CME Group reports strong third-quarter 2016 financial results, revenue of $842 million

CME Group volumes

Shortly after reporting a 57% rise in FX Futures ADV MoM in September, international derivatives marketplace CME Group Inc. (NASDAQ: CME) has reported revenue of $842 million and operating income of $525 million for the third quarter of 2016. Net income was $473 million and diluted earnings per share were $1.39. On an adjusted basis, net income was $357 million and diluted earnings per share were $1.05. Financial results presented on an adjusted basis for the third quarter of 2016 and 2015 exclude certain items, which are detailed in the reconciliation of non-GAAP results.

Terry Duffy, CME Group

Terry Duffy, CME Group

Our solid third-quarter results included 22 percent year-over-year growth in metals average daily volume and 17 percent growth in energy,” said CME Group Executive Chairman and President Terry Duffy. “We are pleased with the overall results this quarter considering there was a significant reduction in market volatility, primarily in financial products, from the same period last year. That was our best quarter during 2015, and represented the second-highest quarterly revenue in our history at that time. From a year-to-date perspective, we have driven record volume levels and our adjusted expenses have remained essentially flat. As a result, we have been able to grow adjusted earnings per share by double digits, while also returning $1.6 billion of dividends to our shareholders.

CME Group Chief Executive Officer Phupinder Gill added:

We continue to focus on globalizing our business, growing our options franchise and providing innovative product extensions to solve challenges our customers face. We made progress during the quarter, as evidenced by the continued expansion of volume from outside the United States – most significantly in Asia in both energy and metals. The proportion of average daily options volume traded electronically hit an all-time high in the third quarter, which has already been surpassed so far in the fourth quarter. During the third quarter, average daily volume of our highly successful Ultra 10-year Treasury futures contract expanded by 17 percent compared with the second quarter. In addition, our new Wednesday Weekly Equity Options, launched in September, have averaged more than 25,000 contracts per day.

Third-quarter 2016 average daily volume was 14.3 million contracts, flat compared with an exceptionally strong third-quarter 2015. Clearing and transaction fee revenue was $704 million, down 2 percent compared with third-quarter 2015. Third-quarter 2016 total average rate per contract was 75.0 cents, down from 78.2 cents in second-quarter 2016, driven by a mix shift in venue as well as member/non-member proportion primarily within equities and energy. Market data revenue was $101 million, up 2 percent compared with the third quarter last year.

As of September 30, 2016, the company had $1.5 billion of cash and marketable securities and $2.2 billion of long-term debt. The company paid the regular third-quarter dividend of approximately $203 million at the end of September, bringing the amount paid in dividends to shareholders to date in 2016 to $1.6 billion. The company has returned more than $6 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

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