01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Total revenues increased by 2% to $3.49 billion in 2021, with a significant 11% increase in transaction and clearing fees.
- The 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.
- North 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.
- Europe 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.
- Cboe announced plans for significant strategic acquisitions, including ErisX (digital assets) and NEO exchange (Canadian equities), expected to close in early 2022.
- The 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.
- Despite an increase in operating expenses (13%), the company's operating income grew by 22% to $805.9 million, indicating effective cost management amidst expansion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Cboe Global Markets, Inc. kept $0.15.
- Revenue$3.49B100.0%
- Cost of revenue−$2.02B57.8%
- Gross profit$1.48B42.2%
- Operating costs−$670.2M19.2%
- Operating income$805.9M23.1%
- Interest, other & tax−$276.9M7.9%
- Net income$529.0M15.1%
Where FY2021 revenue went
$3.49B- Cost of revenue: $2.02B, 58% of revenue
- Operating costs: $670.2M, 19% of revenue
- Net income: $529.0M, 15% of revenue
- Interest, other & tax: $276.9M, 7.9% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.49B$3.43B | +2.0% |
| Cost of Revenue | $2.02B$2.17B | −7.1% |
| Gross Profit | $1.48B$1.25B | +17.7% |
| Operating Expenses | $670.20M$592.10M | +13.2% |
| Operating Income | $805.90M$662.20M | +21.7% |
| Interest Expense | $48.00M$38.70M | +24.0% |
| Net Income | $529.00M$468.20M | +13.0% |
| EPS (Basic) | $4.93$4.28 | +15.2% |
| EPS (Diluted) | $4.92$4.27 | +15.2% |
| Shares Outstanding (Basic) | 107.00M109.10M | −1.9% |
| Shares Outstanding (Diluted) | 107.20M109.30M | −1.9% |
05—Questions
Frequently Asked Questions
What were Cboe's key revenue drivers in 2021?
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.
What are Cboe's major growth strategies outlined in the filing?
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.
How did acquisitions impact Cboe's financial performance in 2021?
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.
What are the main risks facing Cboe Global Markets, according to the filing?
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.
06—Continue