CME Group Inc. (Nasdaq:CME) today reported that second-quarter total revenues increased 26 percent to $814 million and operating income increased 29 percent to $515 million from the year-ago period. Second-quarter 2010 operating margin was 63 percent, up from 62 percent in second-quarter 2009. Operating margin is defined as operating income as a percentage of total revenues.
Second-quarter net income was $271 million and diluted earnings per share were $4.11, up 22 percent and 23 percent respectively from the same period last year. Second-quarter 2010 results included a $20.5 million write down of goodwill of the company's subsidiary, Credit Market Analysis Limited (CMA). Excluding the write down, second-quarter diluted EPS would have been $4.43*, a 33 percent increase versus second-quarter 2009.
"During a volatile second quarter, CME Group's markets performed well in their critical functions of providing liquidity, transparency, reliability and security to market participants," said CME Group Executive Chairman Terry Duffy. "Our extensive track record of operating safe and secure markets is what our customers rely on, and what helped us achieve strong second quarter results. We are pleased that the newly signed Dodd-Frank Act reinforces the value of these attributes, and look forward to working with market participants to efficiently implement the tenets of the Act while preserving the integrity of U.S. financial markets."
"CME Group's performance during the second quarter underscored the value of our products to our customers during highly volatile conditions," said CME Chief Executive Officer Craig Donohue. "Volume was up in every asset class, resulting in 31 percent average daily volume growth from the same quarter last year, and generating $814 million in total revenues. Our focus continues to be on leveraging our globally relevant products, our extensive customer network, and our world class technology and clearing platforms to deliver new risk management opportunities to our clients."
Second-quarter 2010 average daily volume was 13.5 million contracts, up 31 percent compared with second-quarter 2009. Clearing and transaction fee revenue was $684 million, up 27 percent from $537 million in second-quarter 2009, and up 18 percent from first-quarter 2010. Market data and information services revenue was $102 million, up 24 illion, up 24 percent from $82 million in the same quarter last year, and includes the first full quarter of revenue from CME Group's index services business. The total average rate per contract for CME Group decreased 4 percent from second-quarter 2009 to 79 cents.
Second-quarter 2010 non-operating expense was $35 million, driven primarily by interest expense and borrowing costs of $38 million, which was offset by $4 million of investment income. Additionally, the second-quarter 2010 effective tax rate was 43.5 percent, up from 40.8 percent in second-quarter 2009. Excluding the CMA write down, the tax rate would have been 41.7 percent*.
As of June 30, the company had $409 million of cash and marketable securities and $2.8 billion of debt. During the quarter, the company paid down $300 million of debt.