10-KPeriod: FY2011

Cboe Global Markets, Inc. Annual Report, Year Ended Dec 31, 2011

Filed February 28, 2012For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported strong growth in its 2011 fiscal year, driven by an increase in trading volumes across its options and futures exchanges. The company's revenue grew significantly, primarily due to higher transaction fees, reflecting an 8.3% increase in average daily trading volume. This growth was propelled by strong performance in index options, particularly SPX and VIX products, which also represent higher-margin offerings. CBOE also saw substantial growth in its futures segment. The company's strategic initiatives, including the launch of C2 Options Exchange and investments in its proprietary technology platform CBOEdirect, continue to support its market position. Despite facing intense competition from other exchanges, CBOE demonstrated resilience, maintaining a significant market share in the U.S. options market. The company's financial health appears robust, with a focus on operational efficiency and a commitment to returning value to shareholders through dividends and share repurchases, positioning it well for continued expansion in the derivatives market.

Financial Highlights

42 data points
Beta

Revenue

$508.14M

Net Income

$139.41M

27.4% Net Margin

EPS (Diluted)

$1.52

Total Assets

$327.87M

Cash & Equivalents

$134.94M

Free Cash Flow

$203.13M

Financial Statements
Beta
Revenue$508.14M
Operating Expenses$266.51M
Operating Income$241.63M
Net Income$139.41M
EPS (Basic)$1.52
EPS (Diluted)$1.52
Shares Outstanding (Basic)89.99M
Shares Outstanding (Diluted)89.99M

Key Highlights

  • 1Total operating revenues increased by 16.2% to $508.1 million in 2011, driven by a 13.0% rise in transaction fees.
  • 2Average daily trading volume (ADV) across all contracts increased by 8.3% to 4.83 million in 2011, with index options volume up 18.7% and futures contracts up 172.7%.
  • 3Net income increased by 40.2% to $139.4 million in 2011, with diluted earnings per share rising to $1.52 from $1.03 in 2010.
  • 4CBOE's market share in U.S. options contracts was 26.4% in 2011, a slight decrease from 28.7% in 2010.
  • 5The company operates a Hybrid trading model on CBOE and an all-electronic model on C2, leveraging its proprietary CBOEdirect technology platform.
  • 6CBOE holds exclusive licenses for trading options on the S&P 500, S&P 100, and DJIA indexes, which are significant revenue drivers.
  • 7The company successfully completed its restructuring and initial public offering in 2010, demonstrating significant financial and operational transformation.

Frequently Asked Questions

CBOE's primary revenue driver in 2011 was transaction fees, which accounted for 73.4% of total operating revenues. Access fees, exchange services, market data, regulatory fees, and other revenue also contributed to the total operating revenues.

CBOE experienced an 8.3% increase in total average daily volume in 2011 compared to 2010. This growth was particularly strong in index options (up 18.7%) and futures contracts (up 172.7%), while equity options saw a slight decrease of 9.9%.

Key risks include the potential loss of exclusive licenses for key index options, which significantly contribute to revenue. Intense competition from other options exchanges and the possibility of regulatory changes also pose material risks to CBOE's business performance and market share.

CBOE operates a 'Hybrid' trading model that combines electronic and open outcry trading on its main exchange, while its C2 exchange is fully electronic. Both operate on the proprietary CBOEdirect technology platform. The company also operates the CBOE Futures Exchange (CFE).