10-QPeriod: Q1 FY2021

CME GROUP INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 5, 2021For Securities:CME

Summary

CME Group Inc. reported a decrease in revenue and net income for the first quarter of 2021 compared to the same period in 2020. Total revenues declined by 18% to $1.25 billion, primarily driven by a 21% decrease in clearing and transaction fees, which can be attributed to lower contract volumes across most asset classes as market volatility subsided from the elevated levels seen in Q1 2020 due to the COVID-19 pandemic. However, market data and information services revenue saw a 10% increase. Despite the revenue decline, the company managed its expenses effectively, with total expenses decreasing by 6%. This led to a 25% decrease in net income attributable to CME Group to $574.4 million, and a corresponding drop in diluted earnings per share to $1.60. The company highlighted an agreement to combine its post-trade services with IHS Markit into a new joint venture, which has led to the classification of certain net assets as held for sale. CME Group maintained a strong liquidity position with robust credit facilities and a commitment to returning capital to shareholders through dividends.

Financial Highlights

45 data points
Beta

Revenue

$1.25B

Net Income

$574.40M

45.8% Net Margin

EPS (Diluted)

$1.60

Total Assets

$160.65B

Cash & Equivalents

$936.40M

Free Cash Flow

$574.20M

Financial Statements
Beta
Revenue$1.25B
Operating Expenses$528.20M
Operating Income$725.10M
Net Income$574.40M
EPS (Basic)$1.60
EPS (Diluted)$1.60
Shares Outstanding (Basic)358.15M
Shares Outstanding (Diluted)358.82M

Key Highlights

  • 1Total revenues decreased by 18% to $1.25 billion in Q1 2021 compared to Q1 2020, driven by lower clearing and transaction fees due to reduced contract volumes and market volatility.
  • 2Net income attributable to CME Group fell by 25% to $574.4 million, with diluted EPS decreasing to $1.60 from $2.14.
  • 3Market data and information services revenue increased by 10% to $144.2 million, indicating growth in this segment.
  • 4Total expenses decreased by 6% due to lower amortization of purchased intangibles, reduced impairment charges, and decreased licensing and other fee agreements.
  • 5The company announced a joint venture with IHS Markit for post-trade services, resulting in the reclassification of related assets and liabilities as held for sale.
  • 6CME Group maintained significant liquidity, with $936.4 million in cash and cash equivalents and substantial unused credit facilities.
  • 7The company declared a regular quarterly dividend of $0.90 per share, demonstrating a continued commitment to shareholder returns.

Frequently Asked Questions

The primary reason for the revenue decline was a 21% decrease in clearing and transaction fees. This was mainly due to lower contract volumes across various asset classes, as market volatility subsided from the exceptionally high levels experienced in Q1 2020 due to the COVID-19 pandemic.

CME Group effectively managed its expenses, which decreased by 6% year-over-year. Key drivers for this reduction included lower amortization of purchased intangibles (as certain assets were reclassified as held for sale), reduced impairment charges on intangibles and fixed assets, and a decrease in licensing and other fee agreements.

CME Group has agreed to combine its post-trade services with IHS Markit to form a new joint venture. This strategic move aims to enhance trade processing and risk mitigation services. As a result of this pending transaction, the net assets that will be contributed to the joint venture have been classified as assets and liabilities held for sale on the balance sheet.

CME Group maintained a strong liquidity position as of March 31, 2021, with $936.4 million in cash and cash equivalents. The company also has significant access to credit facilities, with approximately $2.4 billion available under its multi-currency revolving senior credit facility and a $7.0 billion 364-day revolving secured credit facility for the clearing house, with no outstanding borrowings on either at the time of the report.