Cboe Global (CBOE) Q3 Earnings & Revenues Top Estimates

Cboe Global Markets, Inc.’s CBOE third-quarter 2021 adjusted earnings of $1.45 per share beat the Zacks Consensus Estimate by 1.4%. The bottom line increased 31% year over year.

The quarter witnessed revenue growth driven by higher trading volumes and RPC in index and multi-listed options, higher transaction and clearing fees, and growth in access and capacity fees.

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

Cboe Global Markets, Inc. price-consensus-eps-surprise-chart | Cboe Global Markets, Inc. Quote

Operational Details

Total revenues came in at $369.5 million and beat the Zacks Consensus Estimate by 1.2%. The top line increased 27% year over year on higher net transaction and clearing fees, and access and capacity fees.

Options revenues increased 30% year over year to $192.2 million, primarily due to an increase in net transaction and clearing fees, as a result of higher trading volumes and RPC in both index and multi-listed options, as well as increases in access and capacity fees and market data fees.

Revenues of North American Equities increased 13% year over year to $85.6 million, primarily due to higher transaction and clearing fees, proprietary market data fees, and growth in access and capacity fees.

Futures revenues of $28.9 million were up 24% year over year, primarily due to increased net transaction and clearing fees.

European Equities revenues surged 53% year over year to $48.5 million, reflecting the addition of Chi-X Asia Pacific in July 2021, which contributed $8.2 million in net revenues and growth in European equities and clearing.

Global FX revenues increased 8% to $14.3 million, driven by higher net transaction and clearing fees.

Adjusted operating expenses of $140.3 million increased 29% year over year, primarily due to acquisitions closed in late 2020 and 2021, resulting in higher compensation and benefits.

Adjusted operating income increased 25.2% year over year to $229.2 million.
Adjusted operating margin in the quarter under review contracted 70 basis points (bps) to 62%.

Adjusted EBITDA margin of 64.8% contracted 110 bps.

Financial Update

As of Sep 30, 2021, CBOE Global had cash and cash equivalents of $392.4 million, up 59.9% from the figure at 2020 end. Total assets were $7.6 billion in the third quarter, up 16.4% from the level at 2020 end.

At the end of the third quarter, the long-term debt of the company stands at $1.3 billion, up 14.4% year over year.

Total shareholders’ equity was $3.5 billion at the end of the reported quarter, up 4.4% from the value on Dec 31, 2020.

Share Repurchase and Dividend Update

The company paid out cash dividends worth $51.5 million or 48 cents per share that represented a 14% year-over-year increase and marked the 11th straight year of dividend hike.

As of Sep 30, 2021, the company had $318.9 million remaining under its existing share repurchase authorization.

2021 Guidance

Adjusted operating expenses are now expected to be in the range of $536 to $541 million, up from the previous guidance of $531 to $539 million. The increased guidance reflects the strong revenue environment seen on a year-to-day basis, as well as Cboe's anticipated ramp-up in hiring.

Capital expenditures are expected in the range of $47 to $52 million, down from the prior guidance of $55 to $60 million, reflecting changes in the timing of certain projects. Depreciation and amortization expense are estimated in the range of $38 to $42 million, up from the previous guidance of $34 to $38 million.

The effective tax rate on adjusted earnings is expected between 27.5% and 29.5%. The company continues to expect the adjusted effective tax rate for 2021 to be at the higher end of the guidance range.

Zacks Rank

Cboe Global currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities and Exchanges

Third-quarter earnings of Intercontinental Exchange ICE, MarketAxess Holdings Inc. MKTX and CME Group Inc. CME beat 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.