NASDAQ OMX Reports Record Fourth Quarter 2010 Results
Included in the fourth quarter of 2010 results are
Financial Highlights:
-
Net exchange revenues were
$400 million , an 8% increase over Q409 results. -
Non-GAAP operating income improved to
$184 million , up 12% from the prior year quarter, while operating margins increased to 46%. -
Non-GAAP Net Income was
$110 million , an increase of 11% over Q409 results. -
Non-GAAP EPS increased to
$0.55 , up from$0.46 in the prior year quarter. -
GAAP EPS increased to
$0.69 , up$0.49 from$0.20 in the fourth quarter of 2009.
| Summary of Non-GAAP Results1 | |||
| ($ millions, except EPS) | Q410 | Q310 | Q409 |
| Net Exchange Revenues2 | 400 | 372 | 369 |
| Total Operating Expenses | 216 | 203 | 204 |
| Operating Income | 184 | 169 | 165 |
| Net Income | 110 | 101 | 99 |
| Diluted Earnings Per Share | $0.55 | $0.50 | $0.46 |
| 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. | |||
"In 2010 we saw a sizable return on the strategic decisions we made in recent years. This was driven by a well-designed diversification strategy and buoyed by our major acquisitions. As a result, we achieved a record performance, seeing excellent growth in derivatives and strength in our European-based businesses. This year we plan to continue our success as we further diversify and leverage the scale of our business model."
Business Highlights
-
On
December 21, 2010 ,NASDAQ OMX completed a share repurchase from Borse Dubai totaling$497 million , or 22.8 million shares. This transaction was financed with$130 million of cash on hand and$367 million from the net proceeds of 7-year senior bonds with a 5.25% coupon rate. Share repurchases for the full year of 2010 totaled$797 million , or 37.8 million shares, representing approximately 18% ofNASDAQ OMX's total shares outstanding at the beginning of 2010.
European Transaction Services
- Witnessed significant growth in derivative trading and clearing revenues and transaction volumes when compared to the prior year quarter. Total revenues increased 23% when compared to the fourth quarter of 2009 while average daily volumes for options, futures, and fixed-income contracts traded or cleared on the Nordic derivatives market grew by 20%.
-
Launched Genium INET, a comprehensive multi-asset trading and clearing system, in the Nordic derivatives market. In addition to powering its own markets, this technology is part of
NASDAQ OMX's commercial exchange technology offering, giving customers access to the fastest and most robust trading system in the world. -
Expanded the Nordic clearinghouse by offering members the opportunity to clear repurchase agreement ("repo") transactions. As a result of an agreement between the
Swedish Money Market Council andNASDAQ OMX , the entire Swedish Interbank repo market will ultimately be cleared throughNASDAQ OMX Stockholm AB .
U.S. Transaction Services
-
NASDAQ OMX was number one in U.S. equity options market share for the fourth quarter and full year of 2010. Additionally, net U.S. derivative trading and clearing revenues for the fourth quarter of 2010 grew to$42 million , representing an increase of 35% when compared to the prior year period, while revenues for the full year increased to$150 million . - Launched NASDAQ OMX PSX ("PSX"), the first U.S. equity trading platform with a price-size priority model. PSX is an equity exchange model that encourages participants to display more shares in the transparent marketplace by offering improved execution opportunities for large orders. More displayed volume encourages greater transparency in the public marketplace and increased depth at a given price level for customers.
-
Acquired FTEN, Inc. , a leading provider of Real-Time Risk Management ("RTRM") solutions for the financial securities market. FTEN is a market leader in RTRM and, with the implementation of new market access rules, is well positioned to grow as the industry becomes more focused on solutions for effectively managing risk.
Market Technology
-
The Australian Securities Exchange launched its next generation trading system, ASX Trade, which is powered by
NASDAQ OMX's Genium INET platform. The Genium INET platform combines rich functionality with high reliability, and has delivered significant latency and transaction capacity improvements.
Issuer Services
-
Acquired
Stockholm -based Zoomvision Mamato ("ZVM"), a company that provides live webcasting services, primarily for investor relations professionals. ZVM is now part ofNASDAQ OMX's Global Corporate Solutions division, which provides a range of investor relations products, market analytics and governance services that help public and private companies minimize risk, maximize efficiency, and increase transparency. -
Announced a plan with the
Singapore Exchange ("SGX") to offer companies cross listing opportunities. NASDAQ-listed companies with strong brand awareness and active business endeavors inAsia will benefit from a secondary listing on SGX. SGX-listed companies interested in reaching U.S. investors will be able to list their ADRs onThe NASDAQ Stock Market .
Operating Highlights
- Total matched market share of U.S. equities was 19.6% in the fourth quarter of 2010, with NASDAQ matching 16.8%, NASDAQ OMX BX ("BX") matching 2.3% and PSX matching 0.5%. Total matched market share was 22.3% in the third quarter of 2010 (NASDAQ: 19.1%; BX: 3.2%) and 24.0% in the fourth quarter of 2009 (NASDAQ: 20.6%; BX: 3.4%). Total matched share volume was 93.1 billion shares in the fourth quarter of 2010, compared with 107.8 billion shares in the third quarter of 2010 and 126.1 billion shares in the fourth quarter of 2009.
-
Total average daily volume was 275 thousand trades in the fourth quarter of 2010, compared with 264 thousand in the third quarter of 2010 and 220 thousand in the fourth quarter of 2009. Total average daily value traded was
$3.2 billion in the fourth quarter of 2010, compared with$2.8 billion in the third quarter of 2010 and$3.3 billion in the fourth quarter of 2009.
U.S. Options
- Total market share of U.S. equity options was 31.4% in the fourth quarter of 2010, with PHLX matching 26.5% and NOM matching 4.9%. Total market share of U.S. equity options was 28.8% in the third quarter of 2010 (PHLX: 23.7%; NOM: 5.1%) and 22.5% in the fourth quarter of 2009 (PHLX: 19.4%; NOM: 3.1%). Total industry average daily volume was 15.1 million contracts in the fourth quarter of 2010, compared with 12.5 million contracts in the third quarter of 2010 and 12.9 million contracts in the fourth quarter of 2009.
European Derivatives
-
In the fourth quarter of 2010, the average daily volume of options, futures and fixed-income contracts was 436 thousand (Q310: 398 thousand; Q409: 363 thousand). Within
NASDAQ OMX Commodities , cleared power contracts during the fourth quarter of 2010 totaled 529 terawatt hours ("TWh") (Q310: 382 TWh; Q409: 599 TWh).
Listings
-
New listings totaled 63 in the fourth quarter of 2010 compared with 45 in the third quarter of 2010 and 67 in the fourth quarter of 2009. Of the 63 new company listings in the fourth quarter of 2010, 54 listed on
The NASDAQ Stock Market and 9 listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic. New listings in the fourth quarter of 2010 included 37 initial public offerings, compared with 18 in the third quarter of 2010 and 19 in the fourth quarter of 2009.
Market Technology
-
Total order intake, which represents the value of orders signed, was
$71 million during the fourth quarter of 2010, compared with$27 million in the third quarter of 2010 and$148 million in the fourth quarter of 2009. At the end of the fourth quarter of 2010, total order value, which represents the total contract value of orders signed that are yet to be recognized as revenue, was$495 million , compared with$446 million at the end of the third quarter of 2010 and$417 million at the end of the fourth quarter of 2009.
"The repurchase of 22.8 million shares during the quarter resulted in the successful culmination of the share repurchase plan launched earlier in the year, during which we bought back 18% of
Expense Guidance
Total operating expenses for the full year of 2011 are expected to be in the range of
Financial Review
Revenues
Revenues less transaction rebates, brokerage, clearance and exchange fees ("net exchange revenues") were
Market Services
Market Services net exchange revenues were
Transaction Services
Net exchange revenues from Transaction Services were
-
Total net cash equity trading revenues were
$60 million for the fourth quarter of 2010, down$3 million , or 5%, from the third quarter of 2010, but up$8 million , or 15%, from the prior year quarter.
- Net U.S. cash equity trading revenues decreased
$5 million when compared to the third quarter of 2010 due to lower trading volumes, which declined 14% from third quarter of 2010 levels, and lower market share. Net revenues increased$8 million when compared to the prior year quarter due primarily to modified rates, offset somewhat by lower trading volumes.- European cash equity trading revenues increased
$2 million when compared to results from the third quarter of 2010 and were equal to revenues in the fourth quarter of 2009. When compared to the third quarter of 2010 the increase in revenue is due to higher trading activity and to changes in the exchange rates of various currencies as compared to the U.S. dollar.- Included in U.S. cash equity trading revenues in the fourth quarter of 2010 are
$57 million in SEC Section 31 fees, compared with$60 million in the third quarter of 2010 and$103 million in the fourth quarter of 2009. Corresponding cost of revenues, reflecting the reimbursement of these fees to theSEC , is included in brokerage, clearance and exchange fees.
-
Total net derivative trading and clearing revenues were
$74 million for the fourth quarter of 2010, up$14 million , or 23%, from the third quarter of 2010 and up$17 million , or 30%, from the prior year quarter.
- Net U.S. derivative trading and clearing revenues increased
$8 million when compared to the third quarter of 2010 and$11 million when compared to fourth quarter of 2009 revenues. The increases when compared to both periods are due to higher market share and higher industry volumes.- European derivative trading and clearing revenues increased
$6 million when compared to the third quarter of 2010 and to the fourth quarter of 2009. Increases when compared to both periods are due to higher trading and clearing volumes for options, futures and fixed-income products, and activity associated with repo contracts launched in the fourth quarter of 2010. The increase when compared to the third quarter of 2010 is also driven by higher activity associated with trading and clearing energy derivative products. Contributing to the increase when compared to the fourth quarter of 2009 are revenues associated with Nord Pool ASA, which was acquired in the second quarter of 2010.
-
Access Services revenues were
$48 million for the fourth quarter of 2010, an increase of$3 million , or 7%, when compared to the third quarter of 2010 and an increase of$7 million , or 17%, when compared to the prior year quarter. The increase in revenues when compared to the third quarter of 2010 is primarily due to increased demand for access services. The increase in revenues when compared to the fourth quarter of 2009 is due to revised fees for access services and increased demand for co-location services.
Market Data
Market Data revenues were
-
Net U.S. tape plans revenues were
$28 million in the fourth quarter of 2010, equal to revenues in the third quarter of 2010 but down$5 million , or 15%, when compared to the prior year quarter. The reduction in revenues when compared to the fourth quarter of 2009 is due to lower plan shareable revenue and to declines in trading and quoting market share of U.S equities, as calculated under theSEC -mandated market data revenue quoting and trading formula. -
U.S. market data products revenues were
$32 million in the fourth quarter of 2010, equal to revenues reported in the third quarter of 2010, but up$1 million , or 3%, when compared to the prior year quarter. The increase in revenues when compared to the fourth quarter of 2009 is driven by the growth of new products such as BX TotalView, options data feeds, and global access products. -
European market data products revenues were
$19 million in the fourth quarter of 2010, an increase of$3 million , or 19%, when compared to the third quarter of 2010, but a decrease of$1 million , or 5%, when compared to the prior year quarter. The increase when compared to the third quarter of 2010 is primarily due to modified fees for market data products and to changes in the exchange rates of various currencies as compared to the U.S. dollar. The decrease in revenues when compared to the fourth quarter of 2009 is due primarily to declines in subscriber populations, discontinued products and changes in the exchange rates of various currencies as compared to the U.S. dollar.
Issuer Services
Issuer Services revenues were
Global Listing Services
Global Listing Services revenues were
Market Technology
Market Technology revenues were
Operating Expenses
Total non-GAAP operating expenses increased
Net Interest Expense
Net interest expense was
Income Tax Provision
The non-GAAP tax rate for the fourth quarter of 2010 was 31%, while the effective tax rate on a reported GAAP basis was 9%. The lower than normal GAAP tax rate is primarily due to the permanent tax effect of the restructuring of certain
Earnings Per Share
On a non-GAAP basis, fourth quarter 2010 earnings per diluted share were
About
NDAQF
Non-GAAP Information
In addition to disclosing results determined in accordance with GAAP,
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.
| The NASDAQ OMX Group, Inc. | |||||
| Consolidated Statements of Income | |||||
| (in millions, except per share amounts) | |||||
| (unaudited) | |||||
| Three Months Ended | Year Ended | ||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |
| 2010 | 2010 | 2009 | 2010 | 2009 | |
| Revenues | |||||
| Market Services revenues | $ 648 | $ 634 | $ 688 | $ 2,700 | $ 2,934 |
| Cost of revenues: | |||||
| Transaction rebates | (299) | (303) | (308) | (1,312) | (1,475) |
| Brokerage, clearance and exchange fees | (84) | (82) | (139) | (363) | (483) |
| Total cost of revenues | (383) | (385) | (447) | (1,675) | (1,958) |
|
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees |
265 | 249 | 241 | 1,025 | 976 |
| Issuer Services revenues | 89 | 85 | 83 | 344 | 330 |
| Market Technology revenues | 46 | 38 | 44 | 152 | 145 |
| Other revenues | -- | -- | 1 | 1 | 2 |
|
Total revenues less transaction rebates, brokerage, clearance and exchange fees |
400 | 372 | 369 | 1,522 | 1,453 |
| Operating Expenses | |||||
| Compensation and benefits | 111 | 102 | 110 | 416 | 412 |
| Marketing and advertising | 6 | 5 | 7 | 20 | 15 |
| Depreciation and amortization | 27 | 25 | 27 | 103 | 104 |
| Professional and contract services | 21 | 18 | 19 | 78 | 76 |
| Computer operations and data communications | 15 | 13 | 16 | 58 | 58 |
| Occupancy | 22 | 23 | 27 | 88 | 81 |
| Regulatory | 9 | 9 | 3 | 35 | 32 |
| Merger and strategic initiatives | 2 | 1 | -- | 4 | 17 |
| General, administrative and other | 12 | 11 | 11 | 89 | 55 |
| Total operating expenses | 225 | 207 | 220 | 891 | 850 |
| Operating income | 175 | 165 | 149 | 631 | 603 |
| Interest income | 2 | 2 | 3 | 9 | 13 |
| Interest expense | (26) | (25) | (25) | (102) | (102) |
| Dividend and investment income | (3) | -- | -- | (3) | 2 |
| Income (loss) from unconsolidated investees, net | -- | 1 | (87) | 2 | (107) |
| Gain on sales of businesses | -- | -- | 12 | -- | 12 |
| Loss on divestiture of businesses | -- | -- | -- | (11) | -- |
| Loss on sale of investment security | -- | -- | -- | -- | (5) |
| Debt conversion expense | -- | -- | -- | -- | (25) |
| Income before income taxes | 148 | 143 | 52 | 526 | 391 |
| Income tax provision | 13 | 43 | 10 | 137 | 128 |
| Net income | 135 | 100 | 42 | 389 | 263 |
| Net loss attributable to noncontrolling interests | 2 | 1 | 1 | 6 | 3 |
| Net income attributable to NASDAQ OMX | $ 137 | $ 101 | $ 43 | $ 395 | $ 266 |
| Basic and diluted earnings per share: | |||||
| Basic earnings per share | $ 0.70 | $ 0.51 | $ 0.20 | $ 1.94 | $ 1.30 |
| Diluted earnings per share | $ 0.69 | $ 0.50 | $ 0.20 | $ 1.91 | $ 1.25 |
| Weighted-average common shares outstanding for earnings per share: | |||||
| Basic | 195 | 200 | 211 | 203 | 205 |
| Diluted | 200 | 204 | 215 | 207 | 215 |
| The NASDAQ OMX Group, Inc. | |||||
| Revenue Detail | |||||
| (in millions) | |||||
| (unaudited) | |||||
| Three Months Ended | Year Ended | ||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |
| 2010 | 2010 | 2009 | 2010 | 2009 | |
| MARKET SERVICES | |||||
| Transaction Services | |||||
| Cash Equity Trading Revenues: | |||||
| U.S. cash equity trading | $ 331 | $ 368 | $ 446 | $ 1,600 | $ 2,010 |
| Cost of revenues: | |||||
| Transaction rebates | (219) | (248) | (286) | (1,094) | (1,394) |
| Brokerage, clearance and exchange fees | (75) | (78) | (131) | (341) | (467) |
| Total U.S. cash equity cost of revenues | (294) | (326) | (417) | (1,435) | (1,861) |
| Net U.S. cash equity trading revenues | 37 | 42 | 29 | 165 | 149 |
| European cash equity trading | 23 | 21 | 23 | 90 | 95 |
| Total net cash equity trading revenues | 60 | 63 | 52 | 255 | 244 |
| Derivative Trading and Clearing Revenues: | |||||
| U.S. derivative trading and clearing | 131 | 93 | 61 | 390 | 232 |
| Cost of revenues: | |||||
| Transaction rebates | (80) | (55) | (22) | (218) | (81) |
| Brokerage, clearance and exchange fees | (9) | (4) | (8) | (22) | (16) |
| Total U.S. derivative trading and clearing cost of revenues | (89) | (59) | (30) | (240) | (97) |
| Net U.S. derivative trading and clearing revenues | 42 | 34 | 31 | 150 | 135 |
| European derivative trading and clearing revenues | 32 | 26 | 26 | 115 | 87 |
| Total net derivative trading and clearing revenues | 74 | 60 | 57 | 265 | 222 |
| Access Services Revenues | 48 | 45 | 41 | 173 | 144 |
| Total Transaction Services revenues less transaction rebates, brokerage, clearance and exchange fees | 182 | 168 | 150 | 693 | 610 |
| Market Data | |||||
| Net U.S. tape plans | 28 | 28 | 33 | 117 | 128 |
| U.S. market data products | 32 | 32 | 31 | 126 | 119 |
| European market data products | 19 | 16 | 20 | 70 | 78 |
| Total Market Data revenues | 79 | 76 | 84 | 313 | 325 |
| Broker Services | 4 | 4 | 6 | 15 | 32 |
| Other Market Services | -- | 1 | 1 | 4 | 9 |
| Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees | 265 | 249 | 241 | 1,025 | 976 |
| ISSUER SERVICES | |||||
| Global Listing Services: | |||||
| Annual renewal fees | 29 | 29 | 29 | 113 | 117 |
| Listing of additional shares fees | 10 | 10 | 10 | 39 | 37 |
| Initial listing fees | 4 | 4 | 5 | 18 | 20 |
| Total U.S. listing fees | 43 | 43 | 44 | 170 | 174 |
| European listing fees | 12 | 12 | 12 | 49 | 45 |
| Corporate solutions | 22 | 18 | 17 | 78 | 72 |
| Total Global Listing Services | 77 | 73 | 73 | 297 | 291 |
| Global Index Group | 12 | 12 | 10 | 47 | 39 |
| Total Issuer Services revenues | 89 | 85 | 83 | 344 | 330 |
| MARKET TECHNOLOGY | |||||
| License, support and facility management revenues | 28 | 27 | 30 | 104 | 106 |
| Delivery project revenues | 5 | 4 | 7 | 17 | 20 |
| Change request, advisory and broker surveillance revenues | 13 | 7 | 7 | 31 | 19 |
| Total Market Technology revenues | 46 | 38 | 44 | 152 | 145 |
| Other | -- | -- | 1 | 1 | 2 |
| Total revenues less transaction rebates, brokerage, clearance and exchange fees | $ 400 | $ 372 | $ 369 | $ 1,522 | $ 1,453 |
| The NASDAQ OMX Group, Inc. | ||
| Consolidated Balance Sheets | ||
| (in millions) | ||
| December 31, | December 31, | |
| 2010 | 2009 | |
| Assets | (unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 315 | $ 594 |
| Restricted cash | 60 | 30 |
| Financial investments, at fair value | 253 | 308 |
| Receivables, net | 298 | 301 |
| Deferred tax assets | 13 | 25 |
| Open clearing contracts: | ||
| Derivative positions, at fair value | 4,037 | 2,054 |
| Resale agreements, at contract value | 3,441 | -- |
| Other current assets | 93 | 58 |
| Total current assets | 8,510 | 3,370 |
| Non-current restricted cash | 105 | 80 |
| Property and equipment, net | 164 | 164 |
| Non-current deferred tax assets | 433 | 504 |
| Goodwill | 5,127 | 4,800 |
| Intangible assets, net | 1,719 | 1,631 |
| Other assets | 149 | 173 |
| Total assets | $ 16,207 | $ 10,722 |
| Liabilities | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $ 142 | $ 125 |
| Section 31 fees payable to SEC | 82 | 137 |
| Accrued personnel costs | 122 | 114 |
| Deferred revenue | 122 | 105 |
| Other current liabilities | 119 | 71 |
| Deferred tax liabilities | 26 | 23 |
| Open clearing contracts: | ||
| Derivative positions, at fair value | 4,037 | 2,054 |
| Repurchase agreements, at contract value | 3,441 | -- |
| Current portion of debt obligations | 140 | 225 |
| Total current liabilities | 8,231 | 2,854 |
| Debt obligations | 2,181 | 1,867 |
| Non-current deferred tax liabilities | 698 | 683 |
| Non-current deferred revenue | 170 | 160 |
| Other liabilities | 198 | 199 |
| Total liabilities | 11,478 | 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 | 3,780 | 3,736 |
| Common stock in treasury, at cost | (796) | (10) |
| Accumulated other comprehensive loss | (272) | (406) |
| Retained earnings | 2,004 | 1,610 |
| Total NASDAQ OMX stockholders' equity | 4,718 | 4,932 |
| Noncontrolling interests | 11 | 12 |
| Total equity | 4,729 | 4,944 |
| Total liabilities, Series A convertible preferred stock and equity | $ 16,207 | $ 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 | |||
| December 31, | September 30, | December 31, | |
| 2010 | 2010 | 2009 | |
| GAAP Net Income attributable to NASDAQ OMX: | $ 137 | $ 101 | $ 43 |
| Adjustments: | |||
| Professional fees | 1 | -- | 2 |
| Technology | 2 | -- | 3 |
| Occupancy | 1 | 2 | 8 |
| Workforce reductions | 2 | 2 | 6 |
| Merger and strategic initiatives | 3 | 1 | -- |
| Asset retirements | -- | 2 | -- |
| Foreign currency revaluation | -- | (3) | -- |
| Regulatory | -- | -- | (3) |
| Gain on sales of businesses | -- | -- | (12) |
| Impairment of unconsolidated investees | -- | -- | 87 |
| Total Adjustments | 9 | 4 | 91 |
| Adjustment to the income tax provision to reflect Non-GAAP adjustments(1) | (3) | (2) | (37) |
| Non-recurring tax items, net | (33) | (2) | 2 |
| Total Adjustments, net of tax | (27) | -- | 56 |
| Non-GAAP Net Income attributable to NASDAQ OMX: | $ 110 | $ 101 | $ 99 |
| GAAP Diluted Earnings per Common Share: | $ 0.69 | $ 0.50 | $ 0.20 |
| Total Adj. from Non-GAAP Net Income Above: | (0.14) | -- | 0.26 |
| Non-GAAP Diluted Earnings per Common Share: | $ 0.55 | $ 0.50 | $ 0.46 |
| Three Months Ended | |||
| December 31, | September 30, | December 31, | |
| 2010 | 2010 | 2009 | |
| GAAP Operating Expenses: | $ 225 | $ 207 | $ 220 |
| Adjustments: | |||
| Professional fees | (1) | -- | (2) |
| Technology | (2) | -- | (3) |
| Occupancy | (1) | (2) | (8) |
| Workforce reductions | (2) | (2) | (6) |
| Merger and strategic initiatives | (3) | (1) | -- |
| Asset retirements | -- | (2) | -- |
| Foreign currency revaluation | -- | 3 | -- |
| Regulatory | -- | -- | 3 |
| Total Adjustments | (9) | (4) | (16) |
| Non-GAAP Operating Expenses | $ 216 | $ 203 | $ 204 |
| (1) We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred. The foreign currency revaluation has no associated tax impact. | |||
| The NASDAQ OMX Group, Inc. | |||||||
| Reconciliation of GAAP to Non-GAAP Operating Income | |||||||
| (in millions) | |||||||
| (unaudited) | |||||||
| Three Months Ended | |||||||
| December 31, | September 30, | December 31, | |||||
| 2010 | 2010 | 2009 | |||||
| GAAP Operating Income: | $ 175 | $ 165 | $ 149 | ||||
| Adjustments: | |||||||
| Professional fees | 1 | -- | 2 | ||||
| Technology | 2 | -- | 3 | ||||
| Occupancy | 1 | 2 | 8 | ||||
| Workforce reductions | 2 | 2 | 6 | ||||
| Merger and strategic initiatives | 3 | 1 | -- | ||||
| Asset retirements | -- | 2 | -- | ||||
| Foreign currency revaluation | -- | (3) | -- | ||||
| Regulatory | -- | -- | (3) | ||||
| Total Adjustments | 9 | 4 | 16 | ||||
| Non-GAAP Operating Income | $ 184 | $ 169 | $ 165 | ||||
| Total revenues less transaction rebates, brokerage, clearance and exchange fees | $ 400 | $ 372 | $ 369 | ||||
| Non-GAAP Operating Margin (1) | 46% | 45% | 45% | ||||
| (1) Non-GAAP Operating Margin equals Non-GAAP Operating Income divided by total revenues less transaction rebates, brokerage, clearance, and exchange fees. | |||||||
| The NASDAQ OMX GROUP, Inc. | |||
| Quarterly Key Drivers Detail | |||
| (unaudited) | |||
| Three Months Ended | |||
| December 31, | September 30, | December 31, | |
| 2010 | 2010 | 2009 | |
| Market Services | |||
| Cash Equity Trading | |||
| NASDAQ securities | |||
| Average daily share volume (in billions) | 1.89 | 2.02 | 2.06 |
| Matched market share executed on NASDAQ | 27.5% | 29.0% | 31.1% |
| Matched market share executed on NASDAQ OMX BX | 1.8% | 2.5% | 2.7% |
| Market share reported to the FINRA/NASDAQ | |||
| Trade Reporting Facility(1) | 32.5% | 30.4% | 38.0% |
| Total market share (2) | 62.3% | 61.9% | 71.8% |
| NYSE securities | |||
| Average daily share volume (in billions) | 4.31 | 4.24 | 4.72 |
| Matched market share executed on NASDAQ | 11.9% | 13.8% | 15.0% |
| Matched market share executed on NASDAQ OMX BX | 2.2% | 3.5% | 4.1% |
| Market share reported to the FINRA/NASDAQ | |||
| Trade Reporting Facility(1) | 30.0% | 27.0% | 33.2% |
| Total market share (2) | 44.6% | 44.3% | 52.3% |
| NYSE Amex and regional securities | |||
| Average daily share volume (in billions) | 1.22 | 1.29 | 1.43 |
| Matched market share executed on NASDAQ | 17.7% | 21.0% | 23.5% |
| Matched market share executed on NASDAQ OMX BX | 3.2% | 3.3% | 2.4% |
| Market share reported to the FINRA/NASDAQ | |||
| Trade Reporting Facility(1) | 26.5% | 25.1% | 32.9% |
| Total market share (2) | 48.0% | 49.4% | 58.8% |
| Total U.S.-listed equities | |||
| Average daily share volume (in billions) | 7.42 | 7.55 | 8.21 |
| Matched share volume (in billions) | 93.1 | 107.8 | 126.1 |
| Matched market share executed on NASDAQ | 16.8% | 19.1% | 20.6% |
| Matched market share executed on NASDAQ OMX BX | 2.3% | 3.2% | 3.4% |
| NASDAQ OMX Nordic and NASDAQ OMX Baltic Markets | |||
| Average daily number of equity trades | 274,776 | 263,965 | 219,811 |
| Average daily value of shares traded (in billions) | $ 3.2 | $ 2.8 | $ 3.3 |
| Derivative Trading and Clearing | |||
| U.S. Equity Options Contracts | |||
| Total industry average daily volume (in millions) | 15.1 | 12.5 | 12.9 |
| Matched market share: | |||
| NASDAQ OMX PHLX | 26.5% | 23.7% | 19.4% |
| The NASDAQ Options Market | 4.9% | 5.1% | 3.1% |
| NASDAQ OMX Nordic and NASDAQ OMX Baltic Markets | |||
| Average daily volume: | |||
| Options, futures and fixed-income contracts | 436,253 | 398,014 | 363,347 |
| Equity options contracts traded on EDX London(3) | -- | -- | 51,498 |
| Finnish option contracts traded on Eurex | 99,716 | 124,553 | 86,381 |
| NASDAQ OMX Commodities | |||
| Clearing Turnover: | |||
| Power contracts (TWh)(4) | 529 | 382 | 599 |
| Carbon contracts (1000 tCO2)(4) | 5,582 | 4,482 | 12,094 |
| Issuer Services | |||
| NASDAQ | |||
| Initial public offerings | 34 | 17 | 18 |
| New listings (5) | 54 | 41 | 64 |
| Number of listed companies (6) | 2,778 | 2,805 | 2,852 |
| NASDAQ OMX Nordic and NASDAQ OMX Baltic Markets | |||
| Initial public offerings | 3 | 1 | 1 |
| New listings (7) | 9 | 4 | 3 |
| Number of listed companies (8) | 780 | 780 | 797 |
| Market Technology | |||
| Order intake (in millions)(9) | $ 71 | $ 27 | $ 148 |
| Total order value (in millions)(10) | $ 495 | $ 446 | $ 417 |
| (1) Transactions reported to the Financial Industry Regulatory Authority, or FINRA, FINRA/NASDAQ Trade Reporting Facility. | |||
| (2) Includes transactions executed on both NASDAQ's, NASDAQ OMX BX's and NASDAQ OMX PSX'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) New listings include IPOs and represent companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets, NASDAQ OMX First North. | |||
| (8) 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. | |||
| (9) Total contract value of orders signed. | |||
| (10) Represents total contract value of orders signed that are yet to be recognized as revenue. | |||
CONTACT:The NASDAQ OMX Group, Inc. Media Relations:Frank DeMaria +1.212.231.5183 Investor Relations:Vincent Palmiere +1.212.401.8742
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