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Cboe Global's (CBOE) Q2 Earnings Beat Estimates, Rise Y/Y

·4 min read

Cboe Global Markets, Inc.’s CBOE second-quarter 2020 adjusted earnings of $1.31 per share beat the Zacks Consensus Estimate by 4.8%. Moreover, the bottom line increased 15.9% year over year on increased trading activity, expanded operating margin, and decline in expenses.

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


Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
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 $296.9 million, missing the Zacks Consensus Estimate by 0.03%. However, the top line increased 5% year over year, reflecting higher market data fees, primarily due to revenues from the acquisitions of Hanweck and FT Options in the first quarter of 2020 and record quarterly trading volumes in U.S. equities and multi-listed options.

Options revenues increased 7% year over year to $150.6 million driven by higher net transaction fees and market data revenues, offset by a decrease in royalty fees.

Average daily volume for Options surged 36% year over year while revenue per contract or RPC slipped 24% in the second quarter.

Revenues of U.S. Equities increased 22% year over year to $90.6 million, driven by higher revenues from net transaction fees, as well as higher revenues from non-transaction fees.

Futures revenues of $20.9 million were down 36% year over year due to a decline in net transaction fees.

European Equities revenues decreased 6% year over year to $21.1 millio, due to decrease in net transaction fees, offset by higher access and capacity fees.

Global FX revenues increased 5% to $13.7 million driven by higher access and capacity fees and net transaction fees.

Total adjusted operating expenses decreased 7% year over year to $95.8 million attributable to lower professional fees and outside services and travel and promotional expenses.

Adjusted operating income improved 12% year over year to $201.1 million. The improvement was driven by higher net revenues and lower operating expenses.

Adjusted operating margin in the quarter under review expanded 410 basis points (bps) to 67.7% owing to increased operating leverage from higher net revenues.

Adjusted EBITDA margin of 71.1% expanded 270 bps.

Financial Update

As of Jun 30, 2020, CBOE Global had cash and cash equivalents of $210.1 million, down 8.4% from the figure at 2019 end. Total assets were $5.4 billion in the second quarter, up 4.9% from the level at 2019 end.

At the end of the second quarter, long-term debt of the company stands at $868.6 million, up 0.1% year over year.

Total shareholders’ equity was $3.3 billion at the end of the reported quarter, down 2.1% from the value on Dec 31, 2019.

Share Repurchase and Dividend Update

The company paid out cash dividends worth $39.5 million or 36 cents per share in the second quarter.

As of Jun 30, 2020, the company had $329.9 million of availability remaining under its existing share repurchase authorizations.

2020 Guidance

Adjusted operating expenses are now expected to be in the range of $436 to $444 million, up $17 million from the previous guidance of $419 to $427 million, primarily reflecting the addition of EuroCCP and expenses related to the launch of pan-European derivatives trading and clearing.

Capital expenditures are still expected in the $65-$70 million band. Depreciation and amortization expense are estimated between $34 million and $38 million.

The effective tax rate on adjusted earnings is expected between 26.5% and 28.5%. However, it is now expected to be at the higher end of the range in the third quarter of 2020.

Zacks Rank

Cboe Global has 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 MarketAxess Holdings MKTX, CME Group Inc. CME and Nasdaq NDAQ beat the Zacks Consensus Estimate.

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