10-QPeriod: Q3 FY2015

Cboe Global Markets, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 3, 2015For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported a strong third quarter in 2015, demonstrating robust financial performance driven by a significant increase in transaction fees. Total operating revenues grew by 25.6% year-over-year to $187.0 million, primarily fueled by a 38.8% surge in transaction fees, attributed to higher average revenue per contract and increased trading volume in index options and futures. This revenue growth outpaced the rise in operating expenses (16.4%), leading to a substantial 34.6% increase in operating income to $101.1 million. Net income allocated to common stockholders saw a significant jump of 39.6% to $67.2 million, translating to a diluted EPS of $0.81, up from $0.57 in the prior year period. The company also continued its capital return strategy, with ongoing share repurchases and dividend payments, reflecting confidence in its financial position and commitment to shareholder value. The acquisition of Livevol, Inc. contributed positively to exchange services revenue, indicating strategic growth initiatives. Overall, CBOE exhibited solid operational execution and financial growth in Q3 2015. Investors can take note of the increasing revenue per contract, the shift towards higher-margin products like index options and futures, and the effective management of operating expenses. The company's strategic acquisition and continued share repurchase program suggest a focus on both organic growth and shareholder returns.

Financial Highlights

45 data points
Beta

Revenue

$187.03M

Net Income

$67.52M

36.1% Net Margin

EPS (Diluted)

$0.81

Total Assets

$397.42M

Cash & Equivalents

$121.68M

Free Cash Flow

$88.31M

Financial Statements
Beta
Revenue$187.03M
Operating Expenses$85.92M
Operating Income$101.11M
Net Income$67.52M
EPS (Basic)$0.81
EPS (Diluted)$0.81
Shares Outstanding (Basic)82.75M
Shares Outstanding (Diluted)82.75M

Key Highlights

  • 1Total operating revenues increased by 25.6% to $187.0 million in Q3 2015 compared to Q3 2014.
  • 2Transaction fees experienced a significant rise of 38.8% to $144.8 million, driven by a 31.1% increase in average revenue per contract and a 5.9% increase in trading volume.
  • 3A strategic shift towards higher-margin products like index options and futures contributed to the increased average revenue per contract.
  • 4Operating income surged by 34.6% to $101.1 million, demonstrating effective cost management relative to revenue growth.
  • 5Net income allocated to common stockholders increased by 39.6% to $67.2 million, with diluted EPS rising to $0.81 from $0.57.
  • 6The company repurchased $97.4 million of its common stock in the first nine months of 2015, indicating a commitment to shareholder returns.
  • 7The acquisition of Livevol, Inc. contributed positively to exchange services and other fees, adding new revenue streams.

Frequently Asked Questions

The primary driver of Cboe's revenue growth was a substantial increase in transaction fees, which rose by 38.8% year-over-year. This was fueled by a 31.1% increase in average revenue per contract and a 5.9% increase in total trading volume, particularly a shift towards higher-margin products like index options and futures.

Total operating expenses increased by 16.4% year-over-year, driven by higher depreciation and amortization, professional fees, and royalty fees. However, revenue growth significantly outpaced expense growth, leading to a substantial 34.6% increase in operating income and an improved operating margin from 50.4% to 54.1%.

The acquisition of Livevol, Inc. on August 7, 2015, contributed to the increase in 'Exchange services and other fees.' This strategic move indicates Cboe's effort to expand its offerings in market data services and trading analytics platforms, diversifying its revenue streams beyond core transaction fees.

Cboe continues to return capital to shareholders through dividend payments and a significant share repurchase program. In the first nine months of 2015, the company repurchased $97.4 million of its common stock under a $500 million authorization, demonstrating a commitment to enhancing shareholder value.