASDAQ Trade Reporting Facility.
(4) Transactions executed on Nasdaq Commodities or OTC and reported for clearing to Nasdaq Commodities measured by Terawatt hours (TWh).
(5) New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed exchange traded products, or ETPs.
(6) New listings include IPOs and represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North.
(7) Number of listed companies for NASDAQ at period end, including separately listed ETPs.
(8) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North at period end.
(9) Represents assets under management in licensed ETPs.
(10) Total contract value of orders signed during the period.
(11) Represents total contract value of orders signed that are yet to be recognized as revenue.
 
MEDIA RELATIONS CONTACT:

Allan Schoenberg

+1.212.231.5534

allan.schoenberg@nasdaq.com



INVESTOR RELATIONS CONTACT:

Ed Ditmire, CFA

+1.212.401.8737

ed.ditmire@nasdaq.com

Primary Logo

Source: NASDAQ, Inc.

News Provided by Acquire Media