10-Q/APeriod: Q1 FY2012

Cboe Global Markets, Inc. Quarterly Report (Amendment) for Q1 Ended Mar 31, 2012

Filed May 2, 2013For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported solid financial performance for the first quarter of 2012, demonstrating resilience despite a slight dip in overall operating revenues. While total revenues decreased by 2.1% to $121.4 million compared to the prior year's first quarter ($124.0 million), this was largely driven by declines in transaction and access fees. However, significant increases in exchange services and other fees (+57.4%) and market data fees (+25.5%) provided a partial offset. Net income saw a modest increase of 1.5% to $33.4 million, resulting in diluted earnings per share of $0.37, up from $0.36 in the same period last year. The company also managed to reduce operating expenses by 3.8% to $64.0 million, mainly due to lower trading volume incentives and employee costs. CBOE's market share in exchange-traded options contracts grew to 28.1% from 27.2% year-over-year, indicating strong competitive positioning. The company continued its capital return strategy through a share repurchase program, having spent $30.6 million on repurchases in the quarter.

Financial Highlights

40 data points
Beta

Revenue

$121.39M

Net Income

$33.42M

27.5% Net Margin

EPS (Diluted)

$0.37

Total Assets

$353.44M

Cash & Equivalents

$148.63M

Free Cash Flow

$63.34M

Financial Statements
Beta
Revenue$121.39M
Operating Expenses$63.98M
Operating Income$57.41M
Net Income$33.42M
EPS (Basic)$0.37
EPS (Diluted)$0.37
Shares Outstanding (Basic)88.15M
Shares Outstanding (Diluted)88.15M

Key Highlights

  • 1Total operating revenues declined slightly by 2.1% to $121.4 million, primarily due to lower transaction and access fees, though offset by growth in exchange services and market data fees.
  • 2Net income increased by 1.5% to $33.4 million, with diluted EPS rising to $0.37 from $0.36 year-over-year.
  • 3Operating expenses decreased by 3.8% to $64.0 million, driven by reduced trading volume incentives and employee costs.
  • 4CBOE's market share in total exchange-traded options contracts increased to 28.1% from 27.2% year-over-year.
  • 5Transaction fees decreased by 5.7% due to lower overall trading volume and a reduction in the average transaction fee per contract.
  • 6The company actively repurchased its stock, spending $30.6 million in the first quarter of 2012 under its $100 million authorization.
  • 7Cash and cash equivalents increased by $13.7 million to $148.6 million, reflecting positive operating cash flow and prepayments.

Frequently Asked Questions

The primary drivers for the revenue decline were decreases in transaction fees (down 5.7%) and access fees (down 9.1%). This was mainly attributed to a 3.9% decrease in overall trading volume and a 1.8% reduction in the average transaction fee per contract, influenced by fee structure changes and product mix.

CBOE successfully reduced operating expenses by 3.8% through several measures. Key contributors included a significant decrease in trading volume incentives (down 55.2%) and a reduction in employee costs (down 1.6%), partially offset by increases in data processing and outside services.

The increase in CBOE's market share for exchange-traded options contracts to 28.1% from 27.2% year-over-year is a positive indicator of its competitive strength. This growth, achieved even with a slight overall market volume decrease, suggests CBOE is effectively capturing a larger portion of the available trading activity.

CBOE is actively returning capital through its share repurchase program. In the first quarter of 2012, the company repurchased $30.6 million worth of its common stock under its authorized $100 million program. The company also expects to continue paying quarterly dividends, subject to board discretion.