Nasdaq Reports Fourth Quarter and Full Year 2022 Results; Delivers Strong Solutions Businesses Revenue Growth in 2022

NEW YORK, Jan. 25, 2023 (GLOBE NEWSWIRE) -- Nasdaq, Inc. (Nasdaq: NDAQ) today reported financial results for the fourth quarter and year 2022.

• 2022 net revenues¹ were $3,582 million, an increase of 5% over 2021. Solutions businesses² revenues increased 9%, including 10% organic growth and 1% from the net impact of an acquisition, partially offset by a negative 2% FX impact. Trading Services net revenues decreased 2%, including a negative 3% FX impact, partially offset by 1% organic growth.
• Fourth quarter 2022 net revenues¹ increased 2% compared to the fourth quarter of 2021. Solutions businesses² revenues increased 3%, including 5% organic growth, partially offset by a negative 2% FX impact. Trading Services net revenues increased 1% including 4% organic growth, partially offset by a negative 3% FX impact.
• Annualized Recurring Revenue (ARR)³ increased 8% compared to the fourth quarter of 2021. Annualized SaaS revenues increased 13% and represented 36% of ARR.
• GAAP diluted earnings per share decreased 4% in 2022 and 6% in the fourth quarter 2022.
• Non-GAAP⁴ diluted earnings per share increased 6% in 2022 and was unchanged in the fourth quarter 2022.

The company returned $1,016 million to shareholders in 2022: $633 million in share repurchases and $383 million in dividends.

Fourth Quarter and Year 2022 Highlights

Adena Friedman, Chair and CEO said, “We delivered another year of strong growth against an uncertain macroeconomic backdrop, illustrating the strength of our diversified business and our ability to deliver on our longer-term objectives. As we look to 2023, our new corporate structure positions us to deliver greater liquidity, transparency, and integrity solutions to our clients throughout the financial system.”

Ann Dennison, Executive Vice President and CFO said, “In 2022 we successfully executed our capital plan to minimize the impact of rising rates, reduce net leverage and support our long-term growth strategy. We enter 2023 with a strong capital position and the flexibility to adapt to varying operating environments. Additionally, we raised our dividend growth potential with an expectation for a rising payout ratio over the next five years, amplifying our ability to continue delivering a compelling dividend growth story.”

FINANCIAL REVIEW

• 2022 net revenues were $3,582 million, an increase of $162 million, or 5% over 2021. Net revenues reflected a $239 million, or 7%, positive impact from organic growth, a $70 million decrease from the impact of changes in FX rates and a $7 million decrease from the net impact of acquisitions and divestitures.
  
  
• Fourth quarter 2022 net revenues were $906 million, an increase of $21 million, or 2%, from $885 million in the prior year period. Net revenues reflected a $41 million, or 5%, positive impact from organic growth, including positive contributions from all segments, partially offset by an $18 million decrease from the impact of changes in FX rates and a $2 million decrease from the net impact of an acquisition and divestiture.
  
  
• Solutions businesses revenues were $652 million in the fourth quarter of 2022, an increase of $21 million, or 3%. The increase reflects a $30 million, or 5%, positive impact from organic growth, and a $1 million increase from an acquisition, partially offset by a $10 million decrease from the impact of changes in FX rates.
  
  
• Trading Services net revenues were $253 million in the fourth quarter of 2022, an increase of $3 million, or 1%. The increase reflects an $11 million, or 4%, positive impact from organic growth, partially offset by an $8 million decrease from the impact of changes in FX rates.
  
  
• 2022 GAAP operating expenses were $2,018 million, an increase of $39 million, or 2% over 2021. Fourth quarter 2022 GAAP operating expenses increased $16 million, or 3%, versus the prior year period. The increases in both periods primarily reflect increased expenses associated with the continued investment in our people and our businesses, and higher travel costs. The increase in 2022 GAAP operating expenses are partially offset by lower regulatory and amortization expenses reflecting one-time charges in 2021 as well as lower restructuring charges for the year. The increase in fourth quarter 2022 GAAP operating expense includes higher merger and strategic initiatives expense and restructuring charges.
  
  
• 2022 non-GAAP operating expenses were $1,721 million, an increase of $105 million or 6%, over 2021. Fourth quarter 2022 non-GAAP operating expenses increased $26 million, or 6% versus the prior year period. The increase in both periods primarily reflects increased expenses associated with the continued investment in our people and our businesses, and higher travel costs, partially offset by lower marketing and advertising expense due to lower capital markets activity and changes in FX rates.
  
  
• The company repurchased $633 million in shares of its common stock during 2022. As of December 31, 2022, there was $650 million remaining under the board authorized share repurchase program, following an approval by the Board of Directors in December 2022 to increase the authorized amount of the share repurchase program.

INITIATING 2023 EXPENSE AND TAX GUIDANCE⁵

• The company is initiating its 2023 non-GAAP operating expense guidance to a range of $1,770 to $1,850 million. Nasdaq expects its 2023 non-GAAP tax rate to be in the range of 24% to 26%.

STRATEGIC AND BUSINESS UPDATES

• Nasdaq implemented its new corporate structure during the fourth quarter of 2022 to amplify strategy. Nasdaq’s new corporate structure took effect during the fourth quarter of 2022 with business units organized into three divisions: Market Platforms, Capital Access Platforms, and Anti-Financial Crime. The new structure aligns the company more closely with evolving client needs and global financial system.
   
• Nasdaq’s annualized SaaS revenues in the fourth quarter of 2022 increased 13% year over year. Annualized SaaS revenues totaled $725 million in the fourth quarter of 2022, representing 36% of total company ARR, up from 34% in the fourth quarter of 2021. The 13% year over year increase in annualized SaaS revenues primarily reflects strong growth in the fraud detection and anti-money laundering solutions and Workflow and Insights businesses.
   
• Nasdaq maintained listings leadership in the U.S. and Nordics during 2022. The Nasdaq Stock Market led U.S. exchanges for operating company IPOs with a 92% total win rate during 2022 and 100% win rate in the fourth quarter of 2022. During 2022, the Nasdaq Stock Market featured six of the largest ten U.S. IPOs by capital raised, attracted 74% of all proceeds raised through U.S. IPOs and welcomed 14 listing switches. In the Nordic and Baltic regions, Nasdaq maintained its leadership positioning with 38 IPOs.
   
• Nasdaq led all exchanges in total multiply-listed options traded and set a record for U.S. equities trading during the December expiration. In the fourth quarter and full year 2022 periods, Nasdaq led all exchanges during the period in total volume traded for multiply-listed equity options, and in December, achieved record U.S. equities volume for a triple witch expiration event during the fourth quarter.
   
• Nasdaq cloud progress continued with completing a migration of one of our options exchanges and further customer adoption. Nasdaq successfully completed the migration of Nasdaq MRX options market onto our new global derivative platform and Amazon Web Services (AWS), our preferred cloud provider. The migration marks a major milestone in Nasdaq’s journey to modernize and build the next-generation infrastructure for the world’s capital markets. Nasdaq also signed an agreement with Bolsa Electronica de Chile in January 2023 to upgrade its current on-premise Nasdaq trading technology to Nasdaq’s SaaS-based Marketplace Services Platform through a full cloud migration strategy.
  
  
• Nasdaq named to the Dow Jones Sustainability North America Index and received approval by The Science Based Targets Initiative for net-zero targets. Nasdaq received key recognitions by several third-party validators during 2022, including being named for the seventh consecutive year to the Dow Jones Sustainability North America Index. Additionally, Nasdaq’s near and long-term science-based emissions reductions targets were approved by The Science Based Targets initiative. Nasdaq has pledged to reduce absolute Scope 1 and Scope 2 greenhouse gas emissions 100% and absolute Scope 3 GHG emissions 50% by 2030, and pledged to reduce Scope 3 GHG emissions 95% to reach net-zero by 2050.

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_{¹ Represents revenues less transaction-based expenses.
² Constitutes revenues from our Capital Access Platforms and Anti-Financial Crime segments and Marketplace Technology business within Market Platforms.
³ Annualized Recurring Revenue (ARR) for a given period is the annualized revenue derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
⁴ Refer to our reconciliations of U.S. GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses, included in the attached schedules.
⁵ U.S. GAAP operating expense and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business.}

ABOUT NASDAQ

Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital markets and other industries. Our diverse offering of data, analytics, software and services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.nasdaq.com.

NON-GAAP INFORMATION

In addition to disclosing results determined in accordance with U.S. GAAP, Nasdaq also discloses certain non-GAAP results of operations, including, but not limited to, non-GAAP net income attributable to Nasdaq, non-GAAP diluted earnings per share, non-GAAP operating income, and non-GAAP operating expenses, that include certain adjustments or exclude certain charges and gains that are described in the reconciliation table of U.S. GAAP to non-GAAP information provided at the end of this release. Management uses this non-GAAP information internally, along with U.S. GAAP information, in evaluating our performance and in making financial and operational decisions. We believe our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparisons of results as the items described below in the reconciliation tables do not reflect ongoing operating performance.

These measures are not in accordance with, or an alternative to, U.S. GAAP, and may be different from non-GAAP measures used by other companies. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as a comparative measure. Investors should not rely on any single financial measure when evaluating our business. This information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. We recommend investors review the U.S. GAAP financial measures included in this earnings release. When viewed in conjunction with our U.S. GAAP results and the accompanying reconciliations, we believe these non-GAAP measures provide greater transparency and a more complete understanding of factors affecting our business than U.S. GAAP measures alone.

We understand that analysts and investors regularly rely on non-GAAP financial measures, such as those noted above, to assess operating performance. We use these measures because they highlight trends more clearly in our business that may not otherwise be apparent when relying solely on U.S. GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our ongoing operating performance.

Organic revenue and expense growth, organic change and organic impact are non-GAAP measures that reflect adjustments for: (i) the impact of period-over-period changes in foreign currency exchange rates, and (ii) the revenues, expenses and operating income associated with acquisitions and divestitures for the twelve month period following the date of the acquisition or divestiture. Reconciliations of these measures are described within the body of this release.

Foreign exchange impact: In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Certain discussions in this release isolate the impact of year-over-year foreign currency fluctuations to better measure the comparability of operating results between periods. Operating results excluding the impact of foreign currency fluctuations are calculated by translating the current period’s results by the prior period’s exchange rates.

Divisional alignment program: In October 2022, following our September announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In connection with the program, we expect to incur pre-tax charges principally related to employee-related costs, consulting, asset impairments and contract terminations over a two-year period. We expect to achieve benefits in the form of both increased customer engagement and operating efficiencies. Costs related to the divisional alignment program will be recorded as “restructuring” in our consolidated statements of income. We will exclude charges associated with this program for purposes of calculating non-GAAP measures as they are not reflective of ongoing operating performance or comparisons in Nasdaq's performance between periods.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT

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, total shareholder returns, growth, dividend program, trading volumes, products and services, ability to transition to new business models or implement our new corporate structure, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain acquisitions, divestitures and other strategic, restructuring, technology, environmental, de-leveraging and capital allocation 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, geopolitical instability, 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

Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.

Media Relations Contacts:

Will Briganti
(646) 964-8169
william.briganti@nasdaq.com

David Lurie
(914) 538-0533
david.lurie@nasdaq.com 

Investor Relations Contact:
Neil Stratton, CFA
(212) 401-8769
neil.stratton@nasdaq.com

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