The NASDAQ OMX Group, Inc. ("NASDAQ OMX®") (Nasdaq:NDAQ) reported strong results for second quarter of 2010. Net income attributable to NASDAQ OMX for the second quarter of 2010 was $96 million, or $0.46 per diluted share, compared with $61 million, or $0.28 per diluted share, in the first quarter of 2010, and $69 million, or $0.33 per diluted share, in the second quarter of 2009. Included in the second quarter of 2010 results are $16 million of charges related to the divestiture of businesses, expenses associated with severance, merger and strategic initiatives, and other non-recurring items.
Financial Highlights1:
-
Non-GAAP EPS increased 21% over first quarter of 2010 results
-
Net revenues grew 8% over prior quarter to $390 million
-
Non-GAAP operating income improved to $183 million, up 15% from first quarter of 2010, while operating margins increased to 47%
-
Completed $200 million of the original $300 million share repurchase program. Board has authorized an additional $100 million for the program, bringing the total authorized amount to $400 million.
Summary of Non-GAAP Results1
----------------------------------------------------
($ millions, except EPS) Q210 Q110 Q209
------------------------------- ----- ----- -----
Net Exchange Revenues2 390 360 367
Total Operating Expenses 207 201 199
Operating Income 183 159 168
Net Income 108 92 99
Diluted Earnings Per Share $0.52 $0.43 $0.47
1. A complete reconciliation of GAAP to non-GAAP
results is included in the attached tables.
2. Represents revenues less liquidity rebates,
brokerage, clearing and exchange fees.
Bob Greifeld, Chief Executive Officer, NASDAQ OMX said:
"Our record-tying performance this quarter was driven by the strong fundamentals of our core business. Top-line growth within our transaction businesses was complemented by growing demand for co-location and listed company corporate services. During the quarter, we also saw an increase in the total number of listed companies on continued strength of the IPO market. These results demonstrate that our diversified business model is capable of delivering solid results while simultaneously allowing us to pursue growth initiatives to drive our business forward."
Business Highlights
-
Completed $200 million of the share repurchase program. During the second quarter of 2010, NASDAQ OMX repurchased 7.8 million shares of common stock, bringing the total number of shares repurchased since the program was announced in March 2010 to 10.0 million.
-
Increased U.S. cash equity net revenues 68.8% when compared to the first quarter of 2010, resulting from favorable changes in client mix and activity, modified rates, and higher industry volumes.
-
Grew combined U.S. equity options market share for NASDAQ OMX PHLX ("PHLX") and The NASDAQ Options Market ("NOM") to 25.1% in the second quarter of 2010 (PHLX: 21.7%; NOM: 3.4%), up from 23.8% in the first quarter of 2010 (PHLX: 21.3%; NOM: 2.5%).
-
Witnessed growth in European derivative volume for the fourth consecutive quarter, as equity derivative volume increased 44.9% from the second quarter of 2009 and fixed income activity improved 37.0%. Contributing to the increase is the addition of 12 new clearing members in 2010, incremental to the 34 new members that joined in the fourth quarter of 2009. Additionally, the NASDAQ OMX Nordic clearinghouse registered two interest rate swap ("IRS") contracts for clearing, making it only the second European clearinghouse to offer clearing of IRS contracts. These transactions represent the first steps of an initiative designed to attract the activity of the entire Nordic IRS market.
-
Improved Corporate Services revenues by 12% when compared to the first quarter of 2010 on the strength of continued customer demand, particularly for shareholder communications and market intelligence services. Also during the quarter, NASDAQ OMX entered into an exclusive partnership with FactSet Research Systems Inc. ("FactSet") in which FactSet will enhance its corporate platform by leveraging NASDAQ OMX's Corporate Intelligence product to provide a complete research solution to corporate clients.
-
Announced earlier today the acquisition of SMARTS Group, the world-leading technology provider of market surveillance solutions to exchanges, regulators and brokers. This acquisition is part of NASDAQ OMX's strategy to diversify its Market Technology business and enter the broker surveillance and compliance market.
-
Completed the acquisition of Nord Pool ASA, which operates the Nordic Power market and the European Carbon market on one trading platform. Through this acquisition, the NASDAQ OMX Commodities offering now includes the world's largest power derivatives exchange and one of Europe's largest carbon exchanges.
-
Welcomed 16 new listings from the Greater China region during the quarter, including 3 IPOs, bringing the total number of NASDAQ listed-companies headquartered in Greater China to 144, more than any other U.S. exchange. Other notable listings in the second quarter of 2010 include CBOE Holdings, SMART Technologies, and Tesla Motors, the first IPO for an American automaker in 54 years.
-
Realized another record day on the NASDAQ Closing Cross on June 25, 2010 as it was used to reconfigure the entire family of U.S. Russell indexes during their annual reconstitution. A total of 1.04 billion shares representing $11.2 billion of market value was executed in the Closing Cross in 0.855 seconds across some 2,065 NASDAQ-listed stocks.
-
Announced that NASDAQ OMX will deliver an ultra low latency trading platform to Singapore Exchange (SGX). The new trading platform, named SGX Reach, will be powered by NASDAQ OMX's Genium INET, the fastest trading technology in the world.
-
In July 2010, IDCG and BNY Mellon announced that BNY Mellon Clearing, LLC will become a clearing member of IDCG. With this membership, BNY Mellon Clearing, LLC will be able to offer its clients central counterparty clearing of interest rate derivatives.
Operating Highlights
-
U.S. Equities: Total matched market share of U.S. equities was 22.8% in the second quarter of 2010, with NASDAQ matching 19.0% and NASDAQ OMX BX ("BX") matching 3.8%. Total matched market share was 23.9% in the first quarter of 2010 (NASDAQ: 20.0%; BX: 3.9%) and 21.2% in the second quarter of 2009 (NASDAQ: 20.2%; BX: 1.0%). Total matched share volume was 147.9 billion shares in the second quarter of 2010, compared with 126.2 billion shares in the first quarter of 2010 and 142.4 billion shares in the second quarter of 2009.
-
European Equities: Total volume was 19.8 million trades in the second quarter of 2010, compared with 17.3 million in the first quarter of 2010 and 13.7 million in the second quarter of 2009. Total value traded was EURO179 billion in the second quarter of 2010, compared with EURO161 billion in the first quarter of 2010 and EURO147 billion in the second quarter of 2009.
-
U.S. Options: Total market share of U.S. equity options was 25.1% in the second quarter of 2010, with PHLX matching 21.7% and NOM matching 3.4%. Total market share of U.S. equity options was 23.8% in the first quarter of 2010 (PHLX: 21.3%; NOM: 2.5%) and 21.3% in the second quarter of 2009 (PHLX: 18.0%; NOM: 3.3%). Total industry average daily volume was 15.7 million contracts in the second quarter of 2010, compared with 14.0 million contracts in the first quarter of 2010 and 14.2 million contracts in the second quarter of 2009.
-
European Derivatives: In the second quarter of 2010, the total volume of stock options and futures was 8.7 million contracts (Q110: 8.5 million; Q209: 7.0 million), index options and futures volume was 12.6 million contracts (Q110: 11.7 million; Q209: 7.7 million) and fixed income volume was 6.3 million contracts (Q110: 5.9 million; Q209: 4.6 million). Within NASDAQ OMX Commodities, cleared contracts during the second quarter of 2010 totaled 499 terawatt hours ("TWh") (Q110: 692 TWh; Q209: 497 TWh).
-
Listings: New listings totaled 65 in the second quarter of 2010 compared with 47 in the first quarter of 2010 and 21 in the second quarter of 2009. Of the 65 new company listings in the second quarter of 2010, 59 listed on The NASDAQ Stock Market and 6 listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic. New listings in the second quarter of 2010 included 27 initial public offerings, compared with 18 in the first quarter of 2010 and 3 in the second quarter of 2009.
-
Market Technology: Total order intake, which represents the value of orders signed, was $12 million during the second quarter of 2010, compared with $50 million in the first quarter of 2010 and $10 million in the second quarter of 2009. At the end of the second quarter of 2010, total order value, which represents the total contract value of orders signed that are yet to be recognized as revenue, was $453 million, compared with $481 million at the end of the first quarter of 2010 and $315 million at the end of the second quarter of 2009.
Adena Friedman, Chief Financial Officer, said:
"The $200 million of share repurchases that we executed enabled us to buy back 10.0 million shares and deliver $0.02 EPS accretion to shareholders this quarter, and we remain committed to executing the remainder of the plan up to the $400 million authorized amount. Results for the second quarter demonstrate the scalability of our business as revenue growth drove expansion in operating income, while continued strong cash flows reflect the resilience of our model in a dynamic market environment."
Expense Guidance
Total operating expenses for the full year of 2010 are expected to be in the range of $870 million to $885 million, including approximately $60 million in non-recurring costs. Total operating expense guidance will be revised following the release of third quarter of 2010 results to incorporate the acquisition of SMARTS Group once the transaction has closed.
Financial Review
Revenues
Revenues less liquidity rebates, brokerage, clearance and exchange fees ("net exchange revenues") were $390 million for the second quarter of 2010, an increase of $30 million, or 8%, from first quarter of 2010 and an increase of $23 million, or 6%, from second quarter of 2009 results. Changes in the exchange rates of various currencies as compared to the U.S. dollar had the impact of lowering revenues in the second quarter of 2010 by $8 million when compared to the first quarter of 2010; however, changes in exchange rates had the impact of increasing revenues by $2 million when compared to the second quarter of 2009.
Market Services
Market Services net exchange revenues were $270 million, up 12% when compared to first quarter of 2010 results and 10% when compared to the second quarter of 2009.
Transaction Services
Net exchange revenues from Transaction Services were $186 million for the second quarter of 2010, an increase of $31 million, or 20%, when compared to the first quarter of 2010 and to the second quarter of 2009.
-
Cash Equity Trading net exchange revenues were $76 million for the second quarter of 2010, up $21 million, or 38%, from the first quarter of 2010 and up $8 million, or 12%, from the prior year quarter.
-
Net U.S. cash equity trading revenues increased when compared to the first quarter of 2010 due to favorable changes in client mix and activity, modified rates, and higher matched volumes, which were up 17%. Revenues increased when compared to the prior year quarter due primarily to modified rates and to higher matched market share of U.S. cash equity trading.
-
European cash equity trading revenues declined when compared to results from the first quarter of 2010 and the second quarter of 2009. When compared to the first quarter of 2010, the decrease in revenue is due to changes in the exchange rates of various currencies as compared to the U.S. dollar. The reduction in revenue when compared to the second quarter of 2009 is due primarily to revised trading fees introduced in the fourth quarter of 2009 and the first quarter of 2010, partially offset by increases in trading activity.
-
Included in U.S. cash equity trading revenues in the second quarter of 2010 are $81 million in SEC Section 31 fees, compared with $55 million in the first quarter of 2010 and $92 million in the second quarter of 2009. Corresponding cost of revenues, reflecting the reimbursement of these fees to the SEC, is included in brokerage, clearance and exchange fees.
-
Derivative trading and clearing net exchange revenues were $69 million for the second quarter of 2010, up $8 million, or 13%, from the first quarter of 2010 and up $14 million, or 25%, from the prior year quarter.
-
Net U.S. derivative trading and clearing revenues increased when compared to the first quarter of 2010 due primarily to increases in volume traded and market share. Revenues increased when compared to the second quarter of 2009 due to higher volumes traded and higher market share, offset somewhat by a decline in the average net fees for traded contracts.
-
European derivative trading and clearing revenues increased when compared to the first quarter of 2010 and to the second quarter of 2009 due to higher trading volume for options and futures contracts and clearing of fixed income products. Partially offsetting the increase when compared to the first quarter of 2010 are changes in the exchange rates of various currencies as compared to the U.S. dollar.
-
Access Services revenues were $41 million for the second quarter of 2010, an increase of $2 million, or 5%, when compared to the first quarter of 2010 and an increase of $9 million, or 28%, when compared to the prior year quarter. The increase in revenues when compared to the first quarter of 2010 is primarily due to increased demand for co-location services. The increase in revenues when compared to the second quarter of 2009 is due to revised fees for access services and increased demand for co-location services.
Market Data
Market Data revenues were $79 million for the second quarter of 2010, down $1 million, or 1%, when compared to the first quarter of 2010 and to the second quarter of 2009.
-
Net U.S. tape plans revenues were $30 million in the second quarter of 2010, down $1 million, or 3%, when compared to the first quarter of 2010 and equal to revenues in the prior year quarter. The reduction in revenues when compared to the first quarter of 2010 is due primarily to a modest decline in trading and quoting market share of U.S equities, as calculated under the SEC-mandated market data revenue quoting and trading formula.
-
U.S. market data products revenues were $32 million in the second quarter of 2010, up $1 million, or 3%, when compared to the first quarter of 2010 and to the prior year quarter. Revenue growth when compared to the first quarter of 2010 is primarily due to increased revenues from non-professional Level 2 subscribers and index products. The increase in revenue when compared to the second quarter of 2009 is driven by the growth of new products such as BX TotalView, options data feeds, and mutual fund products.
-
European market data products revenues were $17 million in the second quarter of 2010, a decrease of $1 million, or 6%, when compared to the first quarter of 2010, and a decrease of $2 million, or 11%, when compared to the prior year quarter. The decrease when compared to the first quarter of 2010 is primarily due to changes in the exchange rates of various currencies as compared to the U.S. dollar. The decrease in revenues when compared to the second quarter of 2009 is due primarily to declines in subscriber populations and discontinued products.
Issuer Services
Issuer Services revenues were $86 million, an increase of $2 million, or 2%, when compared to the first quarter of 2010, and an increase of $1 million, or 1%, when compared to the second quarter of 2009.
Global Listing Services
Global Listing Services revenues were $74 million for the second quarter of 2010, up $2 million, or 3%, from the first quarter of 2010, but down $1 million, or 1%, when compared to the second quarter of 2009.
-
The increase when compared to the first quarter of 2010 is primarily due to higher Corporate Services revenues, resulting from higher demand for services from listed companies. Also contributing to the increase are higher revenues from listing of additional share fees. Partially offsetting these increases are lower European listing fees, resulting from changes in the exchange rates of various currencies as compared to the U.S. dollar.
-
The decline when compared to the second quarter of 2009 is primarily due to lower Corporate Services revenues, resulting from the fourth quarter of 2009 sale of Carpenter Moore, NASDAQ OMX's insurance brokerage business. Also contributing to the decline are lower U.S. annual renewal fees due to a reduction in the number of listed companies. Partially offsetting these declines are higher listing of additional shares fees and higher European listing fees. Driving the increase in European listing fees are higher market capitalization values for European listed equities.
Global Index Group
Global Index Group revenues were $12 million for the second quarter of 2010, equal to revenues in the first quarter of 2010, and up $2 million, or 20%, when compared to the second quarter of 2009. Higher revenues when compared to the prior year quarter are primarily due to increases in asset sizes of licensed exchange traded funds ("ETFs") as well as additional demand for new licensed ETFs and other financial products.
Market Technology
Market Technology revenues were $34 million for the second quarter of 2010, equal to revenues in the first quarter of 2010, but down $2 million, or 6%, when compared to the second quarter of 2009. Order intake for the second quarter was $12 million, up $2 million when compared to $10 million in the second quarter of 2009. Total order value, which represents the value of orders signed that have not yet been recognized as revenue, was $453 million in the second quarter of 2010, up from $315 million in the second quarter of 2009.
Operating Expenses
Total non-GAAP operating expenses increased $6 million, or 3%, to $207 million from $201 million in the first quarter of 2010, and increased $8 million, or 4%, from $199 million in the prior year quarter. The increase in expenses when compared to the first quarter of 2010 is primarily driven by higher compensation, marketing and advertising, professional and contract services, occupancy, and general and administrative expenses. Somewhat offsetting these increases is the impact of changes in the exchange rates of various currencies as compared to the U.S. dollar, which had the effect of lowering expenses by $5 million when compared to the first quarter of 2010. The increase in expenses from the second quarter of 2009 is primarily due to higher professional services, marketing and advertising, and occupancy expenses. Also contributing to the increase in expenses when compared to the second quarter of 2009 are changes in the exchange rates of various currencies as compared to the U.S. dollar, which had the effect of increasing expenses by $2 million.
Net Interest Expense
Net interest expense was $24 million for the second quarter of 2010, compared with $23 million for the first quarter of 2010 and the second quarter of 2009. Included in total interest expense for the second quarter of 2010 is $19 million in interest expense, reflecting a full quarter of the refinancing of our debt. Also included is $4 million of non-cash expense associated with the accretion of senior and convertible notes, $2 million in non-cash debt amortization expenses, and $1 million in other related fees. Interest income for the second quarter of 2010 was $2 million.
Earnings Per Share
On a non-GAAP basis, second quarter 2010 earnings per diluted share were $0.52 as compared to non-GAAP earnings per diluted share of $0.43 in the first quarter of 2010 and non-GAAP earnings per diluted share of $0.47 in the prior year quarter. NASDAQ OMX's weighted average shares outstanding used to calculate diluted earnings per share was 209 million for the second quarter of 2010, 215 million for the first quarter of 2010, and 214 million for the second quarter of 2009.
In June 2009, NASDAQ OMX filed an application for an advance tax ruling with the Swedish Tax Council for Advanced Tax Rulings. The application was filed to confirm whether certain interest expense is deductible for Swedish tax purposes under legislation that became effective on January 1, 2009. In June 2010, we received a favorable response from the Swedish Tax Council for Advanced Tax Rulings in which all members of the Council agreed that such interest expense is deductible for Swedish tax purposes. The Swedish Tax Agency has recently appealed such ruling to the Swedish Supreme Administrative Court. We expect the Supreme Administrative Court to agree with the ruling from the Swedish Council for Advanced Tax Rulings. Since we previously recorded the Swedish tax benefit, the outcome of this ruling resulted in no impact to our financial statements.
About NASDAQ OMX
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit http://www.nasdaqomx.com. *Please follow NASDAQ OMX on Facebook (http://www.facebook.com/pages/NASDAQ-OMX/108167527653) and Twitter (http://www.twitter.com/nasdaqomx).
NDAQF
Non-GAAP Information
In addition to disclosing results determined in accordance with GAAP, NASDAQ OMX also discloses certain non-GAAP results of operations, including net income, diluted earnings per share, operating expenses, and operating income that make certain adjustments or exclude certain charges and gains that are described in the reconciliation table of GAAP to non-GAAP information provided at the end of this release. Management believes that this non-GAAP information provides investors with additional information to assess NASDAQ OMX's operating performance by making certain adjustments or excluding costs or gains and assists investors in comparing our operating performance to prior periods. Management uses this non-GAAP information, along with GAAP information, in evaluating its historical operating performance.
The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. NASDAQ OMX cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to (i) projections about our future financial results, growth, trading volumes, tax benefits and achievement of synergy targets, (ii) statements about the implementation dates and benefits of certain strategic initiatives, (iii) statements about our integrations of our recent acquisitions and (iv) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to, NASDAQ OMX's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ OMX's filings with the U.S. Securities Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on NASDAQ OMX's website at http://www.nasdaqomx.com and the SEC's website at www.sec.gov. NASDAQ OMX undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
The NASDAQ OMX Group, Inc.
Condensed Consolidated Statements of Income
(in millions, except per share amounts)
(unaudited)
Three Months Ended
-------------------------
June March June
30, 31, 30,
2010 2010 2009
------- ------- -------
Revenues
Market Services revenues $ 756 $ 645 $ 768
Cost of revenues:
Liquidity rebates (374) (320) (381)
Brokerage, clearance and
exchange fees (112) (84) (141)
------- ------- -------
Total cost of revenues (486) (404) (522)
------- ------- -------
Total Market Services revenues
less liquidity rebates,
brokerage, clearance and
exchange fees 270 241 246
Issuer Services revenues 86 84 85
Market Technology revenues 34 34 36
Other revenues -- 1 --
------- ------- -------
Total revenues less liquidity
rebates, brokerage,
clearance and exchange fees 390 360 367
------- ------- -------
Operating Expenses
Compensation and benefits 104 99 105
Marketing and advertising 5 4 3
Depreciation and amortization 25 25 27
Professional and contract
services 20 19 17
Computer operations and data
communications 14 16 14
Occupancy 21 22 18
Regulatory 9 9 10
Merger and strategic initiatives 1 -- 3
General, administrative and
other 12 54 11
------- ------- -------
Total operating expenses 211 248 208
------- ------- -------
Operating income 179 112 159
Interest income 2 2 2
Interest expense (26) (25) (25)
Loss on divestiture of
businesses (11) -- --
Dividend and investment income 1 -- 1
Income (loss) from
unconsolidated investees, net 1 -- (18)
Loss on sale of investment
security -- -- (5)
------- ------- -------
Income before income taxes 146 89 114
Income tax provision 51 29 46
------- ------- -------
Net income 95 60 68
Net loss attributable to
noncontrolling interests 1 1 1
------- ------- -------
Net income attributable to
NASDAQ OMX $ 96 $ 61 $ 69
======= ======= =======
Basic and diluted earnings per
share:
Basic earnings per share $ 0.46 $ 0.29 $ 0.34
======= ======= =======
Diluted earnings per share $ 0.46 $ 0.28 $ 0.33
======= ======= =======
Weighted-average common shares
outstanding
for earnings per share:
Basic 206 211 202
Diluted 209 215 214
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
(unaudited)
Three Months Ended
----------------------
June March June
30, 31, 30,
2010 2010 2009
------ ------ ------
MARKET SERVICES
Transaction Services
Cash Equity Trading Revenues:
U.S. cash equity trading $ 488 $ 396 $ 540
Cost of revenues:
Liquidity rebates (326) (284) (359)
Brokerage, clearance and
exchange fees (108) (80) (138)
------ ------ ------
Total U.S. cash equity cost
of revenues (434) (364) (497)
------ ------ ------
Net U.S. cash equity trading
revenues 54 32 43
European cash equity trading 22 23 25
------ ------ ------
Total net cash equity trading
revenues 76 55 68
------ ------ ------
Derivative Trading and Clearing
Revenues:
U.S. derivative trading and
clearing 92 73 61
Cost of revenues:
Liquidity rebates (48) (36) (22)
Brokerage, clearance and
exchange fees (4) (4) (3)
------ ------ ------
Total U.S. derivative trading
and clearing cost of
revenues (52) (40) (25)
------ ------ ------
Net U.S. derivative trading
and clearing revenues 40 33 36
European derivative trading and
clearing revenues 29 28 19
------ ------ ------
Total net derivative trading
and clearing revenues 69 61 55
Access Services Revenues 41 39 32
------ ------ ------
Total Transaction Services
revenues less liquidity
rebates, brokerage, clearance
and exchange fees 186 155 155
------ ------ ------
Market Data
Net U.S. tape plans 30 31 30
U.S. market data products 32 31 31
European market data products 17 18 19
------ ------ ------
Total Market Data revenues 79 80 80
------ ------ ------
Broker Services 4 4 9
------ ------ ------
Other Market Services 1 2 2
------ ------ ------
Total Market Services revenues
less liquidity
rebates, brokerage, clearance
and exchange fees 270 241 246
------ ------ ------
ISSUER SERVICES
Global Listing Services:
Annual renewal fees 28 28 29
Listing of additional shares
fees 10 9 9
Initial listing fees 5 5 5
------ ------ ------
Total U.S. listing fees 43 42 43
European listing fees 12 13 11
Corporate services 19 17 21
------ ------ ------
Total Global Listing
Services 74 72 75
------
Global Index Group 12 12 10
------ ------ ------
Total Issuer Services
revenues 86 84 85
------ ------ ------
MARKET TECHNOLOGY
License, support and project
revenues 27 27 28
Facility management services 6 6 7
Other revenues 1 1 1
------ ------ ------
Total Market Technology
revenues 34 34 36
------ ------ ------
Other -- 1 --
------ ------ ------
Total revenues less liquidity
rebates, brokerage,
clearance and exchange fees $390 $360 $367
====== ====== ======
The NASDAQ OMX Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
December
June 30, 31,
2010 2009
----------- ---------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 526 $ 594
Restricted cash 31 30
Financial investments, at
fair value 310 308
Receivables, net 361 301
Deferred tax assets 24 25
Market value, outstanding
derivative positions 1,511 2,054
Other current assets 125 112
----------- ---------
Total current assets 2,888 3,424
Non-current restricted cash 105 80
Property and equipment, net 154 164
Non-current deferred tax
assets 640 504
Goodwill 4,526 4,800
Intangible assets, net 1,513 1,631
Other assets 84 119
----------- ---------
Total assets $ 9,910 $ 10,722
=========== =========
Liabilities
Current liabilities:
Accounts payable and
accrued expenses $ 172 $ 119
Section 31 fees payable to
SEC 137 137
Accrued personnel costs 74 114
Deferred revenue 188 105
Other accrued liabilities 90 79
Deferred tax liabilities 22 23
Market value, outstanding
derivative positions 1,511 2,054
Current portion of debt
obligations 140 225
----------- ---------
Total current liabilities 2,334 2,856
Debt obligations 1,912 1,867
Non-current deferred tax
liabilities 644 683
Non-current deferred revenue 157 160
Other liabilities 170 197
----------- ---------
Total liabilities 5,217 5,763
Commitments and
contingencies
Series A convertible
preferred stock -- 15
Equity
NASDAQ OMX stockholders'
equity:
Common stock 2 2
Preferred stock -- --
Additional paid-in capital 3,774 3,736
Common stock in treasury,
at cost (212) (10)
Accumulated other
comprehensive loss (647) (406)
Retained earnings 1,766 1,610
----------- ---------
Total NASDAQ OMX
stockholders' equity 4,683 4,932
Noncontrolling interests 10 12
----------- ---------
Total equity 4,693 4,944
----------- ---------
Total liabilities, Series A
convertible preferred stock
and equity $ 9,910 $ 10,722
=========== =========
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP to Non-GAAP Earnings and
Reconciliation of GAAP to Non-GAAP Operating Expenses
(in millions, except per share amounts)
(unaudited)
Three Months Ended
-------------------------
June March June
30, 31, 30,
2010 2010 2009
------- ------- -------
GAAP Net Income attributable to
NASDAQ OMX:
-------------------------------- $ 96 $ 61 $ 69
Adjustments:
Workforce reductions 3 2 3
Merger and strategic
initiatives 1 -- 3
Loss on divestiture of
businesses 11 -- --
Loss on exchange of ownership
of NASDAQ Dubai 1 -- --
Occupancy -- 2 --
Asset retirements -- 3 3
Debt related charges -- 40 --
Technology -- -- 1
Gain on debt extinguishment -- -- (1)
Loss on sale of unconsolidated
investee -- -- 19
Loss on sale of investment -- -- 5
------- ------- -------
Total Adjustments 16 47 33
Adjustment to the income tax
provision to reflect Non-GAAP
adjustments(1) (7) (16) (3)
Non-recurring tax items, net 3 -- --
------- ------- -------
Total Adjustments, net of tax 12 31 30
Non-GAAP Net Income attributable
to NASDAQ OMX: $ 108 $ 92 $ 99
======= ======= =======
GAAP Diluted Earnings per Common
Share:
-------------------------------- $ 0.46 $ 0.28 $ 0.33
Total Adj. from Non-GAAP Net
Income Above: 0.06 0.15 0.14
------- ------- -------
Non-GAAP Diluted Earnings per
Common Share: $ 0.52 $ 0.43 $ 0.47
======= ======= =======
Three Months Ended
-------------------------
June March June
30, 31, 30,
2010 2010 2009
------- ------- -------
GAAP Operating Expenses:
-------------------------------- $ 211 $ 248 $ 208
Adjustments:
Workforce reductions (3) (2) (3)
Merger and strategic
initiatives (1) -- (3)
Occupancy -- (2) --
Debt related charges -- (40) --
Asset retirements -- (3) (3)
Gain on debt extinguishment -- -- 1
Technology -- -- (1)
------- ------- -------
Total Adjustments (4) (47) (9)
------- ------- -------
Non-GAAP Operating Expenses $ 207 $ 201 $ 199
======= ======= =======
(1) We determine the tax effect of each item based on the
tax rules in the respective jurisdiction where the
transaction occurred.
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP to Non-GAAP Operating Income
(in millions)
(unaudited)
Three Months Ended
-----------------------
June March June
30, 31, 30,
2010 2010 2009
------ ------- ------
GAAP Operating Income:
------------------------------ $ 179 $ 112 $ 159
Adjustments:
Workforce reductions 3 2 3
Merger and strategic
initiatives 1 -- 3
Occupancy -- 2 --
Debt related charges -- 40 --
Asset retirements -- 3 3
Gain on debt extinguishment -- -- (1)
Technology -- -- 1
------ ------- ------
Total Adjustments 4 47 9
------ ------- ------
Non-GAAP Operating Income $ 183 $ 159 $ 168
====== ======= ======
------------------------------ ------ ------- ------
Total revenues less liquidity
rebates, brokerage,
clearance and exchange fees $ 390 $ 360 $ 367
Non-GAAP Operating Margin (1) 47% 44% 46%
------------------------------ ------ ------- ------
(1) Non-GAAP Operating Margin equals Non-GAAP Operating
Income divided by total revenues less liquidity
rebates, brokerage, clearance, and exchange fees.
The NASDAQ OMX Group, Inc.
Quarterly Key Drivers Detail
(unaudited)
Three Months Ended
-------------------------
June March June
30, 31, 30,
2010 2010 2009
------- ------- -------
Market Services
Cash Equity Trading
NASDAQ securities
---------------------------------------
Average daily share volume (in
billions) 2.53 2.34 2.41
Matched market share executed on
NASDAQ 28.8% 29.1% 32.3%
Matched market share executed on
NASDAQ OMX BX 3.2% 3.7% 0.8%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility(1) 39.0% 38.6% 37.6%
Total market share (2) 71.0% 71.5% 70.7%
NYSE securities
---------------------------------------
Average daily share volume (in
billions) 5.96 4.83 6.03
Matched market share executed on
NASDAQ 14.0% 15.2% 14.9%
Matched market share executed on
NASDAQ OMX BX 4.1% 4.4% 1.0%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility(1) 33.5% 33.5% 32.6%
Total market share (2) 51.6% 53.1% 48.4%
NYSE Amex and regional securities
---------------------------------------
Average daily share volume (in
billions) 1.84 1.47 2.25
Matched market share executed on
NASDAQ 21.7% 21.6% 21.3%
Matched market share executed on
NASDAQ OMX BX 3.5% 2.4% 1.3%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility(1) 30.0% 32.3% 35.7%
Total market share (2) 55.2% 56.3% 58.3%
Total U.S.-listed equities
---------------------------------------
Average daily share volume (in
billions) 10.33 8.64 10.68
Matched share volume (in billions) 147.9 126.2 142.4
Matched market share executed on
NASDAQ 19.0% 20.0% 20.2%
Matched market share executed on
NASDAQ OMX BX 3.8% 3.9% 1.0%
NASDAQ OMX Nordic and NASDAQ OMX
Baltic Markets
---------------------------------------
Average daily number of equity trades 324,560 278,372 228,233
Average daily value of shares traded
(in billions) $ 3.7 $ 3.6 $ 3.3
Derivative Trading and Clearing
U.S. Equity Options Contracts
---------------------------------------
Total industry average daily volume
(in millions) 15.7 14.0 14.2
Matched market share:
NASDAQ OMX PHLX 21.7% 21.3% 18.0%
The NASDAQ Options Market 3.4% 2.5% 3.3%
NASDAQ OMX Nordic and NASDAQ OMX
Baltic Markets
---------------------------------------
Average daily volume:
Equity options and fixed-income
contracts 460,790 421,275 322,313
Equity options contracts traded on
EDX London(3) -- -- 113,121
Finnish option contracts traded on
Eurex 138,493 108,576 61,783
NASDAQ OMX Commodities
---------------------------------------
Clearing Turnover:
Power contracts (TWh)(4) 499 692 497
Carbon contracts (1000 tCO2)(4) 9,557 11,892 9,136
Issuer Services
NASDAQ
Initial public offerings 23 15 3
New listings (5) 59 41 18
Number of listed companies (6) 2,831 2,823 2,894
NASDAQ OMX Nordic and NASDAQ OMX
Baltic Markets
Initial public offerings 4 3 --
New listings 6 6 3
Number of listed companies (7) 788 792 808
Market Technology
Order intake (in millions)(8) $ 12 $ 50 $ 10
Total order value (in millions)(9) $ 453 $ 481 $ 315
(1) Transactions reported to the Financial Industry Regulatory
Authority, or FINRA, FINRA/NASDAQ Trade Reporting Facility.
(2) Includes transactions executed on both NASDAQ's and NASDAQ OMX
BX's systems plus trades reported through the FINRA/NASDAQ Trade
Reporting Facility.
(3) In December 2009, derivative volume was transferred to NASDAQ
OMX from EDX.
(4) Transactions executed on Nord Pool ASA and reported for
clearing to NASDAQ OMX Commodities measured by Terawatt hours
(TWh) and one thousand metric tons of carbon dioxide (1000 tCO2).
(5) New listings include IPOs, including those completed on a best
efforts basis, issuers that switched from other listing venues,
closed-end funds and separately listed ETFs.
(6) Number of listed companies for NASDAQ at period end, including
separately listed ETFs.
(7) Represents companies listed on the exchanges that comprise
NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the
alternative markets, NASDAQ OMX First North, at period end.
(8) Total contract value of orders signed.
(9) Represents total contract value of orders signed that are yet
to be recognized as revenue.
