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NYSE Euronext (NYX)

Q1 2013 Earnings Call

April 30, 2013 8:00 am ET


Stephen Davidson - Vice President of Investor Relations

Duncan L. Niederauer - Chief Executive Officer and Director

Michael S. Geltzeiler - Chief Financial Officer and Group Executive Vice President

Lawrence E. Leibowitz - Chief Operating Officer


Richard H. Repetto - Sandler O'Neill + Partners, L.P., Research Division

Howard Chen - Crédit Suisse AG, Research Division

Christopher J. Allen - Evercore Partners Inc., Research Division

Alex Kramm - UBS Investment Bank, Research Division

Niamh Alexander - Keefe, Bruyette, & Woods, Inc., Research Division



Good day, ladies and gentlemen, and welcome to the First Quarter 2013 NYSE Euronext Earnings Conference Call. My name is Caroline, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to Stephen Davidson, Head of Investor Relations at NYSE Euronext. Please go ahead, sir.

Stephen Davidson

Thanks, Caroline. Good morning, and welcome to the NYSE Euronext first quarter 2013 earnings conference call. Before I introduce today's speakers, let me remind you that comments on the call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on NYSE Euronext current expectations and involve risks and uncertainties that could cause NYSE Euronext actual results to differ materially from those in the statements. These forward-looking statements speak as of today, and you should not rely on them as representing our views in the future. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements.

Except for any obligation to disclose material information under the federal securities laws, NYSE Euronext undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after this conference call.

We will discuss non-GAAP financial measures during this call. These non-GAAP measures are fully reconciled in the tables attached to the text of the earnings press release that we issued earlier today. We believe that these tables provide investors useful information about our business trends. However, our non-GAAP measures do not replace and are not superior to GAAP measures.

Duncan Niederauer, Chief Executive Officer, will review the highlights for the quarter, update you on key developments in our businesses and conclude with an update on the acquisition by ICE. Michael Geltzeiler, Chief Financial Officer, will then review the financial results for the quarter. We will then open the line for your questions. Also in the room for the Q&A session is Larry Leibowitz, Chief Operating Officer.

We are incorporating slides to the call today which are available for viewing on our website, and Duncan and Mike will refer to the slides during their remarks. With that, let me turn the call over to Duncan.

Duncan L. Niederauer

Thanks, Stephen. Good morning, everybody, and thanks for joining today's call. I'll begin my prepared remarks on Slide 4.

In the first quarter, we benefited from the actions that we've taken over the past several quarters to improve the fundamental earnings power of the company. We saw improved trading volumes in our European derivatives franchise and launched new products. We are on track to transition our U.K. clearing to ICE Clear Europe by the end of June, and we are focused on realizing the value of our continental derivatives clearing after the first quarter of 2014.

We are continuing to see strong momentum in our Listings business, achieving a 75% market share of tech IPOs in the first quarter on the heels of last year's similarly excellent results. We are beginning to generate incremental revenue from our new market data agreements. We've continued to reduce our expenses and are on track to exceed our full year 2013 guidance. And lastly, the reduction in our share count and other capital management actions we have taken are beginning to have a meaningful impact on earnings.

The macro backdrop, as I noted on our last call, continues to show encouraging signs for the global economy, so I'm optimistic that we are on a slow trend up punctuated by event-driven volatility along the way.

In the meantime, we are continuing to execute against our Project 14 commitments to our shareholders and also preparing for our combination with ICE, which I will go into in more detail on the later slides.

The net result of all of this is that we reported $0.50 -- $0.57 a share on $600 million in revenue this quarter, which represents a 21% increase in earnings year-over-year and a 33% increase quarter-over-quarter. So in summary, we are pleased with our results and we are looking to build momentum as we move through 2013 and into our proposed combinations with ICE.

Please turn to Slide 5. Slide 5 is familiar to all of you and illustrates the strong progress we have made in executing against our strategy. As you can see from this slide, we are not taking our foot off the gas. I will highlight a couple of initiatives on the growth side first.

We are launching new derivatives products. In our Liffe business, we continue to move out, out on the yield curve. Remember, our Liffe business in the U.K. has historically been almost entirely focused on the short end of the curve. So we've continued to expand with mid-curve options that we launched last year and the Swapnote products that we're now offering which move us further out on to the yield curve. Once we're in the ICE clearinghouse in the second half of this year, expect to see us launch even more new products.

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