NASDAQ OMX reports Fourth Quarter and Full Year 2011 results

NASDAQ OMX reports Fourth Quarter and Full Year 2011 results

01/02/2012

The NASDAQ OMX Group, Inc. ("NASDAQ OMX®") (Nasdaq:NDAQ) reported strong results for the fourth quarter of 2011. Net income attributable to NASDAQ OMX for the fourth quarter of 2011 was $82 million, or $0.45 per diluted share, compared with $110 million, or $0.61 per diluted share, in the third quarter of 2011, and $137 million, or $0.69 per diluted share, in the fourth quarter of 2010. For the full year of 2011, net income attributable to NASDAQ OMX was $387 million, or $2.15 per diluted share.

 

Included in the fourth quarter of 2011 results are $44 million of pre-tax expenses associated with debt refinancing, the impairment of an available-for-sale investment security and merger and strategic initiatives.

 

Financial Highlights:

 

  • Net exchange revenues were $422 million in Q411, up from $400 million in Q410, and were $1,690 million in FY 2011, up 11% when compared to FY 2010.
  • Non-GAAP operating income was $187 million in Q411, up from $184 million in Q410, and was $769 million in FY 2011, an increase of 10% from FY 2010.
  • Non-GAAP net income was $113 million in Q411, up from $110 million in Q410, and reached $455 million in FY 2011, up 11% when compared to FY 2010.
  • Non-GAAP diluted EPS increased to $0.63 in Q411, up 15% over prior year results. For FY 2011, non-GAAP diluted EPS increased to $2.53, up 27% from FY 2010.

 

Summary of Non-GAAP Results1

($ millions, except EPS)

Q411

Q311

Q410

FY 2011

FY 2010

Net Exchange Revenues2

$ 422

$ 438

$ 400

$ 1,690

$ 1,522

Total Operating Expenses

235

234

216

921

826

Operating Income

187

204

184

769

696

Net Income

113

121

110

455

411

Diluted Earnings Per Share

$0.63

$0.67

$0.55

$2.53

$1.99

 

1. A complete reconciliation of GAAP to non-GAAP results is included in the attached tables.

2. Represents revenues less transaction rebates, brokerage, clearance and exchange fees.

 

Bob Greifeld, Chief Executive Officer and President, NASDAQ OMX said:

 

"In 2011, our strategic decision-making continued to pay off as we achieved double digit growth in revenues and earnings. Investments in new initiatives, contributions from acquisitions, and capital deployment decisions all contributed to our success despite the backdrop of a difficult macroeconomic environment. As we enter 2012, we remain committed to our strategic plan to ensure that we're well positioned for continued growth."

 

Fourth Quarter 2011 Highlights

 

  • Announced the approval of a share repurchase program, authorizing NASDAQ OMX to repurchase in the aggregate up to $300 million of its outstanding common stock. During the fourth quarter of 2011, NASDAQ OMX repurchased 3.98 million shares of common stock at an average price of $25.10 and an aggregate principal value of $100 million. 

 

Market Services

 

  • Launched Genium Risk, a new risk management platform for the Nordic clearing house, NASDAQ OMX Clearing.  Genium Risk, a state of the art risk system, provides the clearing house with a real-time risk management solution, including new tools for improved risk monitoring and handling of incidents for derivatives clearing.
  • Announced intentions to introduce competitive central counterparty (CCP) clearing, in cooperation with EMCF, EuroCCP and SIX x-clear, by the end of April 2012.  Interoperability will allow members of NASDAQ OMX's Nordic exchanges to choose between multiple clearing houses to clear and settle their trades. The introduction of competitive CCP is conditional on the necessary regulatory consents or approvals.
  • Membership at N2EX, the U.K. power market jointly operated by NASDAQ OMX and Nord Pool Spot, continued to grow on the back of increasing liquidity. N2EX ended the year with 34 members and 15 companies trading U.K. power futures. Recently, Scottish Power became the third of the six large U.K. utilities to commit to bidding arrangements in N2EX's day-ahead auction, following earlier commitments by E.ON and SSE. During the fourth quarter of 2011, total cleared volumes reached 20.3 TWh, up from 9.3 TWh in the prior-year period, while futures volumes increased to 1.9 TWh. 
  • Acquired the business of a leading provider of machine-readable economic news to trading firms and financial institutions.  This acquisition allows NASDAQ OMX to provide a new service, Event Driven Analytics, which delivers U.S. government and other economic news directly from the source to customers interested in receiving information in an electronic feed. This service distributes dozens of U.S. government and other economic indicators to a variety of market participants, giving them instant access to events that are incorporated into algorithmic trading systems.

 

Issuer Services

 

  • The NASDAQ Stock Market attracted significant listing transfers during the fourth quarter of 2011, announcing that companies with more than $80 billion in market capitalization intended to switch their listing to NASDAQ.  Blue chip companies Texas Instruments and Viacom led a variety of companies representing diverse industries that announced transfers of their listing. Notable transfers during the quarter include Icahn Enterprises, Sallie Mae, Frontier Communications and Wendy's. 
  • NASDAQ OMX welcomed 56 new listings during the quarter, including 16 initial public offerings. Among the largest IPOs this quarter were Groupon, Ubiquiti Networks, Jive Software, and Zynga. 
  • Acquired Glide Technologies Limited, a leading London-based software-as-a-service (SaaS) provider specializing in corporate communications and reputation management solutions. Combining Glide Technologies with NASDAQ OMX's Corporate Solutions has created the first and only fully-integrated workflow solution for investor relations and public relations professionals.

 

Market Technology

 

  • Signed a strategic alliance with Bolsa Electronica de Chile (BEC) to provide BEC with the NASDAQ OMX market technology, X-stream Trading, and advisory services for product development and global visibility.  BEC and its members benefit from significant enhancements in performance, latency and throughput capacity by shifting to NASDAQ OMX's proven exchange technology.
  • The SMARTS Broker Compliance business continued to demonstrate strong growth during the quarter, winning contracts with two global brokerage firms, each operating in 28 markets.  And in parallel with Chi-X Australia commencing operations, SMARTS launched Broker Compliance in support of the new market while securing nearly a dozen new clients for the service.

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