NYSE Euronext’s Beats Estimates

NYSE Euronext (NYX) reported second-quarter results before the opening bell Thursday.

The company swung to a GAAP net loss of $182 million, against net income of $195 million in the year-ago period. The loss was caused by a one-time charge of $442 million related to termination of a contract with LCH.Clearnet and planned job cuts.

Excluding this charge, pro forma earnings per share came in at 51 cents, beating the consensus forecast by more than 13%, or 6 cents.

The transatlantic exchange, which operates across 6 cash equities exchanges in 7 countries and 8 derivatives exchanges, offers trading, clearing and settlement in equities, futures, options, fixed-income and exchange-traded products.

The company stated that net revenues slipped 13.6% year over year to $611 million, which fell short of the consensus estimate by 2%. The decline was attributable to foreign currency fluctuations, price cuts in the U.S. and European markets and sluggish volume in its Liffe Connect platform in European derivatives.

U.S. operations posted a 3.5% year over year decline in revenue to $304 million, despite 25% growth in average daily volume, as the company offered rebates to attract traders. Revenue from European operations slumped 19.6% to $315 million due to reduced trading fees.

Fixed operating expenses decreased 6% year over year to $398 million on account of benefits related to certain US retiree medical plans. However, operating income still slumped 24% to $214 million, primarily due to sluggish revenues coupled with a 61% year over year rise in liquidity, routing and clearing payments to $514 million.

NYSE Euronext also slashed its headcount by 9% from the year-ago quarter to 3,500 and plans to cut a further 230 employees in Europe and 60 in the U.S.

The company, which operates the NYSE Liffe derivatives exchange in London, also announced the launch of its own clearer, NYSE Liffe Clearing in Europe. NYSE Euronext earlier used to avail the services of LCH.Clearnet for clearing trades of its Liffe exchange. The company expects the clearing arm to generate revenues in excess of $100 million annually and start contributing from this year.

The consensus estimate on NYSE Euronext’s full-year earnings is currently pegged at $1.85 per share, which has edged up a penny over the past week as 1 of 16 covering analysts raised projections.

Last month, the company ventured into the Middle East by announcing an agreement with Qatar Investment Authority to acquire a 20% stake in Qatar Exchange for a total consideration of $200 million. NYSE Euronext also announced a joint venture with Depository Trust & Clearing Corporation (DTCC) to clear US fixed income derivatives, which is likely to commence operations from the second-quarter of next year.

Meanwhile, bigger rival CME Group Inc. (CME) reported second-quarter earnings of $3.37 per share last week, beating the consensus forecast by 14 cents. Other rivals, including IntercontinentalExchange Inc. (ICE) and NASDAQ OMX Group Inc. (NDAQ), are scheduled to announce quarterly results next week.

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