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NYSE Euronext (NYX)

Q3 2010 Earnings Call

November 02, 2010 8:00 am ET


Michael Geltzeiler - Chief Financial Officer and Group Executive Vice President

Dominique Cerutti - President and Deputy Chief Executive Officer

Duncan Niederauer - Chief Executive Officer and Director

Stephen Davidson - Vice President of Investor Relations

Lawrence Leibowitz - Chief Operating Officer and Member of Management Committee


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

Alex Kramm - UBS Investment Bank

Rob Rutschow - Credit Agricole Securities (USA) Inc.

Richard Repetto - Sandler O`Neill

Michael Vinciquerra - BMO Capital Markets U.S.

Roger Freeman - Barclays Capital

Daniel Harris - Goldman Sachs Group Inc.



Good day, ladies and gentlemen, and welcome to the Third Quarter 2010 NYSE Euronext Earnings Conference Call. My name is Noelia, and I'll be your operator for today. [Operator Instructions] I would now like to turn the call over to Mr. Stephen Davidson, Head of Investor Relations at NYSE Euronext. Please go ahead, sir.

Stephen Davidson

Good morning, and welcome to the NYSE Euronext Third Quarter 2010 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 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.

For the call today from our Paris office, Duncan Niederauer, Chief Executive Officer, will review the highlights for the quarter, comment on the increasing diversification of our business model, update you on the various initiatives that we have for our segments and conclude with an update on the U.S. regulatory landscape. Joining Duncan in Paris, Dominique Cerutti, President, will then provide an update on the European regulatory landscape, the launch of our new liquidity hubs in Mahwah and Basildon, highlight key deals for our commercial technology business. Michael Geltzeiler, Chief Financial Officer, will then review the financial results for the quarter. We will then open the line for your questions. Also on the call today for the Q&A session is Larry Leibowitz, Chief Operating Officer.

[Operator Instructions] We are incorporating slides for the call today, which are available for viewing on our website, and Duncan, Dominique and Mike will refer to the slides during their remarks.

With that, let me turn the call over to Duncan in Paris.

Duncan Niederauer

Thanks, Steven, and good morning, everybody. From a rainy Paris, thanks for joining today's call, we appreciate it. I'm going to start on Slide 3 entitled Third Quarter 2010 Update. And I would start by saying that we're very pleased with the progress we made in the third quarter, executing against our long-term strategy. In this quarter, we made tangible progress on our goals of operating the most meaningful capital markets, creating broader and deeper networks and delivering innovative products to our expanding client base. Our business model continues to diversify, and we are focusing on new initiatives and growth area to deliver value for our shareholders through all sorts of business cycles.

For the quarter, we recorded EPS of $0.46 per share on net revenue of $599 million, down from $0.53 on $620 million in net revenue in the prior year period. The strengthening of the dollar year-over-year reduced our net revenue by $25 million and EPS by $0.03. Helping to dampen the negative impact of currencies was $31 million in incremental revenue from new businesses, highlighting the continuing diversification of our model, which I will touch on in more detail later.

Our technology business continue to show great growth and benefited from the addition of NYFIX and expanding customer base and improved software sales, driving increased revenue and operating margins. And the business hit several milestones with Qatar and the Tokyo Stock exchanges, as well as in large Eastern European stock exchange signing up to do business with us. The next stage in the growth trajectory for this business will be a combination of co-location revenues and follow-on technology sales from these co-locating clients.

On the cash and listing side, we are continuing to see strong demand for our listing venues in terms of transfers, new listings and secondaries. Year-to-date through September, 13 companies have transferred to the NYSE from other exchanges with a total market capitalization of over $40 billion. A total of 78 issuers have listed on NYSE Euronext markets, raising total proceeds of just over $17 billion, including nine Chinese companies that raised to just under $1 billion. Important to note that this success has continued in October and even in early November where we've already had two listings from Asia two days in for the month.

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