"During the first quarter, we made progress on a number of important fronts as we operated in a challenging but improving market," said Stuart Clark, president and chief executive officer.
"Excluding the contributions of businesses we acquired in 2003 and the effects of foreign exchange, we generated organic revenue growth of 2.2%. We achieved this growth in spite of a high level of cancellations. This had been expected in the first quarter due to the timing of a number of consolidations within our customer base. In addition, our growth was impacted by ongoing cost containment
initiatives by clients, and the previously announced closure of the Index Services business in Europe at the end of 2003. At the same time, we maintained cost controls while making prudent investments in the business. As a result, our underlying costs increased 1.1%, excluding costs associated with ComStock and HyperFeed which were both acquired in 2003, the increase in non-cash-related depreciation and amortization expenses associated with the ComStock acquisition and the HyperFeed customer base acquisition, the effects of foreign exchange, and costs associated with the consolidation initiative relative to our
data centers and ticker plants."
Clark added, "We continue to successfully expand our reach across back, middle and front office applications. This expansion helped drive strong growth in new sales across the company. Spending by institutional customers has improved from last year at this time, and renewal rates remained at or above the 95% level. These positive trends are balanced by a continued focus on cost containment by our institutional customers."
"During the quarter, we continued to invest in our new data center in Boxborough, Massachusetts," Clark commented. "We completed the facility's build-out in January, and have since installed the equipment and network infrastructure, with plans to bring the facility online in its initial phase later this spring. Our goal of consolidating six data centers and ticker plants in the United States to two primary facilities is an important initiative. This will enable us to respond faster and more effectively to changing customer needs, provide sufficient business continuity and disaster recovery capabilities, and reduce overall costs. Just as important, across our businesses, we continued to invest resources aimed at enhancing the breadth and depth of the services we provide to our customers."
"We generated $30.1 million in net cash this quarter, ending the quarter with over $161 million in cash and cash equivalents. Our balance sheet strength enables us to continue investing in the development of both new and enhanced services. In addition, it allows us to pursue strategic acquisitions that have the potential to expand our position in key geographic markets, complement our existing offerings or enter attractive adjacent market segments," concluded
Other First Quarter Operating and Financial Highlights
- The FT Interactive Data business generated first-quarter revenue of $79.3 million, a 5.8% increase (or 2.3% before the effect of foreign exchange) over the prior year's first quarter. Business in North America remained active as revenue increased 7.8%, primarily due to the addition of new customers, growing acceptance of new services among existing customers, and strong renewals. The Fair Value Information Service closed the first quarter with a total of 52 customers, up from 29 in the fourth quarter. In Europe, revenue declined 1.1% (13.7% before the effect of foreign exchange) as a result of market conditions as well as the closure of the Index Services business at the end of 2003. Asia-Pacific revenue was roughly flat in absolute dollars with the prior year. This
region achieved an important milestone during the quarter with the addition of new customers in two new geographic regions, Korea and Taiwan.
- CMS BondEdge revenue increased 7.3% over last year's first quarter to $8.1 million, driven primarily by new client installations, which nearly doubled in number over the same period last year. In addition, the new business pipeline for the core BondEdge product remained strong.
- ComStock generated quarterly revenue of $18.2 million, an increase of $13.1 million over the same quarter last year, which primarily reflects the timing of the ComStock acquisition at the end of February 2003 and the acquisition of the HyperFeed Technologies customer base in November 2003. We continued to be successful in bringing ComStock's real-time market data to both new customers and existing FT Interactive Data customers in both North America and Europe.
- eSignal first-quarter 2004 Internet revenue of $10.9 million represents a 4.0% increase over 2003's first quarter. eSignal's Internet subscriber base continued to grow strongly through both direct and indirect channels. eSignal's new QuoTrek offering, which delivers streaming, real-time quotes, charts and news to mobile, hand-held devices, was launched in February and subscriptions to this service are growing. As expected, Broadcast revenue of approximately $263,000 in the first quarter of 2004 declined from last year and last quarter as this service is expected to be phased out by the end of the second quarter of 2004.
- Due to the ComStock and HyperFeed costs and expenses, the increase in amortization and depreciation associated with the ComStock and HyperFeed acquisitions, the effects of foreign exchange, and increased spending associated with the data center consolidation initiative, total costs and expenses rose by $17.9 million, or 25.5% compared with the first quarter of 2003. Excluding those factors, total costs and expenses in the first quarter of 2004 increased 1.1% from the same period last year.
As of March 31, 2004, Interactive Data Corporation had no outstanding debt and had cash and cash equivalents of $161.8 million. During the quarter, the company did not repurchase additional shares under its existing buyback program.
Our assumptions for 2004 remain unchanged. We continue to anticipate modest improvement in business conditions throughout the year, although we expect that customers in the financial services sector will continue to emphasize cost containment. Excluding the effect of any future acquisitions, we remain on target to deliver mid-to-high single digit revenue growth in 2004. In terms of 2004 net income, we expect to deliver growth of mid-single digits. The tax rate
for 2004 is expected to remain at 38-39% and capital expenditures are expected to be in the range of $20.0-$23.0 million.
Conference Call Information
Interactive Data Corporation's management will conduct a conference call Thursday, April 29, at 11:00 a.m. Eastern Time to discuss the first-quarter 2004 results and additional matters. The dial-in number for the conference call is (706) 634-1052; no access code is required. Investors and interested parties may also listen to the call via a live web broadcast available through the Investor Relations section of the company's web site. To listen, please register and download audio software at the site at least 15 minutes prior to the call. For those who cannot listen to the live broadcast, a replay of the call will be available from April 29, 2004 at 2:00 p.m. through Thursday, May 6, 2004 and can be accessed by dialing 1-706-645-9291 or 1-800-642-1687, conference ID # 6540653.
In an effort to provide investors with additional information regarding our results as determined by generally accepted accounting principles (GAAP), we also disclose the following non-GAAP information, which management believes provides the following useful information to investors:
- Management refers to growth rates at constant currency so that business results can be viewed without impact of changing foreign currency exchange rates, thereby facilitating period-to-period comparisons of the company's underlying business. Generally, when the U.S. dollar either strengthens or weakens against other currencies, the growth at constant currency rates will be higher or lower than growth reported at actual exchange rates.
- Management refers to organic growth, which excludes the contribution of businesses acquired during the past 12 months and the effects of foreign currency exchange rates, because management believes that facilitating period-to-period comparisons of the company's organic revenue growth on a constant dollar basis better reflects actual trends.
- Management includes information regarding total costs and expenses excluding cost of services revenue and selling, general and administrative costs associated with ComStock and HyperFeed, depreciation and amortization expenses associated with the ComStock and HyperFeed acquisitions, the effects of foreign exchange, and investments related to the data center and ticker plant consolidation initiative, because management believes changes in our core total costs and expenses on a constant dollar basis better reflect actual trends.
Forward-looking and Cautionary Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and is subject to the safe-harbor created by such Act. These statements include our statements discussing future financial conditions, results or projections, including those appearing under the heading "Outlook." These statements are subject to known and
unknown risks, uncertainties and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, but are not limited to: (i) the presence of competitors with greater financial resources than ours and their strategic response to our services and products; (ii) the possibility of a prolonged outage or other major unexpected operational difficulty at any of our data centers; (iii) our ability to maintain relationships with our key suppliers and providers of market data; (iv) our ability to maintain our relationships with
service bureaus and custodian banks; (v) a decline in activity levels in the securities markets; (vi) consolidation of financial services companies, both within an industry and across industries; (vii) the continuing impact of cost cutting pressures across the industries we serve; (viii) new product offerings by competitors or new technologies that could cause our products or services to become less competitive or obsolete; (ix) our ability to derive the anticipated benefits from our acquisitions; (x) potential regulatory investigations of us or our customers relating to our services; (xi) the regulatory requirements
applicable to our FT Interactive Data subsidiary, which is a registered investment advisor; (xii) our ability to attract and retain key personnel; (xiii) the ability of our majority shareholder to exert influence over our affairs, including the ability to approve or disapprove any corporate actions submitted to a vote of our stockholders; and (xiv) our ability to consolidate our data centers and achieve anticipated benefits. We undertake no obligation to update these forward-looking statements.
CONTACT: For Interactive Data Corporation
Andrew Kramer, 781-687-8306