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Press Release: Cboe Global Markets Reports 2020 Fourth Quarter and Full Year Results

· 02/05/2021 07:30
-- Options net revenue of $162.5 million was up $23.1 million, or 17 percent, from the fourth quarter of 2019, primarily due to increases in net transaction and clearing fees1 and market data revenue. Market data revenue included $4.7 million contributed from acquisitions that closed in the first half of the year. -- Net transaction and clearing fees(1) increased $15.3 million, reflecting a 41 percent increase in total options average daily volume ("ADV"), offset somewhat by a 19 percent decrease in total options revenue per contract ("RPC") compared to the fourth quarter 2019. The decrease in total options RPC was due to a mix shift, with multi-listed options representing a higher percentage of total options volume. The RPC for multi-listed options increased 24 percent, primarily due to a shift in concentration by customer, coupled with strategic pricing changes. The RPC for index options increased 6 percent, primarily reflecting a shift in the product mix, as well as pricing changes implemented in the first quarter 2020. -- Cboe's Options business had total market share of 32.0 percent for the fourth quarter of 2020 compared to 37.4 percent in the fourth quarter of 2019, primarily reflecting a mix shift resulting from a lower percentage of ADV from index options. In addition, Cboe's multi-listed optionsTable 2 Total Revenues Less Cost of Revenues by Business Segment (in millions) 4Q20 4Q19 Change Options $162.5 $139.4 17 % North American Equities 73.6 75.5 (3) % Futures 21.5 30.9 (30)% European Equities 35.5 21.6 64 % Global FX 14.0 12.9 9 % Total $307.1 $280.3 10 % (1) A full reconciliation of our non-GAAP results to our GAAP results is included in the attached tables. See "Non-GAAP Information" in the accompanying financial tables.Table 1 Consolidated Fourth Quarter Results 4Q20 4Q19 ($ in millions except per share data) 4Q20 4Q19 Change Adjusted(1) Adjusted(1) Change Total Revenues Less Cost of Revenues $307.1 $280.3 10 % $ 307.1 $ 280.3 10 % Total Operating Expenses $172.3 $161.1 7 % $ 112.2 $ 95.6 17 % Operating Income $134.8 $119.2 13 % $ 194.9 $ 184.7 6 % Operating Margin % 43.9 % 42.5 % 140 pp 63.5 % 65.9 % (240) pp Net Income Allocated to Common Stockholders $87.1 $86.1 1 % $ 130.4 $ 134.9 (3) % Diluted EPS $0.81 $0.77 5 % $ 1.21 $ 1.21 (0) % EBITDA(1) $176.7 $164.6 7 % $ 205.5 $ 196.7 4 % EBITDA Margin %(1) 57.5 % 58.7 % (120) pp 66.9 % 70.2 % (330) pp -- Total revenues less cost of revenues (referred to as "net revenue") of $307.1 million increased 10 percent, compared to $280.3 million in the prior-year period, primarily reflecting increases in net transaction and clearing fees1, access and capacity fees and market data fees. In addition to acquisitions completed in the first half of the year, fourth quarter results include the acquisitions of EuroCCP, which closed on July 1, 2020, and MATCHNow, which closed on August 4, 2020. -- Total operating expenses were $172.3 million versus $161.1 million in the fourth quarter of 2019. Adjusted operating expenses(1) of $112.2 million increased 17 percent compared with $95.6 million in the fourth quarter of 2019, primarily due to acquisitions, resulting in higher compensation and benefits and technology support services. -- Operating income increased by 13 percent to $134.8 million and adjusted operating income(1) increased by 6 percent to $194.9 million. The operating margin for the fourth quarter was 43.9 percent versus 42.5 percent in the fourth quarter of 2019. The adjusted operating margin was 63.5 percent compared to 65.9 percent in the fourth quarter of 2019. -- The effective tax rate for the fourth quarter of 2020 was 29.0 percent compared with 24.4 percent in the fourth quarter of 2019 and the effective tax rate on adjusted earnings(1) was 28.6 percent compared with 24.7 percent in last year's fourth quarter. The higher effective tax rates in the fourth quarter of 2020 were primarily due to the release of income tax reserves in the fourth quarter of 2019. -- Diluted EPS for the fourth quarter of 2020 increased 5 percent to $0.81. Adjusted diluted EPS1 of $1.21 was flat compared to 2019's fourth-quarter results. -- The EBITDA margin for the fourth quarter was 57.5 percent compared to 58.7 percent in the fourth quarter of 2019. The adjusted EBITDA margin was 66.9 percent compared to 70.2 percent for the same period last year.

Cboe Global Markets Reports 2020 Fourth Quarter and Full Year Results

Fourth Quarter and Full Year Highlights*

- Diluted EPS of $0.81 for the quarter and $4.27 for the year, Up 28 percent for the year

- Adjusted diluted EPS(1) of $1.21 for the quarter and $5.27 for the year, Up 11 percent for the year

- Net revenue of $307 million for the quarter and $1.3 billion for the year, Up 10 percent for the year

- Returned $520 million to shareholders through share repurchases and dividends for the year

- For 2021, the company is expecting net revenue contribution from recent acquisitions to be in a range of 4 to 6 percentage points. The company also targets mid-term organic net revenue growth in a range of 4 to 6 percentage points(2)

- For 2021, adjusted operating expenses expected to be in the range of $531 to $539 million(2)

- Board of Directors authorizes up to an additional $200 million for share repurchase program

PR Newswire

CHICAGO, Feb. 5, 2021

CHICAGO, Feb. 5, 2021 /PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE) today reported financial results for the 2020 fourth quarter and full year.

"I'm pleased to report that Cboe posted solid fourth quarter and strong full year 2020 results, including 10 percent net revenue growth and 11 percent adjusted EPS growth for the year, despite an unprecedented macro environment. We continued to execute on our ongoing strategy to leverage product innovation and superior technology, expand our customer base and diversify our business mix with recurring revenue," said Edward T. Tilly, Cboe Global Markets Chairman, President and Chief Executive Officer. "We plan to continue to advance our strategy while leveraging our recent acquisitions to accelerate further growth. We are targeting mid-term organic net revenue growth of 4 to 6 percentage points and believe we can drive additional organic growth longer-term through our ongoing investment in attractive market opportunities. I am excited to build on the progress made by our team in 2020 to capitalize on our strategic opportunities in 2021 and beyond and deliver increased value to our customers and shareholders."

"We delivered strong financial results in 2020, underscoring our ability to deliver improved earnings and cash flow generation in various market conditions. Our 2020 results enabled us to return $520 million of capital to shareholders, a 69 percent increase compared to 2019 and the highest amount ever, demonstrating one of our long-standing objectives of returning value to shareholders through dividends and share repurchases. To this end, we are pleased that our Board of Directors today increased our share repurchase authorization by $200 million," said Brian N. Schell, Cboe Global Markets Executive Vice President, Chief Financial Officer and Treasurer. "We plan to continue investing in future growth, while adhering to the prudent allocation of capital and disciplined expense management that have long been hallmarks of Cboe."

*All comparisons are the fourth quarter or the year ended December 31, 2020, compared to the same period in 2019.

(1) A full reconciliation of our non-GAAP results to our GAAP results is included in the attached tables. See "Non-GAAP Information" in the accompanying financial tables.

(2) Specific quantifications of the amounts that would be required to reconcile the company's organic growth guidance, adjusted operating expenses guidance and the effective tax rate on adjusted earnings guidance are not available. The company believes that there is uncertainty and unpredictability with respect to certain of its GAAP measures, primarily related to acquisition-related expenses that would be required to reconcile to GAAP operating expenses and GAAP effective tax rate, which preclude the company from providing accurate guidance on certain forward-looking GAAP to non-GAAP reconciliations. The company believes that providing estimates of the amounts that would be required to reconcile the range of the company's adjusted operating expenses and the effective tax rate on adjusted earnings would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.

Consolidated Fourth Quarter Results -Table 1

Table 1 below presents summary selected unaudited condensed consolidated financial information for the company as reported and on an adjusted basis for the three months ended December 31, 2020 and 2019.

Business Segment Information:

Discussion of Results by Business Segment:

Options:

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February 05, 2021 07:30 ET (12:30 GMT)