NYSE Euronext Swings to Profit in Q3

NYSE Euronext Inc. (NYX) reported third-quarter results on Friday.

The company swung to a GAAP net income of $125 million or 44 cents per share from a GAAP net loss of $182 million in the prior quarter and a net income of $174 million or 66 cents in the year-ago period. Results included one-time charge related to merger expenses and exit costs, the impact of the disposition of Hugin Group B.V., the sale of investments in BM&F Bovespa and a fair value adjustment to investment in BIDS Holdings L.P.

Excluding these charges, pro forma earnings per share came in at 53 cents, beating the Consensus forecast by more than 18%, or 8 cents. The upside was attributable to growth in the company’s core businesses, significant progress from new initiatives which offset lower trading volumes.

Net revenue increased 2.1% sequentially but slipped 13.8% year over year to $624 million. The decline was primarily attributable to foreign currency fluctuations.

NYSE Euronext has significantly reduced dependence on the competitive share trading business as 30% of its group revenues now came from derivatives, including its recently launched NYSE Liffe Clearing derivatives clearing unit.

U.S. operations posted a 7.6% year over year decline in revenue to $293 million. Revenue from European operations slumped 17.2% to $337 million due to reduced trading volumes.

Fixed operating expenses decreased 0.7% year over year to $431 million. However, operating income still slumped 33.7% to $197 million, primarily due to negative foreign currency fluctuations. NYSE Euronext also slashed its headcount by 3% from the year-ago quarter to 3,399.

The transatlantic exchange, which operates across 6 cash equities exchanges in 7 countries and 8 derivatives exchanges, offers trading, clearing and settlement in equities, futures, options, fixed-income and exchange-traded products.

Meanwhile, bigger rival CME Group Inc. (CME) reported third-quarter earnings of $3.35 per share earlier this week, beating the Consensus forecast by 5 cents. Other rivals, including IntercontinentalExchange Inc. (ICE) and NASDAQ OMX Group Inc. (NDAQ) are scheduled to announce quarterly results next week.