Exchange Operator CME's Results Hit By Tame Trading -- WSJ

By Robert Barba 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 2, 2019).

CME Group Inc. reported a 17% decline in net income in the first quarter, as placid markets led to less trading at the U.S. futures giant.

The derivatives marketplace reported net income of $497 million, or $1.39 a share, in the quarter, compared with $599 million, or $1.76 a share, a year earlier. The company, led by Chairman and CEO Terrence Duffy, reported adjusted earnings of $1.62 a share, down from $1.86.

Analysts polled by FactSet expected earnings of $1.46 a share and adjusted earnings of $1.60 a share. Revenue totaled $1.18 billion, up from $1.10 billion a year earlier. Analysts expected sales of $1.19 billion. Shares fell about 2%.

Volatility tends to help CME by encouraging more trading in its futures markets. Markets were relatively subdued in the first quarter of this year, while turbulence in the same quarter of 2018 powered CME to what was then record quarterly revenue.

Last year, the Chicago-based exchange operator that handles contracts on a range of commodities and financial instruments, completed a deal to buy NEX, an electronic foreign currency and fixed-income trading platform

CME's clearing and transaction fees, the company's largest source of revenue, slipped 2% to $953 million during the quarter, while its market data and information services had revenue of $130 million, up nearly 37%.

Total expenses rose 49% to $549 million, largely driven by higher compensation and benefits costs.

--Alexander Osipovich contributed to this article.

Write to Robert Barba at [e-mail]

Corrections & Amplifications Turbulent markets in the first quarter of 2018 powered CME to what was then record revenue. An earlier version of this article incorrectly stated that the turbulence and the record revenue had taken place in the first quarter of 2019. (May 1, 2019)

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May 02, 2019 02:47 ET (06:47 GMT)

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