By John McCrank
NEW YORK – Exchange operator Cboe Global Markets said on Friday its fourth-quarter profit surged 90%, topping Wall Street estimates on higher transaction volumes, notably in options, and lower-than-expected expenses.
Cboe, which provides trading platforms and products in equities, derivatives and foreign exchange across North America, Europe and Asia Pacific, said net income applicable to common shareholders rose to $165.3 million, or $1.54 per diluted share in the quarter ended Dec. 31. That compares to $87.1 million, or 81 cents per diluted share, a year earlier.
“Our results were driven by higher volumes across our businesses, coupled with increased demand from our suite of data and access solutions,” Cboe Chief Executive Officer Ed Tilly said on a conference call after the earnings were released.
Options revenues grew 25%, driven largely by higher trading volumes in the Chicago-based company’s proprietary products, which include options linked to the VIX volatility index, and the S&P 500. VIX futures average daily volumes surged 50%, it said.
In January, with market volatility rising and expectations for interest rate hikes by the Federal Reserve, Cboe’s VIX futures volumes jumped 31% from a year earlier, VIX options rose 24% and SPX options were up 17%, the company said.
Net revenue rose 27% to 390.5 million.
Excluding one-time items, like M&A costs, Cboe earned $1.70 per diluted share, topping the mean estimate of analysts by 17 cents, according to IBES data from Refinitiv.
The beat was driven by higher-than-expected transaction fees and lower-than-expected expenses, said Jefferies analyst Daniel Fannon.
However, Cboe’s 2022 expense forecast of $617 million to $625 million was above consensus estimates, Fannon said in a client note.
Cboe’s shares were down 0.2% at $116.45 late Friday morning.
(Reporting by John McCrank; Editing by Richard Chang)