Cboe Global Markets (CBOE) Q4 2008 earnings summary

Executive summary

• 2008 delivered record results: revenue $423.8M, operating income $193.4M and net income $115.3M, supported by record trading activity.

• Total options volume reached 1.2B contracts, up 26% YoY; market share rose to 33.3% from 33.0%.

Financial highlights

• Revenue rose 20% to $423.8M; net income increased 39% to $115.3M, compared with $352.3M and $83.2M in 2007.

• Operating income increased 38% to $193.4M from $140.0M; expenses rose 8% to $230.4M, mainly on volume-related royalties, trading incentives and C2 consulting.

• Operating cash flow was $164.9M; cash and cash equivalents ended the year at $281.4M, up 55% YoY.

Outlook and guidance

• 2009 and beyond were expected to remain extremely challenging amid market uncertainty and industry change.

• Growth priorities included developing credit and volatility products, building the C2 all-electronic exchange and pursuing institutional features subject to regulatory approval.

• Strategy emphasized scale, disciplined expense management and selective growth investment; no numerical forecast was stated.