Q1 2024 Cboe Global Markets Inc Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by. Welcome everyone to the CBOE Global Markets first quarter earnings. At this time, all lines have been set on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your cell phone. If you would like to withdraw your question, please press the star followed by the 1 1.

Speaker Change: Ladies and gentlemen, thank you for standing by welcome everyone to the global market first quarter earnings call. At this time all lines are pivotal beach prevent any background noise. After the Speakers' remarks, there will be a question and answer session.

Speaker Change: If you'd like to ask a question. During this time simply press the star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press the star followed by the one once again.

Kenneth William Hill: Thank you. I would now like to hand the call over to Mr. Ken Hill, Vice President of Investor Relations and Treasurer. You may begin your- Good morning, and thank you for joining us for our first quarter earnings conference call. On the call today, Fred Tomczyk, our CEO, and Dave Howson, our global president, will discuss our performance for the quarter and provide an update on our strategic initiatives. Then, Jill Griebenow, our chief financial officer, will provide an overview of our financial results for the quarter, as well as discuss our 2024 financial outlook.

Speaker Change: I would now like to hand, the call over to Mr. Kevin who was president of Investor Relations and Treasurer, you May begin your conference.

Kenneth William Hill: Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer. I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each.

Kevin: Good morning, and thank you for joining us for our first quarter earnings conference call on the call today by Tom.

Kevin: CEO gatehouse and a global presence will discuss our performance for the quarter and provide an update on our strategic initiatives then.

Kevin: Joe <unk>, our Chief Financial Officer will provide an overview of our financial results for the quarter as well as discuss our 2024 financial outlook. Following their comments, we will open the call up to Q&A also joining us for Q&A will be Chris Isaacson, our chief operating officer.

Kevin: I would like to point out that this presentation will include the use of slides, we will be showing the slides and providing commentary on each a downloadable copy of the slide presentation is available on the Investor relations portion of our website.

Kenneth William Hill: A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. In our remarks, we will make some forward-looking statements which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. The actual performance and results may differ materially from what is expressed or implied in any forward-looking statement.

Kevin: During our remarks, we will make forward looking statements, which represent our current judgment on what the future mail and while we believe these judgments are reasonable before looking statements are not guarantees of future performance and involve certain assumptions risks and uncertainties actual performance and results may differ materially from what is expressed or implied in any forward looking statements. Please refer.

Kenneth William Hill: Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, after this call. During this call, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. Now, I'd like to turn the call over to Fred.

Kevin: To our filings with the SEC for a full discussion of factors that may affect any forward looking statements. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information future events or otherwise after this call.

During this call we will be referring to non-GAAP measures as defined and reconciled in our earnings materials now I'd like to turn the call over to Fred.

Frederic J. Tomczyk: Thanks, Ken. And good morning, everyone. And thanks for joining us today. I'm pleased to report strong first quarter results for CBOE Global Markets. During the quarter, we grew net revenue 7% year-over-year to a record $502 million and adjusted diluted earnings per share by 13% to $2.15. The seller results were driven by strong volumes across our derivatives franchise, specifically our proprietary index option product.

Fred: Thanks, Ken and good morning, everyone and thanks for joining us today.

Frederic J. Tomczyk: Continued expansion of our data and access solutions business, and Discipline Expense Management. Our derivatives business delivered another strong quarter as organic net revenue increased 8% year over year. We saw strong volumes across our suite of S&P 500 index option products.

Fred: I am pleased to report our strong first quarter results foreseeable global markets.

Fred: During the quarter, we grew net revenue, 7% year over year to a record $502 million and adjusted diluted earnings per share by 13% to $2 15.

These solid results were driven by strong volumes across our derivatives franchise, specifically, our proprietary index option products.

Continued expansion of our data and access solutions business.

Fred: And disciplined expense management.

Fred: Our derivatives business delivered another strong quarter as organic net revenue increased 8% year over year.

Fred: We saw strong volumes across our suite of S&P 500 index options products with first quarter Adv in the SPX contract, increasing 17% year over year to $3 2 million contracts.

Frederic J. Tomczyk: With first quarter ADV and the SPX contract increasing 17% year-over-year to 3.2 million contracts, we have also seen solid performance in our Volatility product suite during the first quarter, with VIX Futures and Options volumes further accelerating in April. Given the secular and cyclical tailwinds in place, we are well positioned as investors to continue to utilize options in their portfolio and trading strategies. Our data and access solutions business continued to perform well during the quarter, with organic net revenue increasing 8% year over year.

Fred: We are also seeing solid performance in our volatility product suite during the first quarter.

Fred: With VIX futures and options volumes further accelerating in April.

Fred: Given the secular and cyclical tailwind in place we are well positioned as investors continue to utilize options in our portfolio and trading strategies.

Our data and access solutions business continued to perform well during the quarter with organic net revenue, increasing 8% year over year.

Frederic J. Tomczyk: We continue to see durability in this business as we leveraged our global network and ecosystem of data and access solutions to drive growth. Net revenue in our cash and spot markets business was stable during the quarter as volume across global equity markets remains muted.

Fred: We continue to see durability in this business as we leveraged our global network, an ecosystem of data and access solutions to drive growth.

Net revenue in our cash and spot markets business was stable during the quarter as volume across global equity markets remained muted.

Frederic J. Tomczyk: Overall, it was a strong quarter for both transaction and non-transaction revenue growth to start the year. I continue to remain focused on three priorities that I believe will further strengthen CBOE and support our longer-term growth strategy. First, sharpening our strategic focus on areas where we see strategic growth opportunities for CBOE. Second, the effective allocation of our capital. And third, developing talent and management succession.

Fred: Overall, it was a strong quarter for both transaction and non transaction revenue growth to start the year.

Fred: I continue to remain focused on three priorities that I believe will further strengthen siebel and support our longer term growth strategy.

Fred: Sharpening our strategic focus on areas, where we see strategic growth opportunities placebo.

Fred: Yes, the effective allocation of our capital.

Fred: Third developing talent and management succession.

Frederic J. Tomczyk: As part of our strategic review process, coupled with the lack of regulatory clarity in the digital space, last week, we announced plans to refocus our digital asset business to leverage our core strengths in derivatives, technology, and product innovation, while realizing operating efficiencies for both CBOE and our clients. We plan to transition and fully integrate our digital asset derivatives business. Currently offered by CBOE Digital and to our existing global derivatives, harnessing the power of our global derivatives franchise and global technology platform to help support and fuel growth of the exchange-traded crypto derivatives market.

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

Fred: Both stable and our clients.

Fred: We plan to transition and fully integrate our digital assets derivatives currently offered by C. Both digital and to our existing global derivatives.

Fred: We're now seeing the power of our global derivatives franchise.

Fred: Global technology platform to help support and fuel growth of the exchange traded crypto derivatives market.

Frederic J. Tomczyk: We plan to migrate our cash settled Bitcoin and Ether futures contracts, trading on CBOE's Digital Exchange, to the CBOE Futures Exchange in the first half of 2025, pending regulatory review and certain corporate approval. Additionally, we plan to wind down operations of the CBOE Digital Spot Market, our digital asset trading platform, in the third quarter of 2024, subject to regulatory review.

Fred: We plan to migrate our cash settled bitcoin and Easter futures contracts trading on Cmos digital exchange to the seaborne futures exchange in the first half of 2025 pending regulatory review and certain corporate for approvals.

Fred: Additionally, we plan to wind down operations, a placebo digital spot market, our digital asset trading platform in the third quarter of 2024 subject to regulatory review.

Frederic J. Tomczyk: The lack of clarity on the U.S. regulatory front for the cash spot business, combined with the lack of any timeline to provide that clarity, among other considerations, has given us cause to change our strategic direction in the digital business to focus on where we have regulatory clarity and leverage our core strengths of derivatives, technology, and product innovation. With these changes, we are reallocating resources to focus on where we see as the greatest opportunity for growth and profitability, which is the continued expansion of our global derivatives franchise. On the clearing side, we plan to align and unify our clearing operations globally and intend to maintain CBOE Clear Digital, which will continue to clear our Bitcoin and Ether futures.

Fred: The lack of clarity on the U S regulatory front for the cash spot business.

Fred: Buying with a lack of any timeline to provide that clarity.

Fred: Among other considerations has given us cause to change our strategic direction and the digital business to focus on where we have regulatory clarity.

Fred: Leverage our core strengths of derivatives technology and product innovation.

Fred: With these changes we are reallocating resources to focus on where we see.

Fred: The greatest opportunity for growth and profitability, which was the continued expansion of our global derivatives franchise.

Fred: On the clearing side, we plan to align and unify our clearing operations globally and intend to maintain seabolt clear digital which will continue to clear our bitcoin and Easter futures.

Frederic J. Tomczyk: We believe these changes provide an opportunity to leverage our global derivatives platform, enhance efficiencies, and sharpen our focus; optimizing our business operations and product development across borders and asset classes enables us to better serve our diverse client base and sharpen our strategic focus. We continue to develop leadership and all functions across the company and optimize our organizational structure to support our global strategy. This realignment of our digital business into our derivatives and clearing business lines creates continued opportunities for development and growth within our senior leadership team.

Fred: We believe these changes provide an opportunity to leverage our global derivatives platform.

Fred: Hansen efficiencies and sharpened our focus.

Fred: Optimizing our business operations and product development across borders and asset classes enables us to better serve our diverse client base and sharpened our strategic focus.

Fred: We continue to develop leadership in all functions across the company and optimize our organizational structure to support our global strategy.

Fred: This realignment of our.

Fred: Our digital business into our derivatives and clearing business lines creates continued opportunities for development and growth within our senior leadership team.

Frederic J. Tomczyk: Finally, we continue to execute on a disciplined capital allocation strategy. The steps we are taking in our digital business illustrate our intent to allocate our resources and capital to the areas where we see the best returns for our firm. Also, as demonstrated during the first quarter and through April, share repurchases remain an important component of our capital allocation framework.

Fred: Finally, we continue to execute on a disciplined capital allocation strategy.

Fred: The steps we are taking in our digital business illustrate our intent to allocate our resources and capital to the areas, where we see the best returns for our firm.

Fred: Also as demonstrated during the first quarter and through April share repurchases remain an important component of our capital allocation framework. One we plan to continue to use opportunistically in the market.

Frederic J. Tomczyk: What we plan to continue to use opportunistically in the market. Overall, we remain committed to maintaining a flexible balance sheet while investing in organic growth initiatives, our technology capabilities, and operating efficiencies, thereby driving durable revenue expansion. Optimize margins and earnings growth for our stakeholders. I will now turn the call over to Dave Howson to talk through how we are driving results within our strategy. Thanks Fred. Starting with the Strong Results in the Global Derivatives category.

Fred: Overall, we remain committed to maintaining a flexible balance sheet, while investing in organic growth initiatives, our technology capabilities and operating efficiencies, thereby driving durable revenue expansion optimize margins and earnings growth for our stakeholders.

Fred: I will now turn the call over to Dave to talk through how we are driving results within our strategy.

Dave: Thanks, Brad starting with the strong results in the global derivatives category.

David Howson: Despite the cyclical headwind of low volatility in Q1, with the VIX index averaging just 13.7, the lowest in over 5 years, SPX options volume remained strong. Average daily volume was up a robust 17% year-over-year to 3.2 million contracts, finishing just shy of the all-time high set in Q4 last year. In fact, January and February ranked as the second and third highest SBX volume months on record through the first quarter. We believe investors took advantage of the low levels of volatility to more cheaply hedge their portfolios, with SPX puts making up a higher share of the total volume.

Dave: Despite the cyclical headwinds of low volatility in Q1 with the VIX index, averaging just 13 seven five.

Dave: Five years SPX options volume remained strong average daily volume was up a robust 17% year over year to $3 2 million contracts, finishing just shy of the all time high set in Q4 of last year.

In fact January and February ranked as the second and third highest SPX volume months on record through through the first quarter.

Dave: We believe investors took advantage of the low levels of volatility to more cheaply headset portfolio with SPX pumps, making up a higher share of the total volume hedging demand was particularly strong in our VIX options suite with VIX calls, while we may deviate up 4% quarter over quarter to over 500000 contracts.

David Howson: Hedging demand was particularly strong in our big options, with VIX Core Volume ADV up 4% quarter over quarter to over 500,000 contracts as investors took advantage of the low levels of VIX to add cheap tail protection. The resilience of our index options volume in the face of cyclical headwinds speaks to the strength of the secular drivers of our business, which we outlined in detail on the last earnings call. We continue to lean into these and see further room for growth. For example, in January, we launched Tuesday and Thursday expiry for our Russell 2000 index option.

Dave: I think investors took advantage of the low levels of VIX to add cheap Tau protection.

Dave: The resilience of our index options volume in the face of cyclical headwinds speaks to the strength of the secular drivers of our business, which we outlined in detail on the last earnings call.

Dave: We continue to lean into these and see further room for growth for example in January we launched Tuesday, Tuesday expiring for a Russell 2000 index options completing the second daily Expiries to small cap stocks.

David Howson: Completing the set of daily expirings for small-cap stocks. While still in its early days, Russell 2000 Index Options volumes hit a 5-year high ADV of 79,000 contracts in February, and the share of zero DTE volume grew from 8.7% in Q4 to now 12%. Within our more established SBX product, volumes increased 17% year-over-year, and zero DTE options increased a robust 32% year-over-year and grew 3% from Q4 levels to a new record of 1.54 million contracts.

Dave: While still early days Russell 2000 index options volume.

Dave: Yeah, Hi, Adv of 79000 contracts in February and the Sheriff DTE volume grew from eight 7% in Q4 to now 12%.

Dave: Within our more established SPX product volumes increased 17% year over year and zero DTE auctions increased a robust 32% year over year and grew 3% from Q4 levels to a new record of 154 million contracts.

David Howson: Zero DTE Options made up 48% of overall SBX activity in Q1, up 2 percentage points from last quarter. The rise of retail options trading is another secular trend we're excited to build on, with more platforms coming online for index options trading later this year, giving retail investors expanded access to our products. To that end, we're thrilled to see our Margin Relief Plan approved by the SEC recently, which we believe will make it easier for investors to overwrite index options on ETFs that track the same index.

Dave: Zero DTE option is made up 48% as overall SPX activity in Q1.

Dave: Two percentage points from last quarter.

Dave: To remind the retail options trading is another secular trend. We are excited to build on with more platforms coming online for index options trading later this year getting retail investors expanded access to our products. So that's and we're thrilled to see our margin relief plan approved by the SEC recently, which we believe will make it.

Dave: <unk> invested over index options on Etfs that track the same index.

David Howson: This is expected to benefit not just our SBX XSP options complex but also our Russell 2000 and MSCI suite of index options as well. Overwriting funds have grown tremendously in popularity in recent years, with total AUM jumping more than sixfold since the pandemic to now over $130 billion. Anecdotally, we're also seeing more interest from the retail and RIA community in using these options to enhance their portfolios. We see this Margin Relief Approval as an additional catalyst for wider adoption of options by the retail community.

Dave: This is expected to benefit not just the SPX SSP options complex, but also on the Russell 2000, and MSCI <unk> index options as well.

Dave: Overwriting funds have grown tremendously in popularity in recent years with total <unk> jumping more than six fold since the pandemic to now at $130 billion.

Dave: Anecdotally, we're also seeing more interest from the retail.

Dave: Community in using these options to enhance their portfolio. We see this margin relief approval as an additional catalyst for wider adoption of options by the retail community.

David Howson: Even without a turn in the macro environment, we believe we're well positioned for the rest of the year as we continue to execute on our strategic initiatives. However, if we do get a shift in investor sentiment, as was the case in April, we expect to benefit as traders harness the full versatility of our S&P 500 Volatility Toolkit. For example, during the market sell-off in April, VIX auction volumes surged to a six-year high, with daily volumes exceeding 2.6 million contracts on April 12th, on the back of escalating Middle East tensions.

Even without the turn in the macro environment. We believe we are well positioned for the rest of the year as we continued to execute on our strategic initiatives. However, if we do get to a shift in investor sentiment as was the case in April we expect to benefit trade is how long is the full versatility of our S&P 500.

Dave: Volatility toolkit for.

Dave: For example, with the market itself in April VIX options volume surge to a six year high with daily volumes exceeding $2 6 million contracts on April to 12 on the back of an escalating middle east tensions that higher volume than we saw during the 2020 Covid crisis. Despite the VIX index hitting a high of just <unk>.

David Howson: That's higher volume than we saw during the 2020 COVID crisis, despite the VIX index hitting a high of just 19 last month versus 82 in March of 2020. These auctions through April are on pace to report their second highest quarter on record at current levels, while Q1 was characterised by a consistent market rally amidst low volatility. Q2 is looking a lot more precarious amid heightened geopolitical tensions and greater macro uncertainty.

Dave: 19 last month.

Dave: <unk> in March 2020.

Dave: Based options through April are on pace to report its second highest quarter on record at current levels. While Q1 was characterized by a consistent market rally amid low volatility Q2 is looking a lot more precarious amidst heightened geopolitical tensions and greater macro uncertainty.

David Howson: As investors grapple with resurgent inflation, rising rates, not to mention the U.S. election later this year, we believe the need to use options to dynamically manage positions, hedge exposures, and generate income only increases. And while trading metrics in North America remain strong during U.S. hours, volumes traded in U.S. products during non-U.S. hours continue to increase. During the first quarter, SBX global trading hours activity increased 41% as compared to the first quarter of 2023.

Dave: Investors grapple with resurgent inflation rising rates not to mention the U S election late this year, we believe the need to use options to dynamically manage positions hedge exposures and generate income.

Dave: <unk> increases.

Dave: And while trading metrics in North America remained strong during use ours volumes traded in U S product during non U S hours continue to increase during the first quarter SPX global trading hours activity increased 41% as compared to the first quarter of 2023 and <unk>.

David Howson: And in April, we saw SBXGTH activity increase 73% versus Q2 2023 levels, and VIXGTH activity increased 69% over the same period. With GTH activity accounting for just 3% of April's SBX activity and less than 1% of fixed options activity, we continue to see an attractive path forward for non-US customers to increase access to the US market. Looking at the business more globally, we hit some notable milestones on our European derivatives platform. Total index derivative volumes again hit record levels in March, besting the prior record by 26%.

Dave: April we saw SPX GTH activity increased 73% versus Q2, 2023 levels and VIX GTH increased 69% over the same period.

The GTH activity accounted for just 3% of April's SPX activity and less than 1% of VIX options activity. We continue to see an attractive path forward for non U S customers to increase access to the U S markets.

Dave: Looking at the business more globally, we had some notable milestones on our European derivatives platform <unk>.

Dave: Index derivative volumes again hit record levels in March besting the prior record by 26% positioning us for future growth. We broadened the list of single stock options traded on <unk> to more than 300 companies across 14 European countries at the end of March.

David Howson: Positioning us for future growth, we broadened the list of single stock options traded on CDEX to more than 300 companies across 14 European countries at the end of March. And on April 1st, we initiated and revamped our liquidity provider programs in the region. Client feedback has been promising, and we look forward to providing greater customer efficiencies through our pan-European approach to trading and clearing. DNAnet revenues grew 8% compared to the first quarter of 2023, driven primarily by client expansion and additional unit sales of our expanding portfolio of access and data products.

Dave: In April the first we initiated a revamped our liquidity provider programs in the region.

Dave: Feedback has been promising and we look forward to driving greater customer efficiencies through our pan European approach to trading and clearing.

Dave: DNA net revenues grew 8% compared to the first quarter of 2023, driven primarily by client expansion and additional units out of our expanding portfolio of access and data products speak.

David Howson: Speaking to the breadth of the DNA business, during the quarter, each region and every business line outside of digital saw net revenues increase. In fact, 43% of data growth in the first quarter came from outside of the Americas.

Dave: Speaking to the breadth of the DNA business during the quarter each region in every business line outside of digital So net revenue increase in fact, 43% of data growth in the first quarter came from outside of the Americas. We saw outsize contributions from Australia by DNA net revenue grew 19%.

David Howson: We saw outside contributions from Australia, where DNA net revenue grew 19%, and Europe, where net revenue increased a strong 10% on a constant currency basis. We believe future growth will be fueled by strengthening our distribution capabilities through areas like cloud, further expanding our index capabilities, and providing greater access to our markets around the world. Taking a look at cash and spot businesses around the world, first quarter results were solid.

Dave: Percent and Europe, where net revenue increased a strong 10% on a constant currency basis.

Dave: We believe future growth will be fueled by strengthening our distribution capabilities through areas like cloud.

Dave: Expanding our index capabilities, and providing greater access to our markets around the world.

Dave: Taking a look at cash and stock businesses around the globe first quarter results were solid it is.

David Howson: It's worth noting that our ability to expand our cash and spot reach benefits more than just our transaction revenue. The continued progress we make in these markets has the potential to add additional revenue streams in tangential areas around growth. In North America, we saw US on exchange net capture rates rebound from December lows to finish in line with first quarter 2023 levels. Furthermore, Canadian market share improved by a full percentage point to 15.3% during the first quarter, and we remain on track with our final technology integration, the migration of our Canadian market to CBOE technology in early 2025, subject to regulatory review.

Worth, noting that our ability to expand our cash and stock reached benefits more than just our transaction revenues. The continued progress we make in this market has the potential to add additional revenue streams in tangential areas around growth.

Dave: In North America, we saw U S. On exchange net capture rates rebound from December lives to finished in line with first quarter 2023 levels.

Dave: Furthermore, Canadian market share improved by four percentage points to 15, 3% during the first quarter and we remain on track with our final technology integration the migration of our Canadian market to CEVA technology in early 2025 subject to regulatory review.

David Howson: Moving over to Europe, during the first quarter, CBOE Europe was the region's largest exchange by value traded, a testament to the strong breadth of our product offering in the region. As we look to expand our capabilities into related areas with untapped addressable markets, we remain on track for a third quarter launch of our securities financing transactions clearing services, subject to regulatory review. CBOE's SFT business will clear stock vending activities for market parties.

Dave: Moving over to Europe during the first quarter CEVA in Europe with the region's largest exchange by value traded a testament to the strong breadth of our product offering in the region.

Dave: As we look to expand our capabilities into related areas with untapped addressable markets. We remain on track for a third quarter launch of our securities financing transactions clearing services subject to regulatory review.

Dave: CEVA is SSD business will clear stopped lending activities some market participants.

David Howson: With the introduction of stricter capital requirements, we believe now is the right time to leverage our clearing capabilities to bring a solution to the market with the potential to meaningfully reduce risk-weighted assets for customers. We've secured the backing of nine key industry participants. Spanning. Thanks.

Dave: With the introduction of strict to capital requirements. We believe now is the right time to leverage our clearing capabilities to bring a solution to the market with the potential to meaningfully reduce risk weighted assets for our customers.

Dave: We have secured the backing of nine key industry participants spanning banks clearing funds asset managers and custodians and look forward to bringing this service to market in the months ahead.

David Howson: Clearing Firms, Asset Managers, and Custodians and look forward to bringing this service to market in the months ahead. And finally, turning to Asia-Pacific, we saw strong momentum in Australia and Japan. In Australia, CBOE continued its market share gains with total market share for the quarter finishing at 20.4%, up nearly two percentage points from the first quarter of 2023. In Japan, not only did market share reach 5% in the first quarter, a full percentage point higher than the 2023 average, but volumes grew a robust 72% as compared to year-ago levels.

Dave: And finally, turning to Asia Pacific, We saw strong momentum in Australia and Japan.

Dave: Australia seabed continued its market share gains with total market share for the quarter, finishing at 24% up nearly two percentage points from the first quarter of 2023.

Dave: In Japan.

Dave: Not only did market share reached 5% in the first quarter, a four percentage points higher than the 2023 average that volumes grew a robust 72% as compared to year ago levels.

David Howson: Those trends have continued in the second quarter, with CBOE Japan's market share hitting a single-day high of 6.5% on the 23rd of April. With our APAC integrations behind us, we look forward to competing more aggressively in the market to expand our transaction and non-transaction revenue. Overall, CBOE remains incredibly well positioned to consistently grow revenues across the firm. This means not only leaning in on more established product areas, like our index business, but also allowing newer areas to leverage a robust infrastructure already in place. Earlier, Fred spoke about some of the key strategic impacts of our recently announced digital reorganization.

Dave: Those trends have continued in the second quarter with CMA, Japan market share hitting a single day high of six 5% on the 20 <unk> of April.

Dave: With our APAC integrations behind US, we look forward to competing more aggressively in the market to expand our transaction and non transaction revenues.

Dave: Overall, <unk> remains incredibly well positioned to consistently grow revenue across the fab.

Dave: This means the only leaning in on more established product carriers like our index business, but allowing new areas to leverage a robust infrastructure already in place earlier, Fred spoke to some of the key strategic impact of our recently announced digital reorganization I want to provide some additional context on how the new law.

David Howson: I want to provide some additional context on how the move leverages our global derivatives and clearing capabilities. On the derivatives side, the reorganization reinforces the integrated global view we take with not only our derivatives franchise but all of our businesses at CBOE. By consolidating CBOE's futures products onto one market, CBOE's Futures Exchange, also known as CFE, pending regulatory review and certain corporate approvals, we can leverage the totality of our derivatives capabilities to grow our businesses while creating efficiencies for market participants.

Dave: Average is our global derivatives and clearing capabilities.

Dave: On the derivative side the reorganization reinforces the integrated global view, we take with not only our derivatives franchise, but all of our businesses at CEVA by consolidating <unk> futures products onto one market <unk> futures exchange also known as CFC pending regulatory.

Dave: We review and set in corporate approvals, we can leverage the totality of our derivatives capabilities to grow our businesses, while creating efficiencies for market participants.

David Howson: Specifically, that means reducing complexity for clients by allowing them to connect to one global platform for all their US futures trading needs. As part of CFE, newer products like digital asset futures can leverage tried and true CFE capabilities to accelerate the go-to-market timeline for products like options on futures and complex orders for digital products. Expanding the toolkit of solutions available to clients. In addition, these products will be able to tap into a seasoned and global sales force, a resilient technology infrastructure, and a unified management team under the leadership of Cathy Clay, our Executive Vice President of Global Derivatives.

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

Dave: Part of CFA newer products like digital asset fleet changes can leverage tried-and-true CSC capabilities to accelerate the go to market timeline for products like options on futures and complex orders for digital products, expanding the toolkit of solutions available to clients.

Dave: In addition, these products will be able to tap into a seasoned local salesforce, a resilient technology infrastructure and a unified management team under the leadership of Kathy <unk>, Our executive Vice President of global derivatives.

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

Dave: On the clearing side, we are equally excited about the opportunities presented by unifying our clearing operations on a global basis. The cash the Tel currently president of <unk> Europe will also oversee U S training Steve.

Dave: <unk> Europe will continue to operate as a pan European Central clearing counterparties for European equities and derivatives, adding CEVA create digital under the global clearing umbrella provides a cohesive clearing approach that spans equities and derivatives in Europe to bitcoin and either futures in the U S.

David Howson: Adding CBOE Clear Digital under the Global Clearing Umbrella provides a cohesive clearing approach that spans equities and derivatives in Europe to Bitcoin and Ether futures in the US. The result is CBOE having great control of its product development destiny from ideation through to clearing consideration. Across the firm, we continue to leverage our core strengths and find pockets of growth in our cash, data, and derivatives categories. The first quarter of 2024 was very strong, and we look forward to driving further growth in the quarter ahead. With that, I will turn the call over to Jill.

Dave: <unk> is C by having greater control of its product development destiny from ideation to declaring considerations.

Dave: Across the firm, we continue to leverage our core strengths and find pockets of growth in our cash data derivatives categories. The first quarter of 2024 was very strong and we look forward to driving further growth in the quarters ahead.

Dave: With that I will turn the call over to Jim.

Jill M. Griebenow: Thanks, Dave. As Fred and Dave highlighted, CBOE posted a strong first quarter with adjusted diluted earnings per share of 13% on a year-over-year basis to a record $2.15. I will provide some high-level takeaways from the quarter before delving into an assessment of the segment results. Our first quarter net revenue increased 7% to finish at a record $502 million. The growth was again driven by the strength in our derivatives markets and data and access solutions businesses, with steady results from our cash and spot markets category.

Jim: Thanks, Dave first Dave highlighted CEVA posted a strong first quarter with adjusted diluted earnings per share up 13% on a year over year basis to a record $2 15.

Jim: I will provide some high level takeaways from the quarter before delving into an assessment of the segment results.

Jim: Our first quarter net revenue increased 7% to finish at a record $502 million.

Jim: Growth was again driven by the strength in our derivatives market data and access solutions businesses with steady results from our cash and spot market category, specifically derivatives market increased 8% year over year organic net revenue growth in the first quarter as we saw sustained growth in our proprietary product franchise during.

Jill M. Griebenow: Specifically, derivatives markets produced 8% year-over-year organic net revenue growth in the first quarter, as we saw sustained growth in our proprietary product franchise during the quarter. Data and Access Solutions net revenues also increased 8% on an organic basis during the quarter.

Jim: Quarter date.

Jill M. Griebenow: We are pleased with the revenue trends and are confident in our ability to deliver on our 7 to 10% targeted net revenue growth in 2024. Cash and spot market net revenues were roughly flat to a year ago levels on an organic basis, given stable results across our business segments. Adjusted operating expenses increased 4% to $193 million, with the year over year growth driven by higher compensation-related expenses and technology support services during the quarter.

Jim: Data and access solutions net revenues also increased 8% on an organic basis. During the quarter. We are pleased with the revenue trends and are confident in our ability to deliver on our 7% to 10% targeted net revenue growth in 2020 for cash.

Jim: Cash and spot markets net revenues were roughly flat to year ago levels on an organic basis, given stable results across our business segments.

Jim: Adjusted operating expenses increased 4% Q1 hundred $93 million with the year over year growth driven by higher compensation related expenses and technology support services during the quarter and.

Jill M. Griebenow: An adjusted EBITDA of $337 million grew by a solid 9% versus the first quarter of 2023. Importantly, given our strong revenue generation and diligent expense management, we made material progress in stabilizing our adjusted EBITDA margins during the first quarter. Our first quarter adjusted EBITDA margin expanded by 1.4% on a year-over-year basis and by nearly three percentage points sequentially to an attractive 67.2%. Turning to the Key Drivers by Segment.

And adjusted EBITDA of $337 million grew a solid 9% versus the first quarter of 2023.

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

Our first quarter adjusted EBITDA margin expanded by one 4% on a year over year basis, and by nearly three percentage points sequentially to an attractive 67, 2%.

Jill M. Griebenow: Our press release and the appendix of our slide deck include information detailing the key metrics for our business segment, so I'll provide some highlights for each. The option segment delivered another robust quarter as net revenues grew 10%, led by higher index option transaction fees and growth in recurring non-transaction revenue. Total options ADV was up 1%, driven by a 14% increase in index option volume. Revenue per contract moved 12% higher, with index options representing a higher percentage of total options volume. And access and capacity fees were up 7%, while proprietary market data fees increased 15% versus the first quarter of 2012. North American equities net revenue decreased 1% on a year-over-year basis in the first quarter.

Jim: Turning to the key drivers by segment, our press release and the appendix of our slide deck include information detailing the key metrics for our business segments. So I'll provide some highlights for each of the options segment delivered another robust quarter as net revenues grew 10% led by higher index option transaction fees and growth in recurring non <unk>.

Jim: <unk> revenue.

Jim: Little options Adv was up 1% driven by a 14% increase in index options volume.

Jim: Revenue per contract moved 12% higher with index options, representing a higher percentage of total option volume.

Jim: In access and capacity fees were up 7%, while proprietary market data fees increased 17% versus the first quarter of 2003.

Jim: North American equities net revenue decreased 1% on a year over year basis in the first quarter, reflecting lower industry market data and steady net transaction and clearing fees.

Jill M. Griebenow: Reflecting lower industry market data and steady net transaction and clearing fees. In net transaction and clearing fees, a decrease in Canadian equities market volumes in net capture was partially offset by a stronger US off-exchange net capture rate of 24% versus first quarter 23, given positive mix shifts seen during the quarter. On the non-transaction side, access and capacity fees increased 5% as compared to the first quarter of 2023.

Jim: And that transaction and clearing fees a decrease in Canadian equities market volumes and net capture was partially offset by stronger U S off exchange that capture rate up 24% versus the first quarter 'twenty three given positive mix shifting during the corner on that.

Jim: Non transaction side access and capacity fees increased 5% as compared to the first quarter of 2003.

Jill M. Griebenow: The Europe and APAC segment reported a 10% year-over-year increase in net revenue, driven by 20% non-transaction revenue growth across market data, including Access and Capacity Fees and Other Revenue. Transaction revenue in Australia and Japan benefited from another quarter of market share gain. However, future segment net revenue decreased 2% in the quarter, primarily due to lower volume. On the non-transaction side, access and capacity fees continue to perform well, up 8% versus the first quarter of last year, and market data revenues increased by 10%. And finally, net revenue in the FX segment decreased 1%, driven by a slightly lower net capture rate.

Jim: The Europe and APAC segment reported a 10% year over year increase in net revenue driven by 20% non transaction revenue growth across market data fees access and capacity fees and other revenue.

Jim: Transaction revenue in Australia, and Japan benefited from another quarter of market share gains.

Jim: The future segment net revenue decreased 2% in the quarter, primarily due to lower volume on the non transaction side access and capacity fees continued to perform well up 8% versus the first quarter of last year and market data revenues increased by 10%.

Jim: And finally net revenue in the FX segment decreased 1% driven by a slightly lower net capturing market share with 23% for the quarter as compared to 19% in the first quarter of 2003.

Jill M. Griebenow: Market share was 20.3% for the quarter as compared to 19% in the first quarter of 2013. Turning now to CBOE's Data and Access Solutions business, net revenues were up a solid 8% on an organic basis in the first quarter. Net revenue growth continued to be driven by solid new subscription and unit growth, accounting for 57% of market data and access solutions revenue growth. We are pleased with the strong start to the year and believe the momentum across the suite of CBOE's businesses positions us well to fuel our full-year and medium-term DNA revenue growth guidance of 7 to 10 percent.

Jim: Turning now to see those data and access solutions segment net revenues were up a solid 8% on an organic basis in the first quarter net revenue growth continued to be driven by solid new subscription and unit growth accounting for 57% of market data and access solutions revenue growth.

Jim: We are pleased with the strong start to the year and believe the momentum across the suite of <unk> businesses position us well to fuel our full year and medium term DNA revenue growth guidance of 7% to 10%.

Jill M. Griebenow: More specifically, we expect to see continued strength from demand for access across our global markets, particularly as we increase our presence in new geographies. Proprietary Data Sales and Options Analytics, benefiting from the sustained growth across our derivatives complex. And finally, we anticipate a continued focus on our distribution capabilities from market data to indices, adding to the enhanced distribution capabilities of CBOE Global Cloud. Turning to expenses, total adjusted operating expenses were approximately $193 million for the quarter, up 4% compared to last year.

Jim: More specifically, we expect to see continued strength from demand for access across our global markets, particularly as we increase our presence in new geographies.

Jim: Proprietary data sales and options analytics benefiting from the sustained growth across our derivatives complex.

Jim: And finally, we anticipate a continued focus on our distribution capabilities from market data to indices, adding to the enhanced distribution capabilities of Steve a global cloud.

Jill M. Griebenow: The increase was a product of higher compensation and benefits and technology support services, and partially offset by a decline in professional fees and outside services. As we look ahead on slide 16 to our 2024 guidance, we are lowering our full year 2024 adjusted operating expense guidance range to $795 to $805 million from $798 to $808 million. The updated guidance reflects our first quarter results, some reduced cost expectations as a result of the digital realignment, as well as a slightly higher bonus accrual moving forward given our expectation to be at the higher end of our total organic net revenue guidance range for the full year.

Jim: Turning to expenses total adjusted operating expenses were approximately $193 million for the quarter up 4% compared to last year. The increase was the product of higher compensation and benefits and technology support services and partially offset by a decline in professional fees and outside services.

Jim: As we look ahead on slide 16 to our 2024 guidance, we are lowering our full year 2024, adjusted operating expense guidance range to $795 million to $805 million from $798 million to $808 million. The updated guidance reflects our first quarter results some reduced cost expectation.

Jim: As a result of the digital realignment as well as a slightly higher bonus accrual moving forward given our expectation to be at the higher end of our total organic net revenue guidance range for the full year.

Jill M. Griebenow: On digital specifically, I want to walk through a few of the expected one-time and annualized impacts of the announced realignment and revised digital strategy. CBOE expects a one-time estimated pre-tax charge of $39 million to $82 million, primarily related to the non-cash impairment of long-lived intangible assets, which is expected to be recorded in the second quarter of 2024. These charges are expected to be considered one-time only and excluded from adjusted earnings.

Jim: On digital specifically I want to walk through a few of the expected onetime an annualized impact of the announced realignment and revised digital strategy.

Jim: We will expect some onetime estimated pre tax charge of $39 million to $82 million, primarily related to the noncash impairment of long lived intangible assets, which is expected to be recorded in the second quarter of 2020 for these.

Jim: These charges are expected to be considered onetime and excluded from adjusted earnings.

Jill M. Griebenow: We do anticipate roughly $2 to $4 million of adjusted operating expense savings this year as we carefully wind down the spot digital asset trading platform in the third quarter of 2024, subject to regulatory review. Moving forward, we anticipate the closure will generate annualized savings of $11 to $15 million on an annualized adjusted operating expense basis. Overall, we believe the current expense guidance range gives us flexibility to invest in high-return areas of our business.

Jim: We do anticipate roughly $2 million to $4 million of adjusted operating expense savings. This year as we carefully wind down the spot digital asset trading platform in the third quarter of 2024 subject to regulatory review moves.

Jim: Moving forward, we anticipate the closure will generate annualized savings of $11 million to $15 million on an annualized adjusted operating expense base.

Jim: Overall, we believe the current expense guidance range gives us flexibility to invest in high return areas of our business.

Jill M. Griebenow: Looking at our full-year guidance more broadly, we are anticipating organic total net revenue growth to finish at the higher end of our 5-7% expected range for 2024. We are also reaffirming our DNA organic net revenue growth range of 7-10% for 2024, in line with our medium-term expectations. This quarter, we are breaking out our other income line into earnings and investments and other income. Importantly, though, the aggregate benefit we expect to realize for non-operating income is unchanged at $37 to $43 million in 2024.

Looking at our full year guidance more broadly we are anticipating organic total net revenue growth to finish at the higher end of our 5% to 7% expected range for 2024. We are also reaffirming our DNA organic net revenue growth range of 7% to 10% for 2024 in line with our medium term expectations.

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

Jim: Fortunately, though the aggregate benefit we expect to realize for non operating income is unchanged at 37% to $43 million in 2024, we anticipate 33% to $37 million from positive marks on our investments to help our earnings and investments line and $4 million to $6 million and largely dividend income to flow through our other <unk>.

Jill M. Griebenow: We anticipate $33 to $37 million from positive marks on our investments to help our earnings and investments line, and $4 to $6 million in largely dividend income to flow through our other income lines. Our full year guidance range for CapEx remains at $51 to $57 million for 2024. And depreciation and amortization is expected to be in the range of $43 to $47 million for the year. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30.5% for 2024.

Jim: Income line.

Jim: Our full year guidance range for Capex remains at 51% to $57 million for 2024, and depreciation and amortization is expected to be in the range of $43 million to $47 million for the year.

Jim: We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28, 5% to 35% for 2024.

Jill M. Griebenow: And finally, outside of our annual guidance, we expect net expense to be in the range of $9 to $10 million for the second quarter of 2024. On the capital front, we continue to maintain a flexible and attractive capital return policy for shareholders. In the first quarter, we returned a total of $58.5 million to shareholders in the form of a $0.55 per share quarterly dividend.

Jim: And finally outside of our annual guidance, we expect net expense to be in the range of $9 million to $10 million for the second quarter of 2024.

Jim: On the capital front, we continue to maintain a flexible and attractive capital return policy for shareholders in.

Jim: In the first quarter, we returned a total of $58 5 million to shareholders in the form of <unk> 55 per share quarterly dividend.

Jill M. Griebenow: In addition, we repurchased $89 million in shares during the first quarter. We have continued our repurchase activity in the month of April, adding an incremental $27 million in repurchases during the month. Moving forward, we will look to opportunistically repurchase shares, given our continued healthy free cash flow generation. Turning to our balance sheet, our first quarter leverage ratio declined to 1.1 times from 1.2 times in the prior quarter as a result of solid EBITDA generation.

Jim: Addition, we repurchased $80 million in shares during the first quarter. We have continued our repurchase activity in the month of April, adding an incremental $27 million in repurchases. During the month moving forward, we will look to opportunistically repurchase shares given our continued healthy free cash flow generation.

Turning to our balance sheet first quarter leverage ratio declined to one one times from one two times in the prior quarter as a result of solid EBITDA generation overall.

Jill M. Griebenow: Overall, we remain comfortable with our debt profile and the balance sheet flexibility it affords, having locked in low, medium to longer-term fixed rates averaging below 3% on our outstanding debt. As always, we aspire to allocate capital and resources in the most value-enhancing way. Striking the Right Balance Between Investing in Future Revenue Growth and Optimizing Our Margins. We look forward to building on the solid year-to-date trends and delivering durable shareholder returns in 2024.

Jim: Overall, we remain comfortable with our debt profile in the balance sheet flexibility it affords having locked in low medium to longer term fixed rates, averaging below 3% on our outstanding debt.

Jim: As always we aspire to allocate capital and resources in the most value enhancing ways.

Jim: Making the right balance between investing in future revenue growth and optimizing our margins.

Jim: We look forward to building on our solid year to date trends and delivering durable shareholder returns in 2024, now I'd like to turn the call back over to Frank for some closing comments before we open it up to Q&A.

Jill M. Griebenow: Now I'd like to turn the call back over to Fred for some closing comments before we open it up to Q&A. In closing, I would like to thank our team for the continued progress made throughout the first quarter.

In closing I would like to thank our team for the continued progress made throughout the first quarter.

Frederic J. Tomczyk: 2024 is off to a strong start, and we believe we are well positioned for another strong year. At this point, we'd be happy to take questions. Please limit your question to one per person to allow time to get to everyone.

Frank: 2024 is off to a strong start and we believe we are well positioned for another strong year.

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

Operator: Feel free to get back in the queue, and if time permits, we'll take a second question. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number on your telephone keypad to raise your hand and join the... If you would like to withdraw your question, simply press star 1 and, If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star followed by the one on your telephone keypad to raise your hand to join the queue if you'd like to withdraw your question simply press Star one again.

Speaker Change: If you are called upon to ask you a question in a listing by loud speak on your device. Please pickup your handset and ensure that Youll phone is not on mute when asking your question, we'll pause for just a moment to compile the Q&A roster.

Operator: We'll pause for just a moment to compile the Q&A. Our first question comes from the line of Patrick Moley from Piper Stamps. Please go ahead with your questions. Yes, good morning.

Speaker Change: Our first question comes from the line of Patrick <unk> from Piper Sandler.

Patrick: Please go ahead with your question.

Patrick Malcolm Moley: Thanks for taking the question. So you now expect organic total net revenue growth to be at the higher end of that five to seven percent range. Revenues were up six and a half percent in the first quarter. So it seems like, you know, the guide would imply there's an expectation that revenue growth is going to be as good or better than what we saw in the first quarter. But index option volumes did slow down, and they've come back here a little bit in April.

Patrick: Yes. Good morning, Thanks for taking the question. So you now expect organic total net revenue growth to be at the higher end of that 5% to 7% range revenues were up six 5% in the first quarter. So it seems like the guide would imply there is an expectation that.

Patrick: Revenue growth is going to be as good or better than what we saw in the first quarter.

Frederic J. Tomczyk: And you're facing some pretty tough comps for the rest of the year. So just can you speak to, you know, what gave you the confidence to point us toward the higher end of that range? And then, just adding on to that, if you could, what are you baking into that guidance in terms of index option volume growth for the remainder of the year? Thanks.

Patrick: Index options volumes did slow down they've come back here, a little bit in April and.

Speaker Change: And you're facing some pretty tough comps for the rest of the year. So just can you speak to what gave you the confidence to point us towards the higher end of that range and then just adding on to that if you could what are you baking into that guidance in terms of index option volume growth for the remainder of the year.

Speaker Change: Okay.

Frederic J. Tomczyk: Sure, you bet. Thank you for the question, Patrick. So, obviously, first quarter, very strong net revenue results coming in 7% higher than first quarter 2023, really fueled by the derivatives markets business, as well as DNA, very strong contribution there. So that, coupled with again, the very strong April we saw, just again, gave us confidence in guiding to the higher end of that five to 7% range. We'll obviously keep an eye on this and get another quarter of results under our belts and come back to the group in early August with, you know, refined projections, but I feel good at the moment with that five to 7%, that higher end there.

Speaker Change: Sure you bet. Thank you for the question Patrick.

Speaker Change: Obviously first quarter very strong net revenue results coming in.

Speaker Change: Is that higher in the first quarter of 2023 really fueled by the derivatives markets business as well as DNA very strong contribution there so that coupled with again the very strong April we saw just again gave us confidence in guiding to the higher end of that 5% to 7% range, we'll obviously keep an eye on that and get another.

Speaker Change: Our results under our belt and come back to the group in early August when Youll refinance protection, but you'll get at the moment with that 5% to 7% that higher end there.

Frederic J. Tomczyk: Just, Patrick, a little bit more, I'm sure we'll talk a bit more about it in the call, but if you look at Q1 versus Q2, there are different volatility environments there, and the complex continues to perform well through both of those. And then as we take that forward look through the rest of the year, you can see a number of potential drivers, whether that be geopolitical tensions, inflation, interest rates, and, of course, the US election. So plenty of activity is really in front of us there when we think about how customers are using the diverse ecosystem that we have at CBOE. All right, thanks.

Speaker Change: This is Patrick a little bit more I'm sure, we'll talk a bit more about it in the call, but if you look at Q1 versus Q2 different volatility environment.

Speaker Change: The complex continued to perform well through both of those and then as we take that forward look through into the rest of the year, you'll see a number of potential drivers for that made the geopolitical tensions inflation interest rates and of course, the U S election, so plenty of activity really.

Speaker Change: In front of us that when we think about how customers are using the diverse ecosystem that we have in silver.

Speaker Change: Alright. Thanks.

Alexander Kramm: Thank you. Our next question comes from the line of Alex Kramm from UBS. Please go ahead.

Speaker Change: Thank you. Our next question comes from line of Alex Kramm from UBS. Please go ahead.

David Howson: Yes, hello. Just a quick follow-up here on the outlook on the DNA side. I know you did 8% in the first quarter. But when I look forward, I think if I look at last year, the comps are getting much tougher in the second quarter. I don't fully remember what happened there.

Alexander Kramm: Yes, Hello, just a quick follow up actually on the outlook on the DNA side I know you did 8% in the first quarter.

Alexander Kramm: But when I look forward I think if I look at last year, the comps are getting much tougher in the second quarter.

Alexander Kramm: And once fully remember what happened there, but I think there was definitely a step up so just wondering in terms of your confidence level given that that 7% to 10 is it really just your medium term guide so given the visibility you should have in that business. Just wondering how you feel about.

David Howson: But I think there was definitely a step up. So just wondering in terms of your confidence level, given that that seven to 10 is really just your medium-term guide. So given the visibility you should have in that business, just wondering how you feel about where you may check out in the seven to 10 given the tough comps here starting in the second quarter. Yeah, Alex, thanks for the question. We remain confident in this 7 to 10% guide, and particularly as we had in the call notes there, the growth year-over-year in all asset classes in all regions that we saw throughout the quarter, solid growth of 57% from new subscriptions and new units, and then also, encouragingly, 43% of their growth for the market data and access services was from outside of the Americas. That's a record growth percentage for us outside of the Americas.

Speaker Change: Sir you may shake out in the seven to 10, given the tough comps here starting in the second quarter.

Speaker Change: Yeah, Alex Thanks for the question, we remain confident in the 7% to 10% guide.

Speaker Change: Teekay as we adding that the call notes that the growth year over year in all asset classes in all regions that we saw throughout the quarter.

Speaker Change: Our growth from 57% from new subscriptions, New unit and then also encouragingly, 43% of that growth.

Speaker Change: The market data and access services was from outside the Americas That's a.

David Howson: And so as we think through the rest of the year, and as you say, Q2 last year was elevated versus Q1 in terms of growth somewhat, but then continued throughout the year. But when we think about this year, more data on net, we've got CBOE Australia with the re-platformed just over a year ago, resulting in 15% year-over-year growth from CBOE Australia DNA there.

Speaker Change: Our record growth percentage for us outside of the Americas continued strong engagement with 79% of customers to the cloud from outside of the Americas as well and so as we think through the rest of the year and as you say Q2 last year was elevated versus Q1 in terms of growth somewhat but then.

Speaker Change: Continued.

Speaker Change: Throughout the year as last year, but when we think about this year more data on that.

Speaker Change: <unk>, Australia with the re platform just over a year ago, resulting in 15% year over year growth from.

Speaker Change: Steve Australia, DNA that we've got more products to package and bundle from the 27 markets in different ways.

David Howson: We've got more products to package and bundle from the 27 markets in different ways and be able to deliver them to our customers where they are over the cloud. And then, finally, it's been an exciting year for CBOE as we've been able to turn our attention toward technological enhancements in the core platform. And the access layer improvements that we're bringing to market this year and into next year, we think will represent incremental value that customers are willing to pay for and should also enhance our competitive position within those venues themselves, in particular in the US options and equities landscape. So overall, we are confident with the 7-10% guide where we stand today, and of course, we'll update you next quarter as well. Sounds good to me; thank you.

Speaker Change: You have to deliver them to our customers where they are at over the cloud and then finally, it's an exciting <unk> as we've been able to turn our attention towards technology and have some enhancements in the core platform and the access land improvements that we're bringing to market. This year and into next year, we think will represent incremental values.

Speaker Change: Customers are willing to pay for and should.

Speaker Change: Should also enhance our competitive position within those venues themselves in particular in the U S options and equities landscape. So overall company with a 7% to 10% guide where we stand today, but of course, we will update you next quarter as well.

Speaker Change: Sounds good thank you.

Craig William Siegenthaler: Thank you. Our next question comes from the line of Craig Siegenthaler of Bank of America. Hey, good morning, everyone. Hope you're doing well.

Speaker Change: Thank you. Our next question comes from the line of Craig Siegenthaler of Bank of America. Please go ahead.

Craig William Siegenthaler: Hey, good morning, everyone hope you're doing well.

David Howson: My question is on zero DT aspects. Volumes are up a lot over the last year, but it looks like the mix is sort of stabilized in the 50% zone. So we wanted to get your updated thoughts on where the zero DT mix may be heading over the next 12 months. Also, if the Robinhood launch could move it significantly higher, and what other factors you think are most sensitive to adoption.

Craig William Siegenthaler: My question is on the <unk> SPX.

Craig William Siegenthaler: Volumes are up a lot over the last year, but it looks like the mix has sort of stabilized in the 50% zone. So we wanted to get your updated thoughts on where the zero Tpa ITT mix, maybe heading over the next 12 months.

Craig William Siegenthaler: Also if the robinhood launch could move it significantly higher than what other factors you think are most sensitive to adoption.

David Howson: Great, thanks very much for the question there. You're right, 48% of SPX was zero DTE in Q1, and April was 50%. We see those variations as we go through the months, depending on what's actually happening in the environment there.

Speaker Change: Great. Thanks, very much for the question, Matt you're right 48%.

Speaker Change: <unk> losses in Q1 and April was 50%.

Speaker Change: See variations as we go through the months, depending on what's actually happening in the environment that when we think about the breakdown that we normally give you with retail to non retail and non retail does include professional retail. We saw continued increase year over year, whereas now just address third is retail.

David Howson: When we think about the breakdown that we normally give you of retail to non-retail, and where non-retail does include professional retail, we saw a continued increase year over year, whereas now just under a third is retail, and just over two-thirds is non-retail. That's versus around 59% of non-retail in Q1 of last year. So what we see is more funds, more strategies, more PMs coming to the marketplace, and more systematic strategies coming towards the shorter end of the curve.

Speaker Change: I would just stay with two said is non retail asbestos round about 59% of non retail in Q1 of last year. So what we see there is more funds more strategies more coming.

Speaker Change: Coming to the marketplace and more systematic strategies come in towards the shorter end of the curve.

David Howson: And as we think about it now, we're approaching the second anniversary of adding the Tuesday and Thursday expirations, and there's a tremendous amount of data now, and that data is used by institutional and systematic funds in order to be able to train models, and we're seeing some of the outcome of that in the market as we go forward. And the interesting point, as we grew through each percent of Zero DT versus Q4 and Q1, is that this was across volatility regimes and market cycles.

And as we think about it now we are fixing second anniversary of adding the Tuesday, Tuesday explorations and there's a tremendous amount of data now and that data is used by institutional systematic funds in order to be able to trade trading models and we're seeing some of the outcome of that in the complex as we go forward.

Interesting point as we grew 3%.

Sierra versus Q4, and Q1 is that.

Is that that was across volatility regimes and market cycles. So it grew at a level of volatility environment. In Q1. So as we look forward. We continue to see shorter term our risk management strategy as people are being deployed deploying are less sensitive to the broader macro trends.

David Howson: So it grew in a lower volatility environment in Q1. So as we look forward, we continue to see those shorter-term risk management strategies people are deploying are less sensitive to the broader macro trends. Thank you. Thank you, our next question comes from the line of Ben Budish of Park. Hi, good morning, and thanks for taking the question.

Speaker Change: Okay.

Speaker Change: Thank you.

Thank you. Our next question comes from the line of them bodies of Barclays. Please go ahead.

Benjamin Elliot Budish: I wanted to follow up on the outlook. You mentioned that there are some kind of volatility-related events coming up later in the year that could be drivers for the SBAX complex. I also recall not too long ago you were talking about zero DTE as being a more recurring revenue stream, at least versus things like equities, which are sort of you trade once and you can kind of sit in it because it's got a shorter time to expiration. You tend to enter into a new contract. So I guess what your thoughts are on sort of the recurring nature of the zero DTE complex?

Hi, good morning, and thanks for taking the question I wanted to follow up on the on the outlook.

You mentioned that there are some kind of volatility related events coming up later in the year that could be drivers for the SPX complex I also recall not too long ago, you were talking about zero DTE as being a more like recurring revenue stream at least versus.

Speaker Change: Things like.

Speaker Change: Equities, which are sort of your trade once and you can kind of say to that because it's got a shorter time to exploration you tend to enter into new contracts. So I guess what are your thoughts on sort of the recurring nature of the zero DTE complex, how much growth that you're sort of seeing from that sort of user or their users that are becoming more regular users versus how much do you perhaps.

David Howson: How much growth are you sort of seeing from that sort of user or users that are becoming more regular users versus how much do you perhaps expect will come from a pickup in volatility or a normalization in VIX levels later in the year? Thank you. So what we've got here, in terms of the mechanics of options that we've talked about before, is the fact that options do expire. So any position or exposure or view that you've expressed in the market needs to be refreshed at the expiry of that option.

Speaker Change: It will come from a pickup in volatility or a normalization in VIX levels later in the year. Thank you.

Speaker Change: So when we got here in <unk>.

Speaker Change: Terms of the mechanics of options that we've talked about before is the fact that options do expire so any physician or exposure of view that you have expressed in the market needs to be refreshed at the expiry of that option and indeed also if you put on a spread in the market you may need to manage that position is that the right.

David Howson: And indeed, also, if you put on a spread in the market, you may need to manage that position as the regime or pricing or your view changes over time. So those two factors really do result in a much higher engagement rate from customers as they use options to manage risk, to generate income, to take views, or to deploy systematic strategies. And as I mentioned just now, we've seen a lot of funds and bank QISDEs deploying strategies that have a much shorter-dated view, coming forward in the curve from, say, a two to six week strategy to zero to a five or six day strategy that they, again, deployed and redeployed.

Speaker Change: E mail pricing or your view changes over time, so that those two factors really do result in a much higher engagement rates from customers as they utilize options to manage risk to generate income to take views or to deploy systematic strategies and as I mentioned, just now you've seen a lot of funds.

Speaker Change: Thank you I S deployed.

Speaker Change: Deploying strategies that have a much shorter dated view.

Coming forward in the curve from say, a 2% to six weeks strategy towards zero, two or five or six date strategy that they can deploy and redeploy. So you can see that that timing of the frequency of deploying those strategies really creating a more durable.

David Howson: So you can see there that the timing of the frequency of deploying those strategies is really creating a more durable engagement in the platform. And then as you see volatility coming through, we've seen higher volume days, interestingly, on volume up days in recent months. And so we don't just require volatility with market sell-offs to get activity on the platform. And we've seen diverse views being expressed this year as we've gone from Q1 throughout into Q2.

Speaker Change: Engagement in the platform and then as you see volatility coming through we've seen higher volume days interestingly on volume update in recent months and so we don't just required volatility market itself to get activity in the platform and we are seeing diverse huge being expressed in this year as we've gone from Q1.

Speaker Change: Drought and into Q2.

David Howson: Just to add something to Dave's comments, I think the comment we made before that we do see option trading revenue much more recurring than equity trading revenue. And the reason is, as Dave said, it's because they expire; you have to re-put your position on.

Speaker Change: So just just to add something so Dave's comments is I think the comment we made before that we do see option trading revenue much more recurring on equity trading revenue.

Speaker Change: And the reason is as Dave said.

Speaker Change: Because they expire you hope to pre put your position on so to me that applies to the whole option revenue stream not just two zero.

Speaker Change: I appreciate that thank you very much.

Speaker Change: Okay.

Frederic J. Tomczyk: So to me, that applies to the whole option revenue stream, not just to zero D. I appreciate that. Thank you very much. Thank you. Our next question comes from the line of Brian Bedell from Deutsche Bank. Oh, great. Thanks. Good morning.

Speaker Change: Thank you. Our next question comes from the line of Brian Bedell from Deutsche Bank. Please go ahead.

Brian Bertram Bedell: Thanks for taking my question. Maybe just speaking of recurring revenue and back onto data and access, just looking at slides 8 and 14 and the comments on a couple of the drivers for the 7 to 10 percent. I think this would be for the medium term also.

Brian Bertram Bedell: Great. Thanks, Good morning, Thanks for taking my question.

Brian Bertram Bedell: And maybe just speaking of recurring revenue and back onto the data and access.

Just looking at slides eight and 14.

Brian Bertram Bedell: The comments on a couple of the drivers.

Brian Bertram Bedell: For the 7%, 10% I think this would be for medium term also.

David Howson: But can you comment on one of the first ones there, global access? What portion of your data and access revenue, or at least your customer base, is asking for global access or really tying everything that you do globally together? I know, Dave, you talked about the portion that was coming from outside the U.S., but I know global access is a big initiative of yours. Can you talk about what portion of people are using it now and what you see as the opportunity going forward for that? Yeah, absolutely.

Brian Bertram Bedell: But can you comment on the on the one of the first Wednesday of the global access what portion of your.

Brian Bertram Bedell: So your data and access revenue or at least your customer base is asking for global access really tying everything that you do globally together I know David you talked about.

Brian Bertram Bedell: Portion.

Brian Bertram Bedell: That was coming from outside the U S.

Brian Bertram Bedell: <unk>.

Brian Bertram Bedell: I know global access is a big.

David: A big initiative of yours. So can you talk about what proportion of people using it now and what you see as the opportunity.

Brian Bertram Bedell: Going forward for that.

David Howson: The 43% growth rate from outside the United States is certainly a good lead indicator as we see that grow quarter over quarter. The cloud is an example for us where we have customers around the world taking one data set being drawn in by, for example, access to U.S. equity market data as, let's say, a CFD provider out in Australia. But once you're in, you've got the common platform, you've got the API access, you can then find a myriad of other data points that you can find useful to yourself and your user base.

Brian Bertram Bedell: Yeah, absolutely the 43% growth rate in from outside the Americas that is certainly a good lead indicator as we see that grow quarter over quarter a clouded.

Brian Bertram Bedell: Example, for us where we have customers around the world.

Brian Bertram Bedell: E. One data set being drawn in by for example, the access to the U S equity market data as let's say a cfd provider in Australia, the one share and you've got a common platform you've got the API access you can then fund the myriad of other data points that you can find it useful to yourself.

David Howson: And we do see users taking one data item from the cloud and then expanding laterally across interest across those 27 markets. And then we think about access to the derivatives complex. We've seen some really good onboarding this year from retail brokers out in the Asia-Pacific region, so really encouraging there.

Brian Bertram Bedell: Youll user base and we do see users taking one data.

Brian Bertram Bedell: Item from us from the cloud and then expanding laterally across interest across 27 markets and then we think about access to the derivatives complex. We've seen some really good onboarding. This year from retail brokers out in the Asia Pacific regions are really encouraging that in order to onboard the platform.

David Howson: In order to onboard the platform, you need access to the data. And then when you get access to the platform, what we're seeing there is a really good beachhead for activity in the Southeast Asia-Pacific region, bringing activity back into the U.S. core complex. So in summary, there, we do see people taking data units from us in the cloud and then expanding laterally on that. And the benefits of having that single technology platform and that single consistent access point are really bringing great utility for our customers, as they don't have to deploy technology resources for multiple APIs and multiple data sets. They can easily take new data sets that interest them with a very low to no incremental technology effort to do so. Got it.

Brian Bertram Bedell: We need access to the data and then when you get access to the platform. What we're seeing is a really good beachhead for activity in the southeast Asia Pacific region, bringing activity back into the U S.

Brian Bertram Bedell: So in summary that we see we do see people taking data units from us on the cloud and then expanding laterally and that and the benefits of having that single technology platform and a single consistent access points are really bringing great utility for our customers as they don't have to deploy.

Brian Bertram Bedell: Allergy resources for multiple Apis and multiple data sets that can easily take new data sets to interest them with a very low to no incremental technology effort to do that.

David Howson: So it's a land and expand strategy whereby you get the customer, and then you cross-sell multiple other data sets and analytics. Absolutely And we certainly take a one-firm approach to our sales here at CBOE, where we're training all of our salespeople globally on all of the data and assets that we have within CBOE. So if you're in Australia, you know how to talk about the risk market and analytics options capability that we've got, that we can bring to the market, our index, our derivative index capability, but also the broad data from those 27 markets and those Brian, this is Chris.

Speaker Change: Got it so it's a land and expand strategy whereby you get the customer and then you cross sell multiple other datasets and analytics.

Speaker Change: Absolutely, we certainly take a long term approach to our sales <unk>, where we're training all of our salespeople globally on all of that data and assets. We have within <unk>. So if you're in Australia, you know to talk about the risk marketing and analytics options capability that we've got and we can bring to the market our index our derivative index capability.

Speaker Change: But also the raw data from 927 markets in those incremental insights that we're able to produce on top of that.

Speaker Change: <unk> data.

Christopher Andrew Isaacson: I just might follow up there with the pull through that Dave's talking about. You know, we land and expand and get them raw equity data, and then we get them derivatives data, and they start trading in GTH on slide seven. You can see that we're having really good pull through with the expanded access. GTH increased 41% year over year and 73% quarter to date. So, we're really excited about that growth that starts with data that moves to transactions. Great, great. Thank you so much.

Chris: Brian This is Chris.

Chris: Follow up there with the pull through that Dave is talking about.

Chris: We land and expand and get them all equity data and then we get some derivatives data and they start trading in GTH on slide seven you can see that we're having.

Chris: Really good pull through its expanded access with.

Chris: GTH increased 41% year.

Chris: Year over year at 73% quarter to date, so really excited about that growth.

Chris: It starts with data.

Chris: It moves to transactions.

Speaker Change: Great great. Thank you so much.

Speaker Change: Okay.

Owen Lau: Thank you. Our next question comes from the line of Owen Lau from Oppenheimer. Hi, good morning, and thank you for taking my question. I actually have a broader question about CBOE. So, over the past two years, CBOE has benefited from the high growth of CODTE, and now we have identified many smaller incremental revenue and expense opportunities. You talk about land and expense strategy and doing more buybacks. It just felt like the profile has changed.

Speaker Change: Thank you. Our next question comes from the line of our Lau from Oppenheimer. Please go ahead.

Lau: Hi, Good morning, and thank you for taking my question.

Lau: We have a broader question about the boat so over the past two years <unk> has benefited from high global DTC and now we have identified many smaller incremental revenue and expense opportunities you talked about land and expand strategy and doing more buybacks you just feel like the profile.

Lau: Changed so if you could help me over the next two years, what should we investors focus on to gauge the batsman Barrett for Stifel. Thanks, a lot.

Frederic J. Tomczyk: So if you can help me out over the next two years, what should investors focus on to gauge the investment merit of CBOE? Thanks a lot. Well, I mean, I think you're going to look at the same things that you've always looked at, which is our revenue growth. And, you know, we're clearly sending the message about our view on their derivatives franchise and the globalization of that. And that gives us lots of opportunities.

Lau: Okay.

Speaker Change: Well I mean, I think are going to look at the same things that you are always booked reserves.

Speaker Change: Our revenue growth.

Barrett: We're clearly sending the message about.

Barrett: Our view other derivatives franchise of the globalization of that so.

Barrett: So lots of opportunities that we continue to see lots of opportunities on the DRA side.

Frederic J. Tomczyk: And we continue to see lots of opportunities on the DNA side. And so those are the two growth platforms for CBOE. You know, the equities markets, we continue to like that business. It has good margins, kicks off lots of free cash flow, but it's harder to grow than the other two franchises.

And so those are the two growth platforms receivable.

The equities markets, we continue to like that business. It has good margins kicks off lots of free cash flow, but it's harder to grow.

Frederic J. Tomczyk: So we're focused on growing all three, but mainly the top two. We're going to have a more disciplined expense management process, and if you went back over the last couple years, you would have seen us doing lots of what I'll call smaller M&A. That consumes resources, so resources inside the organization are now more focused on delivering organic growth initiatives than on integrating acquisitions that we've been doing the last couple years. Not only the resources internally, but that increase in capital; our balance sheet is in very good shape now.

Barrett: Then the other two franchises. So we're focused on growing all three but mainly the top two.

Barrett: We're going to have a more disciplined expense management process.

Went back over the last couple of years, you would've seen us doing lots of what I'll call smaller M&A.

Barrett: It consumes resources resources inside of the organization are now more focused on delivering organic growth initiatives.

Barrett: Integrating acquisitions that we've been doing the last couple of years.

Speaker Change: Of course not.

Speaker Change: Not only the resources internally, but then it frees up capital.

Speaker Change: Balance sheet is a very good shape, though.

Frederic J. Tomczyk: We're kicking off lots of free cash flow so we can return capital to our shareholders through dividends and buybacks. So, you know, while we've had a nice lift from zero DTE, we continue to see growth as we build this global footprint. And, you know, I think we've got a lot of what I call land to expand, and we have lots of opportunities to sell what we have in different markets around the world.

Speaker Change: Kicking off lots of free cash flow. So we can do.

Speaker Change: Returning capital to our shareholders through dividends and buybacks.

Speaker Change: So while we had a nice lift from zero DTA.

Speaker Change: We are continuing to see growth as we focus global footprint.

Speaker Change: I think we've got a lot of.

Speaker Change: When I call it land and expand we got lots of opportunities to sell what we got in different markets around the world.

Frederic J. Tomczyk: And then, you know, we're doing quite well in the markets that we entered. Our market share, if you look at Japan, Australia, and Canada, once they get on our technology, our market share seems to expand. So we're feeling good about that. So we have lots of things that we're looking forward to. You know, do we have another zero DTE up our sleeve? We would, you know, I'd like to think we do, but I'm not sure we do.

Speaker Change: And then.

Speaker Change: We're doing quite well in the markets that we entered our market share. If you look at Japan, Australia, Canada once they got on our technology.

Speaker Change: Our market share seems to expand.

So we're fairly comfortable pass rate of lots of things.

Speaker Change: But we're looking forward to do.

Speaker Change: So we have another zero DTE, firstly, we with you.

Frederic J. Tomczyk: But that franchise and the SPX complex ought to be, you know, just the way we look at them as they are in high demand around the world, not just in the US. Capital and liquidity continue to flow into the US. And a lot of times, people that want to, you know, invest and trade in the US are looking at the SPX complex. Got it. Thanks a lot. This question comes from the line of Michael Cyprys from Morgan Stanley. Hey, good morning.

Speaker Change: I'd like to think we do but I'm not sure we do.

Speaker Change: But that franchise in the SPX complex.

Speaker Change: Just the way we look at it is it has high demand around the world not just in the U S capital liquidity continues to flow of U S. A.

Speaker Change: A lot of times people that want to invest in trade into Europe are looking into the SPX complex.

Speaker Change: Got it thanks a lot.

Speaker Change: Yes.

Speaker Change: Thank you. Our next question comes from the line of Michael <unk> from Morgan Stanley. Please go ahead.

Michael J. Cyprys: Thanks for taking the question. I just wanted to circle back on the DNA revenue growth target of seven to 10% as you look out over the next couple years. Just curious where you see the biggest opportunity within there to drive growth ahead? Which product specifically do you think should be the biggest driver contributor there? And is this new portion coming from new products versus existing products that you're going to drive greater penetration of the existing customer set versus new customers? Thank you.

Michael: Hey, good morning, Thanks for taking the question I just wanted to circle back on the DNA revenue growth targets of 10% as you look out over the next couple of years, just curious where you see the biggest opportunity within there to drive growth ahead, what which product specifically do you see the biggest driver or contributor there.

Michael: Or is this new what portion will be coming from new products versus from.

Michael: Existing products that you are going to drive greater penetration of existing customers that versus new customers.

David Howson: Certainly for us, the growth in the short term and the medium term continues to be, as Fred said, selling what we've got. We see a great runway for selling the data products that we have internationally, in particular. And then the second and third sleeve of the DNA business outside of the data and access business is the index business.

Speaker Change: Certainly for us the growth in the short term and the medium term continues to be as Fred said sell what we've got we see a great runway for selling.

Speaker Change: Data products that we have internationally in particular, and then the second and third wave of the DNA business outside of the banks are in access.

Speaker Change: The index business, it's a smaller portion of variable, but it's driving in a very good rate with our specialization and derivative index strategy.

David Howson: It's a smaller portion of the overall, but it's growing at a very good rate with our specialization in derivative strategy benchmarks and bringing those to the marketplace. We've got what we think in the risk market analytics sleeve, world-class global options analytics capabilities, which we find greater adoption internationally for those there as well. And then when we think back to the core and the basics, access to our market continues to be high in demand and only going in one way, seemingly, in particular, as we broaden out that access globally. As Chris mentioned, two to 3% of SPX options trade in those global trading hours.

Speaker Change: Our revenue strategy benchmarks, I'm, putting that bringing those to the marketplace.

Speaker Change: We've got what we think in the risk market analytics sleeve that world class global options analytics capabilities, which we find great adoption internationally for those now as well and then when we think back to the core and the basics the access access to a market continues to be.

Speaker Change: High in demand and only going one way one direction seemingly in particularly as we broaden out the access globally as Chris mentioned, 2% to 3% of SPX options trading those global trading hours, you see a solid runway to be able to expand access during that time zones.

Speaker Change: And during those parts of the trading day that so we see good ability to push out new data that and then when we think about new data products, it's really about packaging and bundling what we have the Great example from the zero DTE infection with the uptake of the open and closed data sets, we chose physicians opening and closing.

David Howson: We see a solid runway to be able to expand access during those time zones and during those parts of the trading day there. So we have a good ability to push out new data there. And then when we think about new data products, it's really about packaging and bundling what we have. A great example from the zero DTE inception was the uptake of the open and closed data sets, which show positions opening and closing throughout the day in the SPX options contract.

Speaker Change: Throughout the day and the SPX options contract that was a particularly insightful pivot on the data, which we were able to provide to customers from the existing activity and the franchise. The franchise grows and that liquidity ecosystem growth the demand for data and the opportunity to create innovative.

David Howson: That was a particularly insightful pivot on the data, which we were able to provide to customers from the existing activity in the franchise. And as the franchise grows and that liquidity ecosystem grows, the demand for data and the opportunity to create innovative insights and products from that data really come into their own. And of course, we'll be thinking about new technologies that we can deploy to help us generate those insights on a going forward basis. Michael, this is Chris.

Speaker Change: Inside some products from that data really comes into its own and of course, we'll be thinking about new technologies that we can deploy to help us generate those insights on a go forward basis.

Christopher Andrew Isaacson: I just might add here, as Dave mentioned, we're just very, very focused on increasing access to and distribution of all of our data. The CBOE Global Cloud growth has been great, especially driven outside of the U.S. We'll be pushing to use distribution mechanisms like that to get our data closer to customers, where it can be a win-win for them. They want more data, not just in real time, but they want data at the time of doing quantum research, etc., so that they can better trade on our markets.

Speaker Change: Michael This is Chris I, just might add here as Dave mentioned, we're just very very focused on increasing access and distribution of all of our data.

Chris: Mobile cloud growth has been great, especially driven outside of the U S and we will be pushing to use distribution mechanisms like that to get our data closer to customers, where it can be a win win for them.

Chris: They want more data not just in real time, but they want data.

Chris: Time of doing Quant research et cetera.

So they can better trade on our markets and that the access the access improvements that David spoke about how we can unlock this global network is all of the platform migrations are done except for Canada, which is coming in March of next year that will be rolling out those access improvements versus the U S and then around the world.

Michael J. Cyprys: And then the access improvements that Dave spoke about, you know, as now we can unlock this global network because all the platform migrations are done except for Canada, which is coming in March of next year. Now we'll be rolling out those access improvements first in the U.S. and then around the world. These are material upgrades in our technology platform, which speaks to the power of a global network and a Global Platform Week.

Chris: These are material upgrades in our technology platform, which speaks to the.

Chris: Power of our global network and our global platform we.

Michael J. Cyprys: We build something once and then roll it out all over the world to the benefit of our customers. Great, thank you. This question comes from the line of Alex Blostein of Goldman Sachs. Hey, good morning. Thank you for the question. Fred, one for you.

Chris: We can build something once and then roll it out all over the world to the benefit of our customers.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the amount of Alex <unk> of Goldman Sachs. Please go ahead.

Alexander Blostein: I just want to get your mark on where we are in this sort of strategic review journey you guys have been on. After the decision on CBOE Digital, are there other areas where you think you guys are looking to sort of pivot away from? And if so, what could that look like?

Alexander Kramm: Hey, good morning. Thank you for the question Fred One for you just wanted to get your Mark to market on where we are in this sort of strategic review journey you guys had been on.

Alexander Kramm: After the decision on <unk> digital are there other areas, where you think you guys are looking to sort of pivot away from and if so what could that look like.

Frederic J. Tomczyk: And just one follow-up question for Jill, the $11 to $15 million in annual life savings that you highlighted, is there a revenue offsetting impact as well? Or are you really speaking to the operating income effect from these changes? So why don't you take the second one first?

Fred: And just one follow up for gel the $11 million to $15 million in annualized savings that you highlighted.

Is there any revenue offsetting impact as well are really speaking to the operating income effect from these changes. Thanks.

Speaker Change: Well I'll take the second one first you bet, so the $11 million to $15 million and contemplate a savings on an annualized basis is really the expense portion.

Jill M. Griebenow: You bet. So the 11 to 15 million in contemplated savings on an annualized basis is really the expense portion. So not expecting anything material from a revenue impact perspective in 2024. Very consistent with what we messaged last. Okay, and then back to your first question, Alex. So I'd say in terms of the strategic review, we're in what we call the heart of the process now. We've done all of our analysis of trends we see in the markets around the world, taking a look at our SWOT analysis, our competitors, and where we have strengths on a relative basis. And we're so we're now starting to really get down to focus.

Speaker Change: So not expecting anything material from a revenue impact perspective in 2024, very consistent with what we messaged last week.

Speaker Change: Okay, and then back to your first question Alex.

Speaker Change: So I would say in terms of the strategic review we're in.

Speaker Change: The heart of our process now.

Speaker Change: We've talked with all of our analysis of.

Speaker Change: The trends, we see in the markets around the world.

Speaker Change: We've taken a look at our SWOT analysis, our competitors, we have strengths on a relative basis.

Frederic J. Tomczyk: Okay, so now that we know all that, we've taken an outside view of CBOE and the market. Okay, so what do we do now? So we're getting right into the heart of the discussion in management, but we still have to debate that out and conclude on areas where we want to focus our time and attention. And then we have to review it with the board, obviously, which will, you know, the first round will be in the summer, but there'll probably be a second round in October because there will be some questions.

Speaker Change: So we're now starting to really get our focus okay. So knowledge, we know all that and we've taken an outside in view of stable in the market.

Speaker Change: Okay. So what do we do now so we're getting right into the heart of the discussion of our management team.

Speaker Change: Still now to debate that I'll conclude on areas, where we want to focus our time and attention.

Speaker Change: And then we have to review with the board obviously wish bone.

Speaker Change: First round will be the summer probably a second round in October crosstalk with some questions.

Speaker Change: So as I said the last time.

Frederic J. Tomczyk: And I'll, as I said the last time, We'll probably be in a position to talk about it further later this year. Just want to remind everybody that, you know, this strategy review is all about finding which areas that we want to focus our resources on to drive revenue and earnings growth, which in the longer term will drive shareholder value. That, combined with a disciplined capital allocation strategy, should deliver good value for our shareholders.

Speaker Change: We're probably be in a position to talk about further later this year.

Speaker Change: I just want to remind everybody that.

Speaker Change: The strategy review is all about finding which areas.

Speaker Change: We wanted to focus our resources on to drive revenue and earnings growth, which over the longer term drive shareholder value.

Speaker Change: That combined with a disciplined capital allocation strategy should deliver good value for our shareholders.

Frederic J. Tomczyk: So I said, you know, in an exchange like ours, you have high margins, it's a capital aid business model, and it's all about how you allocate your resources, particularly technology and capital, to drive value for the shareholders over the longer term. Great, thank you. Our next question comes from the line of Kyle Voigt of KBW. Please go ahead. Hi, good morning.

Speaker Change: I certainly don't go to an exchange like ours, you have high margins, it's a capital light business model.

Speaker Change: It's all about how you allocate your resources, particularly technology.

Speaker Change: And capital to drive value for the shareholders over the longer term.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Colin Void of <unk>. Please go ahead.

Kyle Kenneth Voigt: Maybe I can just ask a question on CDAC. Sounds like you've achieved record activity levels there in March, which is good to see. I guess, can you just elaborate whether you still have incentives in place there for trading? And I'm assuming it may still be a bit of a drag on group profitability while the business ramps up and you try to gain further momentum there. I guess, any color on when we should start to see revenues and profitability ramp for CDAP? and Q1 being up 30% year-over-year?

Colin Void: Hi, good morning.

Colin Void: Ask the question on <unk> it sounds like you've realized record activity levels. There in March which is good to see.

Colin Void: I guess can you just elaborate whether you still have incentives in place there for trading and I'm, assuming it may still be a bit of a drag on group profitability, while the business ramps and you try to gain further momentum there I guess any color on when we should start to see revenues and profitability ramp for CBS.

Speaker Change: Thanks very much.

Speaker Change: You rightly pointed out the record months in March for index derivatives in Q1 being up 30% year over year.

David Howson: We did revamp the Liquidity Provider Programme starting in Q2 to really refine it and focus on the type of liquidity, the concentration that we are looking for. That, along with the extension of the number of single-stop options coverage in Q1, we now cover over 90% of OI and ADV on the European landscape. So, what that gives us is a full unit of offering now with single-stock options and futures and options on our index products.

Speaker Change: We did revamp the liquidity provider program, starting in Q2 to really refine those folks on the type of liquidity the concentration that we are looking for.

Speaker Change: That along with the extension of the number of single stock options coverage in Q1, we now cover over 90% of NOI.

Speaker Change: And on the European landscape, so while I give you the full unit of offering now with single stock options and futures and options on our index products, we got more market makers coming on board as we go through the rest of the year and we are eagerly anticipating the launch of a major global retail brokerage.

David Howson: We've got more market makers coming on board as we go through the rest of the year, and we're eagerly anticipating the launch of a major global retail brokerage platform in the coming months. All that will then begin to form the core liquidity ecosystem that we'll be able to build on. We're here to talk to those retail brokers that are looking to expand internationally as well as those funds that are looking to deploy capital into Europe.

Speaker Change: In the coming months or that we will then begin to form the core liquidity ecosystem that will be able to build on.

Speaker Change: Produce more sales and marketing efforts in conjunction with our estimates and talk to those retail brokers that are looking to expand internationally as well as those funds that are looking to deploy capital.

Speaker Change: Into into Europe.

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

Speaker Change: So what we will do throughout the rest of the year is monitor that as those volumes in that activity that platform progresses, and as you speak to profitability and revenues in searches with Ah, reflecting on the fact that this is all built on top of a scaled infrastructure.

Speaker Change: <unk> infrastructure in Europe that lies on top of largest pan European equities exchange profitable the largest cash equity clearinghouse as well. So we've got scale. So the incremental investment here for us is relatively small and affords us the opportunity to be patient and continue to work with our customers to own.

David Howson: We've got scale, so the incremental investment here for us is relatively small and affords us the opportunity to be patient and continue to work with our customers to onboard to what is a brand new exchange, product set, and clearinghouse, which does take time, so it will be a journey. So we continue to review that as we go throughout this year and into next and keep you updated with that. Great, thank you. Thank you. Our next question comes from the line of Patrick Moley from Piper Sandler.

Speaker Change: To onboard towards it Brian you exchange product set I'm clearinghouse, which does take time. So it will be a journey. So we'll be continuing to review that as we go throughout this year and into next and keep you updated with that.

Speaker Change: Okay.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from Vermont.

Piper Sandler: Many of Piper Sandler. Please go ahead.

Piper Sandler: Okay.

Patrick Malcolm Moley: Please go ahead. Thanks for taking the follow-up. Just a modeling question on the buyback. Appreciate that you're being opportunistic, but it was rather large in the first quarter relative to what you've done recently, and it seems like it was pretty strong in April. So can you help us just kind of frame and understand the size and pace?

Vermont: Hey, Thanks for taking the follow up just a.

Vermont: Modeling.

Vermont: On the buyback I appreciate that.

Being opportunistic, but it was rather large in the first quarter relative to what you've done recently and it seems like it was pretty strong in April. So can you help us just kind of frame and understand that the size and pace of that buyback from here.

Jill M. Griebenow: Of that buyback from here, anything you can give us would be great. Thanks. You bet. So I'm really in a very comfortable position from a balance sheet perspective. We paid off the last of our floating rate debt and brought our fourth quarter of 2023 leverage ratio down to 1.1 times here at the end of the first quarter. So the first quarter, as we've always met, or historically mentioned, has typically been heavier on share repurchases. So again, the first quarter this year was heavy.

Speaker Change: Anything you can give us would be great. Thanks.

Jill M. Griebenow: And then also tacked on with that were some opportunistic share repurchases. So we generate a lot of free cash growth initiatives; we want to keep a bit of dry powder to invest in the business to drive that long-term growth. So it's really a balance between those areas.

Speaker Change: You bet so on it.

Speaker Change: Really in a very comfortable position from a balance sheet perspective paid off the last of our floating rate debt in fourth quarter of 2023 leverage ratio down to one one times here at the end of the first quarter.

Speaker Change: So the first quarter as we've always met our historically mentioned is has typically been heavier and share repurchases. So again the first quarter. This year was heavy and then also tacked on with that where some opportunistic share repurchases. So we generate a lot of free cash flow, we deploy the capital via various AR balance itself had a history.

Speaker Change: You're paying a quarterly dividend and the path, we would increase that in the third quarter. We will take a look at that again this year and then again anytime we perceived weakness in the share price will get behind it and backend from a repurchase perspective, especially given the capital balance sheet perspective, we're in right now so that's why you're seeing an elevated level, we stand behind the stock.

Speaker Change: We have the free cash flow there to back. It. We're also mindful of organic growth initiatives, we want to keep that dry powder to invest in the business to drive that long term growth. So it's really a balance between those areas.

Jill M. Griebenow: All right. Great. Thanks, Joe. Thank you. We have a follow-up question from Owen Lau of Oppenheimer.

Speaker Change: Alright, great. Thanks, Joe.

Speaker Change: Yes.

Owen Lau: Please go ahead. Yeah, thank you for taking my follow up. On the digital side, could you please remind us why you think CBOE can be competitive on Bitcoin and Ether futures trading without the spot offering? And then what does this realignment mean to CBOE's broader strategy on how to tackle the digital asset ecosystem longer term? Thanks a lot. I'm sorry, Owen. Could you repeat the second half of that question, please? We've got the competitive element for the first half. In the second half, the line broke a little.

Covid: Thank you we have a follow up question from Covid now of Oppenheimer. Please go ahead.

Covid: Yes. Thank you for taking my follow up.

Covid: On the <unk> side could you. Please remind us on why do you think <unk> can be competitive on big clinic.

Oppenheimer: Can you just trading without the spot offering and then what we are aligned with <unk> broader strategy on how to tackle the digital asset ecosystem longer term. Thanks a lot.

Speaker Change: I'm, sorry could you repeat the second half of that question. Please we've got a competitive element for the first half the second half we have the line broke list.

Speaker Change: Oh, sorry about that.

Owen Lau: Oh, sorry about that. So I was just asking, what does this realignment, the digital assets realignment, mean to CBOE's broader strategy on how to tackle the whole digital assets ecosystem in the long term? The overall landscape here is that we took into account our own assets, capabilities, and strengths here at CBOE, and we looked at where we saw the greatest opportunity set, which was in the crypto derivative space. And so once again, we look to lean on our scaled infrastructure and existing global resources.

Speaker Change: So I was just asking how does speeds we alignment.

So assets, we alignment to steamboat broader strategy on how to tackle the whole.

Speaker Change: Assets ecosystem longer term.

Speaker Change: Great. Thanks for the clarification that.

Speaker Change: So when we looked at when we look to the overall landscape pad as we took into account our own assets capabilities.

Speaker Change: Here at <unk>, and we look to where we saw the greatest opportunity set which was in the correct time derivative space and so once again, we look to lean on our scale of infrastructure on the existing global resources. What we think makes this may be attractive for us is that we get to bring those crypto digital futures.

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

Speaker Change: Onto a single venue.

Speaker Change: Our venue with an existing broad distribution and customer base.

Speaker Change: Gets brought onto a single technology stack, which runs all of our global equities futures and options market familiar set of functionality, which leapfrog. The functionality. We have today on <unk> digital exchange to add a range.

Speaker Change: Versatile functionality that futures customers want we also get a.

David Howson: We also get to have a clearinghouse that clears these products and potential other new product innovations in the crypto derivatives space, which then allows us to define our own destiny and allows us to have autonomy around that product curation and that timeline to market. And then there's the global derivatives team, that scale and expertise around the world for derivatives, but also that scale and expertise around the world for clearing to be brought to bear in unison on the digital asset space. So we think derivatives are where it's at for us. We think we're pretty good at that.

Speaker Change: Clearinghouse.

Speaker Change: These products and potential other new product innovations and the crypto derivatives space, which then allows us to define our own destiny and allows us to have autonomy around that product duration on that timeline to market.

Speaker Change: Then as a global derivatives take that scale and expertise around the world for derivatives, but also in upscale and expertise around the world for clarity brought to back in.

Speaker Change: In unison onto the digital asset space. So within derivatives is whereas Amtrust. We think we're good at that we've got the technology and the people to be able to give us an edge and create an alternative liquidity pool for people to express and manage exposure to crypto assets and Steven.

David Howson: We've got the technology and the people to be able to give us an edge and create an alternative liquidity pool for people to express and manage exposure to crypto assets at CBOE. And maybe I'll just add a few comments here about why we moved on the digital strategy at this time. So first off, it wasn't lost on us that we were losing money on this.

Frederic J. Tomczyk: So it creates a greater sense of urgency to come to a strategic conclusion. We also realized that we do not have regulatory clarity in the spot and cash spot market, and we do not see when we're going to have regulatory clarity. And so we went into all this, we wanted to build a trusted, liquid, efficient market. Everybody wants that.

Steven: Maybe I'll just add a few comments here why we moved on with digital strategy.

At this time, so first off.

Steven: <unk> lost on us that we were losing money on that so it creates a greater sense of urgency to come to our strategic conclusion.

Steven: We also realized that we do not have regulatory clarity on the spot.

Steven: Cash spot market.

And we do not see when we're going to have regulatory clarity and so we went into all of this we wanted to build a trusted liquid infill.

Steven: The efficient market everybody wants that but if you don't have regulatory clarity is very hard to do that because you can't bring all the various participants into the market.

Frederic J. Tomczyk: But if you don't have regulatory clarity, it's very hard to do that because you can't bring all the various participants into the market. So, as Dave said, we've gone to where our strengths are, and we've gone to where we have regulatory clarity. And basically, we see that as the best opportunity for us going forward. Thanks a lot.

Steven: So as Dave said, we've gone to where our strengths are and we've gone to where we we have regulatory clarity.

Steven: Basically we see that as the best opportunity for us moving forward.

Speaker Change: Thanks, a lot.

Michael J. Cyprys: Thank you. Our final follow-up question comes from Michael Cyprys of Morgan Stanley. Please go ahead.

Speaker Change: Thank you our final follow up question comes from Michael <unk> of Morgan Stanley. Please go ahead.

Michael J. Cyprys: Great, thanks for taking the follow up. I just wanted to ask about credit index products. I understand you have a few that you're launching. I hope you could update us on that. And more broadly, if you could speak to the opportunity set within credit index products and new partnership opportunities that can make sense over time. Just how are you thinking about that, particularly as credit markets continue to electronify with new investor types entering the marketplace?

Michael: Great. Thanks for taking the follow up just wanted to ask about credit index products understand you have a few that youre launching hoping you could update us on that and more broadly if you could speak to the opportunity set within credit index products and new partnership opportunities that can make sense over time, just how are you thinking about that particularly as credit markets continue.

David Howson: What's your vision for CBOE and credit? So for us today we have two IBOX futures contracts and we have options on those futures contracts as well available to customers. For us having a futures product is particularly useful for those fixed income funds who can't trade securities and so the ETS are locked off to them so having the ability to manage and hedge exposure is particularly useful there and also for international customers to get those, that access to a aligned future which aligns deeply, which tracks very closely to the two key benchmarks here, the LQD and HYG ETS of the underlying to allow access and exposure there to manage those exposures is particularly useful.

Speaker Change: Electronic fly with new industrial types entering the marketplace, what's your vision for seatbelt and credit.

David Howson: The international aspect also comes into play as a future to be able to access that from international participants as well. So for us, it's the first toe into credit as we go, but that alignment to the core underlying exposure is the key differentiator for CBOE's credit offering because it does align to the HYG and LQD products very, very closely and allows tighter exposure there. Great, thank you. Thank you. There are no further questions at this time.

Speaker Change: So for US today, we have two.

Speaker Change: <unk> futures contracts and we have options on those futures contracts as well available to customers for us having a futures product.

Speaker Change: Particularly useful for the fixed income fund to car trade securities inside of the Etfs are looked after them. So having the ability to manage and hedge exposure is particularly useful that it also for international customers to get those.

Speaker Change: Got access to.

Speaker Change: Mind, future, which align deeply.

Speaker Change: Tracks very closely to the two key benchmarks.

Speaker Change: <unk> and <unk> and Etfs as the underlying to allow access and exposure to manage those exposures is particularly useful the international aspect also comes into play as a future to be able to access debt from international participants as well so for us it's the first toe into credit.

Speaker Change: As we get this right.

Speaker Change: <unk> the core underlying exposure is a key differentiator to placebo as credit offering because it does aligns the <unk> and <unk> products.

Speaker Change: Very very very closely and announced.

Talk to your exposure to that.

Speaker Change: Great. Thank you.

Speaker Change: Thank you there are no further questions at this time I will now turn the call back over to Vascepa global markets team for closing remarks.

David Howson: I will now turn the call back over to the CBOE Global Markets team for closing remarks. Okay, well, thanks, everyone. Thanks for your questions today, and thanks for calling in. We're off to a great start to 2024, and we look to continue the momentum for the rest of the year. Thank you. This concludes today's conference call. We thank you for participating, and you may now disconnect.

Speaker Change: Okay, well thanks, everyone. Thanks for your questions today, and thanks for calling in.

Speaker Change: We're off to a great start to 2024.

Speaker Change: It looks it continues our momentum for the rest of the year.

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

Okay.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].