Interactive Data Corporation today reported its financial results for the third quarter ended September 30, 2013. Interactive Data's third-quarter 2013 revenue was $224.3 million, a 2.9% increase from $218.1 million in the third quarter of 2012.
Excluding the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) revenue for the third quarter of 2013 grew by 3.5% from the third quarter in 2012.
Interactive Data's third-quarter 2013 income from operations was $41.2 million, compared with income from operations of $36.7 million in the same period one year ago. Non-GAAP adjusted EBITDA (which excludes items that are either not part of the Company's ongoing core operations, or do not require a cash outlay, or are not otherwise expected to recur in the ordinary course) for the third quarter of 2013 was $87.9 million, compared with $86.8 million in the same period one year ago.
"Interactive Data's third-quarter 2013 financial results reflect another quarter of progress in expanding our business globally as we continued to make strategic investments in our people, products and technology," stated Stephen Daffron, who was appointed Interactive Data's president and CEO last month. "We continued to drive steady organic revenue growth in our Pricing and Reference Data segment while also producing modest improvements within the Workstations and Real-Time Feeds areas of our Trading Solutions segment. These dynamics, in combination with prudent, ongoing expense management, enabled us to maintain solid adjusted EBITDA margins and generate strong free cash flow this quarter."
Segment Reporting and Related Operating Highlights
Pricing and Reference Data Segment:
- Interactive Data's Pricing and Reference Data segment reported third-quarter 2013 revenue of $159.2 million, a 3.9% increase over the third quarter of 2012. Excluding the impact of changes in foreign exchange rates, third-quarter 2013 organic (non-GAAP) revenue for this business increased by 4.7% from the same period last year. The segment's performance primarily reflects growth in the Company's evaluated pricing and reference data services in North America. In July, BlackRock selected Interactive Data to serve as the calculation agent for its new CoRI Indexes, an innovative series of financial indexes that aim to fundamentally improve the way individuals and their advisors plan and save for retirement. In September, Interactive Data released a new set of enhancements to Vantage(SM), which provides transparency into Interactive Data's evaluation services and facilitates pricing validation workflows.
Trading Solutions Segment:
- Interactive Data's Trading Solutions segment reported third-quarter 2013 revenue of $65.2 million, which was essentially unchanged from the same quarter last year. The segment's performance reflects improved revenue results in the Workstations area primarily due to modest subscriber growth and continued growth in Real-Time Feeds in Europe and Asia, the combination of which was largely offset by softness in the Hosted Web Applications area. A recent highlight in this segment was the announcement that Market-Q was selected by Oppenheimer & Co. to power the desktops and mobile devices of its 2,300 advisors in North America. In terms of product development milestones during the quarter, Interactive Data added content from two of Japan's leading proprietary trading systems, SBI Japannext and Chi-X Japan, to its Consolidated Feed and launched eSignal Mobile, a companion to the eSignal desktop used by professional and individual traders.
Other Third-Quarter 2013 Financial and Operating Highlights
Stephen C. Daffron Appointed President and CEO
- On September 20, 2013, Stephen C. Daffron, who most recently served as global head of operations and technology at Morgan Stanley, became president and chief executive officer of Interactive Data. He succeeded Mason Slaine, who has resumed his previous role as executive chairman where he remains involved with the Company's strategy and business development activities. In addition to his tenure at Morgan Stanley, Daffron's career in the financial services industry includes senior leadership positions at Renaissance Technologies Corp., Citigroup and Goldman Sachs & Co.
Effects of Foreign Exchange:
- The net effect of changes in foreign exchange rates increased third-quarter 2013 income from operations by $0.7 million.
Balance Sheet Highlights:
- As of September 30, 2013, Interactive Data had cash, cash equivalents and short-term investments of $313.6 million, compared with $289.3 million last quarter, $289.4 million at the same time last year and $248.2 million at the end of 2012. The Company's total debt outstanding as of September 30, 2013 was approximately $2.0 billion.
Results for the Nine Months Ended September 30, 2013
- For the nine months ended September 30, 2013, Interactive Data reported revenue of $672.9 million, an increase of $17.1 million, or 2.6%, from $655.8 million in the same period last year. Excluding the effects of changes in foreign exchange, organic revenue grew by 3.2% during the first nine months of 2013.
- For the nine months ended September 30, 2013, Interactive Data's income from operations grew 28.9% to $134.2 million from $104.1 million in the same period one year ago. For the first nine months of 2013, non-GAAP adjusted EBITDA (which excludes items that are not part of the Company's ongoing core operations, or do not require a cash outlay, or are not otherwise expected to recur in the ordinary course) was $259.3 million, compared with $249.0 million in the same period one year ago.
Conference Call Information
Interactive Data Corporation will host a conference call to discuss the Company's third-quarter 2013 results on Friday, October 25, 2013 at 8:30 a.m. ET. The dial-in number for the conference call is (785) 424-1826 and the related access code is IDCQ313. For those who cannot listen to this broadcast, a replay of the call will be available from October 25 at 12:00 p.m. until Friday, November 1, 2013 at 12:00 p.m., and it can be accessed by dialing (402) 220-1371 or (800) 688-9445 and the related access code is 771764.
In addition to presenting our results in accordance with generally accepted accounting principles (GAAP) in this press release, we also disclose the following non-GAAP information:
- Management includes information regarding organic revenue. Organic revenue excludes the impact of foreign exchange rate fluctuations, as well as, if applicable, adjustments related to the amortization of acquisition-related deferred revenue, and the contribution of businesses recently acquired (and related intercompany eliminations). Management believes reporting organic revenue is useful information for stakeholders as it facilitates a fuller understanding of period-to-period changes in revenue and underlying business trends.
- Management includes organic revenue for our Pricing and Reference Data, and Trading Solutions segments because management believes this additional level of detail provides further insight into underlying performance trends.
- Management includes information regarding earnings before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, restructuring charges and benefits, adjustments related to the amortization of acquisition-related deferred revenue, and other non-cash, non-operational or non-recurring items, in each case as applicable for the underlying periods. In addition, management also includes information regarding pro forma adjusted EBITDA. Pro forma adjusted EBITDA is defined as earnings, excluding all of the above factors, as well as other adjustments permitted under the Company's senior secured credit facilities. Management considers these non-GAAP measures to be important indicators of the Company's operational profitability and cash generation strength. Management also believes these metrics provide transparency into and useful information regarding the Company's historical operating results because items that are either not part of the Company's ongoing core operating expenses, do not require a cash outlay, or are not otherwise expected to recur in the ordinary course of business are eliminated. The Company's pro forma adjusted EBITDA measure is based on the definition of Consolidated EBITDA set forth in the agreements governing the Company's senior secured credit facilities.
- Management includes information regarding free cash flow, which we define as adjusted EBITDA less capital expenditures. Management considers free cash flow to be an important measure of the Company's cash generation strength that supports the Company's ability to repay its debt obligations and invest in future growth through new business development activities or acquisitions.
- Management uses these non-GAAP financial measures, in addition to GAAP financial measures, as the basis for measuring the Company's core operating performance and comparing current period performance to that of prior periods, and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making, and for forecasting and planning purposes. In addition, pro forma adjusted EBITDA is an important indicator of the Company's current compliance (and future ability to comply) with the financial covenants set forth in the Company's senior secured credit facilities.
- The non-GAAP financial measures of the Company's results of operations included in this press release should not be considered in isolation from comparable measures determined in accordance with GAAP. The non-GAAP financial measures should not be considered to be superior to or a substitute for the Company's results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the comparable GAAP financial measures are set forth in the accompanying tables. The non-GAAP measures presented may not be comparable to similarly titled measures reported by other companies.
Full results can be viewed here.