01—Abstract
Summary
Summary of the 10-Q filed May 5, 2010. Cited figures are marked; the original filing is the authoritative source.
NASDAQ OMX Group, Inc. (NDAQ) reported its financial results for the first quarter ended March 31, 2010.
The company saw a decrease in revenues less liquidity rebates, brokerage, clearance and exchange fees, primarily driven by a decline in U.S. cash equity trading volumes and lower average net fees per share matched. This was partially offset by strong performance in European derivative trading and clearing, and growth in access services revenues. Operating expenses saw an increase, largely due to a significant pre-tax charge related to the repayment of senior secured credit facilities.
Despite the revenue headwinds in its core market services, the company is strategically investing in its technology segment and has seen growth in its Issuer Services segment, particularly in European listings and its Global Index Group. The company also announced a new $300 milliona share repurchase program, signaling confidence in its financial position and commitment to shareholder returns.
02—Key points
Key Highlights
- Revenues less liquidity rebates, brokerage, clearance and exchange fees decreased by 2.4% to $360 million compared to the prior year period, primarily due to lower U.S. cash equity trading volumes.
- Operating expenses increased by 22.2% to $248 million, largely driven by a $40 million pre-tax charge related to the repayment of senior secured credit facilities.
- The Market Services segment, while seeing a revenue decrease, still represents the largest portion of revenue (66.9%).
- Issuer Services revenue increased by 5.0% to $84 million, boosted by European listing fees and growth in the Global Index Group.
- Market Technology revenue grew by 17.2% to $34 million, indicating positive momentum in this segment.
- The company repaid significant amounts of its senior secured credit facilities and entered into a new $950 million senior unsecured credit facility.
- NASDAQ OMX announced a new $300 million share repurchase program, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Nasdaq, Inc. kept $0.08.
- Revenue$771.0M100.0%
- Cost of revenue−$411.0M53.3%
- Gross profit$360.0M46.7%
- Operating costs−$248.0M32.2%
- Operating income$112.0M14.5%
- Interest, other & tax−$51.0M6.6%
- Net income$61.0M7.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed May 5, 2010Financial Statements
| Revenue | $771.00M |
| Cost of Revenue | $411.00M |
| Gross Profit | $360.00M |
| Operating Expenses | $248.00M |
| Operating Income | $112.00M |
| Interest Expense | $25.00M |
| Net Income | $61.00M |
| EPS (Basic) | $0.10 |
| EPS (Diluted) | $0.09 |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decrease in the first quarter of 2010?
The primary driver of the revenue decrease was a decline in U.S. cash equity trading revenues, stemming from decreased industry volumes, a slight loss in market share, and lower average net fees per share matched on NASDAQ's trading systems.
What caused the significant increase in operating expenses?
The substantial increase in operating expenses was mainly due to a $40 million pre-tax charge incurred in January 2010 related to the repayment of senior secured credit facilities, which included the write-off of debt issuance costs and termination costs for interest rate swaps.
How is NASDAQ OMX managing its debt obligations?
In January 2010, NASDAQ OMX issued $1 billion in senior unsecured notes and entered into a $950 million senior unsecured credit facility. The proceeds were used to repay outstanding senior secured credit facilities, thus refinancing its debt structure with longer-term, unsecured obligations.
What is the outlook for the company's different segments?
While Market Services faced headwinds due to lower trading volumes, Issuer Services showed growth, particularly in European listings, and Market Technology also demonstrated strong revenue increases. The company appears to be strategically focusing on growth in these areas.
06—Continue