Nasdaq Reports Fourth Quarter and Full Year 2020 Results; Delivers Strong Growth in Revenue and EPS
- 2020 net revenues1 were
$2,903 million , an increase of 15% over 2019. Revenues in the Solutions segments2 increased 11%, while Market Services revenues increased 21% due to elevated trading volumes. - Fourth quarter 2020 net revenues were
$788 million , an increase of 22% over the fourth quarter of 2019. Compared to the prior year period, Solutions segments revenues increased 18% while Market Services revenues increased 29%. - Annualized Recurring Revenue (ARR)3 was
$1,577 million in the fourth quarter of 2020, an increase of 9% from the prior year period, and the Solutions segments SaaS revenue increased 11% compared to the prior year period. - 2020 GAAP diluted earnings per share was
$5.59 , an increase of 21% compared to$4.63 in 2019, while fourth quarter 2020 GAAP earnings per share was$1.34 , an increase of 11% compared to$1.21 in the fourth quarter of 2019. - 2020 non-GAAP4 diluted earnings per share was
$6.18 , an increase of 24% compared to$5.00 in 2019, while fourth quarter 2020 non-GAAP diluted earnings per share of$1.60 increased 24% from$1.29 in the fourth quarter of 2019. - At Nasdaq's 2020 Investor Day, the company provided updates to its strategy, operations, and objectives.
- Nasdaq announced the pending acquisition of
Verafin in the fourth quarter of 2020, which is expected to expand the company's anti-financial crime franchise while increasing growth potential.
2020 net revenues were
Fourth quarter 2020 net revenues were
“Our record fourth quarter and full year results attest to Nasdaq’s continuing ability to address the needs of our clients in a capital markets environment characterized by elevated trading, strong IPO activity and rising index valuations, made possible by both our resilient, scalable technology and the flexibility our team exhibited in effectively delivering for clients against a pandemic-impacted backdrop," said
GAAP operating expenses were
Non-GAAP operating expenses were
"As we look back on 2020, Nasdaq continued to demonstrate the resiliency of the business and our balance sheet," said
On a GAAP basis, net income in the fourth quarter of 2020 was
On a non-GAAP basis, net income in the fourth quarter of 2020 was
At
INITIATING 2021 NON-GAAP EXPENSE AND TAX GUIDANCE5
The company is initiating its 2021 non-GAAP operating expense guidance to a range of
Nasdaq expects its 2021 non-GAAP tax rate to be in the range of 25.0% to 27.0%.
BUSINESS HIGHLIGHTS
Market Services - Net revenues were a record
Equity Derivative Trading and Clearing - Net revenues were |
Cash Equity Trading - Net revenues were |
Fixed Income and Commodities Trading and Clearing - Net revenues were |
Trade Management Services - Revenues were |
Corporate Platforms - Revenues were
Listing Services - Revenues were |
IR & ESG Services - Revenues were |
Investment Intelligence - Revenues were
Market Data - Revenues were |
Index - Revenues were |
Analytics - Revenues were |
Market Technology - Revenues were
CORPORATE HIGHLIGHTS
- Nasdaq's Market Services segment sets new highs in
U.S. option and European equity trading in 2020. In the fourth quarter of 2020, Nasdaq'sU.S. options market set a quarterly record of 741 million contracts traded, an increase of 71% year over year. 2020 was also the first year Nasdaq led all exchanges in total volume traded for options (inclusive of both multiply-listed equity options and index option products), building upon what is now an 11th consecutive year leading in multiply-listed equity options market share. Nasdaq also established a new decade-high annual market share of 78% in Nordic equity trading during 2020, including 79% in the fourth quarter of 2020. - ETP assets under management tracking Nasdaq indexes and derivative product volume tracking Nasdaq indexes each set new quarterly records. Overall AUM in ETPs benchmarked to Nasdaq's proprietary indexes totaled
$359 billion as ofDecember 31, 2020 , an increase of 54% compared toDecember 31, 2019 , while the number of futures and options on futures contracts tracking Nasdaq indexes executed in the period totaled 90.2 million, an increase of 151% from 36.0 million in the fourth quarter of 2019. Net inflows into new products that launched in the fourth quarter of 2020 exceeded$1 billion , driven primarily by strong initial interest in the Invesco QQQ Innovation suite. The Nasdaq Stock Market ledU.S. exchanges for IPOs during 2020. During 2020, theNasdaq Stock Market ledU.S. exchanges with a 67% total win rate, including an 83% win rate among operating companies6 and a 53% win rate among special purpose acquisition companies.The Nasdaq Stock Market welcomed 316 IPOs in 2020 representing$81 billion in capital raised, first amongstU.S. exchanges, including 18 of the top 30 operating company IPOs by capital raised. New listings in 2020 included 20 companies switching their listings from NYSE to join Nasdaq, representing an aggregate of$282 billion in global equity market capitalization and included AstraZeneca, Keurig Dr Pepper, American Electric Power and Opendoor Technologies. In the fourth quarter of 2020,The Nasdaq Stock Market welcomed 199 newU.S. listings with 142 IPOs, including Airbnb, Wish and Array Technologies.- Nasdaq announces acquisition of
Verafin , creating a global leader in fighting financial crime. OnNovember 19, 2020 , Nasdaq announced an agreement to acquireVerafin . The combination is expected to bring togetherVerafin's comprehensive suite of anti-financial crime management products with Nasdaq's reach and established regulatory technology leadership to create a global SaaS leader in the fight against financial crime. Based in St. John’s,Newfoundland andLabrador and founded in 2003,Verafin provides a cloud-based platform to detect, investigate, and report money laundering and financial fraud to more than 2,000 financial institutions inNorth America . The acquisition is expected to close in the first quarter of 2021. - Nasdaq to advance diversity through proposed new listing rule. Nasdaq filed a new proposed
U.S. listing rule with theU.S. Securities and Exchange Commission (SEC) that seeks to standardize disclosure of board-level diversity statistics through a consistent disclosure framework. The proposal includes disclosure of either the recommended minimum diversity goal of two diverse directors or an explanation, and is subject toSEC approval.
____________
1Represents revenues less transaction-based expenses.
2Constitutes revenues from Market Technology, Investment Intelligence and Corporate Platforms segments.
3Annualized Recurring Revenue (ARR) for a given period is the annualized revenues derived from contracted termed subscription contracts. This excludes contracts that are not recurring and are one time in nature. ARR is currently one of our key performance metrics to assess the health and trajectory of our business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
4Refer to our reconciliations of
5
6Operating companies exclude special purpose acquisition companies and when a special purpose acquisition company completes an acquisition.
ABOUT NASDAQ
NON-GAAP INFORMATION
In addition to disclosing results determined in accordance with
These measures are not in accordance with, or an alternative to,
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
Foreign exchange impact: In countries with currencies other than the
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, ability to transition to new business models, 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 allocation 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,
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.
MEDIA RELATIONS CONTACT: +1.646.441.5121 joseph.christinat@nasdaq.com |
INVESTOR RELATIONS CONTACT: +1.212.401.8737 ed.ditmire@nasdaq.com |
-NDAQF- |
Condensed Consolidated Statements of Income | |||||||||||||||||||||
(in millions, except per share amounts) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Revenues: | |||||||||||||||||||||
Market Services | $ | 966 | $ | 958 | $ | 644 | $ | 3,832 | $ | 2,639 | |||||||||||
Transaction-based expenses: | |||||||||||||||||||||
Transaction rebates | (503 | ) | (518 | ) | (315 | ) | (2,029 | ) | (1,327 | ) | |||||||||||
Brokerage, clearance and exchange fees | (172 | ) | (181 | ) | (104 | ) | (695 | ) | (400 | ) | |||||||||||
Total Market Services revenues less transaction-based expenses | 291 | 259 | 225 | 1,108 | 912 | ||||||||||||||||
Corporate Platforms | 144 | 132 | 129 | 530 | 496 | ||||||||||||||||
Investment Intelligence | 247 | 238 | 194 | 908 | 779 | ||||||||||||||||
Market Technology | 106 | 86 | 98 | 357 | 338 | ||||||||||||||||
Other Revenues | - | - | - | - | 10 | ||||||||||||||||
Revenues less transaction-based expenses | 788 | 715 | 646 | 2,903 | 2,535 | ||||||||||||||||
Operating Expenses: | |||||||||||||||||||||
Compensation and benefits | 205 | 198 | 189 | 786 | 707 | ||||||||||||||||
Professional and contract services | 40 | 38 | 28 | 137 | 127 | ||||||||||||||||
Computer operations and data communications | 42 | 39 | 35 | 151 | 133 | ||||||||||||||||
Occupancy | 26 | 29 | 25 | 107 | 97 | ||||||||||||||||
General, administrative and other | 43 | 13 | 30 | 142 | 125 | ||||||||||||||||
Marketing and advertising | 19 | 7 | 10 | 39 | 39 | ||||||||||||||||
Depreciation and amortization | 53 | 51 | 47 | 202 | 190 | ||||||||||||||||
Regulatory | 8 | 2 | 8 | 24 | 31 | ||||||||||||||||
Merger and strategic initiatives | 22 | 1 | 5 | 33 | 30 | ||||||||||||||||
Restructuring charges | 12 | 11 | 9 | 48 | 39 | ||||||||||||||||
Total operating expenses | 470 | 389 | 386 | 1,669 | 1,518 | ||||||||||||||||
Operating income | 318 | 326 | 260 | 1,234 | 1,017 | ||||||||||||||||
Interest income | - | - | 2 | 4 | 10 | ||||||||||||||||
Interest expense | (24 | ) | (24 | ) | (28 | ) | (101 | ) | (124 | ) | |||||||||||
Net gain on divestiture of business | - | - | - | - | 27 | ||||||||||||||||
Other income | - | 1 | 4 | 5 | 5 | ||||||||||||||||
Net income (loss) from unconsolidated investees | (27 | ) | 54 | 14 | 70 | 84 | |||||||||||||||
Income before income taxes | 267 | 357 | 252 | 1,212 | 1,019 | ||||||||||||||||
Income tax provision | 43 | 93 | 50 | 279 | 245 | ||||||||||||||||
Net income attributable to Nasdaq | $ | 224 | $ | 264 | $ | 202 | $ | 933 | $ | 774 | |||||||||||
Per share information: | |||||||||||||||||||||
Basic earnings per share | $ | 1.36 | $ | 1.61 | $ | 1.23 | $ | 5.67 | $ | 4.69 | |||||||||||
Diluted earnings per share | $ | 1.34 | $ | 1.58 | $ | 1.21 | $ | 5.59 | $ | 4.63 | |||||||||||
Cash dividends declared per common share | $ | 0.49 | $ | 0.49 | $ | 0.47 | $ | 1.94 | $ | 1.85 | |||||||||||
Weighted-average common shares outstanding | |||||||||||||||||||||
for earnings per share: | |||||||||||||||||||||
Basic | 164.5 | 164.2 | 164.5 | 164.4 | 164.9 | ||||||||||||||||
Diluted | 167.3 | 167.5 | 166.8 | 166.9 | 167.0 | ||||||||||||||||
Revenue Detail | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||
MARKET SERVICES REVENUES | ||||||||||||||||||||||
Equity Derivative Trading and Clearing Revenues | $ | 357 | $ | 317 | $ | 211 | $ | 1,258 | $ | 816 | ||||||||||||
Transaction-based expenses: | ||||||||||||||||||||||
Transaction rebates | (243 | ) | (214 | ) | (124 | ) | (828 | ) | (477 | ) | ||||||||||||
Brokerage, clearance and exchange fees | (22 | ) | (19 | ) | (14 | ) | (76 | ) | (47 | ) | ||||||||||||
Total net equity derivative trading and clearing revenues | 92 | 84 | 73 | 354 | 292 | |||||||||||||||||
Cash Equity Trading Revenues | 514 | 550 | 345 | 2,211 | 1,462 | |||||||||||||||||
Transaction-based expenses: | ||||||||||||||||||||||
Transaction rebates | (259 | ) | (303 | ) | (191 | ) | (1,200 | ) | (847 | ) | ||||||||||||
Brokerage, clearance and exchange fees | (150 | ) | (162 | ) | (89 | ) | (618 | ) | (352 | ) | ||||||||||||
Total net cash equity trading revenues | 105 | 85 | 65 | 393 | 263 | |||||||||||||||||
Fixed Income and Commodities Trading and Clearing Revenues | 17 | 15 | 16 | 64 | 70 | |||||||||||||||||
Transaction-based expenses: | ||||||||||||||||||||||
Transaction rebates | (1 | ) | (1 | ) | - | (1 | ) | (3 | ) | |||||||||||||
Brokerage, clearance and exchange fees | - | - | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||
Total net fixed income and commodities trading and clearing revenues | 16 | 14 | 15 | 62 | 66 | |||||||||||||||||
Trade Management Services Revenues | 78 | 76 | 72 | 299 | 291 | |||||||||||||||||
Total Net Market Services revenues | 291 | 259 | 225 | 1,108 | 912 | |||||||||||||||||
CORPORATE PLATFORMS REVENUES | ||||||||||||||||||||||
Listings Services revenues | 88 | 79 | 77 | 316 | 296 | |||||||||||||||||
IR & ESG Services revenues | 56 | 53 | 52 | 214 | 200 | |||||||||||||||||
Total Corporate Platforms revenues | 144 | 132 | 129 | 530 | 496 | |||||||||||||||||
INVESTMENT INTELLIGENCE REVENUES | ||||||||||||||||||||||
Market Data revenues | 104 | 107 | 96 | 409 | 398 | |||||||||||||||||
Index revenues | 97 | 86 | 57 | 324 | 223 | |||||||||||||||||
Analytics revenues | 46 | 45 | 41 | 175 | 158 | |||||||||||||||||
Total Investment Intelligence revenues | 247 | 238 | 194 | 908 | 779 | |||||||||||||||||
MARKET TECHNOLOGY REVENUES | 106 | 86 | 98 | 357 | 338 | |||||||||||||||||
OTHER REVENUES | - | - | - | - | 10 | |||||||||||||||||
REVENUES LESS TRANSACTION-BASED EXPENSES | $ | 788 | $ | 715 | $ | 646 | $ | 2,903 | $ | 2,535 | ||||||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in millions) | |||||||||
2020 | 2019 | ||||||||
Assets | (unaudited) | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 2,745 | $ | 332 | |||||
Restricted cash and cash equivalents | 37 | 30 | |||||||
Financial investments | 195 | 291 | |||||||
Receivables, net | 566 | 422 | |||||||
Default funds and margin deposits | 3,942 | 2,996 | |||||||
Other current assets | 175 | 219 | |||||||
Total current assets | 7,660 | 4,290 | |||||||
Property and equipment, net | 475 | 384 | |||||||
6,850 | 6,366 | ||||||||
Intangible assets, net | 2,255 | 2,249 | |||||||
Operating lease assets | 381 | 346 | |||||||
Other non-current assets | 358 | 289 | |||||||
Total assets | $ | 17,979 | $ | 13,924 | |||||
Liabilities | |||||||||
Current liabilities: | |||||||||
Accounts payable and accrued expenses | $ | 175 | $ | 148 | |||||
Section 31 fees payable to |
224 | 132 | |||||||
Accrued personnel costs | 227 | 188 | |||||||
Deferred revenue | 235 | 211 | |||||||
Other current liabilities | 121 | 161 | |||||||
Default funds and margin deposits | 3,942 | 2,996 | |||||||
Short-term debt | - | 391 | |||||||
Total current liabilities | 4,924 | 4,227 | |||||||
Long-term debt | 5,541 | 2,996 | |||||||
Deferred tax liabilities, net | 502 | 552 | |||||||
Operating lease liabilities | 389 | 331 | |||||||
Other non-current liabilities | 187 | 179 | |||||||
Total liabilities | 11,543 | 8,285 | |||||||
Commitments and contingencies | |||||||||
Equity | |||||||||
Nasdaq stockholders' equity: | |||||||||
Common stock | 2 | 2 | |||||||
Additional paid-in capital | 2,547 | 2,632 | |||||||
Common stock in treasury, at cost | (376 | ) | (336 | ) | |||||
Accumulated other comprehensive loss | (1,368 | ) | (1,686 | ) | |||||
Retained earnings | 5,628 | 5,027 | |||||||
Total Nasdaq stockholders' equity | 6,433 | 5,639 | |||||||
Noncontrolling interests | 3 | - | |||||||
Total equity | 6,436 | 5,639 | |||||||
Total liabilities and equity | $ | 17,979 | $ | 13,924 | |||||
Reconciliation of |
||||||||||||||||||||||
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 | |||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
$ | 224 | $ | 264 | $ | 202 | $ | 933 | $ | 774 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||
Amortization expense of acquired intangible assets (1) | 26 | 26 | 25 | 103 | 101 | |||||||||||||||||
Merger and strategic initiatives (2) | 22 | 1 | 5 | 33 | 30 | |||||||||||||||||
Restructuring charges (3) | 12 | 11 | 9 | 48 | 39 | |||||||||||||||||
Net gain on divestiture of business (4) | - | - | - | - | (27 | ) | ||||||||||||||||
Net (income) loss from unconsolidated investee (5) | 27 | (55 | ) | (14 | ) | (70 | ) | (82 | ) | |||||||||||||
Extinguishment of debt (6) | - | - | - | 36 | 11 | |||||||||||||||||
Charitable donations (7) | - | - | - | 17 | - | |||||||||||||||||
Provision for notes receivable (8) | - | 6 | - | 6 | 20 | |||||||||||||||||
Other (9) | 4 | (1 | ) | 8 | 8 | 17 | ||||||||||||||||
Total non-GAAP adjustments | 91 | (12 | ) | 33 | 181 | 109 | ||||||||||||||||
Non-GAAP adjustment to the income tax provision (10) | (44 | ) | 4 | (19 | ) | (77 | ) | (43 | ) | |||||||||||||
Excess tax benefits related to employee share-based compensation | (3 | ) | - | (1 | ) | (6 | ) | (5 | ) | |||||||||||||
Total non-GAAP adjustments, net of tax | 44 | (8 | ) | 13 | 98 | 61 | ||||||||||||||||
Non-GAAP net income attributable to Nasdaq | $ | 268 | $ | 256 | $ | 215 | $ | 1,031 | $ | 835 | ||||||||||||
$ | 1.34 | $ | 1.58 | $ | 1.21 | $ | 5.59 | $ | 4.63 | |||||||||||||
Total adjustments from non-GAAP net income above | 0.26 | (0.05 | ) | 0.08 | 0.59 | 0.37 | ||||||||||||||||
Non-GAAP diluted earnings per share | $ | 1.60 | $ | 1.53 | $ | 1.29 | $ | 6.18 | $ | 5.00 | ||||||||||||
Weighted-average diluted common shares outstanding for earnings per share: | 167.3 | 167.5 | 166.8 | 166.9 | 167.0 | |||||||||||||||||
(1) 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. | ||||||||||||||||||||||
(2) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above. | ||||||||||||||||||||||
(3) In |
||||||||||||||||||||||
(4) For the year ended |
||||||||||||||||||||||
(5) Primarily represents the earnings and losses recognized from our equity interest in the |
||||||||||||||||||||||
(6) For the year ended |
||||||||||||||||||||||
(7) For 2020 represents charitable donations made to the |
||||||||||||||||||||||
(8) For the three months ended |
||||||||||||||||||||||
(9) For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the |
||||||||||||||||||||||
(10) The non-GAAP adjustment to the income tax provision primarily includes the tax impact of each non-GAAP adjustment. In addition, for the three months and year ended |
||||||||||||||||||||||
Reconciliation of |
||||||||||||||||||||||
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, and Operating Expenses | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 | ||||||||||||||||||
$ | 318 | $ | 326 | $ | 260 | $ | 1,234 | $ | 1,017 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||
Amortization expense of acquired intangible assets (1) | 26 | 26 | 25 | 103 | 101 | |||||||||||||||||
Merger and strategic initiatives (2) | 22 | 1 | 5 | 33 | 30 | |||||||||||||||||
Restructuring charges (3) | 12 | 11 | 9 | 48 | 39 | |||||||||||||||||
Extinguishment of debt (4) | - | - | - | 36 | 11 | |||||||||||||||||
Charitable donations (5) | - | - | - | 17 | - | |||||||||||||||||
Provision for notes receivable (6) | - | 6 | - | 6 | 20 | |||||||||||||||||
Other (7) | 4 | (1 | ) | 12 | 12 | 22 | ||||||||||||||||
Total non-GAAP adjustments | 64 | 43 | 51 | 255 | 223 | |||||||||||||||||
Non-GAAP operating income | $ | 382 | $ | 369 | $ | 311 | $ | 1,489 | $ | 1,240 | ||||||||||||
Revenues less transaction-based expenses | $ | 788 | $ | 715 | $ | 646 | $ | 2,903 | $ | 2,535 | ||||||||||||
40 | % | 46 | % | 40 | % | 43 | % | 40 | % | |||||||||||||
Non-GAAP operating margin (9) | 48 | % | 52 | % | 48 | % | 51 | % | 49 | % | ||||||||||||
(1) 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. | ||||||||||||||||||||||
(2) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above. | ||||||||||||||||||||||
(3) In |
||||||||||||||||||||||
(4) For the year ended |
||||||||||||||||||||||
(5) For 2020 represents charitable donations made to the |
||||||||||||||||||||||
(6) For the three months ended |
||||||||||||||||||||||
(7) For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the SFSA recorded in regulatory expense in our Condensed Consolidated Statements of Income. The reversal of the regulatory fine is also included in the three months ended |
||||||||||||||||||||||
(8) |
||||||||||||||||||||||
(9) Non-GAAP operating margin equals non-GAAP operating income divided by revenues less transaction-based expenses. | ||||||||||||||||||||||
Reconciliation of |
||||||||||||||||||||||
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, and Operating Expenses | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
$ | 470 | $ | 389 | $ | 386 | $ | 1,669 | $ | 1,518 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||
Amortization expense of acquired intangible assets (1) | (26 | ) | (26 | ) | (25 | ) | (103 | ) | (101 | ) | ||||||||||||
Merger and strategic initiatives (2) | (22 | ) | (1 | ) | (5 | ) | (33 | ) | (30 | ) | ||||||||||||
Restructuring charges (3) | (12 | ) | (11 | ) | (9 | ) | (48 | ) | (39 | ) | ||||||||||||
Extinguishment of debt (4) | - | - | - | (36 | ) | (11 | ) | |||||||||||||||
Charitable donations (5) | - | - | - | (17 | ) | - | ||||||||||||||||
Provision for notes receivable (6) | - | (6 | ) | - | (6 | ) | (20 | ) | ||||||||||||||
Other (7) | (4 | ) | 1 | (12 | ) | (12 | ) | (22 | ) | |||||||||||||
Total non-GAAP adjustments | (64 | ) | (43 | ) | (51 | ) | (255 | ) | (223 | ) | ||||||||||||
Non-GAAP operating expenses | $ | 406 | $ | 346 | $ | 335 | $ | 1,414 | $ | 1,295 | ||||||||||||
(1) 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. | ||||||||||||||||||||||
(2) We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third party transaction costs and will vary based on the size and frequency of the activities described above. | ||||||||||||||||||||||
(3) In |
||||||||||||||||||||||
(4) For the year ended |
||||||||||||||||||||||
(5) For 2020 represents charitable donations made to the |
||||||||||||||||||||||
(6) For the three months ended |
||||||||||||||||||||||
(7) For 2020 primarily includes charges associated with duplicative rent and impairment of leasehold assets related to our global headquarters move recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income, and the reversal of a regulatory fine issued by the SFSA recorded in regulatory expense in our Condensed Consolidated Statements of Income. The reversal of the regulatory fine is also included in the three months ended |
||||||||||||||||||||||
Quarterly Key Drivers Detail | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
2020 | 2020 | 2019 | ||||||||||||||
Market Services | ||||||||||||||||
Equity Derivative Trading and Clearing | ||||||||||||||||
Total industry average daily volume (in millions) | 30.6 | 28.1 | 17.7 | |||||||||||||
Nasdaq PHLX matched market share | 13.5% | 12.8% | 15.9% | |||||||||||||
The Nasdaq Options Market matched market share | 9.0% | 9.6% | 8.4% | |||||||||||||
Nasdaq BX Options matched market share | 0.2% | 0.2% | 0.2% | |||||||||||||
Nasdaq ISE Options matched market share | 7.6% | 6.9% | 9.1% | |||||||||||||
Nasdaq GEMX Options matched market share | 6.4% | 6.3% | 4.2% | |||||||||||||
Nasdaq MRX Options matched market share | 1.1% | 0.9% | 0.4% | |||||||||||||
Total matched market share executed on Nasdaq's exchanges | 37.8% | 36.7% | 38.2% | |||||||||||||
Nasdaq Nordic and Nasdaq Baltic options and futures | ||||||||||||||||
Total average daily volume options and futures contracts (1) | 275,686 | 256,478 | 401,078 | |||||||||||||
Cash Equity Trading | ||||||||||||||||
Total |
||||||||||||||||
Total industry average daily share volume (in billions) | 10.5 | 9.9 | 6.8 | |||||||||||||
Matched share volume (in billions) | 115.4 | 123.7 | 79.5 | |||||||||||||
15.9% | 18.0% | 16.4% | ||||||||||||||
Nasdaq BX matched market share | 0.7% | 0.8% | 1.4% | |||||||||||||
Nasdaq PSX matched market share | 0.6% | 0.6% | 0.6% | |||||||||||||
Total matched market share executed on Nasdaq's exchanges | 17.2% | 19.4% | 18.4% | |||||||||||||
Market share reported to the |
33.7% | 32.0% | 30.2% | |||||||||||||
Total market share (2) | 50.9% | 51.4% | 48.6% | |||||||||||||
Nasdaq Nordic and Nasdaq Baltic securities | ||||||||||||||||
Average daily number of equity trades executed on Nasdaq's exchanges | 961,924 | 819,751 | 625,833 | |||||||||||||
Total average daily value of shares traded (in billions) | $ | 5.9 | $ | 4.8 | $ | 4.5 | ||||||||||
Total market share executed on Nasdaq's exchanges | 79.4% | 77.5% | 76.1% | |||||||||||||
Fixed Income and Commodities Trading and Clearing | ||||||||||||||||
Fixed Income | ||||||||||||||||
$ | 1,650 | $ | 1,206 | $ | 1,796 | |||||||||||
Total average daily volume of Nasdaq Nordic and traded Nasdaq Baltic fixed income contracts | 96,006 | 87,668 | 105,434 | |||||||||||||
Commodities | ||||||||||||||||
Power contracts cleared (TWh) (3) | 286 | 195 | 229 | |||||||||||||
Corporate Platforms | ||||||||||||||||
Initial public offerings | ||||||||||||||||
142 | 105 | 50 | ||||||||||||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic | 24 | 5 | 12 | |||||||||||||
Total new listings | ||||||||||||||||
199 | 144 | 107 | ||||||||||||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (5) | 34 | 11 | 17 | |||||||||||||
Number of listed companies | ||||||||||||||||
3,392 | 3,249 | 3,140 | ||||||||||||||
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic (7) | 1,071 | 1,049 | 1,040 | |||||||||||||
Investment Intelligence | ||||||||||||||||
Number of licensed exchange traded products (ETPs) | 339 | 335 | 332 | |||||||||||||
ETP assets under management (AUM) tracking Nasdaq indexes (in billions) | $ | 359 | $ | 313 | $ | 233 | ||||||||||
Market Technology | ||||||||||||||||
Order intake (in millions) (8) | $ | 37 | $ | 84 | $ | 204 | ||||||||||
Annualized recurring revenues (in millions) (9) | $ | 283 | $ | 278 | $ | 260 | ||||||||||
(1) Includes Finnish option contracts traded on Eurex for which Nasdaq and Eurex have a revenue share agreement. | ||||||||||||||||
(2) Includes transactions executed on |
||||||||||||||||
(3) Transactions executed on |
||||||||||||||||
(4) New listings include IPOs, including issuers that switched from other listing venues, closed-end funds and separately listed ETPs. | ||||||||||||||||
(5) 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. | ||||||||||||||||
(6) Number of total listings on |
||||||||||||||||
(7) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of Nasdaq First North at period end. | ||||||||||||||||
(8) Total contract value of orders signed during the period. | ||||||||||||||||
(9) Annualized Recurring Revenue, or ARR, for a given period is the annualized revenue of Market Technology support and SaaS subscription contracts. ARR is currently one of our key performance metrics to assess the health and trajectory of our business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts during the reporting period used in calculating ARR may or may not be extended or renewed by our customers. | ||||||||||||||||