November 2, 2018 / 11:45 AM / 17 days ago

Cboe's quarterly revenue misses expectations

(Reuters) - Cboe Global Markets Inc’s (CBOE.Z) quarterly revenue fell short of market expectations on Friday, due to a fall in trading volumes of futures and options.

Chicago Board Options Exchange (CBOE) Global Markets sign hangs at its headquarters building in Chicago, Illinois, U.S., September 19, 2018. REUTERS/Michael Hirtzer

Exchange operators, which initially reaped the benefits of increased volatility from the U.S.-China tariff war, are now facing the heat as prolonged periods of volatility drive skittish investors away from the market.

Futures trading volumes fell 28 percent, while index options volumes fell 14 percent. This led to lower transaction fees, which fell 3 percent to $411.8 million.

Market data fee revenue, an area of focus for the company, also rose marginally by about 2 percent in the quarter.

“We continue to expect downward pressure on market data revenue, absent other recoveries due to industry consolidation and historical trends,” Chief Financial Officer Brian Schell said on a post-earnings call with analysts.

Cboe’s peers have also taken a hit with Intercontinental Exchange Inc (ICE.N) reporting sluggish growth in its transaction and clearing business and CME Group (CME.O) reporting a fall in average daily volumes which pulled down its transaction fee revenue.

Cboe’s quarterly net revenue rose just 0.3 percent to $270.5 million missing analysts’ estimate of $271.47 million.

The company, however, managed to beat profit estimates after its income tax provision fell by a third and it kept a tight lid on expenses.

That helped net income allocated to common stockholders rise 42 percent to $85 million, or 76 cents per share, in the third quarter ended Sept. 30.

On an adjusted basis, Cboe earned $1.06 per share, beating market expectations of $1.02 per share, according to IBES data from Refinitiv.

Reporting by Mary Ann Alapatt in Bengaluru; Editing by Shailesh Kuber

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