Nasdaq NDAQ reported first-quarter 2024 adjusted earnings per share of 63 cents, which missed the Zacks Consensus Estimate by 3.1%. The bottom line declined 8.7% year over year.

The decline was due to lower Market Services net revenues and higher expenses. Listings, too, dropped in the reported quarter.

Shares lost about 1% in the pre-market trading session to reflect the underperformance.

Nasdaq, Inc. Price, Consensus and EPS Surprise

Nasdaq, Inc. price-consensus-eps-surprise-chart | Nasdaq, Inc. Quote

Performance in Detail

Nasdaq’s revenues of $1.1 billion increased 22% year over year. The upside can primarily be attributed to a 6% impact from organic growth, net benefit from acquisitions and divestitures, including Adenza, and a $2 million increase from the impact of changes in FX rates. The top line beat the Zacks Consensus Estimate by 0.3%.

Annualized Recurring Revenue (ARR) increased 29% year over year to $2.6 billion.

Market Services net revenues were $237 million, down 9%. The decrease reflects a $11 million decrease in U.S. equity derivatives revenues, an $8 million decline in U.S. tape plan revenues, and a $3 million decline in U.S. cash equities revenues.

Revenues at the Solutions business increased 35% year over year to $871 million, reflecting strong growth from Index and Financial Technology. Organic growth was 11%.

Adjusted operating expenses were $524 million, up 20% from the year-ago period. The increase primarily reflects the inclusion of $68 million of AxiomSL and Calypso non-GAAP operating expenses.  Our estimate for operating expenses was $552.9 million.

Adjusted operating margin of 53% expanded 100 basis points year over year.

The Nasdaq stock market welcomed 79 new company listings in the first quarter of 2024, including 27 initial public offerings. The number of listed companies was 4,020 at quarter end.

Financial Update

Nasdaq had cash and cash equivalents of $473 million as of Mar 31, 2024, down 13.5% from the 2023 end level. Long-term debt increased to $10.2 billion as of Mar 31, 2024, down 3.9% from the 2023 end level.

Nasdaq generated $530 million in cash flow from operations.

Capital Deployment

Nasdaq returned $127 million to shareholders in the first quarter of 2024 through dividends and repaid the $340 million remaining balance of the term loan.

The board of directors approved a 9% increase to its quarterly dividend to 24 cents per share. The dividend will be paid out on Jun 28, 2024, to shareholders of record at the close of business on Jun 14, 2024.

As of Mar 31, 2024, $1.9 billion remained under the board-authorized share repurchase program.



Guidance

Nasdaq expects 2024 non-GAAP operating expenses to be in the range of $2.125 billion to $2.185 billion.

Nasdaq forecasts 2024 non-GAAP tax rate in the range of 24.5-26.5%.

Zacks Rank

Nasdaq carries a Zacks Rank #3 (Hold) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of a Peer

CME Group Inc. CME reported first-quarter 2024 adjusted earnings per share of $2.50, which beat the Zacks Consensus Estimate by 2.4%. The bottom line increased 3.3% year over year. Revenues of $1.5 billion increased 3.2% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 0.7% year over year), market data and information services (up 5.8% year over year) and other (37% year over year). The top line beat the Zacks Consensus Estimate by 0.8%.

CME Group reported average daily volume (ADV) was 26.4 million contracts, which decreased 1.9% year over year. Non-U.S. ADV reached 7.4 million contracts. The total average rate per contract was 69.5 cents.

Upcoming Releases

Cboe Global Markets, Inc. CBOE is slated to report first-quarter 2024 results on May 3, before market open. The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $2.04, suggesting an increase of 7.3% from the year-ago quarter’s reported figure.

CBOE’s earnings beat estimates in each of the last four quarters.

MarketAxess Holdings Inc. MKTX is set to report first-quarter 2024 results on May 7, before market open. The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.85, suggesting a decrease of 5.6% from the year-ago quarter’s reported figure.

MKTX’s earnings beat estimates in three of the last four quarters while missing in one.

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