Exchange operator Cboe tops profit view, grows footprint

11:10 am Friday, July 30th, 2021

By John McCrank and Niket Nishant

(Reuters) -Cboe Global Markets Inc on Friday reported second-quarter earnings above Wall Street expectations, helped by both transactional and non-transactional revenues from the exchanges it operates around the globe, ahead of more overseas expansion.

Excluding one-time items, such as acquisition costs, Cboe earned $1.38 per share, 2 cents above the mean analyst estimate, according to IBES data from Refinitiv.

A soft spot during the quarter was in U.S. equities, where more volume moved to off-exchange trading venues and overall industry volumes were down 15% from a year earlier, as the spike in trading after the start of coronavirus pandemic began to normalize. Cboe runs four U.S. stock exchanges.

Cboe’s revenues from options trading, futures trading, global foreign exchange trading, and European equities – which benefited from the July 2020 acquisition of pan-European clearinghouse EuroCCP – all saw gains.

The Chicago-based company said it won regulatory approvals this month for its new European derivatives market, which is on track to go live on Sept. 6. It said it was moving forward with plans to launch a new equities block-trading venue in Canada in February 2022.

“Our overall business in Europe was exceptionally strong in the second quarter, and we expect the launch of Cboe Europe derivatives to build on this momentum,” Cboe Chief Executive Officer Ed Tilly said on a call with analysts.

Net income dipped 2% from a year earlier, to $105.2 million, or 98 cents per share, from $113.3 million, or $1.03 per share, a year earlier, largely due to the softness in U.S. equities.

Cboe recorded a 19% jump in operating expenses, mainly related to compensation, benefits and other professional fees.

Total revenue, excluding costs, rose 18% to $350.6 million.

Cboe shares were up 2.67% at $118.62 in early trading.

(Reporting by John McCrank in New York and Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila, Aditya Soni and Carmel Crimmins)