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NYSE Euronext (NYX)

Q4 2009 Earnings Call

February 9, 2010 8:00 am ET


Stephen Davidson –Investor Relations

Duncan Niederauer – Chief Executive Officer

Michael Geltzeiler – Group Executive Vice President and Chief Financial Officer

Lawrence Leibowitz - Group Executive Vice President and Head of US Markets

Stephane Biehler - Chief Accounting Officer and Corporate Controller


Roger Freeman - Barclays Capital

Richard Repetto - Sandler O'Neill & Partners L.P.

Johannes Thormann - HSBC

Howard Chen - Credit Suisse

Michael Vinciquerra - BMO Capital Markets

Daniel Harris - Goldman Sachs

Niamh Alexander - Keefe, Bruyette & Woods



Good day ladies and gentlemen, and welcome to the fourth quarter and full year 2009 NYSE Euronext earnings conference call. My name is O’Nika, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. For the Q&A session, we ask that all callers limit their questions to one to allow for broader participation.

I would now like to turn the call over to Stephen Davidson, Head of Investor Relations at NYSE Euronext.

Stephen Davidson

Thank you O’Nika. Good morning and welcome to the NYSE Euronext fourth quarter and full year 2009 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’s current expectations and involve risks and uncertainties that could cause NYSE Euronext’s 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 were 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.

For the call today, Duncan Niederauer, Chief Executive Officer, will review the highlights for the quarter and provide you with our 2010 areas of focus. Michael Geltzeiler, Group Executive Vice President and Chief Financial Officer will then review the financial results, update you on our financial position, and then provide you with considerations for 2010. We will then open the line for your questions.

When we go to the Q&A session, please limit your questions to one to allow for broader participation. Also on the call today for the Q&A session are Larry Leibowitz, Group Executive Vice President & Head of U.S. Markets and Stephane Biehler, Chief Accounting Officer and Corporate Controller. We are incorporating slides for the call today, which are available for viewing on our website, and Duncan and Mike will refer to the slides during the remarks.

With that, let me now turn it over to Duncan.

Duncan Niederauer

Good morning everybody and thanks for joining yet another quarterly earnings call for NYSE Euronext. I’m going to start on Slide 3. I’m going to cover Slides 3 through 6 and then I’m going to turn it over to Mike for the rest of the presentation and then we’ll be sure to leave time at the end for your questions.

Let me start by saying the following: I think you can see from the results of which we’re very proud that it was a solid fourth quarter for us and our full year 2009 results show a trend of improving financial performance which we think gives us strong momentum going into 2010.

You’ll see that we’re growing our derivative business, we’re stabilizing our cash equities business, and we’re providing innovative technology solutions. As we look ahead to 2010 and beyond, we have four core business objectives. Number one, we want to operate the most important set of capital markets in the world. Number two, we want to be innovating across geographies and products with a focus on the customer. Number three, we want to use our infrastructure to build an open platform and number four, we want to apply technology where possible to lower clients’ infrastructure and capital raising costs.

I will review our future goals a bit later but let me first review some highlights from the fourth quarter. In the fourth quarter we recorded non-GAAP EPS of $0.58 on net revenue of $640 million, reflecting growing earnings power from our new businesses, the benefit of our technology harmonization, and our cost savings initiatives.

Fixed costs of $432 million in Q4, including NYFIX, were down 9%. Staffing levels declined 14% year-over-year excluding the addition of NYFIX in December. While NYSE Euronext has historically been regarded as an equities exchange, our business has evolved and today our technology and derivatives business make up 48% of net revenues.

Let me now touch on a few select business highlights for the quarter. First, our global derivatives businesses performed particularly well in the fourth quarter, registering a 21% increase in net revenue an 2010 is promising as well with the addition of NYSE Liffe Clearing, the semi-mutualization of NYSE Liffe US, our Amex Options business, and more favorable macroeconomic conditions for European derivatives.

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