May 9, 2017 / 12:18 PM / 8 months ago

Exchange operator CBOE beats estimates on higher transaction fees

(Reuters) - CBOE Holdings Inc (CBOE.O), the operator of the largest U.S. options exchange, reported a quarterly profit that beat analysts’ estimates, as transaction fees more than doubled.

Transaction fees rose to $256.4 million from $126.2 million, as trading in futures and options rose in the first quarter.

Shares of CBOE, which agreed to buy Bats Global Markets Inc BATS.Z for $3.2 billion last year, were up as much as 3.1 percent in morning trade, touching a record high of $84.81.

“Today’s results reinforce our positive thesis of the combined company’s ability to deliver on synergy realization and we remain encouraged by the growth prospects of CBOE’s proprietary product suite,” wrote RBC analyst Peter Lenardos in a note.

The operating expenses of the Chicago-based company also more than doubled, primarily due to $65.2 million in acquisition-related costs, leading to a 69.3 percent slump in net income.

CBOE’s net income allocated to common shareholders fell to $15.1 million, or 16 cents per share, in the first quarter ended March 31, from $49.2 million, or 60 cents per share, a year earlier.

Excluding items, the company earned 78 cents per share, beating the average analysts’ estimates of 69 cents, according to Thomson Reuters I/B/E/S.

CBOE expects operating expenses to be in the range of $415 million to $423 million in the fiscal year 2017, compared with pro forma adjusted operating expenses of $417 million in 2016.

    “Our targets has always been 3 percent to 5 percent on expense growth year-over-year. And so we’re in that range,” said Chief Executive Edward Tilly on the earnings call.

    CBOE’s net revenue rose 35.2 percent to $193.4 million but missed analysts’ estimates of $200.9 million.

    Total Options average daily volume rose 8.7 percent to 6.85 million contracts.

    Up to Monday’s close, CBOE’s stock had risen 11.33 percent this year.

    Reporting by Diptendu Lahiri in Bengaluru; Editing by Arun Koyyur

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