01—Abstract
Summary
Summary of the 10-Q filed May 5, 2011. Cited figures are marked; the original filing is the authoritative source.
NASDAQ OMX Group, Inc. (NDAQ) reported a strong first quarter in 2011, demonstrating significant year-over-year growth driven by its Market Services segment.
Total revenues increased by 15.3% to $415 milliona, excluding transaction rebates and fees, with operational revenue growth of $45 million. This growth was propelled by robust performance in derivative trading and clearing, access services, and cash equity trading. Operating expenses saw a slight decrease of 5.6% due to the absence of significant one-time charges incurred in the prior year's comparable quarter, despite an increase in compensation and strategic initiatives.
The company's net income attributable to NASDAQ OMX rose to $104 millionb from $61 million in the prior year, translating to diluted earnings per share of $0.57, up from $0.28. This performance highlights effective cost management and revenue generation, positioning NASDAQ OMX well amidst a cautiously optimistic economic recovery. Investors should note the ongoing strategic initiatives, including the significant joint proposal to acquire NYSE Euronext, which could substantially reshape the company's future market position and financial structure.
02—Key points
Key Highlights
- Total revenues (less transaction rebates, brokerage, clearance and exchange fees) increased by 15.3% to $415 million for the three months ended March 31, 2011, compared to $360 million in the same period of 2010.
- Net income attributable to NASDAQ OMX increased significantly to $104 million, or $0.57 per diluted share, compared to $61 million, or $0.28 per diluted share, in the prior year's quarter.
- Operating expenses decreased by 5.6% to $234 million, primarily due to lower general, administrative, and other expenses compared to the prior year's comparable quarter which included significant charges.
- Market Services segment revenue (less transaction rebates, brokerage, clearance and exchange fees) grew by 16.6% to $281 million, driven by increases in derivative trading and clearing, and access services.
- Issuer Services segment revenue (less transaction rebates, brokerage, clearance and exchange fees) increased by 8.3% to $91 million.
- Market Technology segment revenue increased by 26.5% to $43 million, primarily due to higher change request, advisory, and broker surveillance revenues.
- The company announced a joint proposal with Intercontinental Exchange (ICE) to acquire NYSE Euronext for approximately $11.3 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2011, Nasdaq, Inc. kept $0.13.
- Revenue$815.0M100.0%
- Cost of revenue−$402.0M49.3%
- Gross profit$413.0M50.7%
- Operating costs−$230.0M28.2%
- Operating income$183.0M22.5%
- Interest, other & tax−$79.0M9.7%
- Net income$104.0M12.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed May 5, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Revenue | $815.00M$771.00M | +5.7% |
| Cost of Revenue | $402.00M$411.00M | −2.2% |
| Gross Profit | $413.00M$360.00M | +14.7% |
| Operating Expenses | $230.00M$248.00M | −7.3% |
| Operating Income | $183.00M$112.00M | +63.4% |
| Interest Expense | $32.00M$25.00M | +28.0% |
| Net Income | $104.00M$61.00M | +70.5% |
| EPS (Basic) | $0.20$0.10 | +103.4% |
| EPS (Diluted) | $0.19$0.09 | +103.6% |
| Shares Outstanding (Basic) | 528.28M— | — |
| Shares Outstanding (Diluted) | 543.24M— | — |
05—Questions
Frequently Asked Questions
What was NASDAQ OMX's financial performance in the first quarter of 2011?
NASDAQ OMX reported a strong first quarter in 2011 with revenues (less transaction rebates, brokerage, clearance and exchange fees) increasing by 15.3% to $415 million. Net income attributable to NASDAQ OMX significantly grew to $104 million, or $0.57 per diluted share, compared to $61 million, or $0.28 per diluted share, in the same period of 2010. This performance was driven by growth across its key business segments, particularly Market Services.
What were the main drivers of revenue growth?
Revenue growth was primarily driven by the Market Services segment, which saw increases in derivative trading and clearing, access services, and cash equity trading. The Market Technology segment also showed robust growth due to an increase in change request, advisory, and broker surveillance revenues. Issuer Services also contributed positively to the overall revenue increase.
How did operating expenses perform?
Operating expenses decreased by 5.6% to $234 million in the first quarter of 2011 compared to the same period in 2010. This reduction was mainly due to lower general, administrative, and other expenses, as the prior year's comparable quarter included significant charges related to debt repayment. However, compensation and benefits, and merger and strategic initiatives expenses saw operational increases.
What significant strategic initiatives are underway?
The most significant strategic initiative announced during this period was the joint proposal made by NASDAQ OMX and Intercontinental Exchange (ICE) to acquire NYSE Euronext for approximately $11.3 billion. This proposed acquisition is subject to various conditions, including regulatory approvals and shareholder approvals, and would involve a significant restructuring of the acquiring entities and the target company.
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