01—Abstract
Summary
Summary of the 10-Q filed July 30, 2021. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. reported mixed financial results for the second quarter and first half of 2021.
Total revenues saw a slight increase for the first half of the year, driven by growth in transaction and clearing fees, and access and capacity fees. However, a significant decrease in regulatory fees, largely due to a lower Section 31 fee rate, impacted overall revenue performance, particularly in the second quarter. Profitability showed pressure, with net income declining year-over-year for both the quarter and the six-month period.
This was influenced by increased operating expenses, including higher compensation and benefits, technology support, and professional services, partly due to recent acquisitions. Despite these challenges, Cboe's liquidity position remained strong, supported by operating cash flows and available credit facilities. The company continues to execute on its strategic initiatives, including the integration of recent acquisitions and investments in technology and product development.
02—Key points
Key Highlights
- Total revenues increased by 1.2% to $1.81 billion for the first six months of 2021 compared to the same period in 2020, driven by higher transaction and clearing fees and access and capacity fees, despite a significant drop in regulatory fees.
- Net income decreased by 7.1% to $105.5 million for the second quarter of 2021 and by 10.4% to $242.7 million for the first six months of 2021, year-over-year.
- Operating expenses increased by 18.8% in the second quarter and 20.4% in the first six months of 2021, primarily due to higher compensation and benefits, professional fees, and technology support costs, reflecting investments and recent acquisitions.
- The Options segment showed strong performance, with revenues less cost of revenues up 18.6% in the second quarter, driven by increased ADV in index and multi-listed options.
- The North American Equities segment experienced a 1.5% decrease in revenues less cost of revenues for the second quarter, impacted by lower U.S. Equities exchange volumes, although new acquisitions contributed to overall segment growth.
- Cboe maintained a strong liquidity position, with cash and cash equivalents of $450.9 million and available credit facilities providing ample resources for operations and strategic initiatives.
- The company repurchased $33.7 million of its common stock in the second quarter and $81.3 million in the first six months of 2021, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2021, Cboe Global Markets, Inc. kept $0.13.
- Revenue$800.8M100.0%
- Cost of revenue−$450.2M56.2%
- Gross profit$350.6M43.8%
- Operating costs−$160.6M20.1%
- Operating income$190.0M23.7%
- Interest, other & tax−$84.5M10.6%
- Net income$105.5M13.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed July 30, 2021Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $800.80M$868.70M | −7.8% |
| Cost of Revenue | $450.20M$571.80M | −21.3% |
| Gross Profit | $350.60M$296.90M | +18.1% |
| Operating Expenses | $160.60M$135.20M | +18.8% |
| Operating Income | $190.00M$161.70M | +17.5% |
| Interest Expense | $12.40M$7.40M | +67.6% |
| Net Income | $105.50M$113.60M | −7.1% |
| EPS (Basic) | $0.99$1.04 | −4.8% |
| EPS (Diluted) | $0.98$1.03 | −4.9% |
| Shares Outstanding (Basic) | 106.80M109.50M | −2.5% |
| Shares Outstanding (Diluted) | 106.90M109.60M | −2.5% |
05—Questions
Frequently Asked Questions
What was the overall financial performance for Cboe Global Markets in Q2 and the first half of 2021?
Cboe Global Markets reported mixed results. While total revenues saw a modest increase for the first half of 2021, driven by higher transaction and clearing fees, net income declined year-over-year for both the second quarter and the first half due to increased operating expenses and a significant drop in regulatory fees. Key segments like Options showed robust growth, while North American Equities faced some headwinds.
What factors contributed to the change in Cboe's revenues and profitability?
Revenues were impacted by a substantial decrease in regulatory fees, largely due to a lower Section 31 fee rate. Higher transaction and clearing fees, access and capacity fees, and market data fees partially offset this. Profitability was affected by increased operating expenses, including higher compensation and benefits, professional fees, and technology support, partly due to recent acquisitions (BIDS Trading, MATCHNow, EuroCCP, Chi-X Asia Pacific). An increase in interest expense also played a role.
How did the company's acquisitions in 2020 and 2021 impact its performance?
The acquisitions of BIDS Trading, MATCHNow, and EuroCCP in 2020, and Chi-X Asia Pacific in 2021, contributed to revenue growth in specific segments like North American Equities and Europe. However, these acquisitions also led to increased operating expenses, particularly in compensation, technology, and professional services, which pressured profitability in the short term. The company is working on integrating these businesses to realize synergies.
What is Cboe's liquidity and capital position?
Cboe maintained a strong liquidity position, with cash and cash equivalents of $450.9 million as of June 30, 2021. The company also had $250 million available under its revolving credit facility, plus additional borrowing capacity. This, combined with cash generated from operations, is expected to be sufficient for near-term needs, including operations, capital expenditures, debt servicing, and potential strategic acquisitions.
06—Continue