RiskMetrics Group Inc. (RMG), a provider of risk management and corporate governance products and services, Tuesday reported a rise in profit for the third quarter despite a decline in revenues, reflecting lower operating costs and expenses as well as an income tax benefit.
Net income for the third quarter increased 24% to $7.78 million or $0.11 per share from $6.28 million or $0.09 per share in the previous year. Results for the quarter include stock-based compensation of $2.32 million, amortization charges of $5.88 million and income tax effect of $2.95 million.
On an adjusted basis, net income was $13.03 million or $0.19 per share, compared to $10.94 million or $0.16 per share in the previous year.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.09 per share. Analysts' estimates typically exclude special items.
Total revenues for the quarter declined 2.1% to $73.98 million from $75.55 million a year ago. Analysts expected revenue of $74.22 million for the quarter.
The company said that changes in foreign currency exchange rates in third-quarter 2009, compared to last year had a negative impact on consolidated revenue of $1.8 million. Revenue for the quarter, excluding the impact of foreign currency, was flat relative to third quarter of the previous year.
By segment, risk revenues were $39.5 million, a 3.3% decrease over last year due to lower new sales, higher non-renewals rates, particularly in the hedge fund sector, and negative currency impacts.
ISS revenues were $34.5 million for the quarter, a 0.6% decrease from last year, primarily due to a decline in proxy research and voting and CFRA revenues, partially offset by the Innovest acquisition.
Total operating costs and expenses for the quarter declined 2.6% to $58.78 million from $60.37 million last year. Selling and marketing expenses declined to $7.49 million from $9.04 million a year ago.
Provision for income taxes declined to $2.43 million from $4.04 million in the previous year due to increased tax credits and a one-time reversal of previously accrued income tax contingencies in the quarter as a result of statute of limitations expiration.
For the nine-month period, net income rose to $39.68 million from $29.79 million in the same period of the previous year. Total revenues for the period increased 2.7% to $226.89 million from $220.90 million last year.
RMG is currently trading at $14.11, down 0.89 or 5.93% on a volume of 137K shares on the NYSE.
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