Nasdaq, Inc. NDAQ is slated to report second-quarter 2021 results on Jul 21, before the opening bell. The company delivered an earnings surprise in each of the last four quarters, the average being 8.30%.
Factors to Consider
Nasdaq’s second-quarter performance is likely to have benefited from its organic revenue growth and higher licensing revenues.
The acquisition of eVestment, Solovis and Verafin is likely to have provided additional opportunities in the to-be-reported quarter.
Non-trading revenues are expected to have benefited from better performance of Market Technology, and continued strong growth of Market Data, Index and Analytics businesses. Higher SaaS revenues are likely to have driven Market Technology.
The Zacks Consensus Estimate for Investment Data & Analytics businesses revenues is pegged at $48.5 million, indicating an increase of 10.3% from the year-ago reported figure. The consensus estimate for Index revenues is pegged at $105 million, suggesting growth of 54.4% from the year-ago reported figure.
Marketing Technology segment revenues are likely to have been driven by organic revenue growth, acquisition of Verafin, impact from the changes in foreign exchange rates and new sales and revenues from SaaS products and services. The Zacks Consensus Estimate for Marketing Technology revenues is pegged at $115 million, suggesting growth of 36.9% from the prior-year reported figure.
The Investment Intelligence segment is expected to have benefited from organic growth in proprietary data products from new sales, growth in eVestment and Solovis as well as higher licensing revenues courtesy of higher average AUM in ETPs linked to Nasdaq indexes and futures trading linked to the Nasdaq-100 Index. The Zacks Consensus Estimate for Investment Intelligence segment revenues is pegged at $260 million, indicating 22.1% increase from the year-ago reported figure.
Nasdaq reported mixed volumes for second-quarter 2021. While U.S. equity options volume increased 27.8% year over year to 782 million contracts, European options and futures volume declined 9.1% year over year to 16 million contracts.
Revenues per contract for U.S. equity options remained unchanged year over year at 12 cents, while the same for European options and futures increased 13.6% to 50 cents.
In Cash Equities, Nasdaq’s U.S. matched equity volume in the second quarter grossed 114.1 billion shares, down 19.9% from the prior-year quarter.European equity volume improved nearly 16.2% year over year to $294 billion.
Under Fixed Income and Commodities, U.S. Fixed income volume in the second quarter increased 44.4% to $1.8 trillion. European fixed income volume increased 2.8% to 7.3 million contracts. Total listings grew 18.4% year over year to 4,969.
Higher U.S. listings revenues courtesy of increase in IPOs and higher Nasdaq private market revenues coupled with increase in both Investor Relations, Intelligence and ESG advisory services revenues might have favored the Corporate Services segment. However, the company expects Nasdaq private market revenues to witness at least $5 million in sequential decline in the second quarter from a solid first quarter. The Zacks Consensus Estimate for Corporate Services segment revenues is pegged at $152 million, indicating 20.6% increase from the year-ago reported figure.
The consensus estimate for listing revenues is pegged at $95 million, suggesting growth of 28.4% from the year-ago reported figure.
Interest expenses are likely to have increased in the second quarter due to new issuances of senior notes in December 2020 and commercial paper issuances in the first quarter of 2021 to partially fund the acquisition of Verafin. Nasdaq expects an incremental $3 million to $4 million of Verafin related interest expense to be reflected in the second-quarter results.
Nasdaq expects year-over-year organic growth and expenses to be elevated in the second quarter.
The Zacks Consensus Estimate for earnings stands at $1.72, indicating 11.6% increase from the prior-year reported figure.
What Our Quantitative Model States
Our proven model does not conclusively predict an earnings beat for Nasdaq this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below.
Earnings ESP: Nasdaq has an Earnings ESP of -0.72%. This is because the Most Accurate Estimate of $1.71 is pegged lower than the Zacks Consensus Estimate of $1.72. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Nasdaq currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.
Coinbase Global, Inc. COIN has an Earnings ESP of +6.64% and a Zacks Rank #1.
Mastercard Incorporated MA has an Earnings ESP of +0.98% and a Zacks Rank #3.
Fidelity National Information Services, Inc. FIS has an Earnings ESP of +2.58% and a Zacks Rank #3.