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Nasdaq Thrills Shareholders with Q2 Earnings Beat & Stock Split

Story Highlights

Nasdaq’s Q2 results outpaced Wall Street expectations, backed by better-than-expected performance in the Solutions Services segment and lower adjusted operating expense margins.

Global financial services company Nasdaq, Inc. (NDAQ) thrilled investors yesterday after its second-quarter earnings and revenue exceeded expectations. NDAQ also approved a three-for-one stock split in the form of a stock dividend. Shares popped nearly 7% on the news and ended the day up 6.1% at $169.04 on July 20.

Nasdaq is a global technology company offering data, analytics, software, and services to capital markets. NDAQ stock has lost 15.9% year to date amid the broader tech sell-off.

NDAQ Q2 Results in Detail

Nasdaq’s adjusted earnings rose 9% year-over-year to $2.07 per share and came in 15 cents higher than the analysts’ estimates.

Similarly, net revenues of $893 million gained 6% year-over-year and exceeded the Street estimates by $11.16 million. The solid revenue jump was contributed by a 10% year-over-year growth in the Solutions Segments.

Annualized recurring revenue (ARR) grew 9% compared to the prior year period and annualized Software-as-a-Service (SaaS) revenue, which was 35% of ARR, also grew 12% compared to Q2FY21. SaaS revenue growth is driven by solid momentum in the company’s Anti Financial Crime and Analytics businesses.

The company even lowered its non-GAAP operating expense guidance for 2022 to fall in the range of $1.71 billion to $1.74 billion, down from its previous range of $1.70-$1.76 billion.

3-for-1 Stock Split & Dividend Announcement

The company’s Board also announced a three-for-one stock split in the form of a stock dividend. Each common stockholder on record on August 12, 2022, will receive two additional shares in the form of a stock dividend on August 26, 2022. Nasdaq’s common stock will begin trading on a split-adjusted basis on August 29, 2022.

Furthermore, the company even announced a quarterly cash common stock dividend of $0.20 per share payable on September 30, 2022, to shareholders of record on September 16, 2022.

NDAQ Stock Prediction

Following the results, Jefferies analyst Daniel Fannon reiterated a Hold rating on NDAQ stock with a price target of $171, implying 1.2% upside potential to current levels. The analyst is encouraged by a beat on a majority of the segments compared to his own model estimates. Even expenses came in better-than-expected, he noted.

Overall, NDAQ stock commands a Strong Buy consensus rating based on seven Buys and one Hold. The average Nasdaq price forecast of $189.14 implies 11.9% upside potential to current levels.

High Smart Score for NDAQ

According to TipRanks’ Smart Score, Nasdaq has a score of nine, indicating that the stock is likely to outperform the market. Bloggers and news articles are bullish on the stock, and hedge funds have increased their holdings of NDAQ stock by 522,700 shares in the last quarter.

Ending Thoughts

A volatile capital market has helped boost Nasdaq’s performance in the second quarter aided by an increase in listings, volumes traded, the number of contracts traded on the futures and options on futures tracking Nasdaq indexes, and strong net inflows in the indexing business.

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