10-QPeriod: Q1 FY2021

Cboe Global Markets, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 30, 2021For Securities:CBOE

Summary

Cboe Global Markets, Inc. (CBOE) reported its first quarter 2021 financial results, showing a decrease in net income to $137.2 million ($1.27 per diluted share) from $157.4 million ($1.42 per diluted share) in the prior year period. This decline was primarily driven by an increase in operating expenses, particularly in compensation and benefits and technology support services, largely due to recent acquisitions. Total revenues saw a healthy increase of 9.7% to $1.01 billion, boosted by strong performance in transaction and clearing fees, which rose 15.4%, reflecting higher market volumes across U.S. Equities exchanges and the Options segment. The company's strategic acquisitions, including BIDS Trading and EuroCCP completed in 2020, are beginning to contribute to revenue growth, particularly in the North American Equities and Europe segments, respectively. However, these acquisitions also contributed to the rise in operating expenses. Despite the year-over-year net income decrease, Cboe maintained solid profitability and positive operating cash flow. The company also continued its capital return programs, repurchasing $47.6 million in common stock and paying $45.3 million in dividends during the quarter.

Financial Highlights

54 data points
Beta

Revenue

$1.01B

36.2% Gross Margin

Net Income

$137.20M

13.6% Net Margin

EPS (Diluted)

$1.27

Total Assets

$6.96B

Cash & Equivalents

$263.30M

Free Cash Flow

$589.20M

Financial Statements
Beta
Revenue$1.01B
Cost of Revenue$645.30M
Gross Profit$365.50M
Operating Expenses$160.90M
Operating Income$204.60M
Interest Expense$12.40M
Net Income$137.20M
EPS (Basic)$1.27
EPS (Diluted)$1.27
Shares Outstanding (Basic)107.30M
Shares Outstanding (Diluted)107.40M

Key Highlights

  • 1Total revenues increased by 9.7% to $1.01 billion, driven by a 15.4% rise in transaction and clearing fees.
  • 2Net income decreased by 12.8% to $137.2 million, impacted by higher operating expenses.
  • 3Diluted earnings per share declined to $1.27 from $1.42 year-over-year.
  • 4Strategic acquisitions (BIDS Trading, EuroCCP) are contributing to revenue growth, particularly in North American Equities and Europe segments.
  • 5Operating expenses increased by 22.0% to $160.9 million, largely due to higher compensation and benefits and technology support services linked to acquisitions.
  • 6The company returned $47.6 million to shareholders through share repurchases and $45.3 million through dividends.
  • 7Cash provided by operating activities remained strong at $599.1 million.

Frequently Asked Questions

The primary driver for the decrease in net income was a significant increase in operating expenses, up 22.0% to $160.9 million. This rise was mainly due to higher compensation and benefits costs and increased technology support services, largely influenced by recent acquisitions such as BIDS Trading and EuroCCP.

Cboe Global Markets reported a strong revenue performance, with total revenues increasing by 9.7% to $1.01 billion. This growth was primarily fueled by a 15.4% increase in transaction and clearing fees, reflecting higher market volumes, and a notable 15.1% rise in access and capacity fees.

Recent acquisitions, including BIDS Trading (North American Equities) and EuroCCP (Europe), are contributing positively to revenue growth. However, these acquisitions also led to higher operating expenses, particularly in compensation, benefits, and technology support, impacting overall profitability on a year-over-year basis.

Cboe Global Markets maintains a strong liquidity position. Cash generated from operations and availability under its revolving credit facility are expected to be sufficient to fund operations, capital expenditures, debt repayments, dividends, and potential strategic acquisitions. The company also has $352.5 million remaining under its share repurchase authorization.