NYSE Euronext profit boosted by derivatives gains

The New York Stock Exchange parent earned $140 million, or 54 cents, in net income excluding one-time items in the first quarter ended March 31, up from $112 million, or 43 cents, a year earlier. The result matched analyst's expectations.

Our solid first-quarter results were driven by strong growth from our derivatives businesses and the first full-quarter's impact of the NYFIX acquisition, said Chief Executive Duncan L. Neiderauer in a statement.

NYSE Euronext, which runs exchanges in a handful of U.S. and European countries, has ceded market share in stock trading to upstarts such as BATS and Chi-X while it has boosted its share in options and futures markets.

Its shares were up 0.85 percent in Paris on Tuesday. They have risen about 30 percent this year as the company ramps up derivatives trading and clearing and as regulators prepare to force more derivatives through exchanges and clearinghouses.

Looking ahead, Neiderauer said he expected growth from the launches of New York Portfolio Clearing (NYPC) and of interest rate futures contracts on Liffe U.S. in the third quarter and from the start of new data center operations in the second half.

With Liffe U.S. and NYPC, NYSE Euronext aims to challenge CME Group's near monopoly in Treasury and Eurodollar futures trading and offer a one-stop destination for clearing futures and the cash securities to which they are tied.

The exchange operator also acquired NYFIX, a provider of trading systems, for $144 million to improve its platform.

REVENUE BREAKDOWN

Revenue grew 7 percent to $645 million, below expectations of $653.3 million, according to Thomson Reuters I/B/E/S.

Cash equities trading and listing net revenue fell 15 percent to $312 million compared with a year ago.

Derivatives revenues rose 44 percent to $224 million, helped by the London-based Liffe platform.

Its U.S. options market share jumped to 27 percent, making it the largest U.S. options venue, from 17 percent after it sold stakes in the Amex venue to several big market participants.

Information and technology net revenue rose 33 percent to $110 million, including NYFIX.

NYSE Euronext was slow to shift from a floor-based model to largely automated trading over the last decade. It aims to add the last of its platforms to a global trading system this year.

The company said it cut fixed operating expenses by 10 percent on a constant dollar basis from a year ago, with headcount down 13 percent to 3,216. Its operating margin rose to 58 percent from 41 percent excluding merger and exit costs.

Including one-time items, earnings were up 25 percent at $130 million, or 50 cents per share.

We continued to de-lever. with debt to EBITDA levels declining to 2.4 times, down from 2.6 times at the end of 2009, said Michael S. Geltzeiler, chief financial officer.

The quarterly dividend was set at 30 cents per share.

Rival Nasdaq OMX posted lower earnings that missed expectations last week, while CME logged its best quarterly profit since 2008.

(With reporting by Jonathan Spicer in New York; Editing by Louise Heavens)