10-QPeriod: Q3 FY2019

CME GROUP INC. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 6, 2019For Securities:CME

Summary

CME Group Inc. reported strong financial results for the nine months ended September 30, 2019, with total revenues increasing by 21% to $3.73 billion, driven by a 16% rise in clearing and transaction fees and a significant 22% increase in market data and information services. Net income attributable to CME Group rose by 4% to $1.65 billion for the same period. The company experienced substantial revenue growth in the third quarter of 2019 compared to the prior year, with total revenues up 41%. This growth was fueled by a 38% increase in clearing and transaction fees, largely driven by higher contract volumes in interest rate and equity index products, and a 17% increase in market data and information services revenue. Diluted earnings per share were $1.78 for the third quarter of 2019, up from $1.21 in the prior year quarter. The company's operating margin remained strong at 53.6% for the quarter. The acquisition of NEX continues to contribute to revenue and expense growth, with ongoing integration efforts.

Financial Highlights

47 data points
Beta

Revenue

$1.28B

Net Income

$636.30M

49.8% Net Margin

EPS (Diluted)

$1.78

Total Assets

$79.42B

Cash & Equivalents

$1.21B

Free Cash Flow

$752.60M

Financial Statements
Beta
Revenue$1.28B
Operating Expenses$592.10M
Operating Income$685.20M
Net Income$636.30M
EPS (Basic)$1.78
EPS (Diluted)$1.78
Shares Outstanding (Basic)357.21M
Shares Outstanding (Diluted)358.37M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2019, increased by 21% to $3.73 billion compared to the same period in 2018.
  • 2Clearing and transaction fees, the largest revenue driver, increased by 16% for the nine months ended September 30, 2019.
  • 3Market data and information services revenue saw a significant increase of 22% for the nine months ended September 30, 2019.
  • 4Net income attributable to CME Group for the nine months ended September 30, 2019, was $1.65 billion, a 4% increase year-over-year.
  • 5Diluted earnings per share for the nine months ended September 30, 2019, were $4.60, a slight decrease from $4.62 in the prior year.
  • 6Contract volume for futures and options increased by 30% in the third quarter of 2019 compared to the prior year, driven by interest rates and equity indexes.
  • 7Operating expenses increased by 54% for the first nine months of 2019, largely due to the integration of the NEX acquisition, impacting compensation, technology, and amortization costs.

Frequently Asked Questions

CME Group's revenue growth is primarily driven by clearing and transaction fees, which are generated from trading futures and options contracts. Market data and information services also contribute significantly to revenue.

The acquisition of NEX Group, completed in November 2018, contributed to increased revenues, particularly in clearing and transaction fees and other revenue streams from NEX's operations. However, it also led to a significant increase in operating expenses due to higher compensation, technology, and amortization costs associated with integration.

Trading volumes are influenced by market volatility, macroeconomic conditions, geopolitical events, and regulatory changes. For the nine months ended September 30, 2019, increased volatility related to Federal Reserve interest rate policy expectations and U.S. foreign trade policy uncertainty contributed to higher volumes in interest rate and equity index products.

CME Group maintains a healthy liquidity position with substantial cash and cash equivalents and significant credit facilities. The company also manages its debt through a mix of fixed-rate notes and commercial paper, and has consistently maintained investment-grade credit ratings.