Nasdaq Reports Record Fourth Quarter and Full Year 2015 Results
- The company achieved record net revenues and diluted EPS, as well as record non-GAAP diluted EPS for both the fourth quarter of 2015 and the full year ended
December 31, 2015 . - Fourth quarter 2015 non-GAAP diluted EPS of
$0.89 , an increase of 10% compared to the fourth quarter of 2014. Fourth quarter 2015 GAAP diluted EPS was$0.88 . - Fourth quarter 2015 net revenues1 were
$536 million , up 4% year-over-year. On an organic basis, excluding the impact of changes in foreign exchange rates and acquisitions, net revenues increased 5%. - Non-trading segment organic revenue growth was 8% in the fourth quarter of 2015.
- In the fourth quarter, Nasdaq repurchased approximately
$67 million of common stock. Through dividend payments and stock buybacks, the company returned$526 million in capital to shareholders in 2015.
"Over the last several years, we have built a strategic portfolio of businesses that provide a level of resiliency through significant
non-transaction revenue streams and scale potential through a strong global trading franchise," said
On a non-GAAP basis, fourth quarter 2015 operating expenses were
"The fourth quarter capped a year of significant cash flow generation, and we continued to apply our return on invested capital based discipline to directing capital deployment," said
1 Represents revenues less transaction-based expenses.
On a non-GAAP basis, net income attributable to Nasdaq
for the fourth quarter of 2015 was
Please refer to our reconciliation of GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses included in the attached schedules.
The company repurchased 1.2 million shares, or
At
BUSINESS HIGHLIGHTS
Market Services (36% of total net revenues) - Net revenues were
Equity Derivatives (9% of total net revenues) - Net equity derivative trading and clearing revenues were
$48 million in the fourth quarter of 2015, down$5 million compared to the fourth quarter of 2014. The decrease in equity derivatives revenue was driven by lower industry trading volumes, lower U.S. market share, and foreign exchange impact.
Cash Equities (12% of total net revenues) - Net cash equity trading revenues were$66 million in the fourth quarter of 2015, up$7 million compared to the fourth quarter of 2014. The increase in cash equity revenue resulted from higherU.S. average net capture, partially offset by lower U.S. market share and foreign exchange impact.Fixed Income, Currency and Commodities (4% of total net revenues) - Net FICC trading and clearing revenues were
$20 million in the fourth quarter of 2015, down$9 million from the fourth quarter of 2014, due to volume declines inU.S. fixed income and commodities products, and foreign exchange impact.Access and Broker Services (11% of total net revenues) - Access and broker services revenues were
$61 million in the fourth quarter of 2015, up$1 million compared to the fourth quarter of 2014, as organic revenue increases were partially offset by foreign exchange impact.
Information Services (24% of total net revenues) - Revenues were
Data Products (18% of total net revenues) - Data products revenues were
$98 million in the fourth quarter of 2015, up$7 million compared to the fourth quarter of 2014, as increased revenue from proprietary and shared tape revenue plans as well as the inclusion of revenue associated with the DWA acquisition were partially offset by the negative impact of changes in foreign exchange rates.
Index Licensing and Services (6% of total net revenues) - Index licensing and services revenues were$29 million in the fourth quarter of 2015, up$7 million from the fourth quarter of 2014. The revenue growth was primarily driven by the DWA acquisition, including subsequent growth since closing the transaction.
Technology Solutions (27% of total net revenues) - Revenues were
Corporate Solutions (14% of total net revenues) - Corporate solutions revenues were
$75 million in the fourth quarter of 2015, down$3 million from the fourth quarter of 2014. The corporate solutions revenue decline was primarily due to the impact of changes in foreign exchange rates.Market Technology (13% of total net revenues) - Market technology revenues were
$71 million in the fourth quarter of 2015, up$7 million from the fourth quarter of 2014. The increase was driven by organic growth in surveillance products and higher change request revenue, partially offset by changes in foreign exchange rates. New order intake was$116 million for the fourth quarter of 2015, and the order backlog atDecember 31, 2015 was$788 million , up 10% from the prior year period and an all-time record.
Listing Services (13% of total net revenues) - Revenues
were
INITIATING 2016 NON-GAAP EXPENSE GUIDANCE - The company has initiated 2016 non-GAAP operating expense guidance of
CORPORATE HIGHLIGHTS
-
The Nasdaq Stock Market (Nasdaq) LedU.S. Exchanges for IPOs in 4Q15 and 2015. Nasdaq welcomed 72 new listings in the fourth quarter of 2015, including 32 IPOs. Approximately 78% and 73% of allU.S. IPOs listed with Nasdaq in the fourth quarter of 2015 and full year 2015, respectively. IPOs in the fourth quarter of 2015 included companies from diverse industries including healthcare, financial services, and technology, including Match Group, NovoCure, CPI Card Group, Allegiance Bancshares and Atlassian. - Continued momentum at The NASDAQ Private Market (NPM). Nasdaq completed its acquisition of
SecondMarket while growth continued across the client base in ExactEquity, outsourced administration, structured liquidity programs and NPM membership. NPM, including the partial-quarter impact ofSecondMarket , served 107 private companies using subscription products like equity cap table administration or executing liquidity events in 2015, up from 61 in 2014. - Nasdaq Linq enables private securities issuance using blockchain technology. Nasdaq Linq successfully recorded a private securities transaction using blockchain technology, enabling the issuer to digitally represent a record of ownership while significantly reducing settlement time and eliminating the use of paper certificates. In November, Nasdaq announced that it is exploring the application of its blockchain technology to proxy voting in
Estonia , a second application of blockchain technology. - Borsa Istanbul's initial technology implementation goes live. Borsa Istanbul went live in mid-December on nine of Nasdaq's market-leading technologies including trading and clearing, settlement, market data management, index calculation, market surveillance, business intelligence, and pre- and post-trade risk management. The initial implementation is for Borsa İstanbul's equity market, and the exchange has also agreed to implement Nasdaq technology for its other markets, including derivatives, debt securities, and precious metals markets.
- Nasdaq announces agreement to acquire Chi-X Canada. In
December 2015 , Nasdaq announced that it will acquire Chi-X Canada, an Alternative Trading System forToronto Stock Exchange (TSX) andTSX Venture Securities , from Chi-X Global. The acquisition provides Nasdaq with direct access to the Canadian equities market and is expected to close in the first quarter of 2016. The deal expands Nasdaq's North American equities trading business and will ultimately enhance the trading experience for market participants across technology and functionality.
ABOUT
NON-GAAP INFORMATION
In addition to disclosing results determined in accordance with GAAP, Nasdaq also discloses certain non-GAAP results of operations, including, but not limited to, net income attributable to Nasdaq, diluted earnings per share, operating income, and operating expenses, that include certain adjustments or exclude certain charges and gains that are described in the reconciliation table of GAAP to non-GAAP information provided at the end of this release. Management believes that this non-GAAP information provides investors with additional information to assess Nasdaq's operating performance and assists investors in comparing our operating performance to prior periods. Management uses this non-GAAP information, along with GAAP information, in evaluating its historical operating performance.
The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.
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, growth, trading volumes, products and services, order backlog, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain strategic, restructuring, technology, de-leveraging and capital return 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,
NDAQF
| | |||||||||||||||||||
| Condensed Consolidated Statements of Income | |||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| | | | | | |||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenues: | |||||||||||||||||||
| Market Services | $ | 524 | $ | 542 | $ | 603 | $ | 2,084 | $ | 2,229 | |||||||||
| Transaction-based expenses: | |||||||||||||||||||
| Transaction rebates | (249 | ) | (256 | ) | (294 | ) | (983 | ) | (1,065 | ) | |||||||||
| Brokerage, clearance and exchange fees | (80 | ) | (86 | ) | (108 | ) | (330 | ) | (368 | ) | |||||||||
| Total Market Services revenues less transaction-based expenses | 195 | 200 | 201 | 771 | 796 | ||||||||||||||
| Listing Services | 68 | 66 | 61 | 264 | 238 | ||||||||||||||
| Information Services | 127 | 132 | 113 | 512 | 473 | ||||||||||||||
| Technology Solutions | 146 | 131 | 142 | 543 | 560 | ||||||||||||||
| Revenues less transaction-based expenses | 536 | 529 | 517 | 2,090 | 2,067 | ||||||||||||||
| Operating Expenses: | |||||||||||||||||||
| Compensation and benefits | 149 | 150 | 149 | 590 | 588 | ||||||||||||||
| Marketing and advertising | 9 | 6 | 8 | 28 | 32 | ||||||||||||||
| Depreciation and amortization | 35 | 34 | 33 | 138 | 137 | ||||||||||||||
| Professional and contract services | 39 | 33 | 40 | 148 | 157 | ||||||||||||||
| Computer operations and data communications | 26 | 23 | 24 | 107 | 92 | ||||||||||||||
| Occupancy | 22 | 22 | 34 | 85 | 110 | ||||||||||||||
| Regulatory | 6 | 7 | 6 | 27 | 27 | ||||||||||||||
| Merger and strategic initiatives | 4 | 4 | 35 | 10 | 81 | ||||||||||||||
| General, administrative and other | (12 | ) | 11 | 15 | 65 | 89 | |||||||||||||
| Restructuring charges | 12 | 8 | - | 172 | - | ||||||||||||||
| Total operating expenses | 290 | 298 | 344 | 1,370 | 1,313 | ||||||||||||||
| Operating income | 246 | 231 | 173 | 720 | 754 | ||||||||||||||
| Interest income | 1 | 1 | 2 | 4 | 6 | ||||||||||||||
| Interest expense | (28 | ) | (28 | ) | (28 | ) | (111 | ) | (117 | ) | |||||||||
| Net income from unconsolidated investees | - | 2 | - | 17 | - | ||||||||||||||
| Asset impairment charges | - | - | (49 | ) | - | (49 | ) | ||||||||||||
| Income before income taxes | 219 | 206 | 98 | 630 | 594 | ||||||||||||||
| Income tax provision | 71 | 68 | 11 | 203 | 181 | ||||||||||||||
| Net income | 148 | 138 | 87 | 427 | 413 | ||||||||||||||
| Net loss attributable to noncontrolling interests | - | - | - | 1 | 1 | ||||||||||||||
| Net income attributable to Nasdaq | $ | 148 | $ | 138 | $ | 87 | $ | 428 | $ | 414 | |||||||||
| Per share information: | |||||||||||||||||||
| Basic earnings per share | $ | 0.90 | $ | 0.83 | $ | 0.52 | $ | 2.56 | $ | 2.45 | |||||||||
| Diluted earnings per share | $ | 0.88 | $ | 0.80 | $ | 0.50 | $ | 2.50 | $ | 2.39 | |||||||||
| Cash dividends declared per common share | $ | 0.25 | $ | 0.25 | $ | 0.15 | $ | 0.90 | $ | 0.58 | |||||||||
| Weighted-average common shares outstanding for earnings per share: | |||||||||||||||||||
| Basic | 164.6 | 166.9 | 168.2 | 167.3 | 168.9 | ||||||||||||||
| Diluted | 168.9 | 171.5 | 172.5 | 171.3 | 173.0 | ||||||||||||||
| Revenue Detail | |||||||||||||||||||
| (in millions) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| | | | | | |||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| MARKET SERVICES REVENUES | |||||||||||||||||||
| Equity Derivative Trading and Clearing Revenues | $ | 109 | $ | 109 | $ | 135 | $ | 432 | $ | 525 | |||||||||
| Transaction-based expenses: | |||||||||||||||||||
| Transaction rebates | (56 | ) | (53 | ) | (73 | ) | (223 | ) | (285 | ) | |||||||||
| Brokerage, clearance and exchange fees | (5 | ) | (5 | ) | (9 | ) | (21 | ) | (32 | ) | |||||||||
| Total net equity derivative trading and clearing revenues | 48 | 51 | 53 | 188 | 208 | ||||||||||||||
| Cash Equity Trading Revenues | 331 | 349 | 378 | 1,315 | 1,335 | ||||||||||||||
| Transaction-based expenses: | |||||||||||||||||||
| Transaction rebates | (191 | ) | (202 | ) | (221 | ) | (756 | ) | (780 | ) | |||||||||
| Brokerage, clearance and exchange fees | (74 | ) | (80 | ) | (98 | ) | (306 | ) | (332 | ) | |||||||||
| Total net cash equity trading revenues | 66 | 67 | 59 | 253 | 223 | ||||||||||||||
| Fixed Income, Currency and Commodities Trading and Clearing Revenues | 23 | 25 | 30 | 98 | 130 | ||||||||||||||
| Transaction-based expenses: | |||||||||||||||||||
| Transaction rebates | (2 | ) | (1 | ) | - | (4 | ) | - | |||||||||||
| Brokerage, clearance and exchange fees | (1 | ) | (1 | ) | (1 | ) | (3 | ) | (4 | ) | |||||||||
| Total net fixed income, currency and commodities trading and clearing revenues | 20 | 23 | 29 | 91 | 126 | ||||||||||||||
| Access and Broker Services Revenues | 61 | 59 | 60 | 239 | 239 | ||||||||||||||
| Total Net Market Services revenues | 195 | 200 | 201 | 771 | 796 | ||||||||||||||
| LISTING SERVICES REVENUES | 68 | 66 | 61 | 264 | 238 | ||||||||||||||
| INFORMATION SERVICES REVENUES | |||||||||||||||||||
| Data Products revenues | 98 | 103 | 91 | 399 | 384 | ||||||||||||||
| 29 | 29 | 22 | 113 | 89 | |||||||||||||||
| Total Information Services revenues | 127 | 132 | 113 | 512 | 473 | ||||||||||||||
| TECHNOLOGY SOLUTIONS REVENUES | |||||||||||||||||||
| Corporate Solutions revenues | 75 | 72 | 78 | 298 | 314 | ||||||||||||||
| Market Technology revenues | 71 | 59 | 64 | 245 | 246 | ||||||||||||||
| Total Technology Solutions revenues | 146 | 131 | 142 | 543 | 560 | ||||||||||||||
| Total revenues less transaction-based expenses | $ | 536 | $ | 529 | $ | 517 | $ | 2,090 | $ | 2,067 | |||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in millions) | ||||||||
| 2015 | 2014 | |||||||
| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 301 | $ | 427 | ||||
| Restricted cash | 56 | 49 | ||||||
| Financial investments, at fair value | 201 | 174 | ||||||
| Receivables, net | 316 | 389 | ||||||
| Deferred tax assets | 24 | 16 | ||||||
| Default funds and margin deposits | 2,228 | 2,194 | ||||||
| Other current assets | 158 | 151 | ||||||
| Total current assets | 3,284 | 3,400 | ||||||
| Property and equipment, net | 323 | 292 | ||||||
| Non-current deferred tax assets | 619 | 536 | ||||||
| 5,395 | 5,538 | |||||||
| Intangible assets, net | 1,959 | 2,077 | ||||||
| Other non-current assets | 281 | 228 | ||||||
| Total assets | $ | 11,861 | $ | 12,071 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 158 | $ | 189 | ||||
| Section 31 fees payable to | 98 | 124 | ||||||
| Accrued personnel costs | 171 | 143 | ||||||
| Deferred revenue | 127 | 177 | ||||||
| Other current liabilities | 138 | 116 | ||||||
| Deferred tax liabilities | 24 | 37 | ||||||
| Default funds and margin deposits | 2,228 | 2,194 | ||||||
| Total current liabilities | 2,944 | 2,980 | ||||||
| Debt obligations | 2,364 | 2,297 | ||||||
| Non-current deferred tax liabilities | 602 | 626 | ||||||
| Non-current deferred revenue | 200 | 215 | ||||||
| Other non-current liabilities | 142 | 159 | ||||||
| Total liabilities | 6,252 | 6,277 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Nasdaq stockholders' equity: | ||||||||
| Common stock | 2 | 2 | ||||||
| Additional paid-in capital | 3,011 | 3,222 | ||||||
| Common stock in treasury, at cost | (111 | ) | (41 | ) | ||||
| Accumulated other comprehensive loss | (864 | ) | (682 | ) | ||||
| Retained earnings | 3,571 | 3,292 | ||||||
| Total Nasdaq stockholders' equity | 5,609 | 5,793 | ||||||
| Noncontrolling interests | - | 1 | ||||||
| Total equity | 5,609 | 5,794 | ||||||
| Total liabilities and equity | $ | 11,861 | $ | 12,071 | ||||
| Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income and | |||||||||||||||||||||
| 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 | ||||||||||||||||||||
| | | | | | |||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| GAAP net income attributable to Nasdaq | $ | 148 | $ | 138 | $ | 87 | $ | 428 | $ | 414 | |||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| Loss reserve and insurance recovery (1) | (26 | ) | (5 | ) | - | - | - | ||||||||||||||
| Amortization expense of acquired intangible assets (2) | 15 | 15 | 16 | 62 | 69 | ||||||||||||||||
| Restructuring charges (3) | 12 | 8 | - | 172 | - | ||||||||||||||||
| Merger and strategic initiatives (4) | 4 | 4 | 35 | 10 | 81 | ||||||||||||||||
| Asset impairment charges (5) | - | - | 49 | - | 49 | ||||||||||||||||
| Income from OCC equity investment (6) | - | - | - | (13 | ) | - | |||||||||||||||
| Reversal of value added tax refund (7) | - | - | - | 12 | - | ||||||||||||||||
| Sublease loss reserves | - | - | 11 | - | 11 | ||||||||||||||||
| Extinguishment of debt | - | - | 2 | - | 11 | ||||||||||||||||
| Special legal expenses | - | - | - | - | 2 | ||||||||||||||||
| Other | - | - | - | - | 2 | ||||||||||||||||
| Total non-GAAP adjustments | 5 | 22 | 113 | 243 | 225 | ||||||||||||||||
| Non-GAAP adjustment to the income tax provision (8) | (3 | ) | (9 | ) | (61 | ) | (90 | ) | (97 | ) | |||||||||||
| Total non-GAAP adjustments, net of tax | 2 | 13 | 52 | 153 | 128 | ||||||||||||||||
| Non-GAAP net income attributable to Nasdaq | $ | 150 | $ | 151 | $ | 139 | $ | 581 | $ | 542 | |||||||||||
| GAAP diluted earnings per share | $ | 0.88 | $ | 0.80 | $ | 0.50 | $ | 2.50 | $ | 2.39 | |||||||||||
| Total adjustments from non-GAAP net income above | 0.01 | 0.08 | 0.31 | 0.89 | 0.74 | ||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.89 | $ | 0.88 | $ | 0.81 | $ | 3.39 | $ | 3.13 | |||||||||||
| (1) In | |||||||||||||||||||||
| (2) Amortization expense related to intangible assets results primarily from business combinations. These non-cash expenses are fixed and amortized over the estimated useful life of the intangible asset acquired. These expenses generally cannot be changed or influenced by management after the acquisition. Management does not consider these expenses for the purpose of evaluating the performance of the business or its managers or when making decisions to allocate resources. Therefore, such expenses are shown as a non-GAAP adjustment. | |||||||||||||||||||||
| (3) During the first quarter of 2015, we performed a comprehensive review of our processes, businesses and systems in a company-wide effort to improve performance, cut costs, and reduce spending. In the first quarter of 2015, we also decided to change our company name from | |||||||||||||||||||||
| (4) For the three months and year ended | |||||||||||||||||||||
| (5) For the three months and year ended | |||||||||||||||||||||
| (6) We record our investment in | |||||||||||||||||||||
| (7) We previously recorded receivables for expected value added tax, or VAT, refunds based on an approach that had been accepted by the tax authorities in prior years. The tax authorities have since challenged our approach, and the revised position of the tax authorities was upheld in court during the first quarter of 2015. As a result, in the first quarter of 2015, we recorded a charge of | |||||||||||||||||||||
| (8) For the three months and year ended | |||||||||||||||||||||
| Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income and | |||||||||||||||||||
| Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, and Operating Expenses | |||||||||||||||||||
| (in millions) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| | | | | | |||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| GAAP operating income | $ | 246 | $ | 231 | $ | 173 | $ | 720 | $ | 754 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||||
| Loss reserve and insurance recovery (1) | (26 | ) | (5 | ) | - | - | - | ||||||||||||
| Amortization expense of acquired intangible assets (2) | 15 | 15 | 16 | 62 | 69 | ||||||||||||||
| Restructuring charges (3) | 12 | 8 | - | 172 | - | ||||||||||||||
| Merger and strategic initiatives (4) | 4 | 4 | 35 | 10 | 81 | ||||||||||||||
| Reversal of value added tax refund (5) | - | - | - | 12 | - | ||||||||||||||
| Sublease loss reserves | - | - | 11 | - | 11 | ||||||||||||||
| Extinguishment of debt | - | - | 2 | - | 11 | ||||||||||||||
| Special legal expenses | - | - | - | - | 2 | ||||||||||||||
| Other | - | - | - | - | 2 | ||||||||||||||
| Total non-GAAP adjustments | 5 | 22 | 64 | 256 | 176 | ||||||||||||||
| Non-GAAP operating income | $ | 251 | $ | 253 | $ | 237 | $ | 976 | $ | 930 | |||||||||
| Revenues less transaction-based expenses | $ | 536 | $ | 529 | $ | 517 | $ | 2,090 | $ | 2,067 | |||||||||
| Non-GAAP operating margin (6) | 47 | % | 48 | % | 46 | % | 47 | % | 45 | % | |||||||||
| (1) In | |||||||||||||||||||
| (2) Amortization expense related to intangible assets results primarily from business combinations. These non-cash expenses are fixed and amortized over the estimated useful life of the intangible asset acquired. These expenses generally cannot be changed or influenced by management after the acquisition. Management does not consider these expenses for the purpose of evaluating the performance of the business or its managers or when making decisions to allocate resources. Therefore, such expenses are shown as a non-GAAP adjustment. | |||||||||||||||||||
| (3) During the first quarter of 2015, we performed a comprehensive review of our processes, businesses and systems in a company-wide effort to improve performance, cut costs, and reduce spending. In the first quarter of 2015, we also decided to change our company name from | |||||||||||||||||||
| (4) For the three months and year ended | |||||||||||||||||||
| (5) We previously recorded receivables for expected VAT, refunds based on an approach that had been accepted by the tax authorities in prior years. The tax authorities have since challenged our approach, and the
revised position of the tax authorities was upheld in court during the first quarter of 2015. As a result, in the first quarter of 2015, we recorded a charge of | |||||||||||||||||||
| (6) Non-GAAP operating margin equals non-GAAP operating income divided by total revenues less transaction-based expenses. | |||||||||||||||||||
| Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income and | ||||||||||||||||||||
| Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, and Operating Expenses | ||||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| | |
| | | ||||||||||||||||
| 2015 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| GAAP operating expenses | $ | 290 | $ | 298 | $ | 344 | $ | 1,370 | $ | 1,313 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Loss reserve and insurance recovery (1) | 26 | 5 | - | - | - | |||||||||||||||
| Amortization expense of acquired intangible assets (2) | (15 | ) | (15 | ) | (16 | ) | (62 | ) | (69 | ) | ||||||||||
| Restructuring charges (3) | (12 | ) | (8 | ) | - | (172 | ) | - | ||||||||||||
| Merger and strategic initiatives (4) | (4 | ) | (4 | ) | (35 | ) | (10 | ) | (81 | ) | ||||||||||
| Reversal of value added tax refund (5) | - | - | - | (12 | ) | - | ||||||||||||||
| Sublease loss reserves | - | - | (11 | ) | - | (11 | ) | |||||||||||||
| Extinguishment of debt | - | - | (2 | ) | - | (11 | ) | |||||||||||||
| Special legal expenses | - | - | - | - | (2 | ) | ||||||||||||||
| Other | - | - | - | - | (2 | ) | ||||||||||||||
| Total non-GAAP adjustments | (5 | ) | (22 | ) | (64 | ) | (256 | ) | (176 | ) | ||||||||||
| Non-GAAP operating expenses | $ | 285 | $ | 276 | $ | 280 | $ | 1,114 | $ | 1,137 | ||||||||||
| (1) In | ||||||||||||||||||||
| (2) Amortization expense related to intangible assets results primarily from business combinations. These non-cash expenses are fixed and amortized over the estimated useful life of the intangible asset acquired. These expenses generally cannot be changed or influenced by management after the acquisition. Management does not consider these expenses for the purpose of evaluating the performance of the business or its managers or when making decisions to allocate resources. Therefore, such expenses are shown as a non-GAAP adjustment. | ||||||||||||||||||||
| (3) During the first quarter of 2015, we performed a comprehensive review of our processes, businesses and systems in a company-wide effort to improve performance, cut costs, and reduce spending. In the first quarter of 2015, we also decided to change our
company name from | ||||||||||||||||||||
| (4) For the three months and year ended | ||||||||||||||||||||
| (5) We previously recorded receivables for expected VAT, refunds based on an approach
that had been accepted by the tax authorities in prior years. The tax authorities have since challenged our approach, and the revised position of the tax authorities was upheld in court during the first quarter of 2015. As a result, in the first quarter of 2015, we recorded a charge of | ||||||||||||||||||||
| Quarterly Key Drivers Detail | |||||||||||
| (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| | | | |||||||||
| 2015 | 2015 | 2014 | |||||||||
| Market Services | |||||||||||
| Equity Derivative Trading and Clearing | |||||||||||
| Total industry average daily volume (in millions) | 14.4 | 16.0 | 16.1 | ||||||||
| Nasdaq PHLX matched market share | 17.0 | % | 15.8 | % | 16.2 | % | |||||
| The NASDAQ Options Market matched market share | 7.8 | % | 6.7 | % | 9.7 | % | |||||
| Nasdaq BX Options Market matched market share | 1.0 | % | 0.9 | % | 0.7 | % | |||||
| Total matched market share executed on Nasdaq's exchanges | 25.8 | % | 23.4 | % | 26.6 | % | |||||
| Nasdaq Nordic and Nasdaq Baltic options and futures | |||||||||||
| Total average daily volume options and futures contracts(1) | 445,660 | 336,392 | 379,604 | ||||||||
| Cash Equity Trading | |||||||||||
| Total | |||||||||||
| Total industry average daily share volume (in billions) | 7.05 | 7.32 | 7.00 | ||||||||
| Matched share volume (in billions) | 82.2 | 88.2 | 90.8 | ||||||||
|
Matched market share executed on | 15.2 | % | 15.7 | % | 17.6 | % | |||||
| Matched market share executed on Nasdaq BX | 2.1 | % | 2.1 | % | 2.0 | % | |||||
| Matched market share executed on Nasdaq PSX | 0.9 | % | 1.0 | % | 0.7 | % | |||||
| Total matched market share executed on Nasdaq's exchanges | 18.2 | % | 18.8 | % | 20.3 | % | |||||
| Market
share reported to the | 32.0 | % | 30.2 | % | 30.2 | % | |||||
| Total market share(2) | 50.2 | % | 49.0 | % | 50.5 | % | |||||
| Nasdaq Nordic and Nasdaq Baltic securities | |||||||||||
| Average daily number of equity trades | 388,433 | 405,614 | 390,302 | ||||||||
| Total average daily value of shares traded (in billions) | $ | 5.0 | $ | 4.4 | $ | 4.8 | |||||
| Total market share executed on Nasdaq's exchanges | 67.7 | % | 69.7 | % | 69.6 | % | |||||
| Fixed Income, Currency and Commodities Trading and Clearing | |||||||||||
| Total | |||||||||||
| $ | 5,191 | $ | 7,397 | $ | 8,627 | ||||||
| Nasdaq Nordic and Nasdaq Baltic fixed income | |||||||||||
| Total average daily volume fixed income contracts | 105,248 | 116,563 | 98,284 | ||||||||
| Power contracts cleared (TWh)(3) | 419 | 385 | 413 | ||||||||
| Listing Services | |||||||||||
| Initial public offerings | |||||||||||
| 32 | 35 | 49 | |||||||||
| Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic | 22 | 7 | 20 | ||||||||
| New listings | |||||||||||
| 72 | 80 | 95 | |||||||||
| Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(5) | 26 | 9 | 23 | ||||||||
| Number of listed companies | |||||||||||
| 2,859 | 2,850 | 2,782 | |||||||||
| Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(7) | 852 | 835 | 792 | ||||||||
| Information Services | |||||||||||
| Number of licensed exchange traded products | 222 | 210 | 166 | ||||||||
| ETP Assets under management (AUM) tracking Nasdaq indexes (in billions)(8) | $ | 114 | $ | 103 | $ | 99 | |||||
| Technology Solutions | |||||||||||
| Market Technology | |||||||||||
| Order intake (in millions)(9) | $ | 116 | $ | 83 | $ | 194 | |||||
| Total order value (in millions)(10) | $ | 788 | $ | 738 | $ | 716 | |||||
| (1) Includes Finnish option contracts traded on | |||||||||||
| (2) Includes transactions executed on | |||||||||||
| (3) Transactions executed
on | |||||||||||
| (4) New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed exchange traded funds, or ETFs. | |||||||||||
| (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 listed companies for | |||||||||||
| (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) Represents assets under management in licensed exchange traded products, or ETPs. | |||||||||||
| (9) Total contract value of orders signed during the period. | |||||||||||
| (10) Represents total contract value of orders signed that are yet to be recognized as revenue. | |||||||||||
MEDIA RELATIONS CONTACT:Joseph Christinat +1.646.441.5121 joseph.christinat@nasdaq.com INVESTOR RELATIONS CONTACT:Ed Ditmire , CFA +1.212.401.8737 ed.ditmire@nasdaq.com
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