01—Abstract
Summary
Summary of the 10-Q filed August 6, 2014. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported its financial results for the second quarter and first half of 2014.
For the three months ended June 30, 2014, the company saw a decrease in total operating revenues to $143.9 milliona from $150.8 million in the prior year, largely driven by lower transaction fees due to a shift in product mix and lower average revenue per contract, despite an increase in market data fees. For the six months ended June 30, 2014, CBOE reported an increase in total operating revenues to $301.8 million from $293.5 million in the prior year, primarily due to higher transaction fees and market data fees.
Diluted earnings per share for the three months ended June 30, 2014 were $0.50b, down from $0.52 in the prior year, while for the six months, it increased to $1.06 from $1.00. The company continued its share repurchase program and paid dividends, reflecting a commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Total operating revenues for Q2 2014 decreased by 4.5% to $143.9 million, primarily due to a 7.7% decline in transaction fees.
- For the six months ended June 30, 2014, total operating revenues increased by 2.8% to $301.8 million, driven by growth in transaction fees and market data fees.
- Diluted earnings per share for common stockholders decreased to $0.50 in Q2 2014 from $0.52 in Q2 2013, but increased to $1.06 for the first six months of 2014 from $1.00 in the prior year.
- Market data fees showed significant growth, increasing by 36.4% for Q2 2014 and 32.9% for the first six months of 2014.
- Total operating expenses decreased slightly in Q2 2014 to $74.2 million from $75.4 million, mainly due to lower employee costs and outside services.
- The company repurchased $88.3 million of its common stock in the first six months of 2014 under its share repurchase program.
- CBOE experienced a decrease in average revenue per contract, particularly in equity and ETP options, largely due to a shift in product mix towards lower-revenue products and increased volume-based incentives.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2014filed August 6, 2014Financial Statements
Q2 FY2014 against Q2 FY2013
| Line item | Q2 FY2014Q2 FY2013 | Change |
|---|---|---|
| Revenue | $143.94M$150.77M | −4.5% |
| Operating Expenses | $74.23M$75.41M | −1.6% |
| Operating Income | $69.72M$75.36M | −7.5% |
| Net Income | $42.98M$46.16M | −6.9% |
| EPS (Basic) | $0.50$0.52 | −3.8% |
| EPS (Diluted) | $0.50$0.52 | −3.8% |
| Shares Outstanding (Basic) | 85.83M87.34M | −1.7% |
| Shares Outstanding (Diluted) | 85.83M87.34M | −1.7% |
05—Questions
Frequently Asked Questions
What were the primary drivers behind the decrease in transaction fees during the second quarter of 2014?
The decrease in transaction fees during the second quarter of 2014 was primarily attributed to a 4.1% decline in total trading volume and a 3.8% decrease in average revenue per contract. This reduction in average revenue per contract was mainly due to a shift in the mix of trading volume towards products with lower average revenue per contract and increased volume-based incentives, particularly driven by higher volume in equities.
How did the company's market share evolve in the first half of 2014?
Cboe's market share of total U.S. options industry volume increased to 30.3% for the three months ended June 30, 2014, from 27.4% in the prior year period. For the six months ended June 30, 2014, the company's market share of total exchange-traded options contracts was 30.0%, up from 26.4% in the same period of 2013.
What is the company's strategy regarding capital return to shareholders?
Cboe Global Markets, Inc. is committed to returning capital to shareholders through both dividends and share repurchases. The company continued to pay quarterly dividends and actively repurchased shares under its announced program. In the first six months of 2014, CBOE repurchased $88.3 million of its common stock, and on July 30, 2014, the board authorized an additional $100 million for share repurchases.
How did the company's legal proceedings impact its financial results?
While the company is subject to various legal proceedings, including patent litigation and class action lawsuits related to market data and trading practices, management stated in the filing that, as of June 30, 2014, they do not believe there is a reasonable possibility of a material loss exceeding amounts already recognized. The ultimate outcome of these matters is not expected to have a material effect on the company's financial position, liquidity, or capital resources.
06—Continue