Cboe Global Markets, Inc. · CBOE:CBOE
Cboe Global Markets — CBOE Holdings — Q2 2010 Earnings Presentation
27 slides from Cboe Global Markets's earnings presentation, Aug 5, 2010
Slide 1: Second Quarter Earnings Conference Call
CBOE Holdings, Inc. Second Quarter Earnings Conference Call A August t55, 2010 p. 1 CBOE Holdings, Inc.
Slide 2: Forward Looking Statements
Forward Looking Statements ► This presentation contains statements which may be considered forward-looking statements within the meaning of the Securities Exchange Act of 1934, including, without limitation, statements regarding operating strategies, future plans and financial results. Forward-looki
Slide 3: 2Q 2010 Highlights & Recent Developments
2Q 2010 Highlights & Recent Developments ► Completed demutualization and IPO ► Successfully migrated to new trading permit program ► Received favorable ruling g in index options p litigation g ► Entered into a JV with FlexTrade Systems, to create a multi-asset multi asset universal access electronic
Slide 4: Track Record of Innovation
Track Record of Innovation 1973: CBOE 1983: 1993: Devised 2003: Began 2006: Began 2009: becomes first Introduced methodology operating trading VIX Received marketplace for Index Options for VIX, the hybrid trading options approval to trading options market leading market-leading model giving model,
Slide 5: Product Overview
Product Overview CBOE Trades… Equity q y Options p Index Options Options on ETFs • …on 10 different broad- and • … on over 250 exchange • … on the stocks of over narrow-based market traded funds based on 2,400 listed corporations indexes and benchmarks various domestic and foreign g market indices ’
Slide 6: Volume by Product Category
Volume by Product Category 2009 vs. First Six Months of 2010 Stockk Options S O i VIX 55.9% 15.0% OEX Cash 4.1% Full‐Year Indexes 25.9% % SPX RUT 69.5% 5.4% 2009 Other 6.0% ETF'S 24.4% Stock Options VIX 50.5% 20 5% 20.5% Through Other 24.1% SPX OEX 4.1% 66.5% June 2010 RUT 33.7% 7% Other ETF'S 5.2%
Slide 7: YTD 2010 Market Share
YTD 2010 Market Share ¹ Total Industry Volume Excl. Dividend Trades 2% 3% 2% 3% CBOE ISE 11% 11% 30% 31% PHLX 14% NYSE/Arca 14% NYSE/Amex 20% 20% BOX 18% 21% NOM Equity Options ETF Options Index Options 4% 3% 3% 2% 1% 1% 4% 12% 26% 11% 24% 14% 15% 22% 22% 21% 94% 22% CBOE Consistently the Market Lea
Slide 8: The Home of Volatility Products
The Home of Volatility Products ► CBOE Volatility Index® (VIX®) has become VIX Options ADV widely know as “THE” measure of equity market (in thousands) 243 volatility 132 93 103 ► CBOE defined trading volatility as an asset 23 class 2006 2007 2008 2009 2010 YTD¹ ► VIX options and futures volumes con
Slide 9: Licensed and Proprietary Products
Licensed and Proprietary Products ► Exclusive licensing Exclusively agreements to list index Licensed options based on S&P 500®, Products S&P 100® and DJIA® Exclusive through 2018 Exclusive through 2012 Extends through 2022 Right to extend through 2017 Other ► Strong long-term relationships Licensin
Slide 10: FLEX Options Products
FLEX Options Products ► FLEX® options have customizable FLEX / CFLEX ADV features such as found in OTC (in thousands) products ► CFLEXSM, developed in 2007 as an Internet-based Internet based execution system for 68 electronic trading of FLEX options, offers fast, anonymous order handling 14 4 ► Cur
Slide 11: C2
C2 C2 Overview: ► An all-electronic trading solution for market participants, leveraging the scale and flexibility of CBOEdirect® system ► Wholly-owned subsidiary of CBOE Holdings, with its own rules, connectivity and systems architecture ► Operates under separate exchange license with separate acce
Slide 12: Signal Trading Systems, LLC (STS)
Signal Trading Systems, LLC (STS) STS Overview: ► Joint venture between CBOE and FlexTrade Systems Systems, a technology services provider known for its strength in designing algorithmic trading systems. ► Offers a multi-asset, multi asset universal access electronic execution system, system known a
Slide 13: 2Q 2010 Financial Overview
2Q 2010 Financial Overview (in millions, except RPC) $ % 2Q 2010 2Q 2009 Change Change Total Operating Revenues $112.6 $109.0 $ 3.6 3% Total Operating Expenses 70.8 61.4 9.4 15% Operating Income 41.8 47.6 (5.8) -12% Operating Margin 37 1% 43.7% 37.1% 43 7% N/A -6.6 6 6 pts Other Income/(Expense) (0.
Slide 14: Quarterly Financial Highlights
Quarterly Financial Highlights Options ADV (mm) RPC Transaction Fees ($mm) Equities Indexes Exchange-traded funds $94 53 5.3 $81 $83 $ $0 300 $0.300 $80 $0.292 $76 $77 4.5 4.7 4.5 4.5 $0.278 $0.281 4.3 27% $0.273 $0.266 23% 23% 26% 24% 25% 18% 24% 20% 19% 24% 22% 54% 59% 57% 49% 53% 53% 1Q09 2Q09 3Q
Slide 15: 2Q 2010 Operating Revenues
2Q 2010 Operating Revenues Key Variance Drivers: Operating Revenues (in millions) 2Q 2010 2Q 2009 % CHG T Transaction ► ti fees: f Transaction fees $ 94.1 $ 81.1 16% •13% increase in trading volume •3% increase in RPC to $0.281 Access fees 2.3 10.4 -78% Access fees: ► Exchange services and other fee
Slide 16: Transaction Fees Driven by Volume and Rate Per Contract
Transaction Fees Driven by Volume and Rate Per Contract (in millions, except RPC) Fees $99 $ $100 $94 $90 $86 $83 $83 $80 $81 $80 $76 $77 $76 $77 $72 $70 $65 $59 $60 $50 RPC is influenced by: 0.288 0.295 0.294 0.291 0.292 0.300 $40 0.278 0.292 0.279 0.289 0.273 0.266 0.278 0.281 •exchange fee rates
Slide 17: 2Q 2010 Operating Expenses
2Q 2010 Operating Expenses Key Variance Drivers: Operating Expenses (in millions) 2Q 2010 2Q 2009 % CHG Employee Costs: ► Employee Costs $ 22.6 $ 20.9 8% •$0.4 increase in severance expense Depreciation and Amortization 7.3 6.9 6% •$0.6 million for stock-based compensation Data Processing 5.2 5.7 -9
Slide 18: Quarterly Core Operating Expenses
Quarterly Core Operating Expenses ($ in thousands) 2Q 2010 % rev 1Q 2010 % rev 4Q 2009 % rev 3Q 2009 % rev 2Q 2009 % rev Total Operating Expenses $70,792 63% $62,352 62% $64,152 53% $65,196 66% $61,403 56% Less: Depreciation and Amortization $7,301 6% $7,301 7% $6,859 6% $6,884 7% $6,885 6% Trading
Slide 19: Balance Sheet Overview
Balance Sheet Overview ($ in thousands) As Of June 30, 2009 As Of December 31, 2009 As Of June 30, 2010 Balance Sheet Data Cash $339,929 $383,730 $324,066 Total Assets 553,118 571,948 523,666 Total Liabilities 118,974 383,814 99,321 Total Stockholders Stockholders’/Members' /Members Equity Equity² 4
Slide 20: Appendix Materials
Appendix Materials p. 20 CBOE Holdings, Inc.
Slide 21: Annual Financial Highlights
Annual Financial Highlights Options ADV (mm) RPC Transaction Fees ($mm) Exchange-traded funds 4.9 4.7 $0.309 $344 Indexes 4.5 $0.290 $315 26% $0.282 $0.288 $0.288 $0.277 Equities 3.8 28% $273 24% 23% 2.7 20% 20% $190 22% $178 19% 24% $145 1.9 16% % 23% 25% 51% 56% 54% 53% 58% 59% 2005 2006 2007 2008
Slide 22: Historical Transaction Fee Drivers
Historical Transaction Fee Drivers For the Year Ended December 31, 6 Mos 6 Mos ‘05-’09 Ended Ended CAGR/ June 30, June 30, 2005 2006 2007 2008 2009 Avg. 2010 2009 Average Daily Volume (in thousands) Equities 1,094 1,556 1,996 2,387 2,519 23% 2,489 2,610 Indexes 459 628 918 1 026 1,026 884 18 1 187 1
Slide 23: CBOE Rolling 3-Month RPC
CBOE Rolling 3-Month RPC CBOE Rolling Three-Month Average Transaction Fee Per Contract (RPC) 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities E iti $0.177 $0 177 $0.180 $0 180 $0.184 $0 184 $0.172 $0 172 $0.163 $0 163 $0.162 $0 162 Indexes 0.576 0.590 0.597 0.584 0.578 0.580 Exchange-tr
Slide 24: Quarterly Operating Revenues and Pre-tax Earnings
Quarterly Operating Revenues and Pre-tax Earnings ($ in millions) $121 $120 $116 $113 $109 $102 $103 $101 $96 $98 $98 $100 $80 $60 $40 $20 $0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Operating Revenues Pre-tax earnings p. 24 CBOE Holdings, Inc.
Slide 25: Calculation of Weighted Average Shares
Calculation of Weighted Average Shares 3 Months Ending June 30, 2010 6 Months Ending June 30, 2010 Days Total Weighted Days Total Weighted Shares Outstanding Days Avg Outstanding Days Avg Shares Issued to Members 74,400,000 91 91 74,400,000 181 181 74,400,000 Shares Issued to Class Exercise Right 16
Slide 26: Non-GAAP Information
Non-GAAP Information ► In addition to disclosing results determined in accordance with GAAP, CBOE Holdings may also disclose certain non-GAAP measures of operating performance performance. ► Non-GAAP financial measures disclosed by management are provided as additional information to investors in or
Slide 27: CBOE Holdings, Inc.
CBOE Holdings, Inc. 400 South LaSalle Street Chicago, IL 60605 Debbie Koopman Director, Investor Relations koopman@cboe com koopman@cboe.com 312-786-7136 p. 27 CBOE Holdings, Inc.