10-QPeriod: Q1 FY2011

Cboe Global Markets, Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 10, 2011For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported a significant increase in financial performance for the first quarter of 2011 compared to the same period in 2010. Total operating revenues rose by 22.7% to $124.0 million, driven by substantial growth in access fees and strong performance in transaction and regulatory fees, despite a slight dip in market data fees. Net income allocated to common stockholders surged by 41.4% to $32.1 million, translating to diluted earnings per share of $0.36, up from $0.25 in the prior year. The company's operational efficiency also improved, with operating expenses growing at a slower pace than revenues, leading to a significant increase in operating income. This quarter marked a strong recovery and growth for CBOE, showcasing its ability to generate higher revenues and profits amidst increasing trading volumes and strategic fee adjustments. The company also highlighted substantial growth in its cash and cash equivalents, bolstered by strong operating cash flows.

Financial Highlights

22 data points
Beta

Revenue

$124.04M

Net Income

$32.87M

26.5% Net Margin

EPS (Diluted)

$0.36

Cash & Equivalents

$115.69M

Free Cash Flow

$78.22M

Financial Statements
Beta
Revenue$124.04M
Operating Expenses$66.51M
Operating Income$57.53M
Net Income$32.87M
EPS (Basic)$0.36
EPS (Diluted)$0.36
Shares Outstanding (Basic)90.08M
Shares Outstanding (Diluted)90.08M

Key Highlights

  • 1Total operating revenues increased by 22.7% to $124.0 million in Q1 2011 compared to Q1 2010.
  • 2Net income allocated to common stockholders grew by 41.4% to $32.1 million, with diluted EPS rising to $0.36 from $0.25.
  • 3Access fees saw a dramatic increase of 700.0% to $17.6 million, reflecting a new fee structure implemented post-restructuring.
  • 4Transaction fees, while a smaller percentage of total revenue, still grew by 7.8% to $89.9 million, driven by a 13.4% increase in trading volume.
  • 5Operating income saw a substantial increase of 48.6% to $57.5 million, indicating improved operational leverage.
  • 6Cash and cash equivalents significantly increased by $61.9 million to $115.7 million, driven by strong operating cash flows.
  • 7The company paid a quarterly cash dividend of $0.10 per share, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

The primary drivers of CBOE's revenue growth were a significant increase in access fees due to a new fee structure, higher transaction volumes leading to increased transaction fees, and a rise in regulatory fees. Despite a slight decrease, market data fees remained a notable revenue source.

CBOE's profitability saw a substantial improvement. Net income allocated to common stockholders increased by 41.4% to $32.1 million, and diluted earnings per share rose to $0.36 from $0.25 in the prior year's first quarter. This was driven by strong revenue growth and operating expenses increasing at a slower rate.

CBOE's liquidity position strengthened considerably. Cash and cash equivalents increased by $61.9 million to $115.7 million, primarily due to strong net cash provided by operating activities. The company also has a $150 million revolving credit facility available for additional financial flexibility, although no borrowings were outstanding at the end of the quarter.

The restructuring and IPO in June 2010 significantly impacted the comparative financial statements. For the first quarter of 2010, net income per share was presented retrospectively as if the restructuring had occurred at the beginning of that period. The new access fee structure, implemented post-restructuring, led to a substantial increase in access fee revenue in Q1 2011 compared to Q1 2010.