Cboe Global (CBOE) Q2 Earnings & Revenues Beat Estimates

Cboe Global Markets, Inc. 's CBOE second-quarter 2018 adjusted earnings of $1.05 per share beat the Zacks Consensus Estimate of $1.03 by 1.9%. Moreover, the bottom line improved nearly 20.7% year over year.

Cboe Global Markets, Inc. Price, Consensus and EPS Surprise

Cboe Global Markets, Inc. Price, Consensus and EPS Surprise | Cboe Global Markets, Inc. Quote

The quarter benefited from improved revenues and delivered solid cash flow. The company witnessed robust trading volume for SPX Options and continued to show strong growth in its European Equities and FX businesses. However, the company saw a decline in trading volume in VIX options and futures.

Operational Details

Total revenues came in at $283.5 million, surpassing the Zacks Consensus Estimate by 2.3%. The top line grew 6.2% year over year owing to higher net transaction fees as well as market data revenues.

Average daily volume for Options nudged up 1% year over year while the average revenue per contract or RPC increased 7% in the reported quarter. This was primarily driven by a higher RPC achieved in both multiply-listed as well as index options.

Total RPC for U.S. Futures decreased 7.3% year over year to $1.633 million. The company's ADV also declined 16% year over year.

Total operating expenses increased 3.6% year over year to $154.4 million on the back of higher compensation and benefits, professional fees and outside services as well as acquisition related expenses.

Adjusted operating margin for the quarter under review was 62.6%, having improved 60 basis points year over year from 62%.

Financial Update

As of Jun 30, 2018, CBOE Holdings had cash and cash equivalents of $140 million, down 2.4% from $143.5 million at year-end 2017. Total assets were $5.4 billion in the second quarter, inching up by 0.9% from $5.3 billion as of Dec 31, 2017.

Total shareholders' equity was $3.15 billion at the end of the reported quarter, up 1.3% compared with $3.11 billion as of Dec 31, 2017.

Share Repurchase and Dividend Update

The company paid cash dividends worth $30.6 million or 27 cents per share in the second quarter.

During the second quarter, the company bought back 0.5 million shares for $48.3 million. Also, on Aug 1, 2018, the board of directors increased share buyback authorization by $100 million and on the same date, the company had $225 million remaining under its existing share repurchase program. Notably, the company approved a 15% hike with respect to its third-quarter dividend, amounting to 31 cents per share.

2018 Outlook

Adjusted operating expenses are expected between $420 million and $428 million, a 1-3% rise from the range recorded in 2017.

Depreciation and amortization expenses are anticipated to range between $43 million and $48 million (down from the previously guided range of $53-$58 million) excluding the amortization of acquired intangible assets of $157 million.

Capital expenditures are now estimated in the $35-$40 million band, down from the past prediction of $45-$50 million.

The effective tax rate on adjusted earnings for 2018 is likely to be within 26.5-28.5%. But the company expects tax rate to be at the higher end of the guided band when it comes to the third and fourth quarters.

Zacks Rank

Cboe Global Markets carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Players in Securities Exchanges

Among other players from the securities exchanges industry having already reported second-quarter earnings so far, the bottom line of Nasdaq, Inc. NDAQ , CME Group Inc. CME and MarketAxess Holdings Inc. MKTX surpassed the respective Zacks Consensus Estimate.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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