Summary
The Nasdaq Stock Market, Inc. reported a net loss for the three months ended September 30, 2004, compared to a larger net loss in the same period of 2003. However, for the nine-month period, the company swung from a significant net loss in 2003 to a net income in 2004. This improvement was driven by substantial cost reductions and the positive impact of the Nasdaq Strategic Review conducted in 2003. Revenue for both the three and nine-month periods decreased year-over-year, primarily due to competitive pressures in the Market Services segment and a decline in the percentage of share volume reported to Nasdaq's systems. The company completed the acquisition of Brut LLC in September 2004, which is expected to enhance its competitive position and execution quality.
Key Highlights
- 1Net loss narrowed to $5.5 million for Q3 2004 from $38.0 million in Q3 2003, while the first nine months of 2004 showed a net income of $3.9 million compared to a net loss of $84.5 million in the prior year.
- 2Total revenues decreased by 12.6% to $124.0 million for Q3 2004 and by 17.6% to $372.4 million for the nine months ended September 30, 2004, compared to the respective periods in 2003.
- 3Market Services revenue declined by 18.3% in Q3 2004 and 26.6% year-to-date, largely due to competitive pressures and a reduced share of reported trading volume.
- 4Issuer Services revenue remained relatively stable for the quarter and saw a slight increase of 0.9% year-to-date, benefiting from an increase in initial public offerings (IPOs) and secondary listings.
- 5The company completed the acquisition of Brut LLC on September 7, 2004, for $190.0 million in cash, which included the Brut ECN.
- 6Operating expenses decreased significantly, by 20.0% in Q3 2004 and 28.5% year-to-date, reflecting cost reduction initiatives and the impact of the 2003 strategic review.
- 7Cash and cash equivalents decreased from $148.9 million at the beginning of the period to $48.0 million at the end of Q3 2004, largely due to the Brut acquisition.