CME Group, Inc. :CME-US: Earnings Analysis: Q3, 2017 By the Numbers : December 20, 2017

CME Group, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of CME Group, Inc. – Intercontinental Exchange, Inc., Cboe Global Markets Inc, Nasdaq, Inc., MarketAxess Holdings Inc. and MSCI Inc. Class A (ICE-US, CBOE-US, NDAQ-US, MKTX-US and MSCI-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 890.80 million, Net Earnings of USD 308.60 million.
  • Gross margins widened from 80.81% to 81.68% compared to the same period last year, operating (EBITDA) margins now 65.85% from 65.91%.
  • Year-on-year change in operating cash flow of 9.69% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from 64.23% to 68.17%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 890.8 924.6 1015.8 997.3 854.4
Revenue Growth (%YOY) 4.26 2.01 8.73 22.55 0.79
Earnings (mil) 308.6 415.8 399.8 373.4 472.8
Earnings Growth (%YOY) -34.73 29.9 8.7 28.01 31.37
Net Margin (%) 34.64 44.97 39.36 37.44 55.34
EPS 0.91 1.22 1.18 1.1 1.39
Return on Equity (%) 1.48 2.01 1.96 1.79 2.23
Return on Assets (%) 1.57 2.16 2.21 2.25 2.89

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Market Share Versus Profits

Revenues History
Earnings History

CME-US’s change in revenue this period compared to the same period last year of 4.26% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CME-US is holding onto its market share. Also, for comparison purposes, revenues changed by -3.66% and earnings by -25.78% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 65.91% to 65.85%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 80.81% to 81.68%. For comparison, gross margins were 82.94% and EBITDA margins 67.58% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

CME-US’s change in operating cash flow of 9.69% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.


The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from 59.45% to 60.16% and pretax margins widened from 64.23% to 68.17%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for CME Group, Inc.

Company Profile

CME Group, Inc. operates as a security and commodity exchange company. It provides the risk management and investment needs of customers around the globe. The company offers a wide range of products across various asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform across the globe and its open outcry trading facilities in Chicago and New York City. The company also provides clearing and settlement services for exchange-traded contracts, as well as for cleared over-the-counter derivatives transactions. It also offers market data services-including live quotes, delayed quotes, market reports and a comprehensive historical data service and has expanded into the index services business through CME Group Index Services. CME Group was founded in 1898 and is headquartered in Chicago, IL.

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