NEW YORK, Apr. 23 (Korea Bizwire) — The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today reported results for the first quarter of 2015. First quarter net revenues were $507 million, down 4% from $529 million in the prior year period, driven primarily by a $29 million negative impact from foreign exchange rates. On an organic basis, excluding the impact of foreign exchange rates and acquisitions, first quarter net revenues were unchanged, as 3% organic growth in the non-trading segments was offset by declines in Market Services, largely due to lower volumes.
On a non-GAAP basis, first quarter 2015 operating expenses were $272 million, down 8% as compared to the prior year quarter, due to the impact of changes in foreign exchange rates and the result of expense reduction initiatives. On an organic basis, first quarter 2015 non-GAAP operating expenses were down 2% compared to the prior year period.
In response to certain revenue and profit headwinds, including an unfavorable impact from changes in foreign exchange rates, a restructuring effort was initiated during the first quarter of 2015 to improve efficiency, eliminating $17-$19 million in annualized costs, through a combination of reducing compensation, real estate and technology expenses. The company recognized $31 million in charges due to this restructuring in the first quarter of 2015, and expects to recognize a total of $32 million in additional charges through the second quarter of 2016. In addition, restructuring charges in the first quarter of 2015 included a non-cash charge of $119 million related to our global rebranding initiative.
On a GAAP basis, operating expenses were $480 million in the first quarter of 2015, compared to $345 million in the prior year quarter, and includes $208 million of charges not reflected in non-GAAP operating expenses: including $150 million of charges due to the 2015 restructuring program, $31 million of special legal expenses and $15 million of amortization expense from acquired intangible assets.
First quarter 2015 non-GAAP diluted earnings per share was $0.80, up $0.02 compared to $0.78 in the first quarter of 2014. Non-GAAP diluted earnings per share for the first quarter of 2015 excluded $195 million of pre-tax adjustments.
On a GAAP basis, net income attributable to Nasdaq for the first quarter of 2015 was $9 million, or $0.05 per diluted share, compared with $103 million, or $0.59 per diluted share, in the prior year quarter.
The company repurchased 0.6 million shares, or $30 million of our common stock, in the first quarter of 2015 at an average price of $50.08.
On March 31, 2015, the company had cash and cash equivalents of $328 million and total debt of $2,306 million, resulting in net debt of $1,978 million. This compares to net debt of $2,130 million at March 31, 2014.
Market Services (37% of total net revenues) – Net revenues were $188 million in the first quarter of 2015, down $20 million when compared to $208 million in the first quarter of 2014.
Equity Derivatives (9% of total net revenues) – Net equity derivative trading and clearing revenues were $46 million in the first quarter of 2015, down $10 million compared to the first quarter of 2014. The decline in equity derivatives revenue was driven by lower average net capture and industry volumes in U.S. options, while changes in foreign exchange rates more than offset the impact of higher volumes in European products.
Cash Equities (11% of total net revenues) – Net cash equity trading revenues were $59 million in the first quarter of 2015, up $2 million compared to the first quarter of 2014. The increase in cash equity trading revenue resulted primarily from higher U.S. cash equity average capture and European industry volumes, partially offset by the impact of changes in foreign exchange rates.
Fixed Income, Currency and Commodities (5% of total net revenues) – Net FICC trading and clearing revenues were $24 million in the first quarter of 2015, down $11 million from the first quarter of 2014, due to the impact of changes in foreign exchange rates, volume declines across most FICC products, and a scheduled end in licensing revenues from an eSpeed technology customer.
Access and Broker Services (12% of total net revenues)2 – Access and broker services revenues totaled $59 million in the first quarter of 2015, a decline of $1 million compared to the first quarter of 2014, as organic revenue increases were offset by the impact of changes in foreign exchange rates.
Information Services (25% of total net revenues) – Revenues were $125 million in the first quarter of 2015, up $2 million from the first quarter of 2014.
Data Products (20% of total net revenues) – Data products revenues were $100 million in the first quarter of 2015, unchanged compared to the first quarter of 2014, as increased revenue from Nasdaq Basic and the inclusion of revenue associated with the Dorsey Wright acquisition were offset by lower audit collections, and the impact of changes in foreign exchange rates.
Index Licensing and Services (5% of total net revenues) – Index licensing and services revenues were $25 million in the first quarter of 2015, up $2 million from the first quarter of 2014. The revenue growth was driven by the inclusion of revenue associated with the Dorsey Wright acquisition, and higher revenues from licensing certain structured products. Index revenue derived from exchange traded products licensed to Nasdaq indices was unchanged, as increases in AUMs in listed products were offset by pricing mix changes.
Technology Solutions (26% of total net revenues) – Revenues were $130 million in the first quarter of 2015, down $10 million from the first quarter of 2014.
Corporate Solutions (15% of total net revenues) – Corporate solutions revenues were $75 million in the first quarter of 2015, down $7 million from the first quarter of 2014. The corporate solutions revenue decline was due primarily to declines in investor relations products, the impact of changes in foreign exchange rates, partially offset by organic growth in governance products.
Market Technology (11% of total net revenues)2 – Market technology revenues were $55 million in the first quarter of 2015, down $3 million from the first quarter of 2014. Declines were driven entirely by an unfavorable impact from changes in foreign exchange rates, partially offset by organic growth, in particular from expansion of SMARTS surveillance and BWise enterprise risk management solutions. New order intake was $40 million for the first quarter of 2015, down after a record new order intake in the prior quarter, but the $728 million backlog at March 31, 2015 establishes a new record high.
Listing Services (12% of total net revenues) – Revenues were $64 million in the first quarter of 2015, up $6 million compared to the first quarter of 2014 due to certain pricing actions and increases in the number of both U.S. and European listed companies, partially offset by a lower number of initial public offerings (IPOs) and the impact of changes in foreign exchange rates.
2 Certain pre-trade risk product revenues previously included in Access and Broker Services revenues have been recast as Market Technology revenues, with prior periods restated.
Reducing 2015 non-GAAP expense guidance – Due to the impact of our 2015 restructuring program, as well as the impact of changes in foreign currency rates, the company has reduced its 2015 non-GAAP operating expense guidance to $1,085-$1,110, from $1,120-$1,150 million. Included in this non-GAAP operating expense guidance is an expected $30-$40 million in R&D spending, unchanged from prior guidance.
subscribers to our next-generation, cloud-based platform.
Nasdaq announced the expansion of its commodities business into the U.S.
merchants, ISVs and end-users, and is expected to launch in mid-2015.
offering as well as Off-the-Run Treasury bonds.
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing, exchange technology, listing, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,500 listed companies with a market value of over $9.5 trillion and more than 10,000 corporate clients. To learn more, visit www.nasdaq.com/ambition or www.nasdaqomx.com.
In addition to disclosing results determined in accordance with GAAP, Nasdaq also discloses certain non-GAAP results of operations, including, but not limited to, net income attributable to Nasdaq, diluted earnings per share, operating income, and operating expenses, 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'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.
Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. Nasdaq 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, products and services, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain strategic, restructuring, technology, de-leveraging and capital return initiatives, (iii) statements about our integrations of our recent acquisitions, (iv) statements relating to any litigation or regulatory or government investigation or action to which we are or could become a party, and (v) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq's control. These factors include, but are not limited to, Nasdaq'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's filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on Nasdaq's investor relations website at http://ir.nasdaq.com and the SEC's website at www.sec.gov. Nasdaq undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
relating to our share of OCC's income for the year ended December 31, 2014.
recognized restructuring charges of $150 million, with the remaining amount to be recognized through June 2016.
reserve will be reimbursed by applicable insurance coverage.
allocate resources. Therefore, such expenses are shown as a non-GAAP adjustment.
recorded a charge of $12 million for previously recorded receivables based on the court decision.
intangible assets associated with customer relationships ($38 million) and certain technology assets ($11 million).
as described in note (8) below.
unrecognized tax benefit. This amount is offset by the reversal of the receivable described in note (7) above.
receivable under a tax sharing agreement with an unrelated party.
1) Includes Finnish option contracts traded on EUREX Group.
listing venues, closed-end funds and separately listed exchange traded funds (ETFs).
companies on the alternative markets of Nasdaq First North.
markets of Nasdaq First North at period end.