Source: Interactive Data
Interactive Data Corporation today reported its financial results for the first quarter ended March 31, 2011.
Interactive Data's first-quarter 2011 revenue increased 7.4% to $211.5 million from $196.9 million in the first quarter of 2010. First-quarter 2011 revenue was reduced by $0.6 million due to the amortization of acquisition-related deferred revenue. Excluding this adjustment and the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) revenue grew 6.8% from the first quarter in 2010.
Interactive Data's first-quarter 2011 income from operations was $17.5 million, compared with income from operations of $44.5 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 first quarter of 2011 increased 10.3% to $76.8 million from $69.7 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.
"Interactive Data is off to a good start in 2011," stated Mason Slaine, Interactive Data's chairman, president and chief executive officer. "Our revenue growth in the first quarter of 2011 primarily reflects good progress in expanding our Pricing and Reference Data, and Real-Time Services businesses. Our compelling value proposition has continued to resonate with institutional clients worldwide, enabling us to produce solid institutional retention and new sales levels during the first quarter of 2011. The combination of revenue growth and disciplined spending enabled us to drive improvements in our adjusted EBITDA performance in comparison with both the prior quarter and the year-ago period."
Segment Reporting and Related Operating Highlights
Institutional Services Segment:
* Interactive Data Pricing and Reference Data reported first-quarter 2011 revenue of $135.4 million, a 7.1% increase over the first quarter of 2010.e first quarter of 2010. Excluding the reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, first-quarter 2011 organic (non-GAAP) revenue for this business increased by 6.4% from the same period last year - the fifth consecutive quarter of higher quarterly organic revenue growth for this business. The organic revenue growth for this business primarily reflects healthy new sales during the past several quarters, strong retention levels, and solid usage revenue. This business recently announced the Real-Time Fair Value Information Service, a new service that will provide real-time evaluated prices for more than 15,000 international equities throughout the trading day.
* Interactive Data Real-Time Services generated first-quarter 2011 revenue of $47.3 million, which is 13.9% higher than the same quarter last year. Excluding the reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, first-quarter 2011 organic (non-GAAP) revenue for this business increased 13.0%. The organic revenue growth for this business primarily reflects strong growth in the Interactive Data 7ticks business, which was acquired in mid-January 2010. Interactive Data 7ticks has benefited from multiple quarters of robust new sales, which resulted in both higher recurring revenue and increased one-time revenue related to new client installations. In addition, the web-based solutions product area continued to expand its business in Europe.
* Interactive Data Fixed Income Analytics reported revenue for the first quarter of 2011 of $8.7 million, an increase of 0.7% from the 2010 first quarter. Excluding the reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, organic (non-GAAP) revenue in the first quarter of 2011 grew by 0.9% over the same period last year largely due to product upgrades by existing BondEdge® customers. In mid-March 2011, this business released BondEdge® Version 3.3, which contains enhancements designed to more effectively monitor and analyze performance attribution for multiple portfolios and benchmarks, and extends the content within the portfolio report generation functionality for residential mortgage-backed securities.
Active Trader Services Segment:
* Interactive Data's Desktop Solutions business (formerly known as eSignal) reported first-quarter 2011 revenue of $20.0 million, a decrease of 1.0% from the same period last year. Excluding the reduction in revenue associated with the deferred revenue adjustment and the effects of foreign exchange, first-quarter 2011 organic revenue decreased by 1.3%, from the first quarter of 2010 largely due to a 1.8% decline in direct subscription terminals from the same period one year ago. As of the March 31, 2011, Desktop Solutions reported approximately 55,500 direct subscription terminals as strong subscriber growth in the Market-Q platform was more than offset by lower subscriptions within its various active trader platforms.
Other First-Quarter 2011 Financial and Operating Highlights
Effects of Foreign Exchange:
* Interactive Data's first-quarter 2011 revenue was favorably impacted by $1.8 million due to the effects of foreign exchange primarily resulting from a weaker US dollar against the GBP and the Euro in comparison with the first quarter of 2010. Total costs and expenses in the first quarter of 2011 were unfavorably impacted by $1.2 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. Due to this refinancing, the Company recorded a charge of $25.4 million in the first quarter of 2011 as "Loss on extinguishment of debt." In the reconciliation of non-GAAP measures set forth in the accompanying tables, this charge is included in "Other non-recurring charges," for the three months ended March 31, 2011. 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.
Conference Call Information
Interactive Data Corporation will host a conference call to discuss the Company's first-quarter 2011 results on Monday, May 16, 2011 at 9:00 a.m. ET. The dial-in number for the conference call is (706) 679-8825 and the related access code is 59270157. For those who cannot listen to this broadcast, a replay of the call will be available from May 16 at 12:00 p.m. until Monday, May 23, 2011 at 12:00 p.m., and it can be accessed by dialing (706) 645-9291 or (800) 642-1687, using access code 59270157.
In addition to presenting our results in accordance with generally accepted accounting principles (GAAP), we also disclose the following non-GAAP information:
* Management refers to revenue growth rates at constant foreign currency exchange rates so that revenue results can be considered on a comparable basis. Foreign currency fluctuations are outside of management's control and reporting results at constant currency facilitates period-to-period comparisons of our revenue results. Generally, when the U.S. dollar either strengthens or weakens against other currencies, the performance at constant currency rates will be higher or lower than the performance reported at actual exchange rates.
* Management includes information regarding organic revenue. Organic revenue excludes the contribution of businesses recently acquired (and related intercompany eliminations) if applicable, the effects of foreign currency exchange rates, and adjustments related to the amortization of acquisition-related deferred revenue. Management believes reporting organic revenue facilitates period-to-period comparisons and provides a better understanding of underlying business trends and our future revenue growth prospects. Management includes revenue for our Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, Interactive Data Fixed Income Analytics, and Interactive Data Desktop Solutions (formerly eSignal) businesses because management believes this additional level of detail provides further insight into underlying trends and how the individual business areas are performing. In addition, since we have historically reported revenue for these businesses to the investment community as part of our reports on Form 10-K and Form 10-Q, we believe that continuing to offer such information provides consistency in our financial reporting.
* Management includes information regarding earnings before interest, income taxes, depreciation and amortization (EBITDA). We also include information regarding adjusted EBITDA, which we define 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 addition, management also includes information regarding pro forma adjusted EBITDA. We define this metric 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 measures to be important indicators of the Company's operational profitability and cash generation strength and a good measure of the Company's historical operating trend because it eliminates 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 of business. In addition, the Company's pro forma adjusted EBITDA measure is based on the definition of 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 as another 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 such 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, management also considers pro forma adjusted EBITDA to be an important indicator which can be used for the purpose of analyzing covenant compliance under 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 are not meant to be considered 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 may not be comparable to similarly titled measures reported by other companies.