Nasdaq, Inc.
Apr 21, 2005

NASDAQ Announces First Quarter 2005 Results

Net Income Increases 176.1%, Total Expenses Reduced 13.6%, from Prior Year

NASDAQ First Quarter 2005 Financial Statements

New York, NY— The Nasdaq Stock Market, Inc. ("NASDAQ®"; NASDAQ: NDAQ), today reported net income of $12.7 million or $0.14 per basic share and $0.13 per diluted share for the first quarter 2005, an increase of $8.1 million when compared to net income of $4.6 million or $0.02 per diluted share for the first quarter of 2004, and an increase of 71.6% from net income of $7.4 million or $0.02 per diluted share for the fourth quarter 2004.

Gross margin, which represents total revenues less cost of revenues, was $126.3 million for the first quarter 2005, a decrease of 1.6% from $128.4 million in the year ago period, but an increase of 4.0% from $121.4 million in the fourth quarter 2004.

Included in first quarter 2005 total expenses are $7.5 million of pre-tax charges associated with NASDAQ’s continuing efforts to improve efficiencies and reduce operating expenses. The impact of these expenses on net income was $4.5 million or $0.05 per basic and diluted share.

NASDAQ's Chief Executive Officer, Robert Greifeld, commented, “This was a solid quarter for NASDAQ on a number of fronts. Our improved earnings clearly demonstrate our ability to leverage efficiencies gained from our cost reduction program. We welcomed the merged Sears Holdings Corporation as a listed company, reinforcing the list of innovative retailers listed on NASDAQ. We signed a cooperation agreement with leading Russian stock exchanges as part of our ongoing efforts to increase international listings in important developing markets. Within our Market Center we expanded functionality by adding a new anonymous routing service to trade exchange-listed securities and expect to launch the service this month. Finally, we listed our shares on NASDAQ’s National Market and broadened our investor base through a successful secondary offering. Our strategy for 2005 remains focused on leveraging our unique market position to develop the untapped potential in our diverse revenue streams and execute on our cost reduction plan.”

Charges Associated with Cost Reduction Program
Included in total expenses for the first quarter 2005 are pre-tax charges of $7.5 million as part of NASDAQ’s continuing efforts to reduce operating expenses and improve the efficiency of its operations:

2005 Outlook
NASDAQ has revised its expectation of the following results for the full-year 2005:

NASDAQ's Chief Financial Officer, David Warren, commented: “First quarter results demonstrate the effectiveness of our cost reduction program in improving operating leverage and driving net income. We remain on plan with this effort, and are executing well in all identified areas to remove costs, streamline processes, and improve productivity. We continue to expect that charges associated with our cost reduction program will decrease over the next three years, and remain comfortable with our forward-looking guidance.”

Q1 Financial Review
Total Revenues and Gross Margin – Total revenues in first quarter 2005 increased 40.3% to $180.2 million from $128.4 million in the year-ago quarter and increased 7.2% from $168.1 million in the fourth quarter of 2004. Beginning with third quarter 2004 results, NASDAQ began reporting cost of revenues and gross margin associated with Brut, LLC operations; NASDAQ’s other execution revenues will continue to be reported on a net basis. Gross margin, which represents total revenues less the cost of revenues related to Brut, was $126.3 million for the first quarter versus $128.4 million in the year ago period and $121.4 million in fourth quarter 2004.

Total Expenses – Total expenses decreased 13.6% to $103.5 million from $119.8 million in the year-ago quarter and decreased 14.7% from the prior quarter. Expense reductions when compared to both periods are being driven by NASDAQ’s Cost Reduction Program.

NASDAQ® is the largest electronic screen-based equity securities market in the United States. With approximately 3,250 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology industries. For more information about NASDAQ, visit the NASDAQ Web site at www.nasdaq.com or the NASDAQ Newsroom at www.nasdaq.com/newsroom/.

Cautionary Note Regarding Forward-Looking Statements
The matters described herein may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The NASDAQ Stock market, Inc. (“NASDAQ”) cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such forward-looking statements include projections which have not been reviewed by independent auditors of NASDAQ. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ’s control. These factors include, but are not limited to, NASDAQ’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ’s annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NASDAQ that the projections will prove to be correct. We undertake no obligation to release any revisions to any forward-looking statements.

Media Contact:
Bethany Sherman, NASDAQ
212.401.8714

Investor Contacts:
Vincent Palmiere, NASDAQ
212.401.8742

Jody Burfening/Carolyn Capaccio
Lippert/Heilshorn & Associates
212.838.3777