April 26, 2018 / 11:24 AM / 3 months ago

REFILE-UPDATE 2-Exchange operator CME Group's revenue misses, shares fall

(Corrects to “CME Group’s” from “CME’s Group” in headline)

* Revenue hit by lower-priced contracts - analyst

* Profit ekes past estimates

* Shares fall 3.2 pct

April 26 (Reuters) - World’s largest futures exchange operator CME Group Inc narrowly missed analysts’ estimates for first-quarter revenue on Thursday as a rise in lower rate contracts outweighed the benefits from a surge in overall trading volumes.

The company also reported revenue decline in the market data business, a focus area, sending its shares down 3.2 percent to $155.71 in morning trade.

In contrast, fellow-exchange operator Nasdaq Inc on Wednesday reported a first-quarter profit and revenue that beat estimates on higher trading volumes.

CME, which owns the Chicago Board of Trade, said average rate per contract fell 3.4 percent to $0.706 in the first quarter ended March 31.

“Rate per contract fell because there were higher volumes on lower priced products such as interest rate products,” said Sandler O’Neill analyst Richard Repetto.

Revenue from market data and information services fell 2 percent to $94.9 million.

Argus Research analyst Stephen Biggar blamed the drop to a decline in the number of screens obtaining the data.

Like other exchange operators, CME has been looking to build its non-trading related businesses such as its market data and information services.

CME said average daily volume (ADV) jumped 30 percent to an all-time high of 22.2 million contracts, which pushed clearing and transaction fees, CME’s biggest revenue stream, up 23 percent to $973.6 million.

Exchanges booked gains in the first three months of 2018 after global equities, bonds, currencies and commodities markets were roiled by an increase in volatility in February that extended into March.

Total revenue rose 19.3 percent to $1.11 billion, but missed estimate of $1.12 billion, according to Thomson Reuters I/B/E/S.

CME’s net income rose to $598.8 million, or $1.76 per share, from $399.8 million, or $1.18 per share, a year earlier.

On an adjusted basis, the company earned $1.86 per share, beating analysts’ average estimate by 1 cent.

Total expenses rose 12 percent to $368.1 million. (Reporting by Nikhil Subba in Bengaluru; Editing by Sriraj Kalluvila)

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