NEW YORK, July 23, 2015 (GLOBE NEWSWIRE) -- The
NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) today reported results for the
second quarter of 2015. Second quarter net revenues were $518
million, down 1% from $523 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, second quarter net revenues were
up 3%, while across the non-trading segments, organic revenue
growth was also 3%.
"In the second quarter, Nasdaq delivered record
results and solid earnings growth despite a mixed backdrop for the
industry and continued FX headwinds," said Bob
Greifeld, CEO, Nasdaq. "Our customer focused approach to the
capital markets industry, including investors, intermediaries and
issuers, delivered solid organic revenue growth despite the low
volatility environment."
Mr. Greifeld continued, "As
we move into the second half of 2015, we look forward to continuing
our strong performance in foundational equity listings and trading
businesses, working to accelerate growth through product
enhancements and other initiatives, and to launching NFX, a
broad-based partnership with leading market participants to bring
more significant choice to the energy derivatives market. Nasdaq's
strategic evolution and expanded capabilities have multiplied the
opportunities to meet the needs of our customers, and our focus in
meeting these challenges will continue to drive our growth."
On a non-GAAP basis, second quarter 2015 operating
expenses were $281 million, down 3% 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
excluding the impact of foreign exchange rates and acquisitions,
non-GAAP operating expenses were unchanged in the first half of
2015 compared to the first half of 2014.
"Nasdaq's hallmark focus on efficiency, and in
particular recent restructuring efforts, have resulted in flat
organic expense levels in the first half of the year, meaningfully
offsetting the significant impact of elevated foreign exchange
headwinds," said Lee Shavel, EVP and CFO,
Nasdaq. "Growth in earnings and cash flow has been coupled with
a 67% increase in the dividend and opportunistic buybacks on the
capital return front, continued investment in research and
development, and the acquisition of Dorsey Wright, which is
performing well above initial expectations."
1 Represents
revenues less transaction-based expenses.
On a GAAP basis, operating expenses were $301
million in the second quarter of 2015, compared to $332 million in
the prior year quarter, and include $20 million of expenses not
reflected in non-GAAP operating expenses, including $15 million of
amortization expense from acquired intangible assets, and $5
million in charges related to strategic initiatives and
restructuring.
On a non-GAAP basis, net income attributable to
Nasdaq for the second quarter of 2015 was $143 million, or $0.83
per diluted share, up $0.07 compared to $0.76 in the second quarter
of 2014. On a GAAP basis, net income attributable to Nasdaq for the
second quarter of 2015 was $133 million, or $0.77 per diluted
share, compared with $101 million, or $0.59 per diluted share, in
the prior year quarter.
Please refer to our reconciliation of GAAP to
non-GAAP net income, diluted earnings per share, operating income
and operating expenses included in the attached schedules.
The company repurchased 0.5 million shares, or
approximately $25 million of our common stock, in the second
quarter of 2015 at an average price of $50.06.
On June 30, 2015, the company had cash and cash
equivalents of $324 million and total debt of $2,281 million,
resulting in net debt of $1,957 million. This compares to net debt
of $1,870 million at December 31, 2014.
BUSINESS HIGHLIGHTS
Market Services (36% of total net revenues) - Net revenues were $189
million in the second quarter of 2015, down $8 million when
compared to $197 million in the second quarter of 2014. The $8
million year-over-year decrease reflects a $6 million operational
increase which was more than offset by a $14 million decrease due
to changes in foreign exchange rates.
Equity Derivatives (8% of total
net revenues) - Net equity derivative trading and clearing
revenues were $44 million in the second quarter of 2015, down $6
million compared to the second quarter of 2014. The decline in
equity derivatives revenue was driven by lower market share in U.S.
options, and changes in foreign exchange rates, which more than
offset the impact of higher volumes in European products.
Cash Equities (12% of total net
revenues) - Net cash equity trading revenues were $62 million
in the second quarter of 2015, up $6 million compared to the second
quarter of 2014. The increase in cash equity revenue resulted from
higher U.S. cash equity average capture and U.S./European industry
volumes, partially offset by lower market shares and 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 second quarter of 2015,
down $7 million from the second quarter of 2014, due to the impact
of changes in foreign exchange rates, volume declines in
commodities and U.S. fixed income products, and a scheduled end in
licensing revenues from an eSpeed technology customer.
Access and Broker Services (11%
of total net revenues) - Access and broker services revenues
totaled $59 million in the second quarter of 2015, down $1 million
compared to the second quarter of 2014, as organic revenue
increases were more than offset by the impact of changes in foreign
exchange rates.
Information Services (25% of
total net revenues) - Revenues were $128 million in the second
quarter of 2015, up $5 million from the second quarter of 2014. The
$5 million year-over-year increase reflects a $1 million
operational increase and an $8 million increase from Dorsey Wright,
which was partially offset by a $4 million decrease due to changes
in foreign exchange rates.
Data Products (19% of total net
revenues) - Data products revenues were $99 million in the
second quarter of 2015, down $2 million compared to the second
quarter of 2014, as increased revenue from proprietary and shared
tape revenue plans, as well as the inclusion of revenue associated
with the Dorsey Wright acquisition were more than offset by lower
audit collections, and the impact of changes in foreign exchange
rates.
Index Licensing and Services (6%
of total net revenues) - Index licensing and services revenues
were $29 million in the second quarter of 2015, up $7 million from
the second quarter of 2014. The revenue growth was driven by the
inclusion of revenue associated with the Dorsey Wright acquisition,
and higher revenue derived from exchange traded products licensed
to Nasdaq indexes due to increases in Assets Under Management (AUM)
in listed products.
Technology Solutions (26% of
total net revenues) - Revenues were $135 million in the second
quarter of 2015, down $8 million from the second quarter of 2014.
The $8 million year-over-year decrease reflects an $8 million
decrease due to changes in foreign exchange rates.
Corporate Solutions (15% of total
net revenues) - Corporate solutions revenues were $76 million
in the second quarter of 2015, down $4 million from the second
quarter of 2014. The corporate solutions revenue decline was due
primarily to the impact of changes in foreign exchange rates, as
well as declines in revenues from investor relations products,
partially offset by organic growth in governance products
revenues.
Market Technology (11% of total
net revenues) - Market technology revenues were $59 million in
the second quarter of 2015, down $4 million from the second quarter
of 2014. Declines were driven by an unfavorable impact from changes
in foreign exchange rates and declines in software licensing and
support revenues, partially offset by organic growth, in particular
from expansion of SMARTS surveillance. New order intake was $31
million for the second quarter of 2015, and the order backlog at
June 30, 2015 was $707 million.
Listing Services (13% of total
net revenues) - Revenues were $66 million in the second quarter
of 2015, up $6 million compared to the second quarter of 2014. The
$6 million year-over-year increase reflects a $9 million
operational increase which was partially offset by a $3 million
decrease due to changes in foreign exchange rates. The operational
improvement is due to certain pricing actions and increases in the
number of both U.S. and European listed companies.
CORPORATE HIGHLIGHTS
- Solid growth in assets tracking
Nasdaq indexes, particularly in the smart beta category.
Overall AUM in exchange traded products (ETPs) benchmarked to all
Nasdaq indexes increased 13% to $108 billion as of June 30, 2015
compared to June 30, 2014. The Dorsey Wright acquisition continues
to see strong growth and contributed to the proportion of AUM in
Nasdaq-licensed ETPs in smart beta rising to an all-time high of
43% at quarter-end.
- The NASDAQ Stock Market (NASDAQ)
Led U.S. Exchanges for IPOs in 2Q15. NASDAQ welcomed 79 new
listings, including 49 IPOs. Approximately 70% of all U.S. IPOs
listed with NASDAQ in 2Q15, including Etsy, David's Tea, Wing Stop,
Alarm.com, PennTEX, and Virtu Financial. Nasdaq European new
listings totaled 38, the highest quarterly number of new European
listings in company history.
- Continued momentum at Nasdaq
Private Market (NPM). NPM added 25 new clients in the second
quarter of 2015 across ExactEquity, Outsourced Administration,
Structured Liquidity Programs, and NPM Membership. At June 30,
2015, there were more than 100 NPM clients, with Pinterest,
DocuSign, and Business Insider among new additions. Also during the
second quarter of 2015, NPM announced a technology initiative to be
piloted on ExactEquity in partnership with Chain, a leading
provider of blockchain technology.
- Nasdaq Futures (NFX) moves
toward commercial launch with broad coalition of market
participants. NFX, Nasdaq's U.S. based energy futures market,
continues to move toward its launch with completion of market
testing. NFX is building a broad coalition of support and broad
distribution including 16 futures commission merchants (FCMs), 6
independent software vendors, over one dozen registered market
makers, and 40 brokers registered to report block trades. Committed
FCMs include ABN AMRO Group, ADM Investor Services, Advantage
Futures, Citigroup Global Markets, ED&F Man Capital Markets,
Goldman Sachs, INTL FCStone, J.P. Morgan, Merrill Lynch, Mizuho
Securities USA, Phillip Capital, Rosenthal Collins Group, Societe
Generale and Wedbush Futures.
ABOUT NASDAQ
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 3,600 listed companies
with a market value of approximately $9.6 trillion and more than
10,000 corporate clients. To learn more, visit: nasdaq.com/ambition
or business.nasdaq.com.
NON-GAAP INFORMATION
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.
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 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.
NDAQF
| The NASDAQ OMX Group,
Inc. |
| Condensed Consolidated
Statements of Income |
| (in millions, except per
share amounts) |
| |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
|
Revenues: |
|
|
|
| Market
Services |
$ 478 |
$ 539 |
$ 539 |
|
Transaction-based expenses: |
|
|
|
|
Transaction rebates |
(216) |
(261) |
(252) |
|
Brokerage, clearance and exchange fees |
(73) |
(90) |
(90) |
| Total
Market Services revenues less transaction-based expenses |
189 |
188 |
197 |
|
|
|
|
|
|
Listing Services |
66 |
64 |
60 |
|
Information Services |
128 |
125 |
123 |
|
Technology Solutions |
135 |
130 |
143 |
|
|
|
|
|
|
Revenues less transaction-based expenses |
518 |
507 |
523 |
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
Compensation and benefits |
144 |
147 |
145 |
|
Marketing and advertising |
6 |
7 |
9 |
|
Depreciation and amortization |
34 |
34 |
35 |
|
Professional and contract services |
42 |
33 |
42 |
|
Computer operations and data communications |
23 |
35 |
23 |
|
Occupancy |
21 |
21 |
24 |
|
Regulatory |
7 |
7 |
7 |
| Merger
and strategic initiatives |
3 |
-- |
14 |
|
General, administrative and other |
19 |
46 |
33 |
|
Restructuring charges |
2 |
150 |
-- |
|
Total operating expenses |
301 |
480 |
332 |
|
|
|
|
|
|
Operating income |
217 |
27 |
191 |
|
|
|
|
|
|
Interest income |
1 |
1 |
1 |
|
Interest expense |
(27) |
(28) |
(30) |
| Net
income from unconsolidated investees |
1 |
14 |
-- |
|
|
|
|
|
|
Income before income taxes |
192 |
14 |
162 |
| Income
tax provision |
60 |
5 |
61 |
|
|
|
|
|
|
Net income |
132 |
9 |
101 |
|
|
|
|
|
| Net
loss attributable to noncontrolling interests |
1 |
-- |
-- |
|
|
|
|
|
|
Net income attributable to Nasdaq |
$ 133 |
$ 9 |
$ 101 |
|
|
|
|
|
|
Per share information: |
|
|
|
| Basic
earnings per share |
$ 0.79 |
$ 0.05 |
$ 0.60 |
|
Diluted earnings per share |
$ 0.77 |
$ 0.05 |
$ 0.59 |
| Cash
dividends declared per common share |
$ 0.25 |
$ 0.15 |
$ -- |
|
|
|
|
|
|
Weighted-average common shares outstanding for
earnings per share: |
|
|
|
|
Basic |
168.7 |
169.0 |
169.3 |
|
Diluted |
172.1 |
172.7 |
172.5 |
|
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Revenue Detail |
| (in millions) |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
|
MARKET SERVICES |
|
|
|
|
Equity Derivative Trading and Clearing
Revenues |
$ 97 |
$ 116 |
$ 129 |
|
Transaction-based expenses: |
|
|
|
|
Transaction rebates |
(49) |
(64) |
(71) |
|
Brokerage, clearance and exchange fees |
(4) |
(6) |
(8) |
|
Total net equity derivative trading and clearing
revenues |
44 |
46 |
50 |
|
|
|
|
|
|
Cash Equity Trading Revenues |
297 |
339 |
318 |
|
Transaction-based expenses: |
|
|
|
|
Transaction rebates |
(167) |
(197) |
(181) |
|
Brokerage, clearance and exchange fees |
(68) |
(83) |
(81) |
|
Total net cash equity trading revenues |
62 |
59 |
56 |
|
|
|
|
|
|
Fixed Income, Currency and Commodities Trading and
Clearing Revenues |
25 |
25 |
32 |
|
Transaction-based expenses: |
|
|
|
|
Brokerage, clearance and exchange fees |
(1) |
(1) |
(1) |
|
Total net fixed income, currency and commodities
trading and clearing revenues |
24 |
24 |
31 |
|
|
|
|
|
|
Access and Broker Services Revenues |
59 |
59 |
60 |
|
|
|
|
|
|
Total Net Market Services revenues |
189 |
188 |
197 |
|
|
|
|
|
|
LISTING SERVICES REVENUES |
66 |
64 |
60 |
|
|
|
|
|
|
INFORMATION SERVICES |
|
|
|
|
Data Products revenues |
99 |
100 |
101 |
|
Index Licensing and Services revenues |
29 |
25 |
22 |
|
|
|
|
|
|
Total Information Services revenues |
128 |
125 |
123 |
|
|
|
|
|
|
TECHNOLOGY SOLUTIONS |
|
|
|
|
Corporate Solutions revenues |
76 |
75 |
80 |
|
Market Technology revenues |
59 |
55 |
63 |
|
|
|
|
|
|
Total Technology Solutions revenues |
135 |
130 |
143 |
|
|
|
|
|
|
Total revenues less transaction-based
expenses |
$ 518 |
$ 507 |
$ 523 |
|
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Condensed Consolidated
Balance Sheets |
| (in millions) |
| |
|
|
June 30, |
December 31, |
|
|
2015 |
2014 |
|
Assets |
(unaudited) |
|
|
Current assets: |
|
|
| Cash
and cash equivalents |
$ 324 |
$ 427 |
|
Restricted cash |
17 |
49 |
|
Financial investments, at fair value |
264 |
174 |
|
Receivables, net |
323 |
389 |
|
Deferred tax assets |
35 |
16 |
|
Default funds and margin deposits |
2,331 |
2,194 |
| Other
current assets |
152 |
151 |
| Total
current assets |
3,446 |
3,400 |
|
Property and equipment, net |
295 |
292 |
|
Non-current deferred tax assets |
621 |
536 |
|
Goodwill |
5,469 |
5,538 |
|
Intangible assets, net |
2,009 |
2,077 |
| Other
non-current assets |
264 |
228 |
| Total
assets |
$ 12,104 |
$ 12,071 |
|
|
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ 188 |
$ 189 |
|
Section 31 fees payable to SEC |
147 |
124 |
|
Accrued personnel costs |
94 |
143 |
|
Deferred revenue |
231 |
177 |
| Other
current liabilities |
125 |
116 |
|
Deferred tax liabilities |
30 |
37 |
|
Default funds and margin deposits |
2,331 |
2,194 |
| Total
current liabilities |
3,146 |
2,980 |
| Debt
obligations |
2,281 |
2,297 |
|
Non-current deferred tax liabilities |
606 |
626 |
|
Non-current deferred revenue |
208 |
215 |
| Other
non-current liabilities |
147 |
159 |
| Total
liabilities |
6,388 |
6,277 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
Equity |
|
|
| Nasdaq
stockholders' equity: |
|
|
| Common
stock |
2 |
2 |
|
Additional paid-in capital |
3,257 |
3,222 |
| Common
stock in treasury, at cost |
(104) |
(41) |
|
Accumulated other comprehensive loss |
(805) |
(682) |
|
Retained earnings |
3,366 |
3,292 |
| Total
Nasdaq stockholders' equity |
5,716 |
5,793 |
|
Noncontrolling interests |
-- |
1 |
| Total
equity |
5,716 |
5,794 |
| Total
liabilities and equity |
$ 12,104 |
$ 12,071 |
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Reconciliation of GAAP Net
Income, Diluted Earnings Per Share, Operating Income and |
| Operating Expenses to
Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income,
and Operating Expenses |
| (in millions, except per
share amounts) |
| (unaudited) |
| |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
GAAP net income attributable to Nasdaq |
$ 133 |
$ 9 |
$ 101 |
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets (1) |
15 |
15 |
18 |
| Merger
and strategic initiatives (2) |
3 |
-- |
14 |
|
Restructuring charges (3) |
2 |
150 |
-- |
| Other
income from OCC equity investment (4) |
-- |
(13) |
-- |
|
Special legal expenses (5) |
-- |
31 |
1 |
|
Reversal of value added tax refund (6) |
-- |
12 |
-- |
|
Extinguishment of debt (7) |
-- |
-- |
9 |
| Total
non-GAAP adjustments |
20 |
195 |
42 |
|
|
|
|
|
|
Adjustment to the income tax provision to reflect non-GAAP
adjustments |
(10) |
(66) |
(12) |
| Total
non-GAAP adjustments, net of tax |
10 |
129 |
30 |
|
|
|
|
|
|
Non-GAAP net income attributable to
Nasdaq |
$ 143 |
$ 138 |
$ 131 |
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings per share |
$ 0.77 |
$ 0.05 |
$ 0.59 |
| Total
adjustments from non-GAAP net income above |
0.06 |
0.75 |
0.17 |
|
|
|
|
|
|
Non-GAAP diluted earnings per share |
$ 0.83 |
$ 0.80 |
$ 0.76 |
|
|
|
|
|
|
|
|
|
|
| (1) Amortization expense related to intangible assets
results primarily from business combinations. These non-cash
expenses are fixed in connection with an acquisition, are then
amortized over a number of years after the acquisition and
generally cannot be changed or influenced by management after the
acquisition. Management does not consider these expenses for the
purpose of evaluating the performance of the business or its
managers or when making decisions to allocate resources. Therefore,
such expenses are shown as a non-GAAP adjustment. |
| |
| (2) For the three months ended June 30, 2015, merger and
strategic initiatives expense primarily related to certain
strategic initiatives and our acquisition of Dorsey, Wright &
Associates, LLC. For the three months ended June 30, 2014, merger
and strategic initiatives expense primarily related to our
acquisition of the Investor Relations, Public Relations and
Multimedia Solutions businesses of Thomson Reuters, or the TR
Corporate businesses, and other strategic initiatives. |
| |
| (3) During the first quarter of 2015, we performed a
comprehensive review of our processes, businesses and systems in a
company-wide effort to improve performance, cut costs, and reduce
spending. We currently estimate that we will recognize net pre-tax
restructuring charges of $182 million, consisting of the rebranding
of our trade name, severance, asset impairments, facility-related
costs, and other costs. We recognized restructuring charges of $2
million for the three months ended June 30, 2015 and $150 million
for the three months ended March 31, 2015, with the remaining
amount to be recognized through June 2016. The restructuring charge
for the three months ended June 30, 2015 includes the reversal of a
previously recorded sublease loss reserve of $10 million for space
we lease in New York, New York located at 1500 Broadway. In June
2015, as part of our real estate reorganization plans, management
decided to occupy this space. Restructuring charges are recorded on
restructuring plans that have been committed to by management and
are, in part, based upon management's best estimates of future
events. Changes to the estimates may require future adjustments to
the restructuring liabilities. |
| |
| (4) We record our investment in The Options Clearing
Corporation, or OCC, as an equity method investment. Under the
equity method of accounting, we recognize our share of earnings or
losses of an equity method investee based on our ownership
percentage. As a result of a new capital plan implemented by OCC,
we were not able to determine what our share of OCC's income was
for the year ended December 31, 2014 until the first quarter of
2015, when OCC financial statements were made available to us.
Therefore, we recorded other income of $13 million in the first
quarter of 2015 relating to our share of OCC's income for the year
ended December 31, 2014. |
| |
| (5) Nasdaq has established a loss reserve of $31 million
for litigation arising from the Facebook initial public offering,
or IPO, in May 2012. The reserve is intended to cover the estimated
amount of a settlement of class-action litigation initiated on
behalf of investors in Facebook common stock on the date of its
IPO. The reserve would also cover the anticipated cost of
re-opening Nasdaq's voluntary accommodation program to allow any
Nasdaq member that did not file for compensation in 2013 to submit
a claim during the second quarter of 2015, subject to the
conditions and limitations that were applicable to claims filed in
2013. Nasdaq expects that the reopening of the accommodation
program will fully resolve claims by UBS Securities against Nasdaq.
Nasdaq further anticipates that some or all of amounts paid from
the loss reserve will be reimbursed by applicable insurance
coverage. |
| |
| (6) We previously recorded receivables for expected value
added tax, or VAT, refunds based on an approach that had been
accepted by the tax authorities in prior years. The tax authorities
have since challenged our approach, and the revised position of the
tax authorities was upheld in court during the first quarter of
2015. As a result, in the first quarter of 2015, we recorded a
charge of $12 million for previously recorded receivables based on
the court decision. |
| |
| (7) During the three months ended June 30, 2014, we
recorded a $9 million charge for the early extinguishment of senior
notes due in 2015. |
|
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Reconciliation of GAAP Net
Income, Diluted Earnings Per Share, Operating Income and |
| Operating Expenses to
Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income,
and Operating Expenses |
| (in millions, except per
share amounts) |
| (unaudited) |
| |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
|
|
|
|
|
GAAP operating income |
$ 217 |
$ 27 |
$ 191 |
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets (1) |
15 |
15 |
18 |
| Merger
and strategic initiatives (2) |
3 |
-- |
14 |
|
Restructuring charges (3) |
2 |
150 |
-- |
|
Special legal expenses (4) |
-- |
31 |
1 |
|
Reversal of value added tax refund (5) |
-- |
12 |
-- |
|
Extinguishment of debt (6) |
-- |
-- |
9 |
| Total
non-GAAP adjustments |
20 |
208 |
42 |
|
|
|
|
|
|
Non-GAAP operating income |
$ 237 |
$ 235 |
$ 233 |
|
|
|
|
|
|
|
|
|
|
|
Revenues less transaction-based expenses |
$ 518 |
$ 507 |
$ 523 |
|
|
|
|
|
|
Non-GAAP operating margin (7) |
46% |
46% |
45% |
|
|
|
|
|
|
|
|
|
|
| (1) Amortization expense related to intangible assets
results primarily from business combinations. These non-cash
expenses are fixed in connection with an acquisition, are then
amortized over a number of years after the acquisition and
generally cannot be changed or influenced by management after the
acquisition. Management does not consider these expenses for the
purpose of evaluating the performance of the business or its
managers or when making decisions to allocate resources. Therefore,
such expenses are shown as a non-GAAP adjustment. |
| |
| (2) For the three months ended June 30, 2015, merger and
strategic initiatives expense primarily related to certain
strategic initiatives and our acquisition of Dorsey, Wright &
Associates, LLC. For the three months ended June 30, 2014, merger
and strategic initiatives expense primarily related to our
acquisition of the TR Corporate businesses and other strategic
initiatives. |
| |
| (3) During the first quarter of 2015, we performed a
comprehensive review of our processes, businesses and systems in a
company-wide effort to improve performance, cut costs, and reduce
spending. We currently estimate that we will recognize net pre-tax
restructuring charges of $182 million, consisting of the rebranding
of our trade name, severance, asset impairments, facility-related
costs, and other costs. We recognized restructuring charges of $2
million for the three months ended June 30, 2015 and $150 million
for the three months ended March 31, 2015, with the remaining
amount to be recognized through June 2016. The restructuring charge
for the three months ended June 30, 2015 includes the reversal of a
previously recorded sublease loss reserve of $10 million for space
we lease in New York, New York located at 1500 Broadway. In June
2015, as part of our real estate reorganization plans, management
decided to occupy this space. Restructuring charges are recorded on
restructuring plans that have been committed to by management and
are, in part, based upon management's best estimates of future
events. Changes to the estimates may require future adjustments to
the restructuring liabilities. |
| |
| (4) Nasdaq has established a loss reserve of $31 million
for litigation arising from the Facebook IPO in May 2012. The
reserve is intended to cover the estimated amount of a settlement
of class-action litigation initiated on behalf of investors in
Facebook common stock on the date of its IPO. The reserve would
also cover the anticipated cost of re-opening Nasdaq's voluntary
accommodation program to allow any Nasdaq member that did not file
for compensation in 2013 to submit a claim during the second
quarter of 2015, subject to the conditions and limitations that
were applicable to claims filed in 2013. Nasdaq expects that the
reopening of the accommodation program will fully resolve claims by
UBS Securities against Nasdaq. Nasdaq further anticipates that some
or all of amounts paid from the loss reserve will be reimbursed by
applicable insurance coverage. |
| |
| (5) We previously recorded receivables for expected VAT
refunds based on an approach that had been accepted by the tax
authorities in prior years. The tax authorities have since
challenged our approach, and the revised position of the tax
authorities was upheld in court during the first quarter of 2015.
As a result, in the first quarter of 2015, we recorded a charge of
$12 million for previously recorded receivables based on the court
decision. |
| |
| (6) During the three months ended June 30, 2014, we
recorded a $9 million charge for the early extinguishment of senior
notes due in 2015. |
| |
| (7) Non-GAAP operating margin equals non-GAAP operating
income divided by total revenues less transaction-based
expenses. |
|
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Reconciliation of GAAP Net
Income, Diluted Earnings Per Share, Operating Income and |
| Operating Expenses to
Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income,
and Operating Expenses |
| (in millions) |
| (unaudited) |
| |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
|
|
|
|
|
GAAP operating expenses |
$ 301 |
$ 480 |
$ 332 |
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets (1) |
(15) |
(15) |
(18) |
| Merger
and strategic initiatives (2) |
(3) |
-- |
(14) |
|
Restructuring charges (3) |
(2) |
(150) |
-- |
|
Special legal expenses (4) |
-- |
(31) |
(1) |
|
Reversal of value added tax refund (5) |
-- |
(12) |
-- |
|
Extinguishment of debt (6) |
-- |
-- |
(9) |
| Total
non-GAAP adjustments |
(20) |
(208) |
(42) |
|
|
|
|
|
|
Non-GAAP operating expenses |
$ 281 |
$ 272 |
$ 290 |
|
|
|
|
|
|
|
|
|
|
| (1) Amortization expense related to intangible assets
results primarily from business combinations. These non-cash
expenses are fixed in connection with an acquisition, are then
amortized over a number of years after the acquisition and
generally cannot be changed or influenced by management after the
acquisition. Management does not consider these expenses for the
purpose of evaluating the performance of the business or its
managers or when making decisions to allocate resources. Therefore,
such expenses are shown as a non-GAAP adjustment. |
| |
| (2) For the three months ended June 30, 2015, merger and
strategic initiatives expense primarily related to certain
strategic initiatives and our acquisition of Dorsey, Wright &
Associates, LLC. For the three months ended June 30, 2014, merger
and strategic initiatives expense primarily related to our
acquisition of the TR Corporate businesses and other strategic
initiatives. |
|
|
|
|
|
| (3) During the first quarter of 2015, we performed a
comprehensive review of our processes, businesses and systems in a
company-wide effort to improve performance, cut costs, and reduce
spending. We currently estimate that we will recognize net pre-tax
restructuring charges of $182 million, consisting of the rebranding
of our trade name, severance, asset impairments, facility-related
costs, and other costs. We recognized restructuring charges of $2
million for the three months ended June 30, 2015 and $150 million
for the three months ended March 31, 2015, with the remaining
amount to be recognized through June 2016. The restructuring charge
for the three months ended June 30, 2015 includes the reversal of a
previously recorded sublease loss reserve of $10 million for space
we lease in New York, New York located at 1500 Broadway. In June
2015, as part of our real estate reorganization plans, management
decided to occupy this space. Restructuring charges are recorded on
restructuring plans that have been committed to by management and
are, in part, based upon management's best estimates of future
events. Changes to the estimates may require future adjustments to
the restructuring liabilities. |
| |
| (4) Nasdaq has established a loss reserve of $31 million
for litigation arising from the Facebook IPO in May 2012. The
reserve is intended to cover the estimated amount of a settlement
of class-action litigation initiated on behalf of investors in
Facebook common stock on the date of its IPO. The reserve would
also cover the anticipated cost of re-opening Nasdaq's voluntary
accommodation program to allow any Nasdaq member that did not file
for compensation in 2013 to submit a claim during the second
quarter of 2015, subject to the conditions and limitations that
were applicable to claims filed in 2013. Nasdaq expects that the
reopening of the accommodation program will fully resolve claims by
UBS Securities against Nasdaq. Nasdaq further anticipates that some
or all of amounts paid from the loss reserve will be reimbursed by
applicable insurance coverage. |
| |
| (5) We previously recorded receivables for expected VAT
refunds based on an approach that had been accepted by the tax
authorities in prior years. The tax authorities have since
challenged our approach, and the revised position of the tax
authorities was upheld in court during the first quarter of 2015.
As a result, in the first quarter of 2015, we recorded a charge of
$12 million for previously recorded receivables based on the court
decision. |
| |
| (6) During the three months ended June 30, 2014, we
recorded a $9 million charge for the early extinguishment of senior
notes due in 2015. |
|
|
|
|
|
| The NASDAQ OMX Group,
Inc. |
| Quarterly Key Drivers
Detail |
| (unaudited) |
| |
|
|
Three Months Ended |
|
|
June 30, |
March 31, |
June 30, |
|
|
2015 |
2015 |
2014 |
|
Market Services |
|
|
|
|
Equity Derivative Trading and Clearing |
|
|
|
|
U.S. Equity Options |
|
|
|
| Total
industry average daily volume (in millions) |
13.9 |
14.8 |
14.2 |
| Nasdaq
PHLX matched market share |
16.4% |
17.6% |
15.6% |
| The
NASDAQ Options Market matched market share |
6.8% |
9.5% |
10.6% |
| Nasdaq
BX Options Market matched market share |
0.8% |
0.7% |
0.8% |
| Total
matched market share executed on Nasdaq's exchanges |
24.0% |
27.8% |
27.0% |
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic options and
futures |
|
|
|
| Total
average daily volume options and futures contracts(1) |
399,900 |
402,421 |
343,338 |
|
|
|
|
|
|
Cash Equity Trading |
|
|
|
|
Total U.S.-listed securities |
|
|
|
| Total
industry average daily share volume (in billions) |
6.35 |
6.92 |
6.05 |
|
Matched share volume (in billions) |
74.3 |
83.1 |
77.0 |
|
Matched market share executed on NASDAQ |
15.8% |
16.9% |
17.1% |
|
Matched market share executed on Nasdaq BX |
1.9% |
1.8% |
2.6% |
|
Matched market share executed on Nasdaq PSX |
0.9% |
1.0% |
0.5% |
| Total
matched market share executed on Nasdaq's exchanges |
18.6% |
19.7% |
20.2% |
| Market
share reported to the FINRA/NASDAQ Trade Reporting Facility |
32.9% |
31.4% |
32.5% |
| Total
market share(2) |
51.5% |
51.1% |
52.7% |
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic
securities |
|
|
|
|
Average daily number of equity trades |
424,915 |
439,938 |
331,546 |
| Total
average daily value of shares traded (in billions) |
$ 5.4 |
$ 5.5 |
$ 4.9 |
| Total
market share executed on Nasdaq's exchanges |
67.7% |
68.8% |
69.8% |
|
|
|
|
|
|
Fixed Income, Currency and Commodities Trading and
Clearing |
|
|
|
|
Total U.S. Fixed Income |
|
|
|
| U.S.
fixed income notional trading volume (in billions) |
$ 8,281 |
$ 8,365 |
$ 9,582 |
|
|
|
|
|
|
Nasdaq Nordic and Nasdaq Baltic fixed
income |
|
|
|
| Total
average daily volume fixed income contracts |
105,432 |
107,031 |
105,642 |
|
|
|
|
|
|
Nasdaq Commodities |
|
|
|
| Power
contracts cleared (TWh)(3) |
329 |
363 |
345 |
|
|
|
|
|
|
Listing Services |
|
|
|
|
Initial public offerings |
|
|
|
|
NASDAQ |
49 |
27 |
51 |
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic |
31 |
17 |
17 |
|
|
|
|
|
|
New listings |
|
|
|
|
NASDAQ(4) |
79 |
43 |
79 |
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(5) |
38 |
18 |
32 |
|
|
|
|
|
|
Number of listed companies |
|
|
|
|
NASDAQ(6) |
2,828 |
2,779 |
2,709 |
|
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic(7) |
835 |
804 |
782 |
|
|
|
|
|
|
Information Services |
|
|
|
|
Indexes Nasdaq calculates and distributes (in thousands) |
42 |
42 |
42 |
| Assets
under management (in billions)(8) |
$ 108 |
$ 105 |
$ 96 |
|
|
|
|
|
|
Technology Solutions |
|
|
|
|
Market Technology |
|
|
|
| Order
intake (in millions)(9) |
$ 31 |
$ 40 |
$ 32 |
| Total
order value (in millions)(10) |
$ 707 |
$ 728 |
$ 658 |
|
|
|
|
|
|
|
|
|
|
| (1) Includes Finnish option contracts traded on EUREX
Group. |
| (2) Includes transactions executed on NASDAQ's, Nasdaq
BX's and Nasdaq PSX's systems plus trades reported through the
Financial Industry Regulatory Authority/NASDAQ Trade Reporting
Facility. |
| (3) Transactions executed on Nasdaq Commodities or OTC and
reported for clearing to Nasdaq Commodities measured by Terawatt
hours (TWh). |
| (4) 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 exchange traded
funds (ETFs). |
| (5) New listings include IPOs and represent companies
listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and
companies on the alternative markets of Nasdaq First North. |
| (6) Number of listed companies for NASDAQ at period end,
including separately listed ETFs. |
| (7) Represents companies listed on the Nasdaq Nordic and
Nasdaq Baltic exchanges and companies on the alternative markets of
Nasdaq First North at period end. |
| (8) Represents assets under management in exchange traded
products. |
| (9) Total contract value of orders signed during the
period. |
| (10) Represents total contract value of orders signed that
are yet to be recognized as revenue. |
CONTACT: MEDIA RELATIONS CONTACT:
Joseph
Christinat
+1.646.441.5121
joseph.christinat@nasdaq.com
INVESTOR RELATIONS
CONTACT:
Ed Ditmire,
CFA
+1.212.401.8737
ed.ditmire@nasdaq.com
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: The NASDAQ OMX Group, Inc. via Globenewswire
HUG#1940745
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