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NYSE Euronext (NYX)

Q3 2012 Earnings Call

November 06, 2012 8:00 am ET

Executives

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

Analysts

Alex Kramm - UBS Investment Bank, Research Division

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

Jillian Miller - BMO Capital Markets U.S.

Brian Bedell - ISI Group Inc., Research Division

Daniel Thomas Fannon - Jefferies & Company, Inc., Research Division

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

Alexander Blostein - Goldman Sachs Group Inc., Research Division

Patrick J. O'Shaughnessy - Raymond James & Associates, Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 NYSE Euronext Earnings Conference Call. My name is Caris, and I will be your operator today. [Operator Instructions] We will be facilitating a question-and-answer session towards the end of the conference. [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, Caris. Good morning, and welcome to the NYSE Euronext Third Quarter 2012 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.

Duncan Niederauer, our Chief Executive Officer, will review the highlights for the quarter, update you on key business developments in our businesses and conclude with his outlook on various regulatory and macro issues. Michael Geltzeiler, our 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 for 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 now turn the call over to Duncan.

Duncan L. Niederauer

Thanks, Stephen. Good morning, everybody. Thanks for joining today's call on such an important day in the U.S. here, Election Day. Do try to get out and vote. Our town doesn't have any power so I guess we're going to be doing it old-school today, but we'll -- it -- we're going to make sure we do that tonight.

Before I get into the results, I do want to take a few minutes to talk about Hurricane Sandy. It was a pretty challenging week for our community here at NYSE Euronext and many of the communities in and around the East Coast. However, I couldn't be more proud of our teams that worked here nonstop over really the last week or 10 days. As usual, we led the industry from the front in helping to build a consensus to close the markets last Monday and Tuesday, which I firmly believe was the right thing to do. And with Wednesday's historic reopening, I can attribute that to the result of truly heroic efforts on the part of many of our key people. Not only did we reopen the market smoothly when the entire surrounding area was still in darkness but we had 3 IPOs come to market last Friday, which is a testament to the resiliency of the U.S. markets.

So now let me focus on the third quarter. During the quarter, we made significant progress with new product development and our key initiatives that will drive future growth, and we'll highlight those throughout the presentation that Mike and I will do. We're focusing on those levers of our business model that are in our control and that we can influence to deliver value for our shareholders over the long term, well beyond the current lackluster trading environment. As you know, we've made a lot of headway over the last few years in diversifying our business model, a large portion of our -- although we've made a lot of headway, a large portion of our revenues remain linked to trading, and our derivatives franchise in Europe has been especially impacted by macro conditions and deleveraging, driving lower levels of hedging and speculation. But contrary to what many are saying today, this is not a structural shift in the market in my opinion, and we see the current climate as an opportunity to focus the company for growth when macro conditions return to normal. At the same time, we need to remain focused on further diversification into our technology, data and post-trade businesses.

In some respects, I feel about NYSE Euronext the way I do about the U.S. economy, well positioned to grow under the right conditions. But for the moment, we are still facing strong macroeconomic headwinds and our results for the third quarter reflect this. We reported $0.44 for the quarter and $559 million in revenue compared to $0.71 on $704 million in revenue in the prior year third quarter.

Read the rest of this transcript for free on seekingalpha.com