Bats Reports Fourth Quarter Net Income Growth of 50% 

• Sets Record for Full Year 2016 Net Revenue of $436 Million

Bats Global Markets, Inc. (Bats: BATS), a leading global exchange operator and provider of market data and other financial markets services, today reported net income of $32.5 million and adjusted earnings† of $38.5 million for the fourth quarter ended December 31, 2016. Net income increased 50% and adjusted earnings† rose 35% compared to the same period in 2015 driven primarily by continued growth in non-transaction revenue, realization of synergies from the Direct Edge acquisition and a lower effective tax rate in the fourth quarter 2016. For the full year, Bats reported record net revenue of $436 million, an increase of 13% compared to 2015 and record net income of $109 million, a 33% increase over 2015.

Diluted earnings per share increased to $0.34 during the fourth quarter of 2016 from $0.23 for the same period in 2015, and adjusted earnings†, which excludes tax-adjusted amortization and other costs, rose to $0.40 per diluted share from $0.30.

“The fourth quarter capped off an impressive year for Bats. As we move towards closing the pending transaction with CBOE Holdings in the first quarter, we are excited about the opportunities before us in 2017,” said CEO Chris Concannon. “Bats and CBOE share a similar mission to make trading more competitive for all market participants and we will leverage our mutual resources to create greater market efficiencies and expanded opportunities for the trading and investing community.”

Corporate Highlights

• Remained on track to close the transaction with CBOE Holdings by the end of the first quarter of 2017. Bats stockholders voted to approve the merger on January 17, 2017. The transaction remains subject to regulatory approvals and other customary closing conditions.
• Welcomed a record 34 new ETF listings to the Bats ETF Marketplace during the fourth quarter, continuing the growth of its exchange-traded fund (ETF) trading and listings business. Bats remained the #1 U.S. market operator for ETF trading throughout the year, and welcomed 85 new listings to its U.S. market, an increase of 145% over 2015. During the year, Bats also captured 30% of all new ETF listings, up from 9% in 2015. Bats now has 149 ETFs listed on its market from 24 issuers.
• During the fourth quarter, Bats recorded 11.5% U.S. Options market share, its second-highest quarter on record versus 8.9% a year ago. Bats remained the #1 price-time priority market with market share of 37.5% of that segment while leading in single-leg equity options trades with 17.9% market share. Over the year, Bats reported a new annual market share record 11.1% for its U.S. Options business, up from 9.6% in 2015.
• In Global FX, Bats completed the acquisition of the Javelin Swap Execution Facility in the fourth quarter, which accelerates Bats’ plans to offer the trading of non-deliverable forwards for the FX market. In addition, the Bats Hotspot platform set a record on November 9th, with more than $64 billion notional value traded. During the year, Bats Hotspot grew market share to 11.6% in 2016 from 11.4% in 2015.
• Began the roll-out of Bats LIS, a new block trading service for the European equity market. Bats LIS is a large in scale (LIS) indication of interest (IOI) negotiation and execution platform that allows market participants to negotiate large blocks in European equities. Bats will complete rollout of the platform during the first quarter of 2017.

†Adjusted earnings, diluted adjusted earnings per share, organic net revenue, normalized EBITDA, and normalized EBITDA margin are non-GAAP financial measures. Please see the reconciliations of these non-GAAP financial measures at the end of this release.

Fourth Quarter 2016 Results

Net revenue, which represents revenues less cost of revenues, for the fourth quarter of 2016 increased 7% to $105.4 million from $98.6 million one year ago and increased 13% for the entire year. Increases were driven primarily by an increase in connectivity fee pricing in the U.S. Equities and U.S. Options markets and the introduction of connectivity fees in the Global FX market. Organic net revenue† , defined as revenues less cost of revenues excluding revenues less cost of revenues of any acquisition for the year the business was acquired and the following year, increased 7% during the quarter and 11% for all of 2016.

The table below summarizes consolidated financial results for the fourth quarter of 2016 and 2015.

Source: Bats

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