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Cboe Global (CBOE) Q1 Earnings Beat, Revenues Lag Estimates
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Cboe Global Markets, Inc. (CBOE - Free Report) reported first-quarter 2023 adjusted earnings of $1.90 per share, which outpaced the Zacks Consensus Estimate by 2.7%. The bottom line increased 9.8% year over year. Our estimate was $1.71 per share.
The company witnessed increased adjusted revenues and adjusted earnings, double-digit increases in net transaction and clearing fees, access and capacity fees, which were offset by higher expenses.
Cboe Global Markets, Inc. Price, Consensus and EPS Surprise
Total adjusted revenues of CBOE Global were a record $471 million, which improved 12.7% 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 markets net revenues. Inorganic net revenues in the first quarter of 2023 were $4.4 million. The top line missed the consensus mark by 2%. Our estimate was $450.1 million.
Options revenues climbed 28% year over year to $280.7 million. The growth was driven by a double-digit increase in net transaction and clearing fees, as well as growth in access and capacity fees and market data.
Revenues of North American Equities totaled $93.1 million, flat year over year. The revenues reflected a $5.6 million first-quarter net revenue contribution from the 2022 acquisition of Cboe Canada, offset by lower transaction and clearing fees and market data revenues.
Europe and Asia Pacific revenues decreased 14% year over year to $49.3 million, reflecting slower industry volumes and continued currency headwinds. Futures net revenues remained flat year over year at $31.1 million due to a decline in net transaction and clearing fees, largely offset by an increase in access and capacity fees.
Global FX net revenues rose 8% year over year to $18.5 million, courtesy of higher net transaction fees.
Adjusted operating expenses were $186.2 million, which escalated 28% 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 $182.4 million.
Adjusted operating income grew 5% year over year to $285.2 million.
Adjusted operating margin came in at 60.5%, which contracted 460 basis points (bps) year over year. Adjusted EBITDA margin of 65.8% contracted 150 bps year over year.
Financial Update
CBOE Global exited the first quarter with cash and cash equivalents of $435.6 million, which increased 0.7% from the 2022-end level. As of Mar 31, 2022, total assets of $7.9 billion rose 12.9% from the 2022-end figure.
CBOE’s long-term debt was $1.4 billion, up 0.03% from the Dec 31, 2022 level. Total shareholders’ equity was $3.5 billion, down 2.1% from the Dec 31, 2022 figure.
Share Repurchase and Dividend Update
In the first quarter, CBOE Global paid out cash dividends worth $53.3 million or 50 cents per share and bought back shares worth $70 million. As of Mar 31, 2023, CBOE had $147.9 million left under its current share repurchase authorization.
2023 Guidance Unveiled
Organic total net revenue growth is expected to be in the range 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 expenses are expected to be in the range of $769 million to $779 million. Depreciation and amortization expense, which is included in adjusted operating expenses above, is expected to be in the range of $48 million to $52 million, excluding the expected amortization of acquired intangible assets.
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 $60 to $66 million.
Nasdaq, Inc. (NDAQ - Free Report) reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. Revenues of $914 million increased 2% year over year and beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% remained unchanged year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion. Nasdaq forecasts non-GAAP tax rate in the range of 24-26% in 2023.
MarketAxess Holdings Inc. (MKTX - Free Report) reported first-quarter 2023 earnings per share of $1.96, which outpaced the Zacks Consensus Estimate by 3.7% and our estimate of $1.86. The bottom line advanced 13.3% year over year. Total revenues improved 9% year over year to $203.2 million in the quarter under review. The top line surpassed the consensus mark by 1.4% and our estimate of $200.2 million.
Commission revenues rose 9.6% year over year to $182 million in the first quarter. Information services revenues attained a record figure of $11 million, up 12.2% year over year. Meanwhile, post-trade services revenues of $10 million inched up 1% year over year in the quarter under review. MarketAxess’s U.S. high-grade trading volume climbed 14.8% year over year to $392.7 billion.
CME Group (CME - Free Report) reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year. CME Group’s revenues of $1.4 billion increased 4.8% year over year. The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.
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Cboe Global (CBOE) Q1 Earnings Beat, Revenues Lag Estimates
Cboe Global Markets, Inc. (CBOE - Free Report) reported first-quarter 2023 adjusted earnings of $1.90 per share, which outpaced the Zacks Consensus Estimate by 2.7%. The bottom line increased 9.8% year over year. Our estimate was $1.71 per share.
The company witnessed increased adjusted revenues and adjusted earnings, double-digit increases in net transaction and clearing fees, access and capacity fees, which were offset by higher expenses.
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 $471 million, which improved 12.7% 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 markets net revenues. Inorganic net revenues in the first quarter of 2023 were $4.4 million. The top line missed the consensus mark by 2%. Our estimate was $450.1 million.
Options revenues climbed 28% year over year to $280.7 million. The growth was driven by a double-digit increase in net transaction and clearing fees, as well as growth in access and capacity fees and market data.
Revenues of North American Equities totaled $93.1 million, flat year over year. The revenues reflected a $5.6 million first-quarter net revenue contribution from the 2022 acquisition of Cboe Canada, offset by lower transaction and clearing fees and market data revenues.
Europe and Asia Pacific revenues decreased 14% year over year to $49.3 million, reflecting slower industry volumes and continued currency headwinds. Futures net revenues remained flat year over year at $31.1 million due to a decline in net transaction and clearing fees, largely offset by an increase in access and capacity fees.
Global FX net revenues rose 8% year over year to $18.5 million, courtesy of higher net transaction fees.
Adjusted operating expenses were $186.2 million, which escalated 28% 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 $182.4 million.
Adjusted operating income grew 5% year over year to $285.2 million.
Adjusted operating margin came in at 60.5%, which contracted 460 basis points (bps) year over year. Adjusted EBITDA margin of 65.8% contracted 150 bps year over year.
Financial Update
CBOE Global exited the first quarter with cash and cash equivalents of $435.6 million, which increased 0.7% from the 2022-end level. As of Mar 31, 2022, total assets of $7.9 billion rose 12.9% from the 2022-end figure.
CBOE’s long-term debt was $1.4 billion, up 0.03% from the Dec 31, 2022 level. Total shareholders’ equity was $3.5 billion, down 2.1% from the Dec 31, 2022 figure.
Share Repurchase and Dividend Update
In the first quarter, CBOE Global paid out cash dividends worth $53.3 million or 50 cents per share and bought back shares worth $70 million. As of Mar 31, 2023, CBOE had $147.9 million left under its current share repurchase authorization.
2023 Guidance Unveiled
Organic total net revenue growth is expected to be in the range 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 expenses are expected to be in the range of $769 million to $779 million. Depreciation and amortization expense, which is included in adjusted operating expenses above, is expected to be in the range of $48 million to $52 million, excluding the expected amortization of acquired intangible assets.
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 $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, Inc. (NDAQ - Free Report) reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. Revenues of $914 million increased 2% year over year and beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% remained unchanged year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion. Nasdaq forecasts non-GAAP tax rate in the range of 24-26% in 2023.
MarketAxess Holdings Inc. (MKTX - Free Report) reported first-quarter 2023 earnings per share of $1.96, which outpaced the Zacks Consensus Estimate by 3.7% and our estimate of $1.86. The bottom line advanced 13.3% year over year. Total revenues improved 9% year over year to $203.2 million in the quarter under review. The top line surpassed the consensus mark by 1.4% and our estimate of $200.2 million.
Commission revenues rose 9.6% year over year to $182 million in the first quarter. Information services revenues attained a record figure of $11 million, up 12.2% year over year. Meanwhile, post-trade services revenues of $10 million inched up 1% year over year in the quarter under review. MarketAxess’s U.S. high-grade trading volume climbed 14.8% year over year to $392.7 billion.
CME Group (CME - Free Report) reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year. CME Group’s revenues of $1.4 billion increased 4.8% year over year. The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.