CBOE - Earnings call transcript Q1 2024 | Cboe Global Markets, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome, everyone, to the Cboe Global Markets First Quarter Earnings Call.

[Operator Instructions] I would now like to hand the call over to Mr. Ken Hill, Vice President of Investor Relations and Treasurer.

You may begin your conference.

Kenneth Hill

you Call. us thank Quarter our and Conference Earnings morning for for joining First Good

call financial Fred performance for financial the strategic Officer, Global as and On will today, well an the initiatives. President, outlook. Howson, and provide our overview our discuss will quarter our Then Dave provide Jill as discuss Chief on an results our update for Griebenow, quarter Tomczyk, the XXXX the our Financial CEO; our of

open the will to Q&A. Following we their call comments,

Also out joining will Q&A use be Chris Officer. I would Isaacson, Operating us for presentation the our like that include Chief to will slides. point of this

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

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

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

the turn like I'd to over call to Now Fred.

Frederic Tomczyk

for report strong good results Cboe first on pleased today. Markets. morning, I'm us and joining Ken, Global everyone, quarter for and thanks Thanks, to

products, results our management. adjusted we quarter, business, X% across driven to specifically million grew proprietary $X.XX. our Data Derivatives option share strong $XXX disciplined expansion Solutions XX% to record and and of earnings the expense continued our per franchise, by net These index Access were year-over-year diluted by solid During a volumes revenues and

another year-over-year. increasing We saw as business contract index net products the and million S&P contracts. SPX year-over-year Derivatives our X.X quarter ADV XXX revenue to delivered option organic quarter Our XX% strong with strong across of first suite volumes increased X%

We solid during first and in volatility product our in have volumes also April. quarter the seen further VIX performance suite options accelerating futures with

Given place, we secular are positioned tailwinds the trading portfolio options utilize their strategies. cyclical in continue investors as in well and to and

revenue continued and Access year-over-year. X% perform well to increasing with during Our Solutions organic Data business net the quarter

durability network quarter the business was and it we this the talent effective growth growth revenue priorities see on strategic for Cboe sharpening Cboe; third, focused our see continue Cash and quarter Data growth. Net growth allocation where remain our as global to we revenue transaction longer-term first, drive and Overall, our markets succession. and on to nontransaction across areas Spot second, strategy: volume as focus remain to business leveraged our of muted. in equity strategic global was X strengthen our strong for stable start and Markets in will Solutions We both believe that support and a management continue Access ecosystem and further the to during opportunities year. I developing capital; of I

both efficiencies week, As business digital in we clarity coupled and derivatives, leverage of our our innovation, product digital operating strengths clients. in our asset plans of process, and the part realizing for strategic regulatory refocus our technology lack while the to to with Cboe review core announced last space,

futures our our harnessing and help plan Cboe platform growth franchise transition currently the fuel contracts to existing derivatives, We support half Cboe's integrate by and of approvals. of review our Ether plan market. We power technology and derivatives certain into to Cboe digital exchange of fully the to offered crypto derivatives the exchange the regulatory exchange-traded trading and Bitcoin pending assets derivatives, futures first migrate on global XXXX and digital global Digital global to corporate cash-settled in our

to Spot on to strategic has considerations, operations among to in direction U.S. Digital timeline derivatives, Market, regulatory of our any in other of plan to of have lack the clarity asset clarity change Cboe of core on trading business strengths lack and subject regulatory platform, technology us product leverage business, down innovation. digital wind provide we focus cause with spot clarity, combined where given we our quarter XXXX, the for review. The of the digital the our that Additionally, front regulatory to the third the cash and

we changes, the expansion and resources continued profitability, focus growth which greatest are opportunity we these of on franchise. as the for global to our where derivatives reallocating is With see

our On these the and opportunity changes enhance base will Digital, business and derivatives an Clear which client focus. Optimizing plan our our to to provide and believe to futures. sharpen to borders platform, classes operations across clearing better focus. and we global and clear our us and development unify operations enables Bitcoin serve our globally diverse align efficiencies Ether and product side, Cboe maintain our We clearing leverage our sharpen intend to asset continue strategic

strategy. company clearing global our derivatives support business digital to to and realignment continue continued develop in team. our development and senior growth opportunities our functions We creates organizational leadership optimize lines all This leadership within of our for our and the business into across structure

see and execute where digital returns steps use the will Howson on our plan continue how we capital growth over growth results margins to earnings allocation technology stakeholders. I turn optimized to strategy. while talk and quarter maintaining sheet, the within we remain to an taking to the are continue organic the in our demonstrated intent capital and April, committed firm. Also, the thereby allocation our for flexible Dave our are market. Overall, through capital driving disciplined of investing as during to efficiencies, first durable component in important to driving strategy. our we to in a revenue through best remain and call expansion, illustrate repurchases The operating our share one, allocate we a framework, resources our for initiatives, our balance business capabilities opportunistically areas now we we Finally, to

David Howson

high with in cyclical lowest results of in global Fred. with years, contracts, over Thanks, the VIX the was in X.X SPX QX QX the the X volume volatility remains in shy the year. year-over-year XX% set of low options Starting averaging finishing headwind XX.X%, Despite Average category. strong daily a to volume the derivatives strong. Index up all-time just million last robust just

on the first ranked took a and through the of quarter. share second and cheaply volatility February the volume believe the puts portfolio investors third up higher more We volume. fact, total January their In as with month making levels advantage SPX hedge of of highest low SPX record to

took of Hedging XXX,XXX the resilience face call. index demand quarter-over-quarter speaks investors in secular contracts X% The headwinds last of in as volume up low VIX cyclical to to VIX of detail strong tail the levels outlined business, strength our of was earnings the auction drivers particularly in with on the our over cheap to options of which ADV our protection. the we volume suite of core advantage VIX our

see and these into room further lean to continue for We growth.

cap Thursday completing our index example, XXXX stocks. launched expiries and Tuesday Russell in of options, set For we the to daily for January, small expiries

To high the new days, While product, XXXX investors a activity year-over-year X% popularity MSCI and of record quarter. The SPX and an suite options ETFs secular index recent to years from to strategic for than not in this hit margin of to now more our build XXXX seeing options the in to enhance XSP contracts. trend to giving over options a that year-over-year, QX, index our their X Russell same retail benefit total for in And the on contracts we're it on excited established also interest believe year, in but increased of to approval will track positioned of in and is macro more coming are complex, another make index X.X% the of trading We with million grew to also relief options sixfold margin up index access without XX,XXX end, more trading wider a from February. adoption ADV plan up points volumes SPX retail from now we increased XDTE options are initiatives. additional AUM we're XX% this funds jumping X-year easier QX of options more This of volumes share from volume RIA XDTE a tremendously has community. Even expected overwrite $XXX XDTE QX level XX%. Within using we see by we overall Anecdotally, we on and of have later SPX is last catalyst Russell for execute as the still turn to pandemic grown with platforms the year options for our relief retail the XX% just community index. by in our robust early made portfolio. options continue online investors expanded well. Overwriting XX% well believe see to our these billion. thrilled X.XX grew SEC rise percentage to as recently, environment, the that options since products. we options which in approved rest retail the as our

April, we in shift was tool expect as full benefit harness as investor a in get the do kit. we to S&P if of case sentiment, versatility the However, XXX volatility our traders

million April, back characterized month the hitting March quarter consistent levels, are That's high the volatility, the high macro more geopolitical a versus crisis precarious with exceeding heightened than X.X while to record we its with COVID during low pace last highest VIX amidst QX saw running XX on is options volume on a options just a XXXX contracts daily XXXX. VIX QX XX the escalating Middle set index in of to surged uncertainty. lot by and VIX greater despite in on April second through was amidst looking East volumes example, tensions. X-year report at market tensions on XX April a For higher of market volume current

the with products traded need income rates, continue trading believe and hours resurgent use hedge not to to dynamically mention As positions, remained volumes to increase. manage exposures year, metrics U.S. U.S. while increases. And North election generate in U.S. later during only grapple non-U.S. options during America the we in strong inflation, investors this hours, rising to

trading the compared activity During global SPX increased quarter of first first to XXXX. as XX% hours quarter, the

and we just attractive activity levels, QX path over and April, XX% With period. forward we in for GTH an X% the than XX% options versus saw U.S. increase of to activity accounting access X% continue And GTH for April's SPX XXXX to increase VIX non-U.S. activity, VIX GTH less activity increased of see SPX same to the customers markets.

We hit countries volumes of in our European XX for than globally. more Total growth. to again the record CDX. business hit platform March. some notable index options on across European the of derivative end broadened positioning by us besting milestones prior at at record the Looking XXX companies more We single-stock the on list derivatives levels future CDEX XX%, traded March,

April through our trading pan-European X, provider And we has forward liquidity on region. and Client revamped greater the look programs approach in promising. to And clearing. we efficiencies to feedback providing and initiated been our customer

net DnA client products. expanding XXXX, unit compared and our by access additional quarter expansion driven to the X% grew data of portfolio sales revenues of primarily of first and

DnA Speaking of each during every the to outside of business line digital increased. quarter, region the and net for breadth revenue business,

through from make globe, be we of in reach first market tangential spot just the the results revenues. to to like quarter our the and basis. revenue subject where percentage quarter capabilities we progress remain XXXX, the streams finish by increased U.S. in noting, We globe. In than transaction in lows where a constant from growth of areas currency line quarter strengthening the revenue capture world. Taking around came net capabilities our and cloud, on data has XX.X% track It's on and XX% market of first technology were rebound these Americas. believe to cash the around on-exchange saw businesses grew our share Europe, levels. index by greater providing in look outside areas additional to XX% We a spot Canadian fueled net review. expanding The potential markets integration, contributions worth at improved to future Canadian in around during final ability solid. our X and markets though, technology to the from North add our And distribution our Australia, a regulatory quarter. with America, points XXXX rates more saw December benefits with our we access revenue Cboe continued expand the net further XX% to strong DnA cash fact, migration our first first will Furthermore, outsized growth In early

Europe. to over Moving

the During the value the testament Cboe the by Europe strong was offering product quarter, to our a the traded, region. of largest breadth first region with in exchange

our expand transactions review. launch to clear untapped addressable markets, business on a financing look activities regulatory Cboe's we third SST clearing into capabilities track areas As to subject will related participants. we for securities of our for market services, quarter stock lending remain with

a We its of and Cboe saw market point levels. finishing higher only first X market full forward and the ago of requirements, With quarter, grew our the the the backing a Asia Pacific. introduction to strong clearing share bringing than X industry the Japan. risk-weighted momentum reduce customers. we clearing bring In stricter XXXX participants, to at up potential to ahead. And our in robust share compared to solution service months time key year to quarter with not Japan, is turning leverage the meaningfully In but nearly market finally, the market to the percentage in look points share did secured of market X% assets custodians gains capital first the quarter asset from We've now XXXX. believe total capabilities Australia, average, spanning as in this banks, XX.X%, percentage Australia XX% firms, to right with reach a continued volumes and for for managers to the

competing continued revenues. in trends the of we us, of Cboe our nontransaction integrations market With to Those to high a quarter with transaction in the single-day X.X% market April. APAC on share Japan the more have second and XXrd hitting expand our look aggressively behind forward

of established to in how our context to clearing leverage additional derivatives want some leaning firms. our areas revenue index remains only already a like across of place. Earlier, capabilities. in robust product to means I reorganization. areas infrastructure recently allowing not impacts Fred Overall, some incredibly key the more provide global well consistently Cboe positioned leverages strategic announced digital business, grow the spoke but move our This a to newer and on the

products our corporate regulatory for reorganization reinforces known By approvals, but a also view leverage one take market, On the only the franchise, Exchange, grow derivative of derivatives capabilities Futures at to pending Cboe's as derivatives Cboe. the consolidating CFE, the not businesses, businesses Cboe's global we integrated side, can review creating with all our and our of futures we onto totality certain while efficiencies market participants. our

for that reducing to platform trading U.S. one them Specifically, futures connect of means for all needs. their complexity global clients allowing to by

and the like capabilities clients. like for CFE of futures CFE, to part available timeline futures leverage products, products options on to asset newer the of accelerate tried-and-true solutions digital As for products can complex go-to-market expanding orders digital toolkit

technology Clay, management Derivatives. infrastructure team President under Vice In a resilient leadership global able Cathy and force, these our a into addition, Global of and Executive of seasoned will the products a to be sales tap unified

On about and currently as central side, equally by global the are the counterparty basis. U.S. equities Cboe also President operate Europe, for will Europe excited Cboe clearing Vikesh clearing continue Clear presented opportunities operations our on oversee European unifying of we derivatives. clearing clearing. pan-European a Patel, Clear will to a

the firm, umbrella find to in cash, that clearing and clearing the global in leverage of of control to ideation clearing Ether through development Europe and our destiny we core is Digital our the approach growth derivatives Clear provides pockets product result great in Cboe categories. data from and its equities continue U.S. considerations. Across strengths spans futures having and Adding Cboe The derivatives under a Bitcoin cohesive to

look strong, I Jill. of turn driving to to that, first was the further will in quarters growth we XXXX The quarter very and the forward ahead. With over call

Jill Griebenow

Thanks, Dave.

As will record of before earnings $X.XX. to a XX% posted adjusted a Dave on diluted quarter I high-level Cboe Fred from quarter share results. strong delving an segment with and basis takeaways highlighted, the per some into the first year-over-year a assessment provide up

The first Spot again record with by Cash results Solutions in X% Our was market finish our and our Access and increased derivatives Data to Markets categories. steady businesses the million. quarter driven revenue $XXX and growth a at net strength from

Specifically, franchise quarter the market sustained in derivatives X% during product increased growth we an net and our during on X% revenue the growth Solutions first organic Access saw the year-over-year produced proprietary as quarter. in basis quarter. Data also revenues net organic

on results across an ago Markets EBITDA year trends revenue to the ability first to We XXXX. Cash stable and XXXX. Adjusted expenses a were revenues $XXX driven on X% of our in pleased growth segments. levels roughly expenses And our to increased are to million given targeted solid and $XXX XX% with organic adjusted quarter. a support Spot are X% technology flat and deliver X% services million net compensation-related growth the operating net revenue the confident year-over-year higher business basis of the during grew our with by versus quarter in

and in Importantly, quarter. strong stabilizing we given during management, our expense generation diligent revenue margins material first the EBITDA our adjusted made progress

expanded Our adjusted XX.X%. nearly and X.X% to a sequentially margin quarter by first X on year-over-year percentage an EBITDA basis points by attractive

segment. to Turning drivers key by the

our slide press our the Our key business in information the segments. metrics deck appendix detailing for include release of

and in capacity total higher a And X%, up increase moved fees, with clearing net of while market transaction X% index lower to by quarter, of volume. a Revenue higher steady Equities data increased U.S. index volume. proprietary access data equities quarter. XX% in options and XX%, some were net a quarter the on led for delivered 'XX, was positive options ADV revenue fees. a X% options Total In net provide industry revenue. as reflecting net each. The basis and recurring segment market transaction year-over-year another nontransaction higher in given growth in stronger XX% highlights first up fees by mix decreased option was the versus decrease XX% clearing transaction options American options first up first and I'll versus fees offset net market off-exchange by to representing capture contract volumes revenues So robust driven 'XX. North XX% per quarter percentage index grew and quarter Canadian fees during rate, capture seen partially shift

and revenue revenue year-over-year in nontransaction a other and another the increased of quarter access capacity Europe capacity segment Australia and benefited growth market in revenue. fees, XX% On Japan Futures compared in increase primarily share by fees net gains. The and side, first of decreased to fees nontransaction quarter, net APAC revenue XX% across the Transaction data X% 'XX. lower The X% the access and as reported from volume. due to quarter market revenue segment driven

On the market for year, decreased first revenue X% X%, data capture continue last first to perform the the quarter the access in the compared rate. by of 'XX. net by slightly as lower fees segment of revenues a to was quarter capacity XX% and increased And quarter side, driven versus Market nontransaction finally, share and XX%. well, net FX in up XX.X%

now accounting Access Net business. Solutions market continued revenues subscription X% be and growth, revenue solid were on solid Solutions first revenue basis growth for quarter. Access by XX% to a up of unit to growth. in Data Data Net Turning and driven and Cboe's new the organic an

geographies, guidance us demand to our XX%. More We to of of continued full access X% Cboe's year focus from the we across analytics, fuel proprietary momentum revenue sustained and to Cloud. across capabilities, finally, indices, to and suite position pleased the that and market strong are we presence data complex, our particularly markets, the our on benefiting well distribution expect a in from data new specifically, anticipate medium-term increase growth global distribution continued of we the Global with see derivatives DnA to for believe strength businesses across adding growth our options from the to start Cboe year and capabilities enhanced our sales as

services. a million operating higher compensation and year. last decline in offset for compared expenses. of and the by technology up quarter, and outside Turning a X% to product partially to support fees professional approximately and were adjusted $XXX The Total was increase benefits expenses services

forward $XXX look guidance, range XXXX range I we The realignment to million guidance operating the announced to we $XXX updated slightly guidance related XXXX of and end expects of cost realignment year. On full Slide to our of of accrual primarily is $XXX digital in revised given million be on quarter are some reflects expectation result walk reduced As impairment few our onetime annualized the our the to to year a to as million. as onetime XXXX. XX revenue our to our noncash a million assets, intangible full want of digital a from which expectations expected at strategy. impact higher first a digital total the ahead as expense through well higher guidance adjusted $XXX the for results, bonus lowering million to and estimated the organic pretax net second of the Cboe be to million, charge of long-lived $XX quarter $XX expected recorded specifically, moving

We are of regulatory charges savings subject adjusted from asset earnings. anticipate review. of operating in we $X down XXXX, wind to year expense digital quarter million and do be million excluded $X spot as platform the the considered to to expected trading adjusted third onetime carefully roughly this These

range $XX to us adjusted of an annualized the million closure we the generate flexibility guidance million invest savings areas Overall, of anticipate believe current annualized operating on in we expense $XX will forward, business. our high-return to Moving basis. gives expense

at Looking our more full broadly. guidance year

at the end expected of higher total organic XXXX. to finish X% anticipating growth for to net our are X% revenue We range

reaffirming We X% are organic expectations. range line of medium-term our DnA XXXX, with to growth in for revenue XX% our also net

out breaking are other income. we quarter, other income and investments our into earnings line This and

and line. largely for from earnings at income our positive nonoperating in on through other investments We to $XX million anticipate $XX to flow dividend million is XXXX. realize marks our $XX to million million line million aggregate our in help expect $X Importantly, income income we though, the benefit to to and investments unchanged million $X $XX to

to XXXX, range CapEx million remains range and the be million expected in is year. for million for the of for depreciation at amortization guidance and year $XX $XX to $XX to $XX million full Our

tax to $XX to tax continue guidance, $X net to effective be of outside laws for million the expect of adjusted for And we expect XXXX. XX.X% range come million at current the second annual to in under We our the to earnings XX.X% rate quarter of in on XXXX. the finally, expense

the in On returned of maintain a for continue attractive capital $XX.X we total front, the to and shareholders policy In shareholders. first return we quarterly capital form million dividend. a the quarter, to a flexible of $X.XX per share

XX addition, we In during the repurchased million quarter. in first shares

an continued in have activity in repurchase adding our XX the during repurchases month month. We April, of incremental million the

Moving forward, flow healthy to given we look will free continued repurchase shares, cash generation. opportunistically our

Turning our sheet. to balance

on from declined the ratio outstanding in First below prior a with result of comfortable affords, the as balance sheet flexibility having low-, averaging quarter we in Overall, debt. longer-term X% leverage it debt rates to our remain solid quarter generation. medium- EBITDA our fixed and to profile X.Xx X.Xx locked

to striking aspire resources building on right growth capital and to and between returns delivering optimizing margins. most look future durable We and solid our investing we shareholder ways, always, in balance XXXX. a As the forward the value-enhancing revenue allocate trends year-to-date in in

to it to up call like open back the some Fred for Q&A. before comments closing I'd turn over we Now to

Frederic Tomczyk

positioned made for another for XXXX strong continued a we throughout thank closing, our year. In the progress the to is are believe to strong like off quarter. I well start, we first team would and

Kenneth Hill

we'd At take questions. happy be point, this to

[Operator Instructions]

Operator

from question Sandler. line comes Patrick Moley [Operator from of the Piper Instructions] Our first

Patrick Moley

the end total Revenues revenue organic X% the growth net expect now quarter. to in be range. that you X% of first X.X% So higher up were to at

going in But good index better So it quarter. that seems expectation like guide revenue what would is as we first than saw volumes down. option slow be there's the or growth imply to did the an

little pretty They've of for comps year. back a you're tough facing and here the come bit April, rest in the some

baking year? to in you end are what could, just So gave for growth that of you guidance on can the the us you that then you terms point the adding to range? of volume of And remainder to that, index confidence higher if the just speak into what option toward

Jill Griebenow

Sure.

question, You bet. Thank Patrick. the you for

So by first results X% quarter, the there. contribution DnA, fueled very if derivatives you revenue than business saw, very strong higher as markets XXXX, first net in well coming strong as really obviously, quarter

an just, that, under guiding keep of very X% and our and to get another we with of the eye on coupled at to X%, that range. the quarter with higher higher strong end early again, feel We'll us come back the August So there. the refined projections. again, X% in to saw group X% April confidence gave this with, to But belt end results in that moment good obviously that

David Howson

of whether a that volatility a And talk rest then the potential you forward I'm little look just, through the to we see number QX different elections. the Patrick, -- drivers, you of But -- and course, year, the tensions, in geopolitical look inflation, that bit as the more versus about call. QX, more be and it can into And rates, we of U.S. through those. sure we'll a environments the at take there, bit if continues complex both well interest of perform

of front we when there about that ecosystem So think us customers in are using how in plenty really diverse the Cboe. activity we of have

Operator

the comes line of Alex from Our from Kramm next UBS. question

Alex Kramm

I actually the are what did but getting I quarter. remember first if Just the there you a look on there, quick the comps much side. I follow-up here, DnA definitely in think, happened when was fully in step-up. second I quarter. I the X% don't last at look forward, I But a tougher think on year, outlook the know

your is So confidence in your of just to level wondering guide. medium-term really terms given XX% just that, X% that

in you starting visibility should given feel the about in you comps given wondering quarter. where that tough how you the have So XX% the in X% just second shake the to business, may out here

David Howson

services and We asset solid as guide, Yes. record we question. access call of notes, also in in growth saw Alex, particularly And the outside and we units. Americas. the the new a the confident the XX% subscriptions in all and That's from the X% growth XX% growth all the us year-over-year was encouragingly, from from percentage for then thanks quarter, that to the had data for of Americas. growth throughout in outside of XX% remain new the market classes, regions

with Continued XX% the of well. customers for there the strong outside Americas engagement cloud as from of

resulting where position in year market venues just package and customers attention to throughout DnA and to And Cboe of options more themselves, you value to year landscape. our bundle QX more QX Australia competitive year, into the And think be about growth year re-platformed platform. the over exciting We've them an the the then for XX next ways our pay but ago, the from last been through versus in think in those the as year We've they're to was and are also cloud. And will got think somewhat, products should there. this enhance year able data U.S. this finally, core in we Cboe year-over-year it's in to from we've net. access towards enhancements at bringing of with so last elevated as say, within over we year, year. But turn and layer equities Australia the willing a terms for particular, year that on deliver when of that we represent continued improvements got incremental -- and then customers as we're technology different those in Cboe XX% able markets growth and to rest

guide XX% we well. But as with course, stand you where today. next we'll X% quarter confident to overall, of the update So

Operator

the Siegenthaler line comes of Bank Our of next question Craig America. of from

Craig Siegenthaler

mix zone. stabilized SPX. are XDTE on a but is last question like year, it lot the of in over has XX% looks the Volumes up sort the My

maybe move the heading And higher. So XDTE could over your if where thoughts think sensitive updated what factors get we mix XX also you the it the launch other Robinhood significantly wanted adoption? months, are on next most to to

David Howson

Great. Thanks very for question there. much the

retail the You're right, happening was was go about is year-over-year, there. the those and April around We nonretail environment and normally nonretail nonretail we in last through as whereas think of to XX% we just the in that and you of in depending see over continued does a versus SPX give breakdown as QX XDTE under months, is we XX% XX%. just X/X what's actually of now on retail nonretail But professional of X/X we variations where year. retail, about saw QX increase include

some see towards is tremendous systematic of And the and and marketplace data we're that that amount funds the So to shorter strategies, outcome that, and now, Tuesday curve. of be strategies to we that adding QX expirations. as of coming the is cycle. and go used think XDTE across interesting was of Thursday PMs we the versus volatility to of the we're funds, models. order the more we and train point is market And data as in coming institutional now, there's end what in forward. And ratings complex a grew seeing QX anniversary of by systematic second we And more the more and able eclipsing it there as X% more about

in it grew a in So environment lower volatility QX.

the been have management shorter-term risk we as deploying to to look continue we broader strategies. see trends. So macro People a less are sensitive forward,

Operator

comes line Our of from Barclays. Ben next Budish of question the

Benjamin Budish

wanted I on follow outlook. up the to

coming like later least about kind I Because a recurring volatility-related not it's long of kind things mentioned ago, like enter can events could a talking SPX trade being that it. contract. you settle that to got shorter-time of equities, are versus are and revenue you expiration, a year you new at which the were tend into there sort more stream, once in drivers be the you up too complex. XDTE You recall as of for also some

So How what how perhaps versus a of regular come from do users or recurring year? complex? nature the expect that becoming are on you of I later in are the the sort user much will sort that thoughts pickup sort more you of in much levels seeing from volatility XDTE or users guess are of normalization VIX growth your in

David Howson

we've options the we've is expire. mechanics what of talked options is that got terms about in the of before So do that fact

refreshed over that you expiry you in at indeed, or manage to or option. And that your view So expressed of that may any position the to put or the in be as time. spread exposure you've changes needs a pricing market, need the the on also, position if or view regime market

to factors or view X-week from, to as deploying redeploy. a they to So funds bank QIS engagement to curve manage much and that strategies. And rate see to deploy deploy strategy you result customers shorter-dated utilize forward X- have strategies of and from in strategy the a X-day as or X- do higher in lot coming a take much X- say, generate to they a just that really can views, those now, options mentioned income, to risk, X systematic I

coming days we've there engagement those more interestingly, volume days, of creating really that durable recent as see So the deploying frequency a higher-volume you of the of you volatility timing see through, months. strategies seen on then platform. And in in can

use And QX. to the expressed in gone as market we've don't so this seen just we've itself get QX from we in platform. the being into year activity in diverse And require throughout volatility

Frederic Tomczyk

I revenue. see Just the reason recurring revenue it's is, option the add we more Dave said, made that to And expire. because equity comment before is, Dave's trading something much think do trading we to they comments than as

on. have to position reput your You

the me, to to that So just XDTE. option applies to not stream, whole revenue

Operator

question of comes Deutsche line next from the Bank. Brian from Bedell Our

Brian Bedell

just back revenue to Maybe access. and recurring speaking and of the on data

U.S. at also. Slides and think is your, global there, and from tying of I XX know Just together? I outside comments comment to the base global least medium and the I that access Dave, the for globally -- really access know, looking portion of that yours. revenue ones a first would X% What for you portion of on customer or and couple one a global But say, was can is you drivers be about everything XX%, for this term the X the talked But you on at do access. of big data the asking access, initiative coming the your

you can forward that? that opportunity you and So the talk for people about see as of now what are portion going using what

David Howson

got interest good you the data from your then a got let's the you've find set a find we once cloud drawn one from the puts a data can have useful example user taking out users see item of the really year quarter-over-quarter. A CFD common Yes. some expanding example, that to is Absolutely. then that this to rate market by, Australia. us access other you've out Asia base. we've seen world about platform, to in U.S. XX% in can API we certainly onboarding yourself the retail for And and us access, those myriad in, laterally we from The the say, markets. And region. where access one good data from brokers as, derivatives a as that being data taking the and XX outside you lead in then provider grow you're indicator But think Americas, growth we customers for around the across complex, across Pacific equity see do

So complex. the for there need platform, when to the core bringing access Pacific really encouraging good data. Southeast And the access seeing back we're you to for the what U.S. into activity platform, really that region, Asia a is in you order then onboard to get SEF, in beachhead activity

benefits as incremental can multiple interest have and and APIs units access -- very having from see do multiple then take in our that. we technology single for sets. them that easily in don't taking They are low with we So really consistent a And us technology that. data of technology to do data there, people the that great platform laterally customers summary for they new resources single no the utility deploy and bringing to that point expanding see effort on to cloud data sets

Brian Bedell

analytics? Got a other the you land-and-expand cross-sell strategy, It's you. you multiple whereby customer then get data sets and and

David Howson

one-firm and sales Cboe, we here have that Absolutely. Cboe. we're globally within all And our a all approach on data our salespeople take assets at we certainly where to training of of the

risk know bring raw incremental options So talk the index from our but data. capability Australia, to the that capability, to that those body on those our we're analytics we and you markets produce about and to index, market, of the market that got if you're of data insights XX we've top can that derivative also in able

Christopher Isaacson

this is Chris. Brian,

and you trading can talking derivatives land them expand raw Just data, we GTH my GTH data, with the start expanded -- we're and and XX% in access that as follow-up increased about, get having them that X, XX% with year-over-year get Dave on quarter-to-date. there, equity is pull-through good pull-through see and the they we then really and Slide

growth that that with transactions. starts about excited really data So to that moves

Operator

the from of question next from comes Owen Lau Our Oppenheimer. line

Kwun Sum Lau

about a have Cboe. actually I broader question

benefited XDTE. from many now of and incremental So expense over revenue growth have the small past high has X we And identified opportunities. years, Cboe

like You has buybacks. strategy feels about the talked and doing It land-and-expand changed. just profile more

the investors Cboe? investment for the next X focus should you over what if So help me can years, there gauge to on

Frederic Tomczyk

view And opportunities. I, Well, same to look lots the clearly sending side. our at, on looked lots the opportunities going revenue to derivatives that message see of on us which we mean you're at the think is And that, that continue things and gives about franchise and always the of DnA you've of I growth. our our we're globalization

for off the platforms the free harder And are lots X markets, than business. flow, so kicks it's that Cboe. The but grow cash has good It growth franchises. X other those margins, equities of to we continue to like

to a So mainly X. top we're expense but focused more disciplined on process. the We're growing all have X, management going

the have back resources. over last of doing of, us you I'll smaller would seen years, what went consumes M&A call And if you lots couple that

organization then, focused inside then capital. resources acquisitions the couple the growth organic are the more it now internally, on integrating been delivering course, in not that we've years. And of that are So up resources of last only frees doing initiatives but

buybacks. our Our free now. through dividends can do shareholders so kicking of off balance shape cash flow and capital lots We're good -- return sheet we very is to in

I in from XDTE, footprint. while And So this as a I to call, share. what got markets world. And continue the win land we had built see got of We've we that we and of, markets growth global lot well think in we've we've lots doing nice different a got we're we've the expand. to sell around opportunities market our then entered, what quite

look you Australia, seems If at to share once technology, get Japan, our our on they Canada, market expand.

that. we're So feeling about good

in to sure around way of like in We has in want the But U.S. demand things the might at we XDTE that and think do, complex, and up looking the sleeve? capital not SPX U.S. it just look another not and we the liquidity our complex. we we invest lot the to but are that we of And the have have I'm do. trade forward So to franchise we're times, to. Do that is world, the a continues high U.S. looking SPX it flow just to people lots

Operator

line from of the Michael comes Stanley. Cyprys Morgan next Our from question

Michael Cyprys

just to Just the wanted on out looking target, XX% back X% DnA growth revenue couple to next go years. the of over

And which set would see opportunity drive be you will customer the growth to think the be contributor you're -- you new going that What biggest from to do products new within biggest driver there? drive products this penetration the customers? portion coming or where is specifically there versus curious greater new product existing ahead. Just from versus of existing

David Howson

only when think one particular in the selling globally. portion we market out Certainly the and as and we as one the find in continues the strategy strategy world think a index in for -- core got direction of and in Fred global in the the medium access options continues that to we us, the in our got, particular. be, then have internationally see short second seemingly, It's as of marketplace. We've DnA sell access to products the growth in great which term, the what our we've And a access the well. and greater it's the And adoption runway with we analytics analytics those data at term but broaden to bringing be very for good growing those demand as of the risk that we capabilities, business high derivative rate sleeve index what said, overall, business. way, for then and specialization we to the derivative to benchmarks smaller internationally is the back a basic, going outside there market sleeve third data

mentioned, of there. global solid Chris those the trading during parts day X% to expand access trading those As and We to to be zones time a X% runway see those options trade hours. able in during SPX of

day particularly great about able what options and we good closed have. then which the closing when the ability really So think open was existing That shows we of there. And about data contract. packaging from to and the bundling to on see push out the to uptake were products, the SPX a example activity dates, new insightful and the inception which customers we the XDTE franchise. the data it's we in in The was positions throughout pivot provide data, opening from new

on grows to we'll insights help And franchise the own. and And to demand of and technologies the that as and basis. be ecosystem go-forward us that data really that we thinking data liquidity course, about grows, a products create insights innovative comes opportunity the for into generate can deploy its new on those

Christopher Isaacson

those of as technology now except around the the to year. something that global platform. Dave data Cboe our out outside just are first the a U.S. the improvements platform our are will network Dave our increasing of the want access them of in access is Cloud has I distribution done of The upgrades we And cetera, material data. rolling of at research, like to out global platform, network power all our We'll coming we which use win-win here, get of because and data time, a the once We can can real could then which time et not world. of we're speaks they on global on add that very the but Canada, over very, the then it's Michael, so data, These improvements can and want focused our might be and to to been great, world in driven distribution they all Global as as it build all in pushing then U.S. trade unlock be just and it for customers just Chris. to for doing mechanisms roll especially March access mentioned, this that where a benefit in closer more they be the migrations markets. And better spoke about, next growth customers.

Operator

Goldman line the from comes question of next Sachs. Our Alex Blostein of

Alexander Blostein

just from? been of million your of that where strategic After you Digital, in that a impact The like? And these looking what on sort where are guys areas away from on there annualized you've to want guys you one million well? think other Or are Jill. look get on. as operating Fred, offsetting this if is journey changes? for the I you. there review so, Cboe savings just really to And sort to you to mark-to-market could follow-up effect are for have highlighted, pivot you $XX $XX one in speaking income decision are we revenue the

David Howson

second don't Why one you take first? the

Jill Griebenow

You bet.

million $XX million So portion. in annualized expense the basis the an is savings $XX on contemplated to really

impact revenue XXXX, last we very So week. not with expecting in material what consistent a perspective anything from messaged

Frederic Tomczyk

call of with Okay. terms of to of say back trends of our where so the basis. strategic question, at analysis the and in the And I the our in world. our your SWOT taking review, in, the relative analysis, around competitors then I'd on we We've the first strengths We're Alex, look see markets heart we we're now. a process done all a have

And get to we're starting now focused, so down okay. really

now. an We've taken what know we now Cboe that. do market that case outside-in we all view and of So in the of

probably obviously, Board, conclude the revenue That, probably review last want later finding about our position And areas is have remind shareholder the earnings resources a the which should to growth round value. we'll to to want management value over we're just that the of combined want to time, good on with our said this the -- and into October because on strategy, then the which longer as second we team. But be and focus time allocation I'll in that there'll further and drive be summer, capital in have So we and shareholders. a focus out areas I deliver our drive questions. And term right for first still will disciplined review I heart round strategy everybody discussion but a we to the we debate that to with getting year. be to the all -- there'll the talk about be in will where which some attention.

you I have for the ours, longer capital, your like resources, allocate said, capital-light to an how the a margins, particularly you exchange it's And in technology it's and about model. drive shareholders value business high over all As term.

Operator

next KBW. of line Voigt question the comes from of Our Kyle

Kyle Voigt

be I good CDX. which like activity Maybe see. still still a business And try on you may guess, profitability I sounds group is any realized It should bit just on record March, it ramp to you've color ramps to when see I'm CDX? on a a and to there further ask can for gain while we for levels have trading? guess, there. of whether there place in just you and start question profitability, can momentum drag revenues assuming you I incentives in elaborate the

David Howson

Thanks very much, Kyle.

starting the liquidity of provider did European program month refine and QX in derivatives out and XX% for being index QX revamp pointed to You up rightly the record focus year-over-year. We on in type those the and of for. liquidity, March really of on the OI coverage extension XX% QX, the in we the and ADV over landscape. That, looking number are we along with the options concentration that -- cover of now single-stock

coming and the of full retail global we'll expand a the then a marketing deploy sales products. in is build looking are makers to more funds through more are gives on, internationally market be as and that year, and on conjunction go single-stock looking eagerly to efforts options rest to into as it now on begin to our knowledge the platform coming with what of we major retail those the will liquidity ecosystem months. All capital and board and futures able that index brokerage form that well those the anticipating to as So options offering we're customers unit core brokers We've with our talk that of Europe. in got produce

this you revenues we'll monitor speak year fact in and the to that profitability top all in infrastructure, which largest infrastructure And and on equity built the on is of throughout volumes is of as equities worth scale largest scaled is the search lies that those clearinghouse so in of well. what Europe platform of as exchange, cash a And activity reflecting is that the on profitable, the pan-European do top progresses. the rest the

scale. got we've So

work for patient new here the to is customers small affords us be clearinghouse, brand continue our which onboard the us what does set incremental and exchange to time. is with product to and take investment relatively So opportunity to and

will be journey. it So a

into continuing to go review be So and and that next we'll keep throughout this with we you as updated year that.

Operator

from line the Moley comes question next of Sandler. of Patrick Piper Our

Patrick Moley

question opportunistic, buyback. April. a like the And it's Just it large being Appreciate it you've to relative first you're quarter modeling it the on done in rather that -- seems was but in was recently. strong pretty what

you So can give buyback size the that from be understand you great. Anything just pace of help frame and kind us would us of and here? can

Jill Griebenow

You bet.

the off to perspective. really XXXX. balance a sheet ratio last end in in down of comfortable position the the of at a fourth So here the X.Xx debt rate from Leverage our very first Paid floating quarter. of quarter

share typically historically So we've is the -- repurchases. first mentioned or as has quarter, heavier been -- always in

year were this also with was repurchases. share first that then on tacked So heavy, quarter again, and the opportunistic some

a So deploy cash we the lot various We generate bells. free via capital flow. of

at perspective a it in share given So that increased perspective, sheet past, we're look that especially a then comfortable quarter. price, a again balance now. dividend. in time again, history for and this had In behind of perceived we've back a we'll paying the the any third the We'll we And in it weakness the take get year. repurchase quarterly sense right

stand elevated level. you're an the why We seeing stock. that's So behind

to flow invest We're the to back of in there have want it. of We initiatives. drive growth to dry keep growth. We that the bit also mindful free cash business powder long-term to a organic

So those it's between really areas. a balance

Operator

Oppenheimer. from Lau follow-up a have question We of Owen

Kwun Sum Lau

Cboe On to side, broader remind -- mean asset on on please you -- could can be tackle trading to competitive term? then without the the you the does spot the And strategy big ecosystem digital realignment Cboe's offering? on what think digital this futures why us how longer

David Howson

the We've the repeat competitive half. please? you that second for could question, got half first sorry, the element I'm of

we The line -- a second broke little. half, the

Kwun Sum Lau

wet. Sorry, about

strategy on I realignment how just mean broader how this Cboe's So longer assets tackle digital whole the asking, the asset does ecosystem digital realignment, to was to term?

David Howson

the for clarification Thanks Great. there.

landscape which the in opportunity our term looked we correct here into own account where we assets, capabilities at greatest we the saw the was overall took when set, at So looked space. we Cboe. at derivative strengths is and here And

we once look again, lean our And so global resources. on scaled and to infrastructure the existing

What move a base. a venue, add futures for an digital of of the have bring we single single existing and think with crypto we brought to makes this It a us onto single those attractive broad set is that onto customer which functionality, global functionality distribution a range on technology want. customers get gets stack, all which Exchange runs leapfrogs equities, a functionality today options of Cboe that versatile we market, and our futures futures to familiar Digital venue

as And world timeline the allows It and for have our digital world allows to product in a clearing then derivatives to product around derivatives onto crypto scale autonomy clearinghouse around a and other for get that space, and these also define potential us the around expertise scale also derivatives, unison to new destiny. market. have expertise the bear then the to products but to global own and broad clears team, that asset that innovations duration which in We us that space.

at an create at Cboe. us. at crypto the people think express us for We've to and for an we're to technology derivatives people be exposure liquidity alternative to good where that. give assets we and manage pool think it's edge got to able is the So We and

Frederic Tomczyk

digital with And strategy we maybe comments a here, on moved this why I'll few at add time. just

on lost losing were money So this. us first off, that it wasn't we on

a urgency So to to of it creates strategic conclusion. a sense come greater

We going have do also clarity. we're see when realize to we we and have spot clarity not regulatory not the that spot in And market. do cash regulatory

clarity, you because various to we the can't went Everybody that. so all bring participants all if And do very into liquid, wants But regulatory of have efficient this, a into market. it's to we market. build don't when you hard that wanted trusted,

going where Dave we have to have clarity. best forward. opportunity we our basically, as for to the gone said, us strengths are, as where we we've So and And gone that regulatory see

Operator

Michael from A of question final follow-up Cyprys comes Morgan Stanley.

Michael Cyprys

have you on us set opportunity Just index wanted more update to products that that ask a sense about if credit products. that. Hope opportunities speak could you you And and over make new could can few index time. broadly, the launching. Understand you're to within credit partnership

continue particularly you as with how about the your to markets thinking credit in credit? vision new types investor marketplace? What's for Just entering that, are electronify Cboe

David Howson

available today, us we and for to options contracts, as have contracts customers. well on So futures iBoxx we those X futures have

For for sort futures are off useful who trade ETFs us, and to those securities funds locked the is product particularly of having a can't income them. fixed

key is manage and ability HYG, the there, particularly to get X an future ETFs. So and deeply but which closely having LQD very aligned customers here, international also benchmarks useful the those tracks -- access to for hedge to the exposure that to which align --

as access is into -- aspect a to particularly be those there as from comes exposures well. exposure also underlying allow to the international to future for able international participants access play the used manage that to and So

closely first, through there. to the, and it Cboe's HYG offering a LQD because into it's we very is products very, of exposure So credit does align key alignment exposure to go differentiator for core touch and underlying that the as the the credit us,

Operator

no over further the now at are turn to team time. call back will Cboe closing I this for questions There Global remarks. Markets the

Frederic Tomczyk

Okay. Thanks, everyone. momentum off Thanks for to your the continue XXXX, the rest of questions We're today, to we calling start thanks great to the look and and year. in. for a for

Operator

now call. We you. for you may disconnect. thank and This today's you Thank participating, concludes conference

Cboe Global Markets (CBOE) 3 May 242024 Q1 Earnings call transcript