Net revenues for the NASDAQ OMX group were USD517 million in the fourth quarter of 2014, down 1% from USD520 million in the prior year period, driven by the impact of foreign exchange rates.
On an organic basis, excluding the impact of foreign exchange rates, fourth quarter net revenues increased 3% year-over-year.
"Nasdaq's record profitability resulted from its improved strategic positioning, successfully meeting the evolving demands of our diverse client base, and maintaining the organization's relentless focus on efficiency," says Bob Greifeld, CEO, Nasdaq. "Moreover, the strong results in the fourth quarter, and 2014 overall, were driven by both broad-based organic growth and the first full year of contributions from our recent acquisitions."
Greifeld says: "I'm also pleased to say that we realised a sequential uptick in organic growth in the fourth quarter. More importantly, we see clear avenues to accelerate organic growth further from strategic investments made in upgrading and launching several product offerings within recently-acquired fixed income and corporate solutions businesses. The 2015 environmental backdrop also shows evidence of continued momentum and should bring us new opportunities to serve customers."
On a non-GAAP basis, fourth quarter 2014 operating expenses were USD296 million, down 5% as compared to the prior year quarter, due to the impact of changes in foreign exchange rates and the result of the expense reduction initiatives in 2014. On an organic basis, fourth quarter 2014 non-GAAP operating expenses were down 2% compared to the prior year period. On a GAAP basis, operating expenses were USD344 million in the fourth quarter of 2014, up 22% compared to USD282 million in the prior year quarter.
Fourth quarter 2014 non-GAAP diluted earnings per share was USD0.75, compared to USD0.69 in the prior year quarter. Non-GAAP diluted earnings per share for the fourth quarter of 2014 excluded USD97 million of pre-tax adjustments, including: USD49 million of asset impairment charges related to acquired intangible assets associated with certain customer relationships and certain technology assets, USD35 million of merger and strategic initiatives costs (including a charge of USD23 million related to the reversal of a receivable under a tax sharing agreement with an unrelated party that is offset on the tax line, and USD12 million primarily associated with our acquisitions of the Thomson Reuters Corporate businesses), USD11 million of sublease loss reserve charges on space we currently occupy due to excess capacity, and USD2 million of debt extinguishment costs incurred with the refinancing of the company's credit facility.
Please refer to our reconciliation of GAAP to non-GAAP net income, diluted earnings per share, operating income and operating expenses included in the attached schedules.
On a GAAP basis, net income attributable to Nasdaq for the fourth quarter of 2014 was USD87 million, or USD0.50 per diluted share, compared with USD141 million, or USD0.81 per diluted share, in the prior year quarter.
"Our continued expense discipline offset foreign exchange headwinds and helped deliver record earnings for our shareholders," says Lee Shavel, EVP and CFO, Nasdaq. "We anticipate the ongoing successful integration of acquisitions, coupled with our broader expense management philosophy, will create margin expansion opportunities throughout 2015.
"Additionally, we continue to balance the use of our capital to create value for shareholders and clients. We have repurchased USD178 million in stock since the second quarter while also enhancing our profitability profile, growth dynamics and product offering through the agreement to acquire Dorsey, Wright & Associates. We will continue to utilise our capital with the goals of maximising returns for our shareholders and creating value for our clients."
The company repurchased 1.4 million shares, or USD58 million of stock, in the fourth quarter of 2014 at an average price of USD42.07.
On December 31, 2014, the company had cash and cash equivalents of USD427 million and total debt of USD2,313 million, resulting in net debt of USD1,886 million. This compares to net debt of USD2,236 million at December 31, 2013.
