Strong Growth Across Products and Geographies Drives Record Earnings
NYSE Euronext Announces Third Quarter 2007 Financial Results
NEW YORK – Nov. 2, 2007 – NYSE Euronext (NYSE Euronext: NYX) today reported net income of $258 million, or $0.97 per diluted share, for the three months ended September 30, 2007, a 279% increase as compared to net income of $68 million, or $0.43 per diluted share, for the three months ended September 30, 2006. These results are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Third quarter 2007 GAAP results include the operations of NYSE Group and Euronext N.V. for the full quarter. The comparative results for 2006 reflect the operations of NYSE Group only.
"During the third quarter, we delivered record financial results through strong growth across our business lines, driven largely by record trading volumes in the U.S. and Europe and ongoing expense control," said Nelson Chai, Executive Vice President and Chief Financial Officer. "These results reflect the tremendous benefits we derive from operating a globally diversified company, with a business model that will continue to serve us well as we make further progress towards realizing the synergies related to the NYSE Euronext merger.”
Included in the results for the three months ended September 30, 2007 are (i) $22 million in merger expenses incurred in connection with both the acquisition of Archipelago Holdings on March 7, 2006 and the combination with Euronext N.V. on April 4, 2007, and exit costs, (ii) a $32 million gain on the sale of the member firm regulatory functions of NYSE Regulation to FINRA, and (iii) a $55 million deferred tax benefit related to an enacted reduction of the UK corporate tax rate from 30% to 28%.
Giving effect to the Archipelago and Euronext transactions as if they had occurred at the beginning of the earliest period presented, but excluding merger expenses, exit costs and other non-recurring items, NYSE Euronext’s net income on a non-GAAP basis for the three months ended September 30, 2007 would have been $202 million, or $0.76 per diluted share, a $85 million or 73% increase as compared to net income of $117 million, or $0.44 per diluted share, for the three months ended September 30, 2006. In addition, on a non-GAAP basis, operating income grew 68% to $320 million for the third quarter of 2007 from $190 million in the year-ago period. A full reconciliation of these non-GAAP results is included in the attached tables.
At constant USD/Euro exchange rates, neutralizing the impact of acquisitions and dispositions of businesses and equity investments for the period, and on a non-GAAP basis, NYSE Euronext’s revenues, net of activity assessment fees, for the three months ended September 30, 2007 increased 34%, while fixed operating expenses (defined as operating expenses, net of Section 31 fees, merger expenses, exit costs, liquidity payments, routing and clearing fees) decreased 8% compared to the three months ended September 30, 2006.
Other Third Quarter Financial Highlights
- Excluding the effect of activity assessment fees and Section 31 fees, and on a non-GAAP basis:
- NYSE Euronext derived 25% of its third quarter 2007 net revenues (defined as total revenues, net of liquidity payments, routing and clearing fees) from derivatives trading, 18% from European cash trading, 12% from U.S. cash trading, 13% from market data, and 12% from listings; and
- NYSE Euronext’s operating margin increased to 31% of total revenues for the three months ended September 30, 2007 as compared to 26% for the same period a year ago.
- After distributing $133 million of dividends to shareholders and repaying $1.1 billion of debt since the consummation of the NYSE Euronext combination on April 4, NYSE Euronext had $1.4 billion of cash, cash equivalents and short-term financial investments (net of Section 31 fees payable to the SEC ) as of September 30, 2007.
Third Quarter Business Highlights
- NYSE Euronext’s derivative markets, Liffe and NYSE Arca Options, continue to deliver strong growth and superior market quality.
- With 272.2 million contracts traded during the three months ended September 30, 2007 , Liffe set a record for trading activity, an increase of 54.4% compared to the same period a year ago. Average daily volume across Liffe’s product categories increased compared to the three months ended September 30, 2006 : interest rate contracts grew 51.3%, equity products (single stocks and indices) grew 62.4% and commodities grew 23.6%. During the first nine months of 2007, trading activity on Liffe reached 724.4 million contracts traded, a 28.7% increase compared to the nine months ended September 30, 2006 . This year-over-year growth included strong gains of 32.3% for total equity products, 26.7% for commodity products and 26.0% for total interest rate products.
- Bclear, Liffe’s wholesale clearing service for OTC trades, processed 24.3 million contracts for the three months ended September 30, 2007 compared to 9.1 million contracts for the comparable period a year ago, up 167.9%. The growth of business is mainly attributable to the Universal Stock Futures in which Liffe has gained the leadership role in Europe . During the first nine months of 2007, Bclear processed 89.8 million contracts compared to 42.5 million contracts for the comparable period a year ago, an increase of 111%.
- With total volume for all contracts in the U.S. options penny pilot up over 55% year-to-date, NYSE Arca Options' unique pricing model and advanced systems architecture solidified its status as an industry leader in options trading. In the third quarter of 2007, NYSE Arca Options’ market share was 11.8%, an increase of 1.5% from the same period last year. During the three months ended September 30, 2007, market share in the 13 penny pilot issues was 13.5%, up 1.8% from the previous quarter.
- NYSE Euronext’s cash markets, which trade more shares than any other equities marketplace in the world and represent the largest pools of liquidity in their respective markets, realized record trading volumes and message traffic during the three months ended September 30, 2007 .
- NYSE Euronext’s European cash markets had their best quarter ever with an average of 1.34 million trades per day, an increase of 85.5% compared to the three months ended September 30, 2006 . Year-over-year, the average daily number of trades increased in every product category traded on Euronext during the third quarter of 2007: cash equities grew 86.6%, ETFs grew 244.2%, structured products (warrants and certificates) grew 61.7% and bonds grew 9.4%.
- During the first nine months of 2007, 235.9 million trades on cash products have been executed on NSC , NYSE Euronext’s European cash trading platform, up 44.5% compared to the same period in 2006, representing more volume in that period than executed in all of 2006.
- NYSE Euronext’s U.S. cash markets comprised the largest liquidity pool in NYSE-listed cash trading with 59.5% of matched trading volume for the three months ended September 30, 2007 . Total NYSE Group volume for the three months ended September 30, 2007 reached a new all-time record with over 195.4 billion shares handled, including new all-time volume records for the most active day, week and month. Year-over-year, handled volume on NYSE Euronext’s U.S. exchanges grew substantially during the third quarter with increases of 28.4% in NYSE-listed equities, 111.6% in NYSE Arca and Amex listed equities, and 105.6% in ETFs, while volumes in Nasdaq listed equities decreased 13.9%.
- With over 41% of listings and 67% of the total assets under management for all ETFs in the U.S. , NYSE Arca continues to be the largest single displayed liquidity pool for ETF trading in the U.S. with 41.1% of handled trading volume for the three months ended September 30, 2007.
- Nearly 3,900 issuers are listed on NYSE Euronext markets, with operating companies representing $29 trillion in total global market capitalization, greater than the next four largest equities marketplaces combined.
- The 88 new listings on NYSE Euronext’s U.S. markets for the three months ended September 30, 2007 included 15 IPOs by operating companies. Total IPO proceeds raised by operating companies in connection with listings during the three months ended September 30, 2007 were $8.4 billion, compared to $3.3 billion during the three months ended September 30, 2006.
- For the nine months ended September 30, 2007 , NYSE Euronext’s U.S. markets produced a total of 199 listings, including 7 transfers from Nasdaq, 8 transfers from the American Stock Exchange and other markets, and 51 IPOs by operating companies, which raised total proceeds of $24.4 billion in connection with listing.
- Year-to-date, U.S. domestic IPOs listing on NYSE Euronext’s U.S. markets raised more than 90% of qualified IPO proceeds, while non-US offerings on NYSE Euronext’s U.S. markets represented 100% of qualified proceeds raised.
- Year-to-date, NYSE Euronext’s U.S. markets listed 82 ETFs compared to 42 new ETF listings during the same period a year ago. Also during the quarter, 13 ETFs listed in Europe on NextTrack bringing the total number of ETFs listed through the first nine months of 2007 to 57.
- For the three months ended September 30, 2007 , NYSE Euronext’s European markets listed 37 new issuers compared to 26 during the third quarter of 2006. Capital raised in connection with listings during the three months ended September 30, 2007 amounted to €2.7 billion. Of those new listings, NYSE Alternext added 9 IPOs for a total of 109 listings at the end of September.
- For the nine months ended September 30, 2007 , NYSE Euronext’s European markets, including NYSE Alternext, attracted 107 new listings with €5.9 billion raised.
- During the third quarter of 2007, NYSE Euronext’s exchanges achieved a number of significant volume and message capacity records with uninterrupted systems performance. Additionally, the NYSE plans to upgrade message capacity to 64,000 messages per second by year-end, up from 25,000 at the beginning of 2007 and its current capacity of 38,000.
- On October 24, NYSE Euronext was included in the S&P 500 and S&P 100 benchmark indices; NYSE Euronext is the only exchange group included in the S&P 100.
The results of operations of Euronext N.V. for the three and nine months ended September 30, 2007 are reported under U.S. GAAP under the caption "European Operations" in the accompanying tables. Questions regarding Euronext N.V.’s third quarter results should be directed to Investor Relations (contact details provided above).
To supplement NYSE Euronext's consolidated financial statements prepared in accordance with GAAP and to better reflect period-over-period comparisons, NYSE Euronext uses non-GAAP financial measures of performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure, calculated and presented in accordance with GAAP. Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to (i) present the effects of certain merger expenses and exit costs, and other non-recurring items, and (ii) to improve overall understanding of NYSE Euronext's current financial performance and its prospects for the future. Specifically, NYSE Euronext believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to financial condition and operating results. In addition, management uses these measures for reviewing financial results and evaluating financial performance. The non-GAAP adjustments for all periods presented are based upon information and assumptions available as of the date of this release.
About NYSE Euronext
NYSE Euronext, a holding company created by the combination of NYSE Group, Inc. and Euronext N.V., commenced trading on April 4, 2007 . NYSE Euronext (NYSE Euronext: NYX) operates the world’s largest and most liquid exchange group and offers the most diverse array of financial products and services. NYSE Euronext, which brings together six cash equities exchanges in five countries and six derivatives exchanges in six countries, is a world leader for listings, trading in cash equities, equity and interest rate derivatives, bonds and the distribution of market data. Representing a combined $30.3 trillion/€21.3 trillion total market capitalization of listed companies and average daily trading value of approximately $139 billion/€103 billion (as of September 30, 2007), NYSE Euronext seeks to provide the highest standards of market quality and integrity, innovative products and services to investors, issuers, and all users of its markets.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause NYSE Euronext's results to differ materially from current expectations include, but are not limited to: NYSE Euronext's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext’s reference document for 2006 ("document de référence") filed with the French Autorité des Marchés Financiers (Registered on June 6, 2007 under No. R.07-0089), 2006 Annual Report on Form 10-K, as amended, and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés Financiers. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.
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