Markit Q2 revenue impacted by currency movements

Source: Markit

Markit Ltd. (Nasdaq:MRKT), a leading global provider of financial information services, today announced financial results under International Financial Reporting Standards (IFRS) for the second quarter ended June 30th 2015.

Financial highlights

Revenue increased 6.7% on a constant currency basis from second quarter 2014
Organic revenue growth was 5.1% driven by growth across Information and Solutions, which included a 2.5% decrease in our Processing segment
Adjusted EBITDA margin was 44.6% while Adjusted earnings per share, diluted was $0.36
$650 million secondary offering of common shares completed, which included a concurrent $350 million share repurchase

Recent developments

Completed the acquisition of Information Mosaic on July 1st, a leading software provider for corporate actions and post trade securities processing
Announced the acquisition of CoreOne Technologies on August 12th, a leading provider of index management, data management, regulatory reporting and prime brokerage services to financial institutions
Secured four new sponsorship deals for our PMI series: Nikkei as sponsor of the Asia PMI surveys; Caixin as sponsor of the China PMI survey; Emirates NBD as sponsor of key Middle East PMI surveys; and Standard Bank as sponsor of the South Africa PMI survey, complementing its sponsorship of the Africa PMI surveys

"We continued to perform well in the second quarter, producing solid financial results. I am especially pleased with the performance of our Processing division, which exceeded expectations this quarter,” said Lance Uggla, chairman and chief executive officer of Markit.

“The share repurchase demonstrates our commitment to disciplined capital allocation while preserving financial flexibility to support our future growth. In addition, the two bolt on acquisitions we announced recently will enhance growth in our Information and Solutions businesses, aligning with our strategy to achieve double digit growth through acquisitions. One year after our IPO, we are in a very strong position to deliver on our long term strategic priorities.”

Revenue

Revenue increased by $8.5 million, or 3.2%, to $273.1 million for the three months ended June 30, 2015, from $264.6 million for the three months ended June 30, 2014. On a constant currency basis, our revenue growth was 6.7% for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014.

Organic revenue growth was $13.5 million, or 5.1%. This was driven by new business wins and increased customer assets under management across our Solutions and Information segments, offset by a decrease in our Processing segment mainly as a result of previously announced price changes in our derivatives processing product.

Acquisitions contributed $4.3 million to revenue growth, or 1.6% of the 3.2% increase in revenue, associated with the acquisitions in our Solutions segment of thinkFolio and Tax Solutions which were acquired in January 2014 and July 2014 respectively.

We experienced an adverse movement in exchange rates period-over-period, which decreased our revenue growth by $9.3 million, or 3.5%. Our revenue currency exposure for the three months ended June 30, 2015 was 72.5% in US dollars, 23.7% in British pounds, and 3.8% in other currencies.

Operating expenses

Operating expenses increased by $3.9 million, or 2.7%, to $148.5 million for the three months ended June 30, 2015, from $144.6 million for the three months ended June 30, 2014. As a percentage of revenue, operating expenses decreased to 54.4% for the three months ended June 30, 2015, from 54.6% for the three months ended June 30, 2014.

Personnel costs as a percentage of total operating expenses remained stable at 61.8% across the three months ended June 30, 2015 and the three months ended June 30, 2014. Personnel costs increased by $2.5 million, or 2.8%, to $91.8 million for the three months ended June 30, 2015, from $89.3 million for the three months ended June 30, 2014. This increase was driven by several factors, including the addition of employees due to acquisitions, continued investment in products to facilitate future growth, and increases in employee compensation levels, partially offset by the impact of favourable movements in foreign exchange rates.
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