Analyst Note| Michael Miller |
Wide-moat CME Group reported third-quarter results that were largely in line with our expectations. Revenue grew 2.7% year over year but fell nearly 6% sequentially and reported earnings per share was $1.60. The sequential drop in revenue was due to a mix of lower futures trading volume and lower revenue per contract, with the firmwide average daily volume (ADV) dropping to 17.8 million contracts from 18.4 million last quarter. The decline in trading volume was driven by CME’s interest rate complex that saw its ADV fall from 8.6 million in the second quarter to 8.1 million. CME’s interest rate futures volume is still well above its 2020 lows, but low interest rates remain a headwind to a full recovery for the segment.