CME Group Inc. Reports Record First-Quarter 2018 Financial Results

GAAP net income up 50 percent
Record first-quarter 2018 revenue of $1.1 billion increased 19 percent compared with a strong first-quarter 2017

CME Group Inc. (NASDAQ: CME) today reported record revenue of $1.1 billion and operating income of $741 million for the first quarter of 2018. Net income was $599 million and diluted earnings per share were $1.76. On an adjusted basis, net income was $634 million and diluted earnings per share were $1.86. Financial results presented on an adjusted basis for the first quarters of 2018 and 2017 exclude certain items, which are detailed in the reconciliation of non-GAAP results.1

"Broad-based strength across all of our asset classes drove first-quarter revenue to more than $1.1 billion, up nearly 20 percent compared with a strong first quarter last year," said CME Group Chairman and Chief Executive Officer Terry Duffy. "We achieved quarterly average daily volume records in five of our six product lines, as well as records in total options and electronic options. From a global perspective, we had growth of 41 percent in Asia and 37 percent in Europe during the quarter, with each product line experiencing increases of more than 30 percent from non-U.S. customers. In addition to significant revenue growth, our focus on expense efficiency contributed to a 50 percent increase in net income compared with the same quarter last year."

First-quarter 2018 average daily volume was an all-time high of 22.2 million contracts, up 30 percent compared with first-quarter 2017. Clearing and transaction fee revenue was $974 million, up 23 percent compared with first-quarter 2017. First-quarter 2018 total average rate per contract was $0.706, compared with $0.736 in fourth-quarter 2017, driven primarily by a higher proportion of volume from lower priced financial products, which grew by 49 percent while higher priced commodities rose 15 percent. Market data revenue was $95 million, down 2 percent compared with the first quarter last year.

1. A reconciliation of the non-GAAP financial results mentioned to the respective GAAP figures can be found within the Reconciliation of GAAP to non-GAAP Measures chart at the end of the financial statements and earnings presentation materials.

As of March 31, 2018, the company had $875 million of cash and marketable securities, excluding $491 million held in escrow related to the potential NEX Group plc acquisition, and $2.2 billion of long-term debt. The company paid dividends during the first quarter of $1.4 billion, consisting of the annual variable dividend for 2017 of $1.2 billion and the regular first-quarter dividend of $238 million. The company has returned more than $9.8 billion to shareholders in the form of dividends since implementing the variable dividend policy in early 2012.

CME Group will hold a Q&A conference call to discuss first-quarter 2018 results at 8:30 a.m. Eastern Timetoday. A live audio Webcast of the Q&A call will be available on the Investor Relations section of CME Group's Web site at www.cmegroup.com. An archived recording will be available for up to two months after the call.

CME Group Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions)

	March 31, 2018		December 31, 2017
ASSETS
Current Assets:
Cash and cash equivalents	$	784.6	$	1,903.6
Marketable securities	90.4		90.1
Accounts receivable, net of allowance	444.1		359.7
Other current assets (includes $492.3 and $0 in restricted cash)	646.8		367.8
Performance bonds and guaranty fund contributions	39,088.9		44,185.3
Total current assets	41,054.8		46,906.5
Property, net of accumulated depreciation and amortization	387.2		399.7
Intangible assets—trading products	17,175.3		17,175.3
Intangible assets—other, net	2,322.6		2,346.3
Goodwill	7,569.0		7,569.0
Other assets (includes $1.4 and $2.4 in restricted cash)	1,410.4		1,394.4
Total Assets	$	69,919.3	$	75,791.2
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	25.0	$	31.3
Other current liabilities	331.4		1,456.3
Performance bonds and guaranty fund contributions	39,088.9		44,185.3
Total current liabilities	39,445.3		45,672.9
Long-term debt	2,233.5		2,233.1
Deferred income tax liabilities, net	4,846.6		4,857.7
Other liabilities	621.1		615.7
Total Liabilities	47,146.5		53,379.4
Shareholders' equity	22,772.8		22,411.8
Total Liabilities and Equity	$	69,919.3	$	75,791.2

CME Group Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in millions, except per share amounts; shares in thousands)

	Quarter Ended March 31,
	2018		2017
Revenues
Clearing and transaction fees	$	973.6	$	792.0
Market data and information services	94.9		96.8
Access and communication fees	26.0		24.3
Other	14.5		16.2
Total Revenues	1,109.0		929.3
Expenses
Compensation and benefits	152.7		142.6
Communications	5.9		6.3
Technology support services	19.6		18.7
Professional fees and outside services	42.6		28.6
Amortization of purchased intangibles	23.7		24.0
Depreciation and amortization	28.1		29.4
Occupancy and building operations	20.0		20.1
Licensing and other fee agreements	49.5		33.8
Other	26.0		24.9
Total Expenses	368.1		328.4
Operating Income	740.9		600.9
Non-Operating Income (Expense)
Investment income	156.4		138.9
Interest and other borrowing costs	(30.1)		(29.8)
Equity in net earnings of unconsolidated subsidiaries	40.1		30.8
Other non-operating income (expense)	(118.6)		(33.8)
Total Non-Operating Income (Expense)	47.8		106.1
Income before Income Taxes	788.7		707.0
Income tax provision	189.9		307.2
Net Income	$	598.8	$	399.8
Earnings per Common Share:
Basic	$	1.76	$	1.18
Diluted	1.76		1.18
Weighted Average Number of Common Shares:
Basic	339,305		338,339
Diluted	340,747		339,946

CME Group Inc. and Subsidiaries

Quarterly Operating Statistics

1Q 2017

2Q 2017

3Q 2017

4Q 2017

1Q 2018

Trading Days

Quarterly Average Daily Volume (ADV)
CME Group ADV (in thousands)

Product Line	1Q 2017	2Q 2017	3Q 2017	4Q 2017	1Q 2018
Interest rate	9,169	8,210	7,424	7,970	11,948
Equity	2,766	2,707	2,624	2,632	4,096
Foreign exchange	894	879	971	941	1,100
Energy	2,496	2,632	2,693	2,489	2,754
Agricultural commodity	1,261	1,491	1,381	1,278	1,593
Metal	512	533	611	616	713
Total	17,098	16,453	15,704	15,925	22,204
Venue
Electronic	14,947	14,582	14,264	14,265	19,796
Open outcry	1,362	1,115	889	1,066	1,556
Privately negotiated	789	756	551	594	851
Total	17,098	16,453	15,704	15,925	22,204

Average Rate Per Contract (RPC)
CME Group RPC

Product Line	1Q 2017		2Q 2017		3Q 2017		4Q 2017		1Q 2018
Interest rate	$	0.492	$	0.491	$	0.485	$	0.467	$	0.464
Equity	0.718		0.731		0.738		0.768		0.781
Foreign exchange	0.823		0.807		0.796		0.785		0.762
Energy	1.130		1.096		1.072		1.133		1.140
Agricultural commodity	1.334		1.300		1.251		1.251		1.246
Metal	1.496		1.449		1.376		1.315		1.367
Average RPC	$	0.731	$	0.749	$	0.749	$	0.736	$	0.706

CME Group Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Measures
(dollars in millions, except per share amounts; shares in thousands)

	Quarter Ended March 31,
	2018		2017
Net Income	$	598.8	$	399.8

Restructuring and severance	1.4		1.8

Amortization of purchased intangibles	23.7		24.0

Litigation matters	8.9		—

Acquisition-related costs(1)	9.5		—

Foreign exchange transaction (gains) losses(2)	1.6		(2.5)

Gains on CME Ventures investments	(1.1)		—

Gains on sale of BM&FBOVESPA shares	—		(86.5)

Income tax effect related to above	(9.3)		(8.9)

Other income tax item	—		87.8

Adjusted Net Income	$	633.5	$	415.5

GAAP Earnings per Common Share:
Basic	$	1.76	$	1.18
Diluted	1.76		1.18

Adjusted Earnings per Common Share:
Basic	$	1.87	$	1.23
Diluted	1.86		1.22

Weighted Average Number of Common Shares:
Basic	339,305		338,339
Diluted	340,747		339,946


1. Acquisition-related costs include professional fees related to the proposed acquisition with NEX Group plc.
2. Results include foreign exchange transaction net gains and losses principally related to cash held in British pounds within entities whose functional currency is the U.S. dollar.