01—Abstract
Summary
Summary of the 10-Q filed November 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. reported its third-quarter and nine-month results for the period ending September 30, 2019.
Total revenues for the nine months decreased by 6.1% to $1.9 billiona compared to the prior year, largely due to a 7.1% drop in transaction fees, influenced by declining market volumes. However, the third quarter showed a robust 17.3% increase in total revenues to $675.4 million, driven by higher market volumes and an increase in regulatory fees. Net income for the nine months was $284.5 million, a slight decrease of 0.8% from the prior year.
Diluted earnings per share for the nine months were $2.56b. The company continued to manage its debt, repaying the remaining $300 million in 1.950% Senior Notes. Cboe also reported a decrease in operating expenses for the nine-month period, largely driven by lower depreciation and amortization, and compensation and benefits, though acquisition-related costs saw an increase.
The company repurchased approximately $52.4 millionc of its common stock during the third quarter, demonstrating a commitment to returning capital to shareholders. Cboe maintains a strong liquidity position, with $150 million in cash and cash equivalents and significant availability under its revolving credit facility.
02—Key points
Key Highlights
- Total revenues for the nine months ended September 30, 2019, decreased 6.1% to $1.9 billion, primarily due to a 7.1% decline in transaction fees reflecting lower market volumes.
- Third-quarter total revenues increased significantly by 17.3% to $675.4 million, driven by higher transaction fees, regulatory fees, and market data fees.
- Net income for the nine months was $284.5 million, a marginal decrease of 0.8% from the prior year, with diluted EPS at $2.56.
- Operating expenses for the nine months decreased by 4.6% to $438.6 million, largely due to lower depreciation and amortization, and compensation and benefits.
- The company repaid the $300 million 1.950% Senior Notes upon maturity in June 2019.
- Cboe repurchased approximately $52.4 million of its common stock during the third quarter under its authorized program.
- The company ended the quarter with $150 million in cash and cash equivalents and had $150 million available under its revolving credit facility, indicating strong liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Cboe Global Markets, Inc. kept $0.16.
- Revenue$675.4M100.0%
- Cost of revenue−$381.4M56.5%
- Gross profit$294.0M43.5%
- Operating costs−$146.6M21.7%
- Operating income$147.4M21.8%
- Interest, other & tax−$41.9M6.2%
- Net income$105.5M15.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed November 1, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $675.40M$575.90M | +17.3% |
| Cost of Revenue | $381.40M$305.40M | +24.9% |
| Gross Profit | $294.00M$270.50M | +8.7% |
| Operating Expenses | $146.60M$144.40M | +1.5% |
| Operating Income | $147.40M$126.10M | +16.9% |
| Interest Expense | $8.80M$10.70M | −17.8% |
| Net Income | $105.50M$85.00M | +24.1% |
| EPS (Basic) | $0.95$0.76 | +25.0% |
| EPS (Diluted) | $0.94$0.76 | +23.7% |
| Shares Outstanding (Basic) | 111.60M111.40M | +0.2% |
| Shares Outstanding (Diluted) | 111.90M111.80M | +0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in revenues for the first nine months of 2019?
The primary driver for the decrease in revenues for the first nine months of 2019 was a 7.1% decline in transaction fees, which was primarily attributed to a decrease in overall market volumes across all segments compared to the same period in the prior year.
How did Cboe manage its debt during this period?
Cboe repaid the $300 million 1.950% Senior Notes in full upon their maturity in June 2019. The company also made a $50 million repayment on its Term Loan Agreement during the third quarter.
What is the company's liquidity position as of September 30, 2019?
Cboe maintained a strong liquidity position with $150.0 million in cash and cash equivalents. Additionally, the company had $150.0 million available under its revolving credit facility, providing significant financial flexibility.
What is the impact of acquisition-related costs on the financial results?
Acquisition-related costs increased significantly in the third quarter (from $5.9 million to $16.7 million) and for the nine-month period (from $23.3 million to $39.8 million). These costs include severance, impairment charges, and other expenses related to acquisitions, impacting operating expenses and net income.
06—Continue