BEDFORD, Mass â April 28, 2005 â Interactive Data Corporation (NYSE: IDC) today reported its financial results for the first quarter ended March 31, 2005. First-quarter 2005 service revenue grew 18.7% to $139.7 million from $117.6 million in the first quarter of 2004. Net income for the first quarter of 2005 increased by 28.9% to $23.7 million, or $0.25 per diluted share, from $18.4 million, or $0.19 per diluted share, in the same quarter last year.
"Our first-quarter 2005 results were positively impacted by the recognition of $8.1 million in service revenue, $6.7 million in direct SG&A costs and $1.4 million in income from operations primarily as a result of a previously announced reversal that occurred during the fourth quarter of 2004," stated Stuart Clark, president and chief executive officer. "These amounts include the original reversal totals from prior periods plus the related service revenue, costs and income from operations that were deferred in the fourth quarter of 2004."
Clark commented, "It was a strong quarter even without the accounting adjustment, driven by growth at FT Interactive Data and eSignal, and the contribution of FutureSource, whose assets were acquired in September 2004. Within the Institutional Services segment of our business, FT Interactive Data experienced very good growth as a result of ongoing strength in North America and improved performance in Europe. Overall renewal rates within the Institutional Services segment remain at or above 95%. In our Active Trader Services segment, eSignal achieved excellent revenue growth by continuing to expand its direct subscriber base."
"We ended the first quarter with cash and marketable securities of $226.1 million, and we remain debt free. Our strong financial position provides us with the flexibility to continue evaluating a wide range of investment opportunities, including those that would expand our geographical reach and broaden our offerings to address our clientsâ front, middle and back office challenges," concluded Clark.
Other First-Quarter Operating and Financial Highlights
Effects of Foreign Exchange:
â¢ Interactive Dataâs first-quarter 2005 service revenue was positively impacted by $1.0 million due to the effects of foreign exchange. First-quarter 2005 service revenue before the effects of foreign exchange grew by $21.1 million, or 17.9%, over the comparable period in 2004. Total costs and expenses in the first quarter of 2005 were negatively impacted by $0.8 million due to the effects of foreign exchange. First-quarter 2005 total costs and expenses before the effects of foreign exchange increased by $14.4 million, or 16.3%, over the first quarter of last year. The net effect of foreign exchange in the first quarter of 2005 was a $0.2 million increase in income from operations.
Institutional Services Segment:
â¢ FT Interactive Dataâs first-quarter 2005 service revenue of $86.0 million grew 8.5% over the prior yearâs first quarter (or an increase of 7.8% before the effects of foreign exchange). North American service revenue for the first quarter of 2005 increased 8.5% over the prior yearâs first quarter, due to continued high demand for evaluated and descriptive services. First-quarter 2005 European service revenue increased by 8.7% (or an increase of 5.8% before the effects of foreign exchange) from the first quarter of last year. This marks the second consecutive quarter of year-over-year revenue growth for FT Interactive Dataâs European business. Asia-Pacific first-quarter 2005 service revenue increased 7.5% (or an increase of 6.1% before the effects of foreign exchange) compared with the prior yearâs first quarter.
â¢ ComStock generated first-quarter 2005 service revenue of $27.7 million, an increase of 44.9% over the same quarter last year (or an increase of 42.7% before the effects of foreign exchange). The increase includes the previously mentioned recognition of $8.1 million of service revenue and $6.7 million in direct SG&A costs and $1.4 million in income from operations. Excluding these amounts, ComStock generated modest underlying growth. During the first quarter of 2005, ComStock introduced a new interface for integrating its datafeeds into institutional applications and a major investment bank became the first client to implement this interface. ComStockâs first-quarter service revenue in 2004 and 2005 includes real-time foreign exchange data services revenue, which were previously included as Other Service Revenue and are now part of ComStock.
â¢ CMS BondEdgeâs service revenue for the first quarter of 2005 decreased by 1.8% over last yearâs first quarter to $7.9 million. CMS BondEdgeâs first-quarter performance was impacted by a number of cancellations due primarily to a combination of cost-cutting actions and consolidations by institutional clients. The cancellations were partially offset by twelve new client installations.
Active Trader Services Segment:
â¢ eSignalâs first-quarter 2005 service revenue grew 65.3% over 2004âs first quarter to $17.9 million due to the contribution of FutureSource and the continued expansion of eSignalâs direct subscriber base. FutureSource, whose assets were acquired by the Company in September 2004, generated $5.3 million in first-quarter 2005 service revenue, or approximately 29% of eSignalâs first-quarter service revenue. eSignal ended the first quarter of 2005 with approximately 45,250 direct subscription terminals, which includes approximately 6,700 FutureSource terminals. The integration of FutureSource is proceeding as planned on multiple fronts, including product development. The newest version of FutureSource Workstation, which is expected to be generally available in the second quarter of 2005, will incorporate real-time equities data from major US and international stock exchanges, a feature that has distinguished eSignalâs core offerings for many years.
Costs and Expenses:
â¢ Total first-quarter 2005 costs and expenses increased by 17.2% to $103.5 million from $88.3 million in the first quarter of 2004. Total first-quarter 2005 costs and expenses include the previously discussed $6.7 million in direct SG&A costs, which were reversed from prior periods and deferred in the fourth quarter of 2004. Total costs and expenses for the first quarter of 2005 increased by $9.1 million, or 10.5%, before total costs and expenses associated with businesses acquired or closed in the past twelve months, the effects of foreign exchange and data center consolidation initiative costs.
â¢ During the first quarter of 2005, Interactive Data continued to invest significant human and financial resources to address its various compliance obligations, including those related to the Investment Advisers Act and Section 404 of the Sarbanes-Oxley Act.
As of March 31, 2005, Interactive Data had no outstanding debt and had cash, cash equivalents and marketable securities of $226.1 million, an increase of $15.8 million from December 31, 2004. Under the one million share buyback program initiated in September 2004, Interactive Data repurchased a total of 389,600 shares at an average price of $21.23 per share during the first quarter of 2005. As a result, Interactive Data has repurchased a cumulative total of 534,600 shares under the existing buyback program.
We anticipate similar business conditions in 2005 to those that we experienced during the past several quarters. We believe customers in the financial services sector will remain focused on cost containment initiatives. We remain on target to deliver 2005 service revenue and net income growth in the high single-digit to low double-digit range. The effective tax rate for 2005 is expected to be in the range of 38.0% to 38.5%, with potential for the tax rate to increase to as high as 39.0% depending on the outcome of proposed changes to tax laws in the United Kingdom. Capital expenditures for 2005 are expected to be in the range of $24.0 to $26.0 million.