Financial exchanges operator Bats Global Markets Inc (BATS:BATS) has reported net income of $18 million and adjusted earnings of $34 million for the second quarter ended June 30, 2016.
While net income decreased from $20 million from a year ago due primarily to a pretax $18 million debt refinancing charge in the latest period, adjusted earnings rose 38% from a year ago, partly driven by continued growth in non-transaction revenue. Diluted earnings per share decreased to $0.19 during the second quarter of 2016 from $0.21 for the same period in 2015, but adjusted earnings, which excludes tax-adjusted amortization and other costs, rose to $0.35 per diluted share from $0.26 per diluted share from a year ago.
CEO Chris Concannon commented:
The second quarter marked another strong quarter for Bats as we continued to deliver strong organic net revenue growth. This revenue growth was driven by a 14% increase in non-transaction revenue, record market share in our U.S. Options business, and increasing net capture rates. In addition, we continued to see success in our U.S. ETF Listing business as we welcomed 23 new listings and three transfers over the quarter to the Bats ETF Marketplace.”
Corporate Quarterly Highlights
• Announced the planned launch of outright forwards for the FX market, which will further diversify Bats Hotspot’s product offering, as well as BAM price improvement auctions for the Bats Options business. Bats Hotspot will offer global trading of forwards contracts and plans to launch the new offering by the end of 2016. BAM is expected to launch in November on EDGX Options.
• Reported record U.S. Options market share (11.6%) and also remained strong in U.S. Equities (20.4%), European Equities (22.9%), and Global FX (11.6%). U.S. Options market share rose to 11.6% from 9.7% one year ago, while U.S. Equities was 20.4% vs 20.8% and European Equities market share was 22.9% vs 24.6%. Global FX market share reached 11.6% vs 11.0%. Bats also remained the largest stock exchange operator and trade reporting facility in Europe.
• Continued growth in the exchange-traded fund (ETF) trading and listings business as Bats welcomed four new issuers to the Bats ETF Marketplace during the second quarter. Bats remained the #1 market for the trading of ETFs with combined market share of 24.7% during the quarter, and has held the top position since February 2014. Bats added 26 ETF listings, including three transfers, during the current period versus four ETF listings during the second quarter of 2015, increasing its total number of listings on its U.S. market to 95. In the twelve months ended June 30, 2016, Bats added 60 ETF listings.
• Launched new real-time UK benchmark indices in Europe. In June, Bats launched 18 different UK indices covering large to small cap securities and twelve industry sectors. The indices were developed in consultation with investors and index users to offer a robust and trustworthy alternative to incumbent providers. The Bats Indices are published in real-time, have simplified index licensing arrangements, and are highly correlated with comparable benchmarks that investors use every day, thus are designed to accurately reflect market moves.
• Completed debt refinancing transaction on June 30, 2016. Bats refinanced $650 million of term loans and a $100 million revolving credit facility. The refinancing is expected to give Bats the ability to take advantage of its stronger credit profile and favorable market conditions to lower interest expense by nearly $7 million in 2016 and $11 million in 2017. The refinancing resulted in a pretax charge of $18 million in the second quarter incurred as a result of the early extinguishment of previously outstanding debt.
The table below summarizes consolidated financial results for the second quarter of 2016 and 2015:
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