|
|
Business, Economics, Education, Entrepreneurs,
Environment, Science and Technology
|
|
|
|
____________________
Quarterly Results
NASDAQ OMX Announces First Combined Quarterly Results
Net Income is $121.4 Million ($18.3 Million in Q107)
$0.69 Diluted EPS ($0.14 Diluted EPS in Q107)
NEW YORK - The NASDAQ OMX Group today reported first quarter 2008 net income of $121.4 million, or $0.69 per diluted share, an increase of $103.1 million from $18.3 million, or $0.14 per diluted share, in the first quarter of 2007. These results are presented in accordance with U.S. generally accepted accounting principles ("GAAP") and include the financial results of The Nasdaq Stock Market, Inc. ("NASDAQ") for the full quarter, and the financial results of OMX AB ("OMX") from February 27, 2008, when the business combination between NASDAQ and OMX closed. The comparative results for 2007 reflect the financial results of NASDAQ only.
"We are a new company and our opportunities for growth have never been
stronger," stated Bob Greifeld, Chief Executive Officer of NASDAQ OMX.
"The completion of our historic combination with OMX establishes NASDAQ
OMX as the world's largest exchange company with operations on six
continents and an undisputed leader in product innovation. I am pleased
to note that during the quarter we continued to build on our position
as the largest U.S. equities exchange, yet also took steps to diversify
into exciting opportunities with significant potential for earnings
growth. These include the successful launch of our U.S. options market,
progress on the proposed acquisition of the Philadelphia Stock
Exchange, our Pan-European Market, the investment in Dubai
International Financial Exchange ("DIFX"), and our planned transaction
with Nord Pool. We are executing well on the integration of OMX and
continue to feel confident about achieving the synergies announced with
the merger."
On a non-GAAP basis, when excluding certain one-time gains and merger
related expenses, first quarter 2008 net income was $85.0 million, or
$0.48 per diluted share.
For comparison purposes pro forma non-GAAP results are being presented
that reflect the financial results of both NASDAQ and OMX as if they
were a combined company for the periods presented. For the first
quarter of 2008 net income on a pro forma non-GAAP basis was $113.9
million, or $0.54 per diluted share (which excludes the $26.0 million
pre-tax gain on the investment in DIFX), an increase when compared to
pro forma non-GAAP net income of $68.1 million, or $0.33 per diluted
share, for the first quarter of 2007, and an increase when compared to
pro forma non-GAAP net income of $103.2 million, or $0.49 per diluted
share, for the fourth quarter of 2007. The remaining results are
presented on a pro forma non-GAAP basis unless otherwise noted.
Total revenues were $918.2 million in the first quarter of 2008, an
increase of 29.5% from $709.1 million in the year-ago period, and up
10.4% from $832.0 million reported in the fourth quarter of 2007.
First Quarter Highlights
* Traded record volumes on the OMX Nordic Exchange during the
quarter. In January 2008 average daily derivatives trading volume
reached a record 789,898 contracts. This record was eclipsed two
months later in March 2008 when average daily derivatives trading
volume reached 816,760. Also, in January 2008, record figures in
the number of cash equity trades were recorded for the month,
reaching 267,511 trades per day. And in February 2008, new record
high average daily trading volume was achieved for fixed-income
derivatives when an average 158,836 contracts traded.
* Expanded our leadership position as the largest single pool of
liquidity in which to trade U.S. listed equities, matching a record
high 31.0% of all volume for the first quarter of 2008. NASDAQ
also achieved new market share highs in the trading of NYSE- and
Amex-listed securities, matching 21.1% and 36.2% of volume,
respectively, during the quarter.
* Announced plans to launch a new pan-European market to serve
customers seeking a highly liquid trading and routing platform for
the most actively traded European stocks. NASDAQ OMX Pan European
Market will enable best execution in high volume securities trading
in a cross-border, multi-market environment. The market, scheduled
to open in September 2008, is subject to Financial Services
Authority (FSA) approval.
* Signed an agreement with Bombay Stock Exchange ("BSE"), under which
BSE will implement NASDAQ OMX technology to serve as their new
trading and clearing platform for derivatives and cash securities.
In addition to the technology implementation, the agreement
encompasses a business partnership with the joint objective to
drive and grow business at the BSE.
* Signed, subsequent to quarter-end, a large contract with the Tokyo
Commodity Exchange ("TOCOM") and NTT Data to provide an integrated
trading and clearing system for commodity derivatives. TOCOM is
Japan's largest commodity exchange with more than 75% market share,
and lists commodities futures and options contracts, including
metals, oil and rubber. The contract represents NASDAQ OMX's first
technology customer in Japan and the first major technology
contract win since the combination.
* Launched a new technology road map shortly after completing the
business combination with OMX, which defines how to bring together
the best of both technology organizations. This effort is designed
to leverage both the experience and insight gained from operating
NASDAQ and OMX, as well as providing technology solutions to a
global customer base. The successful launch of this road map is a
critical step towards achieving synergy targets and strengthening
the company's position as the world's leading provider of
technology to the exchange industry.
* Launched the company's U.S. options market, a new electronic equity
and index options market and the first options trading platform to
offer true price/time priority. This market is already trading in
excess of 117,000 contracts per day.
* Introduced NASDAQ Market Replay, an innovative data tool that
provides an extremely powerful, NASDAQ-validated replay and
analysis of the market. Market Replay allows users to quickly view
the order book at any point in time, replay the market in simulated
real-time, or at an accelerated/decelerated speed, and zoom-in to
view events at the millisecond level to see exactly what happened.
* Announced an investment of up to $7.5 million in FCStone's
subsidiary Agora-X, LLC. Agora-X is developing a new electronic
communications network for institutional trading in
over-the-counter (OTC) commodity contracts.
* Introduced the NASDAQ OMX 100 Index(sm) (Nasdaq:QOMX), a new global
benchmark for the NASDAQ OMX Group. The NASDAQ OMX 100 Index is a
market-capitalization weighted index comprised of the 100 largest
companies listed on the combined exchanges of the NASDAQ OMX Group.
"During the first quarter, our business continued to operate
efficiently and effectively, punctuated by strong operating
performance, successful integration efforts and our ongoing disciplined
approach to managing our balance sheet," said Chief Financial Officer
David Warren. "In fact, based on the good start to the year and the
better than expected results experienced in the roll out of our new
technology road map, we are raising our expectations for fourth quarter
2008 synergy achievement to $25.0 million to $35.0 million in annual
savings from $20 million to $30 million expected previously. We are
pleased with the results so far and recognize that this is the product
of the hard work of our team members world wide."
Financial Review
Results are presented on a pro forma non-GAAP basis. Revenues less
liquidity rebates, brokerage, clearance and exchange fees ("Net
Exchange Revenues") were $382.7 million for the first quarter of 2008,
an increase of $43.5 million, or 12.8%, from the first quarter of 2007,
and an increase of $3.6 million from the fourth quarter of 2007.
NASDAQ OMX presents for this quarter net exchange revenues along three
primary business segments: Market Services, Issuer Services, and Market
Technology.
Market Services
Market Services net exchange revenues increased to $267.2 million, up
17.6% from the prior year quarter, and up 9.3% from the fourth quarter
of 2007.
Execution Services
Execution Services net exchange revenues were $192.8 million for the
first quarter of 2008, up $31.4 million, or 19.5%, when compared to the
first quarter of 2007, and up $21.8 million, or 12.7%, from the fourth
quarter of 2007.
* Increases in U.S. Execution Services net exchange revenues from the
prior year quarter are primarily due to higher trade execution
volume for U.S.-listed equities. Total U.S.-listed equity volume
matched on NASDAQ increased to 153.7 billion shares in the first
quarter of 2008, up 61.5% from 95.2 billion shares in the first
quarter of 2007. Increases when compared to the fourth quarter of
2007 are primarily due to higher traded share volume and reduced
fees associated with clearing transactions. Included in execution
and trade reporting revenues in the first quarter of 2008 are
$91.1 million in SEC Section 31 fees, compared with $98.5 million
in the first quarter of 2007 and $99.3 million in the fourth
quarter of 2007. Corresponding cost of revenues reflecting the
reimbursement of these fees to the SEC are included in brokerage,
clearance and exchange fees.
* Non-U.S. Execution Services (Nordic) revenues increased when
compared to both the first quarter of 2007 and the fourth quarter
of 2007. Driving revenue higher when compared to both periods is
higher cash equity and derivatives transaction volumes, offset
somewhat by lower cash equity value traded and lower cash equity
transaction fees implemented on January 1, 2008. For the first
quarter of 2008, the number of equity transactions per day grew by
32.0% from 179,059 to 236,409 when compared to the same period in
2007. For the same periods the value of equity trading per business
day declined by 9.9% from 49.4 billion Swedish Krona (SEK) to
44.5 billion SEK. The number of traded derivatives contracts per
day increased by 9.1% to 754,983 from 691,843 in the year-earlier
period. Also contributing to increases in revenue are improving
exchange rates for the Swedish Krona as compared to the U.S.
dollar.
Market Services Subscriptions
Market Services Subscriptions (Market Data) revenues were $66.3 million
for the first quarter of 2008, up $8.2 million, or 14.1%, when compared
to the first quarter of 2007, and up $0.4 million from the fourth
quarter of 2007.
* Market Services Subscriptions revenues increased from the prior
year quarter due primarily to increases in subscriber populations
for proprietary products. Somewhat offsetting this increase is
higher UTP Plan revenue sharing due to declines in NASDAQ's total
UTP market share.
* Non-U.S. (Nordic) Market Data revenues increased from the prior
year quarter and the fourth quarter of 2007 as increasing market
activity levels drive higher demand for Nordic market data products.
Issuer Services
During the first quarter of 2008 Issuer Services revenues increased
8.3% to $86.2 million from the first quarter of 2007 and decreased
6.6%, or $6.1 million, from the prior quarter.
Corporate Client Group
Corporate Client Group revenues were $74.7 million for the first
quarter of 2008, up $4.0 million, or 5.7%, when compared to the first
quarter of 2007, but down $6.0 million from the fourth quarter of 2007.
* Increases in Corporate Client Group revenues from the prior year
quarter are driven primarily by increases in Corporate Client
services and reflect increased customer demand for products and
services such as PrimeNewswire, Shareholder.com, Carpenter Moore
Insurance, and new products such as Directors Desk. The decline
from the fourth quarter of 2007 is primarily due to a reduction in
the total number of listed companies.
* Non-U.S. Corporate Client Group revenues increased when compared to
the first quarter of 2007 due primarily to improving exchange rates
for the Swedish Krona as compared to the U.S. dollar. Revenues
declined when compared to the fourth quarter of 2007 primarily due
to fewer listings of both companies and fixed income products.
Financial Products
Financial Products revenues were $11.5 million for the first quarter of
2008, up $2.6 million, or 29.2%, from the first quarter of 2007, and
down $0.1 million when compared to the fourth quarter of 2007. The
increase from the prior year quarter is due to higher license revenues
associated with NASDAQ-licensed ETFs.
Market Technology
Market Technology revenues were $29.0 million for the first quarter of
2008 compared to $31.9 million in the first quarter of 2007 and $42.1
million in the fourth quarter of 2007. Declines when compared to the
fourth quarter of 2007 are due partly to higher than normal activity
recognized in that period. Also, first quarter 2008 sales declined
temporarily as anticipated as some customers chose to further review
investment decisions in light of the integration of NASDAQ and OMX
technology customer platforms and the creation of a common technology
road map. Customer activity continued to be high with large orders
driving order intake to $46.7 million for the first quarter of 2008,
16.2% higher than the $40.2 million realized in the first quarter of
2007.
Operating Expenses
Total operating expenses increased 5.1% to $229.4 million from $218.3
million in the prior year quarter and declined 2.0% from $234.1 million
in the prior quarter. Higher expenses when compared to the first
quarter of 2007 are driven primarily by higher compensation expenses
resulting from a larger employee base and increased retention expenses.
Also contributing to higher expenses are lower exchange rates for the
U.S. dollar as compared to the Swedish Krona. Declining expenses when
compared to the fourth quarter of 2007 are driven by lower marketing
expenses, as the fourth quarter is typically a strong period for
advertising.
Net Interest Income
Net interest expense was $11.3 million for the first quarter of 2008,
compared with net interest expense of $21.1 million for the first
quarter of 2007. The decline in net interest expense is primarily due
to lower average net debt, lower interest rates, and higher cash
balances in the most recent quarter.
Earnings Per Share
First quarter earnings per diluted share were $0.54 versus $0.33 per
diluted share in the prior year quarter, and $0.49 in the fourth
quarter of 2007. NASDAQ OMX's weighted average shares outstanding used
to calculate diluted earnings per share were 214.1 million in the first
quarter of 2008 versus 212.4 million in the year-ago quarter and 214.5
million in the fourth quarter of 2007.
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It
delivers trading, exchange technology and public company services
across six continents, and with over 3,900 companies, it is number one
in worldwide listings among major markets. NASDAQ OMX Group offers
multiple capital raising solutions to companies around the globe,
including its U.S. listings market; the OMX Nordic Exchange, including
First North; and the 144A PORTAL Market. The company offers trading
across multiple asset classes including equities, derivatives,
commodities, structured products and ETFs. NASDAQ OMX Group technology
supports the operations of over 60 exchanges, clearing organizations
and central securities depositories in more than 50 countries. OMX
Nordic Exchange is not a legal entity but describes the common offering
from NASDAQ OMX Group exchanges in Helsinki, Copenhagen, Stockholm,
Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ
OMX, visit www.nasdaqomx.com.
|
|
|
| © Copyright 2008/Exchange Morning Post/Exchange Business Communications Inc. |
|
|
