Nasdaq Q3 Earnings Beat on Higher Revs - Analyst Blog

Nasdaq OMX Group Inc. (NDAQ) reported third-quarter 2013 operating earnings per share of 66 cents. The result beat the Zacks Consensus Estimate as well as the year-ago earnings figure by 4 cents.

Nasdaq’s total net operating exchange revenues increased 23% year over year to $506 million, and beat the Zacks Consensus Estimate of $502 million. On a constant currency basis and excluding acquisitions, revenues grew 4% year over year in the reported quarter.

The growth was primarily attributable to improved revenues from listing, information, technology and derivatives, all driven by both organic and inorganic attributes. Moreover, revenues from market services witnessed improvement in the quarter.

Segment-wise, Market Services net exchange revenues for the quarter increased 8.1% from the year-ago period to $200 million, attributable to lower cost of revenues. Listing Services revenues for the reported quarter were $57 million, up 3.6% from the year-ago period, owing to improved performance in the European markets. Revenues from Information Services improved 19.2% to $119 million, whereas Technology Solutions revenues stood at $131 million, surging 79% from the year-ago quarter.

During the reported quarter, Nasdaq’s order intakes improved to $119 million from $34 million in the year-ago quarter. Additionally, total order value (the value of orders signed that have not been recognized as revenues) increased to $579 million from $540 million in the prior-year quarter. New listings totaled 64 against 44 in the year-ago quarter.

Meanwhile, on a non-GAAP basis, operating expenses stood at $304 million, up 32% from the year-ago period. The upside was due to expenses related to the acquisitions of Thomson Reuters' IR, PR and Multimedia businesses and the eSpeed electronic fixed income platform. Consequently, operating margin contracted 400 basis points year over year to 40%.

Financial Update

As of Sep 30, 2013, Nasdaq had cash and cash equivalents of $381 million, down from $582 million at the end of 2012. Debt obligations of Nasdaq stood at $2.67 billion, up from $1.84 billion at 2012-end. However, Nasdaq paid $98 million of debt in the reported quarter.

Total assets of Nasdaq increased to $12.5 billion from $9.13 billion at 2012-end, while total equity improved to $6.1 billion from $5.2 billion at 2012-end.

Guidance

Management narrowed core operating expense projection to $1.075–1.090 billion from $1.070-1.100 billion guided earlier. Additionally, the company expects approximately $45 million of incremental expenses from new initiative spending (down from the earlier range of $50–$60 million). Including these charges, total expenses are projected in the range of $1.120–$1.135 billion, narrowed from the guidance of $1.12–1.16 billion provided earlier.

Dividend

Concurrently, the board of directors of Nasdaq declared a cash dividend of 13 cents per share, which is payable on Dec 27, 2013 to shareholders of record as on Dec 13, 2013.

Other Strong Performers in the Finance Space

American Express Co. (AXP) reported its third-quarter 2013 operating earnings per share of $1.25. The result comfortably surpassed both the Zacks Consensus Estimate of $1.22 and the year-ago quarter earnings of $1.09 a share.

Capital One Financial Corp.’s (COF) third-quarter 2013 earnings per share of $1.86 outpaced the Zacks Consensus Estimate of $1.77.

Euronet Worldwide Inc. (EEFT) reported third-quarter operating net income of 51 cents per share, beating the Zacks Consensus Estimate of 48 cents and the year-ago figure of 38 cents.

Zacks Rank

Nasdaq currently carries a Zacks Rank #4 (Sell).

AMER EXPRESS CO (AXP): Free Stock Analysis Report

CAPITAL ONE FIN (COF): Free Stock Analysis Report

EURONET WORLDWD (EEFT): Free Stock Analysis Report

NASDAQ OMX GRP (NDAQ): Free Stock Analysis Report

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