10-QPeriod: Q3 FY2010

CME GROUP INC. Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 5, 2010For Securities:CME

Summary

CME Group Inc. reported solid financial results for the nine months ended September 30, 2010, with total revenues increasing 15% to $2.24 billion and net income attributable to CME Group rising 21% to $755.2 million. This growth was driven primarily by an 16% increase in clearing and transaction fees, largely due to a 20% rise in trading volume across various asset classes, including interest rate, foreign exchange, agricultural, energy, and metal products. The company also saw a significant boost in market data and information services revenue, up 17%, partly due to the formation of CME Group Index Services LLC. Operating expenses increased 14% to $867.8 million, impacted by higher compensation and benefits, including bonus expenses and costs associated with the new Index Services joint venture. Additionally, a goodwill and trade name impairment charge related to Credit Market Analysis Limited (CMA) operations contributed to the expense increase. Despite higher expenses, the company maintained a strong operating margin of 61% and demonstrated robust cash flow from operations, increasing by 31% to $963.0 million, reflecting effective management and continued market demand for its services.

Financial Highlights

46 data points
Beta

Revenue

$733.40M

Net Income

$244.30M

33.3% Net Margin

EPS (Diluted)

$0.73

Total Assets

$33.69B

Cash & Equivalents

$568.20M

Free Cash Flow

$270.00M

Financial Statements
Beta
Revenue$733.40M
Operating Expenses$290.50M
Operating Income$442.90M
Net Income$244.30M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)332.78M
Shares Outstanding (Diluted)333.72M

Key Highlights

  • 1Total revenues increased by 15% to $2.24 billion for the nine months ended September 30, 2010, compared to the same period in 2009.
  • 2Net income attributable to CME Group grew by 21% to $755.2 million for the nine months ended September 30, 2010.
  • 3Clearing and transaction fees rose by 16% to $1.86 billion, driven by a 20% increase in overall trading volume.
  • 4Market data and information services revenue increased by 17% to $291.0 million, benefiting from the formation of CME Group Index Services LLC.
  • 5Operating expenses increased by 14% to $867.8 million, with compensation and benefits, and professional fees related to new ventures being key drivers.
  • 6Cash flows from operating activities showed significant strength, increasing by 31% to $963.0 million.
  • 7The company reported a stable operating margin of 61% despite increased expenses.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in clearing and transaction fees, which rose 16% due to a 20% increase in trading volume across various asset classes. Market data and information services revenue also saw a significant increase of 17%, partly due to the formation of CME Group Index Services LLC.

Operating expenses increased by 14% to $867.8 million. Key contributing factors included higher compensation and benefits (driven by additional employees for Index Services and bonus expenses), professional fees related to the formation of Index Services, and a goodwill and trade name impairment charge for CMA operations.

The company demonstrated strong liquidity, with cash flows from operating activities increasing by 31% to $963.0 million for the first nine months of 2010. This indicates robust cash generation from its core operations, supporting its financial health and ability to meet its obligations.

Yes, the formation of CME Group Index Services LLC through a joint venture with Dow Jones was a significant development. The company also recorded a goodwill and trade name impairment charge of $19.8 million related to its Credit Market Analysis Limited (CMA) operations in the second quarter of 2010.