How did the company's revenue performance change compared to the same period last year?

Total revenues increased by 10% to $895 million for the three months ended March 31, 2009, compared to $814 million for the same period in 2008. This growth was primarily driven by increases in the Market Services segment, benefiting from the full inclusion of European operations, and the Market Technology segment.

What factors led to the decrease in net income and earnings per share?

Net income decreased from $121 million in Q1 2008 to $94 million in Q1 2009, and diluted EPS fell from $0.69 to $0.44. This was mainly due to a significant increase in operating expenses (up 40%) driven by the full-quarter impact of acquisitions like OMX AB and PHLX, higher interest expenses due to increased debt financing for these acquisitions, and the absence of a significant foreign currency contract gain that boosted prior-year results.

How is the company managing its debt obligations, particularly following recent acquisitions?

The company has a substantial debt load resulting from recent acquisitions, with total debt obligations of $2.52 billion at the end of the quarter. Interest expense increased significantly. During the quarter, NASDAQ OMX repurchased $24 million of its 2.50% convertible senior notes, recognizing a gain. The company also made a principal payment of $56 million on its term loan facility and has entered into interest rate swaps to manage floating rate debt exposure. At March 31, 2009, the company was in compliance with all debt covenants.

What is the outlook for new listings and equity issuance given the current economic climate?

The report indicates a very challenging environment for equity issuance, noting the slowest pace of equity issuance since the late 1970s, with only 2 IPOs across all U.S. exchanges and none on The NASDAQ Stock Market during the quarter. This trend significantly impacts the Issuer Services segment, with a notable decrease in new listings compared to the prior year.

NDAQ 10-Q Quarterly Report Q1 FY2009 — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-Q filed May 8, 2009. Cited figures are marked; the original filing is the authoritative source.

The NASDAQ OMX Group, Inc. (NDAQ) reported its first quarter 2009 results, ending March 31, 2009.

The company generated total revenues of $895 million^a, a 10% increase year-over-year, primarily driven by growth in Market Services and Market Technology segments. Net income for the quarter was $94 million, resulting in diluted earnings per share of $0.44, a decrease from $0.69 in the prior year's quarter. This decline was influenced by increased operating expenses, higher interest expenses associated with recent acquisitions, and a significant gain on foreign currency contracts in the prior year that did not recur.

Despite a challenging economic environment marked by low IPO activity and reduced credit availability, NASDAQ OMX demonstrated resilience. The company's strategic acquisitions in 2008, including OMX AB and PHLX, contributed significantly to revenue growth, particularly in European operations and derivative trading.

However, the integration of these businesses and ongoing economic headwinds led to higher operating expenses, including compensation and technology costs. The company's balance sheet remains solid, with significant goodwill and intangible assets reflecting its expansion, and robust cash flow from operations, although investing and financing activities showed significant outflows due to debt repayments and business integration costs.

02—Key points

Key Highlights

Total revenues increased by 10% to $895 million compared to the prior year quarter, driven by Market Services and Market Technology segment growth.
Net income decreased to $94 million ($0.44 diluted EPS) from $121 million ($0.69 diluted EPS) year-over-year, impacted by higher operating expenses and interest costs.
Operating expenses increased by 40% to $203 million, largely due to the full inclusion of acquired entities (OMX AB, PHLX) and integration costs.
Interest expense more than doubled to $27 million, reflecting increased debt from recent acquisitions.
Cash provided by operating activities was $83 million, a decrease from $167 million in the prior year, impacted by changes in working capital.
The company repurchased $24 million of its 2.50% convertible senior notes, recognizing a gain on extinguishment of debt.
Despite economic challenges, the company maintained compliance with debt covenants and regulatory capital requirements.

03—Questions

Frequently Asked Questions

How did the company's revenue performance change compared to the same period last year?
Total revenues increased by 10% to $895 million for the three months ended March 31, 2009, compared to $814 million for the same period in 2008. This growth was primarily driven by increases in the Market Services segment, benefiting from the full inclusion of European operations, and the Market Technology segment.
What factors led to the decrease in net income and earnings per share?
Net income decreased from $121 million in Q1 2008 to $94 million in Q1 2009, and diluted EPS fell from $0.69 to $0.44. This was mainly due to a significant increase in operating expenses (up 40%) driven by the full-quarter impact of acquisitions like OMX AB and PHLX, higher interest expenses due to increased debt financing for these acquisitions, and the absence of a significant foreign currency contract gain that boosted prior-year results.
How is the company managing its debt obligations, particularly following recent acquisitions?
The company has a substantial debt load resulting from recent acquisitions, with total debt obligations of $2.52 billion at the end of the quarter. Interest expense increased significantly. During the quarter, NASDAQ OMX repurchased $24 million of its 2.50% convertible senior notes, recognizing a gain. The company also made a principal payment of $56 million on its term loan facility and has entered into interest rate swaps to manage floating rate debt exposure. At March 31, 2009, the company was in compliance with all debt covenants.
What is the outlook for new listings and equity issuance given the current economic climate?
The report indicates a very challenging environment for equity issuance, noting the slowest pace of equity issuance since the late 1970s, with only 2 IPOs across all U.S. exchanges and none on The NASDAQ Stock Market during the quarter. This trend significantly impacts the Issuer Services segment, with a notable decrease in new listings compared to the prior year.

04—Continue

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