Nasdaq Outperforms Q4 Expectations; Shares Fall 3%

Nasdaq, Inc. (NDAQ) delivered robust fourth quarter and full-year fiscal 2021 results. Q4 results outperformed both earnings and revenue expectations on the heels of a solid initial public offerings market, coupled with solid demand for its financial products.

However, shares fell 3.1% to close at $169.50 on January 26, amid broader market volatility. Meanwhile, NDAQ shares have gained 23.4% over the past year.

Robust Results

The company reported Q4 non-GAAP earnings of $1.93 per share, a 21% growth compared to the same period last year. Moreover, the earnings came in at 16 cents better than analyst estimates of $1.77 per share.

Nasdaq’s quarterly net revenue climbed 12% year-over-year to $885 million, surpassing Street estimates of $866.09 million. Quarterly annualized recurring revenue (ARR) grew 19% year-over-year to $1.87 billion, while annualized Software-as-a-Service (SaaS) revenue grew 43% year-over-year.

For the full year fiscal 2021, non-GAAP earnings increased 22% annually to $7.56 per share. Similarly, the company’s net revenue grew 18% annually to $3.42 billion aided by revenue growth of 21% in the Solutions segment and 13% annual revenue growth in Market services.  

Shareholder Returns

During FY21, the company rewarded shareholders with $943 million in share buybacks and $350 million in dividends.

What’s more, Nasdaq announced an accelerated share buyback program with Goldman Sachs & Co. LLC (GS) to buy back $325 million worth of shares. The step reflects the solid strength of NDAQ’s balance sheet, the cash generative nature of the business, and continued commitment towards shareholders.

The company also announced a regular quarterly common dividend of $0.54 per share, payable on March 25, 2022, to shareholders on record as of March 11, 2022.

CEO Comments

President and CEO of Nasdaq, Adena Friedman, said, “We grew across all segments of our business last year with a focus on competitive positioning, innovation in our trading and listing businesses, and the continued expansion of our software, analytics, data, and cloud services.”

“We have entered 2022 in a position of strength across all of our businesses, primed to capture secular growth opportunities as we continue to play our part in increasing investor participation, optimizing capital formation, and driving efficiency and resiliency in the global financial system,” Friedman concluded.

Analysts’ View

Recently, Citigroup analyst Ben Herbert lowered the price target on the stock to $200 (18% upside potential) from $203, while maintaining a Hold rating.

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys, 4 Holds, and 1 Sell. The average Nasdaq price target of $219.64 implies 29.5% upside potential to current levels.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Nasdaq, with 3.2% of portfolios tracked by TipRanks increasing their exposure to NDAQ stock over the past 30 days.

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