Interactive Data Corporation (IDC) reported fourth quarter 2009 EPS of 34 cents, just short of the Zacks Consensus Estimate of 35 cents per share.
Revenue
Revenue for the quarter was $194.1 million, remaining unchanged compared to the year-ago quarter. The fourth-quarter 2009 results were generally in line with the company’s expectations. As far as revenue is concerned, the contributions from acquisitions and the positive impact of foreign exchange offset a 3.4% decline in organic revenue.
The decline in organic revenue may be attributed to a record fourth-quarter 2008 revenue that was aided by more than $5.0 million in certain one-time sales, strong usage-related revenue and other items. This apart, the company witnessed softness in its active trader and real-time datafeed services. On the other hand, this softness was partially offset by sustained demand for our fixed income evaluations and reference data services.
In Institutional Services, Interactive Data Pricing and Reference Data reported revenue of $127.6 million, a 2.5% increase over the year-ago period. Also, NTT DATA Financial (NDF), which is 90.0% owned by IDC, contributed another $1.7 million to fourth-quarter 2009 revenue. Excluding the effects of foreign exchange, incremental contributions from NDF, and related inter-company eliminations associated with NDF and the Online Financial Solutions (“OFS”) data and tools assets that were acquired in December 2009, the organic revenue remains unchanged from the same period last year.
Real-Time Services generated revenue of $37.3 million, down 4.2% year-over-year. This decline may be attributed to the increased real-time datafeed services cancellations primarily related to market conditions during the past several quarters, offset to a certain extent by strong organic revenue results for its Web-based solutions in the U.S. in January 2010.
The Fixed Income Analytics segment reported revenue of $8.6 million, up 1.2% from the year-ago quarter. During the fourth quarter, the company released a new product BondEdge Asset Manager under this segment.
In the Active Trader segment, eSignal generated $20.6 million in revenue, down 7.1% year-over-year (or a decline of $1.7 million or 7.7% before the effect of foreign exchange). This can be attributed to lower average subscription fees and lower advertising revenue.
As of December 31, 2009, eSignal gathered around 56,500 direct subscription terminals, which is 3.0% higher than the number of direct subscription terminals as of December 31, 2008. During the recently concluded quarter, this business released Market-QSM 3.2, which provides upgraded features to enable users to track real-time streaming market data directly from their Web browser, including advanced charting, alerts, option chains and Canadian fundamental market data.
Geographically, Interactive Data’s total fourth-quarter 2009 revenue in North America was $134.6 million (down 2.6% from the same period last year), Europe generated $51.3 million (unchanged compared to the year-ago quarter). Interactive Data’s Asia-Pacific revenue of $8.2 million in the fourth quarter of 2009 was up 76.5% from the year-ago quarter, primarily as a result of the NFD contribution.
Operating Results
GAAP operating income for the fourth quarter was $50.4 million (25.9% of revenue), down 11.7% from $57.1 million (29.4% of revenue) reported in the year-ago quarter. Excluding special items like contribution from recently acquired business, related inter-company eliminations and effect of foreign currency, non-GAAP income from operations for the quarter was $53.8 million (27.7% of revenue).
Net Income attributable to shareholders for the third quarter was $33.0 million or $0.34 per share, down 17.6% from $40.1 million or $0.42 per share reported in the year-ago quarter.
Balance Sheet
At the end of the fourth quarter, Interactive Data had no outstanding debt and had cash, cash equivalents and marketable securities of $306.0 million. During the fourth quarter of 2009, the company repurchased 480,000 shares of its common stock at an average price of $26.06 per share.
For the first quarter of 2010, the company has approximately 1.5 million shares available for repurchase under the existing stock buyback program. During the fourth quarter of 2009, Interactive Data paid $18.9 million to stockholders in connection with its regular quarterly dividend of $0.20 per share.
Guidance
The company expects 2010 revenue will be between $810.0 million and $830.0 million due to the contribution from recent acquisitions and improved organic revenue performance over the coming quarters. The company expects that the revenue growth, in combination with ongoing cost-control initiatives, will enable it to generate margins in the range of 25.0% to 26.0%. This apart, the company expects to generate substantial operating cash in 2010.
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