CME Group (CME) Q4 Earnings Beat, Revenues Miss Estimates

CME Group Inc. CME reported fourth-quarter 2021 adjusted earnings per share of $1.66, which beat the Zacks Consensus Estimate of $1.64. The bottom line increased 19.4% year over year due to higher clearing and transaction fees and market data and information services.

Average daily volume increased in three out of the six products lines.

CME Group Inc. Price, Consensus and EPS Surprise

CME Group Inc. price-consensus-eps-surprise-chart | CME Group Inc. Quote

Performance in Detail

CME Group’s revenues of $1.1 billion increased 4.4% year over year. The year-over-year increase was primarily due to higher clearing and transaction fees (up 12.6% year over year) and market data and information services (up 1.6% year over year). The top line however missed the Zacks Consensus Estimate by a 2.3%.

Total expenses decreased 11.6% year over year to $515.6 million during the reported quarter, attributable to lower compensation and benefits, technology, professional fees and outside services, depreciation and amortization and amortization of purchased intangibles

Operating income increased 22.7% from the prior-year quarter to $631.7 million.

 Average daily volume was 20.5 million contracts, up 26% year over year.

Full-Year Highlights

Adjusted earnings of $6.67 per share declined 0.7% year over year but were in line with the consensus estimate.

Operating revenues of $4.7 billion for 2021 decreased about 4% year over year but came in line with the consensus estimate.

CME achieved record trading volume in 2021, driven by client demand for tools to hedge against continued economic uncertainty across markets. CME Group delivered strong performance across core benchmarks, new products and international business in 2021.

Non-U.S. ADV reached a record 5.5 million contracts, up 4% year over year.

Financial Update

As of Dec 31, 2021, CME Group had $2.9 billion of cash and marketable securities, up 70.1% from 2020 end. As of Dec 31, 2021, long-term debt of $2.9 billion decreased 21.7% from 2019 end.

As of Dec 31, 2021, the company had total equity worth $27.4 billion, up 4.1% from 2020 end.

Capital Deployment

CME Group has returned about $17.5 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

Zacks Rank

CME Group currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities Exchange Industry Players

Fourth-quarter earnings of Nasdaq NDAQ and Cboe Global Markets CBOE beat the Zacks Consensus Estimate while that of MarketAxess Holdings MKTX missed expectations.

Nasdaq’s fourth-quarter 2021 adjusted earnings per share of $1.93 beat the Zacks Consensus Estimate of $1.78 by nearly 8.4%. The bottom line improved 21% year over year. Revenues of $885 million increased 12% year over year. The Nasdaq Stock Market welcomed 1,000 new company listings in 2021, including 752 IPOs representing $181 billion in capital raised.    

Nasdaq expects its 2022 non-GAAP operating expense in the range of $1.68 billion to $1.76 billion.

Cboe Global reported fourth-quarter 2021 adjusted earnings of $1.70 per share, which outpaced the Zacks Consensus Estimate by 11.1% and soared 41% year over year. Total adjusted revenues of CBOE Global amounted to $390.5 million for the fourth quarter, which improved 27% year over year on the back of growth in transaction and clearing fees, access and capacity fees, market data fees, and other revenues. The top line beat the consensus mark by 0.9%. Adjusted operating income grew 30% year over year to $253 million. Adjusted operating margin for the fourth quarter came in at 64.8%, which expanded 130 basis points (bps) year over year. Adjusted EBITDA margin of 67.5% expanded 60 bps year over year.

Cboe Global estimates total organic net revenue growth within 5-7 percentage points this year. Adjusted operating expenses are projected between $617 million and $625 million, indicating an increase from the 2021 base of $531 million.

MarketAxess’ fourth-quarter 2021 earnings per share of $1.37 missed the Zacks Consensus Estimate of $1.43. Also, the bottom line declined from $1.91 per share a year ago. Total revenues decreased 3.6% to $165.1 million but marginally beat the Zacks Consensus Estimate of $164 million. Emerging markets volume increased 15% year over year to $160.6 billion. For the fourth quarter, the company announced active total client firms of 1,877, while international client firms were recorded at 956. Total credit category’s trading volumes decreased to $604.4 billion from $639.6 billion in the prior-year period.

MarketAxess projects expenses in the range of $385-$415 million, whose mid-point indicates an increase from the 2021 level of $361.7 million.  Capital expenditure for 2022 is expected within $58-$62 million.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.