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Cboe Global (CBOE) Q2 Earnings and Revenues Top, Rise Y/Y

Cboe Global Markets, Inc.’s CBOE second-quarter 2021 adjusted earnings of $1.38 per share beat the Zacks Consensus Estimate of $1.35. Moreover, the bottom line increased 5.3% year over year.

The quarter witnessed revenue growth driven by robust trading in proprietary index products and demand for data and access solutions products.

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

Operational Details    

Total revenues came in at $351 million and beat the Zacks Consensus Estimate by 1.7%. The top line increased 18.2% year over year, reflecting increases in net transaction and clearing fees and access and capacity fees.

Options revenues increased 19% year over year to $181.7 million increase in net transaction and clearing fees, as a result of higher trading volumes in both index and multi-listed options, as well as increases in access and capacity fees and market data fees. Average daily volume for Options rose 12% year over year while revenue per contract or RPC increased 5% in the quarter.

Revenues of North American Equities decreased 2% year over year to $96.1 million attributable to decreases in transaction and clearing fees and market data fees, offset somewhat by growth in access and capacity fees.

Futures revenues of $27.4 million increased 31% year over year driven by increase in net transaction and clearing fees.

European Equities revenues surged 97% year over year to $41.6 million, reflecting the addition of EuroCCP.

Global FX revenues increased 1% to $13.8 million attributable to higher net transaction and clearing fees.

Total adjusted operating expenses increased 33.9% year over year to $128.3 million attributable to primarily due to acquisitions closed in 2020, resulting in higher compensation and benefits and technology support services.

Adjusted operating income decreased 10.5% year over year to $222.3 million attributable to higher expenses.

Adjusted operating margin in the quarter under review contracted 430 basis points (bps) to 63.4%.

Adjusted EBITDA margin of 66.6% contracted 450 bps.

Financial Update

As of Jun 30, 2021, CBOE Global had cash and cash equivalents of $450.9 million, up 83.7% from the figure at 2020 end. Total assets were $7.1 billion, up 8.9% from the level at 2020 end.

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

Total shareholders’ equity was $3.4 billion at the end of the reported quarter, up 2.8% from the value on Dec 31, 2020.

Share Repurchase and Dividend Update

The company paid out cash dividends worth $45 million and bought back shares worth $33.7 million in the reported quarter. The company had $318.9 million remaining under its existing share repurchase authorization as on Jun 30.

2021 Guidance

Cboe Global estimates organic growth for recurring non-transaction revenues, defined as access and capacity fees plus proprietary market data, between 15% and 16%, up from 11-12% guided earlier.

Organic growth is targeted in the range of 12 to 13%, up from the prior guidance of 10 to 11%, driven by the addition of Chi-X, as well as stronger growth in organic recurring non-transaction revenue.

Net revenue growth is estimated between 5% and 7% in 2021, up from 4% to 6%, reflecting the addition of Chi-X on Jul 1.

Adjusted operating expenses are expected to be in the range of $531 to $539 million.

Depreciation and amortization expense, which is included in adjusted operating expenses above, is now expected to be in the range of $34 to $38 million, down from the previous range of $38 to $42 million.

Capital expenditures are expected to be in the range of $55 to $60 million, down from the prior range of $60 to $65 million, primarily reflecting changes in the timing of certain projects.

Zacks Rank

Cboe Global currently 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 Securities and Exchanges

Second-quarter earnings of Nasdaq NDAQ, MarketAxess Holdings MKTX and CME Group CME beat the respective Zacks Consensus Estimate.

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