CBOE - Earnings call transcript Q2 2022 | Cboe Global Markets, Inc.

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Operator

Good morning, everyone and welcome to the Cboe Global Markets Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ken Hill, Vice President of Investor Relations. Please go ahead, sir.

Ken Hill

Good morning and thank you for joining us for our second quarter earnings conference call.

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

Dave and Chris Following us for joining Chief to Q&A. Isaacson, Chief John would their our Also Deters. comments, President; of presentation we out like will open include Howson, Operating Officer, Strategy to slides. Officer; will the use our that call be our will the I Q&A this point

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

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

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

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

Ed Tilly

joining and morning, thanks Good today. us Ken. Thanks, for

and He President. to new Howson overseeing officially as is his role week begin, was Cboe's London welcome from I U.S. Dave Before lines to in business Chicago relocated globally last the I’m to pleased

quarter Cboe are We to Global report him strong pleased here to I’m another at have excited Markets. today.

results, to revenue a and year-over-year achieved growing XX% to net million, revenue we diluted record quarter, $X.XX. record-setting $XXX by the During adjusted grew XX% EPS

results quarter equities integrate diversification second acquisitions, cash in business access solutions proprietary in activity across continued our our and solid driven growth to trading volume with continued continue our as increased strong businesses, were index the recent business. by products, data our Our and of we

Options had performance Our options, Derivatives quarter, SPX options our were as helped XX% volume average specifically solid and activity business by X% SPX well increase monthly a VIX year-over-year. as drive Multi-listed excellent multi-listed options the another trading our increased driven strong ADV franchise, up in a business. in increase remained daily in Record in VIX while options for the flat. Futures index complex quarter, XX%

the revenue Spot exceptionally These Our Cash by average segment, remarkably quarter year-over-year. daily where notional including with performance strong X% net X%, growth well second increasing Markets driven traded revenue organic XX% business year-over-year. performed net was our up were results in and during Equities value European

venues. favorable Similar Cboe market Europe better we analytics-driven share Additionally, sales on by increased quarter, achieve results these a the saw achievable an not reflect, the of other to X Equities results points last to help clients campaign backdrop, XX.X%. market year-over-year to Cboe on European than trends just team percentage but implementation is nearly our

XX%, this net revenue Data revenue continuing to Our and business the increased recent of fuel Access net the with acquisitions business. Solutions Year-over-year organic our XX% strong of with remains integration durability growth.

business: core Derivatives remain opportunities on Access on to of in significant Digital. Cboe Solutions, see and our continue Data areas we executing focused We and the three

acquisition During X. ErisX of including of the we priorities, quarter, May each solid made these progress the advancing on closing

changed. opportunity more changed digital the We the has We detail, accounting remain will evolve. long-term which closed adjustment has by that ErisX space. in the resulted digital market since in Brian compelling the not believe in strategic to the asset opportunity Cboe within we for continue environment excited asset the discuss digital will asset While dramatically our the transaction, strategy space

want assets, strategy trusted, for a which transparent, market market Now, to more class. our digital fundamental for regulated is than this ever, participants asset

We are expect group shape soon and industry. closely partners with of define as announce to continuing equity work partner the we broader to our future Digital and the and Cboe

this over with The complex Since options this increased trend XXX% trading and Derivatives, Weekly our extension strategies. meet as flourish of to our risk. continued to volatility estimates increased Tuesday and of manage where incremental expirations market to volumes. Turning we’ve Options demand, to trading globe, VIX Thursday in XXX,XXX early business. hours-a-day, off accelerating Tuesday per the now the start helped of XX the Thursday zero the market contracts of days to retail on expirations have both addition nearly brokerage and adding over customers growth SPX across and the heightened uncertainty hours products reinforcing to expiries for strong day, participants expanded to volatility for Weekly Cboe’s has have include customers our the seen SPX Weeklys with our our of every meet newer access for derivatives day franchise accounting indicate like duration customer the floor. demand. the we and With of shorter in and on XX% continuing trading core SPX our Spring, SPX X since to outperformed expectations initiatives, average added SPX Many platforms ADV expansion of options, for help further trading XXXX, to XXXX we SPX contracts and initial expiration turn across SPX embracing days-a-week,

meet to Options continue upon to access volume finding SPX needs. increased XXX% to and XX%. Additionally, their Options in average Trading tools XX%, risk during access to customers manage on increased and Global our VIX focus increased ways core year-over-year, Hours, VIX we and to volumes Futures expanding want daily new deliver strength Global

leverages and on going continue to durability we to later of We will and front-end strongly integrate there we we to our across is content quarter and we growth which Solutions in continued every provide have continue to revenue provider, been quality network, are extended access cloud partners; and we’ve broadening business our infrastructure only acquired in markets we and data and, operating all average growth solutions first data and step we’ve daily our record billion demand recently to us more strong but as platforms, set of exchange our capitalize business, further during unlock this important the package year-over-year several our Solutions Today volumes to deliver services streaming to FX globe. revenue data an truly of during day services strategy, to for allows notional classes. asset opportunities. delivering we access exciting include: for The towards XXXX Access Around from addressable our and areas global through of strive continued and from and total proprietary expand with geographies, continue to unique believe market which up Data market Since these second we’re the expansive customers; Cboe’s the on Cboe’s to world a effective share a to with market about and service, the well-positioned excited consistent capture data. by Access very for strong businesses we across data cost forward access global performance we and to our as trading, and data averaged bundled Brian Data expectations further extends opportunities week. geographic of believe as value Three users are and data volume call, prior network products, products topping to our XXXX, important XX%, markets clock, and to the the XX% X% have see vendors high group. services are this business range guidance broadened XX% evolved around expansion in to years innovate, with global quarter the reach geographies were investor the the as updating around organic market Cboe’s and quarter Starting XX%. which globally. Cboe’s around XX%. to new the distribution our the market to saw range and results our last globe, our and integrate business, to of and The $XX.X data, proprietary net driven of

low We impact, market a quarter. larger the also new with record a provides ADV saw reach clients which our risk in full amount of billion order transference $XX.X solution second with offering, for

we rates, our also continued the to million very offering where year-over-year increase strategy, opportunities are FX rising NDF higher particular product margin business. $XXX exist in diversification our for XXX% saw With bullish ADV. be a and that we inflation our interest to by We on encouraged continue

for noted business, addition market. market to Europe, a now Turning earlier trading XX% became share Europe our I to European strong in European equities with of Cboe block-trading #X the platform block the record BIDS the results

saw growth this European steady Additionally, our clearing quarter. business, EuroCCP,

delaying still And to and in to customer continued we our business. early timetables, vision make believe also due European We have Europe we strategy softer this onboarding volume been events progress in long-term on geopolitical while the strongly initiative. Derivatives trends than for expected

In earlier on our the Moving in program this to ago, new continued are we Japan XXXX. one Australia X.X%, as attract proprietary track technology Cboe Pacific, migrate February increased grew and volume. Asia Cboe from from XX% Australia, to market provider to XX% share X.X% share up market to year to year introduced liquidity year-over-year to

our in Canada we completed bolstering our Finally, North globally. America, acquisition in share business of last and market NEO month, expanding the listings

both to Our our and see Canada working the opportunities that equities now MATCHNow, help on and global businesses. overall are listings market will XX.X%, enable plans integration for including in we us and tops we share maximize NEO

around us world. and Our set unique diverse an needs diversification, the to geographic increasingly our with set, of meet customers enables class asset the product of coupled

and Our global ways. unmatched scale ability business the new gives to efficiently expand us scale our in

the from Cboe second in team integrating remains entire for our extracting NEO ErisX created, the of quarters the growth the of its next quarter, wave the we ecosystem value of even focused and and on With have closing the in positioning platforms Cboe acquisitions ahead. greater

to companies new nine laser-focused and services of achieve stages integration and offering of of for years, and as various channels. us Cboe these a brought helped as last on distribution Each a of remain We products, we have greater each the companies. these acquired unique breadth global well in companies the has X

efficiencies teams for approach synergies, a customers, before, and experience As better workflow we’ve access holistically, cost. and of the while maximizing approach creates stated harmonizing creating for avoiding them. points, siloes This technology revenue integration and we technology both

consistent business create opportunities, growth. products and and delivering our on remains architect to that helping the continue of we long-term a for to services enable focused medium our strategy As cadence future, short,

to excited Brian. year. all I’ll are and flywheel turn under creating strong head which over it that, the to into way, efforts With acquisitions closed for We well of is we have momentum second announced our integration the as half

Brian Schell

Thanks good everyone. and Ed, morning,

Let adjusted results. me 'XX XQ 'XX that specifically remind my our and everyone on are non-GAAP noted, comments compared based XQ to relate unless to as

combination noteworthy our of second of takeaways half As on above $X.XX. Ed up strong and environment second quarter. XX% discussed, revenue quarter, In diluted the was share businesses the Cboe. for continued investment record basis to favorable to one levels. was per a on quarter’s the first the an Quickly last of A XXXX across earnings operating touching exceptionally propel from continued some adjusted year-over-year a

Cboe and strength subscription at Data DnA, $XXX X% new the did Our Solutions growth revenues net that growth second quarterly post the Markets and on in our produced net revenue the increased record XX% to up an back business. categories. net XX%, our Data XX% unit organic of up EBITDA business. categories, led Solutions Options at million, $XXX diluted the year-over-year results. setting operating growth, million a and were of would net $X.XX, on the was driven revenue and Adjusted on the note posted Spot adjusted increased Markets like our quarterly basis, FX continued quarter the strength revenue year-over-year organic an to Access of segment Cash second our basis, and I gain, quarter, again compared quarter was by and and revenue Cash each a organic Derivatives from and earnings million; but year-over-year by XX%, $XXX only to Access Markets for expenses strong up to not index X% XX%; given last, and another market strength up diversity share year’s equities of and our adjusted strong XX% share cash in in European increase, Derivatives, per results. XX% to broad-based last yet speaking every volumes up truly produced Derivatives in

to moment segment adjustment we walking I into through quarter ErisX. spend for want the getting made accounting results, Before the a this

on closed mentioned, environment dramatically. Ed we the since As changed the has May ErisX transaction X,

observable Given prices, holding our and dislocations, re-assess peer to publicly-traded ErisX. valuations, the asset necessary intermediary we digital value it felt of

analysis, of writing ErisX of we our effectively recorded approximately As our auditors approximately a of asset million. impairment and of along tax work and with in result consultants, deferred goodwill goodwill a booked to a million, third-party zero, $XXX the $XXX

the reality the today, to transaction believe when XX, our Our space deferred digital asset. asset of tax environment $XXX in back market assets carrying no sum commitment June XXXX this reflecting book announced the we of the set tangible out intangible value but the of $XXX October. and reflects changes way at approximately We in million, to we is million, adjustment what or do asset it and that digital our

events underscore solutions. Cboe, positioned partners, trading, is and a In those and data with the best our the believe clearing of along need we strong fact, help provide assets. transparent recent for that And for only industry digital trusted to venue

to Turning by drivers key segment. the

appendix the so for information our segments, provide and deck include release of business metrics detailing our just key thoughts. press summary slide of Our I'll the each

Revenue fees, as growth proprietary as better we we ADV respectively. revenue from each our index growth And increased American options benefit index in by equities in as index As to double-digit priced ADV of strongest quarter. impressive saw higher driven in by was share, continued well XX%. options, options and mix at Total market net per another year-over-year access increased trading to during growing XX%, revenue per growth data moved with mix a positive of our up year-over-year. a contract earlier, lastly, higher segments and shift stronger multi-listed XX%, Options XX% of our mentioned index up the capacity given products, contract in both revenue higher delivered SPX volumes X% and options. XX% market each continued higher higher-priced the quarter net business. and by North options

the helped up volumes industry segment drive Solid XX%, uptick.

increased XX%. volumes higher On and with driven Pacific side, fees and market XX% the non-transaction access of increase Europe solid revenues was million. was of Net the growth quarter, segment net inclusion proprietary and $X.X APAC Asia revenue for and The X%. capacity reported the up The up Europe transaction data by Cboe fee growth XX%. in was

FX fees a clearing a strong segment, net market nearly quarter, Clearing headwind nearly of an the by growth were point rates Europe’s $X increasing X%. reported were growth percentage the XX% Cboe and given or ADV in industry by higher XX%. revenue equity increase share. impacting fees year-over-year very led increase benefited million During from in for X Transaction volume volumes

quarter. contract year-over-year Volumes metrics were X% increased the for better posted revenues a net gains in and rate basis. the and on revenue quarter slightly as segment Second non-transaction both year-over-year transaction Futures per

XX% net side, non-transaction up market XX% of up the the daily as as grew trends. and value favorable fees clearing benefited capacity in the were market as XXXX. quarter and revenues access average FX in share and well fees And second transaction XX%. continued increase On from to XX% Net a data compared notional segment finally, were

and robust of XX% options accounting subscriptions continued Data trading basis. equities growth rate More by to and attractive year-over-year by three for year-over-year options and book Access driven Cboe’s this driven for port logical Solutions has As growth organic demand changes. earlier, market of accelerate, opposed an on primarily Ed And strong XX% the posting the usage and as to increase, increased saw was our an equities specifically continued to depth physical on a side, businesses in noted quarters and data well. perform revenue capacity. we pricing units, growth revenue additional Again, and net increase, the products top-of-book

we in remain Solutions will and remainder we healthy As of over the the Access Data business. out trends XXXX, anticipate look

up XX% XXXX XX% XX%, at range X% we outlined and rate to X% our We range DnA above revenue the a to Day. medium-term our to growth are of guidance Investor raising from targeted to net organic November XX%,

adjusted Turning quarter, approximately up compared operating to XX% total million last the expenses to expenses, $XXX for were year.

were adjusted owned of impact the XX% the expenses or for than acquisitions Excluding less a up operating $XX year, million quarter.

Moving to our expense guidance.

including We almost full $XXX positive driven year, acquisitions second of compensation year our range to $XXX our are our when performance higher this a prior of from of strong $XXX million, expense half exclusively incentive ErisX increasing first the for million, half to up NEO. and result is guidance XXXX guidance $XXX coupled of to of the million through increase as the a XXXX. financial by outlook The with

and retain million expense base and conviction growth talked in the scale driving performance support adjustments revenues, to future. are Overall, needed levels updated reflects while outsized culture infrastructure greater have today best-in-class that our Cboe’s incremental our revenue the about to moving has strong to is $XX guidance $XX We spend our our for drive as in continue in growth our well our for enhancements we business of work invest expect million approximately as high million to directly XXXX outstanding pay talent higher opportunities commitment reflect with to for XXXX and driving attract expenses activity long and results. operating associate our to entire the $XX growth. of And done investment

want slide, expense our full call that year our to the targets are of out turning reflected to guidance a summary positive Now some revenue updates next of in updates. to the on I

will XXXX X% XX% to our XX%. in X% XX% growth our be prior revenue and net organic DnA anticipate of guidance XX% up from to now in of medium-term range, we previously, to guidance noted the As

than to year contribute expect less a points XXXX. in total to acquisitions continue held between to X We to revenue percentage net X growth

target not year-to-date up Lastly, X% moving results to X% our have to only to overall from we XX%, posted, we business reflects strong least, in not guidance revenue but our our moving forward. certainly net X% revenue growth believe confidence the XXXX. higher guidance the We but updated of for organic is prior have the

our from earnings at strengthening on on ecosystem tax amortization, adjusted a our the effective the remain And seeing full guidance laws, current year our Cboe. contribution operating depreciation unchanged. and and of are all here broader CapEx, under solid We rate segments, tax

for the incremental for $XX.X XXXX in interest related XQ million costs put second in expense borrowing was the ErisX to million in million. $XX Our for the expect quarter NEO, be Factoring place interest of of to $XX expense the range to 'XX. financing we and

remain dividend business, to On in and on our remaining effective payments total share front, the capital. well-positioned returned shareholder $XX support quarter, of authorization. the remains million second $XXX in has We million and been, our focus the a repurchase repurchases. in comprised of our repurchase to maximizing shares opportunistically share capacity we invest $XX dividend, $XX use million capital with and through value in In the of our shareholders, million

increased possible we maintaining an Cboe in of for from related second levels excellent Overall, funding the In to and at value summary, and in increased, sheet enhancing ratio remain quarter debt ErisX balance committed as second leverage flexible shareholders. work to transactions. Our putting June our to capital most way to NEO our XX a the reported X.Xx, up quarter. X.Xx the

are the about and short, continuing forward in to numerous we for Our durable excited performed deliver our investors well, long-term ahead. exceptionally medium We core quarters look investments. growth business to and

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

Ed Tilly

Brian. you, Thank

progress published to XXXX, Cboe I close, our part Report, covers as including the the the exciting about more ensure our made ESG to another report month. net-zero on the was for integrate endeavor our we initiatives, great excited an we second help environmental, to help Cboe have governance to thank I well-positioned customers head innovate, our wanted we its believe XXXX team and half make important we year. designed to combat and reach climate couldn’t are I to This by and last social the continue Before commitment highlight quarter. which does emissions into change. continue entire I progress I grow of to and want be to

Ken Hill

time be that if question. back we'd to one everyone. to to point, to this And take in questions. the a free queue. happy get to questions ask get you per take Feel second We your time please permits, to At limit we'll person allow

Operator

Rich [Operator Repetto Instructions] And Sandler. with this morning's first question from Piper comes

Richard Repetto

your and for pullback, the guess you've Ed, all Good there. thanks Ed. we've morning, the Good the results strong guess, a and index with year-to-date because such last good I morning, But team. I'll And with seems seen detail. the XX% I SPX on a focus retail complex as well run own the as think of portion question driving contracts is, the options seen Brian it it year, like is innovation up. run I versus weekly volatility.

seen So is I guess retract, seen -- is seen the resilience, around we've forward? sticky options other is index I haven't guess. like in the think here, you be we've Because we and retail enough the whether products, in it retail going question going sticky, to

is So, the options. index Thanks. Ed. comments the on question, This

Ed Tilly

realizing, Rich, the cheap. implied look moves is what out you relatively that look in those cheap. the Good relatively of quarter, in called setup. excess we And options year. movements we options Thanks, entire And the they're mean of you. at if last really with the XXX, And are, recall volatility they're that really a the from It's continuation daily of what X%. we by S&P price the Got

and What at is the track of realized Thursdays, appears of much. is from where the really finding institutional seen lot doesn't at than that the and less that opportunity. mean is, great retail sustainable. you and by That be Volume platforms. in XXX And platforms, Tuesdays doesn't that off attention, both looking S&P to movement even and exactly I X%. after retail fall days coming call out interest we've complex the a adding that list there's So

see is obviously the we're past July, seeing just interest continuing, reported as And into for we the what we've quarter like that daily building. sure. that we So

see sign letting So no of up.

tune we're adding good prepared a I as for signs called I remarks, in to think a out from lot the complex, those us. of contracts XXX,XXX additive dailies. And a day all learning are couple in the the

structure, in I market from look So think this uncertainty now, think environment, that platforms continue. is over to this the will the term And us for won't telling retail out we volatility no the think interest reason continue. we

the So options favor. exposure. super dated short, for has met really in those demand still dailies adding that And

expect that we So to continue on. Thanks, Rich.

Richard Repetto

Great. Thanks, Ed.

Operator

Thank Worthington next from question you. Morgan. the And comes Ken with J.P.

Kenneth Worthington

morning. the Hi, taking question. for good Thanks

the continue is you to focused? timeframe. open here? But are see the the in build maybe to of your In where you the set terms interest you to of to the we the over, to as out here, pick what index don't that reached for successful, you terms the what this a might early of quarter? stage, during that the then keep success, think options I Thank of And you do have you you of the here, the greatest think interest continue target to and know, expect next year then or client European couple management invest initiative for and business, you. where days hoping questions is about you consider engaged to open level ramp volume the in what and And levels are

David Howson

Hi, Ken. This the Howson. very is there. David question for Thanks much

results of expectations the did geopolitical interesting of some to plan. few execute on we little. a a the speed had continue and impact we results onboarding quarter, alter the as the our throughout Those So

across that launched to new we country during you peaked the quarter four However, benchmarks. quarter. eight compared open the And at mentioned prior interest the products XX% there higher

well. volume at quarter We also XX% for saw as options the

to that. success year We later on of see previously we continue than of stated. the do guide terms call In what our realization plan, a coming the in execute we there

and success to us, in contract. futures [ph] options onboarding for pricing picture increased new the clients, be However, the continues

and new we As we right start platform, brand as trading an the journey than new a build this here, brand is clearing rather here. said, event at

to out we next the be So the years. the opportunities build here we there continue as convinced proposition value and by over coming

Kenneth Worthington

but is or interest? keep are is What it You talking of numbers? numbers, the -- Okay. big contract it level? small is level putting the What open is growth, we

David Howson

Ken, complex with days, X,XXX that's contracts peak. for the over interest right. was just open It's early the

Kenneth Worthington

Perfect. Thank you so much.

Operator

you. question from Sawant comes Thank And Gautam with Credit next the Suisse.

Gautam Sawant

the for Good bit analytics? please that taking partnership touch walk if with on-premise feedback what morning, to expect to that demand you you further, global And for and and system? the recently is through to my from? bundling in strongest coming Can you're how is from data And questions. the you DnA where thank walk institutions connectivity? response getting will initial through Snowflake. the cloud announced base your partnership a little us Can moving savings to And enhance expense you future by you from that current just generate

Brian Schell

And the of we're -- is obviously is had, U.S the primarily XX% logical But, that to Snowflake access broader I'll increasing asked then APAC, talk data question areas seeing ports, we the that for was access, see half going Of growth, to that that. we is that first in broader higher across it that demand physical over where Chris, from the growth? seen If XX% that up I'll XX%. new overall look wanting about see that really see year strong up story question. separately. they just EMEA, the the growth this back market the that the that international clients data, the the again, Again, before particular, coming with you at even is kick continuing specific and that, XX% is upside global like volumes, clients thanks continuing where where side, of the ramp was the into, question of access, part really connectivity, network flip as we're What seeing the incremental off their makes we're continue XX%, continued we're for U.S seeing that of on we've was that. that demand. Yes, of that which is pool a to participants. last build. to to we're of And composition outside

Cboe and is we growth to that that as that's So as build we in reason are those any to for -- broader And market, lot continue question network, our and They we network only to able we're sales global. that leveraging into the the for not that see and the client look for why global building countries. look we opportunity that prospects at of out success, We Actually, and demand bundle. see opportunity the about is leverage of the network being to also time. the data your change. continuing going again technology next networks our going data. of out the then we're and that we into but only strength those consistency pipeline, of that base organic our system into don't which see future to the leads do years over at like A

bundle entire opportunities asset we're to we see So again, we geographic, across explore, different to the continuing see opportunities, classes, network. that

that in driving the optimism the actual that's we today. see So results really

I'll I Chris. think your it over, turn And that, hit questions. I with

Chris Isaacson

question. Yes, thanks, Brian, and thanks for the question. Good

partnership with analytics of that the announced we question, So so regarding Snowflake. built. data part This is on platform an this Snowflake that internal we

trade use and or results ago, customers. our much on our This we be last two the provide the of providing all scales they of actually so share that insights of our and there, better market years started us global bring to global that calls which these execution insights, all [indiscernible]. can customers learned to The are years, a one mentioned better Over one how better that markets. in European can and -- allows to provide we calls so effort these of on we'd globally better few our are for couple with insights seen of of businesses and we've

So cloud excited our partnership which of part our scale the about platforms distinct overall but from is this Cloud, separate our Cboe of strategy Snowflake, meet we to global Global as needs with and global business.

John Deters

John. this Gautam, is

benefit there. those are, both and It's the we've layers to multiple about think that follow-up expand we globally, there points. M&A one noting Just of worth recently obviously Brian done as of to Chris's

intrinsic, platform. is organic the Within growth layer First each

layer global Second provide you for network layer integration, team, COVID X that travelling we're technology of been is global now. there we've are and our we cross-sell, in And years. certain obviously offices customers. another just Members the our environment consistent, a is exec to then seamless

beginnings the that cross-sell fruits sure, probably seeing global given is in of the we're those are we And the cycle, network phases. early the effort travel of in integration. so And to in be where

Gautam Sawant

Thank you very Understood. much.

Operator

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

Alex Kramm

disclosed the can now thing prices, I close the opportunity ErisX flows. think the still comment but you're Hey, and all spent whole they down. in that the to this. just think. that the two you; to I excited it's you like know good recent X% your now, I set then base you're made review, acquisitions. one, I or this But everyone. given And situation, market morning, about queue, less But acquisition million it. purchase cap hadn't this on of contribution wanted you touch you But the writing obviously, kind almost there. of $XXX where the than obviously revenue One, originally on actually of also

just wondering have on how So should we that done. acquisition about returns buybacks that thinking maybe you could be to relative

and it's just this class, material and know So seems so fresh it is I what seen like we've new it's asset a but far. it's somewhat a new, -- to

Thank to you've that very as So return that just sure make approach acquisitive been wanted you you. as these new hurdles there's opportunities.

Brian Schell

the I briefly is well Sure. But And look we'll want in. at also -- then better in because take planned to in which take I'll ErisX overall Chris this highlight, -- it's on than than Alex, already slightly although NEO well bring and small, now, as team contribution. relatively better chime the we and as -- return, can the going to as that to planned. that contributing, right actually didn't but NEO our as

is it accretive already, day So one.

when to that revenue the hurdle to we a be set looking we what have, then business our about can So XX% again, add across excited up to cases, broadly continuing it ROI, measure for we've build it continue synergies, continued and organically, rate contribute for positive organization. that about

Going fundamentally, specifically changed. nothing has to the ErisX transaction,

the see for and as granted, far As this market that actually we specifics But chance Q reinforces change, is where think on environment it going. the the [indiscernible] of going the the the contribution about we you'll what XX%. platform to the and see this us we're what external where we but see see we did actually adjustment financials, just disclosed, as disclosure does was

you're when just talked you of -- it. So the intangible about total the near that's write-off, part

at net to value. look the got You total book

like, reflective view not in the to make we of represent external is, our given that to something looks our Again, is but sure value that is So it's financial statements job our at that brag the and time, that's think what what performance this overall. point about fairly our about, environment. Again, of XX%.

release timeframe perspective. we So overall day. positive to the of acquisition to EBITDA Back when press ErisX, year put the the X on of a the to we contribution at the announced that end X initially to that's a

as that So changed, absent, this we small, adjustment again, has not value, as far albeit to nothing fair today. recorded

talk then to to about bit is it this So think kind little where more headed. of, turn with over we a that, I'll again, Chris

Chris Isaacson

Yes. Good Alex. question. Good morning,

provides as So is for fundamental think class this strategy a unchanged. that a markets. unchanged, asset us our actually regulated But mentioned, strategic excitement in class. we repricing Brian obviously our transparent been asset with tailwind is There's this trusted for

settled margin have with now. Just same And futures, to a remind derivatives. includes data our with clearing -- foundation exchange upon great you roadmap is ErisX, we and the we have to roadmap build that that futures and

we we've the had we're are excited to about class obviously that the recognize and is been to asset repriced, done, was but this future. which So committed to it committed we fundamentally what class, asset

Alex Kramm

Fair enough. [Multiple speakers].

John Deters

from we're I this partners it's them briefly, they there what that potential John, we're weigh talking told on hearing from to So important. what the demand. we're in see We've is the the because And project. to market is out Street want this hearing on

an and we traditional asset over so those we estimate good see So intermediaries of line largely we the them, what customers, that intermediaries. XX% And of sight. And hear the in they a It's growth initiative. are if is that whole, robust XXXX. at anomalous CAGR you XXXX, data rate. volumes year. bit look of crypto We're is have looking going them. trust to intermediary a a touch, an focused These you from take at volume to in terms from retail -- as XX% back a still And remains that currency that's of you

These is coin the offering. haul. manufactured and They're trade And in where I can risk asking dangerous parameters? framework a they're asking So spreads? robust we're where create can has for hidden, in like, pricing trade I questions this not partners, to that where unconflicted, is things trade isn't in that Where long I framework listing leverage? a reliable framework elevated that in a can they're where are there us those

over So think to the share garner that fair it's of we our reasonable medium-term, market. the

Alex Kramm

Thanks, right. of All again. Lot great color.

Operator

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

Brian Bedell

more? Great, thanks. the 'XX, on than on Good contribution more Maybe to and one then -- a Canadian the But and -- also half calculating combined more positive expenses detail, like on attached still NEO, is you've the NEO on morning, million. if the but in revenue it EBITDA of can question acquisitions NEO in folks. basis. $XX guidance market just you And just the better-than-expected Does just then little outlook that to or just offset the XX% a strategy there's MATCHNow Canada, that elaborate in I the also a racking expect is in ErisX well. the you a looks there you plan. game that there to actually quick, stands still just as NEO I’m is strategy also if versus Canada. in could second trading with the stand? bit grown the combined That dissect And at share right volume little a think trading small listing XX% strategy Maybe bit

Ed Tilly

Yes, Thanks, Brian. thanks.

we line, bottom as Short perspective, far have that as the answer. contribution. not changed So

So of turn to go-forward outlook, kind it with that as far Dave, as look. of strategy will business kind the I the

David Howson

the very goes global thanks strategies Brian. as trading and Canada. as nicely in did between trading Yes, much, with it because To listing you the strategy opportunity dissect listing

footprint that the about Canadian we further useful we along along clients that look also, we come there. analytics what base, earlier had will to have franchise there the terms trading of really really pricing, as the order in really Canadian into for to in pull customers that levers there client terms the with Canada, nice in landscape. general, enhancements, time have the find the more general, order we be data migration pricing, a combined then talked bringing And block in customers books, we've and we've think in and then we tried pricing globally, about brought it the to the can for with opportunities qualities. our the so feature to and of already so we new MATCHNow that MATCHNow big space, with year, that seen they talk protocols, we And the about book in general to vanilla what very rollout do we order do So book new encouraging marketplace international or with there, global see across

to going can that's be to and ETP of our begin XX% really story offering, and as got as a to this itself there, through ETFs innovation corporates we've really on great actually economy. issuers how forward listings and over focused capital in customers got raise we go new yourself we're XXX go Vanguard ETPs, now same winning I progress, that global really opportunities We think we really listings about a interesting Canada about a marketplace. really XXX think the thinking quarter And U.S. that we've then listings, present So with when today, the to strategy, strategy Australia, three the global and XX

Brian Bedell

sounds exciting. That

long-term stronger outlook revenue given it's to a in a as So as this there track strategy, is better-than-expected result of over the growth well? starting

Ed Tilly

to we bit there's that say, an put dive I'll that a continue in place. think would in obviously, is I here as we opportunity little

that we that at the As a respect the I important just far we as as Dave, so think network, to revenue wins and if seeing we're as more about little look well. talk with bit at early look becoming component continue you want successes, overall as think Cboe increasingly I is synergies, it's

David Howson

really really roll from again BIDS on out we this seems Canada. early to point of in the early seen hey, wanted in that. think for boards trade say, to across BIDS doing really coming the know re-platforming the on Australia, February get to February now with to answer, my because particularly what Australia superannuation addition earlier traction, involved that And we coming intermediaries be in got, as next want in of ready customers see in and earlier mentioned year with board new we year. And, to to the we're great funds Australia you're to the in early we in those but fact, year, there to us US coming I to trade on rollout slate we as want about Europe, you've next to Yes, you've that

Brian Schell

place. quick coverage, we've on the a a got It's again, worth the that now to note span

There those trading Our trading that markets opportunities a of like GDP, global unique to really developed competitor XX% And is of over offers that across something those cover no market span and tie together community. markets. of services is this XX% GDP. way the to all

Brian Bedell

all so color. much. Thanks That's great

Operator

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

Owen Lau

base my actually stock a market broader I question. compared the resilient first half I guess the broader have and in was of to question. year. morning, thank Good this the taking you for

and please and how For also can grow people DnA, of half second growth Thank volatility, second in how expansion, still the about should your your about half, investors of economy, the organic in international talk year? could outlook and you the think this your you.

Ed Tilly

start broader trading U.S on back The that say be how by and market. risk risk is me our months And the and around opportunity over a customers are just continues time. informed pricing economic still really in with broader positioning trading for there the global drivers let that opportunity, us, market, not the to but marketplace. And we're positioning environment. the term in the in elevation So volatility structure just

And in that retail this can we adoption don't learning and by contracts in the continue particular, And growth of out from be come engagement watching growth meet platforms. and roll case, service SPX has informed are continued and volatility that we see investors. to meaning we'll how short-term, the much So in complex. and changing the demand in the

short adoption bit the Brian base and to users of a of utility. we'll little and So a Then broaden the there, lot on from and super able effort be more for teach over to turn of that concentration And I'll color. hopefully, dated, adoption.

Brian Schell

launch, Yes, DnA with we and that for a the lot incremental in investments cloud, and kind and ability EU we've set respect continuation launch, and terms we're sales, marketing and last folks you're would it's remind to potential what around, environment that people I organic we've the Thursday to branding, growth, payoff, -- of to the Nanos this Tuesday, the marketing done with of of came we're is when into around the the enabling of the starting year and we're to the that greater doing. want and a what I the both the up XX/X, is, incremental derivatives year, and deliver that data organic making again, investment through And investments to trading talked making see those about.

continuing the in the right the that market getting franchise access, asked what again, to stickiness, see there. continuing the offer, quality within again, able Specifically But not just confidence the given about, across and element of growth. and all higher placement is to obviously we're derivatives of asset the contribution you’ve in DnA we're size it's deliver about one, classes, there's and our data that the to again, that the quality being is,

forecast slightly far lower as the half. see first the than in You'll the is as outlook

from as little able talked leverage bit we But our around rates last fourth mentioned Japan we're continued, and Again, third, year. year. are entry items initiatives, challenge. opportunity a those fourth a saw within medium higher organic as great are as for and announcement across then Again, the growth around still packaging there give comparison continued growth is content, growth we quarter so being quarter global for We're against into right, And just excited about us -- of DnA. third but far recent growth. and Australia classes. term again, then year. And earlier, our asset about we opportunity rate confidence last networks. head existing recent the DnA hard, or had again, distribution the going rest John longer those geographies in and We in Canada, had to you comps the Morningstar are say, example, the and We as again, and is confident up our within to this of about within conviction really the obviously, that service,

Ed Tilly

FINRA this the approval, chime new a asset And is in latter business, another this extensions have in quarter asset but in a in we class environment. had of and half a the into this year. to or global latter see high, Activity quick if in into coming year go terms Cboe customers also FX on I of good may, on we Treasuries onboarding U.S expect class live, of part the we of received UST, just

Owen Lau

Got it. much. Thank you very

Operator

Cyprys comes Morgan Thank you. with And the Stanley. next question from Michael

Michael Cyprys

Hey, good taking morning, thanks question. and the for

versus from you. Thank and to term of OTC exchange how you say convert have the was you opportunities broadly, I So be other as you added new activity comment what Thursday hoping And And but business near-term? might could on terms left then what longer size in at you look types Tuesday, products? contracts traded more you you industry, to might guys your the guys introduce. more expiries, to is able would of that

Ed Tilly

are Tuesday, which in XXX. And platforms -- platforms, we was which early historically Nano designed SXP, for for now is exposure XXX, as out example, course based. retail of just the us one-tenth access came been is which possible in and and for is for retail just same to platforms Nano market good roll in that Thursday, giving the contemplating of strategies broader I [indiscernible] what online, retail as retail the the have dated smaller Yes, like them move in the getting S&P contracts for for the at really a cash institutional really the interest think should short adoption contract, we're adoption expansion in retail settled vogue derivatives, we learning from our and what our super further early be which is adopter the

contract, on and reinvigoration So said, the of one-tenth early we're Nano as days an SPX. access I which view in a think, [ph] I

more like like focused. look And retail at Thursday to to that into that. I are Tuesday, how expand So contracts I continuing

us. what think you should I So see that's

as As bilaterally have We in costs, tends conversion, size off what say the see OTC the be the roughly the listed. to at trading complex far look versus OTC, size. the where as notionally we to or you same risk the same the opportunity trading clearing would roughly volatility bilaterally be That around of really listed trading sensitivities exchange. execution

a do but index, around So say SPX. work opportunity OTC in I of wouldn't much set the the as to lot in

Michael Cyprys

Great. Thank you.

Operator

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

Kyle Voigt

Hi, Maybe SPX. a just good follow-up morning. question on

users? you also than like, And what today? are of types on complex this volumes and which or institutions you the now being believe driven other institutional insights still driven percentage like, three have funds users options, always types of or quarters kind we've I retail far do managers thought wondering overall of being institutional that's surge institutional that asset primary users whether there, Just any of more last have do as that is by the recent seen specific if over so, equity retail. of flow or

Ed Tilly

a I our careful it's be when we to want And Yes, really words. choose great question.

that mean expiry great coming implied note trader expect opportunity. say, through in the of There You'll I would algos moving, on a retail a don't And many retail a the in say growth daily short move a that retail times that's algorithms. platform. of terrific roughly and necessarily that's X% is platform market the loving many dated are I pros retail exposure. as I day, platforms,

growth and the platforms single participations the the in So in the XXs. day retail from

retail in options. high concentration those really platform weekly really, So

more broad in Friday to as traditionally position similar complex. Third continues we greater see the what market, be hedging VIX as

growth that from in adoption big is really So those retail coming platform. weekly

Operator

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

Richard Repetto

increased think million this a But look X.XX looking XXXX side this I between acquisitions it if base the you more And question enhancements, And for quarter, year, year, comp. from Yes, that's and looks the is, last I about Brian, enhancements, the XX% in guys. it $XX all, except like I’ve of is the you expenses. everything, core infrastructure and hi, at the detail. had at been when incentive add increase I for incorporating revenue the incentive. the for guess know expense you of sort

we just had the consensus right It XX% acquisitions XX%. up estimate So see is ex right. that's now looks if I’m and trying like to revenue

are picking that? XX to, do you the think up got enhancements? built the for analysts So think $XX that Or I million in revenue you

Brian Schell

so I'm the kind math, completely not Yes, to sure but take follow percentages I the far as would we expense that make I of as -- sure can offline go.

thing have are think in items, least that I margin. at we to statements some financial the onto don't expense is the some obviously same and pulling focus quite the of revenue on line of the the acquisitions when

expenses rate just be little to a higher year-over-year, a slightly on going the size. bit of there's So given again growth that

surprise obviously the So visibility line, guidance, line, plan along top to up that great as we grow fast we way. and try in would But again, far there. managing obviously the the expenses, to And that. continue short that then we're no that provide to as picking

forecast. example, full to haven't as Again, in acquisitions, sure significant into factored not day, we've the a if the that's this at on excluding you If kind rate it's into that million, of rate, that again, to look increment, year. and a rate look at to that that you $XX we're that XQ just end that's not year, run we as as projection. done relative in half of at and the the make what the clear really expectations at, just you far forecasted growth full as first we build perspective already And XQ look the that, for year what there's entire far a analyze you run some of that of just

Richard Repetto

Neo increases guess. a If simpler, it to ErisX expense make just XX guidance XX. subtract to be is X.XX doing take math, my take XX%, expense is X.XX, to acquisitions the to XX%, if I'm to -- -- guess increase ex appear I you your right. Those ex and The I about Neo are

Brian Schell

Sure.

yes. Sorry,

I So part number rate the as that making of will includes pure prior growth higher transactions than, run year organic expense the the it [indiscernible] of which rate. growth is, also say from a well, call that

Richard Repetto

X.XX But included for normalized I for the base the be expenses, acquisition, XXXX that. thought I the on wrong could

can on Okay, I'm this. talk good. offline We

Brian Schell

Thanks, -- the Rich. on the we can same page just there. That same way get

Operator

Gautam we from also And with a Sawant you. Thank Credit follow-up Suisse. have

Gautam Sawant

quick two just questions follow-up the Hey, the outlook year. on here. One acquisitions is just revenue for this

I an missed provided previously the think update about I know don't I if it. XX%. you you had talked or

contribution Just to what expenses? expectations year are relative the for this revenue

Brian Schell

We was didn't relative of it actually transaction. it frame more [indiscernible] to expenses,

So growth. said we we have X% to incremental X% that expected revenue

Gautam Sawant

one the on European then just And it. more got business. Okay,

region? a at where then some positive As share data to And look potentially volume out in factors and to then very their out the the with in there, team to you the of the market the are platform has please get incumbent platform? of some that trajectory. in think we them cash that Can expand key exchanges Thank compete share equities also And points institutions it on helping settle going what the you you. sales the trading future? could route market choose with these Cboe to is the

Brian Schell

very much for there. Thanks Great. the question

our still data we [ph] liquidity should to So, effective you in the providing to introduced provision to proportion analytics best of to and increase higher one market the which to bidding point warrants an where the -- customers we share, a in actually Cboe we market Snowflake year, provide be That share scheme call sent be and quality our any on what changes. at the platform, started its based of that and back show time improved that responding extent of that as to great to to offer market point from with flow half leveraging that in were there year-over-year, customers basis would analytics is response in use to data I the inflection a to XX point yet we'll as order others there. we One make be able share, we top last an major point the XX that really saw XXXX. see that to couple a drivers

positive lit the on It books trajectory very the order there. So is environment. a competitive

we to data. provide So is continue and there well-positioned will quality in to The respond but platform. very of evidence the responses, be the are order

for Second driver Europe where trading data BIDS share the another points we Cboe to platform resulting a of clients, see point data liquidity in and network both in new evidencing to nearest the there a trading again, for offering intermediary but customers BIDS analytics. quarter-over-quarter. is of onboarding, really uniquely Europe, block through once in analytics gain also with that good they're of campaign institutional X new advantage on around with the ahead platform The Europe and leaving market really the for percentage our customers, about competitor in as XX% BIDS a opportunities Europe, increasing

So the launched cover market. point traction your United to local off really just seeing Did which seen really with overall the platform. questions? market BIDS States for in given also but the some early there auctions have within the well also, us being increased we've of market, working the trades utility, the the all and margin going mention, the share in periodic final some I on with And platform that lit and

Gautam Sawant

it. Yes. Thank you. Got

Operator

to for over Hill the our conference And turn closing any session. you. question-and-answer comments. like this concludes would to I back Thank Ken

Ken Hill

company a for and our great you everyone. weekend have thank to your Like interest in

Operator

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

may You your now disconnect lines.

Cboe Global Markets (CBOE) 29 Jul 222022 Q2 Earnings call transcript