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Nyfix narrows losses

09 May 2008  |  1670 views  |  0 Source: Nyfix

NYFIX, Inc. (Nasdaq: NYFX) ("NYFIX" or the "Company"), a trusted provider of innovative solutions that optimize trading efficiency, today reported results for first quarter 2008. As compared to first quarter 2007, revenues for first quarter 2008 increased 13% to $31.4 million, with no material change in aggregate costs.

Business highlights during the current quarter included:

  • the launch in March of Euro Millennium(TM), NYFIX's European-based neutral dark pool of liquidity;

  • a record volume month for NYFIX Millennium(R), one of the industry's leading dark pools of liquidity, which matched over 1.2 billion shares in January for an average of nearly 58 million shares per day; and

  • the continued growth of the NYFIX Marketplace, which reached 8,666 direct order routing messaging channels by the end of the quarter.

"With our 2007 transitional year behind us, we are focusing more of our efforts now on growing the business while we improve our financial results," said Howard Edelstein, CEO of NYFIX. "The increased margin of our Transaction Services Division revenues combined with our 26% reduction in SG&A from the fourth quarter of 2007 has lead to a significant improvement in our bottom line."

Three Month Results

Financial highlights for first quarter 2008 include:

  • Revenues of $31.4 million, a 13% increase over revenues of $27.7 million for first quarter 2007.

  • A 16% increase in FIX Division net revenues to $16.1 million compared to $13.9 million for first quarter 2007.

  • A 31% increase in Transaction Services Division net revenues to $13.4 million compared to $10.2 million for first quarter 2007.

  • A 48% decrease in OMS Division net revenues to $1.9 million compared to $3.6 million for first quarter 2007.

  • Gross profit of $17.3 million, a 29% increase over gross profit of $13.4 million for first quarter 2007.

  • A net loss of $(3.4) million, or $(0.09) per share, compared to a net loss for first quarter 2007 revenues to $1.9 milliofirst quarter 2007.

  • A net loss of $(3.4) million, or $(0.09) per shrter 2007.ion, or $(0.09) per shrter 2007.

  • A net loss of $(3.4) million, or $(0.09) per share, compared to a net loss for first quarter 2007 revenues to $1.9 million compared to $3.6 million for first quarter 2007.

  • Gross profit of $17.3 million, a 29% increase over gross profit of $13.4 million for first quarter 2007.

  • A net loss of $(3.4) million, or $(0.09) per share, compared to a net loss for first quarter 2007 of $(6.3) million, or $(0.17) per share. These loss amounts exclude the impact of accumulated preferred dividends of $(1.1) million, or $(0.03) per share, and $(1.7) million, or $(0.05) per share, for first quarter 2008 and first quarter 2007, respectively.

  • Since second quarter 2007, NYFIX has incurred costs for Euro Millennium(TM), a neutral dark pool of liquidity in pan-European listed cash equities. Euro Millennium(TM) was launched in March 2008 for matching U.K. listed equities and will be rolled out in other major European markets over the course of 2008.

  • During March 2008, the Company terminated its lease and corresponding sublease of office space previously occupied in Stamford, CT, resulting in a reversal of $0.5 million of a restructuring reserve. Partially offsetting this benefit were employment-related restructuring charges of $0.3 million related to discontinuing the Fusion OMS business. In addition, the Company incurred an additional loss of $0.3 million during first quarter 2008 related to operating the Fusion OMS business during this wind-down phase.

  • During fourth quarter 2007, NYFIX adopted a new equity incentive plan to assist in retention and to further promote alignment with stockholders, and has since issued awards (options and restricted stock units) for more than 11 million shares of common stock.

Outlook for the Remainder of 2008 and Subsequent Events

In 2008, NYFIX will be focused on improving its financial performance and growing its business.

Although Euro Millennium was launched for matching U.K. listed equities, significant work remains to roll this platform out to other major European markets during 2008. The Company expects losses related to this initiative to continue throughout 2008 with a loss of $2.0 million expected in the second quarter of 2008.

The Company expects to incur $0.3 million of remaining employment-related restructuring costs related to transitioning out of the Fusion OMS business, which is currently expected to be substantially completed during the second quarter of 2008. In addition, the Company expects to incur a loss of $0.6 million to operate the Fusion OMS business during the second quarter of 2008.

The Company's equity incentive program was designed to award large upfront grants rather than smaller annual grants to maximize the incentive and retention impacts of the grants and to better align the interests of employees with stockholders. As a result, stock-based compensation will remain at high levels until the 2007 grants fully vest. Stock-based compensation expense is expected to be approximately $2.0 million per quarter for the remainder of 2008. This amount may vary, however, depending on additional grants or cancellations and whether performance awards actually vest.

In April 2008, NYFIX acquired FIX City, Ltd. ("FIX City"), a U.K. based specialist in web-based electronic trading and liquidity discovery solutions, for 3.3 million pounds (or approx. $6.6 million) in cash. NYFIX also agreed to pay an additional $1.0 million in cash consideration contingent on the successful completion of the integration of the existing FIX City and NYFIX technology platforms within six months of the closing date.

In addition, the share purchase agreement for the FIX City acquisition provides the potential for cash earn-out payments in years 1, 2 and 3 following the acquisition totaling up to 3.7 million pounds (or approx. $7.4 million) if certain revenue targets are achieved, with potential additional payments to be based on varying percentages of all such revenue if higher level target thresholds are achieved.

NYFIX expects to incur integration costs relating to the acquisition of approximately $1.0 million during 2008 comprised of non-cash valuation adjustments to existing capitalized software costs, as the acquired FIX City technology will replace certain current NYFIX capitalized initiatives, as well as third-party costs to integrate the technology platforms. FIX City generated $2.2 million in revenues during 2007.

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