Summary
CME Group Inc. reported a decrease in total revenues for the second quarter and the first six months of 2014 compared to the prior year, primarily due to lower exchange-traded contract volumes and a decline in other revenue sources, partially offset by growth in market data fees and over-the-counter contract volumes. Operating expenses increased, driven by higher compensation and benefits, technology development, and professional fees. Despite revenue challenges, the company maintained a strong operating margin. Net income attributable to CME Group and diluted earnings per share saw a decline in both periods, reflecting the impact of lower revenues and increased expenses. Financially, CME Group demonstrated a solid liquidity position with substantial cash and cash equivalents. The company also managed its debt effectively, with a focus on reducing interest expense through debt repayment and interest rate hedging. Notably, CME Group announced a significant acquisition of Trayport and FENICS in July 2014, signaling a strategic move to expand its presence in European energy markets and over-the-counter foreign currency options, which is expected to close in early 2015.
Financial Highlights
48 data points| Revenue | $731.60M |
| Operating Expenses | $319.60M |
| Operating Income | $412.00M |
| Net Income | $263.80M |
| EPS (Basic) | $0.79 |
| EPS (Diluted) | $0.79 |
| Shares Outstanding (Basic) | 334.10M |
| Shares Outstanding (Diluted) | 335.80M |
Key Highlights
- 1Total revenues decreased by 10% in Q2 2014 and 2% in the first six months of 2014 compared to the prior year, largely due to lower clearing and transaction fees.
- 2Operating expenses increased by 4% in Q2 2014 and 3% in the first six months of 2014, driven by higher compensation and benefits and investments in technology and product development.
- 3Net income attributable to CME Group decreased by 15% in Q2 2014 and 3% in the first six months of 2014 year-over-year.
- 4Diluted earnings per share saw a decline of 15% in Q2 2014 and 4% in the first six months of 2014.
- 5Cash flows from operating activities decreased by 28% in the first six months of 2014, primarily due to cash collateral movements related to interest rate swap contracts in the prior year.
- 6The company announced its agreement to acquire Trayport and FENICS from GFI Group Inc. for approximately $580.0 million in CME Group Class A common stock, expected to close in early 2015.
- 7Market data and information services revenue increased by 13% in Q2 2014 and 12% in the first six months of 2014, driven by higher fees for real-time market data.