Cboe Global Markets, Inc. · CBOE:CBOE
Cboe Global Markets — CBOE Holdings — Barclays Global Financial Services Conference 2014
37 slides from Cboe Global Markets's conference presentation, Sep 9, 2014
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference Edward Provost, President and COO September 9, 2014 CBOE HOLDINGS 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those statements that reflect our expectations, assumptions or projections about the future and involve a nu
Slide 3: CBOE Holdings at a Glance
CBOE Holdings at a Glance Leading Brand and Market Position Leading Product Innovator High Performance Trading Technology CBOE HOLDINGS 3
Slide 4: Remain Focused on Core Mission and Strategic Initiatives
Remain Focused on Core Mission and Strategic Initiatives Leverage and Develop Proprietary Products Optimize Revenue in Create value for stockholders Commoditized by generating industry-leading Products profit margins and growth rates through a diversified portfolio of risk management products Broade
Slide 5: Strong Trading Volume Gains YTD
Strong Trading Volume Gains YTD Total ADV up 10% YTD1 Increases in ADV across each product category Record trading in VIX options and futures YTD 2014 vs YTD 2013 ADV by Product ADV Growth by Product Category 2014 YTD Versus 2013 YTD¹ 2014 YTD¹ (in millions) 5.12 Total ADV 10% 4.64 1.58 Total Future
Slide 6: SPX Weeklys ADV
S&P 500 Index (SPX) Product Line SPX Annual ADV* (in thousands) SPX Weeklys - fastest growing product in SPX complex 784 823 835 696 698 SPX ADV up 1% through August 2014 615 SPX Weeklys up 36% SPX Weeklys represent 32% of total SPX volume 2009 2010 2011 2012 2013 2014¹ *includes SPX Weeklys SPX Wee
Slide 7: Broadening our SPX Customer Base
Broadening our SPX Customer Base Continue to see significant opportunities to grow trading among likely SPX users Intensifying educational and marketing efforts in 2014 Targeted user groups include: Users of SPY options and SPY Weeklys Institutional investors Overseas investors CBOE HOLDINGS 7
Slide 8: VIX Trading Continues to Achieve Strong Growth
VIX Trading Continues to Achieve Strong Growth Posted all-time volume records in VIX VIX OptionsChart ADV (in thousands) Title options and futures in 2013 and 1Q14 653 VIX options ADV up 15% through 567 443 August 31, 2014 389 248 132 VIX futures ADV up 18% through 2009 2010 2011 2012 2013 2014¹ Aug
Slide 9: VIX: the Proxy for Global Market Volatility
VIX: the Proxy for Global Market Volatility VIX universe of users continues to expand Still in early stages of developing VIX customer segments globally “Mainstreaming” of VIX options and futures Investors of every type can use VIX options and futures as a means of portfolio diversification CBOE HOL
Slide 10: VIX Trading Poised for Further Growth
VIX Trading Poised for Further Growth To the extent VIX returns to historical norms, we expect to see even greater participation in VIX options and futures trading CBOE HOLDINGS 10
Slide 11: VIX Futures Trading Poised for Further Growth
VIX Futures Trading Poised for Further Growth Key indicators supporting our growth outlook include: Increased demand for VIX futures market data over last six months Shift in mix of market participants to include users that are generally more active traders Continuing to add new trading privilege ho
Slide 12: Increasing Access to VIX Futures Trading Through Extended Trading Hours
Increasing Access to VIX Futures Trading Through Extended Trading Hours Nearly 10% of VIX futures trading took place during non-U.S. trading hours in July and August, the first full months of 24-hour trading Plan to add trading hours for VIX and SPX options in 4Q14, pending regulatory approval VIX F
Slide 13: Expanding Volatility Suite of Products
Expanding Volatility Suite of Products Futures and Options on Short-Term Volatility Index (VXST) Low-volatility environment has posed headwinds for VXST Believe market participants will embrace the utility of VXST futures and options Launched targeted educational and social media programs CBOE HOLDI
Slide 14: Expanding Volatility Suite of Products
Expanding Volatility Suite of Products CBOE/CBOT 10-year U.S. Treasury Note Volatility Index (VXTYN Index) Began disseminating index values in May 2013 Plan to launch futures on the CBOE/CBOT 10-year U.S. Treasury Note Volatility Index (VXTYN Index) on November 13th, pending regulatory review We vie
Slide 15: Responding to Growing Demand for Education in Volatility Trading
Responding to Growing Demand for Education in Volatility Trading Investor education goes hand in hand with new products Options Institute curriculum heavily weighted toward VIX futures and options Social media programs reflect strong interest in VIX-related online chatter and blogs CBOE HOLDINGS 15
Slide 16: CBOE RMC Attracts Most Active and Sophisticated VIX Customers
CBOE RMC Attracts Most Active and Sophisticated VIX Customers Boosting awareness of CBOE’s proprietary products U.S. Risk Management Looking For an Edge in Conference now in its 30th Managing Risk? year The CBOE Risk Management Conference is Third annual RMC Europe the premier educational was held l
Slide 17: Optimizing Revenue and Market Share in Multiply-Listed Options
Optimizing Revenue and Market Share in Multiply-Listed Options Focused on being among the leaders in options market share YTD through August, CBOE multiply- CBOE Market Share¹ listed market share of 21.0% versus 30% 18.7% for same period in 2013 27% 24% YTD through August, CBOE total 21% market shar
Slide 18: Strong Track Record of Organic Growth
Strong Track Record of Organic Growth ¹Adjusted to reflect the impact of certain items. See appendix for “Non-GAAP Information.” ²YTD through June 2014 CBOE HOLDINGS 18
Slide 19: Enhancing Stockholder Value
Enhancing Stockholder Value Strong cash flow generation and disciplined approach to managing cash Cash of $145MM at June 30, 2014 Generated $121MM in operating cash flow through June 30, 2014 Returned nearly $975MM to shareholders since IPO in 2010 Cash Used for Share Repurchases ($ in millions) $88
Slide 20: Continue to Further Define and Expand Options and Volatility Space
Continue to Further Define and Expand Options and Volatility Space Leverage and Develop Proprietary Products Optimize Revenue in Commoditized Products Invest in Return Value to Strategic Stockholders Broaden Growth Customer Base Initiatives Maintain Prudent Fiscal Provide Management Highest Standard
Slide 21: Questions & Answers
Questions & Answers
Slide 22: Appendix Materials
Appendix Materials
Slide 23: Optimistic About Long-term Growth Prospects
Optimistic About Long-term Growth Prospects Well positioned to generate stronger financial results as trading volume improves Quarterly Adjusted Operating Revenue and Diluted EPS¹ $160 ($ in millions, except EPS) $0.60 $140 $0.55 $120 $0.50 $100 $0.45 $80 $0.40 $60 $0.35 $40 $0.30 $20 $0.25 $0 $0.20
Slide 24: Well Positioned to Gain Additional Leverage
Well Positioned to Gain Additional Leverage Quarterly Adjusted Operating Income and Margin¹ ($ in millions) 55% $80 $70 50% $60 $50 45% $40 40% $30 $20 35% $10 $0 30% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Adjusted Operating Income Adjusted Operatin
Slide 25: 2Q14 Financial Overview
2Q14 Financial Overview Adjusted Basis¹ 2Q14 2Q13 $ Change % Change (in millions, except EPS and RPC) Operating Revenues $143.9 $150.8 -$6.9 -5% Adjusted Operating Expenses 74.2 73.6 0.6 1% Adjusted Operating Income $ 69.7 $ 77.2 -$7.5 -10% Adjusted Operating Margin % 48.4% 51.2% -280 bps Adjusted N
Slide 26: YTD Financial Overview
YTD Financial Overview Adjusted Basis¹ 6 months 6 months $ Change % Change (in millions, except EPS and RPC) 2014 2013 Operating Revenues $301.8 $293.5 $8.3 3% Adjusted Operating Expenses 147.5 143.7 3.8 3% Adjusted Operating Income $ 154.3 $ 149.8 $4.5 3% Adjusted Operating Margin % 51.1% 51.0% 10
Slide 27: Quarterly Options ADV
Quarterly Options ADV Index Options 1.75 1.50 1.54 1.49 1.47 1.48 1.38 CBOE Holdings Quarterly Options ADV 1.17 1.25 1.15 1.29 (contracts in millions) 5.42 4.82 4.71 4.78 4.73 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4.67 4.63 TD¹ 4.47 4.24 4.21 Equity Options 4.00 2.32 2.17 2.01 1.96
Slide 28: RPC Change Primarily Reflects Shift in Product Mix and Higher Volume-Based Incentives
RPC Change Primarily Reflects Shift in Product Mix and Higher Volume-Based Incentives Trading Volume Mix & RPC 2Q13 vs 2Q14 CBOE HOLDINGS 28
Slide 29: Proprietary Products Account for Growing Percentage of Transaction Fee Revenue
Proprietary Products Account for Growing Percentage of Transaction Fee Revenue Index options and futures contracts accounted for 81% of transaction fees in 2Q14, up from 80% in 2Q13 CBOE HOLDINGS 29
Slide 30: CBOE Holdings Rolling 3-Month RPC
CBOE Holdings Rolling 3-Month RPC 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.079 $0.079 $0.081 $0.082 $0.081 $0.079 $0.074 Indexes 0.664 0.667 0.669 0.674 0.674 0.670 0.671 Exchange-traded products 0.124 0.119 0.117 0.113 0.113 0.111 0.112 Total options RPC 0.273 0.281 0.281 0.
Slide 31: Quarterly Core Operating Expenses
Quarterly Core Operating Expenses¹ ($ in thousands) 2Q 2014 % rev 1Q 2014 % rev 4Q 2013 % rev 3Q 2013 % rev 2Q 2013 % rev Total Operating Expenses $74,226 52% $75,847 48% $69,231 49% $68,316 50% $75,414 50% Less: Depreciation and amortization 9,895 7% 8,604 5% 9,108 6% 8,476 6% 8,622 6% Accelerated
Slide 32: Annual Core Operating Expenses
Annual Core Operating Expenses¹ ($ in thousands) 2013 % rev 2012 % rev 2011 % rev 2010 % rev 2009 % rev Total Operating Expenses $286,236 50% $268,241 52% $266,512 52% $269,763 62% $248,497 62% Less: Depreciation and Amortization 34,488 6% 31,485 6% 34,094 7% 29,891 7% 27,512 7% Accelerated stock-ba
Slide 33: GAAP to Non-GAAP Reconciliation For Years 2009, 2010 and 2011
GAAP to Non-GAAP Reconciliation For Years 2009, 2010 and 2011 GAAP to Non-GAAP Reconciliation (in thousands, except per share amounts) 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 FY 2009 FY2010 FY2011 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common
Slide 34: GAAP to Non-GAAP Reconciliation For 2012 and 2013
GAAP to Non-GAAP Reconciliation For 2012 and 2013 GAAP to Non-GAAP Reconciliation (in thousands, except per share amounts) 1Q12 2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 3Q13 4Q13 FY2013 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common stockhold
Slide 35: GAAP to Non-GAAP Reconciliation For 2014
GAAP to Non-GAAP Reconciliation For 2014 1Q14 2Q14 3Q14 4Q14 YTD2014 Reconciliation of GAAP Net Income Allocated to Common Stockholder to Non-GAAP GAAP net income allocated to common stockholders $ 48,528 $ 42,598 $ 91,126 Add: Accelerated stock-based compensation 2,530 2,530 Add: Estimated liabilit
Slide 36: Non-GAAP Information
Non-GAAP Information In addition to disclosing results determined in accordance with GAAP, CBOE Holdings has disclosed certain non-GAAP measures of operating performance. The non-GAAP measures provided in this presentation include core operating expenses, adjusted operating revenue, adjusted operati
Slide 37: CBOE, 400 South LaSalle Street, Chicago
CBOE 400 South LaSalle Street Chicago, Illinois 60605 www.cboe.com
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