Cboe Global Markets Posts Record Revenues And Earnings In 2023

Rhea-AI Summary

Cboe Global Markets Inc. reports impressive financial growth in Q4 and full year 2023, with record revenue and earnings. Diluted EPS saw a significant increase, along with positive leadership insights and segment performance. The company outlines a strategic direction for 2024, focusing on growth and operational efficiency.

Positive

• Record revenue and earnings reported for both Q4 and full year 2023.
• Diluted EPS increased by 226% y-o-y for the full year.
• Adjusted diluted EPS rose by 13% for the full year.
• Net revenue reached a record $1.9 billion for the full year, up by 10%.
• Positive leadership reflections on revenue growth and strategic efforts.
• Segment performance highlights growth in options, futures, and FX trading revenue.
• Strategic direction for 2024 includes organic revenue growth and operational efficiency.
• Projected capital expenditures for growth and development in 2024.

Negative

• None.

Insights

Financial Analyst

The report by Cboe Global Markets Inc. indicates a robust financial performance, with a particularly noteworthy 226% year-on-year increase in diluted EPS for the full year of 2023. Such a surge in profitability often reflects effective cost management and potentially expanding margins, which could be indicative of a strong competitive position within the financial exchange industry. The reported 10% growth in annual net revenue, while substantial, aligns with industry growth trends, suggesting that Cboe is maintaining pace with market expansion.

Investors may find the 33% increase in quarterly diluted EPS reassuring, as it implies that Cboe's profitability is not solely reliant on cyclical or one-off events but is sustained across financial periods. The record high market share in Global FX and the increase in options trading revenue by 15% highlight Cboe's strong positioning in these segments, which could be attributed to the company's strategic focus on derivatives and data and access solutions. However, the slight decrease in market share for Options exchanges may require attention to ensure long-term dominance in this core area.

Market Research Analyst

Analyzing Cboe's segment performance reveals nuanced dynamics within their business model. The 15% increase in revenue from options trading, driven by a 24% rise in index options trading, underscores a growing investor interest in derivative instruments, possibly linked to market volatility or the search for alternative investment strategies. Conversely, the 10% decrease in North American Equities revenue, attributed to lower transaction fees and market data revenue, could signal a competitive challenge or a shift in trading patterns. It is essential to monitor how these trends evolve, as they may impact Cboe's market positioning and revenue streams.

The company's strategic direction for 2024, with an emphasis on organic net revenue growth and operational efficiency, suggests a proactive approach to scaling operations while managing costs. The projected increase in revenue from data and access solutions aligns with the industry's broader shift towards data monetization, which is becoming an increasingly critical component of exchange revenue models.

Economist

From an economic standpoint, Cboe's financial results and forward-looking statements provide insight into the broader financial markets' health. The company's performance, particularly in derivatives and foreign exchange, may reflect underlying economic trends such as increased market volatility, international trade flows and the global diversification of assets. The positive outlook for 2024, with anticipated organic revenue growth, suggests confidence in the continued demand for Cboe's offerings, which may be seen as a positive indicator for economic activity and liquidity in the financial markets.

However, it is important to consider macroeconomic factors such as interest rate changes, regulatory developments and geopolitical events that could influence trading volumes and revenue. The effective tax rate estimation between 28.5% and 30.5% will also play a role in net earnings, as changes in tax policy can have a significant impact on financial institutions like Cboe.

CHICAGO, IL / ACCESSWIRE / February 19, 2024 / Cboe Global Markets Inc. (NYSE:CBOE) reported its financial results for the fourth quarter and full year of 2023, showcasing significant growth in several key financial metrics. Some of the standout figures from the report include a substantial increase in diluted earnings per share (EPS), adjusted diluted EPS and net revenue for both the quarter and the full year. The biggest takeaway is the company reported record full-year revenue and earnings, while providing promising targets for 2024.

Financial Highlights

Quarterly Performance: Diluted EPS for the fourth quarter rose by 33% year-on-year (y-o-y) to $1.98, with adjusted diluted EPS also increasing by 14% to $2.06. Net revenue for the quarter reached a record $499 million, marking a 9% annual increase.

Annual Performance: For the full year, diluted EPS saw an impressive 226% y-o-y increase to $7.13, with adjusted diluted EPS up by 13% to $7.80. The company's annual net revenue also hit a record at $1.9 billion, up 10% from the previous year.

Leadership Insights

Cboe's leaders, CEO Fredric Tomczyk and CFO Jill Griebenow, reflected positively on the company's 2023's performance. Tomczyk highlighted the company's revenue growth, particularly from its derivatives and data and access solutions, largely attributing success to market trends and strategic efforts. He also outlined ambitions to leverage Cboe's technological and global strengths for further growth in 2024.

"This year we plan to unlock additional value from our global derivatives and securities network by leveraging our core strengths - our global footprint, superior technology and product innovation - to help drive continued strong revenue growth and financial results." Tomczyk said.

Overall, both leaders expressed optimism for sustaining shareholder returns into the next year.

Segment Performance

Here's an overview of Cboe's financial performance y-o-y across its various business segments:

Options: The revenue from options trading increased by 15% to $314.5 million, mainly due to a 24% rise in the trading of index options. Meanwhile, the market share for Cboe's Options exchanges slightly decreased from 34.1% to 33.5%.

North American Equities: Revenue in this segment dropped by 10% to $86.3 million. This decrease was largely because of lower transaction fees and market data revenue. The market share in U.S. Equities remained stable, while Canadian Equities saw an increase in market share due to more clients.

Europe and Asia Pacific: This area saw a 9% increase in revenue to $48 million, with gains across non-transaction revenue like market data fees. Market share in European Equities slightly decreased, but shares in Cboe Australia and Cboe Japan grew.

Futures: Futures trading revenue went up by $5.6 million to $32.4 million, with a double-digit increase in transaction fees.

Global FX: Foreign exchange trading revenue increased by 12% to $18.9 million, with a noticeable rise in trading volume. Cboe FX's market share also hit a record high due to new clients and broader use of trading protocols.

Strategic Direction And 2024 Outlook

For the fiscal year 2024, Cboe emphasized a focus on growth and operational efficiency. The company projects 5% to 7% in organic total net revenue growth, aligning with its medium-term goals. Similarly, revenue from data and access solutions is anticipated to rise by 7% to 10%, also aligning with medium-term expectations. Operational spending is forecasted to be in the range of $798 million to $808 million, which notably excludes some specific expenses related to acquired assets.

Additionally, Cboe expects depreciation and amortization expenses to fall between $43 million to $47 million, excluding certain costs. The company also foresees a positive impact from minority investments, projecting an income of $37 million to $43 million. Regarding taxes, the effective tax rate on adjusted earnings is estimated to be between 28.5% and 30.5%. Lastly, Cboe plans to allocate $51 million to $57 million toward capital expenditures, investing in the company's growth and development.

Cboe's 2023 Journey And Beyond

Overall, Cboe Global Markets' financial achievements in 2023 underscore a year of significant growth, with record highs in earnings per share and net revenue, demonstrating the company's robust market position and operational success. Leadership's optimistic outlook and strategic plans for leveraging strengths in technology and innovation signal a continued trajectory of growth for 2024. Cboe's comprehensive performance across all business segments highlights its adaptability and resilience amidst market fluctuations, setting a solid foundation for future success.

Featured photo by 金 运 on Unsplash.

Contact:

Michele Ormont
mormont@cboe.com

SOURCE: Cboe Global Markets, Inc.

View the original press release on accesswire.com

FAQ

What were Cboe Global Markets Inc.'s diluted EPS figures for the fourth quarter of 2023?

Diluted EPS for Q4 2023 rose by 33% y-o-y to $1.98.

What is the projected organic total net revenue growth for Cboe in fiscal year 2024?

Cboe projects 5% to 7% organic total net revenue growth for FY 2024.

How did revenue from options trading perform y-o-y for Cboe in 2023?

Revenue from options trading increased by 15% y-o-y to $314.5 million.

What is the effective tax rate on adjusted earnings estimated for Cboe in 2024?

The effective tax rate on adjusted earnings is estimated to be between 28.5% and 30.5% for 2024.

What is the range of operational spending forecasted by Cboe for 2024?

Operational spending is forecasted to be in the range of $798 million to $808 million for 2024.