Interactive Data releases Q3 results

Third-quarter 2005 service revenue grew 9.2% to $134.2 million from $122.9 million in the third quarter of 2004. Net income for the third quarter of 2005 increased by 6.3% to $23.1 million, or $0.24 per diluted share, from $21.8 million, or $0.23 per diluted share, in the same quarter last year.

"Interactive Data's third-quarter 2005 results reflect another quarter of steady growth," stated Stuart Clark, president and chief executive officer. "Our third-quarter 2005 net income performance was influenced by two unusual factors. First, as expected, our tax rate for the third quarter of 2005 was higher than in the first two quarters of 2005. The increase reflected a year-to-date catch-up in our effective annual tax rate due to a UK tax law that was enacted in the third quarter of 2005 and is applicable from March 16, 2005. Second, our third-quarter 2004 expenses included a $1.8 million net benefit associated with a renegotiated supplier contract. The Company's third-quarter service revenue growth was driven by continuing strong performance within FT Interactive Data, our largest business, and the contribution of the FutureSource assets we acquired in September 2004. Excluding FutureSource and the impact of foreign exchange, we generated organic service revenue growth of 7.4%."

Clark commented, "Within our Institutional Services segment, overall renewal rates remained at or above 95%. Although our institutional customers remain focused on containing costs, we are successfully expanding our business in existing accounts. Within our Active Trader Services segment, eSignal continued to make progress with initiatives aimed at expanding its business by introducing enhanced services and establishing new alliances."

"Our cash position remains very strong even after paying a special dividend to stockholders totaling $74.5 million and repurchasing $5.6 million of our common stock as part of our current stock buyback program. We ended the third quarter of 2005 with cash, cash equivalents and marketable securities totaling $196.6 million with no debt. We believe that Interactive Data has the requisite financial strength to continue investing in developing new services, establishing strategic alliances and pursuing acquisitions. Each of these areas is an important element in our growth strategy," Clark concluded.

Other Third-Quarter Operating and Financial Highlights

Effects of Foreign Exchange:

Interactive Data's third-quarter 2005 service revenue was negatively impacted by $0.3 million due to the effects of foreign exchange. Third-quarter 2005 service revenue before the effects of foreign exchange grew by $11.6 million, or 9.5%, over the comparable period in 2004. Total costs and expenses in the third quarter of 2005 were positively impacted by $0.3 million due to the effects of foreign exchange. Third-quarter 2005 total costs and expenses before the effects of foreign exchange increased by $8.3 million, or 9.3%, over the third quarter of last year.
Institutional Services Segment:

FT Interactive Data's third-quarter 2005 service revenue of $90.0 million grew 9.4% over the prior year's third quarter (or an increase of 9.6% before the effects of foreign exchange). North American service revenue for the third quarter of 2005 increased 11.1% over the prior year's third quarter, driven by new sales throughout the year, strong client retention and higher usage-related activity among redistribution clients. Third-quarter 2005 European service revenue increased by 2.0% (or an increase of 3.8% before the effects of foreign exchange) from the third quarter of last year. During the third quarter of 2005, FT Interactive Data won new business for its new European Union Savings Directive data module with customers in Europe and announced the availability of its Fair Value Information Service for European domiciled funds. FT Interactive Data's Asia-Pacific third-quarter 2005 service revenue increased 26.2% (or an increase of 19.1% before the effects of foreign exchange) compared with the prior year's third quarter.

ComStock generated third-quarter 2005 service revenue of $19.0 million, an increase of 1.5% over the same quarter last year (or an increase of 2.1% before the effects of foreign exchange). ComStock's third-quarter 2005 growth in Europe and North America was partly offset by cancellations associated with the final integration of HyperFeed customers onto the ComStock platform.

CMS BondEdge's service revenue for the third quarter of 2005 increased by 2.3% over last year's third quarter to $8.1 million. CMS BondEdge's third-quarter performance was highlighted by five new client installations and additional purchases by existing customers.

Active Trader Services Segment:

eSignal's third-quarter 2005 service revenue grew 22.6% over 2004's third-quarter service revenue to $17.1 million primarily due to the contribution of FutureSource and the expansion of eSignal's direct subscriber base. FutureSource, whose assets were acquired in September 2004, generated $4.5 million in third-quarter 2005 service revenue, or 26.5% of eSignal's third-quarter service revenue. eSignal ended the third quarter of 2005 with approximately 46,000 direct subscription terminals, which includes over 7,000 FutureSource terminals. During the third quarter of 2005, eSignal announced alliances with the Chicago Board Options Exchange and Dow Jones Newswires that further expand delivery of eSignal services and broaden the content available on its market data and news platforms.

Costs and Expenses:

Total third-quarter 2005 costs and expenses increased by 9.0% to $97.3 million from $89.3 million in the third quarter of 2004. Total costs and expenses for the third quarter of 2005 increased by $6.1 million, or 7.0%, before total costs and expenses associated with businesses acquired in the past twelve months, and the effects of foreign exchange.

Executive Appointments:

In late September, Interactive Data announced a series of executive appointments within its existing senior management team as part of a new corporate organizational structure designed to better support and facilitate its long-term growth.

Nine Month Results

For the nine months ended September 30, 2005, Interactive Data reported service revenue of $406.8 million versus $359.4 million for the comparable period in 2004, an increase of $47.4 million or 13.2%. Total costs and expenses for the first nine months of 2005 rose 12.2%, or $32.5 million, to $298.6 million versus the comparable period in 2004. Income from operations increased 16.0% from $93.3 million in the first nine months of 2004 to $108.2 million for the comparable period in 2005. Net income for the first nine months of 2005 increased 17.0% to $69.2 million, or $0.72 per diluted share, from $59.2 million, or $0.62 per diluted share, for the comparable period in 2004.

As of September 30, 2005, Interactive Data had no outstanding debt and had cash, cash equivalents and marketable securities of $196.6 million. On July 7, 2005, Interactive Data paid a special dividend of $0.80 per share to stockholders of record on June 15, 2005, which totaled $74.5 million. As part of the Company's current one million share stock buyback program, Interactive Data repurchased a total of 256,000 shares at an average price of $21.84 per share during the third quarter of 2005, totaling $5.6 million. Entering the fourth quarter of 2005, 700,000 shares of common stock remained available for repurchase under the Company's current stock buyback program.

Outlook

We anticipate no significant change in business conditions during the fourth quarter of 2005 in comparison with the third quarter of 2005. We believe customers in the financial services sector will remain focused on cost containment initiatives. Based on our results to date, combined with our plans and opportunities going forward, we expect to deliver 2005 service revenue and net income growth in the low double digit range. The effective tax rate for 2005 is now expected to be in the range of 38.0% to 39.0%. Capital expenditures for 2005 are expected to remain in the range of $24.0 million to $26.0 million.