Nasdaq Profits Rise on OMX Merger
Nasdaq OMX Group
solidly beat analyst bottom-line estimates on the now-combined companies' strong revenue and record volume.
Excluding merger-related charges, the Nasdaq and Swedish exchange operator OMX Nordic Exchange earned 54 cents a diluted share in the first quarter, compared to 33 cents a share for the prior year. Results also exclude a $26 million pre-tax gain on the investment in DIFX (Dubai International Financial Exchange). Analysts had been forecasting 49 cents per share according to Thomson Reuters.
The exchange operators delivered combined total revenues of $918.2 million for the quarter, a 29.5% jump over last year's $709 million and up 10.4% sequentially. Total equity volume matched trades soared to 153.7 billion shares in the quarter, which was 61.5% more than the 95.2 billion shares in 2007. However, fees associated with clearing transactions were reduced. Execution and trade reporting revenues dropped as a result of the lowered fees, coming in at $91.1 million, vs. $98.5 million for last year's quarter.
Nasdaq combined with the OMX Nordic Exchange in February. The company also has plans to launch a new pan-European market and has signed an agreement with Bombay Stock Exchange. It is continuing its global expansion with a signed contract with the Tokyo Commodity Exchange and NTT Data to provide an integrated trading and clearing system for commodity derivatives in Japan.
"We are a new company and our opportunities for growth have never been stronger,'' said CEO Bob Greifeld in a company statement. "The completion of our historic combination with OMX establishes NASDAQ OMX as the world's largest exchange company with operations on six continents and an undisputed leader in product innovation."
The Nordic exchange provided record trading, with average daily derivatives trading volume reaching 789,898 contracts. Volumes for all products were up across the board at Nasdaq.
"We expect the company's trading volumes to continue to benefit from growing demand for fast electronic trade execution and increased market volatility," wrote Stuart Plesser of Standard and Poor's research. "We see higher trading volumes and continued expansion of its NYSE-listed market share driving 8.6% gross profit growth in 2008."
Plesser, however, kept his rating at a hold, due to increasing competition. He has a target price of $48 for the stock.
Nasdaq OMX is not alone among stock and options trading companies in reporting record volumes. Commodities exchange operators
CME Group
(CME) - Get Report
and
Nymex Holdings
(NMX)
, which are combining, also delivered solid quarters. Futures broker
InterContinental Exchange
(ICE) - Get Report
announced record futures contracts last week and on Tuesday
NYSE Euronext
(NYX)
announced record volumes that helped it deliver strong numbers.
Nasdaq shares were recently down fractionally to $39.25.