01—Abstract
Summary
Summary of the 10-Q filed April 30, 2021. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) reported its first quarter 2021 financial results, showing a decrease in net income to $137.2 milliona ($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 billionb, 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 millionc in common stock and paying $45.3 million in dividends during the quarter.
02—Key points
Key Highlights
- Total revenues increased by 9.7% to $1.01 billion, driven by a 15.4% rise in transaction and clearing fees.
- Net income decreased by 12.8% to $137.2 million, impacted by higher operating expenses.
- Diluted earnings per share declined to $1.27 from $1.42 year-over-year.
- Strategic acquisitions (BIDS Trading, EuroCCP) are contributing to revenue growth, particularly in North American Equities and Europe segments.
- Operating expenses increased by 22.0% to $160.9 million, largely due to higher compensation and benefits and technology support services linked to acquisitions.
- The company returned $47.6 million to shareholders through share repurchases and $45.3 million through dividends.
- Cash provided by operating activities remained strong at $599.1 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2021, Cboe Global Markets, Inc. kept $0.14.
- Revenue$1.01B100.0%
- Cost of revenue−$645.3M63.8%
- Gross profit$365.5M36.2%
- Operating costs−$160.9M15.9%
- Operating income$204.6M20.2%
- Interest, other & tax−$67.4M6.7%
- Net income$137.2M13.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed April 30, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $1.01B$921.50M | +9.7% |
| Cost of Revenue | $645.30M$563.20M | +14.6% |
| Gross Profit | $365.50M$358.30M | +2.0% |
| Operating Expenses | $160.90M$131.90M | +22.0% |
| Operating Income | $204.60M$226.40M | −9.6% |
| Interest Expense | $12.40M$8.00M | +55.0% |
| Net Income | $137.20M$157.40M | −12.8% |
| EPS (Basic) | $1.27$1.42 | −10.6% |
| EPS (Diluted) | $1.27$1.42 | −10.6% |
| Shares Outstanding (Basic) | 107.30M110.40M | −2.8% |
| Shares Outstanding (Diluted) | 107.40M110.60M | −2.9% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net income compared to the prior year?
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.
How did the company's revenue perform in the first quarter of 2021?
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.
What is the impact of the company's recent acquisitions on its financial results?
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.
What is the company's outlook on liquidity and capital resources?
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.
06—Continue