Nasdaq, Inc.
Apr 19, 2007

NASDAQ Announces First Quarter 2007 Results

Highest Ever Reported Operating Income, Apr 19, 2007 (PrimeNewswire via COMTEX News Network) -- Up 94.7 Percent From Prior Year Matched Market Share Reaches Record Levels IPO Win Rate Highest Since 2000

NEW YORK, April 19, 2007 (PRIME NEWSWIRE) -- The Nasdaq Stock Market, Inc. ("NASDAQ(r)"); (Nasdaq:NDAQ), today reported first quarter 2007 net income of $18.3 million, or $0.14 per diluted share, an increase of $0.3 million from $18.0 million, or $0.16 per diluted share, in the first quarter of 2006.

First quarter 2007 results include the following pre-tax items:


 * $24.9 million charge for merger and acquisition related costs
   associated with NASDAQ's lapsed offer for the London Stock
   Exchange.

 * $10.6 million charge included in general, administrative and other
   expense related to a NASDAQ clearing contract.  NASDAQ's single
   trading platform includes functionality that enables NASDAQ to
   discontinue the use of services provided under the contract.

 * $7.8 million loss on foreign currency option contracts purchased to
   hedge the foreign exchange exposure on the acquisition bid for the
   London Stock Exchange.  A $48.4 million gain was recorded in the
   fourth quarter 2006 for foreign currency option contracts.  As a
   result NASDAQ's cumulative gain on foreign currency contracts is
   approximately $40.6 million.

 * $6.5 million gain associated with NASDAQ freezing its employee
   pension plan and Supplemental Executive Retirement Plan (SERP),
   included in compensation expense.

Excluding the above items and an additional $2.1 million in other charges, net income calculated on a non-GAAP basis was $41.8 million versus $26.2 million for the first quarter 2006 and $33.0 million for the fourth quarter 2006. Non-GAAP diluted earnings per common share were $0.29 for the quarter versus $0.22 for the first quarter 2006 and $0.23 for the fourth quarter 2006.

Operating income was $81.4 million for the first quarter of 2007, an increase of $39.6 million, or 94.7%, when compared to $41.8 million for the first quarter of 2006.

Gross margin, representing total revenues less cost of revenues, was $192.1 million in the first quarter of 2007, an increase of 18.6% from $162.0 million in the year-ago period, and up 4.9% from $183.1 million reported in the fourth quarter of 2006.

NASDAQ's Chief Executive Officer, Robert Greifeld commented, "Our first quarter results demonstrate our ability to improve profitability by focusing on the execution of our business plan. Gross margin increased for the 10th consecutive quarter and operating income reached the highest level ever recorded at NASDAQ. Share volume matched in our systems reached record highs and NASDAQ had its strongest performance in IPO listings since the height of the market in 2000. We are extremely confident in our ability to continue to grow our business and remain excited about the future."

Recent Highlights


 * Quarterly operating income reached the highest level ever recorded
   for NASDAQ, increasing 94.7% from prior year and 19.5% from prior
   quarter.

 * For the quarter NASDAQ attracted 79.2% of all IPOs, with proceeds
   totaling $6.3 billion, or 67% of the $9.5 billion raised across all
   U.S. exchanges.

 * Achieved new market share highs in trading of U.S. listed equities.
   NASDAQ matched a record high 28.8% of consolidated U.S. listed
   equities in March.  Matched market share for NYSE-listed stocks
   increased to 15.9% in March 2007, up from 7.7% in March 2006.
   Matched market share for Amex-listed stocks increased to 31.4% in
   March 2007, up from 23.4% in March 2006.

 * Completed the transfer of sponsorship functions for the QQQ and the
   BLDRS ETFs to PowerShares Capital Management.  This transfer expands
   the distribution channels for the funds and brings greater investor
   access to these dynamic products.

 * Completed the migration of trading for non-NASDAQ stocks to our
   trading platform, effectively completing the INET integration.

2007 Outlook

NASDAQ expects the following results for the full-year 2007:


 * Net income in the range of $165.0 million to $175.0 million for the
   year, including the impact of all charges noted above.

 * Gross margin in the range of $755.0 million to $775.0 million.

 * Total operating expenses in the range of $390.0 million to
   $410.0 million.

"We're extremely proud of our first quarter operating results," commented NASDAQ's Chief Financial Officer, David Warren. "By migrating trading to a single platform we've effectively completed the INET integration and have demonstrated our disciplined approach to integrating acquisitions. I'm pleased to say that all revenue and cost objectives identified at the time of the INET acquisition have been achieved. This success is clearly illustrated in the strong growth in operating income."

Financial Review

Total Revenues and Gross Margin -- Gross margin increased 18.6% in the first quarter to $192.1 million, up from $162.0 million in the year-ago quarter, and up 4.9% from $183.1 million reported in the fourth quarter of 2006.

Market Services

Market Services gross margin increased to $125.6 million, or 22.1%, from prior year, and increased 8.3% from prior quarter.


                               Three Months Ended      % Variance
                                                          from
                            ------------------------ --------------
                            Mar 31  Dec 31   Mar 31   Prior   Prior
                             2007    2006     2006   Quarter  Year
                            ------  -------  ------  ------- ------
                                 (in millions)       (in millions)
 NASDAQ Market Center
 Execution and trade
  reporting revenues        $438.3   $322.1   $286.1   36.1%   53.2%
 Access services revenues     16.7     16.5     12.3    1.2%   35.8%
 Tape fee revenue sharing     (6.5)    (5.7)    (5.3)  14.0%   22.6%
 NASDAQ General Revenue
  Sharing Program               --       --     (0.1)    NM      NM
                            ------   ------   ------
    Total NASDAQ Market
     Center revenues         448.5    332.9    293.0   34.7%   53.1%

 Cost of revenues
 Liquidity rebates          (225.2)  (153.8)  (167.2)  46.4%   34.7%
 Brokerage, clearance and
  exchange fees             (144.7)  (110.4)   (67.0)  31.1%     NM
                            ------   ------   ------
    Total cost of revenues  (369.9)  (264.2)  (234.2)  40.0%   57.9%
                            ------   ------   ------
    Gross margin from
     NASDAQ Market Center     78.6     68.7     58.8   14.4%   33.7%

 NASDAQ Market Services
  Subscriptions
 Proprietary revenues         19.8     19.2      7.7    3.1%     NM
 Non-proprietary revenues     32.1     31.3     44.4    2.6%  (27.7)%
 NASDAQ Revenue Sharing
  Programs                    (3.1)    (2.3)    (2.9)  34.8%    6.9%
 UTP Plan revenue sharing     (9.6)    (8.8)   (13.7)   9.1%  (29.9)%
                            ------   ------   ------
    Total NASDAQ Market
     Services Subscription
     revenues                 39.2     39.4     35.5   (0.5)%  10.4%
                            ------   ------   ------
 Other Market Services
  revenues                     7.8      7.9      8.6   (1.3)%  (9.3)%
                            ------   ------   ------
 Gross Margin from Market
  Services                  $125.6   $116.0   $102.9    8.3%   22.1%
                            ======   ======   ======

 NM - Not meaningful.  Denotes variances equal to or greater than 100%

 * NASDAQ Market Center gross margin increases from both prior quarter
   and the year-ago quarter are primarily due to increases in trade
   execution market share for NYSE- and AMEX-listed equities and
   increases in average daily trading volume.  Higher access services
   revenues from prior year and prior quarter are due to increases in
   customer demand for network connectivity.

 * Market Services Subscriptions revenues increased from the year-ago
   quarter as less data revenue was shared under the UTP Plan.
   Effective February 7, 2006, NASDAQ was no longer required to share
   NQDS revenue, thereby reducing the amount of revenue shared with
   UTP Plan participants.  This change is also the primary driver for
   the growth in proprietary revenues and the decline in
   non-proprietary revenues when compared to the year-ago quarter.
   Increases from prior quarter are primarily due to higher TotalView,
   NQDS, and Level 1 subscriber populations, offset somewhat by higher
   UTP Plan revenue sharing.

Issuer Services

During the quarter Issuer Services revenues increased 12.7% to $66.4 million from the prior year quarter and decreased 0.9% from prior quarter.


                               Three Months Ended      % Variance
                                                          from
                            ------------------------ --------------
                            Mar 31  Dec 31   Mar 31   Prior   Prior
                             2007    2006     2006   Quarter  Year
                            ------  -------  ------  ------- ------
                                 (in millions)       (in millions)
 Corporate Client Group

 Annual renewal fees        $ 30.7   $ 27.9   $ 25.8   10.0%   19.0%
 Listing of additional
  shares fees                  9.7      9.5      8.9    2.1%    9.0%
 Initial listing fees          5.4      5.3      6.4    1.9%  (15.6)%
 Corporate Client services    11.7     13.1      7.6  (10.7)%  53.9%
                            ------   ------   ------
   Total Corporate Client
    Group revenues            57.5     55.8     48.7    3.0%   18.1%
                            ------   ------   ------

 NASDAQ Financial Products
 Licensing revenues            7.3      9.5      9.0  (23.2)% (18.9)%
 Other revenues                1.6      1.7      1.2   (5.9)%  33.3%
                            ------   ------   ------
   Total NASDAQ Financial
    Products revenues          8.9     11.2     10.2  (20.5)% (12.7)%
                            ------   ------   ------

 Total Issuer Services
  revenues                  $ 66.4   $ 67.0   $ 58.9   (0.9)%  12.7%
                            ======   ======   ======

 * Corporate Client Group revenues increases from prior year are
   driven primarily by revised annual renewal fees introduced this
   quarter, and by revenues generated from recent acquisitions, which
   are included in the Corporate Client services line.  Increases from
   prior quarter are primarily driven by the revised annual fees,
   offset somewhat by cyclically lower Corporate Client services.

 * NASDAQ Financial Products licensing revenues decreased from the
   prior year and prior quarter due to a decline in licensing fees
   associated with options traded for NASDAQ-licensed ETFs.  As
   previously reported, the recent outcome of two court cases impacted
   NASDAQ's ability to collect licensing revenue for options traded on
   NASDAQ ETFs.

Total Operating Expenses

Total operating expenses decreased 7.9% to $110.7 million from $120.2 million in the year-ago quarter and decreased 3.7% from $115.0 million in the prior quarter. First quarter 2007 expenses decreased from last year primarily due to the completion of the integration of the INET acquisition, which resulted in NASDAQ migrating all trading to a single trading platform. Expenses decreased from fourth quarter 2006 primarily due to integration savings and the recording of a gain associated with freezing the employee pension plan and SERP, offset somewhat by the charge related to a NASDAQ clearing contract.

Loss on Foreign Currency Option Contracts

Included in first quarter 2007 results is a $7.8 million loss on foreign currency option contracts that NASDAQ entered into to hedge the foreign exchange exposure on the bid for the London Stock Exchange. A $48.4 million gain was recorded in the fourth quarter 2006 for foreign currency option contracts. As a result NASDAQ's cumulative gain on foreign currency contracts is approximately $40.6 million.

Strategic Initiative Costs

Included in first quarter 2007 results is a $24.9 million charge associated with NASDAQ's offer for the London Stock Exchange. These charges include $18.4 million of capitalized costs as of December 31, 2006 and subsequent expenses of approximately $6.5 million.

Earnings Per Share

First quarter earnings per diluted share were $0.14 versus $0.16 per diluted share in the year-ago quarter, and $0.43 in the fourth quarter of 2006. NASDAQ's weighted average shares outstanding used to calculate diluted earnings per share was 151.8 million in the quarter versus 128.0 million in the year-ago quarter and 152.1 million in the fourth quarter 2006. The outstanding share count increased from the year-ago quarter primarily due to the issuance of approximately 18.5 million shares in equity offerings in the second quarter of 2006.

NASDAQ(r) is the largest electronic equity securities market in the United States. With approximately 3,200 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(sm) at www.nasdaqnews.com. NDAQF

Non-GAAP Information

In addition to disclosing results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), NASDAQ also discloses certain non-GAAP results of operations, including total operating expenses, operating income, net income and diluted earnings per share, that exclude certain charges that are described further in this press release and in the reconciliation table of non-GAAP to GAAP information provided at the end of this release. Management believes that this non-GAAP information provides investors with additional information to assess NASDAQ's operating performance by excluding these costs and assists investors in comparing our operating performance to prior periods.

Management uses this non-GAAP information, along with GAAP information, in evaluating its historical operating performance.

The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.

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. These forward-looking statements include projections about our future financial results, as well as the implementation dates and benefits of certain strategic initiatives. The Nasdaq Stock Market, Inc. 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. These 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, quarterly reports on Form 10-Q, 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.


                     The Nasdaq Stock Market, Inc.
              Condensed Consolidated Statements of Income
       (in millions, except per share amounts and other drivers)

                                     Three Months Ended (Unaudited)
                                   ----------------------------------
                                   March 31,  December 31,  March 31,
                                     2007        2006         2006
                                   ---------  ------------  ---------
 Revenues
 Market Services                   $ 495.5     $ 380.2      $ 337.1
 Issuer Services                      66.4        67.0         58.9
 Other                                 0.1         0.1          0.2
                                   -------     -------      -------
   Total revenues                    562.0       447.3        396.2
 Cost of revenues
 Liquidity rebates                  (225.2)     (153.8)      (167.2)
 Brokerage, clearance and
  exchange fees                     (144.7)     (110.4)       (67.0)
                                   -------     -------      -------
   Total cost of revenues           (369.9)     (264.2)      (234.2)
                                   -------     -------      -------
  Gross margin                       192.1       183.1        162.0
                                   -------     -------      -------

  Expenses
  Compensation and benefits           44.3        51.2         48.9
  Marketing and advertising            4.9         8.2          5.0
  Depreciation and amortization        9.8        10.6         24.5
  Professional and contract
   services                            8.4         9.0          8.9
  Computer operations and
   data communications                 8.2        11.8         10.0
  Provision for bad debts              3.5         0.7           --
  Occupancy                            8.9         8.5          8.0
  Regulatory                           6.7          --           --
  General, administrative and other   16.0         7.0          6.8
                                   -------     -------      -------
    Total direct expenses            110.7       107.0        112.1
  Support costs from related
   parties, net                         --         8.0          8.1
                                   -------     -------      -------
    Total operating expenses         110.7       115.0        120.2
                                   -------     -------      -------
  Operating income                    81.4        68.1         41.8
  Interest income                      5.5         6.3          4.5
  Interest expense                   (23.5)      (24.6)       (16.4)
  Dividend income                       --         7.0           --
  Gain (loss) on foreign currency
   option contracts                   (7.8)       48.4           --
  Strategic initiative costs         (24.9)         --           --
  Minority interest                    0.1         0.3          0.1
                                   -------     -------      -------
  Income before income taxes          30.8       105.5         30.0
  Income tax provision                12.5        42.5         12.0
                                   -------     -------      -------
  Net income                       $  18.3     $  63.0      $  18.0
                                   =======     =======      =======

  Net income applicable to
   common stockholders:
     Net income                    $  18.3     $  63.0      $  18.0
     Preferred stock:
          Dividends declared            --          --         (0.4)
          Accretion of preferred
           stock                        --          --         (0.3)
                                   -------     -------      -------
  Net income applicable to common
   stockholders                    $  18.3     $  63.0      $  17.3
                                   =======     =======      =======

  Basic and diluted earnings per
   share:
     Basic                         $  0.16     $  0.56      $  0.20
                                   =======     =======      =======
     Diluted                       $  0.14     $  0.43      $  0.16
                                   =======     =======      =======

  Weighted average common shares
   outstanding for earnings per
   share:
     Basic                           112.4       112.1         87.9
     Diluted                         151.8       152.1        128.0

 Other Drivers
     Average daily share volume
      in NASDAQ-listed
      securities (mn)                2,152       1,930        2,122

     Matched market share in NASDAQ
      securities (a)                  45.5%       46.5%        50.4%

     Total market share in NASDAQ
      securities (b)                  74.5%       74.0%        80.0%

     Matched market share in NYSE
      securities (a)                  15.1%       13.9%         7.0%

     Total market share in NYSE
      securities (b)                  33.6%       30.6%        22.0%

     Matched market share in AMEX
      securities (a)                  29.4%       25.3%        22.3%

     Total market share in AMEX
      securities (b)                  52.0%       48.0%        43.8%

     Listings
     Initial public offerings           37          51           30
     Secondary offerings                50          62           69
     Number of listed companies (c)  3,181       3,193        3,191

 (a) Transactions executed on NASDAQ's systems.
 (b) Transactions executed on NASDAQ's systems and internal trades
     reported to NASDAQ.
 (c) At March 31, 2007 and December 31, 2006 number of listed
     companies also includes separately listed ETFs.


                     The Nasdaq Stock Market, Inc.
                 Condensed Consolidated Balance Sheets
                             (in millions)

                                         March 31,      December 31,
                                           2007            2006
                                         ---------      -----------
                                        (Unaudited)
 Assets
 Current assets:
   Cash and cash equivalents             $   493.2       $   322.0
   Available-for-sale investments,
    at fair value                          1,531.8         1,628.2
   Receivables, net                          299.2           233.3
   Deferred tax assets                        18.1            11.1
   Other current assets                       26.5           118.0
                                         ---------       ---------
 Total current assets                      2,368.8         2,312.6
 Property and equipment, net                  61.9            65.3
 Non-current deferred tax assets             100.3            97.0
 Goodwill                                  1,028.9         1,028.7
 Intangible assets, net                      194.7           199.6
 Other assets                                 12.6            13.3
                                         ---------       ---------
 Total assets                            $ 3,767.2       $ 3,716.5
                                         =========       =========

 Liabilities and stockholders' equity
 Current liabilities:
   Accounts payable and accrued expenses $   200.9       $   170.7
   Accrued personnel costs                    25.3            55.6
   Deferred revenue                          161.6            56.4
   Other accrued liabilities                  73.3            72.1
   Deferred tax liabilities                   69.7            95.0
   Current portion of debt obligations        10.7            10.7
                                         ---------       ---------
 Total current liabilities                   541.5           460.5
 Debt obligations                          1,490.4         1,493.0
 Non-current deferred tax liabilities         96.5           115.8
 Non-current deferred revenue                 96.6            90.6
 Other liabilities                           100.5            99.1
                                         ---------       ---------
 Total liabilities                         2,325.5         2,259.0

 Minority interest                              --             0.1

 Stockholders' equity
 Common stock                                  1.3             1.3
 Additional paid-in capital                1,051.2         1,046.6
 Common stock in treasury, at cost          (236.7)         (239.7)
 Accumulated other comprehensive income       95.6           136.2
 Retained earnings                           530.3           513.0
                                         ---------       ---------
 Total stockholders' equity                1,441.7         1,457.4
                                         ---------       ---------
 Total liabilities, minority interest
  and stockholders' equity               $ 3,767.2       $ 3,716.5
                                         =========       =========


                     The Nasdaq Stock Market, Inc.
                    Reconciliation of GAAP Earnings
                (in millions, except per share amounts)

                                      Three Months Ended
                            ----------------------------------------
                            Mar 31, Dec 31, Sept 30, June 30, Mar 31,
                             2007    2006    2006     2006     2006
                            ------- ------- -------- -------- ------

 GAAP Total Operating
  Expenses:                  $110.7  $115.0  $103.3   $134.8  $120.2
 Adjustments:
  Technology Review             0.7     3.3     3.4      9.9    11.9
  Real Estate Consolidation      --      --     0.5      5.4      --
  Workforce Reductions          1.4     1.3     0.9      2.6     1.7
  Extinguishment of Credit
   Facility                      --      --      --     20.9      --
  Foreign Currency Gain          --      --      --     (8.2)     --
  Pension Plan and SERP
   Freeze                      (6.5)     --      --       --      --
  Clearing Contract            10.6      --      --       --      --
  Debt Issuance Costs            --     1.1      --       --      --
                             ------  ------  ------   ------  ------
 Non-GAAP Total Operating
  Expenses                   $104.5  $109.3  $ 98.5   $104.2  $106.6
                             ======  ======  ======   ======  ======

 GAAP Operating Income:      $ 81.4  $ 68.1  $ 67.9   $ 36.3  $ 41.8
 Adjustments:
  Technology Review             0.7     3.3     3.4      9.9    11.9
  Real Estate Consolidation      --      --     0.5      5.4      --
  Workforce Reductions          1.4     1.3     0.9      2.6     1.7
  Extinguishment of Credit
   Facility                      --      --      --     20.9      --
  Foreign Currency Gain          --      --      --     (8.2)     --
  Pension Plan and SERP
   Freeze                      (6.5)     --      --       --      --
  Clearing Contract            10.6      --      --       --      --
  Debt Issuance Costs            --     1.1      --       --      --
                             ------  ------  ------   ------  ------
 Non-GAAP Operating Income   $ 87.6  $ 73.8  $ 72.7   $ 66.9  $ 55.4
                             ======  ======  ======   ======  ======

 GAAP Net Income:            $ 18.3  $ 63.0  $ 30.2   $ 16.6  $ 18.0
 Adjustments:
  Technology Review             0.4     2.0     2.1      6.0     7.2
  Real Estate Consolidation      --      --     0.3      3.3      --
  Workforce Reductions          0.8     0.8     0.5      1.6     1.0
  Extinguishment of Credit
   Facility                      --      --      --     12.6      --
  Foreign Currency Gain          --      --      --     (5.0)     --
  Pension Plan and SERP
   Freeze                      (3.9)     --      --       --      --
  Clearing Contract             6.4      --      --       --      --
  Debt Issuance Costs            --     0.7      --       --      --
  Dividend Income                      (4.2)            (5.6)
  (Gain) Loss on Foreign
   Currency Option Contracts    4.7   (29.3)     --       --      --
  Strategic Initiative Costs   15.1      --      --       --      --
                             ------  ------  ------   ------  ------
  Total Adjustments            23.5   (30.0)    2.9     12.9     8.2
                             ------  ------  ------   ------  ------
 Non-GAAP Net Income         $ 41.8  $ 33.0  $ 33.1   $ 29.5  $ 26.2
                             ======  ======  ======   ======  ======

 GAAP Earnings per
  Common Share:
 Diluted Earnings Per Share  $ 0.14  $ 0.43  $ 0.22   $ 0.13  $ 0.16
 Adjustments:
  Total Adjustments from
   GAAP Net Income Above:      0.15   (0.20)   0.02     0.09    0.06
                             ------  ------  ------   ------  ------
 Non-GAAP Diluted Earnings
  per Common Share           $ 0.29  $ 0.23  $ 0.24   $ 0.22  $ 0.22
                             ======  ======  ======   ======  ======

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SOURCE: The Nasdaq Stock Market, Inc.

NASDAQ
          Media Contact:
          Bethany Sherman 
            212.401.8714
          Investor Contact: 
          Vincent Palmiere 
            212.401.8742

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