Nasdaq Posts Strong Q1 Results Due to Volatility Caused by Covid-19

Global Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term operator and technology firm Nasdaq today reported the financial results for the first quarter of 2020.

First quarter 2020 net revenues were $701 million, an increase of $67 million, or 11%, from $634 million in the prior year period, the firm said.

It added that net revenues reflected a $51 million positive impact from organic growth in the Market Services segment, a $30 million positive impact from organic growth in the non-trading segments and a $2 million increase from the inclusion of revenues from acquisitions, partially offset by a $10 million negative impact from divestitures and a $6 million unfavorable impact from changes in exchange rates.

GAAP operating expenses were $426 million in the first quarter of 2020, an increase of $67 million from $359 million in the first quarter of 2019, according to Nasdaq.

The company said that the increase primarily reflects higher general, administrative and other expense, higher compensation expense and higher restructuring charges, partially offset by lower professional fees compared to the first quarter of 2019. The increase in general, administrative and other expense primarily reflects costs related to bond refinancing costs.

According to Nasdaq, non-GAAP operating expenses were $336 million in the first quarter of 2020, an increase of $14 million, or 4%, compared to the first quarter of 2019, reflecting a $23 million organic expense increase.

The firm said this increase was partially offset by a $5 million decline from the net impact of acquisitions and a divestiture and a $4 million favourable impact from changes in foreign exchange rates.

The $23 million organic expense increase primarily reflects higher achievement within our performance-based compensation programs, Nasdaq noted.

Addressing Covid-19 risks

Michael Ptasznik, Executive Vice President and Chief Financial Officer at Nasdaq explained that to prudently address Covid-19 crisis risks, the company took steps to strengthen its balance sheet. Specifically, Nasdaq refinanced certain bonds to lower interest costs and eliminated near-term bond maturities, and increased cash on the balance sheet by drawing from its existing revolving credit facility to ensure short-term funding needs were insulated from volatile money markets.

“These prudent steps combined with Nasdaq's highly cash-generative business enabled the company to continue executing on our capital deployment plan, including investing for the future and returning capital to shareholders”, Ptasznik said.

At March 31, 2020, the company had cash and cash equivalents of $1,015 million and total debt of $4,108 million, resulting in net debt of $3,093 million. This compares to total debt of $3,387 million and net debt of $3,055 million on December 31, 2019. As of March 31, 2020, there was $510 million remaining under the board authorized share repurchase program.

“The Covid-19 pandemic’s human, health, societal, and economic costs have been severe and will have lasting implications on our global community,” said Adena Friedman, President and CEO at Nasdaq.

“At the same time the crisis has highlighted how humanity manifests itself in inspirational, powerful responses. The unflinching resolve of healthcare and other essential workers, meal delivery efforts and support of small businesses, coupled with the overarching creativity of the human spirit in identifying new ways of working, supporting and caring for each other has been truly awe-inspiring," she added.

Nasdaq committed cash and in-kind donations totaling $6 million to Covid-19 response and relief efforts to help provide assistance to those who are most at risk. As part of Nasdaq's $6 million philanthropic commitment, a total cash donation of $5 million will be provided to a number of programs, including the Opportunity Fund’s Small Business Relief Fund to support small business owners.

Nasdaq thanked all front-line workers who are committed to providing essential services to those impacted by the Covid-19 pandemic. The company’s relief efforts will support small businesses, food provisioning to vulnerable communities, and the safety of healthcare workers.