Cboe profit beats estimates amid robust trading volumes

By John McCrank and Sohini Podder

(Reuters) -Cboe Global Markets Inc on Friday reported quarterly profits that topped Wall Street expectations, helped by robust trading volumes and increased demand for the exchange operator's proprietary products as the economy reopened from pandemic-induced shutdowns.

Stripping out one-time items, like M&A costs, Cboe earned $1.53 per share in the first quarter, 13 cents above the average estimate of analysts, according to Refinitiv IBES data.

The beat was due to both better than expected revenues and expenses, Jefferies analyst Daniel Fannon said in a client note.

Chicago-based Cboe, like other exchange operators, has benefited from a surge in retail participation during the COVID-19 pandemic, and more recently, from a pickup in institutional demand.

"With increased certainty around the political landscape, progress around the vaccine rollout, the reopening of businesses and various companies returning to work, we have seen institutional investors reengage with our index options and volatility products this year," Ed Tilly, Cboe's chief executive officer, said on a conference call.

Quarter-over-quarter volume for futures on Cboe's VIX volatility index were up 63%, while VIX options volumes rose 29% and options on the S&P 500 were up 15%.

For the quarter, Cboe reported a near 10% jump in total revenue compared with the year-ago period to more than $1 billion.

Revenue from North American equities trading rose 11%, while options trading revenue fell 4% and futures revenue was down 24% from a year earlier, when the exchange operator saw record volumes at the onset of the pandemic. European equities trading revenues surged 61%, which was offset by a 13% decline in global foreign exchange revenues.

Cboe boosted its guidance for 2021 net revenue growth for non-transactional items, like market data, to a range of 11-12%, up from 7-8%.

Shares in the company were up 1.5% at $104.89 around midday.

(Reporting by John McCrank in New York and Sohini Podder in Bengaluru; Editing by Ramakrishnan M. and Mark Potter)