01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported solid performance in its 2015 10-K filing, with operating revenues reaching $634.5 milliona, a 2.8% increase year-over-year.
This growth was primarily driven by a 4.2%b 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.
02—Key points
Key Highlights
- Total operating revenues increased by 2.8% to $634.5 million in 2015, primarily driven by higher transaction fees.
- Transaction 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.
- Proprietary 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.
- Trading volume decreased by 11.4% to 4.66 million contracts per day, but the average revenue per contract increased significantly, offsetting the volume decline.
- The company is investing in technology, including the development of its next-generation trading platform, CBOE Vector.
- Cboe Global Markets continues to expand its product offerings through strategic relationships with index providers, such as S&P and FTSE Russell.
- The company repurchased $132.2 million of its common stock under its share repurchase program in 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Cboe Global Markets, Inc. kept $0.31.
- Revenue$663.8M100.0%
- Cost of revenue−$102.1M15.4%
- Gross profit$561.7M84.6%
- Operating costs−$241.8M36.4%
- Operating income$319.9M48.2%
- Interest, other & tax−$114.9M17.3%
- Net income$205.0M30.9%
Where FY2015 revenue went
$663.8M- Operating costs: $241.8M, 36% of revenue
- Net income: $205.0M, 31% of revenue
- Interest, other & tax: $114.9M, 17% of revenue
- Cost of revenue: $102.1M, 15% of revenue
Kept 31% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $663.80M$617.23M | +7.5% |
| Cost of Revenue | $102.10M— | — |
| Gross Profit | $561.70M— | — |
| Operating Expenses | $241.80M$303.42M | −20.3% |
| Operating Income | $319.90M$313.80M | +1.9% |
| Interest Expense | $43K$0 | — |
| Net Income | $205.00M$189.71M | +8.1% |
| EPS (Basic) | $2.46$2.21 | +11.3% |
| EPS (Diluted) | $2.46$2.21 | +11.3% |
| Shares Outstanding (Basic) | 83.10M85.41M | −2.7% |
| Shares Outstanding (Diluted) | 83.10M85.41M | −2.7% |
05—Questions
Frequently Asked Questions
What were CBOE's primary revenue drivers in 2015?
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.
How did CBOE's trading volume and revenue per contract perform in 2015?
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.
What are CBOE's key strategies for future 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.
What are the main risks facing CBOE as outlined in the filing?
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.
06—Continue