CBOE announces fourth quarter earnings

By Bonnie Du

CBOE Holdings Inc., the holding company for Chicago Board Options Exchange, the CBOE Futures Exchange and other subsidiaries, today reported an 8 percent increase in net income in the fourth quarter 2014, driven by an increase of transaction fees and regulatory fees. However, the stock closed at $62.46, down 4.12 percent with its earning missing the Wall Street expectation.

The company earned $49.1 million, or 58 cents per diluted share in the fourth quarter, compared with $145.6 million, or 52 cents per diluted share in the year-earlier quarter. But it missed the expectation of 66 cents per diluted share.

Revenues increased 17 percent to $166.5 million from $141.8 million, which primarily reflects an increase of $23.7 million in transaction fees and $1 million in regulatory fees.

“Record trading in our premium proprietary products, S&P 500 Index options and CBOE Volatility Index futures and options, helped fuel our fourth consecutive year of record revenue and earnings,” said Edward T. Tilly, CBOE Holdings chief executive officer.

According to the company, transaction fees, the largest revenue driver, increased 24 percent in the fourth quarter as a result of a 15 percent increase in trading volume and 8 percent increase in the average revenue per contract, compared with the fourth quarter of 2013.

The increase in average revenue per contract primarily resulted from a shift in the mix of products traded towards higher-margin index options and futures contracts, which accounted for 35.3 percent of trading volume in the quarter, compared with 33.8 percent in the year-earlier quarter.

“They have a good fourth quarter,” said Richard H. Repetto, analyst with Sandler O’Neill & Partners LP. But he pointed out that CBOE’s exchange volume has been diminishing recently.

CBOE's Total Daily Exchange Volume
(Chicago Board Options Exchange)


CBOE earned $189.7 million, or $2.21 per diluted share in full-year 2014, compared with $176 million, or $1.99 per diluted share in 2013. Its full-year 2014 revenues increased 8 percent to $617.2 million from $572.1 million.

Photo at top: Traders in CBOE’s SPX option pit. (Bonnie Du/Medill)