Interactive Data Corporation today reported its financial results for the fourth quarter and full year ended December 31, 2012.
Interactive Data's fourth-quarter 2012 revenue increased 1.0% to a record $224.3 million from $222.1 million in the fourth quarter of 2011. Excluding the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) revenue grew 0.9% from the fourth quarter in 2011.
Interactive Data's fourth-quarter 2012 income from operations was $27.8 million, compared with income from operations of $33.2 million in 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 fourth quarter of 2012 increased 12.2% to a record $93.7 million from $83.5 million in the same period one year ago.
"Interactive Data's fourth-quarter 2012 financial results were highlighted by strong adjusted EBITDA growth and excellent free cash flow," stated Mason Slaine, Interactive Data's president and chief executive officer. "Our Pricing and Reference Data segment continued to generate organic revenue growth in the fourth quarter of 2012 despite persistently challenging market conditions as our value proposition continued to resonate with customers worldwide. Throughout the year, we managed our expense base carefully while remaining committed to advancing key product development and technology infrastructure initiatives. We made good progress on these fronts during the fourth quarter. Looking ahead, we believe we are well positioned to capitalize on the opportunities we see across our business to bring new and enhanced offerings to the marketplace."
Segment Reporting and Related Operating Highlights
As previously disclosed, effective for the fourth quarter of 2011, Interactive Data's two reportable segments were reorganized as Pricing and Reference Data, and Trading Solutions. The change was made in response to operational and organizational initiatives undertaken during the preceding year and completed in the fourth quarter of 2011, and reflects the way the Company currently approaches the market and analyzes operating performance. The Pricing and Reference Data segment represents the Company's evaluated pricing, reference data and fixed income analytics product areas. The Trading Solutions segment represents the Company's real-time data feeds, ultra low latency infrastructure services, hosted web applications and workstations. Historical financial results have been reclassified to reflect this change.
Pricing and Reference Data Segment:
Interactive Data's Pricing and Reference Data segment reported fourth-quarter 2012 revenue of $155.2 million, a 3.0% increase over the fourth quarter of 2011. Excluding the impact of changes in foreign exchange rates, fourth-quarter 2012 organic (non-GAAP) revenue for this business increased by 2.8% from the same period last year due to expansion in its evaluated pricing and reference data services product areas. Fourth-quarter 2012 highlights for this segment included the official launch of Apex(SM), Interactive Data's innovative suite of reference data services, and continued customer adoption of and ongoing enhancements to Vantage(SM), an innovative web application that provides transparency into Interactive Data's evaluated pricing and facilitates client workflows to support valuation and risk management processes. In addition, Interactive Data continued to expand its evaluated pricing services with the launch of a new leveraged loan evaluation service during the fourth quarter of 2012.
Interactive Data's Trading Solutions segment generated fourth-quarter 2012 revenue of $69.1 million, a 3.2% decline from the same quarter last year. Excluding the impact of changes in foreign exchange rates, fourth-quarter 2012 organic (non-GAAP) revenue for this business decreased 3.0%. Continued growth in the 7ticks ultra low latency trading infrastructure services and improved results within the Company's hosted web applications business were more than offset by lower consolidated feeds and workstation revenue. Key milestones in this segment during the past several months have included a new version of the Interactive Data RMDS Feed Handler, a new suite of ETF tools and continued expansion of the 7ticks network.
Other Fourth-Quarter 2012 Financial and Operating Highlights
Effects of Foreign Exchange:
The net effect of changes in foreign exchange rates on fourth-quarter 2012 operating results was immaterial.
Balance Sheet Highlights:
As of December 31, 2012, Interactive Data had cash, cash equivalents and short-term investments of $248.2 million, compared with $262.2 million at the same time last year and $289.4 million at the end of the third quarter of 2012. The Company's cash position reflects the payment of a $100.0 million dividend in December 2012. Igloo Holdings Corporation ("Igloo"), Interactive Data's indirect parent company, used this dividend, along with net proceeds of $339 million raised through an offering of 8.25%/9.00% senior PIK toggle notes due 2017 issued by Igloo, to fund a cash dividend paid to Igloo stockholders and a cash distribution to holders of Igloo stock options that totaled approximately $439 million. Interactive Data's gross debt outstanding as of December 31, 2012 was approximately $2.0 billion.
On February 7, 2013, 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. As a result of the refinancing activity, the Company expects to reduce its annual cash interest expense by more than $8 million in 2013, and, assuming our current interest rates and principal balance remain in place, by more than $9 million annually thereafter.
Full-Year 2012 Results
For the year ended December 31, 2012, Interactive Data reported record revenue of $880.2 million, an increase of $12.4 million, or 1.4%, from $867.7 million in 2011. Excluding the impact of changes in foreign exchange rates and the reduction in 2011 revenue of $0.9 million associated with the deferred revenue adjustment in connection with the acquisition of the Company in July 2010, organic revenue grew by 2.1% in 2012.
Interactive Data's income from operations for 2012 was $131.9 million, compared with income from operations of $101.7 million in 2011. 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) increased by 4.0% to a record $342.6 million in 2012 from $329.3 million in 2011.