Cboe’s fourth-quarter earnings outpaced deal revenue up 42%

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Cboe World Markets (BATS:CBOE) Fourth-quarter earnings and revenue beat consensus estimates as its operating margin widened. This gave the company the confidence to reaffirm its 2022 objectives set at its recent Investor Day for organic growth of 5% to 7% in total net revenue and 7% to 10% organic growth in net revenue for its data solutions and access.

Fourth-quarter adjusted EPS of $1.70 beat consensus of $1.54 and was up from $1.21 in the year-ago quarter. Adjusted operating margin of 64.8% increased from 63.5% a year ago.

Net revenue for the quarter of $391 million increased 27% and beat consensus of $389.3 million as its fourth quarter transaction revenue increased 42% and revenue from its operations non-transactional recurring costs of 21%.

For 2022, Cboe (CBOE) forecasts adjusted operating expenses of $617 million to $625 million, up from the base of $531 million in 2021. The expected increase will come from additional capital expenditures in the technology and workforce to support its growth initiatives. 2021, but not fully reflected in the 2021 cost base, and increases in base spending.

The spending forecast does not include the amortization of acquired intangibles of $116 million, as it plans to exclude the amount of the non-GAAP number.

Additionally, incremental spending related to its pending acquisitions of ErisX and NEO is not included in the 2022 guidance, which is expected to be between $36 million and $42 million in spending in 2022. Cboe (CBOE) expects a potential revenue offset for more than half of expenses in the first year, with the expectation that the additions will generate positive EBITDA on a combined basis in the second year.

Capital expenditures are expected to be between $47 and $52 million.

Conference to call at 8:30 a.m. ET.

Previously Cboe Global Markets (CBOE) non-GAAP EPS of $1.70 beats $0.16

Sallie R. Loera