10-KPeriod: FY2015

Cboe Global Markets, Inc. Annual Report, Year Ended Dec 31, 2015

Filed February 19, 2016For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported solid performance in its 2015 10-K filing, with operating revenues reaching $634.5 million, a 2.8% increase year-over-year. This growth was primarily driven by a 4.2% rise in transaction fees, which benefited from a 17.6% increase in average revenue per contract, largely due to a favorable shift in product mix towards higher-revenue index options and futures. The company's strategic focus on proprietary products, such as VIX options and futures, continues to be a key revenue driver, with these products contributing significantly to transaction fees. CBOE also reported progress on its technological advancements, including the development of its next-generation trading platform, CBOE Vector. Despite a slight decrease in overall trading volume, the company demonstrated resilience through its strong market position, innovative product development, and a strategic focus on expanding its customer base both domestically and internationally.

Financial Highlights

50 data points
Beta

Revenue

$663.80M

84.6% Gross Margin

Net Income

$205.00M

30.9% Net Margin

EPS (Diluted)

$2.46

Total Assets

$384.79M

Cash & Equivalents

$102.30M

Free Cash Flow

$205.98M

Financial Statements
Beta
Revenue$663.80M
Cost of Revenue$102.10M
Gross Profit$561.70M
Operating Expenses$241.80M
Operating Income$319.90M
Interest Expense$43K
Net Income$205.00M
EPS (Basic)$2.46
EPS (Diluted)$2.46
Shares Outstanding (Basic)83.10M
Shares Outstanding (Diluted)83.10M

Key Highlights

  • 1Total operating revenues increased by 2.8% to $634.5 million in 2015, primarily driven by higher transaction fees.
  • 2Transaction fees rose by 4.2% to $456.0 million, supported by a 17.6% increase in average revenue per contract due to a favorable shift in product mix towards index options and futures.
  • 3Proprietary products, particularly VIX options and futures, are highlighted as key revenue drivers, with index options and futures representing 82.9% of transaction fees in 2015.
  • 4Trading volume decreased by 11.4% to 4.66 million contracts per day, but the average revenue per contract increased significantly, offsetting the volume decline.
  • 5The company is investing in technology, including the development of its next-generation trading platform, CBOE Vector.
  • 6Cboe Global Markets continues to expand its product offerings through strategic relationships with index providers, such as S&P and FTSE Russell.
  • 7The company repurchased $132.2 million of its common stock under its share repurchase program in 2015.

Frequently Asked Questions

Cboe's primary revenue driver in 2015 was transaction fees, which accounted for 71.9% of total operating revenues. These fees are largely generated from trading in proprietary products like index options and futures, particularly those related to the VIX Index and S&P 500 Index.

In 2015, CBOE experienced an 11.4% decrease in average daily trading volume. However, this was offset by a significant 17.6% increase in the average revenue per contract, driven by a more favorable product mix and fee structure changes, leading to overall revenue growth.

CBOE's growth strategies include expanding its customer base both domestically and internationally through extended trading hours and investor education, developing innovative proprietary products, optimizing its fee schedule, enhancing its trading platforms with new technology like CBOE Vector, and evaluating strategic acquisition opportunities.

Key risks include the potential loss of exclusive licenses for trading certain index options, which are critical revenue sources. Other risks include intense price competition in the derivatives market, adverse legislative or regulatory changes, dependence on third-party service providers, and the potential for system failures or cybersecurity breaches.