Interactive Data Corporation today reported its financial results for the fourth quarter ended December 31, 2010. Interactive Data's fourth-quarter 2010 revenue was a record $207.8 million, an increase of 7.1% over $194.1 million for the same quarter of 2009.
Fourth-quarter 2010 revenue was reduced by $1.3 million due to the amortization of acquisition-related deferred revenue. Excluding this adjustment, non-GAAP revenue was $209.2 million in the fourth quarter of 2010, an increase of 7.8% over the same quarter last year. Fourth-quarter 2010 organic (non-GAAP) revenue, which excludes the deferred revenue adjustment, the impact of changes in foreign exchange rates, the contribution of businesses acquired in the past 12 months and related intercompany eliminations, grew 5.2% from the same quarter in 2009.
Interactive Data's fourth-quarter 2010 loss from operations was $1.2 million, compared with income from operations of $50.4 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, do not require a cash outlay, or are not otherwise expected to recur in the ordinary course, for the fourth quarter of 2010 was $73.5 million compared with $76.5 million in the same period one year ago. All non-GAAP financial measures with applicable reconciliations are set forth on the pages following the financial tables of this press release.
"We finished 2010 with a strong fourth-quarter performance," stated Mason Slaine, chairman, president and chief executive officer. "Our fourth-quarter 2010 revenue growth was driven primarily by another solid quarter within our Pricing and Reference Data business, improved performance in our Real-Time Services business, as well as the contributions from businesses acquired in late 2009 and early 2010. Our fourth-quarter 2010 adjusted EBITDA performance remained healthy due to the combination of revenue growth and expense management. At the same time, we also began implementing key technology initiatives and other programs aimed at leveraging our global content, accelerating time-to-market for innovative new services, driving operational efficiency and creating greater economies of scale. We are moving into 2011 with a talented team, compelling offerings, strong customer relationships and attractive opportunities to drive long-term revenue and profit growth."
Segment Reporting, Related Operating Highlights and Revenue by Geography
Institutional Services Segment:
* Interactive Data Pricing and Reference Data reported fourth-quarter 2010 revenue of $133.3 million, a 4.4% increase over the fourth quarter of 2009. Excluding a $1.0 million reduction in revenue associated with the deferred revenue adjustment, the effects of foreign exchange and intercompany eliminations related to the December 2009 acquisition of certain Online Financial Solutions (OFS) assets, fourth-quarter 2010 organic (non-GAAP) revenue for this business increased by 5.7% from the same period last year. This business, which has produced four consecutive quarters of improved quarterly organic revenue growth, experienced higher usage revenue and new sales for its fixed income evaluated pricing and reference data services primarily from existing customers in North America. The Pricing and Reference Data business continued to invest in expanding its evaluated pricing coverage, recently launching a new whole loan valuation service. In addition, this business received 'Best Third-Party Valuation Provider' honors at the Credit Awards Americas 2010.
* Interactive Data Real-Time Services generated fourth-quarter 2010 revenue of $45.8 million, which is 22.7% higher than the same quarter last year as a result of the contribution of the OFS and 7ticks assets that were acquired in late 2009 and early 2010, respectively, and improved organic performance. Excluding a $0.1 million reduction in revenue associated with the deferred revenue adjustment, the effects of foreign exchange, the contribution of acquired assets and related intercompany eliminations, fourth-quarter 2010 organic (non-GAAP) revenue increased 7.9%. The organic revenue growth for this business primarily reflected increased business for its customized, hosted web-based solutions business in Europe, which benefited from one-time projects with both new and existing customers. Fourth-quarter and recent highlights in the real-time feeds product area included continued expansion of the Interactive Data 7ticks network in Tokyo, London and Toronto, adding new customers such as Orc Software, FINODEX and Patsystems, and winning a Futures and Options World Award for Innovation 2010.
* Interactive Data Fixed Income Analytics reported revenue for the fourth quarter of 2010 of $8.9 million, an increase of 3.7% from the 2009 fourth quarter. Excluding a reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, organic (non-GAAP) revenue in the fourth quarter of 2010 grew by 4.0% over the same period last year primarily on the strength of product upgrades by existing customers. In late January 2011, this business launched BondEdge® TradeLink, which enables the BondEdge® fixed income portfolio analytics workstation to interface with leading trade order management systems.
Active Trader Services Segment:
* Interactive Data's Desktop Solutions business (formerly known as eSignal) reported fourth-quarter 2010 revenue of $19.9 million, a decrease of 3.3% from the fourth quarter of 2009. Excluding a $0.2 million reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, fourth-quarter 2010 organic revenue decreased by 2.0%, from the same period last year. The decline in Desktop Solutions revenue primarily reflects a 3.7% decrease in direct subscription terminals, which totaled approximately 54,400 terminals as of December 31, 2010. This business recently launched eSignal 11, a redesigned version of the core eSignal software that provides advanced performance and a new, more intuitive user interface.
Other Fourth-Quarter 2010 Financial and Operating Highlights
Effects of Foreign Exchange:
* Interactive Data's fourth-quarter 2010 revenue was unfavorably impacted by $1.8 million due to the effects of foreign exchange resulting from a stronger US dollar in comparison with the fourth quarter of 2009. Total costs and expenses in the fourth quarter of 2010 were favorably impacted by $2.4 million as a result of the effects of foreign exchange.
Senior Secured Credit Facility Refinancing:
* On February 11, 2011, Interactive Data completed a refinancing of its $1.3 billion term loan facility through an amendment to its Credit Agreement that provides for, among other things, a decrease in applicable interest rates and an extension of the maturity date of the term loan facility. As a result of the refinancing activity, the Company expects to reduce its annual cash interest expense by more than $22 million in 2011, and, assuming our current interest rates remain in place, by approximately $25 million annually thereafter.
Results for the Full Year 2010
Please note that the Company's full-year 2010 results detailed below is a non-GAAP presentation to reflect the predecessor period prior to the Company's acquisition (from January 1 through July 29) and the successor period following it (from July 30 through December 31) on a combined basis.
* For the full year ended December 31, 2010, Interactive Data reported revenue of $796.6 million, a 5.2% increase over $757.2 million in 2009. Excluding the $3.7 million deferred revenue adjustment, 2010 non-GAAP revenue was $800.3 million, an increase of 5.7% from 2009. For 2010, organic (non-GAAP) revenue, which excludes the deferred revenue adjustment, the effects of foreign exchange, and revenue and intercompany eliminations related to acquisitions, increased by 2.5% over 2009.
* Interactive Data's loss from operations for 2010 was $7.1 million, compared with income from operations of $207.7 million in 2009. Interactive Data's non-GAAP adjusted EBITDA for 2010 was $289.4 million, compared with adjusted EBITDA of $309.7 million in 2009. The Company's adjusted EBITDA performance in 2010 primarily reflects higher bonus compensation expense in comparison with 2009.
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