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CME Group (CME) Q2 Earnings Top on Higher Trading Volume
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CME Group (CME - Free Report) reported second-quarter 2023 record adjusted earnings per share of $2.30, which beat the Zacks Consensus Estimate by 5.5%. The bottom line increased 16.8% year over year.
Quarterly results benefited from an increase in trading volumes. Average daily volume increased in four of its six asset classes.
CME Group’s revenues of $1.4 billion increased 9.9% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 9.1% year over year) and market data and information services (up 7.5% year over year). The top line beat the Zacks Consensus Estimate by 1.3%.
Total expenses increased 7% year over year to $521.6 million, attributable to higher technology, compensation and benefits, professional fees and outside services, licensing and other fee agreements and other expenses. Expenses exceeded our estimate of $428.1 million.
Operating income increased 11.9% from the prior-year quarter to $838.6 million and beat our estimate of $831.9 million.
Average daily volume (ADV) was 22.9 million contracts. Non-U.S. ADV reached 6.3 million contracts, which included double-digit year-over-year growth in Agricultural, Metals and Energy products.
Financial Update
As of Jun 30, 2023, CME Group had $2 billion of cash and marketable securities, down 29.4% from 2022 end. As of Jun 30, 2023, long-term debt was $3.4 billion, down 0.02% from 2022 end.
As of Jun 30, 2023, CME had total equity worth $27.4 billion, up 3.5% from 2022 end.
Capital Deployment
CME Group paid out $400 billion in dividends, taking the payout to $213.5 billion since the implementation of the variable dividend policy in early 2012.
Nasdaq (NDAQ - Free Report) reported second-quarter 2023 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate of 65 cents. The bottom line improved 3% year over year. The improvement was mainly driven by organic growth and solid results at the Solutions segment. Nasdaq’s revenues of $925 million increased 4% year over year. The upside can primarily be attributed to a 4% impact from organic growth, including contributions from all segments. The top line beat the Zacks Consensus Estimate of $910 million.
Annualized Recurring Revenue (ARR) increased 6% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% contracted 200 basis points year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.785 billion to $1.815 billion, compared with the prior expectation of $1.78 billion to $1.84 billion.
MarketAxess Holdings Inc. (MKTX - Free Report) reported second-quarter 2023 earnings per share of $1.63, which outpaced the Zacks Consensus Estimate of $1.58. The bottom line, however, declined from $1.78 per share a year ago.
Total revenues decreased 1.3% year over year to $179.8 million in the quarter under review. The top line also missed the consensus mark by 0.8%.
MarketAxess reported an operating income of $75.7 million, which decreased 10.7% year over year in the second quarter and missed our estimate by 8.5%.
MarketAxess’ high-grade trading volume declined 1.8% year over year to $353.2 billion, missing our estimate by 5.1%. ADV of the same product category fell 1.8% year over year to $5,697 million, missing our estimate by 5.1%.
Upcoming Release
Cboe Global Markets (CBOE - Free Report) is slated to release second-quarter 2023 earnings on Aug 5. The Zacks Consensus Estimate for the second quarter is pegged at $1.75 per share, indicating an increase of 4.8% from the year-ago reported figure.
CBOE delivered an earnings surprise in three of the last four reported quarters while missing in one.
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CME Group (CME) Q2 Earnings Top on Higher Trading Volume
CME Group (CME - Free Report) reported second-quarter 2023 record adjusted earnings per share of $2.30, which beat the Zacks Consensus Estimate by 5.5%. The bottom line increased 16.8% year over year.
Quarterly results benefited from an increase in trading volumes. Average daily volume increased in four of its six asset classes.
CME Group Inc. Price, Consensus and EPS Surprise
CME Group Inc. price-consensus-eps-surprise-chart | CME Group Inc. Quote
Performance in Detail
CME Group’s revenues of $1.4 billion increased 9.9% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 9.1% year over year) and market data and information services (up 7.5% year over year). The top line beat the Zacks Consensus Estimate by 1.3%.
Total expenses increased 7% year over year to $521.6 million, attributable to higher technology, compensation and benefits, professional fees and outside services, licensing and other fee agreements and other expenses. Expenses exceeded our estimate of $428.1 million.
Operating income increased 11.9% from the prior-year quarter to $838.6 million and beat our estimate of $831.9 million.
Average daily volume (ADV) was 22.9 million contracts. Non-U.S. ADV reached 6.3 million contracts, which included double-digit year-over-year growth in Agricultural, Metals and Energy products.
Financial Update
As of Jun 30, 2023, CME Group had $2 billion of cash and marketable securities, down 29.4% from 2022 end. As of Jun 30, 2023, long-term debt was $3.4 billion, down 0.02% from 2022 end.
As of Jun 30, 2023, CME had total equity worth $27.4 billion, up 3.5% from 2022 end.
Capital Deployment
CME Group paid out $400 billion in dividends, taking the payout to $213.5 billion since the implementation of the variable dividend policy in early 2012.
Zacks Rank
CME 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 - Free Report) reported second-quarter 2023 adjusted earnings per share of 71 cents, beating the Zacks Consensus Estimate of 65 cents. The bottom line improved 3% year over year. The improvement was mainly driven by organic growth and solid results at the Solutions segment. Nasdaq’s revenues of $925 million increased 4% year over year. The upside can primarily be attributed to a 4% impact from organic growth, including contributions from all segments. The top line beat the Zacks Consensus Estimate of $910 million.
Annualized Recurring Revenue (ARR) increased 6% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% contracted 200 basis points year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.785 billion to $1.815 billion, compared with the prior expectation of $1.78 billion to $1.84 billion.
MarketAxess Holdings Inc. (MKTX - Free Report) reported second-quarter 2023 earnings per share of $1.63, which outpaced the Zacks Consensus Estimate of $1.58. The bottom line, however, declined from $1.78 per share a year ago.
Total revenues decreased 1.3% year over year to $179.8 million in the quarter under review. The top line also missed the consensus mark by 0.8%.
MarketAxess reported an operating income of $75.7 million, which decreased 10.7% year over year in the second quarter and missed our estimate by 8.5%.
MarketAxess’ high-grade trading volume declined 1.8% year over year to $353.2 billion, missing our estimate by 5.1%. ADV of the same product category fell 1.8% year over year to $5,697 million, missing our estimate by 5.1%.
Upcoming Release
Cboe Global Markets (CBOE - Free Report) is slated to release second-quarter 2023 earnings on Aug 5. The Zacks Consensus Estimate for the second quarter is pegged at $1.75 per share, indicating an increase of 4.8% from the year-ago reported figure.
CBOE delivered an earnings surprise in three of the last four reported quarters while missing in one.