CBOE Holdings Q1 Profit Up 16%, Revenues Beat View

(RTTNews) - CBOE Holdings, Inc. (CBOE), the largest U.S. options exchange operator, on Tuesday reported a 16 percent increase in profit for the first quarter from last year, reflecting improved margins and revenue growth amid higher transaction fees and trading volume. Revenue for the quarter beat analysts expectations.

Edward Tilly, Chief Executive Officer of CBOE Holdings said, "We experienced double-digit increases in trading volume across each of our product categories during the first quarter, resulting in record revenue and earnings. We were particularly pleased with the continued growth in our volatility products, with average daily trading volume in VIX options up 22 percent and VIX futures up 33 percent during the first quarter."

The Chicago, Illinois-based company, the parent of the Chicago Board Options Exchange, reported first-quarter net income allocated to common shareholders of $48.53 million or $0.56 per share, up from $41.79 million or $0.48 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $50.03 million or $0.58 per share, compared to $43.87 million or $0.50 per share in the year-ago quarter. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.

Total operating revenue for the quarter grew 11 percent to $157.89 million from $142.71 million in the same quarter last year, and beat analysts' consensus estimate of $156.92 million.

The revenue growth primarily represents higher revenue of $13.7 million in transaction fees and $1.6 million in market data fees.

Operating margin for the quarter improved 330 basis pints from the prior-year period to 52.0 percent.

Transaction fees for the quarter increased 14 percent from the year-ago period to $112.79 million, reflecting a 31 percent increase in total trading volume to 342.8 million contracts. This was partially offset by a decline in the average revenue per contract or RPC.

Average daily volume increased 29 percent from last year to 5.62 million contracts per day. However, average revenue per contract or RPC declined 13 percent from the prior-year quarter to $0.329, primarily due to higher volume-based incentives in the latest quarter for certain multiply-listed options and a shift in the mix of products traded.

On April 29, the company's board of directors declared a quarterly dividend of $0.18 per share, payable on June 20 to stockholders of record on May 30, 2014.

Looking ahead to fiscal 2014, CBOE affirmed its outlook for core operating expenses in a range of $191 million to $196 million and capital expenditures in the range of $47.0 million to $50.0 million.

CBOE is currently trading at $52.79, down $0.51 or 0.96 percent on a volume of 20,588 shares.