- Highest quarterly adjusted net income and adjusted earnings
per share ever
CHICAGO, April 26,
2023 /PRNewswire/ -- CME Group Inc. (NASDAQ: CME)
today reported financial results for the first quarter of 2023.
The company reported revenue of $1.4
billion and operating income of $914
million for the first quarter of 2023. Net income was
$884 million and diluted earnings per
common share were $2.43. On an
adjusted basis, net income was $882
million and diluted earnings per common share were
$2.42. Financial results presented on
an adjusted basis for the first quarter of 2023 and 2022 exclude
certain items, which are detailed in the reconciliation of non-GAAP
results.1
"As global market participants sought to manage risk across
asset classes, we saw a flight to futures, resulting in our
second-highest quarterly revenue, highest adjusted net income and
highest adjusted earnings per share ever," said Terry Duffy, CME Group Chairman and Chief
Executive Officer. "During the quarter, our total daily volume
surpassed 25 million contracts 28 times, including a new single-day
volume record of 66.3 million contracts on March 13. Of particular note was our double-digit
growth in options and interest rate products, including the growth
in our SOFR derivatives complex, driven by ongoing Fed policy
changes and regional bank stress. Looking ahead, we expect risk
management will continue to be more important than ever, and we
will remain focused on meeting our clients' needs in this volatile
environment."
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.
|
First-quarter 2023 average daily volume (ADV) was 26.9 million
contracts. Non-U.S. ADV reached 7.2 million contracts, which
included the second-highest quarterly ADV across EMEA, Asia and Latin
America.
Clearing and transaction fees revenue for first-quarter 2023
totaled $1.2 billion. The total
average rate per contract was $0.664.
Market data revenue totaled $166
million for first-quarter 2023.
As of March 31, 2023, the company
had approximately $1.7 billion in
cash (including $100 million
deposited with Fixed Income Clearing Corporation (FICC) and
included in other current assets) and $3.4
billion of debt. The company paid dividends of approximately
$2.0 billion during the first quarter
of 2023. The company has returned over $21.0
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
first-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 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; the impact of the
COVID-19 pandemic and response by governments and other third
parties; 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)
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,565.2
|
|
$
2,720.1
|
Marketable
securities
|
|
105.0
|
|
96.0
|
Accounts receivable,
net of allowance
|
|
723.6
|
|
483.2
|
Other current assets
(includes $5.1 and $4.9 in restricted cash)
|
|
547.2
|
|
529.8
|
Performance bonds and
guaranty fund contributions
|
|
128,090.7
|
|
135,249.2
|
Total current
assets
|
|
131,031.7
|
|
139,078.3
|
Property, net of
accumulated depreciation and amortization
|
|
440.3
|
|
455.5
|
Intangible
assets—trading products
|
|
17,175.3
|
|
17,175.3
|
Intangible
assets—other, net
|
|
3,217.4
|
|
3,269.7
|
Goodwill
|
|
10,490.5
|
|
10,482.5
|
Other assets (includes
$0.0 and $0.1 in restricted cash)
|
|
3,684.0
|
|
3,714.4
|
Total Assets
|
|
$
166,039.2
|
|
$
174,175.7
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
97.2
|
|
$
121.4
|
Short-term
debt
|
|
16.3
|
|
16.0
|
Other current
liabilities
|
|
839.7
|
|
2,300.9
|
Performance bonds and
guaranty fund contributions
|
|
128,090.7
|
|
135,249.2
|
Total current
liabilities
|
|
129,043.9
|
|
137,687.5
|
Long-term
debt
|
|
3,423.1
|
|
3,422.4
|
Deferred income tax
liabilities, net
|
|
5,356.8
|
|
5,361.1
|
Other
liabilities
|
|
831.0
|
|
826.0
|
Total
Liabilities
|
|
138,654.8
|
|
147,297.0
|
Total CME Group
Shareholders' Equity
|
|
27,384.4
|
|
26,878.7
|
Total Liabilities and
Equity
|
|
$
166,039.2
|
|
$
174,175.7
|
CME Group Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
Quarter
Ended
March
31,
|
|
|
2023
|
|
2022
|
Revenues
|
|
|
|
|
Clearing and
transaction fees
|
|
$
1,200.2
|
|
$
1,138.1
|
Market data and
information services
|
|
165.8
|
|
151.7
|
Other
|
|
75.6
|
|
56.8
|
Total
Revenues
|
|
1,441.6
|
|
1,346.6
|
Expenses
|
|
|
|
|
Compensation and
benefits
|
|
204.5
|
|
185.2
|
Technology
|
|
51.3
|
|
45.9
|
Professional fees and
outside services
|
|
38.3
|
|
31.8
|
Amortization of
purchased intangibles
|
|
56.8
|
|
58.4
|
Depreciation and
amortization
|
|
31.9
|
|
33.5
|
Licensing and other
fee agreements
|
|
84.7
|
|
80.9
|
Other
|
|
60.4
|
|
51.8
|
Total
Expenses
|
|
527.9
|
|
487.5
|
Operating
Income
|
|
913.7
|
|
859.1
|
Non-Operating Income
(Expense)
|
|
|
|
|
Investment
income
|
|
1,357.7
|
|
73.1
|
Interest and other
borrowing costs
|
|
(39.9)
|
|
(42.5)
|
Equity in net earnings
of unconsolidated subsidiaries
|
|
78.2
|
|
73.3
|
Other non-operating
income (expense)
|
|
(1,152.8)
|
|
(46.7)
|
Total Non-Operating
Income (Expense)
|
|
243.2
|
|
57.2
|
Income before Income
Taxes
|
|
1,156.9
|
|
916.3
|
Income tax
provision
|
|
273.1
|
|
205.3
|
Net
Income
|
|
$
883.8
|
|
$
711.0
|
Net Income
Attributable to Common Shareholders of CME Group
|
|
$
872.7
|
|
$
702.0
|
|
|
|
|
|
Earnings per Share
Attributable to Common Shareholders of CME Group:
|
|
|
|
|
Basic
|
|
$
2.43
|
|
$
1.96
|
Diluted
|
|
2.43
|
|
1.95
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
Basic
|
|
358,933
|
|
358,609
|
Diluted
|
|
359,313
|
|
359,180
|
CME Group Inc. and
Subsidiaries
|
Quarterly Operating
Statistics
|
|
|
|
1Q
2022
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
Trading
Days
|
|
62
|
|
62
|
|
64
|
|
63
|
|
62
|
|
Quarterly Average
Daily Volume (ADV)(1)
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
|
1Q
2022
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
Interest
rates
|
|
12,484
|
|
10,630
|
|
10,357
|
|
9,832
|
|
14,490
|
Equity
indexes
|
|
7,950
|
|
7,751
|
|
7,445
|
|
7,465
|
|
7,303
|
Foreign
exchange
|
|
904
|
|
950
|
|
1,091
|
|
1,000
|
|
969
|
Energy
|
|
2,515
|
|
1,932
|
|
1,837
|
|
1,829
|
|
2,083
|
Agricultural
commodities
|
|
1,474
|
|
1,308
|
|
1,208
|
|
1,171
|
|
1,379
|
Metals
|
|
593
|
|
484
|
|
498
|
|
508
|
|
649
|
Total
|
|
25,920
|
|
23,055
|
|
22,437
|
|
21,803
|
|
26,873
|
Venue
|
|
|
|
|
|
|
|
|
|
|
CME Globex
|
|
24,060
|
|
21,531
|
|
21,021
|
|
20,279
|
|
24,171
|
Open outcry
|
|
1,030
|
|
725
|
|
704
|
|
746
|
|
1,623
|
Privately
negotiated
|
|
830
|
|
799
|
|
711
|
|
778
|
|
1,080
|
Total
|
|
25,920
|
|
23,055
|
|
22,437
|
|
21,803
|
|
26,873
|
|
Quarterly Average
Rate Per Contract (RPC)(1)
|
CME Group
RPC
|
|
Product
Line
|
|
1Q
2022
|
|
2Q
2022
|
|
3Q
2022
|
|
4Q
2022
|
|
1Q
2023
|
Interest
rates
|
|
$
0.484
|
|
$
0.493
|
|
$
0.479
|
|
$
0.500
|
|
$
0.495
|
Equity
indexes
|
|
0.526
|
|
0.532
|
|
0.524
|
|
0.535
|
|
0.595
|
Foreign
exchange
|
|
0.800
|
|
0.767
|
|
0.729
|
|
0.756
|
|
0.790
|
Energy
|
|
1.124
|
|
1.171
|
|
1.140
|
|
1.181
|
|
1.300
|
Agricultural
commodities
|
|
1.378
|
|
1.411
|
|
1.351
|
|
1.356
|
|
1.349
|
Metals
|
|
1.482
|
|
1.506
|
|
1.520
|
|
1.519
|
|
1.517
|
Average RPC
|
|
$
0.644
|
|
$
0.647
|
|
$
0.631
|
|
$
0.651
|
|
$
0.664
|
|
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
March
31,
|
|
|
2023
|
|
2022
|
Net
Income
|
|
$
883.8
|
|
$
711.0
|
Restructuring and
severance
|
|
0.7
|
|
3.7
|
Amortization of
purchased intangibles(1)
|
|
70.1
|
|
69.8
|
Strategic
transaction-related costs (credits)(2)
|
|
(2.2)
|
|
1.6
|
Foreign exchange
transaction (gains) losses
|
|
0.7
|
|
(4.3)
|
Unrealized and realized
(gains) losses on investments
|
|
(74.8)
|
|
(4.0)
|
Debt costs related to
refinancing
|
|
—
|
|
7.7
|
Trading floor
enhancements
|
|
—
|
|
4.4
|
Income tax effect
related to above
|
|
4.0
|
|
(15.8)
|
Other income tax
items
|
|
—
|
|
(7.9)
|
Adjusted Net
Income
|
|
$
882.3
|
|
$
766.2
|
Adjusted Net Income
Attributable to Common Shareholders of CME Group
|
|
$
871.1
|
|
$
756.6
|
|
|
|
|
|
Earnings per Share
Attributable to Common Shareholders of CME Group:
|
Basic
|
|
$
2.43
|
|
$
1.96
|
Diluted
|
|
2.43
|
|
1.95
|
|
|
|
|
|
Adjusted Earnings
per Share Attributable to Common Shareholders of CME
Group:
|
|
|
|
|
Basic
|
|
$
2.43
|
|
$
2.11
|
Diluted
|
|
2.42
|
|
2.11
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
Basic
|
|
358,933
|
|
358,609
|
Diluted
|
|
359,313
|
|
359,180
|
Preferred
shares(3)
|
|
4,584
|
|
4,584
|
|
1. Includes $10.9
million of amortization of purchased intangibles (net of tax) at
OSTTRA and $2.5 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. Strategic
transaction-related costs (credits) primarily include items related
to the NEX transaction and the formation of the OSTTRA joint
venture.
|
3. 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-first-quarter-2023-financial-results-301807611.html
SOURCE CME Group