01—Abstract
Summary
Summary of the 10-Q filed May 8, 2012. Cited figures are marked; the original filing is the authoritative source.
NASDAQ OMX Group, Inc. reported revenues of $801 milliona for the first quarter of 2012, a slight decrease of 1.8% compared to $815 million in the same period of 2011.
This decline was primarily driven by a 2.5% decrease in Market Services revenues, largely due to lower U.S. cash equity and derivative trading volumes. However, Issuer Services revenues saw a marginal increase of 1.1%, and Market Technology revenues grew by 4.7%. Operating expenses increased by 4.3% to $240 millionb, influenced by restructuring charges of $9 million and increased professional and contract services.
Net income attributable to NASDAQ OMX decreased by 18.3% to $85 millionc ($0.48 per diluted share) from $104 million ($0.57 per diluted share) in the prior year's quarter. The company also incurred a $12 million impairment charge on an equity investment. Despite revenue pressures, NASDAQ OMX announced its first quarterly cash dividend, signaling confidence in its future financial stability.
02—Key points
Key Highlights
- Total revenues for the first quarter of 2012 were $801 million, a decrease of 1.8% year-over-year.
- Net income attributable to NASDAQ OMX decreased by 18.3% to $85 million in Q1 2012, down from $104 million in Q1 2011.
- Diluted earnings per share were $0.48 in Q1 2012, compared to $0.57 in the prior year's quarter.
- Market Services revenue, the largest segment, declined by 2.5% to $666 million, primarily due to lower trading volumes in U.S. cash equities and derivatives.
- Issuer Services revenue grew slightly by 1.1% to $90 million, supported by increased Corporate Solutions revenues.
- Market Technology revenue increased by 4.7% to $45 million, driven by license, support, and delivery project revenues.
- The company incurred $9 million in restructuring charges and a $12 million asset impairment charge during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2012, Nasdaq, Inc. kept $0.11.
- Revenue$804.0M100.0%
- Cost of revenue−$390.0M48.5%
- Gross profit$414.0M51.5%
- Operating costs−$243.0M30.2%
- Operating income$171.0M21.3%
- Interest, other & tax−$86.0M10.7%
- Net income$85.0M10.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2012filed May 8, 2012Financial Statements
Q1 FY2012 against Q1 FY2011
| Line item | Q1 FY2012Q1 FY2011 | Change |
|---|---|---|
| Revenue | $804.00M$815.00M | −1.3% |
| Cost of Revenue | $390.00M$402.00M | −3.0% |
| Gross Profit | $414.00M$413.00M | +0.2% |
| Operating Expenses | $243.00M$230.00M | +5.7% |
| Operating Income | $171.00M$183.00M | −6.6% |
| Interest Expense | $24.00M$32.00M | −25.0% |
| Net Income | $85.00M$104.00M | −18.3% |
| EPS (Basic) | $0.16$0.20 | −16.9% |
| EPS (Diluted) | $0.16$0.19 | −15.8% |
| Shares Outstanding (Basic) | 518.87M528.28M | −1.8% |
| Shares Outstanding (Diluted) | 532.53M543.24M | −2.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of the revenue decrease in the first quarter of 2012?
The primary driver for the revenue decrease was a decline in the Market Services segment, specifically within U.S. cash equity and derivative trading revenues. This was largely attributed to lower industry trading volumes and a decrease in revenue capture, although partially offset by an increase in market share for U.S. cash equities.
How did the company's expenses change compared to the previous year?
Operating expenses increased by 4.3% to $240 million. This increase was mainly due to restructuring charges totaling $9 million, higher professional and contract services expenses, and increased marketing and advertising costs. Compensation and benefits remained flat year-over-year.
What is the company's outlook on returning capital to shareholders?
In a significant development, NASDAQ OMX declared its first quarterly cash dividend of $0.13 per share in April 2012, signaling a commitment to shareholder returns. This decision was made after evaluating profitability and financial condition, and future dividends are subject to board approval.
Were there any significant one-time charges or impairments during the quarter?
Yes, the company recorded $9 million in restructuring charges related to workforce reductions and asset impairments. Additionally, there was a $12 million other-than-temporary impairment charge on its equity investment in EMCF. These items impacted profitability for the quarter.
06—Continue