Q3 2024 Cboe Global Markets Inc Earnings Call
Thank you for standing by my name is Jamie and I will be your conference operator today.
At this time I would like to welcome everyone to the CBOE Global markets third quarter earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question Press Star one again.
Thank you I would now like to turn the conference over to Ken Hill.
Ken Hill: <unk> Treasurer and head of Investor Relations you may begin.
Speaker Change: Good morning, and thank you for joining us for our third quarter earnings conference call on the call today, Fred Thompson, our CEO, Dave Howson, our global President who will discuss our performance for the quarter and provide an update on our strategic initiatives then Joe <unk>, Our Chief Financial Officer will provide an overview of our financial results for the quarter as well as discuss R 22.
For financial outlook 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'd 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 web site during <unk>.
Ken Hill: Our remarks, we'll 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 actual outcomes and results may differ materially from what is expressed or implied in any forward looking statements. Please refer to our <unk>.
Ken Hill: 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 conference call. During the call. This morning, 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.
Fred: Good morning, and thank you for joining us today I'm pleased to report on another record quarter results foreseeable global markets.
Fred: During the quarter, we grew net revenue, 11% year over year to a record $532 million.
Fred: And adjusted diluted earnings per share rose by 8% to a record $2.22.
Fred: These results were driven by strong volumes in our derivatives franchise, specifically, our proprietary index options and futures products.
Solid volumes across our cash in spot markets continued expansion of our data and access solutions business and steady expense management.
Fred: Our derivatives business delivered another record quarter as our organic net revenue increased 13% year over year we.
Fred: We saw solid volumes across our suite of S&P 500 index options products with third quarter ADP in the SPX contract, increasing 7% year over year to $3 1 million contracts.
Fred: We also saw strong year over year growth in our volatility product suite during the third quarter as Adv increased 33% and VIX options and 20% and VIX futures.
Fred: Given the secular and cyclical tailwind some place we believe we are well positioned as investors continue to utilize options in their portfolios and trading strategies are cashed in spot markets category delivered another strong quarter with revenue increasing 12% on a year over year basis.
Fred: Contribution was broad based with each of our global regions posting solid growth as compared to the third quarter of 2023.
Fred: Our data and access solutions business continued to drive solid results with organic net revenue, increasing 6% year over year for the third quarter given the acceleration we've seen the trends during the month of September we remain optimistic in the outlook for this business as we look to further leverage our global network.
Fred: Ecosystem to drive growth.
Fred: Overall, it was another solid quarter for both transaction and non transaction revenues and we are well positioned as we head into the final quarter of the year.
Speaker Change: Over the past year as CEO I have concentrated on sharpening, our strategic focus and making an important and deliberate decisions on how to best allocate our capital and resources to support our growth strategy over the course of the strategic review process, we have made fundamental adjustments, including dialing back at our M&A activities.
Lowering expense growth and stabilizing margins changing our capital allocation strategy to increase investments in organic initiatives and returning capital to our shareholders and lastly, reallocating resources to align with our core strengths, specifically, our derivatives and data access solutions business and leading edge.
Speaker Change: Technology.
Speaker Change: As we move forward, we have set forth a strategic framework that we believe will ensure we are well positioned to drive growth and capitalize on opportunities. We see in the market and we are well aligned to the secular trends occurring in the market today.
Speaker Change: Our strategic framework includes investing in the continued growth of our core business global derivatives, increasing recurring revenue opportunities through our G&A business harnessing the power of our global network and client base to expand product reach and access capitalizing on the dominance of the U S capital markets.
Speaker Change: Leveraging our superior technology to drive innovation and product development and disciplined allocation of resources and capital towards long term secular growth trends.
Speaker Change: Our derivatives business remains very resilient supported by a growing customer base.
Speaker Change: <unk> for access to the U S market and an increasing demand for options given that options by their very nature expire investors must repurchased new options to reposition themselves in the market.
Speaker Change: Which in turn creates a quasi recurring revenue stream that it continues to increase for simo as investors shift to shorter duration explorations and more frequent repositioning in response to market events.
Speaker Change: Our derivatives eco system continue to flourish in the third quarter as traders and investors utilize our flagship VIX and S&P 500 index option products across an ever changing market environment responding to geopolitical events market volatility and uncertainty ahead of the U S election as the.
Speaker Change: Pioneer of listed options Gibeau as led the way in making options more assessable transforming them from a small asset class into a key component of our global trading ecosystem.
Speaker Change: We remain optimistic about the growing retail participation in the options market <unk>.
Speaker Change: Last month, we were excited to announce that robinhood one of the largest options trading platform for retail investors will begin offering <unk> index options to their clients. We believe retail adoption of index options is just beginning and <unk> is well positioned to cater to this growing demand index.
Speaker Change: Index options come what's numerous benefits are retail traders deserve access to those benefits as much as any institution professional or wealthy investor.
We are focused on three key pillars for supporting the growth of this important customer segment.
Speaker Change: First education Zabows options Institute is equipping retail traders with the knowledge and empowering them through education.
Speaker Change: Access we continue to broaden access to our products by working with retail brokers and meeting demand where it access and third product. We continue to evolve our suite of index option products should provide opportunities for customers of all dimensions to trade a contract that is right sized for them.
Timeframe that suits their unique needs.
Speaker Change: Additionally, we continue to focus on product innovation across our ecosystem, we're locking access to U S markets for international investors.
Speaker Change: Other fee through increased accessibility, new products or education will continue to help people.
Speaker Change: This liquidity efficiency and stability of the U S markets, while also providing trusted markets in local regions worldwide.
Speaker Change: Turning to our data and access solutions business, our global footprint continue to help drive the momentum during the third quarter.
Speaker Change: Approximately 40% of the new sales in our DNA business came internationally through the first three quarters of the year.
Speaker Change: Additionally, as we reallocated capital towards investment in our technology platform over the past year. We are have seen these organic investments begin to bear fruit within our DNA business.
Speaker Change: The DNA technology investments have been focused on optimizing efficiencies across three core areas access data and insights.
Speaker Change: While we execute our organic growth strategy, we will continue to explore non organic opportunities that provide scale and broadened distribution inside key geographic markets.
Speaker Change: To that end during October we acquired a 14, 8% ownership stake in Japan next a leading proprietary trading system in Japan.
Speaker Change: <unk> is one of the largest and most important capital market places in the world and is undergoing a lot of change.
Speaker Change: As the regulatory landscape evolves and the market opens to more competition, we see tremendous opportunity for <unk> to compete.
Speaker Change: This investment reaffirming <unk> strong commitment that Japan, and will help us strengthen our relationships within the industry and expand our presence in the region.
Speaker Change: With our global network, largely built and our final technology migration wrapping up early next year, we know without the key is to unlock our future success.
Speaker Change: Our strategic framework aligned with the secular trends great.
Speaker Change: Great technology, and a common platform, our global footprint and strong free cash flow.
Speaker Change: We remain committed to maintaining a flexible balance sheet, while investing in organic growth initiatives, our technology and operating efficiencies in turn driving future revenue growth enhanced margins and earnings growth foreseeable I'll now pass it over to Dave to discuss the business line results.
Dave Howson: Thanks, Greg the third quarter was a strong one for our derivatives franchise placebo producing a 13% increase in net revenue on a year over year basis. The increase was led by strength in our proprietary products with year over year volume growth of 7% in SPX options.
Dave Howson: 18% and access options, 20% and VIX futures and 33% and VIX option. The Q3 results build on our strong first half trends translating to an 11% increase year to date derivative net revenue as compared to 2023 level.
Dave Howson: During the quarter investors relied on the full range of the fever volatility toolkit as they navigated a rising geopolitical uncertainty very economic data points and election uncertainty.
Dave Howson: Perhaps the most notable event last quarter was the August 5th UN carrier unwind that produced one of the largest short term volatility events since COVID-19 and the global financial crisis.
Dave Howson: Investors rushed for downside protection in the form of VIX options VIX options Adv of $1 2 million contracts in August was the second highest on record trailing early February 2018.
Dave Howson: The higher vol of vol regime continued into September extending demand for VIX options VIX Adv totaled 945000 contracts for the month, the second highest level of demand for VIX options in under two years similar to past election cycles. The VIX term structure is pricing and increased uncertainty as.
Dave Howson: As we move through next week's elections as evidenced by the <unk> stuck to the backwardation and while investors have gravitated towards the higher convexity profile that VIX options offered during bouts of volatility SPX volumes have remained healthy.
Dave Howson: Directionally, we have seen a variety of training styles used based on duration with a more balanced put to call ratios with short duration trade versus longer duration trades that favor more puts protection.
Dave Howson: Zero DTE volumes registered a six month high in October and as the trading environment continues to evolve we have seen in our user base continued to expand the use cases grow customer base season, all pointing to an increasingly durable use case for the product building on our strong index product trends.
Dave Howson: Pleased to launch <unk> S&P 500 variance futures in September the <unk>.
Dave Howson: Latest tool and the volatility toolkit provides an exchange listed alternative to over the counter bearing swaps and has an additive impact to activity across the SPX ecosystem.
On October 14th we launched VIX options on futures. These options physically settle into the underlying front month, VIX future and provide a few key benefits.
Dave Howson: It allows us to provide access to our VIX options product to a wider set of market participants in the U S and abroad that may not have access to our securities options exchange.
Dave Howson: It allows us to offer more tenants in particular, those with a shorter duration to meet customer demand as.
Dave Howson: As we look to avenues of future growth, we are incredibly excited by the opportunity both in the U S and abroad for our volatility toolkit.
Dave Howson: Looking at the options asset class more holistically, we believe the potential to bring options through a greater portion of the U S customer base remains a meaningful opportunity placebo.
Dave Howson: The use of options and exchange traded products provides an innovative way for broker dealer clients to access a variety of options strategies in a traditional ETF wrapper.
Dave Howson: U S listed options based Etfs have grown to an estimated 120 billion.
Dave Howson: And with assets, increasing over 600% over the past three years.
Dave Howson: The more direct access to options trading we estimate that less than 10% of customers that major retail broker dealers are enabled to trade options today with some of our largest key customer platforms at a fraction of bath amount the ability to introduce and educate broker dealer customers as to the benefits of this fast growing asset class.
Dave Howson: Is a secular tailwind we believe we can leverage for years to come.
Dave Howson: Later this quarter Robinhood will begin providing customers access to index options enhancing their trading capabilities <unk> proprietary suite of index options provides broad U S market exposure hedging capabilities against the U S large cap and small cap equity market volatility and can allow.
Dave Howson: Estimates to generate income and capitalize on market movements.
Dave Howson: We anticipate that the simplicity of cash settlement.
Dave Howson: S&P of European style exercise and the potential 60, 40 tax treatment may resonate with Robin has active trade community spread and I had the opportunity to take part in the HUD submit 2020 for two weeks ago and I was inspired by the customer excitement around the new features and capabilities being rolled out.
Dave Howson: As well as the hunger for greater education around how to most effectively use these tools in that portfolio.
Turning to cash in the spot market third quarter results continued the strong trends we saw in the second quarter with third quarter net revenues, increasing 12% year over year pushing growth in our cash in the spot market of 9% on a year to date basis.
Dave Howson: In the third quarter, we saw year over year growth in every region as <unk> continued to leverage its scaled infrastructure to monetize a supportive market backdrop in North America U S. On exchange net capture trends were again solid and industry volumes were up 10% year over year, our FHA business. So in <unk>.
Dave Howson: Movement in volumes and capture on a year over year basis in the third quarter and rounding out our north American equity segment stronger industry volumes and net capture helped drive another quarter of year over year growth for our Canadian equities business, we remain particularly excited about the outlook for our Canadian business as we remain on track.
Dave Howson: With the migration of our Canadian market to see bow technology in early 2025 subject to regulatory approval.
Dave Howson: Our Europe and Asia Pacific segment delivered robust, 22% year over year growth led by a 32% increase in net transaction and clearing fee.
Dave Howson: Europe, specifically Teva was the largest European stock exchange throughout the third quarter with our share of continuous trading volume hitting 32, 4% up more than a full percentage point versus last quarter two products in particular speak to the success <unk> has had three alternative market mechanisms to investors.
Dave Howson: Periodic auctions achieved another market share record accounting for eight 7% of continuous trading during the third quarter.
Dave Howson: In addition, <unk> retained its position as the largest large scale venue, adding eight new buy side clients during the quarter turning to Asia Pacific. We continued solid contributions from both Australia and Japan.
Dave Howson: In Australia, Diebold grew market share to 28% up two nine percentage points from the third quarter of 2023 in.
Dave Howson: In addition, net capture improved and our results benefited from a 28% increase in average daily notional value traded during the quarter.
Dave Howson: In Japan market share five 4% in the third quarter of two one percentage point improvement versus the third quarter of 2023 volume trends remained robust with <unk>, increasing 117% on a year over year basis. The APAC region remains a key focus placebo as we move.
Dave Howson: Forward, providing a number of opportunities across our ecosystem to fuel growth.
Dave Howson: The solid cash market trends have helped us better monetize opportunities in our DNA business as evidenced by the 8% year over year third quarter growth in the market data and access services in the region and lastly, we anticipate continued strategic investment in the region to translate into increased brand awareness and improved.
Dave Howson: Sales effort for the import of derivatives activity into the U S.
Dave Howson: Turning to data and access solutions net revenues grew 6% as compared to the third quarter of 2023. The first two months saw a continuation of the slower trends that ended the first half rep productivity changed notably for US in September as net revenues grew a strong nine 7% as compared to September 2000.
Dave Howson: 'twenty three.
Dave Howson: We anticipate that these strong activity levels will carry through the fourth quarter help us hit the low end of our 7% to 10% DNA guidance range for 2024.
Dave Howson: September strength on a year over year basis has been broad based with the index analytics and international businesses, all producing solid year over year increases.
Dave Howson: As we look forward, we expect growth will be driven by a continuation of the solid international trends with over 40% of new sales coming from outside of the U S. In the third quarter. In addition, the uptake from dedicated cause continues to exceed our expectations as we rolled the functionality out across additional markets.
Dave Howson: And finally, the redeployment of technology resources to revenue generating activities is already translating to new data sets and sales in our DNA business.
Dave Howson: <unk> third quarter results highlight the power of the entire ecosystem with derivatives cash in the spot market and data and access solutions all delivering durable results.
Dave Howson: The fourth quarter is off to a solid start as we look to a robust year receiver with that I will turn the call over to Jim.
Jim: Thanks, Steve as Fred and Dave highlighted CEVA posted a strong third quarter with adjusted diluted earnings per share up 8% on a year over year basis to a record $2 22.
Jim: The third quarter results continue to illustrate the complementary and diversified nature of our business model with solid contributions from across the <unk> ecosystem.
Jim: I will provide some high level takeaways from this quarter's operating results before going through an assessment of the segment results.
Jim: Our third quarter net revenue increased 11% versus the third quarter of 2023 to finish at a record $532 million. The growth was driven by strength in our derivatives and cash in spot markets category as well as solid results from our data and access solutions business.
Jim: Specifically derivatives markets produced 13% year over year net revenue growth in the third quarter as our proprietary product franchise again produce sustained growth.
Jim: Cash and spot markets organic net revenues grew 12% versus the third quarter of 2023 with all geographies contributing solid year over year growth.
Data and access solutions net revenues increased 6% on an organic basis during the quarter.
Speaker Change: Steve highlighted earlier, we saw an acceleration of activity in September and remain confident in our ability to hit the lower end of our 7% to 10% targeted net revenue growth range for 2024, adjusted operating expenses increased 13% to $204 million for the quarter with a year over year growth driven by higher compensation relate.
Speaker Change: <unk> expenses as well as travel and promotional expenses, partially offset by a decrease in professional fees and outside services and adjusted EBITDA of $342 million grew 7% versus the third quarter of 2023.
Speaker Change: Turning to the key drivers by segment our press release in the appendix of our slide deck include information detailing the key metrics for our business segments.
Speaker Change: I'll provide some highlights for each of the options segment generated record net revenue with 10% year over year growth led by higher index options transaction fees total options Adv was up 2% driven by a 13% increase in index options volume.
Speaker Change: Revenue per contract moved 10% higher as index options represented a higher percentage of total options volume in multi listed options RPC increased 15%.
Speaker Change: North American equities net revenue increased 3% on a year over year basis, reflecting higher transaction and clearing fees as well as access and capacity fees.
Speaker Change: Increased net transaction and clearing fees, Richard by both higher industry volumes and stronger net capture rate.
Speaker Change: On the non transaction side access and capacity fees increased 12% as compared to the third quarter of 2023.
Speaker Change: The Europe and APAC segment produced a 22% year over year increase in net revenue or <unk>.
Speaker Change: A strong growth across both transaction and non transaction revenue transaction revenue in Australia, and Japan benefited from continued market share gains as well as increased volumes versus the third quarter of 'twenty three.
Speaker Change: Future segment recorded 17% net revenue growth for the quarter with higher net transaction and clearing fees, reflecting a 19% increase in adv on the non transaction side market data revenues were up 9% and.
Speaker Change: And finally, the FX segment delivered another quarter of record net revenue with 9% year over year growth driven by higher net transaction and clearing fees.
Speaker Change: Turning now to see both data and access solutions that net net revenues were up 6% on an organic basis in the third quarter.
Speaker Change: International sales continue to underpin the growth with over 40% of new sales coming from outside the U S. Over the quarter. We continue to believe DNA is well positioned and anticipate an acceleration in trends during the fourth quarter, helping us deliver on the lower end of the DNA revenue growth guidance of 7% to 10%.
Speaker Change: More specifically, we expect to see continued strength from demand for access across our global market, particularly as we increase our presence in new geographies and leverage the distribution capabilities of <unk> global cloud.
Speaker Change: Expansion of dedicated cores in our equities market greatly enhancing our options access layer and increasing capabilities around our data access and insights as we reallocate technology resources from integration efforts to organic revenue generating enhancement.
Speaker Change: Turning to expenses total adjusted operating expenses were approximately $204 million for the quarter up 13% compared to the third quarter of last year. The increase primarily resulted from higher compensation and benefit given an increase in our short term incentive accrual driven by stronger revenue generation as well as the 10 million.
Speaker Change: The benefit in the third quarter of 2023 from executive departures that did not recur in 2004.
Speaker Change: In addition, travel and promotional expenses were also higher on a year over year basis, as we saw some acceleration in our marketing efforts.
Speaker Change: I would note that adjusting for the impact of the 2023 executive departures.
Speaker Change: Adjusted operating expenses would have increased a more modest 7% year over year for the third quarter in line with our efforts to stabilize margins given the 11% revenue growth during the quarter.
Speaker Change: As we look ahead on slide 16 for our 2024 guidance, we are raising our full year organic net revenue growth range to 7% to 9% from 6% to 8%.
Speaker Change: The updated guidance reflects our strong year to date results and a supportive outlook for the remainder of the year give.
Speaker Change: Given the positive revisions to our revenue guidance, we are increasing our full year 2024, adjusted expense guidance to $798 million to $808 million up from our prior guidance of 795 to 805 million to $3 million increase captures the upward pressure on our short term incentive bonus accrual.
Speaker Change: Our improved revenue guidance range as well as some targeted marketing spend to capitalize on the expanded access of our index options product suite.
Speaker Change: We believe the refined revenue and expense guidance continues to strike the right balance as we look to drive long term margin stability looking at our results on a year to date basis, we see that narrowed as reflected in the 80 basis point adjusted EBITDA margin expansion produced through the first three quarters of the year.
Speaker Change: Looking at our full year guidance more broadly we continue to anticipate hitting the lower end of our DNA organic net revenue guidance range of 7% to 10%.
Speaker Change: Dave highlighted September was a strong month for DNA revenue growth and we expect to see the stronger trends carry through the fourth quarter.
Speaker Change: Below the line, we are increasing our expectation for other income to $7 million to $9 million from $4 million to $6 million given an increase in dividend income we realized during the third quarter.
Speaker Change: Within our earnings on investments line, we continue to expect 33% to $37 million from positive marks on our investments in total this raises our 2020 for expected impact on non operating income to 40 to 46 million from 37% to $43 million.
Speaker Change: We are also increasing our full year guidance range for capex to 57% to $63 million from 51% to $57 million, primarily resulting from an acceleration of technology investments across our businesses.
Speaker Change: Depreciation and amortization is expected to remain in the range of $43 million to $47 million for the year and finally, 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, while we don't provide formal guidance on interest income or inter.
Speaker Change: Just expense I wanted to highlight that the third quarter included a benefit from a one time true up of interest earned from available for sale Securities.
Speaker Change: Moving forward, we would expect a more modest impact and anticipate that interest expense net of interest income will be in the $7 million to $8 million range for the fourth quarter.
Speaker Change: Turning to our balance sheet, our third quarter leverage ratio remained at one one times and we remain comfortable with our overall debt profile and the balance sheet flexibility. It affords the effective allocation of capital has been a cornerstone of our ongoing strategic review.
Speaker Change: We strive to allocate capital to where we see the greatest long term opportunity whether it be investments in internal projects or returning it to shareholders in the form of share repurchases and dividend during the third quarter, we repurchased approximately $25 million in shares, bringing our year to date repurchases to $204 million.
Speaker Change: In August we announced a $500 million increase to our share repurchase authorization boosting our total capacity available for share repurchases to approximately $680 million as of the end of September.
Speaker Change: In addition to repurchases we returned a total of $66 million to shareholders in the form of a 63% dividend during the quarter, a 15% year over year increase in our quarterly dividend factoring in both share repurchases and dividends through the third quarter. <unk> has returned a total of $387 million to shareholders.
Representing 56% of adjusted earnings year to date.
Speaker Change: As we move forward, our strong free cash flow generation and flexible balance sheet afford us the opportunity to allocate capital and resources in the most value enhancing activities striking the right balance between investing in future revenue growth and improving shareholder return, we look forward to building on our year to date progress and delivering dura.
Speaker Change: <unk> growth in the quarters ahead, now I would like to turn it back over to Fred for some closing comments before we open it up to Q&A.
Fred Thompson: In closing we are pleased to report another strong quarter, delivering 8% adjusted diluted earnings per share growth year over year.
Fred Thompson: Fundamentally our business performed very well with year to date net revenue up 9%.
Fred Thompson: Adjusted expense growth at 6%.
Fred Thompson: As we head into the final quarter of the year, our balance sheet is strong and we are well position to take advantage of opportunities as they arise.
Fred Thompson: With our new strategic framework, coupled with the strong fundamentals we are seeing across our business. We are very encouraged about the opportunities ahead of us and look forward to sharing more as we move in to 2025 at.
Speaker Change: At this point, we'd be happy to take questions. We ask that you. Please limit your questions 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.
Speaker Change: Thank you the floor is now open for questions.
Speaker Change: If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: If you would like to withdraw your question simply press Star one again.
Speaker Change: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking a question.
Speaker Change: Your first question comes from the line of Patrick <unk> with Piper Sandler. Please go ahead.
Speaker Change: Yes. Good morning, Thanks for taking the question.
Speaker Change: On the DNA revenue guidance, Joe You said, you expect to see a step up in the in the fourth quarter, that's going to get you to the low end of that 71% range.
Speaker Change: Can you maybe just elaborate on what youre seeing there and.
Speaker Change: And the drivers and then is this indicative of a more sustainable step up or acceleration in DNA revenues or is it more so just related to timing.
Speaker Change: Some of those cash collections and some enterprise sales.
Speaker Change: Thanks, very much for the question, Patrick and welcome to keeping up the tradition of being first in the queue.
Speaker Change: As we look back over time, and you rightly point out that we do see inflection points and timing when it comes to the recognition of certain DNA revenues under that line item, so that certainly a factor.
Speaker Change: Come into play as we go forward in terms of the confidence in the drivers.
Speaker Change: The 7% to 10% guidance this year, it's really around about forecasting Greg.
Speaker Change: New sales the new sales side, we talked about it on the call 40%.
Speaker Change: Internationally internationally.
Speaker Change: And the pipeline on the hiring that we're doing that internationally.
Speaker Change: Continue that pipeline of sales is where we draw confidence in terms of the new sales item that is pricing the pricing changes that we put in place earlier this year as we periodically review pricing across.
Speaker Change: <unk> to make sure we're extracting the appropriate value for products that these impacts will be seen continuing through this year into next year.
Speaker Change: Understood areas technology investments the results from the investments in the technology resources freeing up from migrations.
Speaker Change: Over the last year bearing fruit this year those investments in the first half of this year are really beginning to pay off again this year and into next year I'll point out that in taking calls that new.
Speaker Change: Architecture for our equities venues in the United States really performing above our expectations and we're rolling that out to other markets. Later this year and into next year and then finally from those technology investments.
Speaker Change: <unk> and the cole platform.
Speaker Change: To have new insights generated you.
Speaker Change: New dataset.
Speaker Change: It really represents value for customers that they're willing to pay for and then thanks for the insights allow customers to optimize their interaction.
And.
Speaker Change: With the cole platform that today's call factors really gives you that confidence as we see short term bringing.
Speaker Change: Bringing it into the new year.
Speaker Change: More questions.
Speaker Change: Okay.
Speaker Change: Great. Thanks for the color.
Speaker Change: Your next question comes from the line of Ben <unk> with Barclays. Please go ahead.
Hi, Good morning, and thank you for taking my question.
Speaker Change: And in the near term we're focused on some of the more recent opportunities robinhood as some of the other global brokers, you've announced I think earlier in the year that added some sea boat products, but as you think farther out how do you think about continuing to expand that opportunity set are there other major brokers in the U S or elsewhere that don't have access to the full suite of <unk> products or is the opportunity really about sort of.
Speaker Change: More education to that kind of big.
Speaker Change: Chunk of customers, who are either not enabled for options were not using the regulate how do you think about those two different opportunity sets. Thank you.
Speaker Change: Yes, thanks, Brian Thanks for the question.
Speaker Change: So we continue to see growth in new customer acquisition.
Speaker Change: Asia Pacific growth as we've talked about the running this year coming on board new customers as we talked about really leaning into that secular trend.
Speaker Change: Alright assets invested that appetite for access to the U S capital markets. So we're going to continue to lean into that long term trends and deliver long term value.
Speaker Change: Doing that through.
Speaker Change: Hiring putting boots on the ground with very naturally extended marketing in region and education going hand in hand.
Speaker Change: And then secondly, when it comes to that retail brokerage platform network.
Speaker Change: You mentioned that it's really about further penetration of base user base.
Speaker Change: We think we are in the early innings of adoption.
Speaker Change: Uses of retail growth.
Speaker Change: Yes.
Speaker Change: And while we see the facts that we look at for example, robinhood $24 million funded accounts.
Speaker Change: Our presenter values trading options.
Speaker Change: Runway.
Speaker Change: And in general, we see retail brokers, having that long runway customers intend to utilize options that are being educated on the benefits as an additional tool in their toolkit and that's why we're also investing in education and marketing.
Speaker Change: Hello, Ryan, but also joining with us retail brokers and so what we've seen in history as to enrollment.
Mitchell: As our products are rolled out to retail brokers and that trading platforms Mitchell.
Mitchell: From Robin Hood.
Mitchell: We continue to rollout new features throughout mix between durable growth and we expect to see our products.
Mitchell: I mean July because of the differentiation of the products themselves really being quite a compelling additive to our customers' portfolio as they begin to learn the intended benefits the simplicity of a cash settled index option.
Speaker Change: All right got it thanks, so much David.
Speaker Change: Your next question comes from the line of Dan Fannon with Jefferies. Please go ahead.
Speaker Change: Thanks. Good morning. My question is for Fred you know a year ago on your first call you talked about narrowing focus and margin improvement and capital return and then.
Speaker Change: As we sit here today.
We see inorganic back on the table again, and I think talking about that a little bit more so curious about kind of what the change in the strategic focus really was from a year ago to today and how we should think about inorganic versus organic growth priorities and capital return going forward.
Speaker Change: Yes. Thanks.
Speaker Change: Relative to.
Speaker Change: A year ago, if you go back.
We have done a lot of acquisitions, we were doing a lot of migrations.
Speaker Change: A lot of those adequate searches for small or are consuming a lot of the resources of the organization. So we definitely slowed that down.
Speaker Change: Yes.
Speaker Change: Time to sort of say, we're wondering where do we really want to go here.
As I've said, we've kind of gone back.
Speaker Change: Can't be the strategy to kind of supplement the strategy.
Speaker Change: Relative to our strategy.
Speaker Change: I will have a strategy focused on organic growth and that's what we've been trying to do.
Speaker Change: So you have seen us jump back to such revenues business back into the mix.
Speaker Change: Hey, good access solutions business.
And our technology et cetera.
Speaker Change: Also now have our balance sheet in good shape.
Speaker Change: In terms of our leverage ratios are low.
Speaker Change: In a good position there.
Speaker Change: And I think on top of all that our margins have stabilized and we sort of.
Speaker Change: Moderate expense growth.
Speaker Change: Significantly year over year. So we're now on a path, where we're trying to drive organic growth.
Speaker Change: I've always said, we were going to slow down the M&A, but I've never said, we were never going to do M&A.
Speaker Change: And the only reason for bringing up is just to keep all of our options open as you think about it.
Speaker Change: Where we are today in terms of how we deploy capital.
Speaker Change: Our debt is in good position, so we really don't see us paying down cash here.
Speaker Change: Theres really not selling correct use of our capital.
Speaker Change: So we're very much focused on dividends, which we increased 15% share repurchases investing in organic growth.
Speaker Change: Centering on inorganic opportunities provided they make a difference and they have a strategic and financial rationale to them or they fit inside of an area, where we have a bigger strategic ambition example, I would use <unk> investment in Japan in Japan, We do see Japan checked bag market.
Speaker Change: Any changing market when you see a big market that's undergoing a lot of change that usually creates opportunities for players like Stifel.
Speaker Change: So.
Speaker Change: Quite happy with that investment.
Speaker Change: So that's actually the way, we kind of think about it.
Speaker Change: So were just keeping all of our options open as we look forward.
Speaker Change: Understood. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Alex Kramm with UBS. Please go ahead go ahead.
Alex Kramm: Yes, Hey, good morning, everyone. Just in terms of some of the new initiatives, maybe give us an update on the <unk>.
Alex Kramm: On the VIX options on futures I know, it's only been a couple of weeks, but obviously very limited volume. So far just I know theres a lot going on in the world, but just trying to get an update where you are in terms of bringing on market participants and liquidity and what's the feedback been so far thanks.
Speaker Change: Okay.
Speaker Change: Thanks, Alex Yes, we've had two product launches in the last chance.
Speaker Change: A couple of months and.
One of them as VIX options on futures and just a reminder, that the aim there is to bring base optionality to non securities estimates.
Speaker Change: Because of the cost structure of the product itself, we're able to offer shorter dated trading two industries.
Speaker Change: The exploration of a VIX options contract, sorry expanded user base and really leading that shorter dated need and want to have the customer base.
Speaker Change: Variance futures another new product, how do I see it.
For the S&P 500 index call.
Speaker Change: To allow the pure play between implied and realized volatility to additive products.
Speaker Change: Ballots will made time to proceed.
Speaker Change: Early signs are really just we've got prices on the screen, we've got customers engaging testing strategies and testing out.
Speaker Change: The plumbing works with a good pipeline of customers coming soon.
Speaker Change: Take time to season and Gemini throughout the course of.
Speaker Change: 2025 as customers begin to use that we wanted to get just before the election, so people could see how they might be priced and how they might be might.
Speaker Change: Microphone, rather than expecting any great deal of trading, but really that's just straight through this particular time period is really useful to customers to really think about how they can use them in the strategy is going forward because we've got no shortage of uncertainty coming both this year and.
Speaker Change: Into next year.
Speaker Change: Makes sense. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Alex <unk> with Goldman Sachs. Please go ahead.
Speaker Change: Hi, Good morning. This is Anthony on for Alex.
Speaker Change: And pricings role in DNA revenue acceleration.
Speaker Change: Like what is the typical percentage increase we should be expecting across this revenue base.
Speaker Change: From pricing increases and then what are your expectations for pricing increases into 2025.
Speaker Change: Yeah. Thanks for the question.
Speaker Change: <unk>.
Speaker Change: It varies we have a vast array of.
Speaker Change: Pricing.
From a month ago, we have market data products packaged and bundled in different ways for different customer sites is really not a kind of a blanket percentage increase I could point you to it's really about.
Speaker Change: Assessing the relative value today versus compaction compared to comparable products and really making sure we keep those in line.
Speaker Change: Maybe a better reference point for you will see that in Q3.
Speaker Change: Pricing contributed around about a third of the overall growth in Q3 and as we look forward to 2025, I will discuss a little bit earlier on the call harder to really call necessarily but we would expect that one third pricing kind of contribution to the overall growth.
Speaker Change: What does that tell you exact tell you actually we see growth in the distribution and the runway selling our products rather than meeting pricing to be the strategy for growth.
Speaker Change: Helpful. Thank you.
Okay.
Speaker Change: Your next question comes from the line of Owen Lau with Oppenheimer. Please go ahead.
Owen Lau: Good morning, and thank you for taking my question, so going back to Robin Hood, I think it's an exciting partnership but when do you expect <unk> to get more meaningful body.
Owen Lau: You mentioned $24 million as 4% trade options, how big each the addressable market and is there any things people can do to help drive higher volume in this channel. Thanks a lot.
Speaker Change: Thanks, John Yes, there's certainly a few things we can do and we've been doing them.
Speaker Change: Yes, we have some incremental investment towards the end of this year and into next it's going to be a journey.
Jeremy.
Jeremy: It's a journey for robinhood and that customer base, obviously robinhood Avenue to have a new platform to rollout, which will take place throughout next year and begin to add increased functionality or generally that brings increased competition amongst that.
Jeremy: With the retail brokers that we have as customers increased competition is a good sign.
Jeremy: Industry, when we think about the customer base and the runway, yes the numbers.
Jeremy: In front of a 24 million funded accounts, 4% trade options today.
Jeremy: Going to have for the agitation, which is really really important.
Jeremy: And Fred and I hope to see in the physical manifestation of Robinhood conference.
Jeremy: Customers way.
Yes.
Jeremy: Got to learn how to trade spreads have the Chaucer sale premium to generate income and have a diverse range of strategies in that portfolio. So the edge cases, where we're investing.
Jeremy: Alright, and joining with retail brokers like robinhood and others.
Jeremy: Evergreen education in the hands.
Jeremy: The retail base, so that they can really achieve their own financial literacy and financial independence.
Speaker Change: Dennis marketing marketing is really important both again join me and individually to really feed into the education piece because the products are important.
Speaker Change: Cash settled index options product is really really cheap.
Speaker Change: Please see a cash settled trading belt about.
Speaker Change: The certainty of the European exercise, knowing that one leg of your spread won't get pulled away and then there's a tax treatment potential for 64 catastrophe benefit really happy with the economics of this important reeducate on that and if we market the benefits of that as well as we guys right. So where are we investing education.
Okay, broadening access by putting more boots on the ground around the world.
What has already been a strong secular trend and one that we see continuing.
Speaker Change: Sure.
Speaker Change: Got it thanks a lot.
Speaker Change: Yes, I'd just like to add David.
Speaker Change: Dave covered it very well with us as they add on products and a mature their platforms continue to grow the usage of our products. They're also paying.
Speaker Change: Other brokers are going international which feeds right into our <unk> strategy.
Speaker Change: One thing that we haven't mentioned is defined outcome ETP that are out there.
Speaker Change: Usage of our products.
Speaker Change: But the customer doesn't have direct usage, so even if they're not going through a retail broker to directly trade our index options products and they may be using them.
Speaker Change: Through another product like to find out.
Speaker Change: <unk> is a long term secular trend.
Speaker Change: For a long time, so a lot of growth, we see yet to come.
Speaker Change: And I'll, just sort of add on here for a second while we're excited about.
Speaker Change: The launch of index options I think in the longer term trading.
Speaker Change: Trading platform, which is the first time Larry.
Speaker Change: A real sort of active trader platform to their clients over the longer term.
Speaker Change: Terry trading.
Speaker Change: Trading and options are quite a bit over time.
Speaker Change: Thank you all.
Speaker Change: Your next question comes from the line of Craig Siegenthaler with Bank of America. Please go ahead.
Craig Siegenthaler: Thanks, Good morning, everyone.
Craig Siegenthaler: My question is on the strategic review so now that it's complete how is the board thinking about divestments and we know you shut down the spot crypto exchange.
Craig Siegenthaler: Earlier this year are there other noncore assets that you can divestiture closed that would enhance margins and profits.
Speaker Change: First off and the board is very much focused as we think about it we've now that we've stabilized our margins.
Craig Siegenthaler: Because we're very very much focused on growth.
Craig Siegenthaler: Growth into areas, where we see secular trends that <unk> has a core strengths under Christina.
Craig Siegenthaler: And I talked about earlier, so that's where the focus is right now.
Craig Siegenthaler: As a.
Craig Siegenthaler: All strategies.
Craig Siegenthaler: This is a journey to start in November and over time as businesses evolve or the market evolves.
Craig Siegenthaler: It may not happen, but right now we're very much focused on growth as opposed to divesting.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Ashish <unk> with RBC capital. Please go ahead.
Speaker Change: Thanks for taking my question I, just wanted to drill down further on the D&A activation and wanted to better understand the plans for that expanding the dedicated cores.
Speaker Change: As well as.
Speaker Change: The rollout of the CBS CBS Siebel cloud how is that.
Speaker Change: Yeah, I'll take that one thanks for the question so dedicated quarters. We're excited for the growth we've seen in the U S. We currently just have them all that in U S equity markets are for U S equity exchanges now we will be bringing that to Europe to the U K first and the fourth quarter.
Speaker Change: And then in the first quarter of next year.
Speaker Change: Plan to bring that to Australia, and then eventually hopefully to Japan and Canada.
Speaker Change: A staggered rollout here.
Speaker Change: The demand we've seen from customers and the improvements we've made in the U S have been above our expectations and then what was the second part of your question.
Speaker Change: The rollout of placebo cloud thanks.
Speaker Change: Thank you and thank you for the clarification.
Speaker Change: So you have a global cloud we're quite excited is as mentioned in our prepared remarks, 79% of that growth is coming from outside of the U S. We see more of that and as we.
And this year and head into next year, we plan to invest further and greater distribution around the world.
To grow Super Global cloud enough the amount of data that folks want to enter the U S.
Speaker Change: Is just continuing to grow as people want access to the U S. Usually a precursor.
Speaker Change: Access to the U S market is wanting to get our data. So that's why we think a lot of the growth achievable cost coming outside of the U S. So we think this bodes well not just for G&A revenue, both short and long term transaction revenue.
Speaker Change: That's great. Thank you.
Speaker Change: Your next question comes from the line of Kyle Voigt with <unk>. Please go ahead.
Hi, good morning.
Speaker Change: So introducing.
Speaker Change: Everyday explorations in SPX has obviously been really successful in growing the SPX volume pie, introducing new strategies and hedging opportunities for your clients I'm. Just curious if you have seriously considered adding additional explorations to SPX from here in terms of intraday, our multiple explorations per day what are the.
Speaker Change: <unk> challenges with potentially doing that and how close could that be.
Speaker Change: Thanks very much for the question as we think about product development more holistically, it's about looking to simplify the complex, bringing transparency to anywhere.
Speaker Change: Pass it say all or any information out of <unk>.
Speaker Change: Bringing OTC trading.
Speaker Change: Exchange and really allowing for a more flexible trading styles and trading patterns and thats really looking to bring both the smaller users every investment strategy to everyone in size, but also having a suite of products and the volatility.
Speaker Change: They can really allow customers to be nimble around market cycles and volatility regimes.
When it comes to that product development, you can see we added VIX options and futures and variance futures, which all of which have really build around that core.
Speaker Change: When we think about where we go next is really driven by the customers and the customers. At this point are not asking us for an extra expiry joined the day Theyre looking for extra.
Flexibility and precision.
Then it can bring to managing that risk over time and thats the benefit of a variance future.
Speaker Change: As well as the VIX options on the future you can have more precision over the management.
Speaker Change: Your risk profile over time once a day for the moment seems to be enough for the customer base. So we don't see any compelling demand to drive exploration during the day.
Speaker Change: But I would point out that the benefit is with the cash settled product intraday explorations would be way more.
Speaker Change: Easy to achieve than a physically settled product which would have.
Speaker Change: Tendon complexities, which wouldn't allow us to go back.
Speaker Change: Great. Thanks.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Bill Katz with TD Cowen. Please go ahead.
Bill Katz: Great. Thanks, very much taking the question. So I've heard two themes today, one is sort of topline growth, but the second one is a fair amount of investment spending I think you've said boots on the ground for a bit of time as well how should we be thinking about at least preliminary the rate of core expense growth for next year and I noticed your at your EBITDA margin actually slipped a couple of percentage points.
Bill Katz: Quarter on quarter and year on year. So are we close to peak margin for the business as you think about maybe the interplay between revenue and expense growth. Thank you.
Speaker Change: Thanks for the question Amit I think we had mentioned in the prepared remarks that the third quarter expenses.
Speaker Change: Trend a bit high in Q2, some comparable from the third quarter 2023, favorability that did not recur and third quarter of 2024, or so looking at it more holistically on a year to date basis.
Speaker Change: Very much in line with where we projected to be and while I won't comment quite yet on 2025 guidance, we will share more on that.
Speaker Change: With you in early February when I will remind you of is just our focus on disciplined expense management and stabilizing the margin. So you do see our expense growth rate here and 2024 in the range of 6% to 8%.
Speaker Change: The 15% expense growth from 23 to 24, so again not going on record with a number for 2025, but just know that we continue to be focused on stabilizing that margin and are very much aware that the operating expenses R&D component.
Speaker Change: Stabilizing that margin.
Speaker Change: Thank you.
Speaker Change: Okay.
Your next question comes from the line of Ken Worthington with JP Morgan. Please go ahead.
Speaker Change: Hi, This is Matt Orlando Iden on for Ken Good morning, and thanks for taking our question.
Speaker Change: We have a quick one on multi listed options the market share loss that you've been seeing 2024 to date versus 23 comp. We think from competition seems to have re accelerated in the third quarter.
Speaker Change: Is this a correct read and second is there anything you can do or are doing to combat some share loss. Thank you.
Speaker Change: Thanks, very much we've seen a number of new entrants into the U S modular space over time.
Speaker Change: As new entrants have really been focused on lower capture rate plans.
Speaker Change: We focus on as a business is really optimizing revenues through a balance of share capture.
Speaker Change: Capture and what you saw some of the numbers is a 15% increase year over year in that capture rate.
Speaker Change: And then when it comes to what we can do to.
Speaker Change: Stay and remain competitive surfing that essentially that is a focus for us.
Speaker Change: Of course, as we mentioned on pricing with pricing down to really fine tune the market quality and the interaction on each one of our options medallions.
Speaker Change: Secondly, that functionality, new order types, and differentiated capabilities, which draw certain types of flyers to our exchanges versus others.
Speaker Change: Finally, its technology and Thats really been the focus this year, we mentioned earlier in the call the new options access architecture coming to visit us options earlier earlier in the quarter and Chris might have thanks.
Speaker Change: Sorry about that in a moment technology.
Speaker Change: Technology enhancements have really benefited platforms, but actually also opened up the capability to add new data and insights and that's important because any customer because customers have been able to further optimize the strategies and how they behave in the platform and then the last thing I'll say that.
Speaker Change: Thanks Christopher.
Speaker Change: As we are investing in talent, we're investing in talent to really help us think about how we.
Speaker Change: Become more competitive and we're investing some of our data and analytics, our cognitive analytics results into into assessing how we can be even more competitive that but I would point you back to the capture increase that we did see with the market share and I would just add to Dave's comments on multi listed options market share.
Speaker Change: Ive space, but we're here to compete.
<unk> functionality technology and data, we did rollout the new options access architecture on one of our four options markets that was in mid August. So the results are still early we are a couple of months and but we're very.
Speaker Change: We're encouraged by what we've seen on a one.
Speaker Change: One of our exchanges, thus far we.
We've seen better market share we've seen.
Speaker Change: A lot of efficiency of the use of the system and a lot of use of data as well.
And as Dave mentioned, we're investing in talent here and we're going to use that talent to focus on data in this competitive marketplace, but we're here to win and we like we like our position from here.
Speaker Change: Great. Thank you so much.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Chris Allen with Citi. Please go ahead.
Chris Allen: Yes. Good morning, everyone. Thanks for taking the question just kind of following up on a couple of the prior questions just trying to think about how much the investment needs for growth moving forward.
Speaker Change: I mean, you obviously have a strong balance sheet strong free cash flow flexible balance sheet position there.
Speaker Change: <unk> you.
Speaker Change: Basically a lot of talent that has been integrated you can repurpose them to.
To drive growth.
Speaker Change: And Youre investing overseas on the international front, just wondering if you could frame out the magnitude of investment you need to drive growth from here and maybe some color just where are you investing on the talent side or international specifically.
Yes. Thanks for the question I think few of us might have a couple of things to say here, but I'll kick it off.
Speaker Change: So the investment is really in line with that strategic framework, it's into derivatives into data and access and it seems to technology.
Speaker Change: The derivatives clearing some of the key strengths of the credits that all the growth.
Speaker Change: That we've talked about earlier on the call. So we're investing behind that education Thats Mark. Thanks, That's talent, we're investing on that need that desire to access the U S market.
Speaker Change: The impulse strategy, that's based on the ground sales folks people that are knowledgeable derivative salespeople within network in region Natural language speakers you can have high level conversations with customers around the world. It's also investment on the input side.
Speaker Change: Breaking down any pathway barriers that might exist, whether it be access to data.
Speaker Change: The legal approvals adapt marketing region.
Speaker Change: Modulation, we just covered that quite slowly in terms of where we're investing in data analytics and talent that product.
Speaker Change: Product for derivatives products innovation is a key thing for ADESA at the marginal and opportunity cost, but we listen to customers and will forever be innovating around products and looking for new products to launch and we've got some in the pipeline for next year that we've already talked about what does that mean.
Speaker Change: The dispersion futures.
Speaker Change: Vintages.
Speaker Change: So in access we've talked about that on the call as well.
Speaker Change: Investing in analytics investing in index capability around that defined outcome space that embedded option space in derivatives.
Speaker Change: Index business, we get a lot we own about 80, 90% of the <unk>.
Speaker Change: Gtx.
Speaker Change: Next to placebo in the defined that outcome space.
Speaker Change: Looking for incremental insights Chris talked about that.
Speaker Change: And then on the technology side I'll have Chris and maybe Joe for any particular question might have just a couple of comments here on the redeployment of resources measure the prepared remarks, we will finish our Canadian migration here in March.
Speaker Change: Last migration to the Cmos technology platform. We're excited about that we've spent a fair amount of time a lot of resources. This year, making that happen, we think thats worth it but those will free up a substantial amount of them to focus on high growth areas like derivatives and DNA going forward.
Speaker Change: Jill Youll can probably talk to the capex, but we've accelerated some capex like you mentioned.
Speaker Change: And with data and AI, we are investing heavily in our data and analytics platform.
Speaker Change: And also focused on AI, not just to drive productivity within the organization, but to explore an enhanced revenue opportunities.
Speaker Change: To our customers and Joe just to wrap it up here.
Speaker Change: Frankly alluded that our balance sheet is in very strong position and we do have a lot of strategic flexibility, there, which is a great possession of the yen I think where we sit today, we're aiming CHS allocate that capital and our resources in the most value enhancing way.
Speaker Change: Turning to strike the right balance between investing in the future revenue growth and then optimizing our margin.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Unfortunately, we have run out of time for questions I will now turn the conference back over to the management team for closing remarks.
Speaker Change: Thank you and thanks, everyone for joining our call today and for your questions I. Thank you all you will see from our tone and the questions that came to us.
Speaker Change: We are pivoting basically kept very focused away from migration work onto investing in organic growth.
And very much leaning into where <unk> core strengths, but also where we see the long term secular trends.
Speaker Change: We're going to continue to do that.
Speaker Change: We have said earlier, our balance sheets are in a great position here.
Speaker Change: Can take advantage of opportunities as we see them.
Speaker Change: And so we'll see you next quarter.
Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.