CME Group Beats Estimates and Publishes Higher 2022 Results

CME Group (NASDAQ: CME), which operates a major US derivatives exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, has published its quarterly and yearly financial results for 2022, with revenues coming in at $1.2 billion and $5.0 billion, respectively.

CME Group's Quarterly Profits Beats Estimates

According to the financial report published on Wednesday, the exchange operator achieved a slightly lower revenue ($1.2 billion) than in the previous quarter ($1.22 billion), but higher than in the same quarter a year ago ($1.15 billion).

The net income on an adjusted basis stood at $698 million in the period, translating to $192 per share, beating analysts' estimates of $188 per share. The final net income came in at $638 million or $1.75 per single share. It was lower by almost $42 million compared to the third quarter, however, it was $16 million higher than the $613.3 million reported in the same period in 2021.

"Fourth-quarter 2022 average daily volume (ADV) was 21.8 million contracts, up 6% versus fourth-quarter 2021. Non-U.S. ADV for full-year 2022 reached a record 6.3 million contracts, up 15% compared with the same period in 2021," CME Group commented on ADV statistics.

In the same period, the transaction and clearing fees revenue reached $981 million, while the total average rate per contract stood at $0.651. Market data revenue came in at $153 million, being modestly lower than the $154 million reported in the previous quarter.

"CME Group had its best Q4 ever, with record ADV of 21.8 million contracts resulting from double-digit growth in equity index and foreign exchange. Significantly, our SOFR futures and options also hit new highs during what was a historic year for the LIBOR transition, and these contracts now serve as the leading tools for hedging short-term interest rates," Terry Duffy, the Chairman and Chief Executive Officer at CME Group, said.

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CME Group Reports $5b Revenue in 2022

When it comes to the full-year 2022, the total revenue of CME Group stood at $5.0 billion, while operating income reached $3.0 billion. These numbers are higher than the 2021 results when revenue was $4.7 billion and operating income reached $2.6 billion.

Net income was $2.7 billion and on an adjusted basis, it came in at $2.9 billion. Diluted earnings per common share on a nonadjusted and adjusted basis stood at $7.40 and $7.97, respectively.

"Last year was the best year in our history as global market participants turned to CME Group to navigate tremendous economic and geopolitical uncertainty, generating a 19% increase in average daily volume to a record 23.3 million contracts," Duffy added.

CME Reported Record ADV

More than a month before the publication of the financial report, CME Group posted an ADV record of 23.3 million contracts in 2022, which represents a 19% increase from its performance in 2021.

"ADV increased 6% in the fourth quarter to 21.8 million contracts, and ADV increased 7% in December to 19.2 million contracts," CME Group announced.

A few days later, the company additionally reported a record-breaking international ADV of 6.3 million contracts. According to CME Group, the 15% surge compared to 2021 was possible due to the visible growth in the popularity of forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and equity products, rising 22% and 26%, respectively.

In the meantime, the single-day volume of SOFR options and futures contracts hit a record 7.56 million on 12 January 2023. It came with a record open interest rate of 35.7 million contracts on the same day.