- Double-digit growth in revenue and adjusted earnings per
share
CHICAGO, July 26,
2023 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME)
today reported financial results for the second quarter of
2023.
The company reported revenue of $1.4
billion and operating income of $839
million for the second quarter of 2023. Net income was
$778 million and diluted earnings per
common share were $2.14. On an
adjusted basis, net income was $836
million and diluted earnings per common share were
$2.30. Financial results presented on
an adjusted basis for the second quarter of 2023 and 2022 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
"Given ongoing uncertainty in both macroeconomic and
geopolitical environments, market participants continued turning to
CME Group risk management products and services in Q2, with
particularly noteworthy volume increases across our interest rate,
commodity and options contracts," said CME Group Chairman and Chief
Executive Officer Terry Duffy. "As a
result, we generated a 10% increase in revenue and a 17% rise in
adjusted earnings per share, marking our eighth consecutive quarter
of double-digit earnings growth. Looking ahead, we will remain
focused on delivering value to our clients by helping them navigate
through what has become an increasingly unpredictable world."
Second-quarter 2023 average daily volume (ADV) was 22.9 million
contracts. Non-U.S. ADV reached 6.3 million contracts, which
included double-digit year-over-year growth in Agricultural, Metals
and Energy products.
1. A reconciliation
of the non-GAAP financial results mentioned to the respective GAAP
figures can be found within the Reconciliation of GAAP to non-GAAP
Measures chart at the end of the financial statements and earnings
presentation materials.
|
Clearing and transaction fees revenue for second-quarter 2023
totaled $1.1 billion. The total
average rate per contract was $0.724.
Market data revenue totaled $163
million for second-quarter 2023.
As of June 30, 2023, the company
had approximately $2 billion in cash
(including approximately $120 million
deposited with Fixed Income Clearing Corporation, which is included
in other current assets) and $3.4
billion of debt. The company paid dividends of approximately
$400 million during the second
quarter of 2023. The company has returned over $21.5 billion to shareholders in the form of
dividends since the implementation of the variable dividend policy
in early 2012.
CME Group will hold a Q&A conference call to discuss
second-quarter 2023 results at 8:30 a.m.
Eastern Time today. A live audio webcast of the Q&A call
will be available on the Investor Relations section of CME Group's
website at www.cmegroup.com. An archived recording will be
available for up to two months after the call.
As the world's leading derivatives marketplace, CME Group
(www.cmegroup.com) enables clients to trade futures, options, cash
and OTC markets, optimize portfolios, and analyze data - empowering
market participants worldwide to efficiently manage risk and
capture opportunities. CME Group exchanges offer the widest range
of global benchmark products across all major asset classes based
on interest rates, equity indexes, foreign
exchange, energy, agricultural
products and metals. The company offers futures and
options on futures trading through the CME Globex® platform,
fixed income trading via BrokerTec and foreign exchange trading on
the EBS platform. In addition, it operates one of the world's
leading central counterparty clearing providers, CME Clearing.
CME Group, the Globe logo, CME, Chicago Mercantile Exchange,
Globex, and, E-mini are trademarks of Chicago Mercantile Exchange
Inc. CBOT and Chicago Board of
Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York
Mercantile Exchange and ClearPort are trademarks of New York
Mercantile Exchange, Inc. COMEX is a trademark of Commodity
Exchange, Inc. BrokerTec and EBS are trademarks of BrokerTec Europe
LTD and EBS Group LTD, respectively. The S&P 500 Index is a
product of S&P Dow Jones Indices LLC ("S&P DJI").
"S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are
trademarks of Standard & Poor's Financial Services LLC; Dow
Jones®, DJIA® and Dow Jones Industrial Average are service and/or
trademarks of Dow Jones Trademark Holdings LLC. These trademarks
have been licensed for use by Chicago Mercantile Exchange Inc.
Futures contracts based on the S&P 500 Index are not sponsored,
endorsed, marketed, or promoted by S&P DJI, and S&P DJI
makes no representation regarding the advisability of investing in
such products. All other trademarks are the property of their
respective owners.
Statements in this press release that are not historical
facts are forward-looking statements. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or implied in any forward-looking statements. We want to caution
you not to place undue reliance on any forward-looking statements.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise. Among the factors that might affect our performance
are increasing competition by foreign and domestic entities,
including increased competition from new entrants into our markets
and consolidation of existing entities; our ability to keep pace
with rapid technological developments, including our ability to
complete the development, implementation and maintenance of the
enhanced functionality required by our customers while maintaining
reliability and ensuring that such technology is not vulnerable to
security risks; our ability to continue introducing competitive new
products and services on a timely, cost-effective basis, including
through our electronic trading capabilities, and our ability to
maintain the competitiveness of our existing products and services;
our ability to adjust our fixed costs and expenses if our revenues
decline; our ability to maintain existing customers at
substantially similar trading levels, develop strategic
relationships and attract new customers; our ability to expand and
globally offer our products and services; changes in regulations,
including the impact of any changes in laws or government policies
with respect to our products or services or our industry, such as
any changes to regulations and policies that require increased
financial and operational resources from us or our customers; the
costs associated with protecting our intellectual property rights
and our ability to operate our business without violating the
intellectual property rights of others; decreases in revenue from
our market data as a result of decreased demand or changes to
regulations in various jurisdictions; changes in our rate per
contract due to shifts in the mix of the products traded, the
trading venue and the mix of customers (whether the customer
receives member or non-member fees or participates in one of our
various incentive programs) and the impact of our tiered pricing
structure; the ability of our credit and liquidity risk management
practices to adequately protect us from the credit risks of
clearing members and other counterparties, and to satisfy the
margin and liquidity requirements associated with the BrokerTec
matched principal business; the ability of our compliance and risk
management programs to effectively monitor and manage our risks,
including our ability to prevent errors and misconduct and protect
our infrastructure against security breaches and misappropriation
of our intellectual property assets; our dependence on third-party
providers and exposure to risk through third parties, including
risks related to the performance, reliability and security of
technology used by our third-party providers and third party
providers that our clients rely on; volatility in commodity, equity
and fixed income prices, and price volatility of financial
benchmarks and instruments such as interest rates, credit spreads,
equity indices, fixed income instruments and foreign exchange
rates; economic, social, political and market conditions, including
the volatility of the capital and credit markets and the impact of
economic conditions on the trading activity of our current and
potential customers; our ability to accommodate increases in
contract volume and order transaction traffic and to implement
enhancements without failure or degradation of the performance of
our trading and clearing systems; our ability to execute our growth
strategy and maintain our growth effectively; our ability to manage
the risks, control the costs and achieve the synergies associated
with our strategy for acquisitions, investments and alliances,
including those associated with the performance of our joint
ventures with S&P Dow Jones (S&P Dow Jones Indices LLC) in
index services and in trade processing/post trade services
(OSTTRA), our primary data distribution partners' actions and our
partnership with Google Cloud; variances in earnings on cash
accounts and collateral that our clearing house holds for its
clients; impact of CME Group pricing and incentive changes; impact
of aggregation services and internalization on trade flow and
volumes; any negative financial impacts from changes to the terms
of intellectual property and index rights; uncertainty related to
the adoption and growth of SOFR and its impact on our business; our
ability to continue to generate funds and/or manage our
indebtedness to allow us to continue to invest in our business;
industry, channel partner and customer consolidation; decreases in
trading and clearing activity; the imposition of a transaction tax
or user fee on futures and options transactions and/or repeal of
the 60/40 tax treatment of such transactions; our ability to
maintain our brand and reputation; and the unfavorable resolution
of material legal proceedings. For a detailed discussion and
additional information concerning these and other factors that
might affect our performance, see our other recent periodic
filings, including our Annual Report on Form 10-K for the year
ended December 31, 2022, as filed
with the Securities and Exchange Commission ("SEC") on February 27, 2023, under the caption "Risk
Factors".
CME Group Inc. and
Subsidiaries
Consolidated Balance
Sheets
(in
millions)
|
|
|
|
June 30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,880.1
|
|
$
2,720.1
|
Marketable
securities
|
|
106.7
|
|
96.0
|
Accounts receivable,
net of allowance
|
|
599.4
|
|
483.2
|
Other current assets
(includes $5.2 and $4.9 in restricted cash)
|
|
538.3
|
|
529.8
|
Performance bonds and
guaranty fund contributions
|
|
113,241.6
|
|
135,249.2
|
Total current
assets
|
|
116,366.1
|
|
139,078.3
|
Property, net of
accumulated depreciation and amortization
|
|
430.1
|
|
455.5
|
Intangible
assets—trading products
|
|
17,175.3
|
|
17,175.3
|
Intangible
assets—other, net
|
|
3,160.3
|
|
3,269.7
|
Goodwill
|
|
10,490.7
|
|
10,482.5
|
Other assets (includes
$0.0 and $0.1 in restricted cash)
|
|
3,674.2
|
|
3,714.4
|
Total Assets
|
|
$
151,296.7
|
|
$
174,175.7
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
50.9
|
|
$
121.4
|
Short-term
debt
|
|
—
|
|
16.0
|
Other current
liabilities
|
|
593.2
|
|
2,300.9
|
Performance bonds and
guaranty fund contributions
|
|
113,241.6
|
|
135,249.2
|
Total current
liabilities
|
|
113,885.7
|
|
137,687.5
|
Long-term
debt
|
|
3,423.8
|
|
3,422.4
|
Deferred income tax
liabilities, net
|
|
5,343.6
|
|
5,361.1
|
Other
liabilities
|
|
825.8
|
|
826.0
|
Total
Liabilities
|
|
123,478.9
|
|
147,297.0
|
Total CME Group
Shareholders' Equity
|
|
27,817.8
|
|
26,878.7
|
Total Liabilities and
Equity
|
|
$
151,296.7
|
|
$
174,175.7
|
CME Group Inc. and
Subsidiaries
Consolidated
Statements of Income
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
Quarter
Ended
June
30,
|
|
Six Months
Ended,
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
|
$
1,118.3
|
|
$
1,024.6
|
|
$
2,318.5
|
|
$
2,162.7
|
Market data and
information services
|
|
163.1
|
|
151.7
|
|
328.9
|
|
303.4
|
Other
|
|
78.8
|
|
60.9
|
|
154.4
|
|
117.7
|
Total
Revenues
|
|
1,360.2
|
|
1,237.2
|
|
2,801.8
|
|
2,583.8
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
205.7
|
|
185.3
|
|
410.2
|
|
370.5
|
Technology
|
|
53.3
|
|
45.9
|
|
104.6
|
|
91.8
|
Professional fees and
outside services
|
|
37.8
|
|
32.0
|
|
76.1
|
|
63.8
|
Amortization of
purchased intangibles
|
|
57.0
|
|
57.1
|
|
113.8
|
|
115.5
|
Depreciation and
amortization
|
|
32.3
|
|
33.0
|
|
64.2
|
|
66.5
|
Licensing and other
fee agreements
|
|
78.2
|
|
83.1
|
|
162.9
|
|
164.0
|
Other
|
|
57.3
|
|
51.1
|
|
117.7
|
|
102.9
|
Total
Expenses
|
|
521.6
|
|
487.5
|
|
1,049.5
|
|
975.0
|
Operating
Income
|
|
838.6
|
|
749.7
|
|
1,752.3
|
|
1,608.8
|
Non-Operating Income
(Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
|
1,568.2
|
|
286.9
|
|
2,925.9
|
|
360.0
|
Interest and other
borrowing costs
|
|
(40.2)
|
|
(39.9)
|
|
(80.1)
|
|
(82.4)
|
Equity in net earnings
of unconsolidated subsidiaries
|
|
75.1
|
|
87.3
|
|
153.3
|
|
160.6
|
Other non-operating
income (expense)
|
|
(1,425.3)
|
|
(217.3)
|
|
(2,578.1)
|
|
(264.0)
|
Total Non-Operating
Income (Expense)
|
|
177.8
|
|
117.0
|
|
421.0
|
|
174.2
|
Income before Income
Taxes
|
|
1,016.4
|
|
866.7
|
|
2,173.3
|
|
1,783.0
|
Income tax
provision
|
|
238.8
|
|
204.2
|
|
511.9
|
|
409.5
|
Net
Income
|
|
$
777.6
|
|
$
662.5
|
|
$
1,661.4
|
|
$
1,373.5
|
Net Income
Attributable to Common Shareholders of CME Group
|
|
$
767.8
|
|
$
654.1
|
|
$
1,640.5
|
|
$
1,356.1
|
|
|
|
|
|
|
|
|
|
Earnings per Share
Attributable to Common Shareholders of CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
2.14
|
|
$
1.82
|
|
$
4.57
|
|
$
3.78
|
Diluted
|
|
2.14
|
|
1.82
|
|
4.56
|
|
3.78
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
358,940
|
|
358,641
|
|
358,937
|
|
358,625
|
Diluted
|
|
359,429
|
|
359,205
|
|
359,371
|
|
359,179
|
CME Group Inc. and
Subsidiaries
Quarterly Operating
Statistics
|
|
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
|
2Q
2023
|
Trading Days
|
|
62
|
|
64
|
|
63
|
|
62
|
|
62
|
|
|
Quarterly Average
Daily Volume (ADV)(1)
CME Group ADV (in
thousands)
|
|
Product
Line
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
|
2Q
2023
|
Interest
rates
|
|
10,630
|
|
10,357
|
|
9,832
|
|
14,490
|
|
11,273
|
Equity
indexes
|
|
7,751
|
|
7,445
|
|
7,465
|
|
7,303
|
|
6,216
|
Foreign
exchange
|
|
950
|
|
1,091
|
|
1,000
|
|
969
|
|
898
|
Energy
|
|
1,932
|
|
1,837
|
|
1,829
|
|
2,083
|
|
2,104
|
Agricultural
commodities
|
|
1,308
|
|
1,208
|
|
1,171
|
|
1,379
|
|
1,752
|
Metals
|
|
484
|
|
498
|
|
508
|
|
649
|
|
612
|
Total
|
|
23,055
|
|
22,437
|
|
21,803
|
|
26,873
|
|
22,855
|
Venue
|
|
|
|
|
|
|
|
|
|
|
CME Globex
|
|
21,531
|
|
21,021
|
|
20,279
|
|
24,171
|
|
20,907
|
Open outcry
|
|
725
|
|
704
|
|
746
|
|
1,623
|
|
1,124
|
Privately
negotiated
|
|
799
|
|
711
|
|
778
|
|
1,080
|
|
825
|
Total
|
|
23,055
|
|
22,437
|
|
21,803
|
|
26,873
|
|
22,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Rate Per Contract (RPC)(1)
CME Group
RPC
|
|
Product
Line
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
|
2Q
2023
|
Interest
rates
|
|
$
0.493
|
|
$
0.479
|
|
$
0.500
|
|
$
0.495
|
|
$
0.505
|
Equity
indexes
|
|
0.532
|
|
0.524
|
|
0.535
|
|
0.595
|
|
0.644
|
Foreign
|
|
0.767
|
|
0.729
|
|
0.756
|
|
0.790
|
|
0.800
|
Energy
|
|
1.171
|
|
1.140
|
|
1.181
|
|
1.300
|
|
1.347
|
Agricultural
commodities
|
|
1.411
|
|
1.351
|
|
1.356
|
|
1.349
|
|
1.356
|
Metals
|
|
1.506
|
|
1.520
|
|
1.519
|
|
1.517
|
|
1.487
|
Average RPC
|
|
$
0.647
|
|
$
0.631
|
|
$
0.651
|
|
$
0.664
|
|
$
0.724
|
|
|
|
|
|
|
|
|
|
|
|
1. ADV and RPC includes
futures and options on futures only.
|
|
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
June
30,
|
|
Six Months
Ended,
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
Income
|
|
$
777.6
|
|
$
662.5
|
|
$
1,661.4
|
|
$
1,373.5
|
Restructuring and
severance
|
|
1.6
|
|
6.5
|
|
2.3
|
|
10.2
|
Amortization of
purchased intangibles(1)
|
|
70.5
|
|
68.1
|
|
140.6
|
|
137.9
|
Strategic
transaction-related costs (credits)
|
|
—
|
|
0.6
|
|
(2.2)
|
|
2.2
|
Foreign exchange
transaction (gains) losses
|
|
1.1
|
|
(8.8)
|
|
1.8
|
|
(13.1)
|
Unrealized and realized
(gains) losses on investments
|
|
1.0
|
|
0.5
|
|
(73.8)
|
|
(3.5)
|
Unrealized and realized
(gains) losses on assets
|
|
0.4
|
|
—
|
|
0.4
|
|
—
|
Debt costs related to
refinancing
|
|
—
|
|
—
|
|
—
|
|
7.7
|
Trading floor
enhancements
|
|
—
|
|
0.4
|
|
—
|
|
4.8
|
Income tax effect
related to above
|
|
(15.0)
|
|
(13.0)
|
|
(11.0)
|
|
(28.8)
|
Other income tax
items
|
|
(0.8)
|
|
(0.3)
|
|
(0.8)
|
|
(8.2)
|
Adjusted Net
Income
|
|
$
836.4
|
|
$
716.5
|
|
$
1,718.7
|
|
$
1,482.7
|
Adjusted Net Income
Attributable to Common Shareholders of CME
Group
|
|
$
825.9
|
|
$
707.5
|
|
$
1,697.0
|
|
$
1,464.1
|
|
|
|
|
|
|
|
|
|
Earnings per Share
Attributable to Common Shareholders of CME Group:
|
|
|
|
|
Basic
|
|
$
2.14
|
|
$
1.82
|
|
$
4.57
|
|
$
3.78
|
Diluted
|
|
2.14
|
|
1.82
|
|
4.56
|
|
3.78
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Share Attributable to Common Shareholders of CME
Group:
|
|
|
|
|
Basic
|
|
$
2.30
|
|
$
1.97
|
|
$
4.73
|
|
$
4.08
|
Diluted
|
|
2.30
|
|
1.97
|
|
4.72
|
|
4.08
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
358,940
|
|
358,641
|
|
358,937
|
|
358,625
|
Diluted
|
|
359,429
|
|
359,205
|
|
359,371
|
|
359,179
|
Preferred
shares(2)
|
|
4,584
|
|
4,584
|
|
4,584
|
|
4,584
|
|
|
|
|
|
|
|
|
|
1. Includes $11.0
million of amortization of purchased intangibles (net of tax) at
OSTTRA and $2.4 million of amortization of
purchased intangibles at S&P Dow Jones Indices LLC, reported in
Equity in net earnings of unconsolidated subsidiaries on the
Consolidated Statements of Income.
|
2. Preferred shares
have similar rights as common shares without voting
rights.
|
CME-G
View original
content:https://www.prnewswire.com/news-releases/cme-group-inc-reports-second-quarter-2023-financial-results-301885853.html
SOURCE CME Group