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NASDAQ OMX Reports First Quarter 2013 Results

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.

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