NASDAQ
Profit Surges, Led by Market Services
Nasdaq Inc. said first-quarter profit surged as revenue
increased across all segments, led by the market-services
division.
The bottom line beat Wall Street expectations.
Nasdaq has transformed itself from a U.S.-focused exchange
operator to a global business-services company that includes
markets in the U.S., Canada and the Nordic region, as well as
investor, public-relations, technology and data services. In the
quarter it closed deals to buy Chi-X Canada, an alternative trading
system for the Toronto Stock Exchange, and news-release distributor
Marketwired. The financial terms of those deals weren't
disclosed.
Nasdaq reported profit of $132 million, or 78 cents a share, for
the quarter, up from $9 million, or five cents a share, a year
earlier. Excluding restructuring- and acquisition-related charges
and other items, per-share earnings rose to 91 cents.
Revenue increased 5.3% to $534 million. Analysts polled by
Thomson Reuters expected a per-share profit of 89 cents on revenue
of $535 million.
Chris Allen, an analyst at UBS AG, said in a research note that
he expected the "solid results" would positively impact Nasdaq
share price today.
Market-services revenue, which contributed 38% of the exchange's
top line, increased 6.9% to $201 million on higher trading volumes.
Exchanges benefit more from periods of heightened trading and
volatility because the more people trade, the more fees they
collect on transactions.
The company's information-services segment, which represented
25% of the top line, reported revenue increased 6.4% to $133
million, on higher revenue from index data and proprietary data,
and from an acquisition.
One area of weakness was the company's technology solutions,
which saw operating margins decline to 12% from 21%, according to
Daniel Fannon, an analyst at Jefferies Group LLC. Technology
solutions, including exchange technology for operators around the
world and compliance surveillance software, accounts for about a
quarter of Nasdaq's revenues.
The Marketwired acquisition and growth in surveillance products
drove a 3.1% revenue increase to $134 million in the technology
solutions segment.
Despite a moribund market for initial public offerings in the
quarter, Nasdaq said all 10 U.S. IPOs listed on its exchange. The
period was the slowest since the first quarter of 2009, both in
terms of number of deals and total money raised, according to data
provider Dealogic.
Listing services revenue increased 3.1% to $66 million.
--Austen Hufford
STATE STREET
Drop in Fee Income Spurs Earnings Fall
State Street Corp. reported a decline in earnings and revenue
for the first quarter as weaker global markets dented the fees
generated by the trust bank.
Boston-based State Street reported earnings of $319 million, or
79 cents a share, down from $373 million, or 89 cents a share, a
year earlier. Excluding certain items, per-share profit fell to 98
cents from $1.16. Revenue declined 4.5% to $2.48 billion. Analysts
projected 90 cents in per-share earnings on $2.56 billion in
revenue, according to Thomson Reuters.
Chief Executive Joseph Hooley said fee revenue was hurt by a
challenging market environment, especially at the beginning of the
year, but added he was encouraged by signs of stability in
March.
Assets under custody and administration declined 5.4% to $26.94
trillion, and assets under management dropped 6% to $2.3 trillion
from a year before.
Lower assets, the market decline and the stronger dollar also
cut into fee revenue, with servicing fees declining 2.1% and
management fees falling 10%. Fees, which represent most of the
bank's top line, slipped 4.1% to $1.97 billion 4.1% from a year
earlier and 3.6% sequentially.
In recent quarters State Street has focused on managing
expenses. Late last year, the bank said it was accelerating its
cost-cutting plan as it grappled with a challenging environment. It
said Wednesday that layoffs and other measures announced in the
third quarter are on track to result in about $100 million in cost
savings this year. Total expenses in the first quarter fell 2.2%
from a year earlier to $2.05 billion.
--Austen Hufford
(END) Dow Jones Newswires
April 28, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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