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UPDATE -- NASDAQ OMX Reports Second Quarter 2013 Results

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, de-leveraging 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   
     June 30, 2013   March 31, 2013   June 30, 2012   
 Revenues:           
 Market Services     $ 553  $ 508  $ 587  
 Cost of revenues:           
 Transaction rebates     (276)  (242)  (299)  
 Brokerage, clearance and exchange fees     (87)  (84)  (89)  
 Total cost of revenues     (363)  (326)  (388)  
 Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees     190  182  199  
           
 Listing Services     58  55  55  
 Information Services     108  108  106  
 Technology Solutions     95  73  67  
 Revenues less transaction rebates, brokerage, clearance and exchange fees     451  418  427  
           
 Operating Expenses:           
 Compensation and benefits     126  117  113  
 Marketing and advertising     8  7  6  
 Depreciation and amortization     28  27  25  
 Professional and contract services     35  29  26  
 Computer operations and data communications     20  15  17  
 Occupancy     23  22  23  
 Regulatory     8  7  9  
 Merger and strategic initiatives     25  8  1  
 Restructuring charges     --   9  17  
 General, administrative and other     19  25  15  
 Voluntary accommodation program     --   62  --   
 Total operating expenses     292  328  252  
           
 Operating income     159  90  175  
           
 Interest income     2  3  2  
 Interest expense     (26)  (24)  (24)  
 Asset impairment charges     --   (10)  (28)  
 Income before income taxes     135  59  125  
           
 Income tax provision     47  17  33  
           
 Net income     88  42  92  
           
 Net loss attributable to noncontrolling interests     --   --   1  
           
 Net income attributable to NASDAQ OMX     $ 88  $ 42  $ 93  
           
 Per share information:           
 Basic earnings per share     $ 0.53  $ 0.26  $ 0.55  
 Diluted earnings per share     $ 0.52  $ 0.25  $ 0.53  
 Cash dividends declared per common share     $ 0.13  $ 0.13  $ 0.13  
           
 Weighted-average common shares outstanding           
 for earnings per share:           
 Basic     166.4  165.7  169.4  
 Diluted     170.1  169.7  173.4  
 
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
(unaudited)
       
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
 MARKET SERVICES       
 Derivative Trading and Clearing Revenues:       
 U.S. derivative trading and clearing   125  117  103
 Cost of revenues:       
 Transaction rebates   (68)  (62)  (53)
 Brokerage, clearance and exchange fees   (9)  (11)  (6)
 Total U.S. derivative trading and clearing cost of revenues   (77)  (73)  (59)
 Net U.S. derivative trading and clearing revenues  48  44  44
 European derivative trading and clearing revenues   28  30 26
 Total net derivative trading and clearing revenues  76  74  70
       
 Cash Equity Trading Revenues:       
 U.S. cash equity trading  $ 315 $ 276 $ 373
 Cost of revenues:       
 Transaction rebates   (208)  (180)  (246)
 Brokerage, clearance and exchange fees   (78)  (73)  (83)
 Total U.S. cash equity cost of revenues   (286)  (253)  (329)
 Net U.S. cash equity trading revenues  29  23  44
 European cash equity trading   22  22 19
 Total net cash equity trading revenues  51  45 63
       
 Access and Broker Services Revenues   63  63 66
       
 Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees   190  182 199
       
 LISTING SERVICES       
 U.S. listing services   44  42  43
 European listing services   14  13 12
       
 Total Listing Services revenues  58  55  55
       
 INFORMATION SERVICES       
 Market Data Products Revenues:       
 U.S. market data products   64  63  63
 European market data products   20  21  20
 Index data products   6  7  7
 Total Market Data Products revenues  90  91  90
       
 Index Licensing and Services Revenues   18  17  16
       
 Total Information Services revenues   108  108  106
       
 TECHNOLOGY SOLUTIONS       
 Corporate Solutions Revenues:       
 Governance   4  3  3
 Investor relations   24  11  10
 Multimedia solutions   7  3  3
 Public relations   9  7  6
 Total Corporate Solutions revenues   44  24  22
       
 Market Technology Revenues:       
 Software, license and support   35  37  35
 Change request and advisory   9  6  6
 Software as a service   7  6  4
 Total Market Technology revenues   51  49  45
       
 Total Technology Solutions revenues   95  73  67
       
 Total revenues less transaction rebates, brokerage, clearance and exchange fees   $ 451  $ 418  $ 427
 
The NASDAQ OMX Group, Inc.
Condensed Consolidated Balance Sheets 
(in millions)
     
     
  June 30, 2013 December 31, 2012
Assets (unaudited)
Current assets:    
Cash and cash equivalents  $ 379  $ 497
Restricted cash  82  85
Financial investments, at fair value  170  223
Receivables, net  362  333
Deferred tax assets  51  33
Default funds and margin deposits  1,412  209
Other current assets  154  112
Total current assets  2,610  1,492
Non-current restricted cash  25  25
Property and equipment, net  227  211
Non-current deferred tax assets  478  294
Goodwill 6,048 5,335
Intangible assets, net  2,383  1,650
Other non-current assets  182  125
Total assets  $ 11,953  $ 9,132
     
Liabilities     
Current liabilities:    
Accounts payable and accrued expenses  $ 252  $ 172
Section 31 fees payable to SEC  145  97
Accrued personnel costs  84  111
Deferred revenue  222  139
Other current liabilities  127  119
Deferred tax liabilities  36  35
Default funds and margin deposits  1,412  209
Current portion of debt obligations  138  136
Total current liabilities  2,416  1,018
Debt obligations  2,647  1,840
Non-current deferred tax liabilities  689  713
Non-current deferred revenue  146  156
Other non-current liabilities  192  196
Total liabilities  6,090  3,923
     
Commitments and contingencies     
Equity    
NASDAQ OMX stockholders' equity:    
 Common stock  2  2
 Additional paid-in capital  4,261  3,771
 Common stock in treasury, at cost  (1,027)  (1,058)
 Accumulated other comprehensive loss  (139)  (185)
 Retained earnings  2,765  2,678
Total NASDAQ OMX stockholders' equity  5,862  5,208
Noncontrolling interests  1  1
Total equity  5,863  5,209
Total liabilities and equity  $ 11,953  $ 9,132
     
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Revenues (1), Net Cash Equity Revenues (1) and 
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Revenues (1)
Net Cash Equity Revenues (1) and Operating Expenses
(in millions, except per share amounts)
(unaudited)
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
GAAP net income attributable to NASDAQ OMX  $ 88  $ 42  $ 93
       
Non-GAAP adjustments:      
       
Income from open positions relating to the operations of the exchange  --   --   (11)
Merger and strategic initiatives  25  8  1
Voluntary accommodation program  --   62  -- 
Reserve for Securities and Exchange Commission matter  --   10  -- 
Asset impairment charges  --   10  28
Restructuring charges  --   9  17
Special legal expenses  --   2  -- 
Other  --   --   2
Total non-GAAP adjustments  25  101  37
       
Adjustment to the income tax provision to reflect non-GAAP adjustments (2)  (8)  (35)  (13)
Significant tax adjustments, net  --   --   (6)
Total non-GAAP adjustments, net of tax  17  66  18
       
Non-GAAP net income attributable to NASDAQ OMX  $ 105  $ 108  $ 111
       
       
GAAP diluted earnings per share  $ 0.52  $ 0.25  $ 0.53
Total adjustments from non-GAAP net income above  0.10  0.39  0.11
       
Non-GAAP diluted earnings per share  $ 0.62  $ 0.64  $ 0.64
       
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
       
GAAP operating income  $ 159  $ 90  $ 175
       
Non-GAAP adjustments:      
       
 Income from open positions relating to the operations of the exchange  --   --   (11)
 Merger and strategic initiatives  25  8  1
 Voluntary accommodation program  --   62  -- 
 Reserve for Securities and Exchange Commission matter  --   10  -- 
 Restructuring charges  --   9  17
 Special legal expenses  --   2  -- 
 Other  --   --   2
 Total non-GAAP adjustments  25  91  9
       
Non-GAAP operating income  $ 184  $ 181  $ 184
       
       
(1) Represents revenues less transaction rebates, brokerage, clearance and exchange fees.
       
(2) We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred. 
 
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Revenues (1), Net Cash Equity Revenues (1) and 
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Revenues (1)
Net Cash Equity Revenues (1) and Operating Expenses
(in millions)
(unaudited)
       
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
       
       
GAAP cash equity trading revenues less transaction rebates, brokerage, clearance and exchange fees  $ 51  $ 45  $ 63
       
Non-GAAP adjustments:      
       
Income from open positions relating to the operations of the exchange  --   --   (11)
       
Non-GAAP cash equity trading revenues less transaction rebates, brokerage, clearance and exchange fees  $ 51  $ 45  $ 52
       
       
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
       
GAAP revenues less transaction rebates, brokerage, clearance and exchange fees  $ 451  $ 418  $ 427
       
Non-GAAP adjustments:      
       
Income from open positions relating to the operations of the exchange  --   --   (11)
       
Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees  $ 451  $ 418  $ 416
       
       
Non-GAAP operating margin (2) 41% 43% 44%
       
       
       
   Three Months Ended 
   June 30, 2013   March 31, 2013   June 30, 2012 
       
GAAP operating expenses  $ 292  $ 328  $ 252
       
Non-GAAP adjustments:      
       
Merger and strategic initiatives  (25)  (8)  (1)
Voluntary accommodation program  --   (62)  -- 
Reserve for Securities and Exchange Commission matter  --   (10)  -- 
Restructuring charges  --   (9)  (17)
Special legal expenses  --   (2)  -- 
Other  --   --   (2)
Total non-GAAP adjustments  (25)  (91)  (20)
       
Non-GAAP operating expenses  $ 267  $ 237  $ 232
       
       
(1) Represents revenues less transaction rebates, brokerage, clearance and exchange fees.  
       
(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.
Quarterly Key Drivers Detail
(unaudited)
       
  Three Months Ended
   June 30, 2013   March 31, 2013   June 30, 2012 
Market Services      
Derivative Trading and Clearing      
U.S. Equity Options      
Total industry average daily volume (in millions) 15.9 15.0  14.9
NASDAQ OMX PHLX matched market share 18.0% 20.7% 19.6%
The NASDAQ Options Market matched market share 8.9% 7.9% 5.6%
NASDAQ OMX BX Options matched market share 1.0% 1.0%  -- 
Total market share 27.9% 29.6% 25.2%
       
NASDAQ OMX Nordic and NASDAQ OMX Baltic      
Average daily volume:      
Options, futures and fixed-income contracts 438,418 446,789  431,154
Finnish option contracts traded on Eurex 101,255 144,905  92,616
       
NASDAQ OMX Commodities      
Power contracts cleared (TWh) (1)  424  460  346
       
Cash Equity Trading      
NASDAQ securities      
Total average daily share volume (in billions) 1.78 1.82 1.80
Matched market share executed on NASDAQ 25.5% 23.1% 27.3%
Matched market share executed on NASDAQ OMX BX 2.4% 2.5% 2.9%
Matched market share executed on NASDAQ OMX PSX 0.8% 0.9% 1.6%
Market share reported to the FINRA/NASDAQ       
 Trade Reporting Facility 35.8% 35.7% 31.4%
Total market share (2) 64.5% 62.2% 63.2%
       
New York Stock Exchange, or NYSE securities      
Total average daily share volume (in billions) 3.58 3.56 3.86
Matched market share executed on NASDAQ 11.7% 11.6% 13.7%
Matched market share executed on NASDAQ OMX BX 2.2% 2.4% 2.7%
Matched market share executed on NASDAQ OMX PSX 0.5% 0.5% 0.9%
Market share reported to the FINRA/NASDAQ       
 Trade Reporting Facility 32.0% 32.7% 29.1%
Total market share (2) 46.4% 47.2% 46.4%
       
NYSE MKT and regional securities      
Total average daily share volume (in billions) 1.24 0.99 1.19
Matched market share executed on NASDAQ 14.6% 13.1% 18.3%
Matched market share executed on NASDAQ OMX BX 2.7% 2.8% 2.9%
Matched market share executed on NASDAQ OMX PSX 1.4% 1.4% 2.4%
Market share reported to the FINRA/NASDAQ       
 Trade Reporting Facility 31.2% 33.1% 28.1%
Total market share (2) 49.9% 50.4% 51.7%
       
Total U.S.-listed securities      
Total average daily share volume (in billions)  6.60  6.38  6.85
Matched share volume (in billions)  80.7  70.3  95.8
Matched market share executed on NASDAQ 15.9% 15.1% 18.1%
Matched market share executed on NASDAQ OMX BX 2.4% 2.5% 2.8%
Matched market share executed on NASDAQ OMX PSX 0.8% 0.8% 1.3%
Total market share   19.1% 18.4% 22.2%
       
NASDAQ OMX Nordic and NASDAQ OMX Baltic Securities    
Average daily number of equity trades 329,030 317,069  369,680
Total average daily value of shares traded (in billions)  $ 4.4  $ 4.4  $ 4.3
Total market share 69.7% 68.8% 67.8%
       
Listing Services      
Initial public offerings      
NASDAQ 35 18 15
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic  6  --   -- 
       
New listings      
NASDAQ (3) 67 33 29
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (4) 12 4 2
       
Number of listed companies      
NASDAQ (5)  2,581  2,568  2,636
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (6)  758  752  759
       
Technology Solutions      
Market Technology      
Order intake (in millions) (7)  $ 44  $ 19  $ 82
Total order value (in millions) (8)  $ 507  $ 522  $ 538
       
(1) Primarily transactions executed on Nord Pool ASA and reported for clearing to NASDAQ OMX Commodities measured by Terawatt hours (TWh) . 
(2) 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.
(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. 
CONTACT: Contact Media Relations:
         Joseph Christinat +1.646.441.5121
         Joseph.Christinat@NASDAQOMX.Com

         Contact Investor Relations:
         Ed Ditmire +1.212.401.8737
         Ed.Ditmire@NASDAQOMX.Com

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