The market and reference data industry’s two largest publicly listed players – Interactive Data and Thomson Reuters – posted 2009 results last week whose resilience gave some cause for optimism. While neither set the world on fire, neither was expected to, given the ongoing weakness in the overall market, whose ‘recovery’ continues to be muted at best.
The larger of the two, Thomson Reuters’ Markets division revenues declined 2% due to negative net sales and what the company described as “a difficult prior year comparison (up 6%).” Not one to mince words, CEO Tom Glocer called 2009 “the worst global operating environment any of us has faced.”
For full-year 2009, Thomson Reuters’ Sales & Trading group saw revenues drop 4%, as a “modest decline in recurring revenues attributable to desktop cancellations” was further impacted by declines in transactions and recoveries. Commodities & Energy and Treasury businesses both achieved revenue growth for the year. Fourth-quarter Sales & Trading revenues decreased 7% due to continued pressure on recoveries revenues and reductions in desktops in the Exchange Traded Instruments and Fixed Income segments.
In the Investment & Advisory group, full-year revenues declined 2%, as Corporate’s growth of 1% was offset by a slight decline in Retail Wealth Management, a 3% decline in Investment Management and a 6% decline in Investment Banking. Fourth-quarter revenues declined 5%, as Investment Banking’s return to growth was offset by cancellations in Investment Management and lower recoveries in Retail Wealth Management.
Enterprise was once again the bright spot in the overall Thomson Reuters Markets picture. Full-year revenues increased 6%, with Enterprise Information, comprising more than half of the segment’s revenues, grew 17%. The Trade and Risk Management business grew 3%. Fourth-quarter revenues increased 1%, despite “an extremely challenging prior-year comparable when revenues grew 13%.” Enterprise Information grew 9% on continued demand for pricing and reference data, and helped offset a 10% decline in outright revenues.
Glocer said the company was off to a strong start in 2010, with positive net sales in Markets. “I am confident that 2009 was the bottom of the sales cycle for us … I expect that we will return to revenue growth in the second half of 2010.”
Interactive Data, meanwhile, was able to report positive growth for 2009, characterised by CEO Ray D’Arcy as presenting “some of the most challenging conditions that our industry has experienced.” For the year, Interactive Data said revenue grew less than 1% to $757.2 million from $750.5 million a year earlier. Net income was down slightly, however, to $141.2 million from $142.6 million.
D’Arcy attributed the company’s organic revenue growth of 2.8% in 2009 to “the resilience of our fixed income evaluations and reference data offerings.” The Pricing and Reference Data business grew organically at 6% for the year.
D’Arcy said that “Market conditions began to show signs of stabilization starting in the third quarter of 2009, and this trend continued through the fourth quarter.” For the fourth quarter, contributions from acquisitions and the positive impact of foreign exchange offset a 3.4% decline in organic revenue, itself attributed to a difficult year-earlier comparison and softness in the active trader and real-time data feed services.
The company didn’t break out full-year results by operating group. But Interactive Data Pricing and Reference Data reported fourth-quarter revenue growth of 2.5%. Interactive Data Real-Time Services’ fourth-quarter revenues were down 4.2%. And Interactive Data Fixed Income Analytics’ revenues were up 1.2%. The Active Trader Services Segment, meanwhile, saw eSignal’s fourth-quarter revenues drop 7.1%.
In terms of the outlook for 2010, D’Arcy said “there is still a degree of uncertainty regarding overall market conditions in 2010. We anticipate that 2010 revenue will range between $810 million and $830 million due to the contribution from recent acquisitions and improved organic revenue performance over the coming quarters.”