1) 3Q15 EARNINGS
PRESENTATION
October 22, 2015
2) DISCLAIMERS
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 make certain adjustments or
exclude certain charges and gains that are described in the reconciliation tables of GAAP to non-GAAP information provided in the appendix to this
presentation. Management believes that this non-GAAP information provides investors with additional information to assess Nasdaq's operating
performance by making certain adjustments or excluding costs or gains 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 about our future financial results, growth,
trading volumes, products and services, 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, 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
We intend to use our website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other
disclosure obligations. These disclosures will be included on our website under “Investor Relations.”
2
3) 3Q15 NON-GAAP SUMMARY(¹)
â–¶
(US$ millions, except per share)
3Q15
3Q14
%Δ
% Δ ex.
FX(4)
â–¶
Revenue from non-trading
segments(2)
$329
$308
7%
Market Services Net Revenue(3)
$200
$189
6%
$529
$497
6%
11%
Operating Expenses
$276
$267
3%
9%
$253
$230
10%
13%
Excluding the impact of currency:
12%
Net Revenue(3)
3Q15 net revenues were $529 million, +6% y-o-y.
Excluding a $23 million y-o-y negative impact of
currency, net revenues rose 11%.(4)
11%
â–¶
â–¶
Operating Income
â–¶
â–¶
Diluted EPS
1.
2.
3.
4.
$0.88
$0.78
13%
17%
See appendix for non-GAAP reconciliations
Information Services, Technology Solutions, and Listing Services
Represents revenues less transaction-based expenses
Please refer to slide 15 for more information on the impact of changes in foreign exchange rates
3
Revenue from non-trading segments
increased 11%, or $33 million y-o-y, with
increases in Listings Services, Information
Services, and Technology Solutions.
Revenue from Market Services rose 12%,
or $22 million y-o-y, on higher Cash Equity
and Equity Derivatives Revenues partially
offset by lower FICC revenues.
Subscription and recurring revenue businesses
constituted 73% of total revenues in 3Q15, down
from 74% in 3Q14.
3Q15 diluted EPS of $0.88 reflected organic EPS
growth of +$0.10, +$0.02 due to acquisitions,
+$0.01 due to higher other income, and +$0.01
due to lower diluted share count, partially offset
by ($0.03) impact of changes in foreign exchange
rates and ($0.01) due to higher tax rate as
compared to 3Q14’s diluted EPS of $0.78.
4) ORGANIC REVENUE GROWTH AND OUTLOOK
NASDAQ REVENUE GROWTH EXCLUDING ACQUISITIONS, CONSTANT CURRENCY
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
12%
4%
3%
0%
4%
5%
3%
2%
5%
4%
Non-Transactional
Segments (IS, TS, LS)
4%
2%
Market Services
-2%
3Q14
3%
8%
-3%
4Q14
1Q15
-3%
2Q15
3Q15
-6%
2012
2013
2014
2015YTD
NASDAQ MEDIUM-TERM (3-5 YR) ORGANIC REVENUE GROWTH OUTLOOK
U.S. GDP1
S&P 500
Revenue
Consensus2
Information
Services
Technology
Solutions
Listing Services
Non-Transactional
Segments
(IS, TS, LS)
2% - 3%
4% - 5%
Mid Single
Digits
Mid Single
Digits
Low Single
Digits
Mid-Single Digits
1.
2.
Company estimate.
FactSet consensus est. 2015-2017 revenue growth, as of 10/14/2015
4
5) INFORMATION SERVICES
IS 3Q15
Net Revenue
Contribution
Information Services Performance Summary
3Q15
%∆
%∆
Ex. FX
Net
Revenue
$132M
$114M
16%
18%
Operating
Profit
$96M
$84M
14%
17%
Operating
Margin
25%
3Q14
73%
74%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
32% growth in Index Licensing & Services: Driven by the
inclusion of revenue associated with the DWA acquisition.
INFORMATION SERVICES NET REVENUE
140
120
(US$ millions)
100
$117
$18
$123
$107
$123
$23
$22
$100
$101
$20
$114
$113
$22
$22
$125
$128
$132
$25
$29
$29
$100
$99
$103
80
60
40
$87
$92
$91
Total
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
0
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
Information Services’ operating margins reflect the allocation of certain joint costs that support the operation of various aspects of Nasdaq’s business,
including Market Services and Information Services, to business units other than Information Services.
5
Index Licensing &
Services
Data Products
$99
20
1Q14
1.
12% increase in Data Products revenue: Increased revenue
from both proprietary and consolidated tape plans, higher audit
collections, as well as the inclusion of revenue associated with
the DWA acquisition were partially offset by the impact of
foreign exchange.
•
Operating Margin(1)
•
1Q15
2Q15
3Q15
6) TECHNOLOGY SOLUTIONS
TS 3Q15
Net Revenue
Contribution
Technology Solutions Performance Summary
3Q15
%∆
%∆
Ex. FX
Net
Revenue
$131M
$135M
(3%)
1%
Operating
Profit
$19M
$23M
(17%)
(22%)
Operating
Margin
25%
3Q14
15%
17%
Operating Margin
4% decline in Corporate Solutions: Due primarily to
the impact of foreign exchange, and to a lesser extent,
revenue declines in IR and PR products.
•
2% decline in Market Technology: Driven by the
impact of FX and declines in software licensing and
support revenue, partially offset by organic growth in
SMARTS surveillance products and TradeGuard.
TECHNOLOGY SOLUTIONS NET REVENUE
20%
18%
160
16%
12%
10%
100
$137
120
(US$ millions)
14%
140
8%
6%
4%
2%
0%
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
6
•
$78
$151
$83
$140
$143
$82
$80
$135
$75
$142
$78
80
$130
$75
$135
$76
$131
$72
Market
Technology
60
40
20
Corporate
Solutions
$59
$68
$58
$63
$60
$64
$55
$59
$59
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
0
Total
7) LISTING SERVICES
Listing Services Performance Summary
LS 3Q15
Net Revenue
Contribution
3Q15
%∆
%∆
Ex. FX
Net
Revenue
$66M
$59M
12%
17%
Operating
Profit
12%
3Q14
$29M
$25M
16%
24%
•
12% increase in Listing revenue: Due to both pricing
changes and an increased issuer base, partially offset by
foreign exchange impact.
•
•
35 NASDAQ U.S. IPO wins in 3Q15 (from 41 in 3Q14).
U.S. IPO win rate was 80% for 3Q15 and 72% YTD, vs. 61%
for FY2014.
European new listings totaled 9 in 3Q15.
NASDAQ Private Market grew its user base of companies to
over 120, including recent additions of Legal Zoom, Mixpanel
and Farfetch.
•
•
Operating
Margin
44%
42%
Operating Margin
LISTING SERVICES NET REVENUE
100%
90%
70
80%
70%
60
60%
$57
$58
$58
$60
$59
$61
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
$64
$66
$66
1Q15
2Q15
3Q15
50
(US$ millions)
50%
40%
30%
20%
10%
40
30
20
10
0%
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
7
0
8) MARKET SERVICES
Market Services Performance Summary
MS 3Q15
Net Revenue
Contribution
3Q15
%∆
Ex. FX
%∆
3Q14
•
Net
Revenue
$200M
$189M
6%
12%
•
38%
Operating
Profit
$109M
$98M
11%
15%
•
Operating
Margin
55%
52%
•
Operating Margin
2% increase in Equity Derivative Trading and Clearing: The
increase was due to higher U.S. average capture and industry
volumes, partially offset by foreign exchange impact and decline
in U.S. market share.
31% increase in Cash Equity Trading: The increase resulted
from higher average capture and higher volumes in both U.S.
and European equity trading, partially offset by lower market
shares and foreign exchange impact.
23% decrease in FICC Trading and Clearing: FICC revenue
declined due to volume declines in U.S. fixed income products,
scheduled termination of an eSpeed technology licensing
customer, and foreign exchange impact, partially offset by higher
European fixed income revenues.
2% increase in Access & Broker Services: Access services
saw organic growth partially offset by foreign exchange impact.
MARKET SERVICES NET REVENUE
100%
90%
80%
70%
200
60%
$195
$36
(US$ millions)
50%
40%
30%
20%
10%
150
100
$53
$46
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
8
$208
$36
$35
$54
$56
$50
$50
$57
$56
$197
$31
$189
$30
$50
$51
$201
$29
$188
$189
$24
$24
$53
$46
$44
$59
$59
$62
$200
FICC Trading & Clearing
$23
$51
$67
Equity Derivatives
Trading & Clearing
Cash Equity Trading
Access/Broker Srvcs
50
0%
$204
$60
$64
3Q13
4Q13
$60
$60
$58
$60
$59
$59
$59
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
0
Total
9) NON-GAAP OPERATING EXPENSES
(US$ millions)
Total Non-GAAP operating expenses
Compensation and benefits
3Q15
2Q15
3Q15 EXPENSE CATEGORIES
3Q14
150
144
136
6
6
5
Depreciation and amortization
19
19
17
Professional and contract services
33
42
37
Computer operations and data
communications
23
23
22
Occupancy
22
21
26
Regulatory
7
7
7
16
19
17
$276
$281
$267
Marketing and advertising
General, admin. & other
Total non-GAAP operating expenses
3Q15 non-GAAP operating exp.
@ 2Q15 currency rates
3Q15 non-GAAP operating exp.
@ 3Q14 currency rates
9
$277
$292
3%
6%
8%
8%
54%
12%
7%
2%
Compensation
Depreciation
Computer Ops
Regulatory
Marketing
Professional Services
Occupancy
G&A
10) 2015 NON-GAAP EXPENSE GUIDANCE (1)
(US$ millions)
Unchanged 2015 Guidance(1)
Core Non-GAAP Operating Expenses
Research & Development
10
$30-$40
Total Non-GAAP Operating Expenses
1.
$1,055-$1,070
$1,085-$1,110
The guidance does not reflect the impact of any restructuring or integration charges, and excludes
amortization of acquired intangibles.
11) DEBT OBLIGATIONS
3Q15 total debt increased by $154M vs.
2Q15 primarily due to a $150M
revolver draw, a $3M increase in Euro
bond book value (caused by stronger
Euro) and a $1 million increase due to
amortization of debt issuance costs
â–¶
Manageable debt maturities, with
largest maturity in 2021
â–¶
Net interest expense for 3Q15 was
$27M, a decrease of $1M as compared
to $28M in 3Q14, primarily due to
impact of foreign exchange
â–¶
9/30/15
($ millions)2
Maturity Date
Revolver (Libor +137.5 bps)
310
11/25/19
5.25% Bond
368
01/16/18
5.55% Bond
597
01/15/20
3.88% Euro Bond
665
06/07/21
4.25% Bond
495
06/01/24
$ 2,435
Total Debt Obligations
Less Cash and Cash Equivalents
(290)
$2,145
Net Debt
DEBT MATURITIES
800
Total Debt to EBITDA 1 = 2.3x
700
LTM EBITDA 1 = $1,041 million
(US$ Millions)
Net Debt to EBITDA 1 = 2.1x
600
500
400
300
200
100
2015
1.
2.
2016
2017
2018
2019
2020
2021
2022
See Appendix for EBITDA reconciliation. Pro forma leverage ratios have been calculated for Q3’15 to reflect the acquisition of Dorsey, Wright & Associates, LLC
The debt obligations have been reduced for debt issuance costs per early adoption of FASB guidance ASU 2015-03 by Nasdaq.
11
2023
2024
12) HISTORICAL CASH FLOW / USES OF CASH FLOW
Free Cash Flow Calculation
(US$ millions)
2009
2010
2011
2012
2013
2014
2015YTD
2009 – 2015YTD
Cash flow from operations
$582
$440
$669
$588
$574
$687
$472
$4,012
Capital expenditure
(59)
(42)
(88)
(87)
(115)
(140)
(91)
(622)
Free cash flow
523
398
581
501
459
547
381
3,390
Section 31 fees (net) *
(62)
46
(22)
13
8
(28)
84
39
Free cash flow
ex. Section 31 fees
461
444
559
514
467
519
465
3,429
-
797
100
275
10
178
310
1,670
340
(193)
248
145
(606)
235
(190)
(21)
(46)
189
26
112
1,164
-
256
1,701
-
-
-
65
87
98
108
358
294
793
374
597
655
511
484
3,708
Uses of cash flow
Share repurchases
Net repayment/(borrowing)
of debt
Acquisitions (less
dispositions)
Dividends
Total uses of cash flow
* Net of change in Section 31 fees receivables of $26 million in 2009; ($9 million) in 2010; $2 million in 2011; $4 million in 2012; ($7 million) in 2013; $14 million in 2014; ($15 million) in 2015
YTD and $15 million in 2009-2015 YTD.
12
13) APPENDIX
14) SUMMARY NON-GAAP P&L REVIEW
3Q15
3Q14
$ chg.
% chg.
% chg.
ex. FX
Net Revenue
$529
$497
32
6%
11%
Non-GAAP Operating Expenses
276
267
9
3%
9%
Non-GAAP Operating Income
253
230
23
10%
13%
48%
46%
Net Interest Expense
27
28
(1)
(4%)
Non-GAAP Net Income
151
136
15
11%
14%
Non-GAAP diluted EPS
$0.88
$0.78
$0.10
13%
17%
Diluted Shares
171.5
173.2
(1.7)
(1%)
(US$ millions, except per share)
Non–GAAP Operating Margin %
14
15) FOREIGN EXCHANGE NET IMPACTS
Total Variance
All figures in US$ Millions
3Q15
3Q14
$M
Operational Impact
%
$M
FX Impact (Prior Year Rates)
%
$M
%
$200
$189
$11
6%
$22
12%
($11)
(6%)
66
59
7
12%
10
17%
(3)
(5%)
Information Services
132
114
18
16%
21
18%
(3)
(3%)
Technology Solutions
131
135
(4)
(3%)
2
1%
(6)
(4%)
Total Net Revenue
$529
$497
$32
6%
$55
11%
($23)
(5%)
Non-GAAP Expenses
$276
$267
$9
3%
$25
9%
($16)
(6%)
Non-GAAP Operating Income
$253
$230
$23
10%
$30
13%
($7)
(3%)
Market Services
Listing Services
Total Variance
3Q15
2Q15
$M
FX Impact (Prior Quarter
Rates)
Operational Impact
%
$M
%
$M
%
$200
$189
$11
6%
$11
6%
-
-
66
66
-
-
-
-
-
-
Information Services
132
128
4
3%
4
3%
-
-
Technology Solutions
131
135
(4)
(3%)
(4)
(3%)
-
-
Total Net Revenue
$529
$518
$11
2%
$11
2%
-
-
Non-GAAP Expenses
$276
$281
($5)
(2%)
($3)
(1%)
($2)
(1%)
Non-GAAP Operating Income
$253
$237
$16
7%
$14
6%
$2
1%
Market Services
Listing Services
15
16) EQUITY DERIVATIVE TRADING AND CLEARING
U.S. equity options
$56
11
3Q14
$44
35
12
11
41
34
10
10
3Q15
11
41
39
11
$51
$46
2Q15
39
2Q14
45
$53
$50
1Q15
$50
4Q14
$60
$55
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
1Q14
Revenues
(US$ millions)
European options and futures
FY14
1Q14
2Q14
3Q14
4Q14
FY15
2Q15
1Q15
3Q15
Revenues (US$ in Millions)
U.S. equity options
45
39
39
41
35
34
41
European options and futures
11
11
11
12
11
10
10
Equity Derivatives
56
50
50
53
46
44
51
Volumes
U.S. equity options (millions of contracts)
268
242
251
273
252
210
240
European options and futures (millions of contracts)
23.9
20.3
21.5
23.6
24.9
24.0
22.2
Revenue Capture
U.S. equity options (RPC)
$
0.16
$
0.16
$
0.16
$
0.15
$
0.14
$
0.16
$
0.17
European options and futures (RPC)
$
0.46
$
0.53
$
0.51
$
0.51
$
0.44
$
0.42
$
0.45
SEK/US$ $
Euro/US$ $
0.155
1.370
$
$
0.152
1.372
$
$
0.144
1.330
$
$
0.135
1.249
$
$
0.120
1.130
$
$
0.119
1.110
$
$
0.118
1.110
16
Note: numbers may vary slightly due to rounding
17) CASH EQUITY TRADING
37
37
41
22
22
21
21
3Q15
20
46
2Q15
23
31
1Q15
$51
33
25
$59
4Q14
32
$67
$62
$59
$56
2Q14
$57
U.S. cash equities
3Q14
$75
$70
$65
$60
$55
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
1Q14
Revenues
(US$ millions)
European cash equities
FY14
1Q14
2Q14
3Q14
4Q14
2015
2Q15
1Q15
3Q15
Revenues (US$ in Millions)
U.S. cash equities
32
33
31
37
37
41
46
European cash equities
25
23
20
22
22
21
21
Cash Equity Trading
57
56
51
59
59
62
67
U.S. cash equities (billions of shares)
87.2
77.0
71.1
90.8
83.1
74.3
88.2
European cash equities value shares traded ($B)
255
210
184
209
234
219
204
Volumes
Revenue Capture
U.S. cash equities revenue capture per 1000 shares
$
0.38
$
0.43
$
0.43
$
0.40
$
0.44
$
0.55
$
0.52
European cash equities revenue capture per $'000 traded
$
0.10
$
0.11
$
0.11
$
0.11
$
0.10
$
0.10
$
0.10
SEK/US$ $
Euro/US$ $
0.155
1.370
$
$
0.152
1.372
$
$
0.144
1.330
$
$
0.135
1.249
$
$
0.120
1.130
$
$
0.119
1.110
$
$
0.118
1.110
17
Note: numbers may vary slightly due to rounding
18) FICC TRADING AND CLEARING
Other fees and revenues
$40
Energy and carbon products
$35
$30
$30
$29
$24
16
$20
15
12
12
2Q14
3Q14
15
$23
13
12
8
9
9
15
$15
$10
$24
13
17
$25
2Q15
$31
1Q15
$35
Revenues
(US$ millions)
Fixed income products
11
$5
FY14
1Q14
2Q14
3Q14
4Q14
3Q15
4Q14
1Q14
$0
FY15
2Q15
1Q15
3Q15
Revenues (US$ in Millions)
Fixed income products
17
16
15
15
13
13
12
Energy and carbon products
15
12
12
11
8
9
9
3
3
3
3
3
2
2
35
31
30
29
24
24
23
Other fees and revenues
Fixed Income, Currency and Commodities Trading and Clearing
Volumes
U.S. Fixed income trading volume (billions of $ notional)
9,946
9,582
9,439
8,627
8,365
8,281
7,397
European Fixed income products (millions of contracts)
7.3
6.2
5.1
6.1
6.7
6.3
7.7
Energy trading and clearing (TWh)
683
542
604
662
589
515
624
Revenue Capture
European Fixed Income (RPC)(1)
$
0.70 $
0.73 $
0.79 $
0.65 $
0.51 $
0.53 $
0.54
Energy trading and clearing ($'000 per TWh)
$
21.96 $
22.14 $
19.87 $
16.62 $
13.58 $
17.48 $
14.42
SEK/US$ $
Euro/US$ $
0.155 $
1.370 $
0.152 $
1.372 $
0.144 $
1.330 $
0.135 $
1.249 $
0.120 $
1.130 $
0.119 $
1.110 $
0.118
1.110
18
¹Fixed Income revenue includes impact from NLX, which is excluded in the revenue capture calculation.
Note: numbers may vary slightly due to rounding
19) INDEX LICENSING AND SERVICES
Period-End AUM in Licensed ETPs ($B)
Period-End # of Licensed ETPs
110
250
210
197
187
151
166
156
152
200
150
100
108
95
105
103
100
# of Licensed Products
AUM in Licensed Products ($B)
105
99
90
94
96
96
2Q14
3Q14
50
85
1Q14
4Q14
1Q15
2Q15
3Q15
FY14
1Q14
2Q14
3Q14
4Q14
2015
2Q15
1Q15
3Q15
151
152
156
166
187
197
210
Period-End AUM in Licensed ETPs ($B)
94
96
96
99
105
108
103
Index Licensing & Servicing Revenues
23
22
22
22
25
29
29
Period-End # of Licensed ETPs
19
20) MARKET TECHNOLOGY
Backlog
New Order Intake
800
250
700
200
600
Backlog ($M)
150
400
300
675
728
716
658
738
707
637
100
New Order Intake ($M)
500
200
50
100
-
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
FY14
1Q14
New Order Intake
2Q14
3Q14
4Q14
2015
2Q15
1Q15
3Q15
66
32
28
194
40
31
83
Backlog
675
658
637
716
728
707
738
Revenue
58
63
60
64
55
59
59
20
21) NET INCOME AND DILUTED EARNINGS PER COMMON
SHARE: RECONCILIATION OF GAAP TO NON-GAAP
(US$ millions, except EPS)
3Q15
2Q15
3Q14
GAAP net income attributable to Nasdaq:
$138
$133
$123
15
15
17
Restructuring charges (2)
8
2
-
Merger and strategic initiatives (3)
4
3
5
(5)
-
-
-
-
1
Total Non-GAAP adjustments
22
20
23
Adjustment to the income tax provision to reflect non-GAAP adjustments
(9)
(10)
(10)
Total Non-GAAP Adjustments, net of tax
13
10
13
Non-GAAP net income attributable to Nasdaq:
$151
$143
$136
GAAP diluted earnings per share:
$0.80
$0.77
$0.71
0.08
0.06
0.07
$0.88
$0.83
$0.78
Amortization of acquired intangible assets (1)
Insurance recovery (4)
Other
Total adjustments from non-GAAP net income above
Non-GAAP diluted earnings per share
Please refer to slide 24 for detailed footnotes
21
22) OPERATING INCOME:
RECONCILIATION OF GAAP TO NON-GAAP
(US$ millions)
GAAP operating income:
3Q15
2Q15
3Q14
$231
$217
$207
15
15
17
8
2
-
4
3
5
(5)
-
-
-
-
1
22
20
23
Non-GAAP operating income
$253
$237
$230
Total net revenues
$529
$518
$497
Non-GAAP operating margin (5)
48%
46%
46%
Non-GAAP adjustments:
Amortization of acquired intangible assets (1)
Restructuring charges (2)
Merger and strategic initiatives (3)
Insurance recovery (4)
Other
Total non-GAAP adjustments
Please refer to slide 24 for detailed footnotes
22
23) OPERATING EXPENSES:
RECONCILIATION OF GAAP TO NON-GAAP
(US$ millions)
GAAP operating expenses:
3Q15
2Q15
3Q14
$298
$301
$290
(15)
(15)
(17)
(8)
(2)
-
(4)
(3)
(5)
5
-
-
-
-
(1)
(22)
(20)
(23)
$276
$281
$267
Non-GAAP adjustments:
Amortization of acquired intangible assets (1)
Restructuring charges (2)
Merger and strategic initiatives (3)
Insurance recovery (4)
Other
Total non-GAAP adjustments
Non-GAAP operating expenses
Please refer to slide 24 for detailed footnotes
23
24) FOOTNOTES:
RECONCILIATION OF GAAP TO NON-GAAP
(1) Amortization expense related to intangible assets results primarily from business combinations. These non-cash expenses are fixed in connection with an
acquisition, are then amortized over a number of years after the acquisition and 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.
(2) 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 The NASDAQ OMX Group, Inc., to
Nasdaq, Inc., which became effective in the third quarter of 2015. We currently estimate that we will recognize net pre-tax restructuring charges of $188 million,
consisting of the rebranding of our trade name, severance, asset impairments, facility-related and other costs. We recognized restructuring charges of $8 million for
the three months ended September 30, 2015, $2 million for the three months ended June 30, 2015 and $150 million for the three months ended March 31, 2015,
with the remaining amount to be recognized through June 2016. The restructuring charge for the three months ended June 30, 2015 includes the reversal of a
previously recorded sublease loss reserve of $10 million for space we lease in New York, New York located at 1500 Broadway. In June 2015, as part of our real estate
reorganization plans, management decided to occupy this space. Restructuring charges are recorded on restructuring plans that have been committed to by
management and are, in part, based upon management's best estimates of future events. Changes to the estimates may require future adjustments to the
restructuring liabilities.
(3) For the three months ended September 30, 2015 and June 30, 2015, merger and strategic initiatives expense primarily related to certain strategic initiatives and
our acquisition of Dorsey, Wright & Associates, LLC. For the three months ended September 30, 2014, merger and strategic initiatives expense primarily related to
our acquisition of the TR Corporate businesses and other strategic initiatives.
(4) In March 2015, we established a loss reserve of $31 million for litigation arising from the Facebook IPO in May 2012, which was recorded in general, administrative
and other expense. The reserve is intended to cover the estimated amount of a settlement of class-action litigation initiated on behalf of investors in Facebook
common stock on the date of its IPO. The reserve also covered the cost of re-opening Nasdaq’s voluntary accommodation program to allow any Nasdaq member that
did not file for compensation in 2013 to submit a claim during the second quarter of 2015, subject to the conditions and limitations that were applicable to claims filed
in 2013. The re-opened accommodation program is now closed. The insurance recovery recognized during the three months ended September 30, 2015 primarily
represents amounts reimbursed by applicable insurance coverage. Nasdaq anticipates that some or all of remaining amounts paid from the loss reserve will be
reimbursed by applicable insurance coverage.
(5) Non-GAAP operating margin equals non-GAAP operating income divided by total revenues less transaction-based expenses.
24
25) EXPENSE DETAIL: RECONCILIATION OF GAAP TO
NON-GAAP - PART 1 OF 2
3Q15
2Q15
3Q14
34
34
34
Adjustments
(15)
(15)
(17)
non-GAAP
$19
$19
$17
8
2
-
(8)
(2)
-
-
-
-
4
3
5
(4)
(3)
(5)
-
-
-
(US$ millions)
Depreciation and amortization
GAAP
Restructuring
GAAP
Adjustments
non-GAAP
Merger and strategic initiatives
GAAP
Adjustments
non-GAAP
Continued on next page
25
26) EXPENSE DETAIL: RECONCILIATION OF GAAP TO
NON-GAAP - PART 2 OF 2
(US$ millions)
3Q15
2Q15
3Q14
11
19
18
5
-
(1)
$16
$19
$17
($22)
($20)
($23)
General, administrative and other
GAAP
Adjustments
non-GAAP
Total Adjustments (Part 1 + Part 2)
26
27) EBITDA: EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(US$ millions)
TTM
3Q15
2Q15
1Q15
4Q14
Non-GAAP operating income
$962
$253
$237
$235
$237
74
19
19
19
17
1
4
$255
$258
Plus:
Depreciation and amortization of tangibles (NASDAQ)
EBITDA of DWA*
EBITDA pro forma for DWA acquisition
5
$1,041
$272
$256
* 1Q15 EBITDA of DWA contains January’15 EBITDA for Dorsey, Wright & Associates, LLC. TTM EBITDA of DWA contains October’14 to January’15 EBITDA. February’15 to March’15 DWA
EBITDA is not included in EBITDA of DWA because it is included in non-GAAP operating income and Depreciation and Amortization of tangibles (NASDAQ). The sources of the pro forma
information were LTM financials provided by Dorsey, Wright & Associates, LLC.
27
