First Quarter 2003 Revenue Increases 13 Percent Year over Year
eSpeed Reiterates Full Year 2003 After-Tax Net Operating Earnings Guidance of $0.54 Per Share Fully Diluted
NEW YORK - May 12, 2003 - eSpeed, Inc. (NASDAQ:ESPD), a subsidiary of Cantor Fitzgerald and the leading developer of electronic trading technology, today reported results for the first quarter ended March 31, 2003.
Earnings
The Company recorded net operating income of $10.2 million in the first quarter 2003, an increase of 63 percent compared to $6.3 million reported in the first quarter 2002. The Company reported $0.18 per share fully diluted in the first quarter 2003, an increase of 64 percent compared to $0.11 per share fully diluted in the first quarter 2002. eSpeed reports net operating income in order to reflect earnings generated from the Company's operations.
In accordance with Generally Accepted Accounting Principles (GAAP), eSpeed reported net income of $9.5 million, or $0.17 per share fully diluted, for the first quarter 2003, compared to $5.9 million, or $0.10 per share fully diluted, for the first quarter 2002. In the first quarter of 2003, the differences between net operating income and GAAP net income included a $0.7 million non-cash charge for business partner securities. Comparatively, in the first quarter of 2002, GAAP net income included a $0.4 million non-cash charge for business partner securities.
Beginning in the second quarter 2003, the Company expects to report its net operating results on a fully taxed basis.
Revenue
eSpeed's total revenue for the first quarter 2003 was $34.0 million, an increase of 13.4 percent versus $30.0 million in the first quarter 2002. First quarter 2003 fully electronic revenue was $22.5 million, up 4.3 percent compared to $21.6 million in the first quarter 2002.
Total revenue from Software Solutions in the first quarter 2003 was $5.8 million versus $3.2 million in the first quarter 2002, an increase of 83.3 percent. Software Solutions fees from unrelated parties in the first quarter 2003 were $2.1 million, an increase of 614.5 percent from $0.3 million in the first quarter 2002. Software Solutions fees from related parties in the first quarter 2003 were $3.6 million, an increase of 27.8 percent from $2.9 million in the first quarter 2002.
Commenting on the Company's performance, Howard W. Lutnick, Chairman, CEO and President of eSpeed, Inc., said, "Our solid first quarter earnings performance highlights the strength of eSpeed's business model. The basis of our strategy is four-pronged: maintaining leadership in our core markets, launching new products, introducing software enhancements and maximizing opportunities for software licensing and intellectual property. Despite the slow US Treasury markets in the first quarter, we saw our diversified business strategy drive increases in both revenue and earnings."
Volume & Transactions
Fully electronic volume for the first quarter 2003 was $6.8 trillion, a 13.7 percent increase versus $6.0 trillion the first quarter 2002. eSpeed's total electronic volume, including fully electronic and voice-assisted transactions, for the first quarter 2003 was $9.4 trillion, up 17.0 percent from $8.0 trillion in the first quarter 2002. Total transaction count for the first quarter 2003 was 1.2 million transactions, an increase of 18.6 percent from 1.0 million transactions in the first quarter 2002. On a sequential basis, the Federal Reserve reported US Treasury volumes up 0.4 percent while eSpeed total electronic volume was up 0.8 percent from the fourth quarter 2002 to the first quarter of 2003.
Lee Amaitis, Global Chief Operating Officer of eSpeed, Inc. commented, "Our business is driven by opportunities generated by volatility and increases in both volume and issuance in our global electronic marketplaces. For the first quarter 2003, we benefited from volatile market conditions in Europe, where market fluctuations drove increases in our European voice-assisted volume and transaction counts. Looking forward, we believe the US Treasury Department's issuance of a new benchmark 3-year note, and their recent announcement of substantial increases in issuance in the 2-year, 5-year and 10-year notes and in auction frequency, will also contribute to our growth this year."
Cash and Equivalents
As of March 31, 2003, eSpeed had cash and cash equivalents of $175 million.
Outlook
The company is reiterating its guidance of net operating earnings of $0.54 per share fully diluted and after-tax for the full year 2003. This guidance continues to be predicated on the company's expectation that average daily Federal Reserve US Treasury volume growth in 2003 will be between five and seven percent, compared to the Federal Reserve's fourth quarter 2002 average daily volume of $381 billion. The Company expects to generate pre-tax net operating margins of 30 percent and pre-tax incremental margins of 60 percent. For the second quarter 2003 the Company expects to earn in the range of $0.11 - 0.13 per share fully diluted and after-tax.
In conclusion, Mr. Lutnick added, "With the continued traction of our software enhancements and our expectation of additional US Treasury issuance, we remain confident that eSpeed will continue to demonstrate strong growth for our company and our shareholders."
About eSpeed, Inc.
eSpeed Inc., a subsidiary of Cantor Fitzgerald, is the 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 non-equity capital markets, including the world's largest government bond markets and other fixed income marketplaces. eSpeed's suite of marketplace tools provides end-to-end transaction solutions for the purchase and sale of financial and non-financial products over eSpeed's global private network or via the Internet. eSpeed's neutral platform, reliable network, straight-through processing and superior products make it the trusted source for electronic trading at the world's largest fixed income and foreign exchange trading firms, major exchanges and leading natural gas and electricity trading firms. A copy of eSpeed's earnings release is available in the news section of eSpeed's website at www.espeed.com and has been filed with the Securities and Exchange Commission on Form 8-K.
Statements contained in this Press Release, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to: the effects of the attacks on the World Trade Center, market volatility, the limited operating history of eSpeed, Inc., and its ability to enter into marketing and strategic alliances, to effectively manage its growth, to expand the use of its electronic systems and to induce clients to use its marketplaces and services, and other factors that are discussed in eSpeed's Annual Report on Form 10-K, filed with the Securities and Exchange Commission.
1Q03 Balance Sheet
Media:
Tom Ryan
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Investors:
Maureen Murphy
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