Nasdaq Q3 2024 $NDAQ (+0,81%)

Financial performance: Nasdaq generated net revenue of USD 1.1 billion in the third quarter of 2024, representing growth of 22% compared to the same period last year. Non-GAAP net revenue was $1.2 billion. Revenue growth was boosted by a USD 146 million benefit from the acquisition of Adenza. On a pro forma basis, net sales increased by 10%. Solutions revenue reached USD 872 million, an increase of 26 % compared to the previous year or 10 % on a pro forma basis.

Balance Sheet Analysis: Nasdaq's gross leverage ratio was 3.8x at the end of the third quarter of 2024, down slightly from 3.9x in the second quarter of 2024. The company has a well-spaced debt maturity profile, with total obligations of $9.858 billion.

Income Statement: GAAP operating expenses for the third quarter of 2024 were $698 million, an increase of 37% year-over-year, primarily due to the acquisition of Adenza. Non-GAAP operating expenses were USD 543 million, an increase of 21%. Non-GAAP operating profit amounted to USD 637 million with a non-GAAP operating margin of 54%.

Cash flow analysis: Operating cash flow in the third quarter of 2024 amounted to USD 244 million. The company paid out USD 138 million in dividends to shareholders and repurchased USD 88 million worth of shares. Free cash flow, excluding Section 31 fees, amounted to USD 1.137 billion year to date.

Key drivers and profitability: Non-GAAP operating margin improved to 54% in the third quarter of 2024, compared to 52% in the third quarter of 2023. Free cash flow conversion rate was approximately 92%.

Segment analysis:

• Market Services: Net revenue was USD 266 million, an increase of 13% year-over-year, driven by increases in US equity derivatives and cash markets.
• Solutions: Revenue amounted to USD 872 million, with strong growth in Index and Financial Technology.
• Financial Technology: Revenue increased by 71% year-on-year, reaching USD 405 million.

Competitive Analysis: Nasdaq maintained its leading market position in multi-listed US options and relevant Euro cash markets. The company continues to leverage its multiple platforms to drive growth across all business lines.

Forecasts and management commentary: Nasdaq updated its 2024 non-GAAP operating expense guidance to a range of $2.150 billion to $2.180 billion and its non-GAAP tax rate guidance to a range of 23.5% to 24.5%. The company is focused on reducing its debt and realizing synergies from recent acquisitions.

Risks and opportunities: The integration of Adenza presents both opportunities for synergies and risks related to restructuring costs and operational integration. In addition, the company is susceptible to market fluctuations and regulatory changes.

Summary and strategic implications: Nasdaq's strong financial performance in 3Q2024, driven by strategic acquisitions and organic growth, provides a solid foundation for sustainable growth. The focus on deleveraging and operational efficiency as well as robust revenue growth in key segments underscore the company's strategic direction. Nevertheless, Nasdaq must overcome integration risks and market uncertainties in order to continue its growth trajectory. This means continuing the good quarters and remaining a shareholder.

Positive statements:

• Sales growth: Nasdaq's net revenue in the third quarter of 2024 amounted to USD 1.1 billion, representing growth of 22% compared to the same period last year. Non-GAAP net revenue reached USD 1.2 billion.
• Solutions revenue: Solutions revenue increased 26% year-over-year to USD 872 million, driven by strong growth in Index and Financial Technology.
• Operating margin improvement: Non-GAAP operating margin improved to 54% in the third quarter of 2024, compared to 52% in the third quarter of 2023.
• Debt Management: Nasdaq has a well-spaced debt maturity profile, with total obligations of $9.858 billion. Gross leverage ratio decreased slightly to 3.8x.
• Market leadership: Nasdaq maintained its leading market position in multi-listed US options and relevant Euro cash markets.

Negative statements:

• Operating expense increase: GAAP operating expenses for the third quarter of 2024 amounted to USD 698 million, an increase of 37% year-on-year, mainly due to the acquisition of Adenza.
• Integration risks: The integration of Adenza poses risks related to restructuring costs and operational integration.
• Market volatility risk: Nasdaq is exposed to market fluctuations and regulatory changes, which could have a negative impact on its financial performance.
• High debt burden: Despite a well-leveraged debt profile, total obligations remain high at $9.858 billion.
• Increased amortization costs: The acquisition of Adenza resulted in additional amortization costs of USD 87 million on acquired intangible assets.