Nasdaq Reports Q2 Financial Metrics, FX Stymies Revenues

Nasdaq reported mixed operating metrics during Q2 2015, which despite a record non-GAAP income showed some FX-related headwinds.

Nasdaq has reported its financial metrics for Q2 2015, which were highlighted by a record non-GAAP income, according to a Nasdaq statement.

During Q2 2015, Nasdaq yielded a non-GAAP diluted EPS of $0.83 – conversely, its GAAP diluted EPS stood at $0.77. In terms of net revenues during Q2 2015, Nasdaq reported $518 million, which corresponds to a decline of -1% YoY from Q2 2014.

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Moreover, non-GAAP operating expenses during Q2 were reported at $281 million, representing a drop of -3% QoQ from Q1 2015. However, on an organic basis, excluding the impact of foreign exchange (FX) and acquisitions, non-GAAP operating expenses were unchanged in the H1 2015, vs. H1 2014.

Nasdaq’s non-GAAP operating margin also came in at 46% in Q2 2015, up a steadfast 45% YoY from Q2 2014. Finally, Nasdaq returned $67 million to shareholders, 47% of non-GAAP net income, including $25 million in share buybacks and $42 million in dividends, reflecting a 67% increase in the quarterly dividend.

Business Highlights Breakdown

Nasdaq’s Market Services soaked up approximately 36% of its total net revenues in Q2 2015 – overall, its Market Services saw net revenues of $189 million in Q2 2015, down -4.1% YoY from $197 million in Q2 2014. The $8 million YoY decrease is reflective of a $6 million operational increase, which was pared by a $14 million decrease due to volatility and changes in FX rates.

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Additionally, Nasdaq’s net equity derivative trading and clearing revenues reported $44 million in Q2 2015, down -12% YoY from $50 million in Q2 2014. Like its Market Services, the weakness in equity derivatives’ revenue was fueled by a lower market share in US options and changes in FX rates.

Finally, Nasdaq’s Fixed Income, Currency and Commodities (FICC) net trading and clearing revenues yielded $24 million in Q2 2015, down -22.6% YoY from $31 million in Q2 2014.

According to Bob Greifeld, CEO, Nasdaq, in a recent statement on the Q2 metrics, “In the second quarter, Nasdaq delivered record results and solid earnings growth despite a mixed backdrop for the industry and continued FX headwinds. Our customer focused approach to the capital markets industry, including investors, intermediaries and issuers, delivered solid organic revenue growth despite the low volatility environment.”

“As we move into the second half of 2015, we look forward to continuing our strong performance in foundational equity listings and trading businesses, working to accelerate growth through product enhancements and other initiatives, and to launching NFX, a broad-based partnership with leading market participants to bring more significant choice to the energy derivatives market. Nasdaq’s strategic evolution and expanded capabilities have multiplied the opportunities to meet the needs of our customers, and our focus in meeting these challenges will continue to drive our growth,” added Mr. Greifeld.

“Nasdaq’s hallmark focus on efficiency, and in particular recent restructuring efforts, have resulted in flat organic expense levels in the first half of the year, meaningfully offsetting the significant impact of elevated foreign exchange headwinds,” said Lee Shavel, EVP and CFO, Nasdaq. “Growth in earnings and cash flow has been coupled with a 67% increase in the dividend and opportunistic buybacks on the capital return front, continued investment in research and development, and the acquisition of Dorsey Wright, which is performing well above initial expectations.”

Last week, Nasdaq made headlines after Market Prophit, a provider of real-time stock market sentiment analysis of social media conversations, licensed its platform to the Nasdaq’s Market Intelligence Desk. The integration saw a reinforcement of Nasdaq’s Market Intelligence Desk utility, which aimed to provide touch-points for trading analysis and market information.

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