10-KPeriod: FY2012

Cboe Global Markets, Inc. Annual Report, Year Ended Dec 31, 2012

Filed February 28, 2013For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported total operating revenues of $512.3 million for the year ended December 31, 2012, a slight increase of 0.8% from the previous year, despite an industry-wide decline in trading volume. This resilience was driven by growth in revenue from market data fees, exchange services, and other fees, which offset a decrease in transaction and access fees. The company maintained its market share in the U.S. options market at 27.8%. Financially, CBOE demonstrated strong profitability with net income increasing by 12.9% to $157.4 million. This growth was supported by an effective tax rate reduction and efficient expense management, with total operating expenses rising by only 0.6%. The company also announced a leadership transition with Edward T. Tilly set to become CEO. CBOE continues to invest in its technology and product development, including a new London hub to expand international reach and innovative pricing models to remain competitive in a challenging market landscape.

Financial Highlights

42 data points
Beta

Revenue

$512.34M

Net Income

$157.40M

30.7% Net Margin

EPS (Diluted)

$1.78

Total Assets

$338.86M

Cash & Equivalents

$135.60M

Free Cash Flow

$200.53M

Financial Statements
Beta
Revenue$512.34M
Operating Expenses$268.24M
Operating Income$244.10M
Net Income$157.40M
EPS (Basic)$1.78
EPS (Diluted)$1.78
Shares Outstanding (Basic)87.46M
Shares Outstanding (Diluted)87.46M

Key Highlights

  • 1Total operating revenues increased slightly to $512.3 million in 2012, showing resilience amidst a broader market volume decline.
  • 2Net income grew by 12.9% to $157.4 million, indicating strong profitability and operational efficiency.
  • 3CBOE maintained its market share in U.S. options at 27.8%, demonstrating competitive strength.
  • 4The company experienced significant growth in VIX options and futures volume, up 13.0% and 99.2% respectively.
  • 5A leadership transition was announced, with Edward T. Tilly appointed as CEO effective after the 2013 annual meeting.
  • 6CBOE is investing in technological enhancements and international expansion, including a new London hub.
  • 7The company recorded a $5.0 million charge related to an SEC investigation into its compliance as a self-regulatory organization.

Frequently Asked Questions

Cboe's primary source of revenue in 2012 was transaction fees, which accounted for approximately 69.7% of total operating revenues. Other significant revenue streams included access fees, exchange services and other fees, market data fees, and regulatory fees.

Cboe's average daily trading volume decreased by 6.0% to 4.54 million contracts in 2012 compared to 4.83 million in 2011. This decline was seen across most options product categories, although futures contracts, particularly on the VIX Index, saw significant growth.

Cboe holds exclusive licenses for options on the S&P 500 Index, S&P 100 Index, and DJIA. In 2012, these exclusively-licensed products, particularly S&P 500 index options, generated approximately 36% of Cboe's transaction fees, highlighting their critical importance to the company's financial performance. The company faces legal challenges that could impact the exclusivity of these licenses.

Key risks identified include the potential loss of exclusive licenses for index options, intense price competition within the options market, regulatory compliance obligations and potential penalties (including an ongoing SEC investigation), and general economic conditions that can impact trading volumes. Competition from other exchanges and the potential for technological disruptions are also significant concerns.