Cboe Global (CBOE) Q3 Earnings Top, Revenues Lag Estimates
Cboe Global Markets, Inc. CBOE reported third-quarter 2023 adjusted earnings of $2.06 per share, which outpaced the Zacks Consensus Estimate by 10.8%. The bottom line increased 18.4% year over year.
The reported quarter saw a strong performance from Derivatives and Data and Access Solutions categories. The quarter was the 10th consecutive quarter of double-digit, year-over-year net revenue growth.
Operational Details
Total adjusted revenues of CBOE Global were a record $480.5 million, which increased 9% year over year, driven by increases in derivatives markets and data and access solutions net revenue, partially offset by a decrease in cash and spot markets net revenue. Inorganic net revenues in the third quarter of 2023 were $7.6 million. The top line missed the consensus mark by 0.02%.
Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
Cboe Global Markets, Inc. price-consensus-eps-surprise-chart | Cboe Global Markets, Inc. Quote
Options revenues climbed 14% year over year to $290.8 million. The growth was driven by an increase in net transaction and clearing fees, as well as growth in market data and access and capacity fees.
Revenues of North American Equities totaled $95.1 million, down 2% year over year, reflecting lower net transaction and clearing fees and industry market data.
Europe and Asia Pacific revenues increased 2% year over year to $45.6 million, reflecting double-digit non-transaction revenue growth led by higher market data fees, access and capacity fees and other.
Futures net revenues increased 14% year over year to $32.4 million due to double-digit increases in net transaction and clearing fees, access and capacity fees and market data fees.
Global FX net revenues rose 6% year over year to $18.3 million, driven by higher net transaction and clearing fees.
Digital revenues were negative $1.7 million.
Adjusted operating expenses were $180.3 million, which increased 4% year over year, primarily due to higher technology support services, professional fees and outside services and travel and promotional expenses. Our estimate was $186.7 million.
Adjusted operating income grew 11% year over year to $300.2 million. Our estimate was $278.1 million.
Adjusted operating margin came in at 62.5%, which expanded 160 basis points (bps) year over year. Adjusted EBITDA margin of 66.7% expanded 180 bps year over year.
Financial Update
CBOE Global exited the third quarter with cash and cash equivalents of $403.6 million, which increased 6.8% from the 2022-end level. As of Sep 30, 2022, total assets of $7.7 billion rose 10.5% from the 2022-end figure.
CBOE’s long-term debt was $1.5 billion, up 0.1% from the Dec 31, 2022 level. Total shareholders’ equity was $3.8 billion, up 9.3% from the Dec 31, 2022 figure.
Share Repurchase and Dividend Update
In the third quarter, CBOE Global paid out cash dividends worth $58.5 million or 55 cents per share.
On Oct 26, the board of directors increased its share repurchase authorization by $250 million. As of Oct 31, 2023, CBOE had about $389.8 million authorized and available for repurchase.
2023 Guidance Reaffirmed
CBOE anticipates achieving the higher end of its organic total net revenue growth of 7% to 9%, which is above the medium-term organic total net revenue growth expectation of 5% to 7%.
Data and Access Solutions organic net revenues are expected to grow 7% to 10%.
The adjusted operating expense guidance was lowered to $754 million to $762 million from $766 to $774 million, guided earlier. Depreciation and amortization expense, which is included in adjusted operating expenses, is expected to be in the range of $40 to $44 million.
The effective tax rate on adjusted earnings is expected to be in the range of 27.5% to 29.5%. Capital expenditures for 2023 are now expected to be in the range of $42 to $48 million, down from the previous guidance of $48 to $54 million.
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
Nasdaq NDAQ reported third-quarter 2023 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate of 67 cents. The bottom line improved 4% year over year. The improvement was mainly driven by organic growth and solid results in the Solutions segment. Revenues of $940 million increased 6% year over year and beat the Zacks Consensus Estimate of $929 million.
Operating margin of 52% contracted 100 basis points year over year. The Nasdaq stock market welcomed 87 new company listings in the third quarter of 2023, including 39 initial public offerings.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.785 billion to $1.805 billion.
MarketAxess Holdings Inc. MKTX reported third-quarter 2023 earnings per share of $1.46, which missed the Zacks Consensus Estimate by 2%. Moreover, the bottom line declined from $1.58 per share a year ago. Total revenues increased 0.1% year over year to $172.3 million in the quarter under review. However, the top line missed the consensus mark by 0.6%.
MarketAxess reported operating income of $66.9 million, which decreased 12.3% year over year. Its high-grade trading volume declined 0.5% year over year to $326.3 billion, missing our estimate by 11.3%. Average daily volume (ADV) of the same product category rose 1.1% year over year to $5,179 million but missed our estimate by 10.2%.
Management revised the expense guidance upward to be between $432 million and $438 million for this year, the mid-point of which indicates an 11.1% increase from the 2022 reported figure.
CME Group CME reported third-quarter 2023 record adjusted earnings per share of $2.25, which beat the Zacks Consensus Estimate by 1.8%. The bottom line increased 13.6% year over year. This marked the ninth straight quarter of double-digit growth. Revenues of $1.3 billion increased 9% year over year and beat the Zacks Consensus Estimate by 0.01%.
Operating income increased 11% from the prior-year quarter to $820.2 million and beat our estimate of $750.5 million.
ADV was 22.3 million contracts. Non-U.S. ADV reached 6.5 million contracts, up 7% year over year, including 16% growth in interest rates and double-digit growth across agricultural, energy and metals products.
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