Cboe Global Markets, Inc. (Cboe: Cboe | NASDAQ: Cboe) has released its financial metrics for the third quarter ending September 30, 2017, which are now reported on a consolidated basis to include the business of its acquired Bats Global Markets Inc. The latest quarterly reports are issued under the new corporate identities following the completion of their $3.4 billion merger earlier this year.
The exchange operator noted that its consolidated results for the Q3 2017 include legacy Bats’ metrics for the three months through September 30, 2017. In addition, it now reports five business segments (Options, Futures, U.S. Equities, European Equities and Global FX) instead of the one reporting segment it used to prior to the acquisition of Bats.
During Q3 2017, Cboe Global generated a net revenue of $269.7 million, up 98 percent year-on-year from $136.2 million back in Q3 2016. This corresponded to a $112.6 million net revenue contribution from Bats for the third quarter plus increases in transaction fees. Excluding Bats’ contribution, Cboe’s organic net revenue was $157.1 million, up $20.9 million or 15 percent year-over-year, primarily due to stronger trading volumes.
In terms of its operating costs, Cboe reported total operating expenses at $150.4 million in the three-month period through September 2017, higher by 114 percent year-on-year from $70.4 million in the same quarter a year earlier. The exchange attributed the higher costs primarily to Bats acquisition related expenses, as well as other operational outgoings.
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As a result, the higher revenues lifted Cboe’s net income to $59.7 million in Q3 2017, up by a factor of 48 percent when compared to $40.3 million in Q3 2016. This improvement extended to Cboe’s diluted earnings per share (EPS), which came in at $0.53 during Q3 2017, up 6 percent YoY from $0.50 in the last year’s third quarter. Adjusted combined diluted EPS was $0.89, up 24 percent compared to $0.72 for 2016’s third quarter.
Foreign Exchange Business
Finally, Cboe disclosed that its Global FX business generated net revenue of $11.3 million, up 9 percent YoY from $10.4 million in Q3 2016, which came primarily due to higher transaction fees. In addition, Cboe’s institutional spot FX platform Cboe FX has retained its market share in Q3 2017, which held steady at 12.9 percent and $29 billion in average daily trading volumes.
Last month, Cboe’s FX venue saw its average daily trading volumes amounting to $32.03 billion in October 2017, up 26.7 percent year-over-year from $25.3 billion in October 2016. However, the figure was lower by 3.3 percent on a month-over-month basis when weighed against $33.1 billion in September 2017.
Commenting on the results, Edward Tilly, Cboe Global Markets’ Chairman and CEO, said: “I am pleased to report strong financial results for Cboe Global Markets led by record quarterly average daily trading volume in VIX options and futures, with increases of 56 percent and 36 percent, respectively, compared to the third quarter of 2016, despite record lows in realized volatility. I am also very excited to move forward under our new name, Cboe Global Markets. This change signals how we have greatly expanded beyond our options heritage to a business with multiple asset classes and a much larger global footprint to serve customers and deliver enhanced value to shareholders.”
Alan J. Dean, Cboe’s VP and CFO, added: “Our third quarter results reflect strong organic growth and margin expansion as we benefit from a broader global business model. Our strong cash flow generation allowed us to pay down $100 million of our term loan and we continue to make solid progress on delivering our acquisition-related synergies.”