01—Abstract
Summary
Summary of the 10-K filed February 21, 2020. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported revenues of $2.50 billiona for the year ended December 31, 2019, a decrease of 9.8% from the prior year, primarily driven by lower transaction fees due to reduced trading volumes across key segments.
Despite the revenue decline, the company maintained strong operating income of $537.2 millionb, though this was a decrease of 10.4% compared to 2018. The Options segment remains the largest contributor to revenue, followed by U.S. Equities. Cboe continues to invest in technology and has seen a slight increase in access and capacity fees and market data fees.
The company also repurchased $156.9 millionc of its common stock in 2019 and paid $150.0 million in dividends, reflecting a commitment to returning capital to shareholders. Looking ahead, Cboe remains focused on innovation and strategic growth while navigating a competitive and evolving market landscape.
02—Key points
Key Highlights
- Total revenues decreased by 9.8% to $2.50 billion in 2019 compared to 2018, primarily due to a 13.6% drop in transaction fees driven by lower trading volumes.
- Operating income decreased by 10.4% to $537.2 million in 2019, reflecting the impact of lower revenues and increased acquisition-related costs.
- The Options segment remains the largest revenue driver, contributing $983.1 million (39.4% of total revenues) in 2019, followed by U.S. Equities at $1.21 billion (48.6%).
- Access and capacity fees, as well as market data fees, showed modest increases of 5.2% and 4.7% respectively, indicating growth in non-transactional revenue streams.
- The company repurchased $156.9 million of its common stock in 2019 and paid $150.0 million in dividends, demonstrating a commitment to shareholder returns.
- Cboe continues to manage its debt, reducing its outstanding debt balance to $867.6 million by the end of 2019.
- The company is actively managing risks related to market volatility, regulatory changes (such as the SEC's transaction fee pilot and proposed consolidated data plans), and cybersecurity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Cboe Global Markets, Inc. kept $0.15.
- Revenue$2.50B100.0%
- Cost of revenue−$1.36B54.5%
- Gross profit$1.14B45.5%
- Operating costs−$599.7M24.0%
- Operating income$537.2M21.5%
- Interest, other & tax−$164.5M6.6%
- Net income$372.7M14.9%
Where FY2019 revenue went
$2.50B- Cost of revenue: $1.36B, 54% of revenue
- Operating costs: $599.7M, 24% of revenue
- Net income: $372.7M, 15% of revenue
- Interest, other & tax: $164.5M, 6.6% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.50B$2.77B | −9.8% |
| Cost of Revenue | $1.36B$1.55B | −12.4% |
| Gross Profit | $1.14B$1.22B | −6.6% |
| Operating Expenses | $599.70M$617.50M | −2.9% |
| Operating Income | $537.20M$599.40M | −10.4% |
| Interest Expense | $37.80M$40.50M | −6.7% |
| Net Income | $372.70M$422.10M | −11.7% |
| EPS (Basic) | $3.35$3.78 | −11.4% |
| EPS (Diluted) | $3.34$3.76 | −11.2% |
| Shares Outstanding (Basic) | 111.40M111.80M | −0.4% |
| Shares Outstanding (Diluted) | 111.80M112.20M | −0.4% |
05—Questions
Frequently Asked Questions
What was Cboe's overall financial performance in 2019?
In 2019, Cboe Global Markets, Inc. reported total revenues of $2.50 billion, a decrease of 9.8% from the previous year, mainly due to a decline in transaction fees driven by lower trading volumes. Operating income was $537.2 million, down 10.4% year-over-year. Net income allocated to common stockholders was $372.7 million.
Which business segments were the largest contributors to revenue?
The U.S. Equities segment was the largest contributor to revenue in 2019, generating $1.21 billion (48.6% of total revenues), closely followed by the Options segment, which generated $983.1 million (39.4% of total revenues).
How did Cboe manage its capital and shareholder returns in 2019?
Cboe continued its commitment to shareholder returns by repurchasing $156.9 million of its common stock and paying $150.0 million in dividends during 2019. The company also reduced its outstanding debt to $867.6 million by year-end.
What are the key risks Cboe highlighted in its 10-K filing for 2019?
Key risks highlighted include dependence on exclusive licensing agreements for proprietary products, intense price competition in the exchange industry, potential adverse impacts from legislative and regulatory changes (like the transaction fee pilot and evolving market structure regulations), cybersecurity threats, and the reliance on third-party service providers.
06—Continue