Archipelago Announces Conference Call And First Quarter 2005 Results

Archipelago Holdings, Inc. (PCX: AX), owner and operator of the Archipelago Exchange(SM) (ArcaEx(R)), the nation's first totally open, all-electronic stock exchange, will hold a conference call today at 4:30pm (ET). The dial-in information for the call is 866-320-4707 and the pass code is 779799. A webcast will also be available at http://investor.archipelago.com/phoenix.zhtml?c=140290&p=irol-irhome.

Today, Archipelago Holdings, Inc. also reported net income of $13.2 million, or $0.28 per diluted share, for the first quarter of 2005 as compared to $12.5 million, or $0.26 per diluted share, for the fourth quarter of 2004.

Archipelago reported pre-tax income of $21.9 million for the first quarter of 2005 which was substantially equivalent to the $22.0 million net income, or $0.55 per diluted share, reported for the first quarter of 2004 when the Company operated as a limited liability company and was not required to pay taxes at the corporate level.

Jerry Putnam, Chairman and CEO of Archipelago commented, "Our first quarter 2005 results were solid as we continued to deliver on our goal of providing fast, fair and efficient trading services to investors. We continued to roll out new products for traders, made progress in our efforts to attract corporate issuers, with three new listings in the quarter, in addition to focusing on the required approvals and integration planning for our pending acquisition of PCX Holdings, Inc."

First Quarter Financial Information

Total revenues for the first quarter of 2005 were $133.7 million as compared to $146.9 million for the first quarter of 2004.
Cost of revenues declined $14.0 million, or 15.0%, to $78.4 million for the first quarter of 2005 from $92.4 million for the same period in 2004.
Gross margins increased to $55.3 million for the first quarter of 2005 from $54.5 million for the first quarter of 2004. As a percentage of total revenues, gross margin increased to 41.3% for the first quarter of 2005 from 37.1% for the first quarter of 2004.
Liquidity payments decreased slightly to $51.9 million, or 38.9% of total revenues, in the first quarter of 2005 from $53.2 million, or 36.2% of total revenues in the first quarter of 2004.
Clearance, brokerage and other transaction expenses declined to $7.7 million or 5.7% of total revenues in the first quarter of 2005 from $12.7 million, or 8.6% of total revenues in the first quarter of 2004.
Total indirect expenses were $34.2 million in the first quarter of 2005, a 5.0% increase from the $32.6 million reported for the same period in 2004.
As of March 31, 2005, Archipelago had $193.2 million of cash and cash equivalents and no outstanding long-term debt obligations.

First Quarter Volume Information

Total U.S. market volumes were down to 262.8 billion shares for the first quarter of 2005 from 269.4 billion shares for the same period in 2004. Clients executed 35.8 billion shares or 13.6% of total U.S. equity securities on ArcaEx during the first quarter of 2005 compared to 37.8 billion shares or 14.0% for the same period in 2004.
ArcaEx market share was 23.5% in Nasdaq-listed stocks down slightly from 23.7% in the fourth quarter of 2004 and 25.5% from the first quarter in 2004.
ArcaEx market share increased to 2.5% in NYSE-listed stocks from 2.3% in the fourth quarter of 2004 and 1.6% from the first quarter in 2004.
ArcaEx market share was 25.5% in AMEX-listed stocks, in line with 25.6% in the fourth quarter of 2004 and up from 17.6% in the first quarter of 2004.
The internal match rate rose to 88.4% on ArcaEx compared to an internal match rate of 87.4% in the fourth quarter of 2004 and 85.5% in the first quarter in 2004.

First Quarter Business Highlights

Archipelago announced that it had entered into a definitive agreement to acquire PCX Holdings, Inc., the parent company of the Pacific Exchange (PCX) and PCX Equities, Inc. The Company expects that, ArcaEx will be the first exchange to bring together the all-electronic trading of equity securities and options products upon the closing of this pending acquisition, thereby expanding and diversifying Archipelago's business lines.
During the first quarter of 2005, American International Group, Inc. (AIG), optionsXpress (OXPS) and Metropolitan Health Networks (MDF) dually listed on ArcaEx, a facility of the Pacific Exchange.
Sun Microsystems, Inc. and Archipelago Holdings, Inc. announced the companies plan to build the world's first online compute exchange.
Matthew Gelber joined Archipelago in the position of Executive Managing Director, Options, and will be responsible for coordinating Archipelago's options business and managing the Company's integration of the PCX options exchange.
Margaret Lauderback joined Archipelago as Managing Director, Government Affairs. In this newly created position, Ms. Lauderback will be responsible for representing the interests of Archipelago before members of Congress, the White House, other government entities, and think tanks, along with maintaining an office in Washington DC.
The Company implemented the changes necessary to open ArcaEx for trading at 4 AM Eastern Time for all U.S. listed and OTC stocks upon receipt of the Securities and Exchange Commission's approval. Trading commenced at 4 AM Eastern Time on April 8, 2005.

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