Nasdaq Reports Third Quarter 2022 Results; Continues Strong Growth in Solutions Segments Revenue

NEW YORK, Oct. 19, 2022 (GLOBE NEWSWIRE) -- Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the third quarter of 2022.

• Third quarter 2022 net revenues1 increased 6% compared to the third quarter of 2021. Solutions segments2 revenues increased 8%, including 10% organic growth, partially offset by a negative 2% FX impact.
• Annualized Recurring Revenue (ARR)3 increased 8% compared to the third quarter of 2021. Annualized SaaS revenues increased 13% and represented 35% of ARR.
• Third quarter 2022 GAAP diluted earnings per share increased 5% compared to the third quarter of 2021. Third quarter 2022 non-GAAP4 diluted earnings per share increased 15% compared to the third quarter of 2021.
• In September, the company announced it will be implementing a new corporate structure in the fourth quarter of 2022. Supplemental recast segment financial information is now available on the Nasdaq IR website, and the company will update investors on its strategy and objectives at the November 8, 2022 Investor Day.

Third Quarter 2022 Highlights

Adena Friedman, President and CEO, said, “Nasdaq’s strong third quarter results, and in particular the sustained organic growth against a turbulent capital markets backdrop, are a testament to the effective competitive position of the company today. The new corporate structure announced last month is designed to further advance our strategy, enhance our client focus and better position the organization to capture the dynamic opportunities inherent in our growth pillars.”

Ann Dennison, Executive Vice President and CFO, said, “Our third quarter results reflect the carefully calibrated investments in our largest growth opportunities. With our deep client relationships and our resilient business model, we expect to continue to respond effectively to a wide range of operating environments. We have also positioned the balance sheet to minimize the impact of rising rates and to maintain flexibility to support our growth strategy.”

FINANCIAL REVIEW

• Third quarter 2022 net revenues were $890 million, an increase of $52 million, or 6%, from $838 million in the prior year period. Net revenues reflected a $77 million, or 9%, positive impact from organic growth, including positive contributions from all segments, partially offset by a $22 million decrease from the impact of changes in FX rates and a $3 million decrease from the net impact of an acquisition and divestitures.
• Solutions segments revenues were $584 million in the third quarter of 2022, an increase of $43 million, or 8%. The increase reflects a $53 million, or 10%, positive impact from organic growth, and a $1 million increase from acquisitions, partially offset by a $11 million decrease from the impact of changes in FX rates.
• Market Services net revenues were $305 million in the third quarter of 2022, an increase of $13 million, or 4%. The increase reflects a $24 million, or 8%, positive impact from organic growth, partially offset by a $11 million decrease from the impact of changes in FX rates.
• Third quarter 2022 GAAP operating expenses increased $10 million, or 2%, versus the prior year period. The increase primarily reflects higher compensation and benefits expense due to continued investment in our people, higher computer operations and data communications expense, partially offset by lower general, administrative and other expense due to lower capital markets activity and lower depreciation and amortization expense.
• Third quarter 2022 non-GAAP operating expenses increased $20 million, or 5% versus the prior year period. The increase reflects a $40 million, or 10%, organic increase over the prior year period, partially offset by a $19 million decrease from the impact of changes in FX rates and a $1 million decrease from the net impact of acquisition and divestitures. The organic increase primarily reflects higher compensation and benefits expense due to continued investment in our people, higher general, administrative and other expense reflecting increased travel, and higher computer operations and data communications expense, partially offset by lower marketing and advertising expense due to lower capital markets activity.
• The company repurchased $633 million in shares of its common stock during the first nine months of 2022. As of September 30, 2022, there was $293 million remaining under the board authorized share repurchase program.

2022 EXPENSE AND TAX GUIDANCE UPDATE5

• The company is narrowing its 2022 non-GAAP operating expense guidance to a range of $1,700 to $1,720 million. Nasdaq expects its 2022 non-GAAP tax rate to be in the range of 24% to 25%.

STRATEGIC AND BUSINESS UPDATES

• Nasdaq announces new corporate structure to amplify strategy. On September 28, 2022, Nasdaq announced that it is organizing its business units into three divisions: Market Platforms, Capital Access Platforms, and Anti-Financial Crime. This new structure will align the company more closely to the foundational shifts that are driving the evolution of the global financial system and evolving client needs. The new structure will take effect by the end of the fourth quarter of 2022 with the corresponding executive appointments taking effect on January 1, 2023.  
• Nasdaq establishes new Digital Assets business to power the digital asset ecosystem. The planned launch underpins Nasdaq’s ambition to facilitate broader institutional participation in digital assets by providing trusted and institutional-grade solutions, focused on custody, liquidity and integrity. Nasdaq Digital Assets will initially develop an advanced custody solution. Additionally, Nasdaq has expanded its anti-financial crime technology with new coverage for the cryptocurrency ecosystem, including a comprehensive suite of crypto-specific detection capabilities.  
• Nasdaq’s annualized SaaS revenues in the third quarter of 2022 increased 13% year over year. Annualized SaaS revenues totaled $699 million in the third quarter of 2022, representing 35% of total company ARR, up from 34% in the third quarter of 2021. The 13% year over year increase in annualized SaaS revenues primarily reflects strong growth in our Anti-Financial Crime and Analytics businesses.  
• Corporate Platforms delivered year over year growth from both IR and ESG Services and Listing Services. IR & ESG Services revenues in the third quarter of 2022 increased 13% reflecting higher adoption and stronger retention across the breadth of investor relations and ESG advisory offerings. Listing Services revenues in the third quarter of 2022 increased 6% to $105 million.  
• Investment Intelligence continues to deliver strong revenue growth led by Analytics and Index. The Analytics business, led by eVestment, saw continued strong user adoption across both asset owners and asset managers as annualized SaaS revenues increased 10% to $218 million. In our Index business, revenues increased 5% year over year and the business experienced strong net inflows of $56 billion over the last 12 months, partially offsetting the impact of market depreciation. Additionally, the number of contracts traded on futures and other derivatives tracking Nasdaq indexes increased 53% year over year.  
• Nasdaq led all exchanges in total multiply-listed options traded, and Trade Management Services set a quarterly record for revenues. In the third quarter and first nine months of 2022, Nasdaq led all exchanges during the period in total volume traded for multiply-listed equity options. In our Trade Management Business, revenues increased 10% in the third quarter of 2022 versus the prior year period due to increased demand for connectivity and infrastructure services.

____________

1 Represents revenues less transaction-based expenses.2 Constitutes revenues from Market Technology, Investment Intelligence and Corporate Platforms segments.3 Annualized Recurring Revenue (ARR) for a given period is the annualized revenue derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring 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.4 Refer to our reconciliations of U.S. GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses, included in the attached schedules.5 U.S. GAAP operating expense and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business. 

ABOUT NASDAQ

Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital markets and other industries. Our diverse offering of data, analytics, software and services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.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, non-GAAP net income attributable to Nasdaq, non-GAAP diluted earnings per share, non-GAAP operating income, and non-GAAP 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 in the reconciliation tables 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. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as a comparative measure. Investors should not rely on any single financial measure when evaluating our business. This information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. 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 reconciliations, 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 those noted above, 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 that have less bearing on our ongoing operating performance.

Organic revenue and expense growth, organic change and organic impact are non-GAAP measures that reflect adjustments for: (i) the impact of period-over-period changes in foreign currency exchange rates, and (ii) the revenues, expenses and operating income associated with acquisitions and divestitures for the twelve month period following the date of the acquisition or divestiture. Reconciliations of these measures are described within the body of this release.

Foreign exchange impact: 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, 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, divestitures and other strategic, restructuring, technology, de-leveraging and capital allocation initiatives, including the proposed stock split, (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, geopolitical instability arising from the Russian invasion of Ukraine, 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.

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.

Nasdaq Media Relations Contact:

Will Briganti +1.646.964.8169 william.briganti@nasdaq.com

Nasdaq Investor Relations Contact:

Ed Ditmire, CFA +1.212.401.8737 ed.ditmire@nasdaq.com

-NDAQF-