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Cboe Global (CBOE) Q2 Earnings Top Estimates, Expense View Cut
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Cboe Global Markets, Inc. (CBOE - Free Report) reported second-quarter 2023 adjusted earnings of $1.78 per share, which outpaced the Zacks Consensus Estimate by 1.1%. The bottom line increased 6.6% year over year.
The quarter marked the ninth consecutive quarter of double-digit, year-over-year net revenue growth. The results benefited from solid performance at Derivatives and Data and Access Solutions categories.
Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
Total adjusted revenues of CBOE Global were a record $467 million, which improved 10.1% year over year on the back of increases in derivatives markets and data and access solutions net revenues, partially offset by a decrease in cash and spot market net revenues. Inorganic net revenues in the second quarter of 2023 were $3.2 million. The top line missed the consensus mark by 0.02%.
Options revenues climbed 20% year over year to $283.2 million. The growth was driven by a double-digit 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 $90.8 million, down 2% year over year, attributable to lower net transaction and clearing fees and industry market data, offset by a $3.6 million second-quarter inorganic net revenue contribution from the 2022 acquisition of Cboe Canada.
Europe and Asia Pacific revenues decreased 5% year over year to $47.3 million, reflecting slower industry volumes.
Futures net revenues declined 1% year over year to $29.2 million due to a decline in net transaction and clearing fees, partially offset by an increase in access and capacity fees.
Global FX net revenues rose 7% year over year to $17.8 million, courtesy of higher net transaction fees.
Adjusted operating expenses were $192.3 million, which escalated 22% year over year, primarily due to the acquisitions of Cboe Digital (formerly ErisX) and Cboe Canada (formerly NEO) as well as higher compensation and benefits, travel and promotional and technology support services expenses. Our estimate was $190 million.
Adjusted operating income grew 3% year over year to $274.8 million. Our estimate was $270.3 million.
Adjusted operating margin came in at 58.8%, which contracted 420 basis points (bps) year over year. Adjusted EBITDA margin of 62.8% contracted 190 bps year over year.
Financial Update
CBOE Global exited the second quarter with cash and cash equivalents of $413.6 million, which decreased 4.4% from the 2022-end level. As of Jun 30, 2022, total assets of $7.2 billion rose 2.8% from the 2022-end figure.
CBOE’s long-term debt was $1.4 billion, up 0.02% from the Dec 31, 2022 level. Total shareholders’ equity was $3.7 billion, up 5.7% from the Dec 31, 2022 figure.
Share Repurchase and Dividend Update
In the second quarter, CBOE Global paid out cash dividends worth $53.2 million or 50 cents per share and bought back shares worth $8.1 million. As of Jun 30, 2023, CBOE had $138.9 million left under its current share repurchase authorization.
2023 Guidance Updated
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%.
Adjusted operating expense guidance was lowered to $766 million to $774 million from $769 to $779 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, down from the previous range of $48 to $52 million.
The effective tax rate on adjusted earnings is expected to be in the range of 28.5% to 30.5%. Capital expenditures are expected to be in the range of $48 to $54 million, down from the previous guidance of $60 to $66 million.
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%. Average daily volume (ADV) of the same product category fell 1.8% year over year to $5,697 million, missing our estimate by 5.1%.
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. 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%.
Operating income increased 11.9% from the prior-year quarter to $838.6 million and beat our estimate of $831.9 million.
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.
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Cboe Global (CBOE) Q2 Earnings Top Estimates, Expense View Cut
Cboe Global Markets, Inc. (CBOE - Free Report) reported second-quarter 2023 adjusted earnings of $1.78 per share, which outpaced the Zacks Consensus Estimate by 1.1%. The bottom line increased 6.6% year over year.
The quarter marked the ninth consecutive quarter of double-digit, year-over-year net revenue growth. The results benefited from solid performance at Derivatives and Data and Access Solutions categories.
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 adjusted revenues of CBOE Global were a record $467 million, which improved 10.1% year over year on the back of increases in derivatives markets and data and access solutions net revenues, partially offset by a decrease in cash and spot market net revenues. Inorganic net revenues in the second quarter of 2023 were $3.2 million. The top line missed the consensus mark by 0.02%.
Options revenues climbed 20% year over year to $283.2 million. The growth was driven by a double-digit 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 $90.8 million, down 2% year over year, attributable to lower net transaction and clearing fees and industry market data, offset by a $3.6 million second-quarter inorganic net revenue contribution from the 2022 acquisition of Cboe Canada.
Europe and Asia Pacific revenues decreased 5% year over year to $47.3 million, reflecting slower industry volumes.
Futures net revenues declined 1% year over year to $29.2 million due to a decline in net transaction and clearing fees, partially offset by an increase in access and capacity fees.
Global FX net revenues rose 7% year over year to $17.8 million, courtesy of higher net transaction fees.
Adjusted operating expenses were $192.3 million, which escalated 22% year over year, primarily due to the acquisitions of Cboe Digital (formerly ErisX) and Cboe Canada (formerly NEO) as well as higher compensation and benefits, travel and promotional and technology support services expenses. Our estimate was $190 million.
Adjusted operating income grew 3% year over year to $274.8 million. Our estimate was $270.3 million.
Adjusted operating margin came in at 58.8%, which contracted 420 basis points (bps) year over year. Adjusted EBITDA margin of 62.8% contracted 190 bps year over year.
Financial Update
CBOE Global exited the second quarter with cash and cash equivalents of $413.6 million, which decreased 4.4% from the 2022-end level. As of Jun 30, 2022, total assets of $7.2 billion rose 2.8% from the 2022-end figure.
CBOE’s long-term debt was $1.4 billion, up 0.02% from the Dec 31, 2022 level. Total shareholders’ equity was $3.7 billion, up 5.7% from the Dec 31, 2022 figure.
Share Repurchase and Dividend Update
In the second quarter, CBOE Global paid out cash dividends worth $53.2 million or 50 cents per share and bought back shares worth $8.1 million. As of Jun 30, 2023, CBOE had $138.9 million left under its current share repurchase authorization.
2023 Guidance Updated
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%.
Adjusted operating expense guidance was lowered to $766 million to $774 million from $769 to $779 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, down from the previous range of $48 to $52 million.
The effective tax rate on adjusted earnings is expected to be in the range of 28.5% to 30.5%. Capital expenditures are expected to be in the range of $48 to $54 million, down from the previous guidance of $60 to $66 million.
Zacks Rank
CBOE Global currently carries 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
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%. Average daily volume (ADV) of the same product category fell 1.8% year over year to $5,697 million, missing our estimate by 5.1%.
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. 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%.
Operating income increased 11.9% from the prior-year quarter to $838.6 million and beat our estimate of $831.9 million.
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.