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Cboe Global (CBOE) Q3 Earnings & Revenues Top Estimates

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Cboe Global Markets, Inc.’s (CBOE - Free Report) third-quarter 2021 adjusted earnings of $1.45 per share beat the Zacks Consensus Estimate by 1.4%. The bottom line increased 31% year over year.

The quarter witnessed revenue growth driven by higher trading volumes and RPC in index and multi-listed options, higher transaction and clearing fees, and growth in access and capacity fees.

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 $369.5 million and beat the Zacks Consensus Estimate by 1.2%. The top line increased 27% year over year on higher net transaction and clearing fees, and access and capacity fees.

Options revenues increased 30% year over year to $192.2 million, primarily due to an increase in net transaction and clearing fees, as a result of higher trading volumes and RPC in both index and multi-listed options, as well as increases in access and capacity fees and market data fees.

Revenues of North American Equities increased 13% year over year to $85.6 million, primarily due to higher transaction and clearing fees, proprietary market data fees, and growth in access and capacity fees.

Futures revenues of $28.9 million were up 24% year over year, primarily due to increased net transaction and clearing fees.

European Equities revenues surged 53% year over year to $48.5 million, reflecting the addition of Chi-X Asia Pacific in July 2021, which contributed $8.2 million in net revenues and growth in European equities and clearing.

Global FX revenues increased 8% to $14.3 million, driven by higher net transaction and clearing fees.

Adjusted operating expenses of $140.3 million increased 29% year over year, primarily due to acquisitions closed in late 2020 and 2021, resulting in higher compensation and benefits.

Adjusted operating income increased 25.2% year over year to $229.2 million.
Adjusted operating margin in the quarter under review contracted 70 basis points (bps) to 62%.

Adjusted EBITDA margin of 64.8% contracted 110 bps.

Financial Update

As of Sep 30, 2021, CBOE Global had cash and cash equivalents of $392.4 million, up 59.9% from the figure at 2020 end. Total assets were $7.6 billion in the third quarter, up 16.4% from the level at 2020 end.

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

Total shareholders’ equity was $3.5 billion at the end of the reported quarter, up 4.4% from the value on Dec 31, 2020.

Share Repurchase and Dividend Update

The company paid out cash dividends worth $51.5 million or 48 cents per share that represented a 14% year-over-year increase and marked the 11th straight year of dividend hike.

As of Sep 30, 2021, the company had $318.9 million remaining under its existing share repurchase authorization.

2021 Guidance

Adjusted operating expenses are now expected to be in the range of $536 to $541 million, up from the previous guidance of $531 to $539 million. The increased guidance reflects the strong revenue environment seen on a year-to-day basis, as well as Cboe's anticipated ramp-up in hiring.

Capital expenditures are expected in the range of $47 to $52 million, down from the prior guidance of $55 to $60 million, reflecting changes in the timing of certain projects. Depreciation and amortization expense are estimated in the range of $38 to $42 million, up from the previous guidance of $34 to $38 million.

The effective tax rate on adjusted earnings is expected between 27.5% and 29.5%. The company continues to expect the adjusted effective tax rate for 2021 to be at the higher end of the guidance range.

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

Third-quarter earnings of Intercontinental Exchange (ICE - Free Report) , MarketAxess Holdings Inc. (MKTX - Free Report) and CME Group Inc. (CME - Free Report) beat the respective Zacks Consensus Estimate.