What were the main drivers of Nasdaq's revenue growth in the first nine months of 2006?

The primary drivers were the inclusion of results from the acquired INET platform, significant increases in average daily share volume, and a growing market share in the trading of NYSE- and Amex-listed securities. Revenue growth in the Issuer Services segment was boosted by acquisitions like Carpenter Moore, Shareholder.com, and PrimeZone.

How did Nasdaq fund its significant investments, such as the LSE stake?

Nasdaq financed its investments and acquisitions through a combination of operating cash flow, proceeds from debt obligations (including significant new credit facilities established in April 2006), and net proceeds from public equity offerings conducted in early 2006 and May 2006.

What impact did the INET integration have on Nasdaq's financial performance?

The integration of INET significantly contributed to the increase in revenues and trading volumes in the Market Services segment. While the integration process incurred expenses related to cost reduction and operational efficiency, it is expected to yield significant operating synergies and has been largely completed, enhancing Nasdaq's trading platform.

What is the significance of Nasdaq's investment in the London Stock Exchange (LSE)?

The investment represents a strategic expansion beyond Nasdaq's core U.S. market operations and increased total assets significantly. While accounted for under SFAS 115 as an available-for-sale security, this substantial stake introduces market price volatility and foreign currency exposure, with unrealized gains reported in other comprehensive income.

NDAQ 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

NASDAQ, INC. (NDAQ) reported significant revenue growth for the nine months ended September 30, 2006, with total revenues reaching $1.21 billion, a 95.1% increase over the same period in 2005. This surge was primarily driven by the Market Services segment, which more than doubled its revenue, largely due to the inclusion of INET's results and increased trading volumes and market share in NYSE and Amex-listed securities. The company also made strategic acquisitions, including PrimeZone and Shareholder.com, which bolstered its Issuer Services segment. Despite substantial revenue growth, expenses also increased significantly, by 16.7% for the nine-month period, driven by INET integration costs, cost reduction programs, and expenses related to recent acquisitions. Net income for the nine months rose by 45.8% to $64.9 million, indicating profitable growth despite increased operational spending. The company also significantly increased its assets, largely due to a substantial investment in the London Stock Exchange (LSE), reflecting a strategic expansion beyond its core U.S. market operations.

Key Highlights

1Total revenues increased by 95.1% to $1.21 billion for the nine months ended September 30, 2006, compared to $620.3 million in the prior year period.
2Net income grew by 45.8% to $64.9 million for the nine months ended September 30, 2006, compared to $44.5 million in the prior year period.
3The company became operational as an exchange for Nasdaq-listed securities on August 1, 2006.
4Acquired PrimeZone Media Network and Shareholder.com to expand its Issuer Services segment.
5Invested significantly in the London Stock Exchange (LSE), holding a 25.4% ownership stake as of September 30, 2006.
6Total assets grew by 73.1% to $3.54 billion at September 30, 2006, largely due to the LSE investment.
7Increased debt obligations to $1.61 billion at September 30, 2006, primarily to finance strategic acquisitions and investments.

NASDAQ, INC. Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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