Regardless of the long term future of its Pricing and Reference Data business (whether it is eventually spun off, merged with another business or remains exactly where it is), it has performed well so far this year for Interactive Data with a 3.8% increase in revenue for the business line over the previous year’s figures. The data vendor, which last week announced its acquisition by private equity houses Warburg Pincus and Silver Lake, also experienced a revenue uptick of 5.8% in its overall revenue for the first quarter of 2010 compared to the same period in the previous year.
The Pricing and Reference Data business experienced a US$4.7 million increase in revenue for the first quarter of this year over last year’s revenues for the same period, thus ending the quarter with US$126.5 million. The vendor indicates that 1.6% is attributable to organic growth in revenue, primarily derived from its US operations. After all, Interactive Data has been heavily promoting its new evaluated pricing services and recently began providing daily independent evaluations for fixed rate reverse mortgage backed securities (HMBS) issued under the Government National Mortgage Association (GNMA) Home Equity Conversion Mortgage (HECM) programme in the US.
Ray D’Arcy, Interactive Data’s president and CEO, indicates that it has been a fairly sound start to the year for its reference data focused business line. “Our Pricing and Reference Data business continued to experience solid demand for its fixed income evaluations and reference data services. In addition, we produced another strong quarter of revenue growth for our web-based solutions in the US and experienced an improved revenue performance with our fixed income analytics offerings,” he notes. Revenue growth overall across the vendor’s business lines was also positive for the quarter, with an increase to US$196.9 million from US$186.0 million in the first quarter of 2009.
However, the vendor’s overall income for the quarter was somewhat tempered by the costs of its recent acquisitions, its “strategic review” prior to the private equity buy out and various operating costs. Income from operations in the first quarter of 2010 was US$44.5 million, an 8% decrease from US$48.3 million in the same period one year ago. Net income attributable to Interactive Data for the first quarter of 2010 was US$29.5 million, or US$0.30 per diluted share, a decrease of 7.6% over net income of US$31.9 million, or US$0.33 per diluted share, in the first quarter of 2009.
D’Arcy explains: “Our income from operations for the first quarter was affected by several factors. First, we incurred approximately US$3.4 million in costs associated with the review of strategic alternatives, which reduced net income by approximately US$2.2 million. Second, higher capital spending in prior periods and our recent acquisitions increased depreciation and amortisation expenses by US$3.6 million. Third, personnel costs increased as a result of expanding our fixed income evaluations organisation in 2009 to address continued demand, and implementing our annual merit-based salary increase in January 2010 after deferring this action last year. In addition, our expense base reflected the addition of our newly acquired businesses.”
The vendor is hoping that its recent acquisition by Silver Lake and Warburg Pincus will boost its revenues further still this year and D’Arcy says that the buy out process, which is expected to conclude in September, will not hold back any development plans. This includes further development of its global corporate actions data service and the launch of a new Options Analytics offering. In the longer term, D’Arcy is hoping to leverage the vendor’s new ownership structure to become much more competitive in the market. Even though Interactive Data is number three in the market at the moment, D’Arcy is keen to catch up to arch rivals Thomson Reuters and Bloomberg.
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