Interactive Data Reports First-Quarter 2015 Results

NEW YORK, April 27, 2015 /PRNewswire/ -- Interactive Data Corporation today reported its financial results for the first quarter ended March 31, 2015.  Interactive Data's first quarter 2015 revenue was $232.2 million, a 0.9% decrease from $234.4 million in the first quarter of 2014.  Excluding the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) revenue for the first quarter of 2015 was $239.2 million, an increase of 2.0% from the same quarter last year.

Interactive Data's first quarter 2015 income from operations was $36.0 million compared to income from operations of $40.9 million in the first quarter of 2014.  Non-GAAP Adjusted EBITDA (which excludes items that are either not part of the Company's ongoing core operations, or do not require a cash outlay, or are not otherwise expected to recur in the ordinary course) for the first quarter of 2015 was $88.0 million, compared with $82.1 million in the same period one year ago.  

"Interactive Data's first quarter results exceeded our expectations and we are well positioned to generate continued revenue and profit growth throughout 2015," stated Stephen Daffron, Interactive Data's President and CEO.  "Our first quarter organic revenue growth was mainly driven by continued growth in our Pricing and Reference Data segment of 4.5%, partially offset by lower revenues among our 7ticks trading infrastructure and customized hosted web applications businesses, both of which had large one-time and non-recurring revenue in the prior year period.  We generated Adjusted EBITDA of $88.0 million during the quarter, a 7.2% increase over the first quarter of 2014, reflecting our continued commitment to cost containment and driving operating efficiencies."

Segment Reporting and Related Operating Highlights

Pricing and Reference Data Segment:

• Interactive Data's Pricing and Reference Data segment reported first quarter 2015 revenue of $166.8 million, a 2.4% increase over $162.9 million in the first quarter of 2014.  Excluding the impact of changes in foreign exchange rates, first quarter 2015 organic (non-GAAP) revenue for this segment increased by 4.5% from the same period last year.  The segment's organic revenue growth reflects positive trends across all regions of the Company's evaluated pricing and reference data services, particularly in the North America region; growth within the fixed income and equity portfolio analytics platform; and contributions from newer products, including the recently launched Continuous Fixed Income Evaluated Pricing Service, or "CEP", and Apex reference data offerings.

Trading Solutions Segment:

• Interactive Data's Trading Solutions segment generated first quarter 2015 revenue of $65.4 million, a decrease of 8.4% from $71.5 million in the same period one year ago.  Excluding the impact of changes in foreign exchange rates, first quarter 2015 organic (non-GAAP) revenue for this segment decreased 3.5% from the same period last year. Lower organic revenue was driven by a one-time large customer implementation in the 7ticks trading infrastructure managed services product area in the first quarter of 2014 that did not recur in 2015.  Further, the Company's customized hosted web applications and real-time services product areas reported lower recurring and non-recurring revenue in Europe. The segment's other product areas grew in the first quarter of 2015. 

Other First Quarter 2015 Financial and Operating Highlights

Operating Expenses:

• Total operating expenses for the first quarter of 2015 were $196.3 million, a 1.4% increase over the same period one year ago.  During the first quarter of 2015, the Company recorded foreign exchange losses of $11.6 million, a substantial increase over the $1.6 million of losses recorded in the first quarter of 2014. These largely non-cash foreign exchange losses contributed to the overall increase in operating expenses as compared to the first quarter of 2014. Partially offsetting these charges was lower hardware related cost of sales due to a one-time large customer implementation in the 7ticks trading infrastructure managed services product area in the first quarter of 2014 that did not recur in 2015, and the positive impact of realized savings from on-going cost savings initiatives. Total adjusted operating expenses in the first quarter of 2015, exclusive of foreign exchange losses, depreciation and amortization, decreased by $6.9 million, or 4.4%, compared to the first quarter of 2014.

Refinancing Activity; Adjusted EBITDA:

• As previously announced, in May 2014, Interactive Data refinanced its debt and entered into a new $2.1 billion senior secured credit facility, consisting of a five-year $160.0 million Revolver (currently unfunded) and a seven year $1.9 billion Term Loan.  Additionally, the Company completed the offering of $350 million in aggregate principal amount 5.875% Senior Notes due 2019.  To facilitate period over period comparisons, the Company is reporting Adjusted EBITDA for all periods presented, as determined by reference to its May 2014 credit agreement.  Accordingly, Adjusted EBITDA amounts reported for the first and second quarters of 2014 differ from previously reported Adjusted EBITDA amounts. 

Balance Sheet Highlights:

• As of March 31, 2015, Interactive Data had cash and cash equivalents of $335.0 million, compared with $319.7 million at the end of 2014 and $326.9 million at the same period last year. The Company's total debt outstanding as of March 31, 2015 was approximately $2.2 billion compared to approximately $2.0 billion as of March 31, 2014.

Conference Call Information

Interactive Data Corporation will host a conference call to discuss the Company's first quarter 2015 results on Tuesday, April 28, 2015 at 8:30 a.m. ET.  The dial-in number for the conference call is (785) 424-1675 and the related access code is IDCQ115.  For those who cannot listen to this broadcast, a replay of the call will be available from Tuesday, April 28, 2015 at 12:00 p.m. until Tuesday, May 5, 2015 at 12:00 p.m., and it can be accessed by dialing (402) 220-7228 or (800) 757-4770.

Non-GAAP Information

In addition to presenting our results in accordance with generally accepted accounting principles (GAAP) in this press release, we also disclose the following non-GAAP information:

• Management includes information regarding organic revenue. Organic revenue excludes the impact of foreign exchange rate fluctuations, as well as, if applicable, the contribution of businesses recently acquired (and related intercompany eliminations). Management believes reporting organic revenue is useful information for stakeholders as it facilitates a fuller understanding of period-to-period changes in revenue and underlying business trends.
• Management includes organic revenue for our Pricing and Reference Data and Trading Solutions segments because management believes this additional level of detail provides further insight into underlying performance trends.
• Management includes information regarding earnings before interest, other income, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and Pro Forma Adjusted EBITDA. Adjusted EBIDTA and Pro Forma Adjusted EBITDA are determined by reference to defined terms in the Company's May 2014 Credit Agreement. Adjusted EBITDA is defined as earnings before interest, other income, income taxes, depreciation and amortization, stock-based compensation expense, and other non-cash, non-operational or non-recurring items, in each case as applicable for the underlying periods. Pro Forma Adjusted EBTIDA is defined as Adjusted EBITDA plus an additional adjustment related to the expected pro forma impact of certain planned cost savings initiatives. Management considers Adjusted EBITDA to be an important indicator of the Company's operational profitability and cash generation strength. Further, Management also believes reporting Adjusted EBITDA provides transparency into and useful information regarding the Company's operating results, because items that are either not part of the Company's ongoing core operating expenses, do not require a cash outlay, or are not otherwise expected to recur in the ordinary course of business are eliminated. Pro Forma Adjusted EBITDA is metric that is used as a basis for determining certain leverage ratios under the Company's debt agreements. The leverage ratios are used in various ways, including determining the amount of any required excess cash flow payments. For this reason, management believes it is useful for investors to have information on this metric.
• Management includes information regarding free cash flow, which we define as Adjusted EBITDA less capital expenditures. Management considers free cash flow to be an important measure of the Company's cash generation strength that supports the Company's ability to repay its debt obligations and invest in future growth through new business development activities or acquisitions.
• Management uses these non-GAAP financial measures, in addition to GAAP financial measures, as the basis for measuring the Company's core operating performance and comparing current period performance to that of prior periods, and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making, and for forecasting and planning purposes.
• The non-GAAP financial measures of the Company's results of operations included in this press release should not be considered in isolation from comparable measures determined in accordance with GAAP. The non-GAAP financial measures should not be considered to be superior to, or a substitute for, the Company's results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the comparable GAAP financial measures are set forth in the accompanying tables. The non-GAAP measures presented may not be comparable to similarly titled measures reported by other companies.

Forward-looking and Cautionary Statements

This press release may contain forward-looking statements.  Forward-looking statements include all statements that are not historical statements and include statements discussing the Company's goals, beliefs, strategies, objectives, plans, future financial conditions, future challenges and opportunities including our statement that we are well positioned to generate continued revenue and profit growth throughout 2015.  Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: (i) the effectiveness of strategies designed to improve revenue and profit results; (ii) the impact of cost-cutting and cost containment pressures across the industries the Company serves; (iii) general worldwide economic conditions and related uncertainties; (iv) consolidation of financial services companies, within and across industries; (v) a decline in activity levels in the securities markets, weak or declining financial performance of market participants or the failure of market participants; (vi) the intensity of competition the Company faces; (vii) a prolonged outage at one of the Company's data centers or other major disruptions of the Company's computer operations or those of the Company's suppliers, including outages or disruptions that result in the failure to timely deliver services or otherwise adversely impact the quality of the Company's services; (viii) the Company's ability to maintain relationships with its key suppliers and providers of market data, including unanticipated costs and expenses that may arise as the result of unfavourable resolution of third party data use audits conducted by such suppliers from time to time; (ix) the Company's ability to maintain relationships with service bureaus and custodian banks; (x) the need to develop new products and services, and to adapt existing services to legal, regulatory, technology or other changes or new competitive offerings; (xi) the Company's cost and operational optimization plans may not yield the expected efficiencies or cost savings or may take longer than anticipated, including the Company's unified technology platform project; (xii) risks related to the Company's substantial leverage, including, without limitation, the need to dedicate substantial cash flow to pay interest and principal thereby reducing cash flow available to fund operations, capital expenditures and potential business opportunities and the Company's ability to raise additional capital (if required) to react to unexpected adverse changes in the economy, the Company's industry, or to repay the Company's Senior Notes due 2019; (xiii) risks related to the Sponsor control of the Company, including the power to cause the Company to dividend cash to service the Senior Notes due 2017 issued by our parent company; (xiv) the Company is subject to regulatory oversight and it provides services to financial institutions who are subject to regulatory oversight, and enforcement actions by regulatory agencies can be time-consuming, costly and could harm the Company's reputation; (xv) the Company's ability to maintain its registered investment adviser status; (xvi) the risks of doing business internationally; (xvii) intellectual property related risks, including any allegations that the Company infringes the intellectual property rights of others; (xviii) the Company's ability to attract and retain qualified management and other key personnel; (xix) the Company's ability to negotiate and enter into any strategic acquisitions or alliances on favorable terms, if at all; and (xx) the Company's ability to realize the anticipated benefits from any strategic acquisitions or alliances that it may be a party to.  While the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, even if current management estimates change or assumptions prove invalid and, therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to today.

About Interactive Data Corporation

Interactive Data Corporation is a trusted leader in financial information. Thousands of financial institutions and active traders, as well as hundreds of software and service providers, subscribe to our fixed income evaluations, reference data, real-time market data, trading infrastructure services, fixed income analytics, desktop solutions and web-based solutions. Interactive Data's offerings support clients around the world with mission-critical functions, including portfolio valuation, regulatory compliance, risk management, electronic trading and wealth management. Interactive Data has over 2,400 employees in offices worldwide.

For more information, please visit www.interactivedata.com.

SOURCE Interactive Data Corporation