01—Abstract
Summary
Summary of the 10-Q filed August 9, 2011. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported a strong increase in revenue and net income for the six months ended June 30, 2011, compared to the same period in 2010.
Total operating revenues grew by 14.3% to $244.3 milliona, driven primarily by a significant surge in access fees due to a new fee structure implemented in July 2010, and a notable increase in regulatory fees. This revenue growth, coupled with a reduction in total operating expenses by 2.1% (largely due to decreases in outside services and trading volume incentives), led to a substantial 41.4% increase in operating income. Net income allocated to common stockholders rose by 36.2% to $64.7 million for the six-month period.
Diluted earnings per share also saw a healthy increase to $0.72b from $0.52 in the prior year. The company's balance sheet strengthened, with total assets increasing to $319.4 million, supported by a significant rise in cash and cash equivalents to $106.5 million. CBOE also demonstrated a commitment to shareholder returns by initiating quarterly cash dividends and announcing a new share repurchase program.
02—Key points
Key Highlights
- Total operating revenues increased by 14.3% to $244.3 million for the six months ended June 30, 2011, compared to $213.7 million in the prior year.
- Net income allocated to common stockholders grew significantly by 36.2% to $64.7 million for the six months ended June 30, 2011, compared to $47.5 million in the prior year.
- Diluted earnings per share increased to $0.72 for the six months ended June 30, 2011, up from $0.52 in the prior year.
- Access fees saw a dramatic increase, growing 668.9% to $34.6 million for the six months ended June 30, 2011, due to a new fee structure implemented in July 2010.
- Operating expenses decreased by 2.1% to $130.3 million for the six months ended June 30, 2011, primarily due to lower outside services and trading volume incentives.
- Cash and cash equivalents increased by $52.8 million to $106.5 million as of June 30, 2011, reflecting strong operational cash flow.
- The company announced a new share repurchase program authorizing up to $100 million in stock repurchases, and continued to pay quarterly cash dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed August 9, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $120.29M$112.62M | +6.8% |
| Operating Expenses | $63.84M$70.79M | −9.8% |
| Operating Income | $56.45M$41.83M | +35.0% |
| Net Income | $33.40M$24.89M | +34.2% |
| EPS (Basic) | $0.36$0.27 | +33.3% |
| EPS (Diluted) | $0.36$0.27 | +33.3% |
| Shares Outstanding (Basic) | 90.16M— | — |
| Shares Outstanding (Diluted) | 90.16M92.23M | −2.2% |
05—Questions
Frequently Asked Questions
What drove the significant increase in revenue for CBOE?
The primary driver of the revenue increase was a substantial rise in access fees, which more than sextupled to $34.6 million for the six months ended June 30, 2011. This was a result of a new trading access fee program implemented on July 1, 2010, which assesses fees to all Trading Permit Holders, a broader base than previously charged. Regulatory fees also saw a significant increase of 21.3%.
How did operating expenses change, and what contributed to the change?
Total operating expenses decreased by 2.1% to $130.3 million for the six months ended June 30, 2011. Key contributors to this decrease include lower spending on outside services (down 24.2%), trading volume incentives (down 24.5%), and travel and promotional expenses (down 23.1%). These reductions were partially offset by increased employee costs and depreciation and amortization.
What is the company's cash position, and how is it being managed?
CBOE's cash and cash equivalents increased significantly by $52.8 million to $106.5 million as of June 30, 2011. This increase is attributed to positive cash flow generated from operations and the prepayment of liquidity provider transaction fees. The company stated it expects to use cash on hand and funds generated from operations to meet its cash requirements and does not anticipate needing to draw from its $150 million revolving credit facility.
What is the company's outlook on returning capital to shareholders?
CBOE is committed to returning capital to shareholders. They have been paying quarterly cash dividends, with the dividend amount increasing slightly for the upcoming payment in September 2011. Additionally, on August 2, 2011, the company announced a new share repurchase program, authorizing the purchase of up to $100 million of its unrestricted common stock, indicating confidence in its financial position and future prospects.
06—Continue