U.S. exchange Nasdaq Stock Market Inc. said Wednesday net profit surged on record high trading volume, increased market share, and a one-time gain on the sale of its stake in the LSE. Q3 net was $365.0 million ($2.41/share), up from $30.2 million ($0.22/share) year-over-year. Included in the gain are pre-tax gains of $431 million on the sale of its 31% stake in the London Stock exchange (full story), net of which, together with other items, EPS was $0.42/share. Revenue was $652 million, up 62% from 2006, while net exchange revenue (excluding liquidity rebates, brokerage, clearance and exchange fees) was up 22.7% to $210 million. Analysts had forecast earnings of $0.39/share on exchange revenue of $210 million. Nasdaq shares are up 42% since CEO Robert Greifeld said on June 30 he would sell the LSE stake and expand into Europe though what emerged as a joint bid for Sweden's OMX AB with Borse Dubai (full story). "The volatility in the equity market is actually great for exchanges. As long as you've got high volumes, Nasdaq and the New York Stock Exchange will benefit," one analyst said. Nasdaq boosted its full-year revenue forecast to between $800 million and $810 million, from a July estimate of as much as $790 million. Operating expenses will be $435-$445 million, vs. July's forecast of $415 million. Nasdaq's matched market share (trades executed internally instead of being routed to other venues) fell to 47.3% from 48.7%, but its share of trades in NYSE Euronext's listed stocks jumped to 18% from 12%. It said it captured 56 new listings during the quarter, of which 24 were IPOs (full earnings call transcript later today). Shares are up 2% in pre-market trading.
Commentary: The Publicly Held Exchange Industry: Is There Any Value Left? • Nasdaq is not a Strategic Asset • An Exchange ETF Would Have Been a Top Performer Over Recent Years
Stocks to watch: NDAQ. Competitors: CME, NYX, ISE, ICE
Earnings call transcript: The Nasdaq Stock Market Q2 2007
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