Cboe Global Markets, Inc. Q3 2024 Financial Results

Cboe Global Markets, Inc. (NYSE:CBOE), a prominent provider of global market infrastructure and tradable products, reported a record net revenue of $532 million for Q3 2024, representing an 11% year-over-year increase. The adjusted diluted earnings per share also rose by 8% to $2.22.

The financial success is attributed to a 13% organic net revenue growth in the Derivatives market and a 12% increase in Cash and Spot Markets revenues. The company has updated its full-year organic net revenue growth guidance to 7%-9% and adjusted its expense guidance to $798 million-$808 million.

Key Takeaways

• Record net revenue of $532 million, up 11% YoY.
• Adjusted diluted earnings per share increased by 8% to $2.22.
• Derivatives market organic net revenue grew by 13%.
• Cash and Spot Markets revenues rose by 12%.
• Full-year organic net revenue growth guidance raised to 7%-9%.
• Adjusted expense guidance set at $798 million-$808 million.

Company Outlook

• Cboe anticipates continued strength in Q4, especially in Data and Access Solutions.
• The company expects a favorable outlook for its volatility toolkit in US and international markets.
• Adjusted guidance indicates improved revenue expectations and increased marketing investments.

Highlights

Bearish:

• Total adjusted operating expenses for Q3 2024 rose by 13% YoY to $204 million, primarily due to higher compensation and travel expenses.
• Increased competition in multi-listed options resulted in market share loss.

Bullish:

• Strong performance in proprietary index options and futures, with a 33% ADV increase in VIX options.
• 7% rise in average daily volume for SPX contracts.
• International segments reported a 22% revenue increase, driven by growth in Europe and Asia Pacific.
• Strategic partnership with Robinhood (NASDAQ:HOOD) aims to enhance retail investor access to index options.

Misses

• Despite growth, market share loss in multi-listed options due to heightened competition.

Q&A Highlights

• No current need for additional SPX options expirations; focus is on flexibility and risk management.
• Projected expense growth for 2024 is 6% to 8%, aiming for margin stabilization.
• Investments will focus on derivatives, data access, and technology, prioritizing international expansion and product innovation.
• Completion of Canadian migration to Cboe's technology platform expected by March 2024.

In conclusion, Cboe Global Markets achieved significant growth in Q3 with record revenues and increased earnings per share. The company is prioritizing organic growth, strategic partnerships, and international expansion to sustain its market momentum. Management expresses optimism, driven by investments in technology and product innovation.

InvestingPro Insights

InvestingPro's data indicates Cboe's revenue growth of 3.84% over the last twelve months and 16.16% quarterly growth. This aligns with the revised full-year organic net revenue growth guidance of 7%-9%. Cboe has raised its dividend for 10 consecutive years, highlighting its dedication to shareholder returns. Profitability remains strong, with a 51.75% gross profit margin.

However, Cboe trades at a high P/E ratio of 26.7, raising potential concerns amid market share challenges. InvestingPro offers additional insights into Cboe's financial health and market position.