Welcome to the Nasdaq third quarter 2015 results conference call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. If you require any assistance during the call, you may press star then zero on your touch-tone telephone. As a reminder, today's call is being recorded. I would now like to turn the conference over to Ed Ditmire, Vice President of Investor Relations. Sir, you may begin.
Good morning, everyone, thanks for joining us today to discuss Nasdaq's third quarter 2015 earnings results. On the line are Bob Greifeld, our CEO, Lee Shavel, CFO, our co-presidents, Adena Friedman and Hans-Ole Jochumsen, Ed Knight, our general counsel, and other members of the management team. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material, non-public information and complying with disclosure obligations under SEC Regulation FD. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections.
Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I now will turn the call over to Bob.
Thank you, Ed, good morning, everyone, and thank you for joining us today to discuss Nasdaq's third quarter 2015 results. I am here today joining this call from our London office, an important and growing hub for many of our businesses. It's always a pleasure to visit this great city. Turning to our performance in the third quarter, I am pleased to announce that this franchise delivered its best quarter ever in terms of revenue, non-GAAP operating profit, pre-tax income, net income, and diluted EPS. What is even more interesting to me is that we delivered record results again for our shareholders, despite significant FX headwinds. All the while, we continue to heavily invest in our future. During the quarter, we were also pleased to see accelerating organic growth, not only in our Market Services segment, which benefited from favorable macro factors, but also across our non-transactional segments.
Positive organic revenue growth, which excludes foreign exchange and acquisition impacts, was contributed by all four business segments. Because of our continued strong execution and the significant cash generation our model delivers, we were in a position to be able to return almost $300 million to shareholders through buybacks and dividends during the period. This is certainly a prized position that all companies strive to achieve and one that Nasdaq is pleased to be able to achieve this quarter. Today, I want to focus the bulk of my remarks again on the strength of our business model and how that is contributing not only to results we saw during this quarter, but how it is also creating additional upside opportunities across the franchise. We talk a lot here at Nasdaq about innovation and our ambition to lead change on behalf of our clients.
It is a core tenet of our culture. We also, however, greatly respect the value of consistency. Consistency not only in the way we run our business, effectiveness first, and then efficiency, but also consistency in our approach to building a robust and resilient business model. When you look at the results we continue to deliver quarter after quarter, we have the right ingredients, and the power of our model was especially evident this quarter with both the trading and non-trading business segments hitting their strides. Our market services segment saw a very robust 12% organic growth excluding FX, which was driven in significant part by the impact of market volatility, which it had on volumes, but this was also amplified by healthy capture rates and leading market share positions in the vast majority of the markets we compete in.
We saw a significant jump in organic growth across our non-trading segments, which combined reached 8% and was driven by double-digit performances in both listings and information services segments, as well as improvements in technology solutions. One of the benefits of our strategy to compete in businesses that are levered to technology, as well as our disciplined approach to expenses and capital deployment, is that our model affords us an ability to deliver bottom-line growth that meaningfully outpaces revenue growth. Excluding the impact of FX, but including the 2% revenue impact of the Dorsey Wright acquisition, revenue increased 11% year-on-year, operating income increased 13%, and EPS grew 17%, with the last four points of growth largely due to capital deployment, including repurchases and income associated with the OCC recapitalization.
To me, the most attention-grabbing aspect of our performance is that we are still in what I would consider a building phase. There is much more upside on our horizon, especially given the growth initiatives we have in our pipeline, including Nasdaq Private Market, our new energy derivatives market, NFX, the work we're putting into corporate solutions business, and the innovations we're implementing across many of our other products. I would like to turn and highlight some of the more notable areas of our strong performance during the quarter. As I emphasized earlier in my remarks, our core businesses continue to deliver. Revenues from our foundational cash equities, trading and listing businesses combined are up over 27% year-over-year on an organic basis, excluding FX, a very strong performance.
Global cash equity trading rose 39% on an organic basis, resulting in one of our best revenue quarters in over the last seven years. Truly outstanding. Our listing businesses rose 17% on an organic basis as we capitalized on the strong supply of new listings, leveraging the firm's strongest competitive positioning in the company's history and higher average pricing. Our expanding value proposition continues to attract companies, as evidenced by our expanding U.S. IPO win rate, which reached 80% during the quarter, helping to bring our IPO count for the year to 111. Our total number of U.S. listings rose 4% compared to the prior year period. Nasdaq has listed more IPOs than any other U.S. exchange this year, with combined proceeds raised of approximately $13.6 billion.
The companies that continue to be drawn to the expanding portfolio of services we offer include a diverse mix of technology, consumer, and energy brands. In the third quarter, we are pleased to again welcome wonderful brands to our market, including Blue Buffalo, TerraForm, MasterCraft and Sunrun, to name a few. Equally exciting for us is the recent announcement that wireless provider T-Mobile, a $30 billion plus market cap company, will switch its listing to Nasdaq. Our competitive spirit has never been stronger. We are pleased to welcome T-Mobile to the Nasdaq family. In our Nordic markets, we continue to see an equally robust performance. The third quarter had nine new listings. Total listings are up 7% compared to the prior year.
We are excited about our prospects and our ability to continue to attract new listings as we further enhance our value proposition with more client-centric product and services. A great example of this is our new IPO Indicator, which we introduced earlier this year. The indicator provides real-time transparency about a stock throughout the IPO open event. Client feedback has been very positive. Another area of our business that continues to contribute meaningfully to our results is the information services segment. Over the last year, we have been reshaping our strategy in this business to align more tightly with the needs of our clients in a way that leverages our core expertise in data and index benchmarking. Our acquisition of Dorsey, Wright & Associates is a good example of the sound execution of that strategy.
Since announcing this acquisition at the beginning of the year, we have experienced significant growth, with AUM up nearly 70% year to date and revenue run rates nearly doubling. More broadly, we have about 43% of the AUM licensed to Nasdaq indices in smart beta products. We expect continued growth in investor appetite for smart beta strategies. We are excited to be in a leading position in this segment and to bring innovative products to our clients. In data products, we've added new talent to the team and are investing in new kinds of informational and analytical products with a goal of broadening our opportunity set while continuing to grow the value inherent in our current product portfolio. I mentioned before the most revealing aspect of our record performance this quarter is that it was primarily driven by organic growth in our foundational businesses.
When you factor in the areas we're investing in the future, we believe there's much more growth and upside for this franchise. Let me highlight a few of them for you. A perfect example of how we tap into this potential at Nasdaq is NFX, our new global commodities venture, which we launched in late July. NFX is a direct response to our customers and their desire for a more efficient and competitive energy market. Now, in its third month of operation, we are seeing noteworthy uptake by the trading community, with over 70 firms having already executed trades on the platform and activity levels building. We set another record again yesterday. One aspect of NFX's performance we're particularly encouraged by is the rising open interest on the platform. Yesterday, we passed 300,000 contracts. Truly remarkable.
This is including customer positions with durations reaching several years out on the curve in an indication of the confidence and support of end users, not just intermediaries and liquidity providers. We also believe strong open interest trends bode well for continued ramp in transaction volumes. We are extremely encouraged by our progress in the short time we've been up and running and are excited about the opportunity to grow this venue and hit the longer-term objectives we've established. A core principle at Nasdaq is that clients come first. We have always maintained that Nasdaq was more than a listing venue. We've expanded the ecosystem of solutions we offer companies at all stages of development and the value we provide to them. The Nasdaq Private Market, or NPM, is a good example of how we are filling an important need in the marketplace for private growth companies.
This business represents a sizable opportunity for us. NPM has strong demand today, with 120 private companies using our platform to manage their liquidity and equity ownership needs. There were approximately 20 additions this quarter alone, including such great companies as LegalZoom, Mixpanel, and Farfetch. In addition, we are very pleased to announce today we've reached an agreement to acquire Second Market Solutions. Second Market is a recognized innovator in facilitating liquidity for private company securities. Second Market and its talented team will join the Nasdaq family and help to strengthen our offerings to clients, as well as add meaningful scale to our efforts with bicoastal operations. We are continuing to find ways to inject innovation into this business and help enhance our offerings. In fact, we plan to bring further benefits and efficiencies to private companies through the use of blockchain technology in NPM.
We will bring a distributed ledger that will bring increased security, speed, and efficiency to tracking a company's ownership, will have the ability to settle and clear trades in 10 minutes as compared to three days, which we see in the public market. We have identified several clients who will be included in initial beta pilot, expected to launch by the end of this year. Finally, another area where our efforts are positioning us to improve growth and profitability is in our corporate solutions business. We have made strategic investments in our core platforms built for IR, PR, communication, and governance professionals. In addition, we have further integrated our content, insight, and tools to further differentiate our offering, as well as enhance all of our client touchpoints, from back-office billing systems to account management. The result of our efforts are starting to emerge.
For the third quarter in a row, we are seeing positive net subscription sales, which is extremely encouraging as we work to transform the business and drive organic growth. In addition, we are on target for the launch of our fully featured version of the Nasdaq IR Insight platform, which is expected by the end of this year. Nasdaq IR Insight will provide us with a foundation to support innovative new product features and enhancements for the months and the years to come. In addition, by integrating information and technology from our broader suite of solutions in unique ways to solve our customers' challenges, we can accelerate adoption of other corporate solutions products. Up to this point, I've highlighted the various ways our model is moving the franchise forward, delivering for clients and shareholders. I want to spend a few minutes updating you on our deployment of capital.
Our model generates significant cash flow and with it adds opportunities for us to be aggressive in how we deploy this capital. Thus far in 2015, through our stock buyback program and our increased dividend, we returned $418 million in capital to investors, equal to 97% of our non-GAAP net income generated in the same period. We're very pleased we've been able to deliver these concrete rewards from our success to our shareholders. More importantly, our future is built on how well we will seize new opportunities. A big part of our capital allocation strategy is ensuring we're investing in our future and in the core businesses that will drive our growth and our returns. We have the great ability to, one, return capital to our shareholders, two, invest in organic growth opportunities, and three, make informed value-creating acquisitions.
We are as equally excited by our share buyback and dividend program as by our organic growth initiatives such as NPM and NFX, and also by our acquisitions such as SecondMarket and DWA. To me, it's truly ideal when you are in a position to invest at high levels for your future, while still returning meaningful amounts of capital to investors. We will continue to look for opportunities to best use our capital, and that will provide meaningful growth and returns to our investors. Finally, I would like to say a few words about how we measure success here at Nasdaq, because it's particularly important in light of the results we delivered this quarter. When we look at how we are growing as a firm, we don't only look at financial metrics, but we also look at how our businesses are progressing.
Our success metrics are based on how well we strengthen our competitive position. We know that when we focus on serving our clients and improving our products and solutions, financial performance will always follow. That is our mindset. In addition, we continue to enhance and adjust our operational effectiveness and efficiency across the organization and are structuring our talent and resources so we are effective as possible in running our business and serving our clients. This will always be a key priority for us. I have confidence in our model and the future of this franchise as we work to strengthen our competitive position to deliver results for our clients and shareholders. We're very pleased to deliver a record quarter for our shareholders. It is a visible result of good teamwork by everyone here at Nasdaq.
I would like to thank our employees, our clients, and our shareholders for their continued support. We are encouraged by all the positive trends across our business during the quarter, and we are confident we are on the right path to take this franchise to new levels in the quarters to come. With that, I'll turn the call over to Lee.
Thanks, Bob. Good morning, everyone. The following comments will focus on our non-GAAP results. Reconciliations of the GAAP to non-GAAP results can be found in the attachments to our press release and in the presentation that's available on our website at ir.nasdaq.com. I want to start off, as I did the last few quarters, by highlighting the impact the stronger dollar had on our results, as it obscures, in many cases, the solid organic growth of our business. Excluding the impact of FX, our revenues would have been up $55 million or 11% from the prior year, and operating income would have been up $30 million or 13%. In order to provide a greater understanding of these effects on the business units, we continue to provide a schedule of FX impact on the revenues for each business unit on page 15 of the presentation.
Let's start by reviewing third-quarter revenue performance relative to the prior year quarter, as shown on page three of the presentation. The 6% or $32 million increase in reported net revenue of $529 million consisted of organic growth in the non-trading segments revenue of $24 million or 8% due to growth in listings, information services, and market technology, plus $9 million in revenues from the Dorsey Wright acquisition, reduced by a $12 million FX impact for a net $21 million increase in reported revenues. Organic growth in market services net revenues of $22 million or 12%, resulting principally from higher cash equity revenues reduced by an $11 million FX impact for a net $11 million reported increase.
Moving to page four in the presentation, we show how organic growth breaks down historically between the non-transaction information services, technology solutions, and listing services segments, which had 8% organic growth this quarter, and the volume-sensitive market services segment at 11% for the quarter. Looking at our year-to-date 2015 results, we have achieved 5% organic growth for our non-transaction segments, consistent with our mid-single-digit medium-term guidance and returning to the level that we achieved in 2013. In market services, we have achieved 4% organic growth for the year-to-date 2015 period, reflecting the positive inflection we've seen over the past two quarters with increased market volatility. On the bottom of the page, we reiterate our views on the medium-term organic growth outlook for the non-transactional segments.
As I've said in the past, these views were meant to reflect multi-year cross-cycle periods, and actual growth in shorter periods can be above or below these ranges. Let's now go over some of the highlights within each of our reporting segments. All comparisons will be to the prior year period unless otherwise noted. Information services on page five saw a $12 million or 11% organic increase, plus a $9 million increase from the Dorsey Wright acquisition, reduced by a $3 million FX impact for an $18 million net increase in reported revenues. The operating margin came in at 73%, down slightly from 74% in the prior year due to FX impact. This consisted of market data revenues producing an $11 million or 12% organic increase, reflecting growth in tape plan and proprietary revenues.
Well as index licensing and services, which saw a $1 million or 5% organic increase from higher non-QQQ licensing revenues with a 20% growth in non-QQQ assets under management and higher futures volumes, reduced by a decline in QQQ assets under management and associated licensing fees. Technology solutions, as shown on page six, saw a $2 million or 1% organic revenue increase, reduced by a $6 million FX impact, resulting in a $4 million reported decline. The operating margin was 15%, down from an exceptionally strong 17% in the prior year period. This consisted of market technology revenues, which saw a $3 million or 5% organic increase, due in particular to growth in our SMARTS surveillance product revenues.
New order intake was $83 million in the third quarter. New order activity continues to be healthy with a number of significant new contracts in the traditional market tech business, as well as SMARTS and BWise. It's worth noting that the period end backlog finished at a record $738 million, up about 16% year-over-year. Corporate Solutions revenue saw a $1 million or 1% organic decline in line with the prior quarter as we continue to progress through the late stages of the integration and customer transitions from the acquisition of the Thomson Reuters corporate business. We continue to see solid momentum in the business, particularly with the third consecutive quarter of net positive subscription sales of $3 million, up from $2 million in the prior quarter and $1 million in the first quarter of 2015.
We also continue to receive very positive feedback on the new Nasdaq IR Insight platform to be launched on January 1, 2016. Saw particularly strong 23% new sales growth from the prior quarter in our legacy Thomson ONE platform in anticipation of migration to the new platform. In listing services on page seven, we saw a $10 million or 17% organic increase in revenues, driven by pricing changes and an increased issuer base reduced by $3 million of FX impact, resulting in a $7 million increase in reported revenue. Operating margin of 44% was up from 42% in the prior year. The U.S. issuer base has 4% more companies at the end of the quarter compared to the prior year period, while in the Nordics, the count is 7% higher.
Market services on page eight saw a $22 million or 12% organic increase in net revenues, reduced by an $11 million FX impact, resulting in an $11 million increase in reported revenue. Operating margin rose to 55% from 52% in the prior period as a result of the operating leverage implicit in that business. Equity derivatives trading and clearing net revenues saw a 6% organic increase, primarily due to higher U.S. derivative capture and higher industry volumes, partially offset by a decline in overall market share at our three U.S. options exchanges. Cash equities trading net revenues saw a 39% organic increase as higher cash equity average capture and increased industry volumes were partially offset by modestly lower market shares. Cash equity revenues were at our highest levels since the third quarter of 2011, and U.S. cash equity revenues were at our highest levels since the second quarter of 2010.
Fixed income, currency, and commodities trading and clearing net revenues saw a 13% organic decline from the prior year, with principally volume-driven declines in several important FICC product categories like U.S. fixed income and European energy, as well as the end of revenues from an eSpeed technology license, which terminated as planned at the end of 2014. Access and broker services revenues saw a 5% organic revenue increase. Turning to pages nine and 14 to review the income statement and expenses. Operating expenses increased by $25 million or 9% on an organic basis, partially offset by $16 million in FX impact, resulting in a $9 million or 3% reported increase.
I'd note here that while we saw an increase in compensation accrual in the current third quarter as a result of the strong operating performance, the prior year period conversely saw some revenue softness in both trading and non-transactional businesses that drove a release of certain accrued incentive compensation, thus the unusually high year-over-year comparison. To minimize the volatility that quarter-to-quarter compensation accrual variations can bring to the year-over-year expense comparisons, I'd point to the year-to-date comparison, where operating expenses are up 3% compared to the prior year period on an organic basis. non-GAAP operating income in the third quarter rose 13% on an organic basis, but this was partially offset by foreign exchange, resulting in a 10% reported increase, and non-GAAP operating margin came in at 48%, up from 46% in the prior year period, reflecting the improvement of our trading businesses and their margin.
Net interest expense was $27 million in the third quarter, a decrease of $1 million versus the prior year, mainly due to the favorable impact of foreign exchange related to our euro-denominated debt. We also recorded non-operating income related to our equity method ownership interest in OCC. The non-GAAP effective tax rate for the third quarter was 34% at the midpoint of our 2015 33%-35% effective tax rate guidance range for the year. non-GAAP net income was $151 million or $0.88 per diluted share, compared to $136 million or $0.78 per diluted share in the third quarter of 2014.
The $0.10 increase in our non-GAAP EPS year-over-year reflects core organic EPS growth of $0.10, an additional $0.02 due to acquisitions, principally Dorsey Wright, $0.01 due to higher other income, $0.01 higher due to lower share count, partially offset by a $0.03 impact of changes in foreign exchange rates, and a $0.01 decrease due to the higher effective tax rate. Moving on to the balance sheet, cash flow, and capital, please turn to slides 11 and 12. Our gross debt to EBITDA leverage ratio increased to 2.3 times from 2.2 at June 30th, 2015, due to a small increase in our debt level as we drew on revolver capacity to fund the stock repurchases, partially offset by increased trailing 12-month EBITDA.
I want to take a moment to discuss the material repurchases in the quarter, which were well above recent average quarterly levels. The company was in a strong position in terms of balance sheet flexibility, both in terms of our leverage as well as the strong capital generation in the period. Valuation was attractive, especially relative to the valuations we were seeing for assets in the M&A market, also considering the opportunity that the more volatile market provided. We acted opportunistically, as we have in the past, to put a larger than typical amount of capital to work in the buyback program, continuing an aspect of our capital deployment discipline that has generated very high returns for Nasdaq shareholders over the years.
We continue to evaluate opportunities to deploy capital across the full spectrum of internal, external, and capital return alternatives and are always looking for the best returns to guide our use of capital. Thanks for your time this morning, and I'll now turn it back over to Ed.
Operator, can you please open the lines for Q&A?
Ladies and gentlemen, if you wish to ask a question at this time, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. We ask that you please limit yourself to one question. Our first question is from Richard Repetto with Sandler O'Neill. You may begin.
Good morning, Bob. Good morning, Lee.
Good morning, Rich.
How are you, Rich?
I'm doing fine. I appreciate you both addressed the capital return program, and especially the accelerated buyback. I guess my one question would be on the follow-up to that. When you look at, you did draw down on the revolver. This just wasn't a 2x or 3x the prior quarter buyback, this was a 10x. I'm just trying to see, when you look at the stock price, yeah, it broke 50, but it had broke 50 in both the other prior two quarters. Just trying to understand a little bit more on, and I know you addressed it, both of you, in the prepared remarks, but how you balanced the three things, the cap return, acquisitions, and investment. What can we expect going forward? Can we see this lumpy buyback program going forward? I know shareholders like the buyback. Anyway, your call.
All right. Rich, not even a good quarter, or a very good quarter? I was living through your compliment there, Rich.
Excellent quarter, Bob. You outperformed.
Thank you. I feel better now. All right. I think Lee touched on it, but I would say this, probably the trigger was, as I said before, we've looked at a lot of different acquisitions during the last 12 to 18 months, and some of the multiples that were being paid were, in our mind, somewhat eye-popping and somewhat representative of a little bit of an asset bubble. We said, "Okay, if this is the state of play, and it's going to be this way, we have no interest in paying 18 times EBITDA, we probably have a better use for our capital, and that is to buy our own shares, which obviously we're not treating at that." I think, ourselves and management and the board reflected upon it and came to that conclusion and obviously decided it was a time to act.
This obviously represents a lumpiness, as you said. It's nothing that we can do on a consistent basis. You do have to recognize that over the fullness of time, as you've seen in the last three to four years, we will be acquiring our shares when we think it represents a particular opportunity for us to create value for our shareholders.
Okay. I know. I follow that, the acquisition sort of environment, the levering up a bit, I guess, is something new. Anyway, I don't want to ask any more questions. I got my one in. Thanks.
All right. Thank you.
Thank you. Our next question is from Chris Allen with Evercore. You may begin.
Morning, guys. Nice quarter.
Thank you, Chris.
I just wanted to touch on Corporate Solutions. You mentioned that you're seeing positive net subscription sales for the third quarter in a row. I wonder if maybe you could give us a reference in terms of how material that is. The revenue trajectory obviously hasn't been great. Sounds like a lot to do with FX. Just wondering where you stand from a competitive pressure standpoint. I know that had been an issue in prior quarters. Just trying to get a better sense of when we can start to see the trajectory start to improve from here.
Okay. As we said before, certainly we will make progress with Corporate Solutions during this year. I think under Adena's leadership, we've done a very good job there. We also recognize there is a certain element of a holding pattern to this year, and that we are spending a lot of time, effort, and money, and I think very intense engagement with our customers as we start the next-gen product. I think this quarter represents a strong trend line, which we expect to accelerate as we go into the new product cycle in 2016. Adena, would you like to add to that?
Sure. Chris, I think that we are seeing definitely some clients very excited about the new platform, and as Lee mentioned, we are seeing acceleration of new sales in the IR Insight business because of the new platform coming down the road. Q3 does tend to represent a seasonally low quarter with regard to revenue because of the fact that some of our revenue recognition comes from using certain services in a quarter. There are fewer press releases issued and there are fewer web conferences held during the third quarter just because of the holiday season. That also tends to be reflected in the third quarter results for Corporate Solutions. Overall, we are seeing positive momentum in the business, and the competitive landscape does continue to be very competitive, but we are feeling good about the trajectory of the business in general.
I would tie back to the comments I made in my prepared remarks. It's definitely a hallmark of Nasdaq here that we have to first look at our competitive positioning and how we were doing in that positioning, and certainly relative to our peers. To the extent we improve that competitive positioning, the financial results will follow. We saw evidence of that in the third quarter. Again, I highlight, we are spending a lot of time, effort, and money for what will represent truly innovation in the IR space, and we're excited to be able to launch that product going into the first quarter of next year.
Great. Thanks.
Thank you.
Thank you. Our next question is from Rob Bradshaw with CLSA. You may begin.
Hey, good morning, everybody.
How you doing, Rob?
Good. I was hoping to follow up on Chris's question about Corporate Solutions. I think the product that you're rolling out is very impressive and should certainly help arrest some of the customer attrition you've had. I'm hoping that you might be able to give us some metrics around what your customer attrition is in the Corporate Solutions business. Even if you can't give us exact numbers, kind of at least an order of magnitude that that, in a new product, might help address.
I would say, one, we don't have exact numbers, and we can certainly think of how we'd come up with them. We are, on a net basis, seeing growth in our customer list right now, so we're excited about that. As I said, we're increasing the number of wins that we have, and this is all a prelude to major new products coming towards the end of the year. Adena, you want to embellish that?
Sure. I think that we do in fact provide some information regarding our overall retention rates within the business. We are experiencing just below 90% retention, but that generally has been consistent. There are certain parts of our business that are improving in those numbers, and there's also certain parts of the business that are well above that. We do track that, and we are seeing improvements in key parts of the business in the retention rates. That retention rate includes what I'll call uncontrollable cancels related to mergers, acquisitions, and bankruptcies, as well as other things in terms of clients having to move away from services due to budget constraints. At the same time, we also feel that we are seeing, I think, very good growth in those retention rates in some of our key products, and we continue to track that very carefully.
May I just add a little directional color, Rob, to Adena's response, is that in the third quarter relative to the second quarter, we saw improvements in all of our products from a retention standpoint, with the exception of our advisory product, which has been a competitive sector for us. The IR Insight retention remains steady over that period. I would say kind of broad improvement. There always are going to be one or two products where we have faced some additional pressure. In this period, advisory was that one.
Okay, great. Thank you.
Thank you. Our next question is from Christopher Harris with Wells Fargo. You may begin.
Thanks. Good morning, guys.
Good.
Hey, doing well. Wondering if you could talk to any revenue synergies, I'm really thinking mainly here of cross-sell opportunities you guys might be getting out of all the businesses you put together. It's kind of hard for us to see that looking from the outside. Just wondering if you can comment if this is happening and to the extent it's happening.
Are you talking about a particular business?
No, just really across the entire franchise in the aggregate, whether you guys are seeing opportunities to cross-sell. I know that IR, the Thomson Reuters acquisition, was a new customer set relative to a lot of the existing customers at Nasdaq more broadly.
Right. Let me start with the transaction business. When you look at the initiatives we have, whether that be the TOM initiative, NLX, NFX, things we're doing with respect to our dark pool strategy, it's all based upon us building a solid foundation of relationship with our customers. We definitely take customer input to guide how we invest in internal R&D, and we're seeing definitely the fruits of that labor here. Obviously, on the corporate solutions side, our listing franchise, we have a deep relationship at the very highest level of those companies, and that's a natural point of leverage with us. It's also important to recognize we have 10,000 customers, and many of them are not listed with us.
In that situation, the breadth of our product line allows us to walk the halls in a more comprehensive fashion than our competitors, who tend to be point solution providers, can do.
Okay. Thank you.
I just want to add, again, some directional color. One thing that we're tracking in corporate solutions is, on a quarterly basis, are the average number of products per client, average revenue per client, and we have seen steady progress in both of those metrics, which I think is a sign of continued success in working off of that existing customer base and selling additional products and generating more revenue from it. That's something that we're watching carefully and are pleased with the specific progress that we've made over the past four quarters.
Thank you. Our next question is from Ashley Serrao with Credit Suisse. You may begin.
Good morning.
How we doing?
Doing well. I was curious, if I look at all the initiatives that you have right now, more on the trading side being NFX, NLX, what's the current drag on EPS from a combination of those two?
Lee, do you have that number?
Yeah. Ashley, first of all, both of those initiatives are within the gift expenses, which in aggregate is in the $30 million-$40 million range as we provided from a guidance standpoint. As we've said previously, NLX is approximately $0.02 per quarter, and NFX is below that level. That gives you some sense of the aggregate scale of those initiatives on a quarterly basis.
Okay. This following up on trading, one of the initiatives that the press is reporting that you're going to be launching next year is FX. I was hoping you could just share some color on what your intentions are in that arena, and how do you see yourself differentiating yourselves from your peers? That happens to be one market where pricing definitely matters.
Yeah. I can't speak for what you're reading in the press, but we haven't announced any FX initiatives that are launching next year. I'm sitting here in London with Hans-Ole. Hans-Ole, have you announced anything without telling me? Yeah. I don't know where you're getting that information, but it's not correct.
There is no initiative in play?
Right.
Okay. All right, thanks for taking my questions.
Thank you. Our next question comes from Kyle Voigt with KBW. You may begin.
Hi, thanks for taking my questions, and congrats on the good quarter.
Thanks.
Turn to NLX again. Given that another large exchange has just announced the planned launch of an interest rate futures exchange in Europe, can you just talk about your commitment to NLX and how you feel that venue can fare from a competitive perspective, or what the value proposition will be going forward? Thanks.
Definitely. One, I would say is, obviously, that announcement was not unexpected, and I think it was expected many months before, so it was no surprise there. Clearly, we're in close touch with our customers, and I would state that since that announcement, we've reconfirmed with our customers that there's no change in plans they have with respect to NLX. I previously stated that we needed to proceed with NLX too, with some core support in a very meaningful way from some of the major banks, and we're continuing along that path. Right now, we remain optimistic that we're going to get there.
I also would want to make it clear that the world that we envision in the listed futures world is not that dissimilar from what we see in the equity world, where we expect them to have more than one trading venue clearing through a common clearing house. If we have LCH playing the essential role that DTCC would play in the U.S. equity world, we certainly see that our customer could trade on one venue and have that then, as long as it's clearing the same venue, then it's basically fungible. It puts the customer in a position where the different trading venues can compete quite aggressively against each other.
You have a situation in the listed futures world where the customers have smart order routers, and if they don't, they're planning to have them, which will allow them to create essentially a virtual book between the different venues. That's the world we see developing. It's one we're very comfortable with. It's one we compete in our transaction businesses today. When you see the results of our transaction businesses in this quarter, in particular, you see that we can run in that competitive world and how efficiently we run our businesses, you can still run it with a very healthy margin. That's where we see the world developing.
All right. Thanks a lot for the color.
Thank you. Our next question is from Kenneth Hill with Barclays. You may begin.
Hey, good morning, everyone.
Good to see you.
Thanks. I wanted to touch on technology again, talk a little bit about the market tech side. I think one nice piece for you guys have been SMARTS, there was some news, I think, earlier in the quarter about you guys supplying market surveillance technology for Chinese Security Exchange and some mainland firms. How are you able to make inroads there, in what's historically been a pretty tough place to do business? On a related note, you guys announced, I guess, surveillance for monitoring dark pools. How do you see those two opportunities kind of unfolding and actually adding to the revenue picture over time?
Yeah. I'll start and say one, obviously, SMARTS has been a very strong acquisition for us, and it's kind of the model we'd like to use, where as a smaller, successful company, we were able to lever our distribution capability and also significantly ramp up the R&D spending where we came out with products for the brokerage community, where at the time of acquisition, it was primarily geared around exchanges and/or regulatory bodies. You saw evidence of additional product set, as you mentioned, with the dark pool, and we have more products coming. I say across the planet, you have increased intention, and we think that will continue for surveillance. It's necessary in the markets that we live in, and clearly, whether you're in China, whether in Europe or the U.S., that is a common global phenomenon.
Our job is to make sure we're delivering the right product and services to meet that growing and real need, and I think the team's done an exceptional job doing that. The need for surveillance is no different in China than it is in other parts of the world. Adena, do you want to add to that?
I would just add that we've been in Hong Kong for well over a decade. We've had a good team there, and we've been working with exchanges as well as broker-dealers in Asia for many, many years. It is a testament to the relationships that we've been able to develop over the years to be able to find opportunities to work with exchanges and as well as broker-dealers in China, as well as all over Asia, and I think that the team's done a great job there.
Thanks for taking my question.
Thank you. Our next question is from Michael Carrier with Bank of America. You may begin.
Thanks, guys. Just a question on the new initiatives on the private markets. It seems like you're increasing maybe your focus on that space. I just want to get a sense, what's that target market? Where do you see those revenues over the near term? Or is it more of a pipeline where you establish relationships with those firms, and then obviously when they IPO, then you have them longer term as well? And then if I can do one side just for Lee on the market data, just wanted to see if the audit revenues this quarter, where that significantly
All right. Let me start with Nasdaq Private Market. It's important to recognize that we seized on this opportunity based upon the passage of the JOBS Act. The JOBS Act said that you could stay private with up to 2,000 shareholders, and employees did not count. The prior rule was 500, and employees did count. It said a company could go a long way in its evolution and stay private, and we had to make sure that we provided solutions for them. Certainly, the relationships we build with these companies in the pre-IPO phase, we have a fundamental belief that they will help us with our IPO win rate. That's an element to it.
That's a secondary benefit because we think the market by itself is quite exciting, and we certainly believe that a company similarly situated with respect to size and/or complexity will earn for us an equal amount of revenue, if not greater, than it would if it was in a public company context. Our job is to meet the customer need where companies want to stay private for a longer period of time. We actually support that notion in general, in that you should only come public when you have a mature business model that can withstand the rigors of these quarterly calls. We think there'll be increasing number of private companies, and we're there to meet the totality of their needs.
Within Nasdaq Private Market now obviously being combined with SecondMarket, they have a lot of needs that we have developed for a public company, and we have to make sure we target that for the private company. We think the liquidity needs of these private companies will evolve over time. We run what's known as SLPs today. We do it on an episodic basis, and we are starting to see some trend line where companies want to run these liquidity programs on a more consistent and regular basis. We also see the broadening of participation in these liquidity programs where they are today, primarily employee-based, and we certainly think it will evolve to where early-stage investors can use this mechanism for liquidating their position, or second-stage investors can use it for coming into the marketplace. It's something that we think has tremendous potential for us.
As I said, we think the revenue potential per company, in the fullness of time, is equal to or greater than the revenue potential of a company in the public market context.
Okay. Michael, on your question on audit. Audit was up just slightly. It was up $1 million from the prior quarter and up $2 million from the year-ago quarter. I'd say consistent with kind of the lower level of audit fees that we've had. It was a slight increase from prior periods.
Okay, thanks a lot.
Thank you. Our next question comes from Brian Bedell with Deutsche Bank. You may begin.
Hi. Good morning, folks.
How you doing, Brian?
Good. Good. How are you?
Good.
Congrats on your quarter also.
Thank you.
Just to zoom back in on the corporate solutions side. Given the IR Insight product ramping up in the first quarter and attrition coming down and the headwind that you had in 2015, this year from foreign exchange translation, should we expect, I guess, can you sort of make a statement that you think technology solutions revenue, all in, inclusive of the market technology, can actually exceed your mid-single-digit growth long-term outlook in 2016? Maybe if you want to just talk again about the operating margin that you see in that segment with integration going very well. Thanks.
Yeah. Brian, I do want to start by answering that question in a different way. I believe right now that the corporate solutions business has to be primarily judged by how good our products are, how good they are relative to the competition, and what momentum do we have with our customers. The financial results will follow if we do these things right in 2016. Great credit to the team. I think we've cleaned up what I'll call the operational aspects of the business over the last year or so. Our touchpoints with our customers have improved quite dramatically. We're seeing signs of that in the financial performance. More importantly, as we deal with our customers, they recognize that we are on the move, we're making progress, and you have the whole world anxiously awaiting now our NextGen product.
As I've said previously, we are in the unique position to take our development might and our development muscle and turn it to this sector of the marketplace. We don't have any competitors who have our kind of technological capability, and we're investing in it. We're investing heavily in it, and we're excited with the progress the team is delivering on time, on schedule. Hopefully, we'll finish on budget. Good things will happen from there. The other general point, are you in a market segment, once you are more competitive, that can grow over time? We certainly believe that corporate solutions is really strategically placed. To be running a public company today is an intense endeavor, and you have an increasing need for information to help manage that and then also communicate to your shareholders and your stakeholders, and we're there positioned to meet those needs.
Just any kind of clarification on the operating margin that you're forecasting for technology solutions in 2016?
No. As I said, I will be focused on that soon enough. Right now, we're making sure the team is doing all the right things. This is a function. You do the right things, the margins will come. If you're expecting this business to have margins like we have in index and data, then we won't get there. I don't want to create any false expectations, but we certainly know what a world-class software company should have as margins, and that's clearly where we're going to get to.
Okay, thanks.
Thank you. Our next question comes from Kenneth Worthington of JPMorgan. You may begin.
Hi, good morning. Can you share your views on the evolution of electronic trading of fixed income? Together, can you update us with how your eSpeed initiatives are progressing? Thanks.
Right. I would say certainly that you will be witnessing a fundamental change in the fixed income market over time. It's also wrong to think that it's going to look like the equity market over time. It has different dimensions to it, different complexities to it, which will lead it down a different path. Clearly, we identified U.S. government Treasuries as a place for us to start, because that's the one area of fixed income that does look and feel like the equity market does on a fully deployed basis. We're keenly aware of what's going to change in fixed income in general. We have views of where it's going to end up, and then obviously, we have to pay attention to where it's a proper place for us to enter that market.
With respect to eSpeed, I think I referred on prior calls to the fact there is change in the market, you see a number of our customers have traded in the dark on an increasing basis. I think under Hans-Ole's leadership, the team has come up with an innovative approach that's shifting market structure. We had the first launch of it just this past Monday, it's called eSpeed Elect, it allows segmentation in the customer base, so customers can choose who they want to trade with and give the pricing that's appropriate to that customer base. It also allows them to do some of those transactions, assuming they're respecting the lit market in the dark. In many ways, it's a market structure we had envisioned for the U.S. equity market structure.
We're able to put it into the fixed income market, to the Treasury market, we're excited about the prospects. It's obviously way too early to declare anything today. This week was kind of a semi-beta launch, where we came out with it in a limited basis, we'll see full release of it as the quarter waxes on. Hans-Ole, you want to add anything to that?
Just one thing that, as Bob already have expressed, we are extremely customer-focused and centric, it also means that we have a dialogue, also on the European and the U.S. side, with market participants in the fixed income side about how to address the challenge in the fixed income market going forward. Broadly speaking, part of that is the increased cost of capital coming out of regulation and the Basel requirements. The other element is new regulation, like for example, the new exchange regulation in Europe in MiFID II, which definitely influenced the fixed income market. Also the last two days conference, organized by Fed in New York, are showing us that there's a high likelihood that we will see more regulation also coming into the U.S. Treasury market.
We stay in very close contact with our customers to make sure that we develop solutions together with them.
Great. Thank you very much.
Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Mr. Greifeld for closing remarks.
Great. Well, first off, thank you everybody for attending this call today. As I said in my prepared comments, this was truly a remarkable quarter for us. We congratulate the team on great execution. We're seeing the power of the business model, but it's also important to highlight that this is a balanced quarter. Our results were in no way, shape optimized for the quarter. If anything, you could say that our investments in the future increased during the quarter, which we're proud to do. We also balanced that with a very strong return of capital to our shareholders. In many ways, we're pleased with the quarter, but most importantly, it gives us the platform to continue to grow and continue to provide returns to our shareholders. Thank you for your time. Look forward to talking to you in the near future.
Ladies and gentlemen, this concludes today's conference. Thanks for your participation and have a wonderful day.