CME Group (NASDAQ: CME) reported second-quarter financial results on July 31. The exchange titan is enjoying solid revenue growth as it works to integrate its recent $5 billion acquisition of trading platform operator NEX.
CME Group results: The raw numbers
| Metric | Q2 2019 | Q2 2018 | Change |
|---|---|---|---|
| Revenue | $1.27 billion | $1.06 billion | 20% |
| Operating income | $699 million | $667 million | 5% |
| Earnings per share | $1.43 | $1.66 | (14%) |
Data source: CME Group Q2 2019 earnings press release.
What happened with CME Group this quarter?
Average daily volume (ADV) rose 14% year over year to 21 million contracts, driven by growth in the company's interest rate, equity, and agricultural product lines.
| Metric | Q2 2019 | Q2 2018 | Change | CME Group Product Line | Q2 2019 ADV | Q2 2018 ADV |
|---|---|---|---|---|---|---|
| Revenue | $1.27 billion | $1.06 billion | 20% | Interest rate | 11,593 | 9,200 |
| Operating income | $699 million | $667 million | 5% | Equity | 3,480 | 3,086 |
| Earnings per share | $1.43 | $1.66 | (14%) | Energy | 2,498 | 2,630 |
| Agricultural commodity | 1,839 | 1,734 | ||||
| Foreign exchange | 874 | 1,035 | ||||
| Metal | 633 | 674 |
Data source: CME Group. Numbers in thousands.
Growth was particularly strong in Latin America, Asia, and Europe, which saw volume rise 81%, 28%, and 22%, respectively.
"During the second quarter, our clients turned to CME Group to manage their risks amid ongoing global trade concerns, geopolitical unease and Fed policy uncertainty, all of which drove our strong financial results," Chairman and CEO Terry Duffy said in a press release.
CME Group's international business is booming. Image source: Getty Images.
CME Group's total average rate per contract decreased by 3% sequentially and 8% year over year to $0.693, mainly due to higher discounts and the launch of some lower-fee products.
In all, CME Group's clearing and transaction fees revenue increased 16% year over year to $1.1 billion, while market data revenue grew 13% to $128 million. The company's other revenue, which includes some of NEX's operations, surged 133% to $93 million.
Still, higher costs weighed on CME Group's profits. In turn, net income fell 9% to $514 million. However, when adjusted to exclude acquisition, restructuring, and certain other charges, the company's non-GAAP net income rose 7% to $632 million.
Looking forward
Management says that CME Group's integration of NEX is progressing smoothly. CME is selling off some NEX assets and streamlining its operations. Improved efficiencies led CME to reduce its full-year expense guidance by $10 million, and the company said it's on track to reach its goal of $50 million in expense synergies by the end of 2019.
"We remain focused on the successful integration of the NEX businesses, which we believe will provide additional value for both clients and shareholders," Duffy said.
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