eSpeed Reports First Quarter 2007 Results.Company Updates Outlook for 2007 NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- eSpeed, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ESPD ESPD Enfants En Situation Particulièrement Difficile (French) ESPD Engine Shutdown Protective Device ), a leading developer of electronic marketplaces and related trading technology for the global capital markets, today reported results for the first quarter ended March 31, 2007. First Quarter Results Summary GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). revenues were 3% lower than in the year-ago period. GAAP net income was $0.02 per diluted share in the first quarter of 2007 vs. $0.04 per diluted share in the first quarter of 2006. eSpeed's non-GAAP operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. increased 6% and the Company's non-GAAP net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. per diluted share increased to $0.04 in the first quarter of 2007 from $0.03 in the prior year's first quarter. [TABLE OMITTED] "eSpeed's fundamental strength was underscored by the year-over-year gains in our U.S. treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. business and by increased screen-assisted revenue as additional BGC BGC General Cable Corporation (stock symbol) BGC Billy Graham Center BGC Baptist General Conference (formerly Swedish Baptist Denomination) BGC Boys & Girls Club BGC Bubblegum Crisis desks entered our hybrid pipeline," said Howard W. Lutnick, eSpeed's Chairman, Chief Executive Officer, and President. "In addition, eSpeed's futures products made solid gains. We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our growth prospects for 2008 and beyond based on strong expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: on the investments the Company has made in our portfolio of new products." First Quarter Earnings eSpeed reported net income of $0.9 million, or $0.02 per diluted share, for the first quarter of 2007 based on Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP"). To reflect earnings generated from the Company's operations, eSpeed also reported non-GAAP net operating income of $2.0 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and GAAP net income for the quarter occurred primarily due to $0.8 million in patent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. costs and $0.4 million in losses from eSpeed's Equities Direct Access business, which is set to become a separate company called Aqua in the second quarter and in which eSpeed will have an equity stake. Both of these differences were net of tax. For the first quarter of 2006, eSpeed reported GAAP net income of $2.0 million, or $0.04 per diluted share and non-GAAP net operating income of $1.4 million, or $0.03 per diluted share. The difference between non-GAAP net operating income and GAAP net income for the quarter was primarily due to a gain from insurance proceeds of $2.1 million and a settlement of a tax-related matter of $0.1 million, partially offset by $0.7 million in accelerated amortization of capitalized software, $0.4 million in patent litigation costs, and $0.4 million in expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the relocation of the Company's London office, all net of tax. First Quarter Revenues eSpeed reported GAAP revenues of $41.4 million and non-GAAP operating revenues of $41.1 million for the first quarter of 2007. The difference between GAAP and non-GAAP revenues for the first quarter of 2007 reflected eSpeed Equities Direct Access revenues of $0.3 million. In comparison, eSpeed reported GAAP revenues of $42.6 million and non-GAAP operating revenues of $38.7 million for the first quarter of 2006. The difference between GAAP and non-GAAP revenues for the first quarter of 2006 was due to a $3.5 million gain from insurance proceeds and $0.4 million in interest income related to the settlement of a tax-related matter. Fully electronic revenues were $17.9 million in the first quarter of 2007 compared with $16.7 million for the first quarter of 2006. Revenues from Software Solutions in the first quarter of 2007 were $12.3 million versus $11.3 million in the year ago period. Voice- assisted and screen-assisted revenues totaled $8.7 million in the first quarter of 2007 compared with $8.7 million in the first quarter of 2006. Non-GAAP pre-tax operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 7.8 percent in the first quarter of 2007. The year over year decrease in quarterly GAAP revenues and net income were due primarily to the aforementioned gain from insurance proceeds in the year-ago quarter partially offset by a year-over-year increase in total transaction revenues and from Software Solutions. See "Non-GAAP Financial Measures" below for a detailed description of the Company's non-GAAP financial measures. Cash Flow & Cash The Company generated cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $13.7 million during the first quarter of 2007, compared with $5.1 million during the first quarter of 2006. The Company also reports free cash flow, which it defines as cash from operations less net cash used in investing activities, including capital expenditures. eSpeed's free cash flow was $5.0 million for the first quarter of 2007, compared with ($1.5) million in the prior year period. Excluding related party receivables and payables, free cash flow was $2.6 million for the first quarter of 2007, compared with $4.9 million for the first quarter of 2006. Year-over-year improvements in cash flow from operations were due primarily to higher receivables from related parties and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. , partially offset by an increase in payables to related parties and decreased depreciation and amortization. As of March 31, 2007, eSpeed's cash and cash equivalents were approximately $192.6 million. First Quarter Volume and Transactions on the eSpeed System Fully electronic volume on the eSpeed system, excluding new products, was $11.8 trillion for the first quarter of 2007, up 31.8 percent from $9.0 trillion in the first quarter of 2006. eSpeed's combined voice-assisted and screen-assisted volume for the first quarter of 2007 was $16.4 trillion, an increase of 22.3 percent from $13.4 trillion in the first quarter of 2006. Fully electronic volume on the eSpeed system for new products, which the Company defines as foreign exchange, interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. , futures, credit default swaps Credit Default Swap A swap designed to transfer the credit exposure of fixed income products between parties. Notes: The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. , and repurchase agreements, was $1.4 trillion for the first quarter of 2007, up 169.9 percent from the $524 billion reported in the first quarter of 2006. Outlook For the second quarter of 2007, eSpeed expects to generate non-GAAP operating revenues in excess of $36 million and expects non-GAAP net operating income to be approximately $0.00 per diluted share. For the full year 2007, eSpeed now expects to generate non-GAAP operating revenues of approximately $153 million, compared with the Company's previous outlook of $152 million. eSpeed expects non-GAAP operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. to be in the range of $148 million to $149 million, versus the previously expected range of $146 million to $148 million. eSpeed expects full year 2007 non-GAAP net operating income to be in the range of $0.05 to $0.06 compared to the prior outlook of $0.05 to $0.07 per diluted share. eSpeed expects lower revenue and non-GAAP net operating income for the remainder of 2007 primarily due to the expiration of the Wagner patent on February 20, 2007. eSpeed recognized $3.1 million in revenue and $1.5 million in non-GAAP net operating income related to the patent in the first quarter of 2007. The Company will host a conference call on Thursday, May 3, 2007 at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , to discuss the above results. To listen to the call via audio webcast, please visit www.espeed.com. Please note: listeners must have a Real Media or Windows Media Microsoft's audio and video framework for Windows, which embraces playback, encoding and streaming. Windows Media Player is the digital jukebox and media player that comes with every version of Windows. plug in and headphones Head-mounted speakers. Headphones have a strap that rests on top of the head, positioning a pair of speakers over both ears. For listening to music or monitoring live performances and audio tracks, both left and right channels are required. or speakers to listen to the webcast. Non-GAAP Financial Measures To supplement eSpeed's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance with GAAP and to better reflect the Company's quarter-over-quarter and comparative year-over-year operating performance, eSpeed uses non-GAAP financial measures of revenues, net income and earnings per share, which are adjusted to exclude certain expenses and gains. In addition, the Company provides a computation of free cash flow. These non-GAAP financial measurements do not replace the presentation of eSpeed's GAAP financial results but are provided to improve overall understanding of the Company's current financial performance and its prospects for the future. Specifically, eSpeed believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to the Company's financial condition and results from operations. In addition, eSpeed's management uses these measures for reviewing the Company's financial results and evaluating eSpeed's financial performance. For the first quarter of 2007, the difference between GAAP net income and non-GAAP net operating income was approximately $1.2 million, net of tax, while the difference between GAAP revenues and non-GAAP operating revenues was $0.3 million. eSpeed considers "non-GAAP net operating income" to be after-tax income generated from the Company's continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the excluding certain non-recurring or non-core items such as, but not limited to, asset impairments, litigation judgments, costs or settlements, restructuring charges, costs related to potential acquisitions, charitable contributions, insurance proceeds, business partner securities, gains or losses on investments and similar events. eSpeed considers "non-GAAP operating revenues" to be net revenue excluding these same items. The amortization of patent costs and associated licensing fees (including those made in settlement of litigation) from such patents are generally treated as operating items. Material judgments or settlement amounts paid or received and impairments to all or a portion of such assets are generally treated as non-operating items. Management does not provide guidance of GAAP net income because certain items identified as excluded from non-GAAP net operating income are difficult to forecast. About eSpeed, Inc. eSpeed, Inc. (NASDAQ: ESPD) is a leader in developing and deploying electronic marketplaces and related trading technology that offers traders access to the most liquid, efficient and neutral financial markets in the world. eSpeed operates multiple buyer, multiple seller real-time electronic marketplaces for the global capital markets, including the world's largest government bond markets and other fixed income and foreign exchange marketplaces. eSpeed's suite of marketplace tools provides end-to-end transaction solutions for the purchase and sale of financial products over eSpeed's global private network or via the Internet. eSpeed's neutral platform, reliable network, straight-through processing straight-through processing The direct exchange of cash and securities. Straight-through processing is a major objective for cross-border transactions that are generally much more costly to settle compared to domestic transactions. and superior products make it a trusted source for electronic trading  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. at the world's largest fixed income and foreign exchange trading Foreign Exchange Trading or FX Trading, clients are able to hedge against, or speculate upon, changes in the exchange rate of two currencies. For example, a speculator can long EUR/USD in foreign exchange market in order to profit from capturing the appreciation of Euro against the firms and major exchanges. For more information, please visit www.espeed.com. Discussion of Forward-Looking Statements by eSpeed, Inc. The information in this release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements. Our actual results and the outcome and timing of certain events may differ significantly from the expectations discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, our relationship with Cantor and its affiliates, the costs and expenses of developing, maintaining and protecting our intellectual property, including judgments or settlements paid or received and their related costs, the possibility of future losses and negative cash flow from operations, the effect of overall market conditions, including trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. and volatility, our pricing strategy and that of our competitors, our ability to develop new products and services, to enter new markets, to secure and maintain market share, to enter into marketing and strategic alliances, and other transactions, including acquisitions, reorganizations, partnering opportunities, and joint ventures, to hire new personnel, to expand the use of our technology, for both integrated hybrid voice-assisted and fully electronic trading, to induce clients to use our marketplaces and services and to effectively manage any growth we achieve, and other factors that are discussed under "Risk Factors" in eSpeed's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. We believe that all forward-looking statements are based upon reasonable assumptions when made. However, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that accordingly you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made and we undertake no obligation to update these statements in light of subsequent events or developments. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] * New Products defined as Foreign Exchange, Interest Rate Swaps, Repos, Futures, and Credit Default Swaps. CBOT See Chicago Board of Trade. CBOT See Chicago Board of Trade (CBOT). Futures volume calculated based on per contract notional value Notional Value The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets because in them a very little amount of invested money can control a large position (have a large consequence for the trader). of $200,000 for the two year contract and $100,000 for all others. [TABLE OMITTED] Trading Days 2007 Q1 Q2 Q3 Q4 62 64 63 62 2006 Q1 Q2 Q3 Q4 62 63 63 62 |
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