CME Group Inc.
CEO : Mr. Terrence A. Duffy
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 5.3% YoY | 5.8% | 2.9% | 2023-02-08 |
Terrence Duffy says,
CME Group’s Record-Breaking Year in 2022
- Record average daily volume of 23.3 million contracts, up 19% from 2021.
- Financial products finished the year up 25% to a record average daily volume of 19.5 million contracts.
- Options average daily volume across all asset classes set a record with ADV of 4.1 million contracts, up 23% versus last year.
- The non-U.S. ADV increased to a record 6.3 million contracts.
LIBOR Transition and SOFR Futures and Options
- CME Group continued its efforts on the LIBOR transition, collaborating with the industry and market participants to shift trading behavior, order flow, and open interest to SOFR.
- SOFR’s futures and options are now the leading tools for hedging short-term interest rates, with deep liquidity supporting a wide range of strategies across the forward curve.
Investments and Joint Ventures
- CME Group’s joint ventures and investments contributed nearly $350 million or 9% of the pre-tax income in 2022.
- Invested in S&P Dow Jones Indices joint venture to expand its offerings to include leading fixed income and credit indices.
- Continued collaboration with Google to build out the cloud platform and successfully migrated some early applications.
2023 Focus on Risk Management and Innovation
- Risk management will continue to be critical for customers in 2023 with higher cost of doing business in general and uncertainty persisting across all asset classes.
- CME Group will focus on innovating and offering market participants with a diverse, relevant product set for meaningful capital and operational efficiencies.
Short-term Growth and Long-term Sustained Growth
- CME Group’s focus will continue to be on growing in the short-term while also positioning the business for long-term sustained growth.
- Volume is averaging approximately 23 million contracts per day so far this year, near the average for all of 2022.
John Pietrowicz says,
Record Annual Financial Performance
- CME Group achieved a record annual trading volume resulting in $5 billion in revenue, up 11% YoY.
- Adjusted operating margins expanded to 64.7%, and adjusted net income was up 20% YoY.
- Incremental cash costs associated with the migration to the filed were $30 million and in line with expectations.
Financial Performance in Q4 2022
- CME Group generated more than $1.2 billion in revenue in Q4 2022, with average daily volume up nearly 6.5% YoY.
- Market data revenue was up nearly 8% from last year to $153 million.
- Adjusted EPS attributable to common shareholders was $1.92, up 15% YoY.
Announcement of Fee Adjustments
- Fee adjustments were announced in November 2022 and became effective on February 1, 2023.
- Assuming similar trading patterns as 2022, the fee adjustments would increase futures and options transaction revenue in the range of 4% to 5%.
2023 Guidance
- Further details regarding CME Group’s 2023 guidance will be discussed by Lynne in the earning call.
Q & A sessions,
Adjustments in Pricing
- Transaction fees have been adjusted across all asset classes in futures business with an increase of about 4%-5% for the financial and commodity product sets.
- An inflation adjustment of about 4% has been made to market data subscriber licenses, effective from January 1, 2023.
- The completion of the SOFR First for Options initiative had an impact of $11 million in fee waivers and $8 million in increased license fees in 2022, which will not be repeated in 2023.
Energy Market Normalization
- Open interest in WCI complex has recovered to about 1.8 million open interest since the end of 2022, and financial players are returning to the market.
- WTI is the central marketplace and price setter for both physical and financial markets, and the U.S. is exporting a record level of 4.1 million barrels in Q4; global oil production out of the U.S. is expected to increase about 1 million barrels between now and 2024.
- Growth in energy markets is seen outside the U.S. with LATAM business and energy up 70% and APAC volumes up 15% last year.
Uncertainty in Future Volumes
- January 2023 ADV is roughly around the same as the end of 2022 at 22-23 million contracts per day.
- Risk management is expected to be at the forefront of people’s minds due to geopolitical events such as the debt ceiling issue and the Ukraine-Russian conflict, and the increase in interest rates over the last year.
FCM Application and Long-Term Market Structure
- FCM application process was launched to participate in a potential different market structure in the future.
- CME Group is committed to the FCM model today, and any changes will be worked out with stakeholders.
No bad stock 