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OFFON

CME GROUP INC.

(CME)
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Q3 2021 Quarterly Earnings Commentary

10/27/2021 | 07:18am EST

3Q 2021

Earnings Commentary

Revenue

Adjusted

Adjusted Expense*

Diluted EPS

in millions

CME Group

$2.00

$1,400

(consolidated)

Legacy

CME Group

$1,050

$1.50

$700

$1.00

3Q21 Summary

  • CME Group continued to help clients manage their risk and navigate uncertainty during the quarter. 3Q21 average daily volume (ADV) of 17.8 million contracts was up 14% compared with 3Q20, primarily driven by double-digityear-over-year (YoY) growth in Interest Rates, including a quarterly ADV record in Secured Overnight Financing Rate (SOFR) futures, and Energy asset classes
    • Interest Rates ADV up 53% to 8.1 million
    • Energy ADV up 18% to 2.2 million
  • 3Q21 Options ADV increased 45% to 3.1 million contracts, with double- digit growth across several asset classes

• Interest Rates up 87%

• Equity Index up 21%

• Energy up 26%

• FX up 15%

  • 3Q21 non-U.S. ADV increased 13% to 5 million contracts, with double- digit growth across Interest Rates (+54%) and Energy (+31%)
    • Europe, Middle East and Africa (EMEA) region up 15%
    • Asia Pacific (APAC) up 8%

• Greater Latin America (LatAm) region up 32%

$350

$0.50

$0

$0.00

  • Continued to launch/advance innovative new products, tools and services to support customer needs, including additions to our suite of micro-sized contracts that allow market users to customize their trading and hedging, as well as ESG-focused futures contracts that help manage climate-related risk
  • Strategic execution led to adjusted net income attributable to CME Group of $574 million and adjusted diluted earnings per share (EPS) of $1.60

Order of Contents

ADV in millions

OI in millions*

21

150

1

3Q21 Summary

2

3Q21 Highlights

14

100

  1. 3Q21 Product Detail - Financials
  2. 3Q21 Product Detail - Commodities

5

Financial Results & Guidance

7

50

6 Forward Looking Statements

7

Q&A Conference Call Details

0

3Q19

3Q20

0

*

3Q18

3Q21

Represents quarterly adjusted operating expense excluding licensing and other fee agreements which is the basis for expense guidance

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

All growth rates included in this document refer to 3Q21 versus 3Q20, unless otherwise noted, and all global data/statistics exclude the open outcry venue

OI within the chart, and throughout this document, includes only benchmark product within Energy (Crude Oil, Natural Gas and Refined Products)

• Ultra U.S. Treasury Bond futures/options ADV up 13% to 211,309 contracts
• Ultra 10-YearU.S. Treasury Note futures ADV up 62% to 351,436 contracts
• Options ADV up 45% to 3.1 million contracts
• Record quarterly ADV for SOFR futures of 123,705 contracts, up 183%
• Ultra 10-YearU.S. Treasury Note futures reached record open interest (OI) of 1,674,889 contracts on August 24th
• Mexican Peso futures record daily volume of 238,965 on September 8th
• August Natural Gas options ADV was the best August on record with 129,141 contracts; September ADV was the best September on record with 137,914 contracts
• Record Copper options average OI of 68,766 contracts
• Global Emissions Offset (GEO)/Nature-basedGEO (N-GEO)record OI of 9,009 contracts on September 30
• Record ADV in Aluminum and European Hot-RolledCoil Steel
Interest Rate Highlights:
• Treasury futures ADV up 36% to 4.1 million contracts and Treasury options ADV up 68% to 833,506 contracts
• Eurodollar futures ADV up 67% to 2.1 million contracts and Eurodollar options ADV up 111% to 889,690 contracts
• Interest Rates ADV up 53% to 8.1 million contracts
• Energy ADV up 18% to 2.2 million contracts
• 3Q21 ADV increased 14% to 17.8 million contracts
3Q21 Highlights

3Q 2021 Earnings Commentary - Unaudited

CME Group's highly diverse product set positions the company well for varying macroeconomic backdrops

Includes EBS(~$39M)

3Q 2021

Revenue Mix

FX Agricultural

7% 9%

Energy

Equity Index14%

16%

Metals

4%

Market Data

Interest Rates13%

28%

Other

9%

ADV

SOFR Futures & Options

125,000

ADV and OI

Includes

Includes

BrokerTec (~$41M)

Optimization

OI

Interest Rate

businesses for

Swaps Clearing(~$15M)

July and August

1,200,000

Energy Highlights:

only*

100,000

75,000

50,000

25,000

1,000,000

800,000

600,000

400,000

200,000

  • WTI Crude Oil futures ADV up 26% to 989,744 contracts
  • WTI Crude Oil options ADV up 45% to 129,340 contracts
  • Natural Gas options ADV up 11% to 134,977 contracts
  • Gasoline futures/options ADV up 20% to 195,565 contracts
  • Heating Oil futures/options ADV up 10% to 153,776 contracts
  • Strong Micro WTI Crude Oil futures launch - averaging 52,221 contracts per day since launch during the quarter, and reaching record OI of 15,344 contracts on September 15

Options Highlights:

• Significant YoY ADV

3.5

Options ADV

growth across several

in millions

asset classes:

-

-

• Early in 3Q21, the Alternative Reference Rates Committee

(ARRC) formally recommended CME Term SOFR Reference

Rates for use based on their previously outlined best

practices, an important milestone for the industry and the

continued development of the broader SOFR ecosystem

• As the market continues to manage their interest rate risk

ahead of key transition deadlines, clients are increasingly

adopting SOFR futures

A record 396,421 SOFR futures contracts were

traded on October 18th

SOFR futures OI reached a record 1.2 million

  • Interest Rates up 87% 2.8
  • Energy up 26%

• Equities up 21%

2.1

• FX up 15%

• Non-U.S. Options ADV

1.4

up 39% to 627K

contracts

• Weekly U.S. Treasury

0.7

options ADV up 117% to

185,170 contracts

0

  • Record CME Direct trading participants in September driven by strength outside the U.S.

3Q203Q21

Privately Negotiated ADV

Open Outcry ADV

Electronic ADV

contracts on October 19th

-2-

*See note in paragraph above Notes & Guidance on page 6 related to the treatment of the OSTTRA joint venture

3Q 2021 Earnings Commentary - Unaudited

3Q21 non-U.S. ADV was 5 million contracts, up 13% from 3Q20

3Q21 non-U.S. ADV highlights:

2.5

Non-U.S. ADV by Product Line

• Interest Rates ADV up 54% from 3Q20

ADV in millions

• Energy ADV up 31% from 3Q20

2.0

• FX ADV up 2% from 3Q20

• YoY growth across 15 of the top 20

1.5

countries

EMEA region ADV highlights:

1.0

• EMEA ADV increased 15% to 3.6 million

contracts, with double-digit growth across

0.5

Interest Rates and Energy

• Quarterly ADV records across Brazilian

0.0

FX

Energy Agricultural Metals

Real futures, Natural Gas options and

Interest Rates

Equities

Soybean options

3Q20

3Q21

  • APAC region ADV highlights:
    • APAC ADV increased 8% to 1.1 million contracts, with double-digit growth across Interest Rates and Energy
    • Quarterly ADV record reached in Natural Gas options
  • Greater Latin America (LatAm) region up 32% YoY
    • Interest Rates ADV up 117% and double- digit growth in Equities and Energy
    • Brazil ADV increased 90% with specific strength in Interest Rates

Non-U.S. % of Total ADV by Product Line

50%

49.5%

46%

40%

30%

29%

32%

26%

25%

20%

10%

0%

Interest Rates Equities

FX

Energy Agricultural Metals

3Q20

3Q21

As activity picked up year-to-date (YTD) in 2021 relative to 2020, with market participants turning to CME group to manage risks associated with the potential for a post-pandemic economic recovery, the company continued to focus on factors in its control and execute on strategic priorities

3Q21 saw solid levels of sales productivity and strong revenue conversion

  • In line with strong quarterly ADV, 3Q21 saw solid levels of sales productivity
  • YTD client meetings are up 7% as sales staff and clients alike begin to return to the office around the world; 3Q21 in-person meetings are up 24% versus 2Q21
  • YTD record with CME Group's largest campaign slate - 30 unique campaigns completed, including 11 currently

live campaigns. In total through our campaign selling model, we have reached more than 4,600 clients YTD

  • CME Group sales & client facing teams remain extremely active and engaged with clients in the Interest Rates space. YTD we've hosted more than 975 Client meetings within our Rates complex - equating to more than 5 meetings per day focused on Interest Rates.
  • Our teams have been particularly active in the SOFR space, helping to prepare clients to transition to SOFR futures & options based on the 12/31/2021 date where banks are to cease entering new contracts that use USD LIBOR as a reference rate

Completed formation of leading post-trade services joint venture with IHS Markit

  • Launched OSTTRA - 50/50 joint venture (JV) owned by CME Group and IHS Markit and a leading provider of post-trade solutions for the global OTC markets across interest rate, FX, equity and credit asset classes. It incorporates CME Group's optimization businesses -Traiana, TriOptima, and Reset - and IHS Markit's MarkitSERV. Headquartered
    in London, OSTTRA will be led by Co-CEOs Guy Rowcliffe and John Stewart. Financial details highlighted on page 6

-3-

3Q 2021 Earnings Commentary - Unaudited

CME Group continues to launch analytical tools to enhance clients' experience, along with new products and services, as well as enhancements to existing offerings

New Products and Services launched in 3Q21

  • Micro WTI futures - Launched July 12th, Micro WTI futures, which are 1/10th the size of the company's global benchmark WTI Crude Oil futures contract and cash-settled, enable market participants - from institutions to sophisticated, active, individual traders - to fine-tune exposure to crude oil markets and enhance their trading strategies in an efficient, cost-effective way. This contract represented the most successful commodities product launch, with volumes surpassing 1 million contracts in the first 20 days. Micro WTI futures volume traded during non-U.S. hours during the third quarter was 34% of its total volume, which is higher than 21% for the standard WTI futures contract. There are over 100 unique firms, and almost 20,000 unique users, participating in the product - and, importantly, over 9,800 participants have not traded any other CME Group crude oil products in 2021. Retail active traders made up 25% of the volume during the quarter
  • Bloomberg Short-TermBank Yield (BSBY) Index futures - Made available for trading on August 23rd, and in response to client demand for credit sensitive instruments, BSBY futures offer both price discovery and risk hedging for the BSBY Index and complements our existing short-term interest rate futures and Term SOFR index products (with seamless spread trading and margin offsets available), providing global market participants with a suite of capital-efficient risk management tools to manage their interest rate exposures going forward. Since launch, over 260,000 contracts have traded, OI has grown to near 12,000 contracts and strong liquidity has developed
  • FTSE 100 Adjusted Interest Rate (AIR) Total Return futures available on Nasdaq-100, Russell 1000, Russell 2000 and Dow Jones Industrial Average indices - building on the success of our expanding suite of Total Return contracts, the new FTSE 100 AIR Total Return futures were launched June 7th and were expanded to be available on the additional above indices in late July. These contracts provide a capital-efficient, exchange-tradedalternative to total return swaps and support clients in hedging Euro equity benchmark exposure and provide greater trading flexibility. AIR Total Return futures reached a record monthly ADV of 3,337 contracts in September and OI of nearly 148,000 contracts on October 1st
  • Micro Treasury Yield futures - Launched August 16th, expanding our suite of deeply liquid U.S. Treasury futures/options contracts, these innovative, micro-sized contracts provide market participants - from institutions to sophisticated, active, individual traders - exposure to the yield of on-the-run Treasury securities in an efficient, cost-effective way. Micro 2-Year, Micro 5-Year, Micro 10-Year, and Micro 30-Year Yield futures are sized at $10 per basis point of yield, and are cash settled to newly created BrokerTec cash U.S. Treasury benchmarks, responding directly to client demand for products that reference one of the most widely quoted market metrics - yield on U.S. Treasury securities. Since launch, over 500,000 contracts have traded from over 500 unique accounts. The simple design and 23-hour liquidity has attracted considerable retail interest, expanding the reach of CME Group interest rate futures
  • Nature-basedGlobal Emissions Offset (GEO) futures (N-GEO)- Launched a nature-basedGEO contract on August 1, 2021, leveraging the successful launch of GEO futures in March of this year. N-GEOfutures are the company's latest market-basedsolution to help create a more transparent and efficient voluntary emissions offset market. More companies are relying on nature-basedoffsets as part of their overall climate strategies as the move to net-zeroemissions continues to accelerate. By offering a standardized mechanism for managing the price risk associated with those initiatives, our new N-GEOfutures provide the marketplace with an important tool to help navigate their ongoing climate strategies. GEO and N-GEOcombined OI just reached over 10,000 contracts on October 21st, surpassing the record OI of 9,009 contracts occurring in the third quarter, and reached a new peak of 10,367 on October 25th. In total, we have now enabled the physical delivery of 146,000 offset credits across four delivery cycles, equal to 146 million metric tons of CO2 equivalent
  • First-eversustainable derivatives clearing service - Made available September 27th, this service helps market participants track and report on how their hedging activities are advancing their sustainability goals. Sustainable derivatives encompass both the trading of products (i.e. carbon offsets, battery metals, bioenergy) as well as interest rate and foreign exchange futures hedging activity that is carried out to support a sustainable business. Sustainability continues to be an increasing priority for our global clients as they significantly expand both the risk management that they provide to green businesses and environmental projects. This new framework will make it easier for our clients to measure the impact of their support for sustainable activities and can be part of the solution to encourage further growth in this key sector as the economy transitions to net-zero emissions
  • E-miniRussell 2000 Monday/Wednesday Weekly options - Announced during 3Q for an early October launch, these contracts complement the existing Friday Weekly, End-of-Month and Quarterly options on E-mini Russell 2000 futures. Demand for more short-dated options continues to grow and these products allow our clients to hedge/trade with enhanced flexibility around major market-moving events. Weekly options on our deep, liquid underlying futures contracts also provide market participants with a more cost-effective and efficient toolset to manage risk in the small-cap segment
  • Block eligible E-miniOptions - Made eligible June 6th, this eligibility enabled the company to de-listfloor-based standard S&P futures and options. September ADV of these newly launched block traded options was 49,000 contracts, and has increased to 75,000 contracts ADV month-to-date in October, with a peak day of nearly 150,000 on October 14th
  • 12-MonthTerm SOFR rates - After launching 1-Month,3-Month, and 6-Month Term SOFR rates in April, we added 12-Month Term SOFR rates in September. We have already signed 100+ Term SOFR licenses and are working with an additional 300 firms on licensing

-4-

3Q 2021 Earnings Commentary - Unaudited

3Q 2021 Product Detail - Financials

Interest Rates

OI

Equities

OI

ADV

ADV

in millions

in millions

in millions

in millions

14

120

6

10

11

90

4

7

60

5

2

4

30

0

0

0

0

ADV

OI

ADV

OI

3Q 2021 Product Detail - Commodities

Energy

Agricultural

ADV

OI*

ADV

OI

in millions

in millions

in millions

in millions

2.8

18

1.6

10.0

2.1

1.2

7.5

12

1.4

0.8

5.0

6

0.7

0.4

2.5

0.0

0

0.0

0.0

ADV

OI*

ADV

OI

*OI includes benchmark product areas only - Crude Oil, Natural Gas and Refined

FX

OI

ADV

in millions

in millions

1.2

3

0.9

0.6

2

0.3

0.0

1

ADV

OI

Metals

ADV

OI

in millions

in millions

0.90

4

0.60

3

0.30

2

0.00

1

ADV

OI

ADV off to a strong start in 4Q21 to date (asof October 25, 2021)

• 4Q21 to date ADV is 20 million contracts, up 35% from the same period in 4Q20

• Interest Rates ADV is 9.6 million contracts, up 90% from the same period in 4Q20

•Market participants have begun to price in FOMC target rate hike expectations for 2022. The CME FedWatch Tool currently predicts a 78% chance of 1-4 rate hikes by the December 2022 FOMC meeting

•Current Interest Rate futures and FX futures Large Open Interest Holders (LOIH) levels are sitting just under their all-time highs which occurred in February 2020. 3Q21 marked the highest average LOIH across Financial products, surpassing 2Q21 - top two all-time average quarters have come in 2021, showing higher baseline activity across our Financial business lines

• Equity Index ADV is up 9% to 5.5 million contracts and Energy ADV is up 31% to 2.6 million contracts

-5-

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

CME Group Inc. published this content on 27 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 October 2021 11:17:06 UTC.


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Sales 2021 4 703 M - -
Net income 2021 2 565 M - -
Net Debt 2021 981 M - -
P/E ratio 2021 31,5x
Yield 2021 2,75%
Capitalization 80 958 M 80 958 M -
EV / Sales 2021 17,4x
EV / Sales 2022 16,7x
Nbr of Employees 4 370
Free-Float 99,6%
Chart CME GROUP INC.
Duration : Period :
CME Group Inc. Technical Analysis Chart | CME | US12572Q1058 | MarketScreener
Technical analysis trends CME GROUP INC.
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 18
Last Close Price 225,26 $
Average target price 225,53 $
Spread / Average Target 0,12%
EPS Revisions
Managers and Directors
Terrence A. Duffy Executive Chairman & Chief Executive Officer
John William Pietrowicz Chief Financial Officer & Senior Managing Director
Kevin Dean Kometer Chief Information Officer & Senior MD
Julie Holzrichter Chief Operating Officer & Senior Managing Director
Terry L. Savage Independent Director
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