Earnings Release • Aug 3, 2010
Earnings Release
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-- Second Quarter GAAP Diluted EPS of \$0.70 vs. Prior Year Loss --
-- Diluted EPS of \$0.64 vs. \$0.51, Up 25% Excluding Merger Expenses, Exit Costs and Disposal
Activities --
-- Derivatives Net Revenue Up 34%; Technology Solutions Revenue Up 29% --
Conference Call, Tuesday, August 3, 2010 at 8:00 a.m. (New York, EDT)/2:00 p.m. (Paris, CEST)
• Board declares third quarter 2010 cash dividend of \$0.30 per share 1 All comparisons versus 2Q09 unless otherwise stated. Excludes merger expenses and exit costs and net gain from disposal activities.
2 A full reconciliation of our non-GAAP results to our GAAP results is included in the attached tables. See also our statement on non-GAAP financial measures at the end of this earnings release.
NEW YORK – August 3, 2010 – NYSE Euronext (NYX) today reported net income of \$184 million, or \$0.70 per diluted share for the second quarter of 2010, compared to a net loss of (\$182) million, or (\$0.70) per diluted share for the second quarter of 2009. Results for the second quarter of 2010 and 2009 include \$32 million and \$442 million, respectively, of pre-tax merger expenses and exit costs. Second quarter of 2010 results also include a net \$54 million pre-tax gain from disposal activities. Excluding the impact of these items, net income in the second quarter of 2010 was \$167 million, or \$0.64 per diluted share, compared to \$132 million, or \$0.51 per diluted share, in the second quarter of 2009.
"Our strong second quarter results were driven by robust trading volumes, strong revenue generation from new initiatives across our segments and continued cost discipline, said Duncan L. Niederauer, CEO, NYSE Euronext. And building upon the initial steps taken with the creation of NYSE Liffe Clearing in 2009, we announced our new clearing strategy to develop clearinghouses in London and Paris by the end of 2012. As we move through the remainder of the year, we are focused on further strengthening our competitive position and seamlessly migrating markets and clients to our new data centers, which will serve as the liquidity hubs of the future and create unparalleled low-latency trading communities for market participants. The launch of our new data centers is integral to the implementation of our long-term strategy of operating the most meaningful capital markets, connecting members of the capital markets community to our networks and delivering innovative products to our ever expanding client base."
| % Δ | % Δ | ||||||
|---|---|---|---|---|---|---|---|
| 2Q10 | 1H10 | 1H09 | 1H10 | ||||
| (\$ in millions, except | vs. | vs. | |||||
| EPS) | 2Q10 | 1Q10 | 2Q09 | 2Q09 | 1H09 | ||
| Total Revenues2 | \$1,247 | \$1,083 | \$1,252 | (0%) | \$2,330 | \$2,394 | (3%) |
| Total Revenues, Less | 654 | 645 | 612 | 7% | 1,299 | 1,217 | 7% |
| Transaction-Based | |||||||
| Expenses3 | |||||||
| Other Operating | 407 | 427 | 397 | 3% | 834 | 819 | 2% |
| Expenses | |||||||
| Operating Income4 | \$247 | \$218 | \$215 | 15% | \$465 | \$398 | 17% |
| Net Income4, 5 | \$167 | \$140 | \$132 | 27% | \$307 | \$244 | 26% |
| Diluted Earnings Per | \$0.64 | \$0.54 | \$0.51 | 25% | \$1.18 | \$0.94 | 26% |
| Share4, 5 | |||||||
| Operating Margin | 38% | 34% | 35% | 3 ppts | 36% | 33% | 3 ppts |
| EBITDA Margin | 48% | 44% | 46% | 2 ppts | 46% | 44% | 2 ppts |
The table below summarizes our financial results1 :
1 A full reconciliation of our non-GAAP results to our GAAP results is included in the attached tables. See also our statement on non-GAAP financial measures at the end of this earnings release.
2 Includes activity assessment fees.
3 Transaction-based expenses include section 31 fees, liquidity payments and routing & clearing fees.
4 Excludes merger expenses and exit costs.
5 Excludes net gain from disposal activities in 2Q10.
"During the quarter, we continued to invest in new business initiatives that will drive our future growth and further reduced our fixed operating expenses, commented Michael S. Geltzeiler, Group Executive Vice President and CFO, NYSE Euronext. On a constant dollar, constant portfolio basis, our fixed operating expenses declined \$29 million, or 7%, from the second quarter of 2009. Due to the strengthening of the dollar, we are revising downward our cost guidance and now expect full-year 2010 fixed operating expenses to be between \$1,685 million and \$1,729 million. And lastly, we made significant progress in de-levering, reducing our total debt outstanding by \$538 million since the beginning of the year. Reduced debt levels combined with stronger EBITDA generation resulted in a debt-to-EBITDA ratio of 1.9 times, down from 2.6 times at the end of 2009."
Total revenues less transaction-based expenses (net revenue), which include Section 31 fees, liquidity payments and routing and clearing fees, was \$654 million in the second quarter of 2010, up \$42 million, or 7% compared to \$612 million in the second quarter of 2009. Second quarter of 2010 net revenue compared to the second quarter of 2009 included a \$19 million negative impact attributable to foreign currency fluctuations. On a currency neutral basis, net revenue would have increased 10%. The increase in net revenue compared to the second quarter of 2009 was primarily driven by a \$31 million, or 10% increase in net transaction and clearing revenue, principally related to derivatives trading, and a \$26 million, or 53% increase in technology services revenue. These increases were partially offset by declines in revenue from BlueNext (other revenue), our environmental trading exchange, and market data.
Fixed operating expenses, excluding merger expenses and exit costs, were \$407 million, compared to \$397 million in the second quarter of 2009. Second quarter of 2009 fixed operating expenses included a discrete \$10 million curtailment benefit for changes implemented to certain U.S. retiree medical plans. Excluding the impact of acquisitions, a \$9 million positive impact attributable to foreign currency fluctuations and investment in new businesses, fixed operating expenses were down \$29 million, or 7%, compared to the second quarter of 2009.
Full-year 2010 fixed operating expenses are now expected to be between \$1,685 million and \$1,729 million, adjusted for currency fluctuations. The new full-year 2010 fixed operating expense range is based on estimated full-year 2010 average currency rates of EUR/USD \$1.30 and GBP/USD \$1.50. The previous full-year 2010 fixed operating expense range of \$1,723 million and \$1,768 million was based on 2009 average foreign currency rates of EUR/USD \$1.39 and GBP/USD \$1.57.
Operating income, excluding merger expenses and exit costs, was \$247 million, up 15% compared to the second quarter of 2009. Second quarter 2010 operating income compared to the second quarter of 2009 includes a \$10 million negative impact attributable to foreign currency fluctuations. Operating margin was 38%, up from 35% in the second quarter of 2009 and well above the 32% recorded for fullyear 2009.
Adjusted EBITDA which excludes merger expenses and exit costs, was \$313 million, compared to \$281 million in the second quarter of 2009. Adjusted EBITDA margin was 48% in the second quarter of 2010, compared to 46% in the second quarter of 2009.
Non-operating income for the second quarter of 2010 includes the impact of the investment in New York Portfolio Clearing (income from associates) and NYSE Liffe U.S. (net income attributable to non-controlling interest) initiatives. Both New York Portfolio Clearing and NYSE Liffe U.S. are currently in a loss position. Non-operating income in the second quarter of 2010 also includes a net pre-tax gain of \$54 million related to disposal activities, primarily in connection with the sale of our 5% stake in the National Stock Exchange of India (other income).
The effective tax rate for the second quarter of 2010 was 27.5%.
At June 30, 2010, total debt declined \$538 million from December 31, 2009 to \$2.2 billion and consists of \$1.9 billion in long-term debt and \$0.3 billion in short-term debt. Cash, cash equivalents, investments and other securities (including \$155 million related to Section 31 fees collected from market participants and due to the SEC) was \$0.4 billion and net debt was \$1.8 billion.
Headcount as of June 30, 2010 was 2,993, down 11% from December 31, 2009 and down 15% from June 30, 2009. June 30, 2010 headcount reflects 165 staff transitioned to FINRA as part of their agreement to assume market surveillance and enforcement functions previously conducted by NYSE Regulation.
The Board of Directors declared a cash dividend of \$0.30 per share for the third quarter of 2010. The third quarter 2010 dividend is payable September 30, 2010 to shareholders of record as of the close of business on September 15, 2010. The anticipated ex-date will be September 13, 2010.
NYSE Euronext's reportable segments are focused on three global business units: Derivatives, Cash Trading and Listings, and Information Services and Technology Solutions. The financial results for each reported segment are presented below.
The table below summarizes our second quarter of 2010 Derivatives segment results. In the second quarter of 2010, the Derivatives segment represented 35% of net revenue and 49% of operating income for NYSE Euronext (excluding merger expenses and exit costs), up from 28% and 32%, respectively, in the second quarter of 2009.
| % ∆ 2Q10 vs. |
1H10 | 1H09 | % ∆ 1H10 vs. |
||||
|---|---|---|---|---|---|---|---|
| (\$ in millions) | 2Q10 | 1Q10 | 2Q09 | 2Q09 | 1H09 | ||
| Total Revenues | \$305 | \$298 | \$219 | 39% | \$603 | \$417 | 45% |
| Total Revenues, Less | 226 | 224 | 169 | 34% | 450 | 325 | 38% |
| Transaction-Based | |||||||
| Expenses1 | |||||||
| Merger Expenses & Exit | 5 | 3 | 371 | NM | 8 | 377 | NM |
| Costs (M&E) | |||||||
| Other Operating Expenses | 86 | 94 | 96 | (10%) | 180 | 188 | (4%) |
| Operating Income – | \$135 | \$127 | (\$298) | NM | \$262 | (\$240) | NM |
| GAAP | |||||||
| Operating Income – | \$140 | \$130 | \$73 | 92% | \$270 | \$137 | 97% |
| Excluding M&E | |||||||
| Adjusted EBITDA | \$153 | \$145 | \$91 | 68% | \$298 | \$175 | 70% |
| Operating Margin – | 62% | 58% | 43% | 19 ppts | 60% | 42% | 18 ppts |
| Excluding M&E | |||||||
| EBITDA Margin – | 68% | 65% | 54% | 14 ppts | 66% | 54% | 12 ppts |
| Excluding M&E |
1 Transaction-based expenses include section 31 fees, liquidity payments and routing & clearing fees.
NM=not meaningful
The average net rate per contract for European derivatives (excluding Bclear), including the impact of currency fluctuations, in the second quarter of 2010 was \$0.64 per contract, up from \$0.60 per contract in the second quarter of 2009, but down from \$0.66 per contract in the first quarter of 2010. On a currency neutral basis, using second quarter of 2010 currency rates, the average net rate per contract in the first quarter of 2010 was \$0.63 and \$0.58 in the second quarter of 2009.
U.S. equity options net transaction revenue of \$42 million in the second quarter of 2010 increased \$9 million, or 27% compared to the second quarter of 2009 and was flat compared to the first quarter of 2010. The increase in net transaction revenue compared to the second quarter of 2009 was primarily driven by a 57% increase in U.S. equity options ADV to 4.1 million contracts, up from 2.6 million contracts in the prior year period. Net transaction revenue was flat compared to the first quarter of 2010 due to a decline in capture rates of approximately 11% which offset a 10% increase in U.S. options ADV in the second quarter of 2010.
The table below summarizes our second quarter of 2010 Cash Trading and Listings segment results. In the second quarter of 2010, the Cash Trading and Listings segment represented 49% of net revenue and 44% of operating income for NYSE Euronext (excluding merger expenses and exit costs), down from 59% and 63%, respectively, in the second quarter of 2009.
| % ∆ 2Q10 |
1H10 | 1H09 | % ∆ 1H10 |
||||
|---|---|---|---|---|---|---|---|
| vs. | vs. | ||||||
| (\$ in millions) | 2Q10 | 1Q10 | 2Q09 | 2Q09 | 1H09 | ||
| Total Revenues1 | \$835 | \$676 | \$949 | (12%) | \$1,511 | \$1,811 | (17%) |
| Total Revenues, Less | 321 | 312 | 359 | (11%) | 633 | 726 | (13%) |
| Transaction-Based | |||||||
| Expenses2 | |||||||
| Merger Expenses & Exit | 19 | 7 | 62 | (69%) | 26 | 74 | (65%) |
| Costs (M&E) | |||||||
| Other Operating Expenses | 195 | 206 | 215 | (9%) | 401 | 436 | (8%) |
| Operating Income – | \$107 | \$99 | \$82 | 30% | \$206 | \$216 | (5%) |
| GAAP | |||||||
| Operating Income – | \$126 | \$106 | \$144 | (13%) | \$232 | \$290 | (20%) |
| Excluding M&E | |||||||
| Adjusted EBITDA | \$171 | \$149 | \$186 | (8%) | \$320 | \$374 | (14%) |
| Operating Margin – | 39% | 34% | 40% | (1 ppts) | 37% | 40% | (3 ppts) |
| Excluding M&E | |||||||
| EBITDA Margin – | 53% | 48% | 52% | 1 ppts | 51% | 52% | (1 ppts) |
| Excluding M&E |
1 Includes the impact of activity assessment fees.
2 Transaction-based expenses include section 31 fees, liquidity payments and routing & clearing fees.
first quarter of 2010. On a currency neutral basis, using second quarter of 2010 currency rates, the average net revenue per transaction in the first quarter of 2010 was \$0.74 and \$0.84 in the second quarter of 2009.
Technology-related IPOs year-to-date include Sensata Technologies, MaxLinear, Calix, Higher One Holdings, Fabrinet, RealD and Green Dot.
The table below summarizes our second quarter of 2010 Information Services and Technology Solutions segment results. In the second quarter of 2010, the Information Services and Technology Solutions segment represented 16% of net revenue and 7% of operating income for NYSE Euronext (excluding merger expenses and exit costs), up from 14% and 5%, respectively, in the second quarter of 2009.
| % ∆ | % ∆ | ||||||
|---|---|---|---|---|---|---|---|
| 2Q10 | 1H10 | 1H09 | 1H10 | ||||
| vs. | vs. | ||||||
| (\$ in millions) | 2Q10 | 1Q10 | 2Q09 | 2Q09 | 1H09 | ||
| Total Revenues | \$107 | \$110 | \$83 | 29% | \$217 | \$166 | 31% |
| Merger Expenses & Exit | 8 | 2 | 7 | 14% | 10 | 12 | (17%) |
| Costs (M&E) | |||||||
| Other Operating Expenses | 87 | 93 | 71 | 23% | 180 | 143 | 26% |
| Operating Income – GAAP | \$12 | \$15 | \$5 | 140% | \$27 | \$11 | 145% |
| Operating Income – | \$20 | \$17 | \$12 | 67% | \$37 | \$23 | 61% |
| Excluding M&E | |||||||
| Adjusted EBITDA | \$28 | \$25 | \$18 | 56% | \$53 | \$35 | 51% |
| Operating Margin – | 19% | 15% | 14% | 5 ppts | 17% | 14% | 3 ppts |
| Excluding M&E | |||||||
| EBITDA Margin – | 26% | 23% | 22% | 4 ppts | 24% | 21% | 3 ppts |
| Excluding M&E |
• Information Services and Technology Solutions revenue was \$107 million in the second quarter of 2010, an increase of \$24 million, or 29% compared to the second quarter of 2009 and included a \$3 million negative impact from foreign currency fluctuations. Revenue decreased \$3 million, or 3% compared to the first quarter of 2010 and included a \$4 million negative impact from foreign currency fluctuations. The increase in revenue compared to the second quarter of 2009 was primarily driven by the impact of the NYFIX acquisition and an increase in global SFTI and software sales revenue. Adjusting for the impact of foreign currency fluctuations, revenue in the second quarter would have increased 33% compared to the second quarter of 2009 and would have increased 1% compared to the first quarter of 2010.
Summarized below are the results for Corporate and Eliminations. Corporate and Eliminations includes unallocated costs primarily related to corporate governance, public company expenses, onetime integration costs related to the new data centers, as well as intercompany eliminations of revenues and expenses.
| % ∆ 2Q10 |
1H10 | 1H09 | % ∆ 1H10 |
||||
|---|---|---|---|---|---|---|---|
| vs. | vs. | ||||||
| (\$ in millions) | 2Q10 | 1Q10 | 2Q09 | 2Q09 | 1H09 | ||
| Total Revenues | \$- | (\$1) | \$1 | NM | (\$1) | \$- | NM |
| Merger Expenses & Exit | - | 1 | 2 | NM | 1 | 2 | (50%) |
| Costs (M&E) | |||||||
| Other Operating Expenses | 39 | 34 | 15 | NM | 73 | 52 | 40% |
| Operating Income – GAAP | (\$39) | (\$36) | (\$16) | NM | (\$75) | (\$54) | (39%) |
| Operating Income – | (\$39) | (\$35) | (\$14) | NM | (\$74) | (\$52) | (42%) |
| Excluding M&E | |||||||
| Adjusted EBITDA | (\$39) | (\$35) | (\$14) | NM | (\$74) | (\$52) | (42%) |
| Operating Margin – | NM | NM | NM | NM | NM | ||
| Excluding M&E |
| EBITDA Margin – | NM | NM | NM | NM | NM | |
|---|---|---|---|---|---|---|
| Excluding M&E | ||||||
| NM=Not meaningful |
• Fixed operating expenses in the second quarter of 2010 increased \$24 million compared to second quarter of 2009 due to an increase in data center/integration costs of \$15 million and a discrete \$10 million curtailment benefit for changes implemented to certain U.S. retiree medical plans in the second quarter of 2009.
A presentation and live audio webcast of the second quarter 2010 earnings conference call will be available on the Investor Relations section of NYSE Euronext's website,
http://www.nyseeuronext.com/ir. Those wishing to listen to the live conference via telephone should dial-in at least ten minutes before the call begins. An audio replay of the conference call will be available approximately one hour after the call on the Investor Relations section of NYSE Euronext's website, http://www.nyseeuronext.com/ir or by dial-in beginning approximately two hours following the conclusion of the live call.
United States: 866.788.0541 International: 857.350.1679 Passcode: 83134795
Replay Dial-in Information: United States: 888.286.8010 International: 617.801.6888 Passcode: 59984384
To supplement NYSE Euronext's consolidated financial statements prepared in accordance with GAAP and to better reflect period-over-period comparisons, NYSE Euronext uses non-GAAP financial measures of performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure, calculated and presented in accordance with GAAP. Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to (i) present the effects of certain merger expenses, exit costs and other special items, and (ii) improve overall understanding of NYSE Euronext's current financial performance and its prospects for the future. Specifically, NYSE Euronext believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to financial condition and operating results. In addition, management uses these measures for reviewing financial results and evaluating financial performance. The non-GAAP adjustments for all periods presented are based upon information and assumptions available as of the date of this release.
NYSE Euronext (NYX) is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the United States trade equities, futures, options, fixed-income and exchange-traded products. With approximately 8,000 listed issues (excluding European Structured Products), NYSE Euronext's equities markets – the New York Stock Exchange, NYSE Euronext, NYSE Amex, NYSE Alternext and NYSE Arca – represent onethird of the world's equities trading, the most liquidity of any global exchange group. NYSE Euronext also operates NYSE Liffe, one of the leading European derivatives businesses and the world's second-largest derivatives business by value of trading. The company offers comprehensive commercial technology, connectivity and market data products and services
through NYSE Technologies. NYSE Euronext is in the S&P 500 index, and is the only exchange operator in the S&P 100 index and Fortune 500. For more information, please visit: http://www.nyx.com.
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause NYSE Euronext's results to differ materially from current expectations include, but are not limited to: NYSE Euronext's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext's reference document for 2009 ("document de référence") filed with the French Autorité des Marchés Financiers (Filed on April 22, 2010 under No. D.10-0304), 2009 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés Financiers. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.
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Condensed consolidated statements of income (unaudited) (in millions, except per share data)
| Three months ended June 30, | Six months ended June 30, | ||||||
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||||
| Revenues | |||||||
| Transaction and clearing fees | \$ 927 |
\$ 943 |
\$ 1,689 |
\$ | 1,773 | ||
| Market data | 93 | 101 | 184 | 204 | |||
| Listing | 105 | 101 | 210 | 201 | |||
| Technology services | 75 | 49 | 154 | 99 | |||
| Other revenues | 47 | 58 | 93 | 117 | |||
| Total revenues | 1,247 | 1,252 | 2,330 | 2,394 | |||
| Transaction-based expenses: | |||||||
| Section 31 fees | 99 | 126 | 162 | 156 | |||
| Liquidity payments, routing and clearing | 494 | 514 | 869 | 1,021 | |||
| Total revenues, less transaction-based expenses | 654 | 612 | 1,299 | 1,217 | |||
| Other operating expenses | |||||||
| Compensation | 160 | 158 | [a] | 332 | 326 | [a] | |
| Depreciation and amortization | 66 | 66 | 132 | 134 | |||
| Systems and communications | 47 | 56 | 99 | 113 | |||
| Professional services | 66 | 43 | 124 | 98 | |||
| Selling, general and administrative | 68 | 74 | 147 | 148 | |||
| Merger expenses and exit costs | 32 | 442 | 45 | 465 | |||
| Total other operating expenses | 439 | 839 | 879 | 1,284 | |||
| Operating income (loss) | 215 | (227) | 420 | (67) | |||
| Net interest and investment (loss) income | (25) | (28) | (52) | (54) | |||
| Income (loss) from associates | (1) | - | (3) | - | |||
| Other income | 56 | 4 | 53 | 8 | |||
| Income (loss) before income taxes | 245 | (251) | 418 | (113) | |||
| Income tax (provision) benefit | (66) | 72 | (114) | 40 | |||
| Net income (loss) | 179 | (179) | 304 | (73) | |||
| Net loss (income) attributable to noncontrolling interest | 5 | (3) | 10 | (5) | |||
| Net income (loss) attributable to NYSE Euronext | \$ 184 |
\$ (182) |
\$ 314 |
\$ | (78) | ||
| Basic earnings per share attributable to NYSE Euronext | \$ 0.70 |
\$ (0.70) |
\$ 1.20 |
\$ | (0.30) | ||
| Diluted earnings per share attributable to NYSE Euronext | \$ 0.70 |
\$ (0.70) |
\$ 1.20 |
\$ | (0.30) | ||
| Basic weighted average shares outstanding | 261 | 260 | 261 | 260 | |||
| Diluted weighted average shares outstanding | 261 | 260 | 261 | 260 |
[a] The results of operations for the three and six months ended June 30, 2009 include a \$10 million benefit curtailment gain.
We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of our GAAP financial results but are provided to improve overall understanding of our current financial performance and our prospects for the future.
| Three months ended June 30, | Six months ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| Non-GAAP Reconciliation | 2010 | 2009 | 2010 | 2009 | ||||
| Income (loss) before income taxes - GAAP | \$ 245 |
\$ | (251) | \$ | 418 | \$ | (113) | |
| Excluding: | ||||||||
| Merger expenses and exit costs | 32 | 442 | 45 | 465 | ||||
| Net gain on disposal activities | (54) | - | (54) | - | ||||
| Income before income taxes - as adjusted | 223 | 191 | 409 | 352 | ||||
| Income tax provision | (61) | (56) | (112) | (103) | ||||
| Net income - as adjusted | 162 | 135 | 297 | 249 | ||||
| Net loss (income) attributable to noncontrolling interest | 5 | (3) | 10 | (5) | ||||
| Net income attributable to NYSE Euronext - as adjusted | \$ 167 |
\$ | 132 | \$ | 307 | \$ | 244 | |
| Diluted earnings per share attributable to NYSE Euronext | \$ 0.64 |
\$ | 0.51 | \$ | 1.18 | \$ | 0.94 |
| (in millions) | |
|---|---|
| Three months ended | June 30, 2010 Information |
Three months ended June 30, 2009 Information |
||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Derivatives | Cash Trading and Listings |
Services and Technology Solutions |
Corporate and Eliminations |
Consolidated | Derivatives | Cash Trading and Listings |
Services and Technology Solutions |
Corporate and Eliminations |
Consolidated | |||||||||
| Revenues Transaction and clearing fees Market data Listing Technology services Other revenues Total revenues Transaction-based expenses: Section 31 fees Liquidity payments, routing and clearing Total revenues, less transaction-based expenses |
- - - |
282 \$ 12 11 305 79 226 |
645 \$ 49 105 - 36 835 99 415 321 |
- \$ - - - - |
32 75 107 107 |
- \$ - - - - - - - - |
927 \$ 93 105 75 47 1,247 99 494 654 |
- - - |
202 \$ 10 7 219 50 169 |
- | 741 \$ 57 101 50 949 126 464 359 |
- \$ - - - - |
34 49 83 83 |
- \$ - - - - - |
1 1 1 |
943 \$ 101 101 49 58 1,252 126 514 612 |
||
| Depreciation and amortization Merger expenses and exit costs (M&E) Other operating expenses Operating income (loss) - GAAP Operating income excluding M&E Adjusted EBITDA Operating margin excluding M&E |
[a] [b] [c] [c] + [b] [c] + [a] + [b] |
13 5 73 135 \$ 140 \$ 153 \$ 62% |
45 19 150 107 \$ 126 \$ 171 \$ 39% |
8 8 79 12 \$ 20 \$ 28 \$ 19% |
- - 39 (39) \$ (39) \$ (39) \$ N/M |
66 32 341 215 \$ 247 \$ 313 \$ |
38% | 18 371 78 (298) \$ 73 \$ 91 \$ 43% |
42 62 173 82 \$ 144 \$ 186 \$ 40% |
6 7 65 5 \$ 12 \$ 18 \$ 14% |
- | 2 15 (16) \$ (14) \$ (14) \$ N/M |
66 442 331 (227) \$ 215 \$ 281 \$ 35% |
|||||
| Adjusted EBITDA margin | 68% | 53% | 26% | N/M | 48% | 54% | 52% | 22% | N/M | 46% | ||||||||
| Six months ended June 30, 2010 |
Six months ended June 30, 2009 |
|||||||||||||||||
| Derivatives | Cash Trading and Listings |
Information Services and Technology Solutions |
Corporate and Eliminations |
Consolidated | Derivatives | Cash Trading and Listings |
Information Services and Technology Solutions |
Corporate and Eliminations |
Consolidated | |||||||||
| Revenues Transaction and clearing fees Market data Listing Technology services Other revenues Total revenues |
- - |
560 \$ 24 19 603 |
1,129 \$ 97 210 - 75 1,511 |
- \$ - - |
63 154 217 |
- \$ - - - (1) (1) |
1,689 \$ 184 210 154 93 2,330 |
- - |
384 \$ 21 12 417 |
- | 1,389 \$ 116 201 105 1,811 |
- \$ - - |
67 99 166 |
- \$ - - - - - |
1,773 \$ 204 201 99 117 2,394 |
|||
| Transaction-based expenses: Section 31 fees Liquidity payments, routing and clearing Total revenues, less transaction-based expenses Depreciation and amortization Merger expenses and exit costs (M&E) Other operating expenses Operating income (loss) - GAAP Operating income excluding M&E Adjusted EBITDA |
[a] [b] [c] [c] + [b] [c] + [a] + [b] |
- | 153 450 28 8 152 262 \$ 270 \$ 298 \$ |
162 716 633 88 26 313 206 \$ 232 \$ 320 \$ |
- - |
217 16 10 164 27 \$ 37 \$ 53 \$ |
- - (1) - 1 73 (75) \$ (74) \$ (74) \$ |
162 869 1,299 132 45 702 420 \$ 465 \$ 597 \$ |
- | 92 325 38 377 150 (240) \$ 137 \$ 175 \$ |
156 929 726 84 74 352 216 \$ 290 \$ 374 \$ |
- - |
166 12 12 131 11 \$ 23 \$ 35 \$ |
- - - - |
2 52 (54) \$ (52) \$ (52) \$ |
156 1,021 1,217 134 465 685 (67) \$ 398 \$ 532 \$ |
N/M = Not meaningful
We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of our GAAP financial results but are provided to improve overall understanding of our current financial performance and our prospects for the future.
| Fixed operating expenses for the three months ended June 30, 2010 - GAAP Less: |
\$ 439 |
|
|---|---|---|
| Merger expenses and exit costs | \$ (32) 407 |
|
| Excluding the impact of: | ||
| Currency translation | 9 | |
| Acquisitions and dispositions, net | * (10) | |
| New business initiatives | ** (13) | |
| Duplicative datacenter and integration | (15) | |
| Fixed operating expenses for the three months ended June 30, 2010 - as adjusted | \$ 378 |
[a] |
| Fixed operating expenses for the three months ended June 30, 2009 - GAAP Less: |
\$ 839 |
|
| Merger expenses and exit costs | (442) | |
| Excluding the impact of: | ||
| Benefit curtailment gain | *** 10 | |
| Fixed operating expenses for the three months ended June 30, 2009 - as adjusted | \$ 407 |
[b] |
| Variance (\$) | \$ (29) |
[a] - [b] = [c] |
| Variance (%) | -7% | [c] / [b] |
| Fixed operating expenses for the six months ended June 30, 2010 - GAAP | \$ 879 |
|
| Less: | ||
| Merger expenses and exit costs | \$ (45) 834 |
|
| Excluding the impact of: | ||
| Currency translation | (2) | |
| Acquisitions and dispositions, net | * (22) | |
| New business initiatives | ** (28) | |
| Duplicative datacenter and integration | (24) | |
| Fixed operating expenses for the six months ended June 30, 2010 - as adjusted | \$ 758 |
[a] |
| Fixed operating expenses for the six months ended June 30, 2009 - GAAP | ||
| \$ 1,284 |
||
| Less: | ||
| Merger expenses and exit costs | (465) | |
| Excluding the impact of: | ||
| Benefit curtailment gain | *** 10 | |
| Fixed operating expenses for the six months ended June 30, 2009 - as adjusted | \$ 829 |
[b] |
| Variance (\$) | \$ (71) |
[a] - [b] = [c] |
| Variance (%) | -9% | [c] / [b] |
* Includes the contribution of NYFIX, net of the disposition of Hugin.
** Includes the contribution of new business initiatives, primarily NYSE Liffe Clearing.
*** Includes curtailment gain associated with changes to U.S. retiree medical plan.
our GAAP financial results but are provided to improve overall understanding of our current financial performance and our prospects for the future. We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to the presentation of
| June 30, | December | |
|---|---|---|
| 2010 | 31, 2009 | |
| Assets | ||
| Current assets: | ||
| Cash, cash equivalents, investment and other securities | \$ 419 |
\$ 490 |
| Accounts receivable, net | 729 | 660 |
| Deferred income taxes | 83 | 100 |
| Other current assets | 181 | 270 |
| Total current assets | 1,412 | 1,520 |
| Property and equipment, net | 991 | 986 |
| Goodwill | 3,863 | 4,210 |
| Other intangible assets, net | 5,532 | 6,184 |
| Deferred income taxes | 618 | 680 |
| Investment in associates and other assets | 627 | 802 |
| Total assets | \$ 13,043 |
\$ 14,382 |
| Liabilities and equity | ||
| Accounts payable and accrued expenses | \$ 1,110 |
\$ 1,352 |
| Deferred revenue | 368 | 163 |
| Short term debt | 282 | 616 |
| Deferred income taxes | 17 | 18 |
| Total current liabilities | 1,777 | 2,149 |
| Long term debt | 1,962 | 2,166 |
| Deferred income taxes | 1,970 | 2,090 |
| Accrued employee benefits | 482 | 504 |
| Deferred revenue | 354 | 362 |
| Other liabilities | 169 | 176 |
| Total liabilities | 6,714 | 7,447 |
| Equity | 6,329 | 6,935 |
| Total liabilities and equity | \$ 13,043 |
\$ 14,382 |
| Average Daily Volume | Total Volume | Total Volume | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2Q10 vs. 2Q09 | 2Q10 vs. 2Q09 | ||||||||||
| (Unaudited) | 2Q10 | 1Q10 | 2Q09 | % Chg | 2Q10 | 1Q10 | 2Q09 | % Chg | YTD 2010 | YTD 2009 | % Chg |
| Number of Trading Days - European Markets | 63 | 63 | 62 | 63 | 63 | 62 | 126 | 125 | |||
| Number of Trading Days - U.S. Markets | 63 | 61 | 63 | 63 | 61 | 63 | 124 | 124 | |||
| European Derivatives Products (contracts in thousands) | 6,628 | 4,851 | 4,884 | 35.7% | 417,597 | 305,606 | 302,754 | 37.9% | 723,204 | 540,843 | 33.7% |
| of which Bclear | 2,651 | 972 | 1,681 | 57.7% | 167,029 | 61,234 | 104,198 | 60.3% | 228,263 | 148,239 | 54.0% |
| Avg. Net Rate Per Contract (ex. Bclear) | \$ 0.64 \$ |
0.66 \$ | 0.60 | 6.7% | \$ 0.64 |
\$ 0.66 |
\$ 0.60 |
6.7% | |||
| Total Interest Rate Products1 | 2,668 | 2,711 | 2,163 | 23.4% | 168,095 | 170,820 | 134,063 | 25.4% | 338,916 | 259,247 | 30.7% |
| Short Term Interest Rate Products | 2,546 | 2,594 | 2,064 | 23.4% | 160,423 | 163,418 | 127,949 | 25.4% | 323,841 | 246,800 | 31.2% |
| Medium and Long Term Interest Rate Products | 122 | 117 | 99 | 24.1% | 7,672 | 7,402 | 6,114 | 25.5% | 15,075 | 12,447 | 21.1% |
| Total Equity Products2 | 3,905 | 2,088 | 2,672 | 46.2% | 246,021 | 131,513 | 165,649 | 48.5% | 377,534 | 275,691 | 36.9% |
| Individual Equity Products | 3,197 | 1,466 | 2,060 | 55.2% | 201,434 | 92,343 | 127,714 | 57.7% | 293,777 | 196,159 | 49.8% |
| Futures | 2,402 | 726 | 1,417 | 69.5% | 151,304 | 45,712 | 87,873 | 72.2% | 197,016 | 115,450 | 70.7% |
| Options | 796 | 740 | 643 | 23.8% | 50,130 | 46,631 | 39,841 | 25.8% | 96,760 | 80,709 | 19.9% |
| Equity Index Products | 708 | 622 | 612 | 15.7% | 44,587 | 39,170 | 37,935 | 17.5% | 83,758 | 79,532 | 5.3% |
| of which Bclear | 2,651 | 972 | 1,681 | 57.8% | 167,029 | 61,234 | 104,198 | 60.3% | 228,263 | 148,239 | 54.0% |
| Individual Equity Products | 2,551 | 851 | 1,556 | 64.0% | 160,737 | 53,634 | 96,474 | 66.6% | 214,371 | 131,234 | 63.3% |
| Futures | 2,400 | 725 | 1,405 | 70.8% | 151,223 | 45,653 | 87,112 | 73.6% | 196,877 | 114,269 | 72.3% |
| Options | 151 | 127 | 151 | 0.3% | 9,514 | 7,981 | 9,362 | 1.6% | 17,495 | 16,966 | 3.1% |
| Equity Index Products | 100 | 121 | 125 | -19.8% | 6,292 | 7,600 | 7,724 | -18.5% | 13,892 | 17,005 | -18.3% |
| Commodity Products | 55 | 52 | 49 | 12.6% | 3,481 | 3,273 | 3,042 | 14.4% | 6,754 | 5,905 | 14.4% |
| U.S. Derivatives Products - Equity Options 3 (contracts in thousands) | |||||||||||
| Options Contracts | 4,064 | 3,713 | 2,590 | 56.9% | 256,038 | 226,490 | 163,192 | 56.9% | 482,527 | 302,309 | 59.6% |
| Avg. Net Rate Per Contract | \$ 0.17 \$ 15,683 |
0.19 \$ 13,975 |
0.20 14,229 |
-15.0% | \$ 0.17 988,057 |
\$ 0.19 825,501 |
\$ 0.20 896,411 |
-15.0% | \$ 0.17 1,840,558 |
\$ 0.22 1,697,023 |
-22.7% |
| Total Consolidated Options Contracts | 10.2% | 10.2% | 8.5% | ||||||||
| Share of Total | 25.9% | 26.6% | 18.2% | 25.9% | 26.6% | 18.2% | 26.2% | 17.8% | |||
| NYSE Liffe U.S. | |||||||||||
| Futures and Futures Options Volume | 18.6 | 20.8 | 13.9 | 33.3% | 1,170.0 | 1,267.7 | 877.4 | 33.3% | 2,437.7 | 2,163.5 | 12.7% |
| European Cash Products (trades in thousands) | 1,722 | 1,369 | 1,455 | 18.4% | 108,485 | 86,224 | 90,184 | 20.3% | 194,709 | 176,812 | 10.1% |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Avg. Net Revenue Per Transaction | \$ 0.65 \$ |
0.80 \$ | 0.90 | -27.8% | \$ 0.65 |
\$ 0.80 |
\$ 0.90 |
-27.8% | |||
| Equities | 1,654 | 1,313 | 1,395 | 18.6% | 104,207 | 82,696 | 86,504 | 20.5% | 186,904 | 169,003 | 10.6% |
| Exchange-Traded Funds | 22 | 16 | 15 | 46.7% | 1,361 | 1,012 | 912 | 49.3% | 2,373 | 1,783 | 33.1% |
| Structured Products | 40 | 34 | 39 | 3.6% | 2,532 | 2,115 | 2,409 | 5.1% | 4,647 | 5,324 | -12.7% |
| Bonds | 6 | 6 | 6 | 5.4% | 385 | 401 | 359 | 7.1% | 785 | 702 | 11.8% |
| U.S. Cash Products (shares in millions) | 3,214 | 2,541 | 3,642 | -11.7% | 202,510 | 154,993 | 229,433 | -11.7% | 357,503 | 474,990 | -24.7% |
| Avg. Net Revenue Per 100 Shares Handled | \$ 0.030 \$ |
0.032 \$ | 0.031 | -3.2% | \$ 0.030 |
\$ 0.032 |
\$ 0.031 |
-3.2% | \$ 0.031 |
\$ 0.026 |
19.0% |
| NYSE Listed Issues 4 | |||||||||||
| Handled Volume 5 | 2,367 | 1,824 | 2,634 | -10.2% | 149,105 | 111,249 | 165,966 | -10.2% | 260,354 | 344,346 | -24.4% |
| Matched Volume 6 | 2,219 | 1,692 | 2,394 | -7.3% | 139,798 | 103,195 | 150,847 | -7.3% | 242,993 | 312,247 | -22.2% |
| Total NYSE Listed Consolidated Volume | 6,019 | 4,866 | 6,086 | -1.1% | 379,202 | 296,818 | 383,397 | -1.1% | 676,021 | 772,291 | -12.5% |
| Share of Total NYSE Listed Consolidated Volume | |||||||||||
| Handled Volume 5 | 39.3% | 37.5% | 43.3% | -4.0% | 39.3% | 37.5% | 43.3% | -4.0% | 38.5% | 44.6% | -6.1% |
| Matched Volume 6 | 36.9% | 34.8% | 39.3% | -2.4% | 36.9% | 34.8% | 39.3% | -2.4% | 35.9% | 40.4% | -4.5% |
| NYSE Arca & Amex Listed Issues | |||||||||||
| Handled Volume 5 | 381 483 | 608 | -20.5% | 30,460 | 23,260 | 38,298 | -20.5% | 53,720 | 80,042 | -32.9% | |
| Matched Volume 6 | 337 434 | 531 | -18.3% | 27,327 | 20,579 | 33,456 | -18.3% | 47,906 | 70,246 | -31.8% | |
| Total NYSE Arca & Amex Listed Consolidated Volume | 1,842 | 1,470 | 2,253 | -18.2% | 116,057 | 89,652 | 141,909 | -18.2% | 205,709 | 286,062 | -28.1% |
| Share of Total NYSE Arca & NYSE Amex Listed Consolidated Volume | |||||||||||
| Handled Volume 5 | 26.2% | 25.9% | 27.0% | -0.8% | 26.2% | 25.9% | 27.0% | -0.8% | 26.1% | 28.0% | -1.9% |
| Matched Volume 6 | 23.5% | 23.0% | 23.6% | -0.1% | 23.5% | 23.0% | 23.6% | -0.1% | 23.3% | 24.6% | -1.3% |
| Nasdaq Listed Issues | |||||||||||
| Handled Volume 5 | 364 | 336 | 400 | -8.9% | 22,945 | 20,484 | 25,169 | -8.8% | 43,428 | 50,602 | -14.2% |
| Matched Volume 6 | 307 | 275 | 328 | -6.4% | 19,337 | 16,750 | 20,633 | -6.3% | 36,088 | 41,686 | -13.4% |
| Total Nasdaq Listed Consolidated Volume | 2,529 | 2,339 | 2,409 | 5.0% | 159,309 | 142,682 | 151,790 | 5.0% | 301,991 | 288,024 | 4.8% |
| Share of Total Nasdaq Listed Consolidated Volume | |||||||||||
| Handled Volume 5 | 14.4% | 14.4% | 16.6% | -2.2% | 14.4% | 14.4% | 16.6% | -2.2% | 14.4% | 17.6% | -3.2% |
| Matched Volume 6 | 12.1% | 11.7% | 13.6% | -1.5% | 12.1% | 11.7% | 13.6% | -1.5% | 11.9% | 14.5% | -2.6% |
| Exchange-Traded Funds 5,7 | |||||||||||
| Handled Volume 5 | 465 | 365 | 598 | -22.2% | 29,317 | 22,256 | 37,655 | -22.1% | 51,573 | 79,811 | -35.4% |
| Matched Volume 6 | 418 | 324 | 523 | -20.0% | 26,361 | 19,774 | 32,978 | -20.1% | 46,135 | 70,168 | -34.3% |
| Total ETF Consolidated Volume | 1,826 | 1,443 | 2,278 | -19.9% | 115,020 | 88,017 | 143,542 | -19.9% | 203,037 | 292,412 | -30.6% |
| Share of Total ETF Consolidated Volume | |||||||||||
| Handled Volume 5 | 25.5% | 25.3% | 26.2% | -0.7% | 25.5% | 25.3% | 26.2% | -0.7% | 25.4% | 27.3% | -1.9% |
| Matched Volume 6 | 22.9% | 22.5% | 23.0% | -0.1% | 22.9% | 22.5% | 23.0% | -0.1% | 22.7% | 24.0% | -1.3% |
1 Data includes currency products.
2 Includes all trading activities for Bclear, NYSE Liffe's clearing service for wholesale derivatives.
3 Includes trading in U.S. equity options contracts, not equity-index options.
4 Includes all volume executed in NYSE crossing sessions.
5 Represents the total number of shares of equity securities and ETFs internally matched on NYSE Euronext's exchanges or routed to and executed at an
6 external market center. NYSE Arca routing includes odd-lots. Represents the total number of shares of equity securities and ETFs executed on NYSE Euronext's exchanges.
7 Data included in previously identified categories.
Source: NYSE Euronext, Options Clearing Corporation and Consolidated Tape as reported for equity securities.
All trading activity is single-counted, except European cash trading which is double counted to include both buys and sells.
| Three Months Ended | |||
|---|---|---|---|
| (Unaudited) | June 30, 2010 | March 31, 2010 | June 30, 2009 |
| NYSE Euronext Listed Issuers | |||
| NYSE Listed Issuers | |||
| Issuers listed on U.S. Markets1 Number of new issuer listings1 Capital raised in connection with new listings (\$millions)2 |
2,934 35 \$3,575 |
2,919 39 \$3,472 |
2,988 74 \$1,445 |
| Euronext Listed Issuers | |||
| Issuers listed on Euronext1 Number of new issuer listings3 Capital raised in connection with new listings (\$millions)2 |
1,013 21 \$81 |
1,031 18 \$432 |
1,046 6 \$1 |
| NYSE Euronext Market Data | |||
| NYSE Market Data4 | |||
| Share of Tape A revenues (%) Share of Tape B revenues (%) Share of Tape C revenues (%) Professional subscribers (Tape A) |
47.7% 33.4% 18.8% 382,133 |
44.4% 34.2% 18.4% 381,873 |
47.5% 33.8% 19.6% 403,588 |
| Euronext Market Data | |||
| Number of terminals | 239,919 | 238,905 | 250,689 |
| NYSE Euronext Operating Expenses | |||
| NYSE Euronext employee headcount | |||
| NYSE Euronext headcount | 2,993 | 3,216 | 3,538 |
| NYSE Euronext Financial Statistics | |||
| NYSE Euronext foreign exchange rate | |||
| Average €/US\$ exchange rate Average £/US\$ exchange rate |
\$1.274 \$1.492 |
\$1.384 \$1.560 |
\$1.364 \$1.551 |
1 Figures for NYSE listed issuers include listed operating companies, special-purpose acquisition companies and closed-end funds listed on the NYSE and NYSE Amex and do not include NYSE Arca or structured products listed on the NYSE. There were 1,085 ETFs and 3 operating companies exclusively listed on NYSE Arca as of June 30, 2010. There were 494 corporate structured products listed on the NYSE as of June 30, 2010. Figures for new issuer listings include NYSE new listings (including new operating companies, special-purpose acquisition companies and closed-end funds listing on NYSE) and new ETP listings on NYSE Arca (NYSE Amex is excluded). Figures for Euronext present the operating companies were listed on Euronext and do not include NYSE Alternext, Free Market, closed-end funds, ETFs and structured product (warrants and certificates). As of June 30, 2010, 143 companies were listed on NYSE Alternext, 311 on Free Market and 541 ETFs were listed on NextTrack.
2 Euronext figures show capital raised in millions of dollars by operating companies listed on Euronext, NYSE Alternext and Free Market and do not include closedend funds, ETFs and structured products (warrants and certificates). NYSE figures show capital raised in millions of dollars by operating companies listed on NYSE and NYSE Arca and do not include closed-end funds, ETFs and structured products.
3 Euronext figures include operating companies listed on Euronext, NYSE Alternext and Free Market and do not include closed-end funds, ETFs and structured products (warrants and certificates).
4 "Tape A" represents NYSE listed securities, "Tape B" represents NYSE Arca and NYSE Amex listed securities, and "Tape C" represents Nasdaq listed securities. Per Regulation NMS, as of April 1, 2007, share of revenues is derived through a formula based on 25% share of trading, 25% share of value traded, and 50% share of quoting, as reported to the consolidated tape. Prior to April 1, 2007, share of revenues for Tape A and B was derived based on number of trades reported to the consolidated tape, and share of revenue for Tape C was derived based on an average of share of trades and share of volume reported to the consolidated tape. The consolidated tape refers to the collection and dissemination of market data that multiple markets make available on a consolidated basis. Share figures exclude transactions reported to the FINRA/NYSE Trade Reporting Facility.
Source: NYSE Euronext, Options Clearing Corporation and Consolidated Tape as reported for equity securities.
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