Nasdaq’s Secures Strong Q2 Revenue Growth, Fueled by M&A Activity

Revenues swelled during Q2 2016, though net income weighed down an otherwise upbeat earnings report.

Nasdaq, Inc. (Nasdaq:NDAQ), one of the largest market operators in the US, has reported its Q2 2016 financials, which were highlighted by upbeat revenues and an outperformance across key figures, per a Nasdaq release.

In particular, the group (Nasdaq:NDAQ) showed strong revenues of $559 million in Q2 2016, up 8.0% YoY from $518 million in Q2 2015. Looking at a quarterly snapshot, Nasdaq also managed to see higher returns, yielding a QoQ climb of 4.7% from $534 million in revenues in Q1 2016.

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Overall, the growth in revenues was sparked by a net positive impact in Nasdaq’s acquisitions and M&A activity in past quarters. This included a $24 million boost, as well as a $14 million positive impact from operations, and $3 million positive impact from changes in foreign exchange rates.

Key Financial Highlights

Looking further into the tranche of data, Nasdaq’s operating expenses during Q2 2016 were $385 million, rising abruptly by a factor of 27.9% YoY from just $301 million in the Q2 2015. The jump was less pronounced relative to Q1 2016 which saw operating expenses of $315 million, or 22.2% QoQ from Q1 2016.

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While higher than its long term averages, the increase in expenses was reflective of higher merger and strategic initiatives expense of $32 million, restructuring charges of $31 million, and $15 million in incremental expenses garnered from the acquisitions of Nasdaq CXC (formerly Chi-X Canada), and others.

The lone blemish to Nasdaq’s Q2 figures was on display in its net income, which fell to $176 million in Q2 2016, down -18.9% from $217 million in Q2 2015. In addition, net income was also lower QoQ by -19.6% QoQ from $219 million in Q1 2016.

According to Bob Greifeld, CEO, Nasdaq, in a recent statement on the earnings: “Nasdaq has experienced broad-based demand for our distinctive technology, services and solutions, resulting in continued organic growth from each of our business segments. 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.”

“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,” added Mr. Greifeld.

Nasdaq made headlines earlier this month after the Japan Exchange Group (JPX) integrated its next-generation derivatives trading system via the JPX subsidiary, Osaka Exchange (OSE). The extension of the system represented the latest assimilation between the two groups, having worked together since 2011.

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