01—Abstract
Summary
Summary of the 10-K filed February 19, 2021. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported strong performance in its 2020 10-K filing, driven by significant growth across its business segments, particularly in North American Equities and Options.
The company completed several strategic acquisitions, including EuroCCP, MATCHNow, and BIDS Trading, expanding its service offerings and geographic reach. Despite a challenging operating environment due to the COVID-19 pandemic, Cboe demonstrated resilience with increased revenues, transaction volumes, and operating income. Key growth strategies involved building upon core proprietary products like SPX and VIX options/futures, leveraging leading trading technology, diversifying revenue streams with non-transactional services, broadening geographic reach, and expanding product lines across asset classes.
The company's financial health appears robust, supported by healthy cash flows and manageable debt levels. Investors should note the company's continued focus on innovation and strategic expansion as drivers for future value creation, while remaining aware of the competitive landscape and regulatory environment.
02—Key points
Key Highlights
- Total revenues increased by 37.3% to $3.43 billion in 2020, primarily driven by a 40.9% increase in transaction and clearing fees due to higher market volumes and regulatory fees.
- Completed multiple significant acquisitions in 2020: Hanweck, FT Options, Trade Alert, EuroCCP, MATCHNow, and BIDS Holdings, bolstering its market data, clearing, and trading capabilities.
- Operating income increased by 23.3% to $662.2 million, reflecting strong revenue growth and disciplined operating expense management.
- The Options segment saw a 15.2% increase in revenues less cost of revenues, driven by higher multi-listed options ADV and increased proprietary market data revenue.
- The North American Equities segment experienced an 8.6% rise in revenues less cost of revenues, supported by a 50.0% increase in U.S. Equities exchange market ADV.
- Cboe repurchased $349.1 million of its common stock in 2020 under its share repurchase program, demonstrating a commitment to returning capital to shareholders.
- The company maintains a strong balance sheet with $245.4 million in cash and cash equivalents and $1.2 billion in total debt as of December 31, 2020, with adequate covenant compliance.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Cboe Global Markets, Inc. kept $0.14.
- Revenue$3.43B100.0%
- Cost of revenue−$2.17B63.4%
- Gross profit$1.25B36.6%
- Operating costs−$592.1M17.3%
- Operating income$662.2M19.3%
- Interest, other & tax−$194.0M5.7%
- Net income$468.2M13.7%
Where FY2020 revenue went
$3.43B- Cost of revenue: $2.17B, 63% of revenue
- Operating costs: $592.1M, 17% of revenue
- Net income: $468.2M, 14% of revenue
- Interest, other & tax: $194.0M, 5.7% of revenue
Kept 14% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 19, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $3.43B$2.50B | +37.3% |
| Cost of Revenue | $2.17B$1.36B | +59.9% |
| Gross Profit | $1.25B$1.14B | +10.3% |
| Operating Expenses | $592.10M$599.70M | −1.3% |
| Operating Income | $662.20M$537.20M | +23.3% |
| Interest Expense | $38.70M$37.80M | +2.4% |
| Net Income | $468.20M$372.70M | +25.6% |
| EPS (Basic) | $4.28$3.35 | +27.8% |
| EPS (Diluted) | $4.27$3.34 | +27.8% |
| Shares Outstanding (Basic) | 109.10M111.40M | −2.1% |
| Shares Outstanding (Diluted) | 109.30M111.80M | −2.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Cboe Global Markets' revenue growth in 2020?
Cboe Global Markets' revenue growth in 2020 was primarily driven by a significant increase in transaction and clearing fees, which rose by 40.9% year-over-year. This surge was fueled by higher trading volumes across its U.S. Equities and Options segments, along with a notable increase in regulatory fees. Strategic acquisitions completed during the year, such as EuroCCP and MATCHNow, also contributed to revenue growth.
How has Cboe Global Markets expanded its business operations and service offerings?
Cboe Global Markets significantly expanded its business in 2020 through several key acquisitions. These included Hanweck, FT Options, and Trade Alert to enhance its market data and analytics capabilities; EuroCCP, a European equities clearinghouse; MATCHNow, a Canadian equities ATS; and BIDS Trading, a U.S. block-trading ATS. These acquisitions broadened Cboe's geographic presence, diversified its service portfolio, and strengthened its position in various asset classes.
What is Cboe's strategy for future growth and shareholder value creation?
Cboe's growth strategy focuses on several key areas: building upon its core proprietary products (like VIX and SPX options/futures), leveraging its advanced trading technology, diversifying its revenue mix by increasing non-transactional revenue streams (e.g., market data), expanding its geographic reach through customer engagement and acquisitions, and broadening its product lines across different asset classes. The company also continues to manage capital effectively through share repurchases and dividend payments.
How did the COVID-19 pandemic impact Cboe's operations, and what was the company's response?
While the COVID-19 pandemic presented challenges, Cboe demonstrated resilience. The company temporarily suspended open outcry trading but maintained all-electronic trading without significant disruptions. The pandemic's impact on trading behavior influenced volumes, which ultimately contributed positively to transaction fees. Cboe implemented health and safety protocols and adapted its work environment to support employees during the period.
06—Continue