CBOE Holdings Reports Solid Second-Quarter Results

Q2 2016 metrics gained momentum at CBOE Holdings, following strong trading volumes in the quarter.

The holding company for the Chicago Board Options Exchange, CBOE Holdings, Inc. (NASDAQ: CBOE), today released a set of robust financial metrics for second quarter (Q2) 2016, which showed a 10% YoY jump in revenues, according to a company press release.

The Chicago-based exchange benefited from the heightened volatility in the period leading up to and after the Brexit vote. Total trading volume in the second quarter was 291.2 million contracts, or 4.55 million contracts per day, compared with volume of 275.9 million contracts, or 4.38 million contracts per day, in last year’s second quarter.

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CBOE and other exchanges operators make the most of their revenue through transaction fees, which rise and fall in tandem with trading volumes. As such, the higher Q2 volatility and overall rise in trading volume helped push transaction fees to increase 16 percent at CBOE versus the second quarter of 2015.

In the reported quarter, total operating revenue increased 10 percent year over year to $163.3 million, compared with $148.7 million in Q2 2015. The uptick was primarily driven by increases of $16.3 million in transaction fees and $1.6 million in exchange services and other fees. However, this was partially offset by a $4.2 million decrease in other revenue.

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Growth in profits despite higher expanses

In addition, CBOE reported total operating expenses at $85.3 million for Q2 2016, up $10.0 million or 13 percent from the same period in 2015. The higher expenses were said to reflect increases in compensation and benefits, royalty fees, professional fees and outside services.

According to the update, total adjusted operating expenses, which exclude accelerated stock-based compensation, acquisition-related expenses and other unusual items were $83.8 million, up $8.5 million or 11 percent, compared with $75.3 million for the second quarter of 2015.

All told, the net income allocated to common stockholders in Q2 2016 grew to $50.7 million, or $0.62 per diluted share, up 14 percent and 15 percent respectively from $44.6 million and $0.54 in the second quarter of 2015. Adjusted net income allocated to common stockholders yielded $48.7 million, or $0.60 per share, up 9 percent and 11 percent respectively compared with the Q2 2015’s figures.

Commenting on the results, Edward T. Tilly, CEO at CBOE Holdings, said: “Our strong financial results were largely fueled by robust trading in options on the S&P 500 Index (SPX) and futures and options on the CBOE Volatility Index (VIX).  The VIX Index and SPX are widely viewed as proxies for worldwide volatility and the global stock market, respectively.”

“Investors worldwide turned to CBOE’s marketplace in the face of increased market uncertainty leading up to and in the aftermath of the Brexit referendum.  We look forward to further advancing our strategic growth initiatives as our team continues to execute on our four-point strategy,” he concluded.

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