Nasdaq OMX Group Inc. (NDAQ), the operator of the second-largest U.S. stock exchange, said third-quarter profit rose 27 percent as technology and information services sales advanced.
Net income climbed to $113 million from $89 million in the third quarter a year ago as net revenue advanced 23 percent to a record $506 million, the New York-based company said in a statement today. Earnings excluding some items increased to 66 cents a share in the three months ended Sept. 30 from 62 cents in the year-earlier period. That compares with the 62-cent average estimate of 15 analysts compiled by Bloomberg.
Chief Executive Officer Robert Greifeld is diversifying the business to offset a decline in stock trading. The exchange has bought the eSpeed platform for dealing in U.S. Treasury bonds, the shareholder-relations unit of Thomson Reuters Corp. and a 25 percent stake in The Order Machine, a Dutch alternative trading system focused on options. Nasdaq also has a program called GIFT to fund projects such as a new derivatives market in London.
“Our acquisitions of eSpeed and the IR, PR and Multimedia businesses of Thomson Reuters are ahead of plan and are accretive to earnings,” Greifeld said in the statement. “Although we have more to do to ensure they realize their full potential, our confidence has never been stronger.”
Today’s earnings release is the first since Nasdaq halted trading for thousands of U.S. stocks for three hours on Aug. 22 after a flood of data from NYSE Arca, a rival market, exposed a software flaw in Nasdaq’s conduit for disseminating prices. That prompted U.S. Securities and Exchange Commission Chairman Mary Jo White on Sept. 12 to order market operators to collaborate on avoiding malfunctions.
Nasdaq OMX narrowed its full-year cost guidance, saying core expenses will be in a range of $1.075 billion to $1.09 billion, compared with a previous forecast of $1.07 billion to $1.1 billion. Total expenses will be between $1.12 billion and $1.135 billion, down from the prior estimate of $1.12 billion to $1.16 billion, the company said.
“Our expense discipline has led to very modest organic cost growth thus far in 2013,” Lee Shavel, chief financial officer of Nasdaq, said in the statement. “We are narrowing our full-year expense guidance towards the low end of our previous projections.”
Nasdaq OMX’s biggest rival, NYSE Euronext (NYX), agreed in December to be bought by futures bourse IntercontinentalExchange Inc. for $8 billion in a move that underscored the growing importance of derivatives in the face of shrinking volume worldwide.
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