February 9, 2018 / 12:42 PM / in 5 months

Exchange operator Cboe's profit misses estimates as costs rise

(Reuters) - Cboe Global Markets Inc’s (CBOE.O) fourth-quarter earnings narrowly missed analysts’ estimates, as the operator of the largest U.S. options exchange incurred higher costs.

Chicago-based Cboe said on Friday operating expenses rose 130 percent to $156.9 million, partly due costs related to its acquisition of exchange operator Bats Global in 2016.

Cboe has been expanding through acquisitions, mainly to counter weakness in trading and clearing revenues due to swings in market volatility.

Costs are expected to rise in fiscal 2018 as well, with Cboe forecasting a 1 percent to 3 percent increase in adjusted operating expenses to $420 million to $428 million.

Capital spending in 2018 is expected to range between $50 million and $55 million, reflecting Cboe’s migration to Bats’ technology as well as its own technology investments.

Cboes’ adjusted capital expenditures were $43 million in 2017.

The company’s net income allocated to common stockholders rose to $254.6 million, from $44.7 million a year earlier, reflecting a $191.5-million gain related to new U.S. tax laws.

Excluding one-time items, Cboe earned 87 cents per share, one cent short analysts’ average estimate , according to Thomson Reuters I/B/E/S.

Total revenue more than tripled year-over-year to $620.7 million as transaction fees soared.

Shares of Cboe were down 3.3 percent at $107.50 in premarket trading on Friday.

Reporting by Nikhil Subba in Bengaluru; Editing by Sai Sachin Ravikumar

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