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NYSE Euronext (NYX)

Q2 2013 Earnings Call

July 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



Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 NYSE Euronext Earnings Conference Call. My name is Laura, 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

Thank you, Laura. Good morning, and welcome to the NYSE Euronext Second 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'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, 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. For the call today, we will not be holding a Q&A session at the end of the prepared remarks. We felt that it would be more appropriate given that we are moving closer -- to closing with the ICE management team taking the lead in the process and their call is in just a few days.

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

Right, thanks, Stephen. Good morning, everybody, and thanks for joining today's call.

I'll begin my prepared remarks on Slide 4, because as you all know, in the compliance world that we live in, if you're in a transaction like this, it means 2 slides of disclaimers, not one. So you have to please turn to Slide 4.

Let me start by saying how proud we are of our results for the second quarter.

As you know, we've made significant progress in moving our transaction with ICE toward closing, and at the same time, we've continued to execute against our own business strategy. We're generating strong momentum ahead of the combination with ICE, culminating with an impressive set of recent achievements.

We seamlessly transitioned our U.K.-based Derivatives markets to ICE Clear Europe. We were appointed the administrator for LIBOR. We welcomed Oracle to the NYSE as the largest company ever to transfer its listing. Our market share of tech IPOs stands at 64% year-to-date, and we continue to be ranked #1 globally in terms of capital raising.

Trading volumes in our European derivatives franchise, while not as high as the levels we saw in the first quarter, have continued to show strength and we're pleased by the growing momentum in some of our newer products. We are beginning to generate incremental revenue from our new market data initiatives, which should continue to build during the second half of this year. We've continued to reduce our expenses and are on track to beat our full year 2013 guidance of $1.525 billion. And lastly, we retired the remaining $414 million of our June 2013 notes, which will drive $15 million in savings in the remainder of 2013, and $24 million in annual savings next year in 2014. So for the second quarter, we reported $0.63 per share on $611 million in net revenue.

Modest increases in revenue, both year-over-year and quarter-over-quarter, with strong expense discipline, drove earnings higher by 24% year-over-year, reflecting the strong operating leverage in our business model.

Turning to Slide 5. This provides an update of our Derivatives franchise. NYSE Liffe volumes in the second quarter were influenced by increased volatility in global interest rate markets resulting from speculation about future monetary policy. While volumes pulled back from the elevated levels we saw in the first quarter, June was a standout month with STIR futures hitting new monthly records for short sterling and Euribor futures. May also saw an all-time record for gilt volumes. Year-to-date, long gilt futures contracts are up 24% compared to the same period in 2012. In recognition of the growing demand for gilt products, we're looking to launch ultralong gilts and we are also gauging the market potential for index-linked gilts.

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