Cboe Global Markets Posts Record Revenues And Earnings In 2023

Cboe Global Markets Inc. 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.

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