10-KPeriod: FY2021

Cboe Global Markets, Inc. Annual Report, Year Ended Dec 31, 2021

Filed February 18, 2022For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported strong performance in its 2021 10-K filing, driven by robust trading volumes across its diverse business segments, including Options, North American Equities, and Futures. The company saw a significant increase in revenues, primarily from transaction and clearing fees, bolstered by acquisitions and organic growth. Strategic initiatives, such as the planned acquisitions of ErisX and NEO, signal Cboe's commitment to expanding its offerings in digital assets and the Canadian market, respectively. Despite increased operating expenses related to growth and integration, Cboe maintained healthy profitability, demonstrating its ability to manage costs effectively. The company also highlighted its focus on human capital management, including diversity and inclusion initiatives, and its commitment to robust internal controls. Investors can look to Cboe's continued expansion and strategic investments as drivers for future growth, while remaining aware of the competitive and regulatory landscape inherent in the financial markets industry.

Financial Highlights

55 data points
Beta

Revenue

$3.49B

42.2% Gross Margin

Net Income

$529.00M

15.1% Net Margin

EPS (Diluted)

$4.92

Total Assets

$6.81B

Cash & Equivalents

$341.90M

Free Cash Flow

$545.80M

Financial Statements
Beta
Revenue$3.49B
Cost of Revenue$2.02B
Gross Profit$1.48B
Operating Expenses$670.20M
Operating Income$805.90M
Interest Expense$48.00M
Net Income$529.00M
EPS (Basic)$4.93
EPS (Diluted)$4.92
Shares Outstanding (Basic)107.00M
Shares Outstanding (Diluted)107.20M

Key Highlights

  • 1Total revenues increased by 2% to $3.49 billion in 2021, with a significant 11% increase in transaction and clearing fees.
  • 2The Options segment showed strong growth, with a 16% increase in revenues less cost of revenues, driven by higher average daily volumes and revenue per contract.
  • 3North American Equities segment revenues less cost of revenues grew by 11%, significantly boosted by the acquisition of BIDS Trading and an increase in U.S. Equities - Off-Exchange ADV.
  • 4Europe and Asia Pacific segment revenues less cost of revenues surged by 61%, driven by acquisitions in Australia and Japan (Chi-X Asia Pacific) and increased activity at EuroCCP.
  • 5Cboe announced plans for significant strategic acquisitions, including ErisX (digital assets) and NEO exchange (Canadian equities), expected to close in early 2022.
  • 6The company repurchased $81.3 million of its common stock in 2021 and maintained its commitment to paying dividends, with a quarterly dividend of $0.48 declared in February 2022.
  • 7Despite an increase in operating expenses (13%), the company's operating income grew by 22% to $805.9 million, indicating effective cost management amidst expansion.

Frequently Asked Questions

Cboe's primary revenue driver was transaction and clearing fees, which increased by 11% to $2.69 billion in 2021. This growth was fueled by increased trading volumes across its Options, North American Equities, and Europe and Asia Pacific segments, as well as the positive impact of recent acquisitions.

Cboe's key growth strategies include innovating to capture growing demand for trading products and data services globally, integrating across ecosystems to increase efficiency, and expanding by accessing untapped addressable markets. The company is actively pursuing growth through organic investment and strategic acquisitions, including the planned acquisitions of ErisX and NEO.

Acquisitions played a significant role in Cboe's 2021 performance. The integration of businesses like BIDS Trading, EuroCCP, and Chi-X Asia Pacific contributed to increased transaction volumes, market data revenue, and overall segment growth, particularly in the North American Equities and Europe and Asia Pacific segments.

Key risks highlighted include the loss of exclusive rights to trade certain index options and futures products (e.g., SPX options, VIX futures), intense price competition in the industry, potential decreases in trading or clearing volumes, and the need to protect its technology systems from cybersecurity threats. Additionally, the company faces risks related to its growth strategy, including the successful integration of acquisitions and managing regulatory compliance in various jurisdictions.