Interactive Data Corporation (IDC) reported first quarter 2010 EPS of 30 cents, missing the Zacks Consensus estimate of 33 cents per share.
Revenue
Revenue for the quarter was $196.9 million, up 5.8% from $186.0 million reported in the year-ago quarter. The revenue growth may be attributed to the contribution from the company’s recent acquisition and the transaction gains from foreign currency. This apart, the company also witnessed revenue growth from its fixed income evaluation business, reference data and also from its web-based solutions business.
In Institutional Services, Interactive Data Pricing and Reference Data reported revenue of $126.5 million, a 3.8% increase over the year-ago period. Excluding the effects of foreign exchange, incremental contributions from NDF and related inter-company eliminations associated with the Online Financial Solutions (OFS) data and tools assets that were acquired in December 2009, organic revenue grew by 1.6% from the same period last year, attributable to the good performance in the U.S.
Real-Time Services generated revenue of $41.5 million, up 18.9% year over year. Organic revenue, which excludes the effect of foreign exchange, full quarter contribution of acquired OFS assets, contribution from the 7ticks asset, and inter-company eliminations related to acquisitions, declined 2.3% on a year-over-year basis.
Fixed Income Analytics segment reported revenue of $8.6 million, up 5.3% from the year-ago quarter. This may be attributed to the increase in new business activity and to increased usage of BondEdge Asset Manager.
In the Active Trader segment, eSignal generated $20.2 million in revenue, down 4.0% year-over-year (or a decline of $1.3 million or 6.1% before the effect of foreign exchange). This may be attributed to a decline in average subscription fees and also as a result of the decline in advertising revenue. As of March 31, 2010, eSignal gathered around 56,500 direct subscription terminals, which is unchanged on a sequential basis, but down 1.7% from the year-ago quarter. During the recently concluded quarter, eSignal started working on domain trading.
Geographically, Interactive Data’s total first-quarter 2010 revenue in North America was $140.6 million, an increase of 5.7% from the same period last year, while Europe generated $48.5 million, up 4.7% compared to the year-ago quarter. Interactive Data’s Asia-Pacific revenue of $7.8 million in the first quarter of 2010 was up 15.5% from the year-ago quarter.
Operating results
GAAP operating income for the first quarter was $44.5 million (22.6% of revenue), down 8.0% from $48.3 million (25.9% of revenue) reported in the year-ago quarter. The decline in operating income can be attributed to higher personnel cost associated with fixed income evaluations and merit based salary increase, and increase in depreciation and amortization, as a result of higher capital spending.
Excluding special items like cost related to the recently acquired business, inter-company eliminations and the effect of foreign currency, non-GAAP income from operations for the quarter was $47.4 million (27.7% of revenue).
Net Income attributable to shareholders for the first quarter was $29.5 million or 30 cents per share, down 7.6% from $31.9 million or 33 cents per share reported in the year-ago quarter. The decline in net income can be associated with a $3.4 million cost associated with the review of strategic alternatives, which had a downward effect on net income by approximately $2.2 million.
Balance Sheet
At the end of the first quarter, Interactive Data had no outstanding debt and had cash, cash equivalents and marketable securities of $305.9 million. During the first quarter of 2010, the company did not repurchase any common stock. Around 1.5 million shares of common stock remain authorized to be repurchased. During the first quarter of 2010, Interactive Data paid $19.0 million to stockholders in connection with its regular quarterly dividend of $0.20 per share.
Guidance
The company has kept its guidance intact, as declared by it in the previous quarter. The company expects 2010 revenue to be in the range of $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 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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