CBOE - Earnings call transcript Q4 2020 | Cboe Global Markets, Inc.

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Operator

Good morning and welcome to the Cboe Global Markets 2020 Fourth Quarter Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Debbie Koopman. Ms. ahead. go please Koopman,

Debbie Koopman

morning quarter you earnings Good for joining our fourth conference and Steve. for thank us Thanks, call.

results as and performance On our the strategic year overview President, outlook. the the initiatives; our Executive Schell, on provide an CFO Chairman, Tilly, and discuss and financial quarter for as full Vice President and then of an call CEO for will our today update quarter the well our year Ed and the XXXX our will provide Brian discuss our Treasurer financial

comments, Following John Isaacson; Officer, Q&A. be and for will our their joining will Strategy Chief Deters. we to open the Q&A Chris our Also call Chief Officer, Operating us

include of the In use out I addition, like will to slides. would point presentation that this

providing on Relations the the each. slides be downloadable A will of Investor available the showing website. slide We is our commentary on presentation of and portion copy

forward-looking may future is will uncertainties. materially our while and undertake this a Please these whether involve or our events conference obligation future outcomes the are expressed of of statements, for are judgments We new filings a any to after implied the some remarks, forward-looking risks affect assumptions forward-looking what refer full publicly of certain differ any as factors any or no call. current forward-looking and we with results Actual what information, reasonable, statements statements, in from statements. otherwise statements. forward-looking discussion our not During update hold. believe to may which these the SEC result that future may guarantees on represent performance make we and And judgment

as to reconciled this be referring defined our materials. the morning, During earnings the non-GAAP of call and course in we'll measures

Now, I'd call the turn to over like Ed. to

Ed Tilly

thank navigate pandemic. full as great strength safe to joining continue year results, I'm of and and diversification report to that XXXX the off hope is business. for global solid for today. Thank this fourth start we keeping highlighting and record to you morning, well our and a Cboe us posted I Good everyone you, Debbie. you're and pleased quarter

grew revenue earnings per XX%. did the trading. a that adjusted year, macro for share not by net XX% of much environment the unprecedented, an favor year For we Despite index by and

Our integrated trading, multi volumes record growth were options, results driven trading enabled U.S revenues, in efficiency superior equities, by non-transactional and recurring strong technology. by our cash increased fully retail and by and fueled list

superior to growth, achieving key product innovation successfully revenue. we and our Importantly, mix customer base, diversify with initiatives and leverage to while technology, execute our recurring growth advance continue business expand strategy strong to our

as We to operational by our XXXX, in our and commitment the despite also resiliency evidenced years unrelenting continuity excellence of challenges. maintained the markets,

key continuing execute Our our strategic global provide environment, markets and continuous is reliable strong dedication ability team. to testament while a in to growth that expertise to entire of the initiatives post and and

flow XX% Additionally, high enabled shareholders to a increase our to strong million time to compared XXXX. $XXX return results all new and record XXXX, and us cash in a generation

and beyond XXXX by share the Our additional authorization commitment Board's reinforced of in shareholders capacity. will announcement to to today's capital continue returning regarding buyback

in average to compounded XXXX, Brian an X% contribute we approximately which to incremental over in the invest dive line Turning organic we closed organic XXXX X% in to we top to this expectations expect organic $XX the to growth leverage deeper year. in deals growth mid-term. of this, target but targets We on plan our to and XXXX. accelerate to plan do million for initiatives will a growth

accelerate our capital strategy As inorganically to you've also seen capital since returning shareholders. our IPO, allocated have help we while to

our in strategy basis, diversification our success growth. X% years, XX% forma on the confidence which growing while strength of ability growth, ongoing our The perform EPS adjusted X past Over the a reinforces and have of annual our to continued revenue cycles. pro compound delivered most by we reflects in net challenging the

Additionally, reengage products. weeks VIX January, by while year, trading we're only options XX% SPX X investors in XX% options. futures, see into increased volatility In options and index month-over-month our volume to the XX% in and we're new beginning in index institutional

political calls, As market clouded around there uncertainty to we've where the more views noted these in was previous that was see we reengagement clarity investors in expected products and once pandemic the headed. and

The will the vaccine deal Although these continue come into Brexit uncertainty U.S and the the on previous our other We in believe trading are been increased index see much begun. we as to new is market products on administration rollout remains pandemic, of the and focus. has COVID-XX has place executed. uncertainty unknowns

in as considerable last customer XX% to XXxX Naturally, trading are to took to regulatory began to review. planning the progress strategic made response from Over place trade the the which model trading result in momentum from XXxX to amount options SPX we subject We options and outside futures, of extend similar demand in of trading of well. with XXXX. quarter in XXxX U.S hours Additionally, futures, non-U.S of believe and year up VIX the hours in this fourth increased VIX year, VIX already trading in will in SPX XXXX. we trading year, in XX% a

product long-term engagement, driven and our in in business We and in by long-term invest revenue are continuing recurring both growth. while opportunities proprietary near increases to to and expand trading, excited about part grow retail

increase broaden strong our by product which of consistent, asset our strengthen recurring leverage remains line class. unique Our products, our ongoing fueled reinforced geographic value has and our revenue, expand superior core our and proprietary strategy, platform further year-over-year footprint growth, the our technology,

I'd Information each The within tools products by launch providing our drive value increase reestablish products further focus CBOE Solutions, drivers. in strategic prospects Information with revenue that expand solutions, like to excited and incremental participants Trading of four and enhancing Europe underway our our through with grow base. and generate trading growth initiatives comprehensive exciting they positions. indices. We're data retail revenue expanding draw on of pillars. to Cboe added support trading to have revenue our non-transactional Solutions, users But growth these transactional to grow volume plans and We opportunity our today to BIDS trading Derivatives, to about recurring suite our markets as market resources and recurring These proprietary Cboe analytics

recurring discussed we expect ability X% in optimize As XXXX, offering acquisitions recurring of long-term as revenue last non-transactional organic XX% our continue Solutions growth in grow previous revenue. growth, growth to we year's our and expansion accelerate our and incremental to Information calls, through XXXX. In key see sustainable in integrations we non-transactional reported these to

allows to market with an interact solutions step process. value at of every information trade add of expansion us our now to participants Importantly, the

risk We to XXXX our APIs. analytics are customer with portfolio including proprietary offered additional in through mechanisms, Silexx, opportunities delivery various order execution and our these enhance and Cboe looking management through support system,

plan market intelligence to alerts many analytics including expand to we market traders. and retail our segments Additionally,

We expand platform, with also services which channels. real development distribution indices plan our to calculation global time provides index and

further Finally, offering data sets and our data we to Information of to data sets historical unique like suite. add Solutions the expand expect cryptocurrencies high demand

bringing our Cboe growth quarter unlock for regulatory fruition on pleased track the upcoming the in this now to to of launch launch second Turning of vision approval, say to potential considerable in to the to are Europe market. I’m year, we we Derivatives. this planned pending see

support. us simplify and derivatives derivatives received and bring to efficiencies and market European positive expertise equities customer of to ownership participants uniquely business, worked successful very EuroCCP global and highly feedback clearing. plans new closely trading in have shaping Our We’ve our with position pan-European and

and quarter toward the day flow we have During and progress approvals. market the fourth to the we there Customer the on clearing achieving regulatory firms, necessary providers makers of technical commitments be clearing optimization testing ongoing, and and made build-out platform from is on one. strong exchange order and

we’ve ripe this before, think As growth. structural market significant said we for is

incumbent market exchanges; participants. derivatives aiming grow market simply reshape with intend structure existing attract in are and to we and take both trading We overall new to novel to not a from Europe designed share

long-term we expectations and derivatives revenue product gain investing XXXX and While paradigm realize in to shift a our looking traction as European we trading. for in expand are derivatives we our are modest, gradual view for as build what revenue a for offering growth European

in our transition result here trading will as from region. us in to of exchange, start in to serve also our home our seamlessly U.K business Brexit, of which Our yesterday. to launched that on the the Brexit, venue Amsterdam welcome to strategy a excited U.K XXXX at the of note enabled implementation our as shares venue flawless Amsterdam year. new advance Swiss I’ll of were Also, derivatives back Brexit we trading we the of

was Cboe's in last was notional market are working share in June Swiss when Swiss on XXXX with trading X% re-establish to market. equities approximately our our traded value of customers available trading, which We

the Turning end we acquisition BIDS quarter. Trading, of which at of fourth the now our to completed

Cboe and to We are welcome the family. team pleased to Tim Mahoney the

We have Europe. BIDS, a platforms largest of of block-trading record in working the which powers Cboe track LIS, successful with one

continue operate geographies, and our look and block equities. us we BIDS’ other including expand trading in BIDS capabilities to presence venue, American expand While as to North to acquisition helps an independently as will managed the to products enable services Canada, further

XXX market, segment global MatchNOW, us underway provides network markets. future. equities XX% the volume. integration constituents, and block a more differentiates of features off-exchange foundation now in BIDS BIDS that which markets the expand buy-side Canada the U.S. which investment than trading which We disrupt our foothold into and accounts strong and from believe electronic to the in we will platform equities us with overall for new Canadian provides of has the well last acquisition an help the year, a with we over provides managers ATS additional extensive sell-side BIDS are market the of acquired and U.S. of in also other

investor we to in to here of retail trading, retail the believe XXXX on stay. saw we resurgence the is Moving

contract to as universe of core sizes and to tailored sophisticated includes our needs products Product and with Russell expand SPX to products as proprietary growing programs that with our are base empower We futures Mini well recently the education franchise, to to announced Mini This meet value to traders services index customer Cboe retail-focused this broader to deliver and both offering a VIX retail plan we content a options, and investors. new which of XXXX product add additional investors. institutional and our of innovation smaller options, retail-centric Mini extend evolve pipeline, investors. focus to our well-equipped in remains these will appeal the our continue

these cross-functional products, to in investor strategy dedicated marketing robust and on client education, targets driven initiatives growth underway. by a is Our well which nurture is focused services, team

Retail in equities of quality firms retail execution daily new in and which January, improve orders we in record, the total XX% over volume trading market our with Retail facilitate trading set see for reaching Cboe their XXXX. of monthly orders. exchange record trading EDGX helps priority volume quarter. that December to and Volume investors as on average did program, record volume U.S. retail outcomes In share Priority on increased and Additionally, in fourth continued a X.X% which individual represented over XX% orders were Priority up the EDGX

With in market relationships, greater innovation, technology, We’re XXXX and leverage I’ll through invest then create to another, closing excited XXXX retail in will We growing in to investments remarks. opportunity growing growth user I’ll our and detail, over see well-positioned some education strengths, our sustainable, for this marketplace, turn engagement our investors strong believe performance are customer to investor outlook walk in provide and it the core Cboe. and and retail to support to area this base. and long-term and Brian benefit that, product

Brian Schell

you everyone. of all good Ed, Thanks your and healthy. and hope remain morning and safe families I

that highlighting of non-GAAP diversification results our acquisitions, comments and the remind XQXX everyone quarter, my our streams me reinforcing again, on the initiatives. noted, adjusted relate as results. reported to based for solid and our revenue specifically Let our strategic contributions compared from We unless and XQXX to are investments financial the

up our net increased XX%; flat XX%; from expenses adjusted X%; last of share fees was and adjusted up per year. $XXX EBITDA earnings up recurring increased $X.XX, Our revenue XX%, was our operating non-transactional revenue finally, revenue transaction adjusted with X% and to net diluted million

Turning to segment. the by key drivers

Off-exchange our decreased our options metrics options and was I’ll for press equities a key revenue revenue In appendix recoveries. was TRF fourth growth in volume our proprietary North in the the the quarter, revenue SIP our of lower trading in share. of offset continuation EuroCCP. drove in our contributed by so volumes The caused Our Equities release slide thoughts. capacity as VIX multilisted result higher strong fees by ADNV business reflects again primarily in volume segments, The or in includes the deck transaction data, from from by trading provide Futures, SIP, hit data, access including FX, Revenue audit futures. revenue each and a lower of European decline of higher our from increase market fees somewhat and products. non-transactional increased revenue. higher summary highs the just addition of lower In the in impacting segment new to and driven market information proprietary lower growth American detailing

We’re also share XX.X%. of to new announce proud our to a high surged market record

for Turning expenses against quarter, operating last quarter. up to year’s about expenses, XX% fourth adjusted the total $XXX million were

was year. and the majority actually up Excluding of the were impact The related X% the compensation quarter variance acquisitions expenses adjusted X% for operating expense of benefits. for acquisitions, the and the down to

Turning now guidance. our to XXXX

for drive plans call in business. growth XXXX beyond our sustainable noted, our investments As long-term and for to continued Ed

of we be contribute acquisitions is the For units X% aggregate, growth expect or capacity additional Longer the reported the proprietary expect our in the to total as After of prior of additional define revenue, rate pricing to targeting fees top rate X% to XXXX. average from XXXX revenue be In plus organic fees. to for changes. growth X%. category this X%. are to growth we to driven compounded X% acquisitions, growth by to ISG incorporating recurring line data our XXXX, this which our we of in majority mid-term, access anticipate target Similar to non-transactional a to X% years, we we closed market organic X% growth versus X% and

plans of XXXX and I’ll planning in rate further our in growth incremental moment. $XX a are to increase that Given strategic the we million opportunities, future, investment growth to million help discuss in $XX which

expense Moving to guidance. our

year-over-year versus expenses million XXXX three increase categories, and operating of XXXX. to incremental a in core normalization, million $XXX projected to million to expense We $XXX million $XXX falls adjusted million into in The expect range be $XXX $XXX investment. main

due we First, long-term which realized c, or is XX% nearly expect to in do expenses; favorable a, a were from incentive million, repeat XXXX non-recurring normalization. to caused $XX which delays Approximately in include; in XXXX savings about XXXX. related to The contribute XXXX to incremental also increase, will or b, not our COVID-related to acquisitions expenses compensation growth that non-recurring savings adjustments million, the profile, $XX of by accrual and in related savings; facilities and hiring, disruptions COVID-XX. XXXX

current for our our approximately are If on differentiated increase to our you is normalize XXXX expense and expenses record demonstrated expect the recur these items, the Based costs we although XXXX, as optimize these able will in track projected outlook, beyond, XXXX of we expansion. we market costs XX%. margin preserve to in

expenses. core Second,

adjustments, growth. increases. $XX these million, by approximately annual expect or our costs to to includes We expenses compensation general to increase million X% X% $XX price incremental otherwise category This and infrastructure

in for an locked-down a more However, growth expense extended should XXXX, muted. state should period expected be remain in the we of time

facility majority also approximately not overlap We we office expect to transition And as incremental finally, investment. of to costs million We XXXX. $X headquarters recur other space. of incur incremental in $X and Chicago do this million expect our to cost the

retail growth to in As organic and XXXX opportunities. earlier, among high-conviction, well efforts strategy, and $XX support to developing, to $X content distributing investors, and base into to for incremental futures, supporting growing Derivatives in as $XX European sustainable we initiatives. marketing, tap including Ed enhancing well invest drive build as This approximately options listing and revenue our previously highlighted growth out, our aimed other the in includes $XX of our unique to investments in million long-term as as million plan high-return products announced index million at of million and education

are with flexibility levels have the help our of to demonstrated realize in the spend weaken, our the to our the business Should revenue we As adjust multiple may underlying past, for strong market there year. investment through the model. of profile levers our have we we magnitude transaction margin adjust which overall conditions

calibrating how and investments are potential. revisit year to to both growth current our the market develops, we reality margins the long-term we optimize As will

and guidance million XXXX, Turning we $XX of intangibles compared year of $XX expect our to summary million of be This $XX on for depreciation to amortization million. full amortization slide, next million excludes to $XXX approximately in the to XXXX.

Moving to of nearly benefit rate, share tax income last XX the adjusted Absent over taxes, last share was our earnings for XX.X%, rate of the X%, increased quarter per earnings count XX.X%. higher netted year’s have would our impact effective by earnings tax against fourth rate the the higher of incremental reducing X% months. reflects adjusted on the quarter which above

Our to be in on of adjusted tax versus to XXXX. a XXXX earnings rate full-year XX.X%, in XX.X% range is XX.X% expected

spending XXXX other capital build to of investments new out be to $XX expect technology growth floor to support initiatives. reflecting range million we in and higher our expenditures Finally, the the trading million, infrastructure $XX and in and acquisitions of a for

trend-line year investments we XXXX million an expect $XX to level time, to return of noted, We to CapEx CapEx to the over to a be $XX above more various and expect due million. normalized

of costs. wanted numbers, and for to related include to guidance are significant full quarterly XXXX not LIBOR, absent interest to the expense, $XX which fees our on be million, than $XX additional which borrowing that lower slightly to changes we While refinancing interest XXXX we to year million any is the highlight first providing is incremental expected quarter expense XQ

to Moving capital allocation.

Our committed our through strategy we investing repurchases. and priorities to shareholders have growth while to cash excess dividends returning in as changed remain not share

our to return capital technology strong in and flow generation We of to time, highest the organic BIDS cash value EuroCCP growth our reflect over core our strategic a cash the capital, this end of of the Ed, share As capacity, plan us of XXXX. continue operating we amounts to robust shareholders a million million at you morning’s as to heard becoming amount the our of public BIDS since acquisition, million a January of up repay conviction announcement ability credit $XXX enabled purposes. financial outstanding record enhance general perspective, and buyback additional with amounts offering From under bond to profile. other as our our leveraging approximately portion highlighted revolving completed loan, from under XXXX used company. availability results In of corporate a repurchases line to by acquisitions December, deploy recent the as return opportunistic an leverage fund bringing and as $XXX outstanding and total to $XXX to well term of in in being

regulatory Our X.Xx adjusted ratio X.Xx due of ended balances with XX outstanding. higher from increased additional XX, operating $XXX to cash September year reflecting at cash associated the higher leverage We for EuroCCP. part, the and at with debt needs December to in million,

comments Q&A. Now -- I’d open it Ed to over it we to for back up turn like to before to some closing

Ed Tilly

closing, year of opportunities to about proud Brian. leverage to extremely results are recent and In delivered optimistic business. acquisitions we the our we are Thanks, last grow our

recurring this build expected networks. trading beyond. of to investments our plan our be proprietary Our consistent year global geographic one operating product contribute and in and to our our of execution are class, strength further by superior of highlight line and to revenue, we to increasing core strengthening footprint, growth our securities largest our products, mission to our leveraging results By strategy. business long-term world’s and the XXXX asset team’s broadening The expanding well-positioned our the technology, derivatives diversified achieve make our will we

and to very the of markets and expense a continue plan efficient value, technology, way. long-term allocation believe have define in to to create exercise and capital expertise to We to powerful people, we disciplined also continue management shareholder

Debbie Koopman

second you queue. allow if a be everyone. that Thanks, in Ed. time take to would And we get back the we'll With take permits, question. to happy to questions. get Feel please your to to that, limit to questions Steve? We per ask free person one time

Operator

[Operator comes Repetto Instructions] And from Piper first Rich question the with Sandler.

Rich Repetto

in could Because is savings. in COVID there guess guess semi my the for the on probably Ed. of the XXs morning, million two Brian. have situation, sort the And assuming that expenses. Slide now breakout. and is M&A, on just -- Brian, seems guess morning, But the those assume revenue you I walk from question Good the you in no in you what's the us there. through a Good right direct XX happening offset I $XX lockdown, is you're which don't we're to And way Yes. I then parts much BIDS probably revenue? if thanks Is I of how like, this more is lockdown walk anyway. that midyear, this that, or

are those So anyway, it. two questions on

Brian Schell

Thanks, neutral. we for they getting of without each I would announced I we were transactions each from Sure. Rich. the expense with that think accretive deal XXXX, say did, that specifically or that each

So expectation, X% an year, the on of the would prior that and broad across have year. expectations so range you revenue to prior we gave a X%

of So where pretty good the we've gauge million. that you I as a mentioned Slide revenue more the you than here adjustment offset for noted think $XX to the on XX expect gives we expense that

it's So going be as previously. accretive we to aggregate in noted the

have. it's is we've mentioned, I relative 'XX a -- like I as we're do probably a again, savings number and $XX third, anything it's as as third, in of if during far would continues as lockdown of your continued be a incremental level, some good guide some really -- million, high there far Of to of XXXX. a our don't for categories the expenses that as third the say we there's and and think, reflecting out obviously those we kind guess to got mine rough as expense On kind put a as I framework three that to

benefit. delayed delay a of savings savings And about hiring is third get that the the was then of one-time the probably that. Some that a won't third from we

'XX. and expenses -- with of how kind you frame gives expenses the reference a said, related impact like expense that for that I COVID-XX of, the of might So

Rich Repetto

Got Thank go Bucs Go Brady. you. it.

Brian Schell

Oh, geez.

Operator

Ken with Thank next question the from comes And you. JPMorgan. Worthington

Ken Worthington

additional embedded in Hi, XXXX call good How that million. morning. the spent $XX of the about we level you so should think investments guidance,

As into get continue in would what or we $XX that expected of what and is be beyond? one-time? part truly even And increase XXXX, million to XXXX

Ed Tilly

Ken. Thanks, good really Again, question.

we And build think don't Derivative spend the again, that get European I out. of first of this, the build As 'XX, I too about a for on into of it's certainly say and will some out specific forward of would going sustain versus portion that this, but 'XX.

So I'd say about repeat a -- a could of be up go will upfront because years. there's that forward to investment we the a incremental not in quarter as

Some and of 'XX, 'XX projection out. build as far you're obviously that in our was seeing for that as

based the As vary growth how strategic a end much on on fixed we will and versus up permanent is spending far basis. and far as initiatives, go-forward that what as of as that

that think going we'll and forward. to again, this be I provide So it's to -- we more move guidance as

dollar again, it's total at it's longer -- look is, geared of of actual at the of seeing term that again, will looking level rate the we're where it revenues we investment As projected. amount, toward growth the where be

-- So, long-term. really everyone a line remind revenue that that's a that I to want again, for the spend spend grow top to it's

'XX we're the with have in derivatives, said said certainly show so as up spend before to and investment we occur we upfront actual the before, planning. And revenue as will

now right So variable and certainly that, of you in and fixed I stay 'XX. number occur will not but give I'm tuned, be a hesitant would portion a to say

Ken Worthington

very you Thank much. okay. Okay,

Operator

Jefferies. And Dan comes with from question Fannon the Thank next you.

Dan Fannon

what initiatives is spend comes that retail investments what from sustainable think makes Thanks. kind from guess of of and of on business I of these it today make maybe retail. My is the talking about confident retail levels you're to percentage so the pickup and you And -- also the do you some question your today?

Ed Tilly

Good. Ed This Tilly. is

tends to an name Let it sustainable, began and we've I me year, think But seen demand incredible start to be in. last options. just single it that jump in invite Chris continues,

in, out, that's out. the one our what really educated that's will education the day targeting. in be So we year investor day first. year focused basics, in, be will is The And on

concentrating just how the what XX for suitability, participants think series we invest even be the XXXX. recently, an investment of early in and change turnout we'll XXX is I which of on. risk for profile investors So the derivatives It's responsibleness, -- what derivatives XX is incredible And really can our strategies XX, for amount on. had

the So interest to in it. continuation committed we're we're by education, gauging the

make Delta investment how the One we be and and then most different in Straight mix, Derivatives and long-term, a that bit the for various and is effort Cboe's on we from concentrated. what products. the maybe is of So little products And conversion coming see Trading on where our will really uniqueness across that's Chris, the

Chris Isaacson

Ed, for thanks the Thanks, Sure. and Dan. question,

products. what priority to So mentioned, out out our we're rolled in addition EDGX rolling also Ed education We efforts retail on our equities market.

priorities market of because a now U.S quality As Ed record XXX X% almost better those the X% equities above investors and getting those shares. Retail who we execution. retail -- mentioned there are million facilitating orders had his script, in volume are entire

many during as about have out other many of just well SPX And we thinking the and an or products then retail as script, appeal to base, with this equities. size, that's So of new new futures, we're some [indiscernible] VIX We mentioned also announced generation wave of new retail XSP. retail more we're investors. we to things this investor rolling

about our believe what for to be for come. long-term. with educate why we to is So very them our the them be years to need can asset sustainable across successful to That's and this products they empower our arm classes goal

Dan Fannon

you. Great. Thank

Operator

comes you. Thank with the UBS. Alex And question Kramm from next

Alex Kramm

going I in good the prepared facilities and those Hey, sorry remarks, morning, everyone. Hopefully, one costs missed of if last the on this but expense side go away. question the to

or how number secondarily, number didn't million, you they’re synergy guess is It's talk these given always then synergy opportunities is a I not cost And bolt-ons? that about ex of the cost that are long synergies? really $XX anyways, the deals So M&A overlap? more Thanks.

Ed Tilly

Thanks, Alex. No, sleeping. you weren't

So didn't those we explicitly. you -- cover

So the thanks for question.

were, on the away we to as expense the sites. that 'XX into we as far not say, up be goes, overlap, participate the And really following capabilities would revenue almost the those we Those majority transition and more a transactions as on gaining were side. in more cost play. of want ramp go to as the new while I far where As side, the

anticipate don't expense we there. any So synergies

Alex Kramm

sense. Thanks. Makes

Chris Isaacson

on just might expense side. the in I Alex, jump

So places to example there's Information this made believe Solutions highlighted, purchases order that highlighted as different is we especially build there's said, -- we Ed grow class platform. we are as Solutions Information Brian in what synergy where great really to -- those as world a we is of a

fueling is this not cost so about growth, And synergies.

Alex Kramm

again. Thanks Understood. Yes.

Operator

Thank question comes with the Hill you. from next Capital. And Ken Loop

Kenneth Hill

everyone. you future to touched on good long-term you a but the that has talk this to Cboe in has side had remarks Hey, this continues in little grow given about challenging could class to standing. guys your been product the pretty more The But prepared have bit, was for institutional you hoping the everyone ETF involved. crypto and around side past. overall I is on morning, important asset a Ed becoming It's an aspirations. retail.

to environment of that's bit little you a agreement the data think CoinRoutes on have provide indices kind and with touched you So I murky. an to

ecosystem how plays that environment what time growing So Cboe kind then role I'd on, and you will over of love more that A, of broadly involve, thoughts and what kind your there? see

Ed Tilly

is potential huge after and by saw Boy, certainly asset AUM, trades. too measured as when bit the a by class years early ecosystem a you while in we few not were way ago. probably a interest I love the The launched, the and albeit turnover that. we framed We what really

institutionally as know deal a some we trading from So growing the community interest of out you exposure. and interest there's for point great

we of to are warm vibrant the see we better importance space, But it the markets, and to retail and planning you ecosystem cautiously. how markets, up derivatives mentioned not you I cash for that the what could can when a describe by settled markets, reenter very any all very ETPs, exposure that important ETNs, successful crypto. accessible measured So tell that, I like

now reentering market right So a in it's prioritization. stages, planning the over on plan but of just matter and us we on that time,

space. want So stay get development tuned in and into back to the

Kenneth Hill

much. very Thanks Understood.

John Deters

this Ken, John. is

that it's touched We we in the is a framework. you We'll on that. much weren't CoinRoutes It's that was on further When start regulated follow-up partnership. our transparent that to ecosystem developed, developing earlier, crypto CoinRoutes the with rapidly Just a the think pricing crypto -- approach. space. and

believe to started side the pricing for kind any important there's is product framework that on transparent to into so folks a reason we of we would plays those critically look that assets. the value have we a we understand ultimately And that pricing It's of launch.

Kenneth Hill

Thanks, John. Thanks, Ed.

Operator

from the next comes Mike with of America. And you. Carrier Bank Thank question

Mike Carrier

Good the taking thanks morning, for and question.

transaction to the then total a that the on non-transaction outlook the X%. side where of for confident on more can versus so, And down And growth? on breaks transaction just Is revenue on then Just provide you revenue side? X% Thanks. growth of how front? bit if you're the midterm organic perspective that areas

Brian Schell

start with that. question. Yes, I'll Thanks for the

that sometimes guide, we we because revenue a we start term -- about or it's As not over quarters unpredictability medium think time. few the year even obviously -- with that transaction off know And quarter-over-quarter there's next that, a know that we'll in first target. it's

over We Ed called the to out understood laid going why the that's we've kind we non-transaction actually a view we I X term. already as referenced that, of with be incredibly it's say medium years what combination. sure a to our also last So expectation. growth And revenue a over earlier. to would make -- consistent want achieved it's people

being is revenue that side. which probably is time. of transaction for at and capacity far made Obviously, flat, our have -- have the the best on products versus period SIP, the out. fees, me, over take have time, As remainder and us, as -- Again, laid excuse that any proprietary we up how proprietary one the market you access you you plans, the then

it's we at continue think numbers the -- that's more So And just be if frankly, as I look that it's have just build how we but which is continues into again, to you're achieved, diversified looks, that math and rolls we're look, sustainable you again, about that grow drivers to of what you're going time see the the that there's a to as that primary a base. do that, you the can looking revenue of you as how we that, that we've we're well. is over recurring not more that's revenue -- seeing going to talked feel that that's that in growing. conviction it's is organic But about, how good revenue, over acquisitions number Again, the to higher And impact that building number. and time. and

Mike Carrier

All right. Make sense. Thanks.

Operator

Thank you. from Ari And Ghosh with the next Suisse. question comes Credit

Ari Ghosh

everyone. morning, good Hey,

either the that, could that lot prop management this your of ISG has efforts expansion modest there the and you've So and pension screen, some the to of certain the like been had more a I opportunities to are leverage a for little and talk strength that slower you engage? to exposure underpenetrated products. customer given customers, given sell segments funds, educational had looks outlook base board And within remains of cross typically managers about as guess that to institutional footprint, your related pressured, to where favorable your Thanks. maybe

Ed Tilly

there's I first Chris start I'll and particular. question. with The take step products what a for the Great we half quarter told too you on of then in they’re first ISG, back, segment, year a -- the the on primarily Ari. the after sidelines, volumes and huge Thanks, last think invite out the us and just if in John volatility and there, discussed much that institutions three spike the uncertainty right. was quarters

reengagement Brexit we're market. about led going some to what that's runoff there'd in election, If that And map once this told you there, of there on U.S us think uncertainties an seeing broadly demand not the elections in be exposure coming, being to be more were And pandemic defined those closing. needs and January. the closing, and U.S passed, there's a that just for a uncertainty

feeding seeing So users that their back directly moving those plans from forward, basically we're institutional and just and a engagement.

So little a that's really bit maybe Stressed, much a surprising I of reach. not too to think, word us. your probably

volatility, in people saw be don't then to or last and And we're look realize interest in names, cash this at we we think interest week, a cycle buying think that sustainable. that put puts, investors the tended saw overall. when moves seeing realize single raising right. see volatility enough, of more volatility that in short-term and lot spike, by that's I and led broadly, we sure in VIX buying, options, We investors

The of So like institute it. we macro reengagement. cycles, and by our is down, see trading engagement -- variety engagement and across now our a I up proprietary products led institutions

I'd see we'd So, I'd what call some continue. ISG but and that in January, we're think I maybe and slower Chris, see each engagement out, every to it's love maybe And reengaging, any like not segments to seeing than don't day. others, John, the on or question.

Chris Isaacson

with Yes, give data think fits access, not model ISG to for manage they risk And might in to just be and And about we unique complete usually just suite looking just with out our data. because manage then to we position. starts in customers And they they think at proved tools. them customers, other strategies engaging so invested Silexx we have investing whatever then once as a management our data, we to have and once general, on lot positions need what in a sets with products they choose nicely risk is institutions, but them. and have they've get

specific then an we end managing getting an there, be we to they're target products I use product outcome really that appeals leading just inventing and So use offer suite FLEX example products, data offering for them and and efficient our customers, and in a our our to example broad products investing. certain and tools us for it's that manner. for a instance, of where for looking with is outcomes in using space. think which effective to to your unique full and would risks portfolio a like and with feel very a our have really get engage access I'll And

John Deters

well, is Ari, John. as jump in I will this

a the making largely This investors point, on the when product processes, for fits But them, network. side. question, our -- when not because we Chris's not say, instruments, machinery of think asset we what in a those proprietary an long-term think phases, a decision our is X-year institutions they about this deeply that I'd like for especially really it's acquisition. drive there's on making decision their think automating we it's institutional really a the is ISG not they M&A, acquisitions think with how very about complex trend, fit just And broader drive to tight I We're revenues. of the process middle X-year trend. into It's those ISG the about in trend. do not the case, that

their mitigation, product things we're risk engage to processes our automating processes, in evaluation pricing allow set. so more tools them institutions automate process, And to to margin and like the giving deeply

of while in revenues potential. while, there's because a doing this we value itself. we all So we're the see the long-term lot extract And remember, product

people are of but are only have products the as themselves ISG trading not products, recurring growing So a they more result of base our value the contributing ISG to revenues. and

Ari Ghosh

Thanks Appreciate color. all all. the

Operator

Sachs. with Thank you. comes Blostein next And from Alex the Goldman question

Alexander Blostein

had on I you But M&A changed. was capital active know little minute could couple obviously front nothing last the came I 'XX. hoping Brian really guys in we priorities about each as bit a think the Leverage been kind on Great. morning, you has well. a your pretty Hey, years. as of spend good everybody. broader strokes, up

over the between walk flow kind anything free through So XX next the to on deleveraging maybe front? shareholders us use help months cash the return of and else sort of M&A of

Brian Schell

just question. reiterating, cash continue shareholder those that again, thanks. value flows Yes, the strength achieving with approach Good and deploy the will we of Again, the to growth. generate which, of that long-term

-- of the repurchase could for our absent our outlook inorganically, all it's value deploy we It's with But to and I'll then management growing makes is trying that potentially continue the We initiatives, that, annual a to continue you It's today today I commitment we in focus delevering, a say, reflected and repurchase that authorization. that we're does changed. from on prioritization look, part have last increase continue sense. -- really else that again, shareholders. the share me, with from those the absent that we ranks that the hasn't capital. with attractive But to have make think what I that become in the for call the versus we're see increase. We confidence seen prioritization it We growing standpoint, product, the Again, leverage, an grow to to long-term. share -- dialogue. the see team, the we'll for to share the about. where to be a have going capital guidance the something again I continuing always sure with growth, access, Board, to example, the organically, want have to organic we’ve the and talked look is again, been that the an to balance you again, call of if sure it is And the there's keeping enhance infrastructure leveraging of delevering make is that mentioned, dividend focus to as for on forward. anything network stock going repurchase, global don't -- return the deploy and sheet, conviction to excuse cash much Depending one opportunistic. as where as personally repurchase low

from delevering deployment. of would So I capital focus say a today where are big that is we not,

Alexander Blostein

much. Thanks Great. very

Operator

Deutsche Bank. next comes from Brian the And you. Thank question with Bedell

Brian Bedell

folks. tie morning, question. wanted my together. taking Maybe for to revenue Thanks Good and expenses Great.

revenue kind on also in just there maker thought attributable considering have about timing revenue flavor of outlook just, revenue Brian, effort 'XX. of you -- if then payments? European on is gaining -- outlook, talk the growth the think the on to when the do I the obviously January of And can that volume quickly positive of what's expense payback expenses? market just after -- you those Derivatives on terms the you'll you you for expense But have trends initiatives, a in are the strategic So forecasts the guess,

Brian Schell

… about understood I thanks. the sure I'm question first the not your of Sure, part

Brian Bedell

given Just in making to institutional on would for essentially that I view of were here was revenue retail this calling get you that sustainable trading environment. you to expense the trading a sort that we're are environment to market more be a in guide, volume XXX XXX back the investors strong -- come January, the be and and seeing

Brian Schell

Okay.

I I and response, understand I that a think make January, year. with I if would that, say my So doesn't may know I be flip

So that strong has been volumes.

the we and achieved. does what thought And play so be how about it certainly into can year

on. So backdrop, continue and but not having our year doing, we're January entire to we're that there's as obviously inform what seeing trends that a using some we're

As various the activity products team about, on as from and talked of the asset the the and basis rest has about the go-forward various Ed classes. a from activity, retail institutional talked the

in each hours, BIDS XXxX, me, As we growth we extended more things the excuse far 'XX long, investment the or and -- were priorities XXXX. expansion, for and investments product less respect Derivatives and are of the out, investments latter outlook these the a contributions revenue. by half more the as and 'XX, as all the and coming trading that where of Ed for to non-transaction in how worthy do return, build 'XX about see are for in with will to as vary significant those a And of revenue we more online talked the kind expect mentioned European we said XXXX in talked it, retail, about growth,

And, addressing what a than So yes, see better possibility represented we're make of there's think I that analytics, other can't going should with product, access we're on is, the in a happen revenue real it's delivering the right again, to again, need the some secular growth delivery. and again, community going business. later day, demand to in a it four to new kind and in a new have the now trying go we're increasing for growth this it's year, quarter that the expect for that, our data see we by end I the think, is geography, the say expectation we're at again investment But to the but that that revenues prioritizing. a to that 'XX. need 'XX of And areas of we're is and have which it's sure looking

we we a if that probably on this can demand see firms. the 'XX rate infrastructure, large I'm really, as existing really a we not seeing leverage with is meeting that that's have to the that that's So way long going and of long-term X give that ROI again, a existing we especially to a beyond. and that that a that activities We -- and most look. access in guidance far And that organic medium to today, as saying, contribute and 'XX, that's we see helps revenue ROI -- with obviously upfront. And true X winded you year start expect really to capacity high the again, and and talked about growth leverage and really network to

Ed Tilly

the our looking launch for an the on XXxX, me of as European eliminating to it see impact and happening at Separate the to for XXXX apart reengagement us if and them queue when the in ISG extension I investment the can making it. future see sideline ready we and our bit. Brian last were institutions we're summarize That laid way continued let waiting of I in for institutional uncertainty and out, BIDS, What we're obviously headwind at it's just is think Derivatives, a all level. in from quarter's beyond. make pass. investment midyear the So in predicted and That's January,

Brian Bedell

much. so you Thank color. great That's

Brian Schell

but opportunity to a super equity on it's thing the It's in just directives, It to up the We're statistics down market want super also for Derivatives. in hit exciting pie XX% a this. about Brian, be to bears the flat And is European market I to derivatives. grow just highlights European in of We're the out European and us. the excited it XXXX. just there. terms going U.S build,

Brian Bedell

a 'XX And comments. in Is that's starting correct? in from in the think I that first perspective, later revenue the of later you intimated -- what it's part

Ed Tilly

That's right.

steady launch back build end midyear, year. So into the of out the

Brian Bedell

you. Thank Great. Okay.

Operator

Wells the Thank next Chris question comes Harris from Fargo. you. with And

Chris Harris

Great, SEC Cboe view change in thanks. what industry for the and the specifically? leadership on a share Can your guys you mean might

Ed Tilly

is had, investor more it in long-term development, me structure thinking the SEC up foremost day where We in the it's the order been view the to market handling, letters. an it's I investor, comment healthy all aligned with investing Let sum and public. what trying in Cboe it's would incredibly tension and a our it's operations, in broadly. our both our The new retail SEC put the day, as and with our do first start for wise best relationship to is we've both an an have product and

expectation relationship I listed be think the putting new his very will with he's a that together will our frontline, as of team his the continue healthy exchanges. chair

team Chairman We are sure to where happens. incredibly I'm this discovery dialogue. will understand and And his I'm just price that. forward looking some healthy

hope So change. going continues they've the lit stability is maintaining I this think I uncertain incredible year role SEC in in seen and the very Chris, most of exchanges I hope about an the continues. in engagement that the optimistic how primarily times. into operationally, we've played what what the

couple a you calls, in is from But think I will, it but operation has Chris, a communication and the with SEC the I amount words at think the for team think time future. of spent I us regular is the model updates important.

Chris Isaacson

Chris. Yes,

So really. And U.S to markets, worked in events. very the SEC we've et education, dialogue I showed incredible of kind lit investor investing lit the CCPs, forward really saw -- serving is volumes record which work great we equities, empowerment that's which structure aligns staff. goals are classes, of what the them. well our it. at look very volume the great well, options, in education, a those with Obviously as and on continued well, to they public and protection, center We we think some will with U.S sure commission continuing market focused many asset designed. the much just dialogue the structure January is with investor as really across market and see And investor markets unprecedented and January, despite making And cetera,

Chris Harris

you. Thank Okay.

Operator

Oppenheimer. And Owen you. the Thank comes next from with question Lau

Owen Lau

you Thank for my question. taking morning. Good

So a Slide on me from one XX. quick

Your organic in are you to in X% to that -- X% make only for was the recurring growth X% XXXX. to guide What XXXX. revenue non-transactional factors

are down you. they Or call to reasons you growth? any that being want the you Thank slow would are conservative? like So

Brian Schell

at would rate. there -- say some were where with mid where are. of larger, obviously, to that penetration as actually we that We kind the base opportunity look look we still our is pleased look we single-digit I know, high of continue we gets out coming as you the we is, -- at to gate, pretty pipeline, No, at growth our that are the

where going that there's growth to we're pretty We still We are. at a But are look still are pleased still we We we be conservative, geographic where think standpoint. opportunity. from with rate.

coming are we growth where asset generating seeing EMEA, as where coming those they're across across and U.S., far As growth where the it's APAC the classes, targets.

Ed and and heard Chris sets from and the talked are You've there historical John and the analytic out expanding new opportunities to services that ISG services base. data index the data the customer the and about

So rate. growth that liked actually again, we

it go-forward normalization were basis. with from a I some growth the some for a think the But And that the we rate of where good is very, expectation acquisitions. of prior a from overall, reflects year from very

Owen Lau

much. All right. Thank you very

Operator

Kyle comes next Voigt And KBW. from question you. with Thank the

Kyle Voigt

should your SEC long included? Obviously, fees book implementation. how eventually just data model? of consolidator Market passed morning. thinking good competing there's a more data SIP maybe about prop But December. reform Hi, of question. the a there's your investors if to was revenues really road potential be Kind Or on prior depth follow-up in infrastructure under

Ed Tilly

Maybe, Kyle Chris. -- Thanks. you there go,

Chris Isaacson

Kyle, jump Yes, on that. I'll in

all the the the on well letter. -- as both our proposal in governance made order rule, comments as infrastructure we've views our clear of So government's pretty

refer those. you I'll So to

the supportive broadly quality supportive have improving of technology of over the content increasing And been very the the years well. as of We have the been of SIPs.

both SEC with the So certain -- points on but we infrastructure and governance the do differ proposals. on

to there's be they for enhancements our see valuable to market as SIPs don't some exclusive. the are, decide as that them who opportunity think it. to see we for continue well as as We them mutually proprietary as those continue purchase data So We complimentary. with

Operator

comes question next Compass the Allen Point. from And with you. Chris Thank

Chris Allen

million about ask acquisitions wanted revenues. to to Hey, I next X% equates impact $XX year. to X%, million from $XX the morning, guys. about to I incremental think The of

the the $XX million wondering BIDS Just another $XX about we're second year million about trailing XX-month June. was think Euroclear running so of what annualized $X.X far It's basis. year? million this as equities, of revenues, Then, annualized is are different half million. in components? what generation I this revenue $XX And

So are bit little guidance what and a just getting higher the components than wondering your different what numbers implies.

Brian Schell

that. sorry, I I'm Chris. not your 'XX sorry, -- I’m specifically around Was or got number your I'm question was sure --

Chris Allen

revenue what's to your And the the expectation million. deals about from -- million yes, revenue Yes, $XX XXXX baked contribution -- what revenue then in what for XX which XXXX? was what's is was the into impact,

impact can about the from then the assume $XX.X any Just any because the deals million, impact we and and see growth. doesn't BIDS in current rates implies Europe and that run or derivatives rollout that

Brian Schell

as roll role, expense the in you're roll role derivatives purely that -- we was more excuse correct, me, guidance. we the and right, -- is off, the derivatives expense of as as Well, overall far the as back into

question. I X% math more that's I rate going of X% for think forward, the think mean, a I to

number specific provide all good additional looks I detail about is follow-up included numbers the like. we again, announcements aggregated me what including from BIDS you, rate XXXX. with on that on total I look the as numbers, but we get can don't that to the know, the that that that's certainly in specific dollar the certainly those as the basis, amount So we've the the feel in a around, had you we range. too, contribution. just X% all can X% what I gave think as far then run if each XXXX And go-forward there of that say that individual. that have I I'll front I'm I sure have at I not just color don't as And far of XXXX as can

Chris Allen

Thanks. Okay.

Operator

the And question a follow-up from you. Kramm UBS. next with is Alex Thank

Alex Kramm

Yes. Hey, thanks.

were Sorry, volume the just of just follow-ups was out amount, These end a revenues, what think I of EuroCCP, down flesh quarter-over-quarter cleared to can back quick couple they housekeeping here. happened but there Coming call In sequentially? questions. the to decent the are you up. terms

lot there. metrics capture a provide revenue don't You of

in Europe we as then help, your of BIDS, And mean, your or just this you in there's so you model and that again, the now, speaking the comes income statement, of segments, anything stuff help I So better. rather geography in can can business. -- the us the U.S

time You’re to be should up going including being? this where we Thanks. or for break this the

Ed Tilly

is So the the can 'XX going we'll provide for going the to we we're American as colors that, into -- metrics this much where kind to see there. North up around of roll and equities is

look So release. for our of kind go-forward basis that volume with

of the time volume will over up. of But the anytime going -- of more go we tiers, that see schedule -- respect with the little EuroCCP mix shift some fee as and the you're volumes as there. We color to far metrics with bit types and see to with see we of capture, settlements. the we and a On types within saw increases, capture bit the with clearing, the overall of some the the provide more and were a revenue you'll and little revenue, as

actually from overall XQ because able a revenues. lift little growth nice in rate. of actually had we're take actually basis, had pure, a XQ credit call transaction a with we're a I'll lift in from But to overall, liquidity XQ. a pleased The to the we bit of a XQ that of advantage So

Alex Kramm

Okay, thank you.

Operator

Rich is follow-up Thank you. with Repetto And the Piper a Sandler. from question next

Rich Repetto

again. morning Good Yes.

just City, between a Kansas -- connection say to I didn't offend didn't but would conscious, Bats I was to you want the mean First, can friend. make I might one in City it Kansas

Brian Schell

Rich. We are forgive you, trying to

Rich Repetto

Okay, know solutions or you there's the Chris, of but as question or guess really you, the is ask issues you That or it. are is number that all to potential follow-up. and around But seen been I -- the to And do the I I that it? do trading that a what Ed do retail, see anybody yes. have on in we've on the wanted frenzy don't the I a else. can questions SEC

Ed Tilly

… think Rich, don't I

Rich Repetto

you solution, need Do a yes.

Ed Tilly

I the think factor is don't retail in directly of to retail duration? it, solution, think, of the to retail contracts some categorize -- exposure is way my focused investing which market what goal? what Good being Great. retail exposures what looking that decisions? put is for, is reference I motivating looking of investor in understanding the for, I these the that perhaps know is investment hunger? the able and education, I What investor bring the yesterday. on transparency, that Why to today different, What's are the to is and is that the understanding strategies as on

development contracts. who's engaged continue because we with follow. for a we day and education to wrap say year trading say So question sophisticated with done needs there. of the with armed this with investor. way market new us, options retail up. basics what looking engage them that education needs a the and in, suitable that everything ready does to I retail, out at love don't are research new said, then our will the can. out investor provide we're transparency, And can help to I've we as there's once address strategies to solve team going that to to great the That's we We But for think to it's truly bring day we're contracts our and be out, institute year and is focused Rich, teased engaged I on. be certainly that and fixing in, And will a as the I

Rich Repetto

Okay, much. okay. Brady. Thank very you Go,

Operator

the And you. from Kyle KBW. a next with is Voigt Thank question follow-up

Kyle Voigt

taking for my thanks Hey, follow-up.

Just a then other And your $XX.X the else? how that something that or is? -- increase million. trade reporting modeling question to related on level on just of revenues sustainable Does CCP wondering

Brian Schell

ebbs at, the see at just aggregate and basis. not of prior contribution from be the have going don't say from with is we does forward CCP. we kind what that's matters. a be always collection a the and to, material higher It's It modeling a I slightly And that and a going don't when over been and to but periods would items of bit there have look number of standpoint, and we in do of -- it. visibility look collection a to flows honest we little a that's to any item much a EuroCCP I'll -- roll things. of it's So be you but have where your It's going as

Kyle Voigt

you. Thank

Operator

Thank question-and-answer you. conclude And does that session. the

to comments. So closing Debbie return to floor like the I any would Koopman for

Debbie Koopman

in Thank be time you. company. That completes any for Thank you. available our and call continued follow-up. this morning. I'll our We appreciate your interest

Operator

Thank attending The conference you now today's concluded. presentation. has Thank you. for

disconnect You lines. may your now

Cboe Global Markets (CBOE) 5 Feb 212020 Q4 Earnings call transcript