NEW YORK, Jan. 31, 2018 (GLOBE NEWSWIRE) — Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the fourth quarter and full year of 2017.
2017 net revenues were $2,428 million, up $151 million, or 7%, from $2,277 million in the prior year period. The full year increase in net revenues included a $52 million increase due to organic growth, a $9 million favorable impact from changes in foreign exchange rates and a $90 million impact from acquisitions. Fourth quarter 2017 net revenues were $635 million, up $36 million, or 6%, from $599 million in the prior year period. The fourth quarter increase in net revenues included a $17 million, or 3%, increase due to organic growth, a $12 million favorable impact from changes in foreign exchange rates and a $7 million impact from acquisitions.
“We achieved strong results in the fourth quarter and full year of 2017 through an intense focus on our clients and strong execution against our business priorities,” said Adena Friedman, President, and CEO, Nasdaq. “The acquisition of eVestment advanced our relationships with investment managers, the timely integration of ISE delivered benefits to our trading clients and our shareholders, our next generation markets platform opened new opportunities with our technology clients, and our advocacy has driven a deeper partnership with our corporate clients.”
Mrs. Friedman continued, “We are building upon the success of 2017 by establishing three new execution priorities for 2018, including progressing our pivot to align with and maximize our opportunities as an innovative analytics and technology partner, developing and deploying our ‘markets economy’ technology strategy, and continuing to advance our competitive position in our core businesses. All of us at Nasdaq are aligned around these priorities and look forward to another productive year.”
GAAP operating expenses were $392 million in the fourth quarter of 2017, an increase of $6 million from $386 million in the fourth quarter of 2016. The increase primarily reflects higher merger and strategic initiatives expense and depreciation and amortization expense, partially offset by lower regulatory expense.
Non-GAAP operating expenses were $341 million in the fourth quarter of 2017, an increase of $17 million, or 5%, compared to the fourth quarter of 2016. This reflects a $16 million increase from acquisitions and a $7 million unfavorable impact from changes in foreign exchange rates, partially offset by a $6 million organic expense decrease.
“In 2017, we successfully executed against our integration, efficiency and capital return plans, exceeding our initial $60 million synergy target related to the 2016 acquisitions, increasing our operating margin, and returning 65% of non-GAAP net income to shareholders through dividends and share repurchases,” said Mr. Michael Ptasznik, Executive Vice President and Chief Financial Officer, Nasdaq.
Mr. Ptasznik continued, “To advance the strategic ambitions we’ve outlined in late 2017, we’ve deliberately reallocated resources, people and capital towards our largest growth opportunities, principally in the Market Technology and Information Services segments, which is expected to further enhance our ability to deliver on our double-digit total shareholder return target.”
On a GAAP basis, net income for the fourth quarter of 2017 was $246 million, or $1.45 per diluted share, compared with a net loss of $224 million, or a loss of $1.35 per diluted share, in the fourth quarter of 2016. In the fourth quarter of 2017, we recorded a decrease to tax expense of $87 million to reflect the estimated impact associated with the enactment of the Tax Cuts & Jobs Act on December 22, 2017. The decrease in tax expense primarily relates to the remeasurement of our net U.S. deferred tax liability at the lower U.S. federal corporate income tax rate. The estimate may be refined in the future as new information becomes available.
On a non-GAAP basis, net income for the fourth quarter of 2017 was $179 million, or $1.05 per diluted share, compared with $161 million, or $0.95 per diluted share, in the fourth quarter of 2016. For the three months and year ended December 31, 2017, as well as going forward, non-GAAP diluted EPS will exclude any excess tax benefits or provisions related to employee share-based compensation.
At December 31, 2017, the company had cash and cash equivalents of $377 million and total debt of $4,207 million, resulting in net debt of $3,830 million. This compares to net debt of $3,200 million at December 31, 2016. Share repurchases totaled $29 million during the fourth quarter of 2017.
As of December 31, 2017, there was $226 million remaining under the board authorized share repurchase program, and in January 2018, Nasdaq’s board of directors added $500 million to the repurchase authorization, bringing the total capacity to $726 million.
INITIATING 2018 NON-GAAP EXPENSE AND TAX GUIDANCE4– The company expects 2018 non-GAAP operating expenses of $1,375 to $1,415 million. The guidance assumes a full year, or approximately $170 million, of expenses associated with the Public Relations Solutions and Digital Media Services businesses, which we have announced an agreement to sell. We will provide an update to the full year expense guidance after the transaction is closed. Nasdaq expects its 2018 non-GAAP tax rate to be in a range of 24.5% – 26.5%.
BUSINESS HIGHLIGHTS
Market Services (35% of total net revenues) – Net revenues were $222 million in the fourth quarter of 2017, up $2 million when compared to the fourth quarter of 2016.
Equity Derivatives (10% of total net revenues) – Net equity derivative trading and clearing revenues were $63 million in the fourth quarter of 2017, down $5 million compared to the fourth quarter of 2016. The decrease primarily reflects lower net revenue capture, partially offset by higher U.S. industry trading volumes and higher U.S. market share.
Cash Equities (10% of total net revenues) – Net cash equity trading revenues were $65 million in the fourth quarter of 2017, up $3 million from the fourth quarter of 2016. This increase primarily reflects higher European cash equities revenues as well as a $2 million favorable impact from changes in foreign exchange rates.
Fixed Income and Commodities Trading and Clearing (3% of total net revenues) – Net fixed income and commodities trading and clearing revenues were $21 million in the fourth quarter of 2017, up $1 million from the fourth quarter of 2016, due to a favorable impact from changes in foreign exchange rates.
Trade Management Services (12% of total net revenues) – Trade management services revenues were $73 million in the fourth quarter of 2017, up $3 million compared to the fourth quarter of 2016, primarily due to an increase in customer demand for third-party connectivity and co-location, as well as a favorable impact from changes in foreign exchange rates.
Corporate Services (27% of total net revenues) – Revenues were $170 million in the fourth quarter of 2017, up $3 million compared to the fourth quarter of 2016.
Corporate Solutions (16% of total net revenues) – Corporate solutions revenues were $99 million in the fourth quarter of 2017, up $1 million from the fourth quarter of 2016 due to a favorable impact from changes in foreign exchange rates.
Listing Services (11% of total net revenues) – Listing services revenues were $71 million in the fourth quarter of 2017, up $2 million from the fourth quarter of 2016. The change reflects a $2 million favorable impact from changes in foreign exchange rates and an increase in European listings revenues, partially offset by a decrease in U.S. listings revenues due to the run-off of fees earned from listing of additional shares, resulting from client adoption of our all-inclusive annual listing fee program beginning in 2015.
Information Services (25% of total net revenues) – Revenues were $156 million in the fourth quarter of 2017, up $21 million from the fourth quarter of 2016.
Data Products (19% of total net revenues) – Data products revenues were $119 million in the fourth quarter of 2017, up $14 million compared to the fourth quarter of 2016, primarily due to a $7 million impact from acquisitions, net of an $11 million purchase price adjustment on deferred revenue associated with the closing of the eVestment acquisition, a $5 million organic growth impact and a $2 million favorable impact from changes in foreign exchange rates.
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