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Press release from GlobeNewswire (a Nasdaq OMX company)

NASDAQ OMX Reports First Quarter 2013 Results

Wednesday, April 24, 2013

NASDAQ OMX Reports First Quarter 2013 Results

04:00 EDT Wednesday, April 24, 2013
  • First quarter 2013 non-GAAP diluted EPS of $0.64, tied for the second highest quarterly performance in company history; first quarter 2013 GAAP diluted EPS of $0.25.
  • First quarter 2013 net exchange revenues1 were $418 million, up 1% from the prior year quarter.
  • Non-transaction based revenues were 72% of our first quarter 2013 net exchange revenues, compared to 69% in the prior year quarter, and increased 5% from the prior year quarter.
  • First quarter 2013 non-GAAP operating expenses of $237 million increased 2% from the prior year quarter.
  • Beginning in 2013, we realigned our reportable segments as a result of changes to the organizational structure of our businesses.

NEW YORK, April 24, 2013 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today reported results for the first quarter of 2013. First quarter net exchange revenues were $418 million, up from $414 million in the prior year period, driven by increases in our Global Technology Solutions and Global Information Services segments, partially offset by lower U.S. cash equity trading revenues. On an organic basis (constant currency and excluding acquisitions) first quarter net exchange revenues decreased 2% year-over-year.

Operating expenses were $328 million in the first quarter of 2013, compared to $243 million in the prior year quarter. On a non-GAAP basis, first quarter 2013 operating expenses were $237 million, up 2% as compared to the prior year quarter. On an organic basis (constant currency and excluding acquisitions), first quarter non-GAAP operating expenses fell 3% year-over-year.

First quarter 2013 non-GAAP diluted earnings per share were $0.64, up $0.03 compared to the prior year quarter. Non-GAAP diluted earnings per share in the first quarter of 2013 exclude $62 million of expenses accrued for the one-time voluntary accommodation program. This program, which was approved by the SEC on March 22, 2013, expands the pool available to compensate members of the NASDAQ Stock Market for qualified losses arising directly from the system issues experienced with the Facebook IPO that occurred on May 18, 2012.

As previously disclosed, the staff of the SEC's Division of Enforcement is conducting an investigation relating to these systems issues. Although the Commission has not reached a final conclusion, NASDAQ OMX may pay $10 million in connection with the potential resolution of this matter. As a result, non-GAAP diluted earnings per share in the first quarter of 2013 also exclude $10 million of expenses accrued for this estimated liability.

Non-GAAP diluted earnings per share in the first quarter of 2013 further exclude $10 million of non-cash asset impairment charges, $9 million of restructuring charges, $8 million of merger and strategic initiatives expenses, and $2 million of special legal expenses. On a GAAP basis, net income attributable to NASDAQ OMX for the first quarter of 2013 was $42 million, or $0.25 per diluted share, compared with $85 million, or $0.49 per diluted share, in the prior year quarter.

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

"The successful execution of our strategy has delivered solid first quarter results," said Bob Greifeld, CEO, NASDAQ OMX. "While the volume environment remained challenging, our portfolio of corporate, trading, technology, and information businesses continue to deliver consistent revenue and earnings performance. We remain focused on helping our clients manage the growing complexity and connectivity, which is required to optimize today's global business environment, by delivering products and services that enhance efficiency and productivity in the environments in which they operate."

Mr. Greifeld continued, "Looking forward in 2013, while we are confident that a recovering economy and increasing investor confidence will eventually lead to stronger tailwinds for our businesses, our diverse client base of investors, financial institutions, exchanges, and regulators, and public and private companies, are not waiting idly by, and are actively looking for solutions that deliver a more effective means of interacting with the capital markets. As such, we continue to dedicate significant resources towards both organic initiatives, in particular our growing GIFT program, as well as strategic acquisitions, to enhance the options and opportunities inherent in our global offering."

Lee Shavel, EVP and CFO, NASDAQ OMX said:

"We have realigned our business to better serve our customers and our revised business segments are intended to improve the transparency of our business model for investors. We have combined our Corporate Solutions and Market Technologies businesses to highlight the combined scale of our financial software businesses which will be further enhanced by the acquisition of the Thomson Reuters Corporate Services Business. Similarly, we have combined our Market Data and Index businesses to emphasize the strength of our information services businesses. The revenue and operating profit disclosures for these segments will facilitate comparisons to companies with similar revenue and profitability dynamics."

Mr. Shavel continued, "While we have delivered substantial value to shareholders through our share repurchases and dividends, we will be focused in the near-term on reducing the leverage associated with our recently announced acquisitions of Thomson Reuters Corporate Services and eSpeed. Utilizing our strong and consistent cash flow, we believe NASDAQ OMX will return to pre-transaction leverage ratios within a year from closing these transactions. We remain focused on delivering on the objectives we set for the eSpeed and the Thomson Reuters Corporate Services businesses and believe they represent significant strategic and financial opportunities for our shareholders."

At March 31, 2013, the company had cash and cash equivalents of $591 million and total debt of $1,966 million, resulting in net debt of $1,375 million.  This compares to net debt of $1,479 million at December 31, 2012. During the first quarter of 2013, the company repurchased 0.3 million shares of outstanding common stock under a share repurchase program, for a total of $10 million. Since January 2010, NASDAQ OMX has repurchased $1,182 million of outstanding common stock, representing 53.7 million shares at an average price of $22.03.

BUSINESS HIGHLIGHTS

Market Services (43% of total net exchange revenues) - Net exchange revenues were $182 million in the first quarter of 2013, down $8 million when compared to the first quarter of 2012.

Cash Equities (11% of total net exchange revenues) – Total net cash equity trading revenues were $45 million in the first quarter of 2013, down $8 million compared to the first quarter of 2012. The decline was due to lower industry volumes, both in the U.S. and in Europe, as well as lower market share, in particular in the U.S.

Derivatives (17% of total net exchange revenues) – Total net derivative trading and clearing revenues were $74 million in the first quarter of 2013, down $1 million compared to the first quarter of 2012. Net U.S. derivative trading and clearing revenues increased 5% year-over-year due to market share gains and positive revenue capture per traded contract. European derivative trading and clearing revenues declined $3 million on lower rate per contract in equity derivatives due to pricing incentives aimed at capturing OTC volume and lower fixed income volumes, partially offset by higher commodity revenues and a favorable impact from foreign exchange of $1 million.

Access and Broker Services (15% of total net exchange revenues) – Access and broker services revenues totaled $63 million in the first quarter of 2013, up $1 million compared to the first quarter of 2012.  The increase was primarily driven by the uptake of new products including 40G connectivity.

Information Services (26% of total net exchange revenues) – Revenues were $108 million in the first quarter of 2013, up $6 million from the first quarter of 2012.

Market Data (22% of total net exchange revenues) – Total market data revenues were $91 million in the first quarter of 2013, up $4 million from the first quarter of 2012. U.S. market data products contributed the largest part of the increase, as a result of increased sales of proprietary products like Totalview and NASDAQ Basic, price increases to Level 2 products, and higher audit collections, partially offset by lower net U.S. tape plan revenues. Index data products also grew, while European market data products were flat. 

Index Licensing and Services (4% of total net exchange revenues) – Index licensing and services revenues were $17 million in the first quarter of 2013, up $2 million from the first quarter of 2012. The revenue increase was split between growth in the value of assets in licensed products and from the acquisition of the index business of Mergent Inc., including Indxis.

Technology Solutions (18% of total net exchange revenues) - Revenues were $73 million in the first quarter of 2013, up $7 million from the first quarter of 2012.

Corporate Solutions (6% of total net exchange revenues) – Total corporate solutions revenues were $24 million in the first quarter of 2013, up $3 million from the first quarter of 2012. Corporate solutions revenues growth was primarily due to strong performance in Shareholder.com, GlobeNewswire, and Directors Desk products. 

Market Technology (12% of total net exchange revenues) – Market technology revenues were $49 million in the first quarter of 2013, up $4 million from the first quarter of 2012. The revenue increase is primarily due to revenues from BWise, which we acquired in the second quarter of 2012. Order intake in the first quarter of 2013 decreased, from $55 million in the first quarter of 2012 to $19 million in the first quarter of 2013, as several customer purchasing decisions were delayed. The order backlog remains higher year-over-year.

Listing Services (13% of total net exchange revenues) – Revenues were $55 million in the first quarter of 2013, down $1 million compared to the first quarter of 2012. The decrease was driven by a decrease in U.S. listing revenues, driven by lower initial listing fees, partially offset by an increase in European listing revenues.

COST GUIDANCE – For the full year of 2013, core operating expenses are expected to be in the range of $910 million to $930 million, with an additional $50 million to $60 million in incremental new initiative spending, and $12 million related to a 2013 accounting reclassification of certain Corporate Solutions expenses that were previously netted in revenue, resulting in total operating expenses in the range of $972 million to $1,002 million. This guidance excludes expenses related to our previously announced cost reduction plan, expenses for the voluntary accommodation program, the SEC matter, special legal expenses, and the expenses associated with the announced acquisitions of eSpeed and the IR, PR, and Multimedia Solutions businesses from Thomson Reuters.   

CORPORATE HIGHLIGHTS

  • Agreement to acquire eSpeed. On April 1, 2013, NASDAQ OMX announced an agreement with BGC Partners, Inc., to acquire the eSpeed platform for trading U.S. Treasuries. Following the closing of the transaction, which is subject to regulatory approval, NASDAQ OMX intends to leverage its strong technology experience and leading distribution capabilities to further develop eSpeed's leading marketplace, while enjoying the structural tailwinds of a growing U.S. Treasury market.
  • Joint venture with SharesPost announced to form NASDAQ Private Market. NASDAQ OMX and SharesPost announced a NASDAQ OMX majority owned joint venture that will establish the preeminent marketplace for private growth companies. The NASDAQ Private Market (NPM) will provide improved access to liquidity for early investors, founders, and employees, while enabling the efficient buying and selling of private company shares. NPM is expected to launch later in 2013, pending regulatory approvals.
  • Combination of Market Technology and Corporate Solutions businesses. NASDAQ OMX combined the Market Technology and Corporate Solutions businesses, which are now included under the Technology Solutions segment and are led by Anna Ewing, Executive Vice President, Technology Solutions. The combination enables increased customer focus, growth across the company's technology businesses and a dedicated software and technology management structure. 
  • Combination of Data Products and Index Group businesses. NASDAQ OMX combined the Data Products and Index Group businesses, which are now included under the Global Information Services segment and are led by John Jacobs, Executive Vice President, Global Information Services. The combination enables greater customer focus and leverage of NASDAQ OMX's scalable technology, product innovation and robust distribution channels. 

About NASDAQ OMX Group

The inventor of the electronic exchange, The NASDAQ OMX Group, Inc., fuels economies and provides transformative technologies for the entire lifecycle of a trade - from risk management to trade to surveillance to clearing. In the U.S. and Europe, we own and operate 23 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed income, derivatives, commodities, futures and structured products. Able to process more than 1 million messages per second at sub-40 microsecond speeds with 99.99+% uptime, our technology drives more than 70 marketplaces in 50 developed and emerging countries into the future, powering 1 in 10 of the world's securities transactions. Our award-winning data products and worldwide indexes are the benchmarks in the financial industry. Home to over 3,300 listed companies worth more than $6 trillion in market cap whose innovations shape our world, we give the ideas of tomorrow access to capital today. Welcome to where the world takes a big leap forward, daily. Welcome to the NASDAQ OMX Century. To learn more, visit www.nasdaqomx.com. Follow us on Facebook (www.facebook.com/NASDAQ) and Twitter (www.twitter.com/nasdaqomx). (Symbol: NDAQ and member of S&P 500)

Non-GAAP Information

In addition to disclosing results determined in accordance with GAAP, NASDAQ OMX also discloses certain non-GAAP results of operations, including, but not limited to, net income attributable to NASDAQ OMX, diluted earnings per share, net exchange revenues, 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 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, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain strategic and capital return 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 and 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.

NDAQF

 The NASDAQ OMX Group, Inc. 
 Condensed Consolidated Statements of Income 
 (in millions, except per share amounts) 
 (unaudited) 
       
   Three Months Ended 
   March 31,   December 31,   March 31, 
   2013   2012   2012 
 Revenues:       
 Market Services   $ 508  $ 520  $ 580
 Cost of revenues:       
 Transaction rebates   (242)  (249)  (306)
 Brokerage, clearance and exchange fees   (84)  (84)  (84)
 Total cost of revenues   (326)  (333)  (390)
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees   182  187  190
       
 Listing Services   55  57  56
 Information Services   108  99  102
 Technology Solutions   73  79  66
       
 Revenues less transaction rebates, brokerage, clearance and exchange fees   418  422  414
 Operating Expenses:       
 Compensation and benefits   117  116  112
 Marketing and advertising   7  7  6
 Depreciation and amortization   27  27  26
 Professional and contract services   29  29  25
 Computer operations and data communications   15  10  17
 Occupancy   22  25  23
 Regulatory   7  7  9
 Merger and strategic initiatives   8  4  2
 Restructuring and other charges   9  8  9
 General, administrative and other   25  14  14
 Voluntary accommodation program   62  --   -- 
 Total operating expenses   328  247  243
       
 Operating income   90  175  171
       
 Interest income   3  3  2
 Interest expense   (24)  (25)  (24)
 Asset impairment charges   (10)  --   (12)
 Income before income taxes   59  153  137
       
 Income tax provision   17  69  53
       
 Net income   42  84  84
       
 Net loss attributable to noncontrolling interests   --   1  1
       
 Net income attributable to NASDAQ OMX   $ 42  $ 85  $ 85
       
 Basic and diluted earnings per share:       
 Basic earnings per share   $ 0.26  $ 0.52  $ 0.49
 Diluted earnings per share   $ 0.25  $ 0.50  $ 0.48
 Cash dividends declared per common share   $ 0.13  $ 0.13  $ -- 
       
 Weighted-average common shares outstanding for earnings per share:       
 Basic   165.7  164.5  173.0
 Diluted   169.7  169.1  177.5
 
 
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
(unaudited)
       
   Three Months Ended 
   March 31,   December 31,   March 31, 
   2013   2012   2012 
MARKET SERVICES       
Cash Equity Trading Revenues:     
U.S. cash equity trading   $ 276  $ 283  $ 340
Cost of revenues:       
Transaction rebates   (180)  (180)  (235)
Brokerage, clearance and exchange fees   (73)  (74)  (75)
Total U.S. cash equity cost of revenues   (253)  (254)  (310)
Net U.S. cash equity trading revenues  23  29  30
European cash equity trading   22  18  23
Total net cash equity trading revenues  45  47  53
       
Derivative Trading and Clearing Revenues:     
U.S. derivative trading and clearing   117  124  122
Cost of revenues:       
 Transaction rebates   (62)  (69)  (71)
 Brokerage, clearance and exchange fees   (11)  (10)  (9)
 Total U.S. derivative trading and clearing cost of revenues   (73)  (79)  (80)
 Net U.S. derivative trading and clearing revenues  44  45  42
European derivative trading and clearing revenues   30  30  33
Total net derivative trading and clearing revenues  74  75  75
       
Access and Broker Services Revenues   63  65  62
       
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees   182  187  190
       
LISTING SERVICES       
U.S. listing services   42  44  44
European listing services   13  13  12
       
Total Listing Services revenues  55  57  56
       
INFORMATION SERVICES       
Market Data Revenues:       
U.S. market data products   63  60  60
European market data products   21  17  21
Index data products   7  6  6
       
Total Market Data revenues  91  83  87
       
Index Licensing and Services Revenues   17  16  15
       
Total Information Services revenues   108  99  102
       
TECHNOLOGY SOLUTIONS       
Corporate Solutions Revenues   24  25  21
       
Market Technology Revenues:       
Software license and support   37  36  36
Change request and advisory   6  12  4
Software as a service   6  6  5
Total Market Technology revenues   49  54  45
       
Total Technology Solutions revenues   73  79  66
       
Total revenues less transaction rebates, brokerage, clearance and exchange fees   $ 418  $ 422  $ 414
 
 
 
The NASDAQ OMX Group, Inc.
Consolidated Balance Sheets 
(in millions)
     
  March 31, December 31,
  2013 2012
Assets (unaudited)  
Current assets:    
Cash and cash equivalents  $ 591  $ 497
Restricted cash  83  85
Financial investments, at fair value  218  223
Receivables, net  317  333
Deferred tax assets  46  33
Default funds and margin deposits  229  209
Other current assets  124  112
Total current assets  1,608  1,492
Non-current restricted cash  25  25
Property and equipment, net  215  211
Non-current deferred tax assets  291  294
Goodwill 5,309 5,335
Intangible assets, net  1,619  1,650
Other non-current assets  121  125
Total assets  $ 9,188  $ 9,132
     
Liabilities     
Current liabilities:    
Accounts payable and accrued expenses  $ 217  $ 172
Section 31 fees payable to SEC  71  97
Accrued personnel costs  59  111
Deferred revenue  250  139
Other current liabilities  116  119
Deferred tax liabilities  35  35
Default funds and margin deposits  229  209
Current portion of debt obligations  137  136
Total current liabilities  1,114  1,018
Debt obligations  1,829  1,840
Non-current deferred tax liabilities  702  713
Non-current deferred revenue  148  156
Other non-current liabilities  192  196
Total liabilities  3,985  3,923
     
Commitments and contingencies     
Equity    
NASDAQ OMX stockholders' equity:    
Common stock  2  2
Additional paid-in capital  3,776  3,771
Common stock in treasury, at cost  (1,059)  (1,058)
Accumulated other comprehensive loss  (218)  (185)
Retained earnings  2,699  2,678
Total NASDAQ OMX stockholders' equity  5,200  5,208
Noncontrolling interests  3  1
Total equity  5,203  5,209
Total liabilities and equity  $ 9,188  $ 9,132
 
 
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 
  March 31, December 31, March 31,
   2013   2012   2012 
GAAP net income attributable to NASDAQ OMX:  $ 42  $ 85  $ 85
       
Non-GAAP adjustments:      
       
Voluntary accommodation program  62  --   -- 
Reserve for Securities and Exchange Commission matter  10  --   -- 
Merger and strategic initiatives  8  4  2
Restructuring charges  9  8  9
Asset impairment charges  10  --   12
Special legal expenses  2  2  -- 
Sublease reserve  --   3  -- 
Value added tax refund  --   (7)  -- 
Other  --   1  -- 
Total non-GAAP adjustments  101  11  23
       
Adjustment to the income tax provision to reflect non-GAAP adjustments(1)  (35)  (5)  (3)
Significant tax adjustments, net  --   17  3
Total non-GAAP adjustments, net of tax  66  23  23
       
Non-GAAP net income attributable to NASDAQ OMX:  $ 108  $ 108  $ 108
       
GAAP diluted earnings per share:  $ 0.25  $ 0.50  $ 0.48
Total adjustments from non-GAAP net income above  0.39  0.14  0.13
       
Non-GAAP diluted earnings per share:  $ 0.64  $ 0.64  $ 0.61
       
   Three Months Ended 
  March 31, December 31, March 31,
   2013   2012   2012 
       
GAAP operating income:  $ 90  $ 175  $ 171
       
Non-GAAP adjustments:      
       
 Voluntary accommodation program  62  --   -- 
 Reserve for Securities and Exchange Commission matter  10  --   -- 
 Merger and strategic initiatives  8  4  2
 Restructuring charges  9  8  9
 Special legal expenses  2  2  -- 
 Sublease reserve  --   3  -- 
 Value added tax refund  --   (7)  -- 
 Other  --   1  -- 
 Total non-GAAP adjustments  91  11  11
       
Non-GAAP operating income  $ 181  $ 186  $ 182
       
Total Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees   $ 418  $ 422  $ 414
       
Non-GAAP operating margin (2) 43% 44% 44%
       
(1) We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred. 
(2) Non-GAAP operating margin equals non-GAAP operating income divided by Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees. 
       
 
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 
  March 31, December 31, March 31,
   2013   2012   2012 
       
GAAP operating expenses:  $ 328  $ 247  $ 243
       
Non-GAAP adjustments:      
       
Voluntary accommodation program  (62)  --   -- 
Reserve for Securities and Exchange Commission matter  (10)  --   -- 
Merger and strategic initiatives  (8)  (4)  (2)
Restructuring charges  (9)  (8)  (9)
Special legal expenses  (2)  (2)  -- 
Sublease reserve  --   (3)  -- 
Value added tax refund  --   7  -- 
Other  --   (1)  -- 
Total non-GAAP adjustments  (91)  (11)  (11)
       
Non-GAAP operating expenses  $ 237  $ 236  $ 232
 
 
 
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues(1) and Operating Expenses 
to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues(1) and Operating Expenses
(in millions)
(unaudited)
               
   Three Months Ended   Year Ended 
  March 31, June 30, September 30, December 31, December 31, December 31, December 31,
   2012   2012   2012   2012   2012   2011   2010 
               
GAAP revenues less transaction rebates, brokerage, clearance and exchange fees:  $ 414  $ 427  $ 412  $ 422  $ 1,674  $ 1,690  $ 1,522
               
Non-GAAP adjustments:              
               
Income from open positions relating to the operations of the Exchange  --   (11)  --   --   (11)  --   
Total non-GAAP adjustments  --   (11)  --   --   (11)  --   -- 
               
Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees:  $ 414  $ 416  $ 412  $ 422  $ 1,663  $ 1,690  $ 1,522
               
               
   Three Months Ended   Year Ended 
  March 31, June 30, September 30, December 31, December 31, December 31, December 31,
   2012   2012   2012   2012   2012   2011   2010 
               
GAAP operating expenses:  $ 243  $ 252  $ 242  $ 247  $ 984  $ 994  $ 891
               
Non-GAAP adjustments:              
               
Merger and strategic initiatives  (2)  (1)  3  (4)  (4)  (38)  (4)
Restructuring charges  (9)  (17)  (10)  (8)  (44)  --   -- 
Extinguishment of debt  --   --   --   --   --   (31)  (40)
Special legal expenses  --   --   (4)  (2)  (7)  --   -- 
Sublease reserve  --   --   --   (3)  (3)  --   (5)
Value added tax refund  --   --   --   7  7  --   -- 
Asset retirements   --   --   --   --   --   --   (2)
Workforce reductions  --   --   --   --   --   --   (9)
Other  --   (2)  --   (1)  (4)  (4)  (5)
Total non-GAAP adjustments  (11)  (20)  (11)  (11)  (55)  (73)  (65)
               
Non-GAAP operating expenses  $ 232  $ 232  $ 231  $ 236  $ 929  $ 921  $ 826
               
(1) Represents revenues less transaction rebates, brokerage, clearance and exchange fees. 
 
The NASDAQ OMX Group, Inc.
Quarterly Key Drivers Detail
(unaudited)
       
  Three Months Ended
   March 31,   December 31,   March 31, 
   2013   2012   2012 
Market Services      
Cash Equity Trading      
NASDAQ securities      
Total average daily share volume (in billions) 1.82 1.74 1.80
Matched market share executed on NASDAQ 23.1% 23.6% 26.3%
Matched market share executed on NASDAQ OMX BX 2.5% 2.6% 2.6%
Matched market share executed on NASDAQ OMX PSX 0.9% 1.3% 1.3%
Market share reported to the FINRA/NASDAQ     
Trade Reporting Facility 35.7% 33.2% 33.2%
Total market share (1) 62.2% 60.6% 63.4%
       
New York Stock Exchange, or NYSE securities    
Total average daily share volume (in billions) 3.56 3.39 3.91
Matched market share executed on NASDAQ 11.6% 11.5% 13.4%
Matched market share executed on NASDAQ OMX BX 2.4% 2.5% 2.5%
Matched market share executed on NASDAQ OMX PSX 0.5% 0.7% 0.7%
Market share reported to the FINRA/NASDAQ     
Trade Reporting Facility 32.7% 30.0% 31.5%
Total market share (1) 47.2% 44.7% 48.2%
       
NYSE MKT and regional securities    
Total average daily share volume (in billions) 0.99 0.97 1.12
Matched market share executed on NASDAQ 13.1% 14.1% 19.0%
Matched market share executed on NASDAQ OMX BX 2.8% 2.9% 2.3%
Matched market share executed on NASDAQ OMX PSX 1.4% 1.6% 1.9%
Market share reported to the FINRA/NASDAQ     
Trade Reporting Facility 33.1% 30.6% 29.4%
Total market share (1) 50.3% 49.3% 52.6%
       
Total U.S.-listed securities      
Total average daily share volume (in billions)  6.38  6.09  6.83
Matched share volume (in billions)  70.3  71.6  90.1
Matched market share executed on NASDAQ 15.1% 15.4% 17.7%
Matched market share executed on NASDAQ OMX BX 2.5% 2.6% 2.5%
Matched market share executed on NASDAQ OMX PSX 0.8% 1.0% 1.1%
Total market share  18.4% 19.0% 21.3%
       
NASDAQ OMX Nordic and NASDAQ OMX Baltic Securities  
Average daily number of equity trades 317,069 273,330  372,081
Total average daily value of shares traded (in billions)  $ 4.4  $ 3.4  $ 4.6
Total market share 68.8% 68.2% 70.0%
       
Derivative Trading and Clearing    
U.S. Equity Options      
Total industry average daily volume (in millions) 15.0 14.3  15.9
NASDAQ OMX PHLX matched market share 20.7% 21.9% 22.2%
The NASDAQ Options Market matched market share 7.9% 6.2% 5.2%
NASDAQ OMX BX Options matched market share 1.0% 1.0%  -- 
Total market share 29.6% 29.1% 27.4%
       
NASDAQ OMX Nordic and NASDAQ OMX Baltic    
Average daily volume:      
Options, futures and fixed-income contracts 446,789 379,905  470,216
Finnish option contracts traded on Eurex 144,905 107,373  71,411
       
NASDAQ OMX Commodities      
Power contracts cleared (TWh)(2)  460  453  521
       
Listing Services      
Initial public offerings      
NASDAQ 18 19 21
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic  --  4 1
       
New listings      
NASDAQ (3) 33 46 43
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (4) 4 9 3
       
Number of listed companies      
NASDAQ (5)  2,568  2,577  2,665
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (6)  752  754  769
       
Technology Solutions      
Order intake (in millions)(7)  $ 19  $ 95  $ 55
Total order value (in millions)(8)  $ 524  $ 546  $ 496
       
(1) Includes transactions executed on NASDAQ's, NASDAQ OMX BX's and NASDAQ OMX PSX's systems plus trades reported through the FINRA/NASDAQ Trade Reporting Facility.
(2) Primarily transactions executed on Nord Pool ASA and reported for clearing to NASDAQ OMX Commodities measured by Terawatt hours (TWh) . 
(3) 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.
(4) 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 of NASDAQ OMX First North.
(5) Number of listed companies for NASDAQ at period end, including separately listed ETFs.
(6) Represents companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets of NASDAQ OMX First North at period end.
(7) Total contract value of orders signed during the period. 
(8) Represents total contract value of orders signed that are yet to be recognized as revenue. 
 
 
 The NASDAQ OMX Group, Inc. 
 Condensed Consolidated Statements of Income 
 (in millions, except per share amounts) 
               
   Three Months Ended   Year Ended 
   
March 31, 
 
June 30, 
 September 30,   December 31,   December 31,   December 31,   December 31, 
   2012   2012   2012   2012   2012   2011   2010 
 Revenues:  (unaudited) (unaudited) (unaudited) (unaudited)      
 Market Services   $ 580  $ 587  $ 519  $ 520  $ 2,206  $ 2,553  $ 2,387
 Cost of revenues:               
 Transaction rebates   (306)  (299)  (250)  (249)  (1,104)  (1,344)  (1,312)
 Brokerage, clearance and exchange fees   (84)  (89)  (84)  (84)  (342)  (404)  (363)
 Total cost of revenues   (390)  (388)  (334)  (333)  (1,446)  (1,748)  (1,675)
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees   190  199  185  187  760  805  712
               
 Listing Services   56  55  55  57  224  236  229
 Information Services   102  106  99  99  406  391  365
 Technology Solutions   66  67  73  79  284  258  215
 Other   --   --   --   --   --   --   1
               
Revenues less transaction rebates, brokerage,  clearance and exchange fees   414  427  412  422  1,674  1,690  1,522
Operating Expenses:               
Compensation and benefits   112  113  113  116  454  458  412
Marketing and advertising   6  6  6  7  26  24  20
Depreciation and amortization   26  25  26  27  104  109  103
Professional and contract services   25  26  27  29  107  91  78
Computer operations and data communications   17  17  18  10  60  65  58
Occupancy   23  23  22  25  93  91  88
Regulatory   9  9  8  7  34  35  35
Merger and strategic initiatives   2  1  (3)  4  4  38  4
Restructuring and other charges   9  17  10  8  44  --   -- 
General, administrative and other   14  15  15  14  58  83  93
 Total operating expenses   243  252  242  247  984  994  891
Operating income   171  175  170  175  690  696  631
               
 Interest income   2  2  2  3  10  11  9
 Interest expense   (24)  (24)  (24)  (25)  (97)  (119)  (102)
 Asset impairment charges   (12)  (28)  --   --   (40)  (18)  -- 
 Loss on divestiture of business   --   --   (14)  --   (14)  --   (11)
 Income (loss) from unconsolidated investees   --   --   --   --   (1)  2  2
 Dividend and investment income   --   --   --   --   --   1  (3)
               
 Income before income taxes   137  125  134  153  548  573  526
               
 Income tax provision   53  33  45  69  199  190  137
               
 Net income   $ 84  $ 92  $ 89  $ 84  $ 349  $ 383  $ 389
               
 Net loss attributable to noncontrolling interests   1  1  --   1  3  4  6
               
 Net income attributable to NASDAQ OMX   $ 85  $ 93  $ 89  $ 85  $ 352  $ 387  $ 395
               
 Basic and diluted earnings per share:               
 Basic earnings per share   $ 0.49  $ 0.55  $ 0.53  $ 0.52  $ 2.09  $ 2.20  $ 1.94
 Diluted earnings per share   $ 0.48  $ 0.53  $ 0.52  $ 0.50  $ 2.04  $ 2.15  $ 1.91
 Cash dividends declared per common share   $ --   $ 0.13  $ 0.13  $ 0.13  $ 0.39  $ --   $ -- 
               
                
Weighted-average common shares outstanding for earnings per share:               
 Basic   173.0  169.4  166.2  164.5  168.3  176.3  203.0
 Diluted   177.5  173.4  170.5  169.1  172.6  180.0  207.0
 
 
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
               
  Three Months Ended Year Ended
   
March 31, 
 
June 30, 
 September 30,   December 31,   December 31,   December 31,   December 31, 
   2012   2012   2012   2012   2012   2011   2010 
MARKET SERVICES  (unaudited) (unaudited) (unaudited) (unaudited)      
Cash Equity Trading Revenues:             
U.S. cash equity trading   $ 340  $ 373  $ 297  $ 283  $ 1,294  $ 1,617  $ 1,600
Cost of revenues:               
Transaction rebates   (235)  (246)  (193)  (180)  (854)  (1,087)  (1,094)
Brokerage, clearance and exchange fees   (75)  (83)  (75)  (74)  (308)  (375)  (341)
Total U.S. cash equity cost of revenues   (310)  (329)  (268)  (254)  (1,162)  (1,462)  (1,435)
Net U.S. cash equity trading revenues  30  44  29  29  132  155  165
European cash equity trading   23  19  18  18  80  95  90
Total net cash equity trading revenues  53  63  47  47  212  250  255
               
Derivative Trading and Clearing Revenues:             
U.S. derivative trading and clearing   122  103  110  124  458  471  390
Cost of revenues:               
 Transaction rebates  (71)  (53)  (57)  (69)  (250)  (257)  (218)
 Brokerage, clearance and exchange fees  (9)  (6)  (9)  (10)  (34)  (29)  (22)
 Total U.S. derivative trading and clearing cost of revenues  (80)  (59)  (66)  (79)  (284)  (286)  (240)
 Net U.S. derivative trading and clearing revenues  42  44  44  45  174  185  150
European derivative trading and clearing revenues   33  26  28  30  117  128  115
Total net derivative trading and clearing revenues  75  70  72  75  291  313  265
               
Access and Broker Services Revenues   62  66  66  65  257  242  188
               
Other Market Services Revenues   --   --   --   --   --   --   4
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees   190  199  185  187  760  805  712
               
LISTING SERVICES               
U.S. listing services   44  43  43  44  174  181  178
European listing services   12  12  12  13  50  55  51
               
Total Listing Services revenues  56  55  55  57  224  236  229
               
INFORMATION SERVICES               
Market Data Revenues:               
U.S. market data products   60  63  61  60  244  229  225
European market data products   21  20  17  17  74  80  69
Index data products   6  7  6  6  25  24  19
               
   Total Market Data revenues  87  90  84  83  343  333  313
               
Index Licensing and Services Revenues   15  16  15  16  63  58  52
               
Total Information Services revenues   102  106  99  99  406  391  365
               
TECHNOLOGY SOLUTIONS               
Corporate Solutions Revenues   21  22  22  25  89  75  63
               
Market Technology Revenues:               
Software license and support   36  35  36  36  143  139  120
Change request and advisory   4  6  7  12  29  29  27
Software as a service   5  4  8  6  23  15  5
Total Market Technology revenues   45  45  51  54  195  183  152
               
Total Technology Solutions revenues   66  67  73  79  284  258  215
               
Other   --   --   --   --   --   --   1
               
Total revenues less transaction rebates, brokerage, clearance and exchange fees   $ 414  $ 427  $ 412  $ 422  $ 1,674  $ 1,690  $ 1,522
CONTACT: Media Relations:
Joseph Christinat +1.646.441.5121
Joseph.Christinat@NASDAQOMX.Com
Investor Relations:
Ed Ditmire +1.212.401.8737
Ed.Ditmire@NASDAQOMX.Com

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