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Cboe Global's (CBOE) Q3 Earnings and Revenues Beat Estimates
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Cboe Global Markets (CBOE - Free Report) third-quarter 2019 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate by 11.2%. Moreover, the bottom line increased 22% year over year on higher trading volumes.
Operational Details
Total revenues came in at $294 million, beating the Zacks Consensus Estimate by 1.4%. Moreover, the top line increased 9% driven by higher trading volume in proprietary products, including SPX options, VIX options and futures, as well as growth in market data revenues.
Options revenues increased 10% driven by higher revenues from net transaction fees. Total options average daily volume (ADV) increased 15% while revenue per contract (RPC) declined 3%.
Revenues of U.S. Equities increased 6% on higher market data revenues from the industry tape plan, which included audit recoveries of $4.3 million. Futures revenues increased 28% driven by higher net transaction fees.
However, European Equities revenues declined 7%, reflecting a decline in net transaction fees, partially offset by a slight increase in non-transaction revenues.
Global FX revenues declined 4% due to lower net transaction fees.
Total adjusted operating expenses decreased 3% year over year to $96.5 million. The decline was attributable to a decrease in compensation and benefits as a result of lower incentive-based compensation.
Adjusted operating margin in the quarter under review was 67.2%, up 380 basis points (bps), reflecting higher net revenues and lower expenses.
Adjusted EBITDA margin of 70.9% expanded 380 bps.
Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
As of Sep 30, 2019, CBOE Global had cash and cash equivalents of $150 million, down 45.5% from the figure at 2018 end. Total assets were $5.1 billion in the third quarter, down 5.7% from the level at 2018 end.
At the end of the third quarter, long-term debt was $867.1 million, down 5.3% year over year. The company deployed $50 million to pay a term loan, lowering the leverage ratio to 1.1 as of Sep 30 from 1.2 as of Jun 30, 2019.
Total shareholders’ equity was $3.3 billion at the end of the reported quarter, up 2.7% from the value on Dec 31, 2018.
Share Repurchase and Dividend Update
The company paid out cash dividends worth $40.4 million or 36 cents per share in the third quarter.
The company also bought back 0.5 million shares for $52.4 million. On Oct 30, 2019, the board of directors increased its share repurchase authorization by $250 million.
2019 Guidance
Adjusted operating expenses are now expected between $390 and $395 million, down from the previous estimate of $405-$413 million.
Capital expenditures are now projected in the $35-$40 million band, down from the prior band of $50 to $55 million, indicating a shift in the timing of expenditures associated with the company's Chicago headquarters relocation.
Depreciation and amortization expense is reiterated between $35 and $40 million.
The effective tax rate on adjusted earnings for 2019 is expected between 25.5% and 27.5%, down from the previous range of 27% to 29%.
Third-quarter earnings of Nasdaq (NDAQ - Free Report) , MarketAxess Holdings (MKTX - Free Report) and CME Group (CME - Free Report) beat their respective Zacks Consensus Estimate.
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Cboe Global's (CBOE) Q3 Earnings and Revenues Beat Estimates
Cboe Global Markets (CBOE - Free Report) third-quarter 2019 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate by 11.2%. Moreover, the bottom line increased 22% year over year on higher trading volumes.
Operational Details
Total revenues came in at $294 million, beating the Zacks Consensus Estimate by 1.4%. Moreover, the top line increased 9% driven by higher trading volume in proprietary products, including SPX options, VIX options and futures, as well as growth in market data revenues.
Options revenues increased 10% driven by higher revenues from net transaction fees. Total options average daily volume (ADV) increased 15% while revenue per contract (RPC) declined 3%.
Revenues of U.S. Equities increased 6% on higher market data revenues from the industry tape plan, which included audit recoveries of $4.3 million. Futures revenues increased 28% driven by higher net transaction fees.
However, European Equities revenues declined 7%, reflecting a decline in net transaction fees, partially offset by a slight increase in non-transaction revenues.
Global FX revenues declined 4% due to lower net transaction fees.
Total adjusted operating expenses decreased 3% year over year to $96.5 million. The decline was attributable to a decrease in compensation and benefits as a result of lower incentive-based compensation.
Adjusted operating margin in the quarter under review was 67.2%, up 380 basis points (bps), reflecting higher net revenues and lower expenses.
Adjusted EBITDA margin of 70.9% expanded 380 bps.
Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
Cboe Global Markets, Inc. price-consensus-eps-surprise-chart | Cboe Global Markets, Inc. Quote
Financial Update
As of Sep 30, 2019, CBOE Global had cash and cash equivalents of $150 million, down 45.5% from the figure at 2018 end. Total assets were $5.1 billion in the third quarter, down 5.7% from the level at 2018 end.
At the end of the third quarter, long-term debt was $867.1 million, down 5.3% year over year. The company deployed $50 million to pay a term loan, lowering the leverage ratio to 1.1 as of Sep 30 from 1.2 as of Jun 30, 2019.
Total shareholders’ equity was $3.3 billion at the end of the reported quarter, up 2.7% from the value on Dec 31, 2018.
Share Repurchase and Dividend Update
The company paid out cash dividends worth $40.4 million or 36 cents per share in the third quarter.
The company also bought back 0.5 million shares for $52.4 million. On Oct 30, 2019, the board of directors increased its share repurchase authorization by $250 million.
2019 Guidance
Adjusted operating expenses are now expected between $390 and $395 million, down from the previous estimate of $405-$413 million.
Capital expenditures are now projected in the $35-$40 million band, down from the prior band of $50 to $55 million, indicating a shift in the timing of expenditures associated with the company's Chicago headquarters relocation.
Depreciation and amortization expense is reiterated between $35 and $40 million.
The effective tax rate on adjusted earnings for 2019 is expected between 25.5% and 27.5%, down from the previous range of 27% to 29%.
Zacks Rank
Cboe Global currently 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
Third-quarter earnings of Nasdaq (NDAQ - Free Report) , MarketAxess Holdings (MKTX - Free Report) and CME Group (CME - Free Report) beat their respective Zacks Consensus Estimate.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.5% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>