Q4 2024 CME Group Inc Earnings Call
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Welcome to the CME group fourth quarter 2024 earnings call.
At this time I would like to inform all participants that your lines have been placed on a listen only mode until the question and answer session of today's conference.
Speaker Change: I would now like to turn the call over to Adam mimic Sir. Please go ahead.
Adam: Good morning, and I hope, you're all doing well today, we released our executive commentary earlier. This morning, which provides extensive details on the fourth quarter of 2020 for which we will be discussing on this call.
Speaker Change: I'll start with the Safe Harbor language, and then I'll turn it over to Terry.
Terry: Statements made on this call and in the other reference documents on our website that are not historical facts are forward looking statements.
Speaker Change: These statements are not guarantees of future performance.
Speaker Change: Involve risks uncertainties and assumptions that are difficult to predict therefore actual results and outcomes may differ materially from what is expressed or implied in any statements.
Speaker Change: Detailed information about factors that may affect our performance can be found in our filings with the SEC, which are on our website.
Speaker Change: Lastly in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements with that I'll turn the call over to Terry.
Terry: Thanks, Adam and thank you all for joining us this morning, I'm going to make a few brief comments about our record year end 'twenty 'twenty four and some thoughts on the current business environment. Following that Lynne will provide an overview of our financial results and our 2025 guidance and additional land. We have other members of our management team present to answer your questions.
Terry: After the prepared remarks 2024 was the best year in CME group's history.
Terry: Our fourth consecutive year of record volume with average daily volume increased 9% to $26 9 million contracts. This growth was broad based with volume increasing year over year in all six asset classes, including all time volume records in our interest rate.
Terry: Foreign exchange metals and agricultural complexes.
Terry: It was also a record year for our international business, which averaged 7.8 million contracts per day are up 14%.
Yes records set in 2023 and.
Terry: In addition to our impressive volume results, we continue to provide unmatched capital efficiencies for our customers. We have previously discussed that within our interest rates along with the breadth of our operating results and margin savings in excess of $20 billion per day for our clients. It is worth noting.
Terry: This margin savings applies across all the asset classes, we clear as you may have seen in the commentary. We released this morning, our customers are now saving approximately $60 billion per day across all six asset class.
Terry: Commodities were a third fastest growing asset class in 'twenty 'twenty, four with metals volume up 23% energy up 17% and acts up 13%.
Terry: These businesses combined to generate a record $1 $7 billion in revenue in 2024 up 16 versus <unk> versus 'twenty 23, and are off to another great start in 2025 commodities.
Terry: Commodities growth came from every customer segment led by the buy side.
We've seen significant increases in activity by global multi strategy hedge funds as they expand and commodity focused strategies, yes.
Terry: And clearly the fastest growing growth came from EMEA or are year over year volume was up 34% across the commodities business commodity options also demonstrated strong growth with volumes up 29.
Terry: 2023.
Terry: Our growth has been driven by strong new client acquisition across both institutional and retail sectors.
Terry: I've said many times in recent years that is going to become more and more difficult to distinguish between retail and institutional trading behaviors technology is equalizing the access to data and improving the flow of information is there.
Terry: It is bringing in new type of trade or into our markets and we'll continue to grow the overall financial system.
Over the last year or several large retail broker partners have joined our markets to meet this customer demand as discussed throughout this year, we have increased our allocation of expenses to marketing and education of potential new clients.
Terry: Given the strong financial results, we further increases in investment.
Terry: During Q4 and total new clients added in the last five years and generated approximately $1 billion of revenue, including approximately 5%.
Terry: <unk> revenue in 2024, moving in 2025, we continue to see strong volumes to start the year with new volume Records in January and ongoing customer needs through efficient trading and hedging solutions.
Terry: Shifting abuse around the global economy persistent inflation potential for changes in tariffs and ongoing geopolitical tensions all contribute to potential market movement and the need for effective risk management, which we will continue to provide to our clients.
Terry: In addition to the impressive volume results I've outlined we delivered record financial results with that I'll turn the call over to Lynn to review these results in more detail.
Lynn: Thanks, Terry and thank you all for joining us this morning.
Lynn: As Terry mentioned, we had very strong financial results delivering a therapeutic that could have a year of record revenues and earnings in 2020 for a revenue of $6 1 billion grew 10% compared to 2023 and included all time revenue records in all six of our asset classes.
Lynn: Annual adjusted expenses, maybe license fees were approximately $1 five 9 billion, including 85 million related to our cloud migration alright.
Lynn: Alright, just that operating margin for the year expanded to 68, 3% up over 140 basis points from 2023.
Lynn: We delivered $3 7 billion and adjusted net income, resulting in 10% earnings per share growth for the year.
Lynn: During the fourth quarter CME group generated more than $1 5 billion in revenue a 6% increase from Q4 2023 on similar volumes.
Lynn: Data revenue grew 9% from last year to 182 million.
Lynn: Expenses were very carefully managed and on an adjusted basis were $520 million for the quarter and $436 million excluding license fees.
Lynn: You May group had an adjusted effective tax rate of 21, 8%, which resulted in adjusted net income of $919 million.
Lynn: Our adjusted earnings per share were $2 52 stacks up 6% from the fourth quarter last year.
Lynn: Capital expenditures for the fourth quarter were approximately $28 million in cash at the end of the year was $3 1 billion.
Lynn: CME group declared dividends during 2020 for approximately $3 8 billion, including the annual variable dividend of $2 1 billion, which was paid in January.
Lynn: Turning to 2025 guidance, we expect total adjusted operating expenses, excluding license fees, but including cloud migration expenses to be approximately 165 billion.
Lynn: Total capital expenditures are expected to be approximately $90 million and the adjusted effective tax rate should come in between 22.5 is 23, 5%.
Lynn: In December we announced the transaction fee adjustments, which became effective February 1st.
Lynn: Similar trading patterns as 2020 for the fee adjustments what increased features and options transaction revenue by approximately one to one 5%.
Lynn: Good data fees were increased by three 5% at the beginning of the year.
Lynn: Additionally, we announced a 10 basis point noncash collateral surcharge effective in April a participant, but you're not supposed to at least 30% of their margin requirements on cash.
Lynn: This change will ensure a minimum level of cash for risk management purposes.
Lynn: The financial impact of this requirement will be dependent on customer decision and May result in an increased average rate on non cash collateral or an increase in cash flow so that the clearinghouse.
Lynn: As always we focus on the total cost of trade for our clients and considered the impact of the collateral fee changes when reviewing it just back to the clearing and transaction fees. This year.
Lynn: In aggregate the fee changes in cash minimum could add two to two 5% of pretax income assuming similar volume and collateral levels.
Lynn: In summary, we're very proud of the results we were able to deliver as a firm that you are describing 10% revenue growth and 10% adjusted earnings growth from our previous record year of 2023.
Lynn: With the growth goal, we discussed coming out of 2020 to you. If youre represented our third consecutive year of double digit earnings graph, we'd now like to open up the call for your questions.
Lynn: Sure.
Speaker Change: Certainly if he would like to ask a question at this time. Please press Star then one please on mute your phone and <unk>.
Lynn: Record your name at the prompt.
Lynn: If at any time. Your question has been answered or you would like to remove yourself from the question queue. Please press Star then two.
Lynn: Once again, please press star one for questions at this time.
Lynn: One moment please for our first question.
Lynn: The first question will come from Patrick Molly of Piper Sandler.
Patrick Molly: Yes. Good morning, Thanks for taking the question.
Patrick Molly: In the release today, you mentioned that retail remains a bedrock of the new customer acquisition strategy.
Patrick Molly: Currently in the process of rolling out futures to Robinhood 24 million customers.
Speaker Change: It's still pretty early but I was hoping you could talk about maybe how additive do you think that this rollout can be the volumes. This year and then if you could just maybe speak to the broader retail strategy and any other opportunities that you see out there on the horizon.
Speaker Change: Thanks, Patrick let me turn it over to Julie Winkler, she can discuss a little bit about that.
Speaker Change: Going to chime in.
Julie Winkler: Sure. Thanks for the question Patrick on the New client acquisition front I'm about two thirds of that 1 billion number that Gerry referenced in his comments are driven by our retail business.
Julie Winkler: Or was there another really strong quarter for us in terms of total participation number of traders being up 6% and that N. C. A number was up another 23% year on year.
Julie Winkler: Regionally, we saw growth there as well and you know that was great. Because we saw that really also across all of our asset classes with kind of FX and metals, certainly leading the charge there.
Julie Winkler: Gross volume is in product I think has continued to be a sweet spot for us and our retail business. So that that volume was up 2.8.
Julie Winkler: Million contracts in ADP in Q4, so that was up 11%.
Julie Winkler: And you know what what this all has meant and you referenced that is you know we've been working with many new futures brokers over the last year.
Julie Winkler: They're interesting coming into the space is that sophistication a trader that Terry mentioned earlier.
Julie Winkler: Lot of this is about reaching this customer base with education and growing awareness and what is also appealing as our very diversified product offerings. So while we have the micro equity suite. We are also seeing a lot of uptake and crypto and commodities as well which is great.
Julie Winkler: Yeah Robin Hood did launch you know a couple of weeks ago. They are continuing to do a phased rollout among their customer base. So very similar to what we've seen with other broker partners as they enter into the space.
Julie Winkler: Yeah, we're excited about that and certainly opportunity to work with all of these global partners. We have about 100 that we partner with <unk> around the globe and we do have some other additional ones coming online as we look ahead into 2025.
Julie Winkler: I think the other kind of context around this is just you know this retail business is also a huge contributor to that international performance as well and so you know as we see retail grow that as a big contributor those international results with a $7 8 million in ADP, which was up another 13%. So we're excited with our diverse product offering.
Speaker Change: And the global appeal of our products and certainly being able to partner with these great broker partners and providing an education and awareness. So we felt like the outlook is good so Patrick what I would just add to it.
Julie Winkler: Julie said.
Julie Winkler: Is that I think as I said earlier the lines between institutional and retail are continuing to get more and more blurred when referring to our current institute our current retail business, which is more of a professional style trader I think the definition and all of that retail participants going to continue to evolve over the next several years and we might be saying.
Julie Winkler: Something a lot different about what our retail partners and it looks like sort of say what it could look like just that one particular broker or another it may not be fair.
Julie Winkler: How they access markets to ease of accessing markets, the new risk management tools that technology and artificial intelligence will allow us to deploy well help us broaden the scope of what we define as retail today tomorrow. So that's what's more exciting to me than just at current retail trade, even though it's an exciting business I think that's going to continue.
Julie Winkler: To evolve can be defined in different ways in the upcoming years.
Speaker Change: Okay. Thanks for that and then one quick follow up.
Speaker Change: In the fourth quarter, you received approval from the NFA to establish your own Futures Commission merchant.
Speaker Change: You did put out a press release after you're saying that you're committed to the existing SDM model, but just was hoping you could maybe talk about what strategic benefit does this give you going forward.
Speaker Change: And would there ever be an instance, where you would look to utilize it.
Speaker Change: I don't know if there would be a situation for me to utilize it or not at this given moment in time, there is not and I have said that we were not dislocate or current F. C. M partners what are actually a.
Speaker Change: License that we now hold I think it's important and I've said this for a lot of years you cannot try to get prepared when things change you need to be prepared prior to that happening and this is just another step in us putting pieces of different parts of the equation and place if in fact market structure changes behavior changes or the business.
Speaker Change: <unk> changed a little bit I'm, not gonna wage or the future of this company will not wait until that happens and then try to deploy those type of assets that you don't have at the time. So it's really important for us to have those in place. My viewpoint has not changed I am not looking to dislocate or dis intermediate any of my mcm's today.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks, that's it for me.
Speaker Change: Thanks, Patrick.
The next question will come from Alex Kramm of UBS. Your line is open yes.
Alex Kramm: Yes, Hey, good morning, everyone just quickly on capital allocation.
Alex Kramm: And more specifically on buybacks I don't think you've spoken since you.
Alex Kramm: We got the authorization for the $3 billion.
Alex Kramm: Any any update or can you just elaborate a little bit how you're thinking about buying back stock.
Is it is it is it consistent is it more dependent on what the stock is doing and then of course, how what have you been doing with it. So far have you been buying stock or what are the near term plans. Thank you.
Alex Kramm: Thanks, Alex Yeah. Thanks, Alex So I would say you know as you saw with our most recent announcement on our dividend last week, we raised that from $1 15 to $1 25, we continue to view that as a important use of our capital and just a reminder, that we did pay out the variable dividend here in mid January so our excess cash.
That we built up over the course of last year, just was paid out in that variable dividend. So as we look should go forward.
Alex Kramm: With this new lever, we have with our repurchase program I would describe it as opportunistic we're viewing this as kind of fifth third.
Alex Kramm: <unk> that we have to return capital to our shareholders and we will continue to use those three.
Alex Kramm: Levers that we have.
Alex Kramm: Alright, that's it for me.
Alex Kramm: Thank you Alex.
Speaker Change: The next question will come from Michael Cyprus of Morgan Stanley. Your line is open.
Michael Cyprus: Hey, good morning, Thanks for taking the question just wanted to ask around product development opportunities around climate events, just given we've seen more severe weather patterns and natural disasters and events in recent years, just curious how do you see the opportunity to help more customers manage risk here.
Michael Cyprus: You already have whether contracts I guess, what's the potential to broaden out that product set more fulsome seem.
Speaker Change: It seems the insurance industry may have some challenges from some of these events to what extent can a capital markets based contract be part of the solution and how are you thinking about that.
Speaker Change: Yeah, Thanks, Mike I'll, let Dirk address that and then I want to give a comment also.
Speaker Change: Yeah. Thanks, Mike the short answer is the market is already using our products and services today great.
Speaker Change: Great point about weather patterns that is one of the primary drivers of what's going on in our record activity in our AG markets from 2024, and if you look at where we are starting 2025 of our AG business is up 32% year to date and growth and almost 20% of open interest as well. So I think we're seeing significant participation where folks are looking to understand the impacts on real economies. They are playing in.
Speaker Change: Not sure AG markets and our Greensville Oilseeds markets. We're also seeing that play through the energy markets, particularly Natgas is that gas is becoming increasingly the power source for both heating and cooling when you look at our record results in the last year from Nat gas and carrying over into this year and most important of our options is up 61% last year. So is this on.
Speaker Change: Planned but now.
Speaker Change: To some degree expected dislocations in weather patterns were actually seen folks increased our use of our energy products to adapt for that and using options as a large proportion of that you also rightly mentioned that are weather driven as you know we are the largest weather derivatives market out there. We finished the year at about 90000 contracts open interest 70% of that is in the form of.
Speaker Change: Options and that tells you where I think we got sophisticated end user buy side and commercial customers using that market not just directly in our own derivatives, but that actually spent a lot of the prices for a number of indexes and OTC transactions a trade off the back of their index too and that hedge back into our weather markets.
Speaker Change: The last piece to that that we're seeing this play out is in the energy transition economy. When you look at our metals business. We are the leader and put it up substantial growth in our battery metals business, whether it's cobalt lithium or the spodumene product, we launched just a few months ago.
Speaker Change: As folks are looking at not just the disruptions to market, but what the alternatives are there are playing that through our battery metals market, they're playing that through our ethanol contract with the largest ethanol market out there and we just launch the physical ethanol contract last week in the first two trades, we're actually too large agricultural customers. So the last piece of that is what we're seeing in the industrial.
Speaker Change: Metals market. So as more work is put into the grid to reinforce our energy sector here in the U S and globally that runs right through the middle of the copper market as long as the battery amount of market and those are two markets, where we've seen record growth. So.
Speaker Change: We certainly see that the weather derivative of niche itself has room to grow but we're seeing the market already adopting market based solutions in CME group products and that's why Terry referenced the top of the script that our commodities asset classes energy acts metals are the three fastest growing products in 'twenty four and were out of the gate strong in 2025 with AG was up 32% energy.
Speaker Change: 25 of the metals up 14, so we'll continue to talk to our customers and fill that need in the portfolio, but we're seeing them already use market based solutions here at CME group.
Just to add to that Mike I think what the comment that I read yesterday by Sharon Paul about talking about how mortgages could be unattainable in many parts of the country due to insurance reasons and you raised this in your question and I think it's a much bigger concern that people are thinking about Derek referenced our products today that can help manage it.
Speaker Change: Mitigate some of those risk, but we're looking at other ways to continue to rollout products that might be more tailored towards the EDA industry.
Speaker Change: Again this is just.
Speaker Change: And the pipeline, where nothing to announce now, but I do think that is becoming more and more of an issue. When it's not so much about can you qualify for a mortgage can you qualify for a mortgage and get insurance also so that's a big issue and again I think that's another reason why risk management is going to be a priority in the out years.
Speaker Change: Going forward.
Speaker Change: Great. Thank you.
Okay.
Speaker Change: The next question will come from Benjamin Boudeuse of Barclays Capital. Your line is open hi, good morning, and thanks for taking the question Terry I was wondering if you could talk a little bit about a little more about your product expectations on the retail side I'm curious it looks like looking through some of your micro products. You know the equity indices have been sort of the lion's share I'm curious what your.
Speaker Change: Our expectations are in terms of engagement, how do you think about maybe for that product specifically competition with other sort of S&P derivatives, and then I'll have a follow up on pricing.
Okay.
Speaker Change: But I look at the retail business as Julie referenced you know, it's a massively growing business and as I said earlier technology is just enabling more and more participants.
Speaker Change: To facilitate their own risk management learn these products I think education is absolutely key for retail and those are a couple of things that we are really focused on making sure. They understand what theyre doing but with retail as you know then the speed to market is critically important that they don't want to sit around and wait for two weeks it could be facilitated to try.
Speaker Change: To open an account they need to expedite that process. So I think that business will continue to grow and bolster.
Speaker Change: More and more people today that young people today are managing their own risk that's only going to continue it's not going to go the other way.
Speaker Change: I'm really excited about retail and as I said, a moment ago on the previous question or two I really think it's the definition of retail is going to be critically important to the growth of that industry and see how we define it is it more mainstream versus professional is it a combination there's a professional just get a little bit larger and theres a lot of different factors here I think a lot of those.
Julie Winkler: Can all come through at the same time. So this is pretty exciting I'm going to ask Julia to comment more on the retail as it relates to the growth of it.
Julia: Yeah. It's a great question I think similar to my answer from earlier I think that the diversity of our product suite is a real differentiator for CME. So while we have historically seen retail customers come to us first to train our micro equity suite.
Julie Winkler: I'd say that trend is it tends to shift.
Julie Winkler: And those strong.
Eric: Macro trends that Eric spoke about earlier.
Eric: <unk> interest there, especially when we look over to APAC is really strong which.
Eric: That's kind of contributing to our recent announcement as well about the micro add contracts coming in and so we believe both with that as well as what we see with crypto.
Eric: It's interesting that we are attracting customers with new products.
Eric: Lee than maybe what we had in the past I think the other trend that supports that is some of our newer futures participants are actually targeting a different segment right. So they may be existing <unk> providers and so their entry point to come over into future says, it's going to be different than our traditional partners in this space.
Eric: Yes.
Eric: Great thing is we're still continuing to see great really strong year on year growth from our existing partners as well. So a lot of this comes down to building awareness.
Eric: Sure they have the product education that they need and our team is working very closely with them on that front.
Eric: And this allows us to easily cross sell with what is interesting in and what products are moving at that point in time, and just add to that that you referenced competition, then Julien touched down a little bit for us with all the different asset classes that I referenced in my opening remarks, hitting all these new highs. It is really important that you introduce new.
Eric: <unk> potential retail clients and there's something they feel they they know something about today. So if you come up with a very difficult product for them to try to understand so if you didn't list in our sulfur contract to the retail participants they might have a different more difficult time participating in that than they would in a gold silver oil or some of our other contracts.
Eric: There are more mainstream that they hear about every single day. So the question is how can we customize those products for their ability to participate in those are the things that we're working on so I think from a competitive standpoint.
Eric: Competitive question, then along with the crypto we're in a really strong position to introduce these to a whole new audience of retail participants.
Speaker Change: Great I appreciate all the color and just one housekeeping question maybe for Lynn on this pricing change expectation I just want make sure I had it correct. The b adjustments on the trading side, one to one 5% and then adding to sort of see changes of cashman them. So that add another 1% on top of the total is two to two and a half and I also wanted to double check does the trans.
Speaker Change: Action fee piece is that sort of net of incentive changes or is that the sort of pricing changes in isolation.
Speaker Change: Yes, so the.
Speaker Change: Incentives are included in that so that's the expectation we always are looking at not just rack rate changes, but also incentive changes. So if you look at that one to one and a half that is inclusive of the changes being made there now the thing you have to be.
Speaker Change: On the other elements of the collateral fee.
Speaker Change: Based on customer choice, so it could lead to a higher.
Speaker Change: Right that recapture on the noncash collateral that would flow through other revenue, but it also could mean that our customers would post more cash which is yet to go.
Speaker Change: All of this of this structure, because we want that cash from a risk management perspective. So if we see a shift to cash you would see more of that come through in the non operating income. So when we talked about that two to two 5%. That's a pretax earnings number because we don't know yet if we will see the increase in the other revenue or in the nonoperating income at all.
Speaker Change: Depending on that decision by the customer base.
Speaker Change: Okay very helpful. Thank you.
Pam: Thanks Pam.
Pam: The next question will come from Chris Allen of Citi. Your line is open.
Chris Allen: Good morning, everyone and thanks for taking the question wanted to ask about your securities clearing a build out there.
Chris Allen: Kind of where that stands currently.
Chris Allen: You talked in the past about having this as an option.
Chris Allen: The the marketplace demands it relative to the kind of incumbent so I'm, just wondering where that kind of stands and how are you thinking about it from a revenue opportunity standpoint longer term.
Speaker Change: Because it's a good question and I'll turn it over to Suzanne spread.
Chris Allen: Chief operating officer, and head of risk and clearing.
Speaker Change: Thanks, Chris.
Speaker Change: I'm pleased that our application for a securities clearing house has been published now in the Federal Register in January of this year, and we continue engaging with the SEC toward approval.
Speaker Change: We are excited about the opportunities that that license could bring in terms of generating additional value for our customers.
Speaker Change: We also continue partnering very closely with a fixed income clearing corporation to expand our cross margining program with effect not only for the existing house account structure. That's in place today, but to expand that offering to clients as well so capital efficiencies in a large focus for us as we've talked about already on this call and both with our <unk>.
Speaker Change: Securities clearing offering and continuing to expand that partnership with <unk>, we're looking forward to being able to deliver that in a larger way.
Speaker Change: So Chris sometimes you hear folks, especially recently you said that this could be delayed.
Speaker Change: And that's not a surprise anytime you implement a new policy as you know everybody thinks they might be ready, but theyre not but I think what's really important suzanne touched on it and we've been touching on this for quite a while is the benefits that this clearing.
Speaker Change: Offering offer a set of clients by freeing up a bunch of capital program. So even though it might be delayed and some people think that they don't want it when you look at the savings are just truly undeniable, we're referencing $60 billion of margin efficiencies when we're referencing $20 billion of rate efficiencies along with N CMA.
Speaker Change: And I touched about it a lot back in 2010 during Dodd Frank and the biggest opposers are the biggest beneficiaries today of central clearing and the offsets if they get to free up their balance sheet and lose some of the other requirements of the gum and I've come at them.
Speaker Change: Our balance sheet. So this is a huge bonus for the participants going forward. So again, whether they use fix offering or whether they use ours or someone else's. We think this is a benefit for the industry. So we're looking forward to pursuing it.
Speaker Change: And just on the point of view you done any work to kind of quantify what the margin potential that you would theoretically see.
Speaker Change: The industry.
Speaker Change: No at this point, it's hard to tell I think choices important here, we have seen an increase and clearing members to take advantage of the existing house account program.
Speaker Change: Income clearing corporation.
Speaker Change: And with expanding it to client that presents additional opportunity for clients to be able to maintain that relationship that they have today in the market place and gain the efficiencies that that clearing level through the existing structure as well as bringing online a new offering through the CME securities clearing house. So it's there's a lot of moving parts I think choice.
Speaker Change: It's key for these market participants, especially as the clearing mandate evolves, it's hard to anticipate what those numbers would look like but all of those variables.
Speaker Change: Thank you.
Speaker Change: Thanks, Chris.
Operator: The next question will come from Dan Fannon of Jefferies. Your line is open.
Speaker Change: Thanks, Good morning, Terry I was hoping you kind of you could expand upon your comments on just the outlook for activity doing you, obviously don't have a crystal ball, but maybe just discuss the setup as we sit here and you know kind of mid February of 2025. After several record years of growth for you what are the kind of building blocks do you think of growth in activity.
Speaker Change: As we think about 2025 from a from a transaction perspective.
Speaker Change: Yeah, Dan My outlook really hasn't changed a lot over the last several years I think it's going to be a very.
Speaker Change: The difficult environment for a lot of companies and individuals around the world and you need to manage and mitigate that risk I mean, nothing's really changed from a year ago, except when you acquired just a touch more than that so when youre looking at 36 trillion dollars here in the United States is that 36, five trillion $1 nine trillion dollar deficit you have.
Speaker Change: The political issues in Washington about people trying to cut spending that essentially cutting taxes. There's so many moving parts right now it's hard to say that people cannot will not be you have to manage that kind of risk because it has such an impact on everyone's business.
Speaker Change: <unk> do or don't do.
Speaker Change: Even the smallest rate increase or decrease could have a massive impact on our balance sheet.
Speaker Change: With these kind of numbers outstanding so we're going to I think geopolitically.
Speaker Change: We're still looking at you know the conversation around deregulation, which we haven't really gotten to and president Trump's agenda. He is dealing with other issues right now he's got a very large agenda. So it's gonna be fascinating, but I think all of these twists and turns that he has presented which is exactly what the American public devoted amend to do and you've telegraphed to a T cell.
Speaker Change: This is not shouldn't be a surprise.
Speaker Change: They all have a cause and effect on the economies not only United States, but globally I think people need to mitigate and manage that risk. So I do believe that youre going to continue to see a very active marketplace. Derek referenced some of the commodity products I think that I referenced in my early remarks for a reason I actually think that youll start to see more come.
Speaker Change: Out of the index funds participating in trying to manage that rescue it whether it's due to tariffs whether it's due to weather whether it's due to a lot of things and then of course when you look at foreign exchange right now foreign exchanges jumping around quite a bit because of the potential tariffs that we haven't seen in a while these are all things that you don't we haven't seen they've been a little quiet lately that could come to the forefront in 2000.
Speaker Change: 25, so I actually I'm pretty optimistic again across all six asset classes for CMA.
Speaker Change: Theres a lot out there that as you know and so even though we feel like our lives are going well and things are going good there are still a lot of dangerous places, especially economically around the world that we have to deal with so and I think that's what we're good advantage.
Speaker Change: Great. That's helpful and then just as a follow up.
Speaker Change: Capital return and to understand the buyback and the dividend, but on an inorganic or M&A perspective can you remind us around the framework of how youre thinking about that and ultimately has that changed at all given maybe looser potentially standards around M&A that maybe brought into what you would be looking at under the current administration versus prior.
Yeah, I'll take the I'll take the second part of the question and then I'll give the first part Glenn it's yet to be seen what the regulations are going to be around M&A or not it was a difficult environment under the by the administration for them. The Doj perspective to get some deals done and even ipos out the door people are talking about how.
Speaker Change: This could be different this year, it's really hard to draw a conclusion down when we're a couple of weeks into the year and we haven't seen a whole lot of activity just yet on deregulation or new companies coming forward. So I think that's going to take some time to get into the system to see if that materializes, one way or not.
Speaker Change: And I will let Lynn talk about the former under our repurchase yeah. So I think that our approach to M&A is the same that it has been we put ourselves in a good position from a balance sheet perspective, very conservative there. So that if the right opportunity comes up we have the capacity and the ability to act, but we tend to be at that Mark.
Speaker Change: Judy I guess I would say and.
Speaker Change: Not as acquisitive as some of the others in our space. We typically are looking for things, where there's a clear path to value and something that is.
Speaker Change: In our core competencies, if that's risk management running market.
Speaker Change: And capital efficiencies for our clients. So we continue to look just as we always do and if the opportunity where it should be there where.
Speaker Change: I'm more than happy to execute on an M&A.
Speaker Change: Dan we're focused we're focused on so many different things, but one of the things that keeps all of my team is you have to be able to look over your shoulder and see a pipeline of clients coming down in future in some way shape or form because theres a lot of business turning around right now we're not seeing anybody that's not the situation for CMA and we're going to make sure. It continues that way. So we are.
Speaker Change: We're looking at not just some of your traditional ways. If you want to call M&A, but other avenues and how we build this business, but it is really important as I referenced earlier to make sure that that customer base is continually educated and coming into your doors.
Speaker Change: Taste that they need to come in here with but it is important to make sure you look over your shoulder and know there is a pipeline of participants coming in and that's what we are working towards in doing right now.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: The next question comes from Brian Bedell of Deutsche Bank. Your line is open.
Brian Bedell: Great. Thanks, Good morning, Thanks for taking my questions.
Brian Bedell: If I can come back to the retail theme and Antares, especially your comments around the blurring of the retail users are it sounds like it's mostly between individuals and professionals I mean, just in terms of identifying that.
Brian Bedell: I guess the simple question is aren't aren't they all coming in from retail oriented F. C m's or where is there a mix that you can tell is the blurring simply on say you know retail professional traders and then how you treat them differently from from retail and in and then the you know the tangent.
Question to that is.
Brian Bedell: You know to what extent are they interacting directly with CME in things like data and analytics as opposed to say out there you know at their retail brokerages and is that and you know to what extent is that an opportunity to create a more vibrant data and analytics for that retail class.
Brian Bedell: Yeah. Thanks, Brian appreciate the question and then again, what I was referring to in my opening remarks between.
Brian Bedell: Retail blurring with more on the institutional not splitting the harrah's of what a retail client is today versus what it might look like tomorrow I did reference that I thought that the definition of retail is going to change over the years I didn't reference that it's changed to date. So I think what I'm, referring to when I say they are blurred I'm referring to.
Brian Bedell: The retail versus institutional today, why because the professional retail has technology and a lot of other tools that did not have 567 10 years ago that they do have today and theyre coming more at a much cheaper cost than they historically have so that was my my comment around blurring between current retail and individuals.
Brian Bedell: It relates to retail to retail versus the individual that you referenced I think that definition will change as well it just hasn't been defined yet what it's going to look like so I want to make sure I'm clear on that I'm, not saying that's changed to date I'm, suggesting that it will change tomorrow and why will it change I think it is going through our existing <unk>.
Brian Bedell: CMS today I think it will continue to go there as they continue to embrace.
Brian Bedell: Bringing new tools to allow clients to that they feel comfortable with managing theres been kind of a pushback from some people about not wanting to have certain clients and their <unk> because of the risk profiles associated with that and I can certainly understand that but I do believe that some of the new technology tools and risk management protocols.
Julie Winkler: <unk> will allow that universe to grow so that's what I was referring to as it relates to the data and analytics I'm going to ask Julie to comment on that yeah. No great. Great question and I think we have seen some great trends there I think it plays to the point earlier about just the growing sophistication of these users.
Julie Winkler: They are they are big users of data they are looking at analytics to make their trading decisions and I also think ride that trend towards you know just how these communities are connecting online and getting trading ideas from one another it's also contributing to what we're seeing with this retail flow so as it relates back to <unk>.
Julie Winkler: Our data business from.
Julie Winkler: We had a record quarter, certainly we are up 9%, but specifically as it relates back to this nonprofessional device usage. We saw an increase just even from Q3 to Q4 and almost 40% from our vendors and our brokers in terms of increased units that they were reported to us on a on a nonprofessional or RV.
Julie Winkler: <unk> asos, so the demand and the interest is there and our retail brokers are also offering things in that way. They know they need to provide robust data and analytics in order to continue to you know.
Julie Winkler: Tract in and educate them about what's going on in the marketplace. I think that is a key component as we think about that I think the other trend that I would look at is we're seeing a lot of increased usage of options among the retail client base as well and that again I think speaks to increase sophistication and we're seeing a lot more of our retail.
Julie Winkler: Brokers being in a position to offer options.
Julie Winkler: As 2024 progressed and looking into 2025, and I think that that aligns nicely with just the need for data and analytics as well.
Julie Winkler: That's helpful and can you say like what portion of your revenue you think is coming from that retailer photo or is that too difficult to.
Julie Winkler: Yes.
Julie Winkler: We have broken out some of the retail revenue, but not by a lot. So granular by individual I think until you have some.
Julie Winkler: I don't think we've historically disclosed what that portion is you know what what we've said is of our new client acquisition. That's two third of the 1 billion that we've seen over the last five years, which was contributing 85% of our transaction revenue.
Speaker Change: Got it got it and then if I could just ask one last one for Lynn on the cash collateral. If you can go through the the rates coming into one Q on.
Julie Winkler: On the cash collateral.
Julie Winkler: Is there has already been any change with the new program coming into this year.
Julie Winkler: Yeah. So if you look at the.
Julie Winkler: So this quarter U S cash balances have ticked up a bit from where they were in Q4. So we had 75 billion on average in cash in Q4 quarter to date, we're running at 77 billion.
Julie Winkler: The noncash collateral we were at $178 million in the quarter and quarter to date Q1 is $175 million now.
Julie Winkler: Now the change on the non cash collateral fee and the cash minimum does not take effect until April so you won't see that changed this quarter.
Julie Winkler: Got it okay.
Julie Winkler: Okay, great. Thank you.
Julie Winkler: Thanks, Brian.
Speaker Change: The next question will come from Bill Katz of TD Cowen Your line is open.
Bill Katz: Okay. Thank you very much just circling back to the regulatory backdrop, Terry I'd be curious what is the sort of the most recent update as it relates to the competitive backdrop on the interest rate contract and the U S. Treasury contract I know, there's been a lot of back and forth during the quarter in terms of some congressional commentary, but what.
Bill Katz: What's the sense here in terms of the sort of the regulatory.
Bill Katz: Scrutiny around U S. Non U S into play for that part of the platform. Thank you.
Bill Katz: Yeah, Thanks, Bill and I think the changes as more clarity.
Bill Katz: And I think there was a lot of miscommunication of what I was saying and what CME was saying as it relates to the competitors offering which was that L. C. H is a newly registered clearing house in the U K and the U S. I totally agree with that or the monies of the depositors can be kept in U S banks or non U S banks.
Bill Katz: Totally agree with that so I never argued the things that they said I was arguing about I argued about the default and resolution of the London clearing house, which falls under the exclusive jurisdiction of the bank of England. Now if you took the rate swaps market, that's clear that L. C. H is bigger than the damn country, but that is going.
Bill Katz: It can be a massive.
Bill Katz: Focus for the bank of England, and when you look how big that market could be and if there was ever a default if they were to try to clear.
Bill Katz: U S foreign sovereign debt on futures, which is larger than the cash market on a turnover basis isn't.
Bill Katz: Isn't that country in the U S did not have a seat at the table.
Bill Katz: Or have any authority on default and resolution, we feel that that's detrimental not only to the U S treasury market to the people who own that debt because when you tear up trades, it's not we're even a small portion.
Bill Katz: Someone gets sick, we all get a cold when you were talking about a market as big as 28 trillion if someone gets sick, we all get cancer.
Bill Katz: As a bad outcome. So it's important for the U S under sovereign debt under the Treasury Department and you heard what Secretary Bessent said at the hearing that is important that the United States of America has the resolution authority embedded in the U S. So again I've been making this our.
Bill Katz: For a long time and I think people are realizing it and we'll see where it goes but I.
Bill Katz: I feel good that people are understanding the differences now versus where we were at just.
Bill Katz: A few short months ago, where others on the other side, we're trying to confuse the issue and even our new Commerce Secretary, which will probably be voted on this week when asked in the in the committee by Senator Cantwell you gave a very convoluted answer that it had nothing to do with what I just referenced.
Speaker Change: Okay. Thank you and maybe just coming back to pricing from always want to make sure I understand that's just looking at my notes from a year ago, I think youre pricing in futures and options was up $1 five 2% and I think I heard today, a blip or a lesser rate of about one to one 5% a am I thinking about that on a like for like basis is that the right way to think.
Speaker Change: It and B if that is the case can you talk a little bit about maybe the puts and takes of where you saw the greatest.
Speaker Change: Reising capabilities, maybe by either trading class or geography or by client type.
Speaker Change: Yes, Bill. Thanks for the question. So you are correct that the adjustment on the clearing and transaction fee is a bit lower this year than it was last year, it's not unusual for us to pull different pricing levers, what we're always trying to make sure that we don't impact the velocity of trades coming across our system to us. It's not just focused on RPC is how do we.
Speaker Change: We continue to drive healthy volume given the high incremental margin that be deliberate that we achieve on that next that next train. So you have to balance not just changes on clearing and transaction fees you got to look at the changes on data as well as the changes on collateral and as we talked about there was this new soft minimum that was put in on the.
Speaker Change: <unk> side, which did have an impact to our client base. So the mix shifted a bit away from the clearing and transaction fees you want to look at where those changes are where we're impacted the mouse. We made changes in the crypto complex as well as metals, both on the micro side and options also in Nash.
Speaker Change: Gas and our <unk> complex in our agricultural.
Speaker Change: Commodities.
Speaker Change: Those were the contracts that we saw the largest increases this year.
Speaker Change: Thank you.
Bill Katz: Thanks Bill.
Speaker Change: The next question will come from Owen Lau of Oppenheimer. Your line is open.
Owen Lau: Good morning, and thank you for taking my question. So you mentioned crypto multiple times on the call with increasing breakthroughs regulatory clarity how does <unk> think about further expansion into the space, which you can see the launching more to work with your products more tokens auto than bitcoin and Easter and what does it take.
Speaker Change: To go there thanks.
Speaker Change: Thanks, Elena and I think it's a very interesting.
Speaker Change: Asset class as you know we were one of the first to come out with a crypto bitcoin in 2017 under the regime and rules that we put forward and we think that was a very smart way to approach lifting bitcoin and then you can see in the numbers today is reflective of the growth of that product and along with either.
Speaker Change: As far as other products goes I think it's going to be really important for us to consult and work with the FCC to make sure we get their comfort level about what's deemed to security and what is not and that is yet to be decided from that agency. We continue to work with them well, we will not front run them in any way shape.
Speaker Change: Or form another crypto currencies until we have much deeper conversations but there are some there's an appetite out there I'll turn it to Tim a card who runs that asset class talk a little bit more about the potential appetite for those other currencies great. Thanks, Terry and Terry is absolutely right our long standing approach to the crypto currency business at CME group.
Speaker Change: As to be the trusted and transparent regulated venue and we're going to continue to wait for the regulatory clarity and certainty before we introduced additional products on additional tokens and crypto currencies.
Speaker Change: We've been rewarded as a day because of that because the secret to our success is listening to clients for demand driven product development and meet their risk management needs in this new asset class.
Speaker Change: It continues to grow and when we look at just even this month in February we had our largest trading data and crypto currency with almost 700000 contracts trading on February 3rd continuing to establish records across bitcoin and across either in both standard and micro sized contracts and continuing to innovate.
Speaker Change: In the bitcoin and either lane that is where we have the certainty and clarity are present with our regulators and we continue to introduce products like the bitcoin Friday futures, but financially cash settled bitcoin Friday future auctions.
Speaker Change: To introduce additional order types and transactional handshakes around bitcoin and either and that will continue to grow in 2025, and we look forward to working with our clients and the regulators see what additional products makes sense in the future.
Speaker Change: Got it that's super helpful. And then quickly going back to the fourth quarter futures and options RPC was 71 up from $66.06 in the third quarter because of mix shift towards higher priced commodity activity and less volume theory.
Speaker Change: Could you please unpack a little bit more on that volume PRA and how could it potentially impact the RPC in 2025 things.
Speaker Change: Glen.
Speaker Change: Yes, it is separate for each asset class and the products within that asset class. So it really depends on the volume that we're seeing flow through.
Speaker Change: You will see a downward bias as you see large increases in volume and the opposite is true as you see decreases just because of that structure and its an important part of our structure because we do as I mentioned earlier want to see that incremental trained and we do want to help our clients and Seth asked you continue that trading activity.
Speaker Change: It does provide a little bit of.
Speaker Change: Flex to our pricing structure, but next.
Speaker Change: Really important so you will see pricing on that individual TRP individual asset class basis, it's not across the whole enterprise that helps.
Speaker Change: And let me just ask you one I think.
Speaker Change: And just to add to that our philosophy around.
Speaker Change: Whether it's a full sky this contract on micro or mini.
Speaker Change: We look at the constituency who is participating in this we don't look at just the notional value.
Speaker Change: <unk> made a been a historical look at the way we did things 10 12 years ago. So I think that can also have an influence on the RPC, depending on how those products grow.
Speaker Change: The people that are using them. So it is going to fluctuate as Lynn said, well, we feel from a pricing standpoint, we're understanding the client better versus just looking at the product and saying here's the value of the products that we'll charge you know or have it because they have a contract that doesn't make sense to me. It all depends on what's the use and the case for the participants.
Speaker Change: So just wanted to understand better so that's step 1% to 1.5% capture that volume peering or this is not the right way to think about that.
Speaker Change: Yes, so the assumption for when we put forward the pricing estimates, assuming a similar mix and volume level as the prior year. So if you had it changes and those elements it would it would adjust that.
Speaker Change: Percentage, but we're basing it based on a similar.
Speaker Change: Trading experience as we saw in 2024 that would be the impact.
Speaker Change: Got it thanks a lot.
Speaker Change: Thanks, Sean.
Speaker Change: The next question comes from Kyle Voigt of K VW. Your line is open.
Kyle Voigt: Hey, good morning, maybe.
Kyle Voigt: Maybe I just wanted to come back to the commodities discussion, but more specifically around the increases in activity by global multi strat hedge funds that you mentioned in your prepared remarks, I guess can you just expand a bit on.
Kyle Voigt: When you start to see those are a material pick up from that user base, what specific products, you're mostly seeing those users trade and I'm just trying to get a sense. If this is if this is cyclical because there are simply more gone with inflation and tariffs and macro volatility or whether this is the start of a secular trend in growth and that user base.
Speaker Change: Thanks, Kyle there yeah, Kyle its a its a travelling to point to on previous calls 2024 was a record year for us on the commodity side as Terry mentioned not just on the revenue side cross sell each of those asset classes, but by penetration into particularly EMEA APAC and Julie mentioned, a little bit of that as well when you actually look at.
Kyle Voigt: The fastest growing client segment among that record.
Kyle Voigt: <unk> generated activity in 2024, the fastest growing client segment was that buy side community. So this isn't a trend that we're seeing emerging we saw this emerge over the last 18 months have accelerated into the back end of 'twenty for helping us put up the record volumes and most importantly, the record revenues because that's that ISI business tends to come at a higher RPC for us in.
Eddie High RPC commodities products. So that's a trend that we've seen in place for the last 12 to 15 months given the movements in head count from places like bank trading desks and commodities trading desk into multi strat hedge funds globally. We see this as very much an investment by the buy side community. So bill.
Kyle Voigt: This out as an alternative income stream beyond just typical.
Kyle Voigt: What he is in fixed income. So we are seeing I would say is some secular trends of growth and the enhancement on buy side, serving client need who are seeking access to physical markets in a way that we haven't seen in a very very long time. So I would say that that has been a significant component in growing our 34% growth in E M.
Kyle Voigt: Over the course of 2024 and as I mentioned in one of my earlier comments, our business kicking off into 2025 has started extremely strong with our overall business up in AG was up 32% energy twenty-five in metals up 14, so we see the secular trend and the only other point I would make inside of that.
Kyle Voigt: Is that M. Julie mentioned this before we're seeing an increased participation not just on the future side, but an outsized growth in options as well. So that was an area saw record growth in 2004, 2024, and we're seeing that kick off very strong in 2025. So we see this as additive to the overall customer mix that we have Julie spends a lot of time working on.
Kyle Voigt: Myself, and Tim and Mike, making sure that the healthy ecosystems of each different kind of clients in our markets by sides is crucial to come up alongside banks commercial customers in retail and our client segments and sales teams bring to us ideas and opportunities for unmet need and that is a source of new product development. That's one of the reasons, we built out.
Kyle Voigt: So to go off at all contract micro eggs and short dated options and eggs as well so.
Kyle Voigt: We see that a secular continuing and continuing the trend from the last 12 months.
And Kyle I, just think that when you look at the world today.
Kyle Voigt: And what's going on not just with inflation, but the amount of people that we need to continue to the.
Kyle Voigt: The feed.
Kyle Voigt: These products, even though they come and they go at it appears from the front page. They are always critical to each and every one of US as we go forward. So I I don't know if I don't want to call them secular secular or whatever I think that they're constantly and if the question is what pages of the newspaper or are they on so we're going to have ebbs on.
Kyle Voigt: Close but these are products that we are very excited about we have been through a lot of years and I think they'll continue to go forward and people will need to use them.
Speaker Change: That's great and if I can just ask a quick follow up for Len really sorry, but just to be very clear on the pricing changes the two to two 5% pre tax impact that you mentioned that as an aggregate figure inclusive of the transaction fees correct.
Kyle Voigt: As well as market data and the collateral fee changes correct.
Kyle Voigt: Perfect and then on the collateral fee changes roughly what percentage of the noncash collateral balances would that additional 10 basis points fee applied to you today, if no customers changed their cash collateral allocations just for modeling. Thank you.
Kyle Voigt: Yeah. So we can't break that out right now Kyle just given that that customer base decision will continue to provide updates as we see the chance for all through but there's still a couple of thoughts are.
Kyle Voigt: Optimize their.
Kyle Voigt: There are positioning if you look at the total cash collateral of total collateral youre going to see that in the high 20% right now but.
Kyle Voigt: But it's going to be based on the individual firm's aggregate.
Kyle Voigt: Yep. Thank you.
Kyle Voigt: Thanks.
Speaker Change: The next question comes from Ken Worthington of Jpmorgan. Your line is open.
Speaker Change: Hi, Good morning. This is Matt <unk> on for Ken Thanks for taking our question.
Speaker Change: Can you. Please talk about brokerage can be updated market share trends, there with leadership likely moving to Washington that Fedex do you feel that this puts broker tagging and a better or worse position in the coming years to drive higher market share. Thanks, so much.
Speaker Change: Thanks, Madeleine I will ask Mike Dennis to address that.
Speaker Change: Madeline I appreciate the question on broker Tech.
Speaker Change: When we benchmark ourselves for market share around broker Tech, we focus on the FINRA trace number.
Speaker Change: Sure versus trace fell slightly in Q2 is down about 1.2% January is much better with Adv up 29% month over month in.
Speaker Change: And market share taking up about a half a percent versus December despite volatility remaining near recent lows. They only think one thing that's important to highlight around broker tech as broker Tech is more than just a central limit order book for U S treasuries broker tax and a strategic asset of the CME group and it helps us drive our core futures and options business.
Speaker Change: Overall revenues for broker Tac were up 7% in Q4, we have a strong business in both U S and EU repo, where we saw a record adv in 'twenty 'twenty four across the repo complex. So Additionally, we've had some five solid.
Speaker Change: On adoption in some of our newer training modalities, which we launched VR relative value curve offerings, which include cash spreads and cash butterfly spreads.
Speaker Change: And then lastly, you know one thing I want to focus on as it relates to broker taxes. When the clearing mandate happens you feel that broker can provide benefits as clients adapt to this new regulatory landscape. So I hope that answers your question.
Speaker Change: Thank you.
Speaker Change: Thanks, Matt Thank you Madeleine.
Speaker Change: The next question is from Simon Collins of Redburn Atlantic Your line is open.
Simon Collins: Hi, Thanks for taking my question.
Speaker Change: Being honest it already but I was wondering if you could talk about the market data business.
Simon Collins: You mentioned that there's a I think it was three and hops and pricing taken.
Speaker Change: Already this year.
Speaker Change: Should we think about the breakdown of volume growth here and the growth going forward just given it's been consistently in that kind of high single digit range for some time now.
Speaker Change: Yeah.
Julian: Julian you want to address that.
Julian: Thanks for the question you know that the data business, we had a very strong quarter right at $182 million in revenue up another 9% and that.
Julian: That was driven I would say about a couple of different factors certainly the.
Julian: We had a price increase of three three.
Julian: Three 5% that took effect throughout 2024.
Julian: Also that we're seeing interest in professional subscribers and access to our real time data.
Julian: And that is contributing to the growth of the business as well as that nonprofessional component that I talked about earlier as well as the derived data business.
Julian: I'm talking about the derived data business you know just the detail. There is that we continue to see increasing intercept or data by institutional clients as they look to create you know more of their own financial products and things like indices and benchmarks for their end customers.
Julian: So yeah, we're looking at some new things in terms of enterprise drive data licenses that really give clients more flexibility in that regard and then we're also continuing to evaluate what additional analytic offerings that we can provide so a lot of good innovation there across the entire suite.
Julian: That I think really bodes well for a strong outlets there as well and as Lynn mentioned, we have another 3.5% of pricing increases that took effect on January one or the core business.
Speaker Change: Great. That's really useful thank you and just as a follow up maybe this is more of a housekeeping question for you Lynn.
Could you give us.
Speaker Change: The latest update on the Google cloud spend for 2025, and what the spend was in 'twenty in fourth quarter 'twenty four.
Speaker Change: And also just give us a sense of the priorities for that investment and you've already talked about.
Speaker Change: The marketing element tolls are getting after new retail customers et cetera, but I wonder if you could flesh that out a little bit more for us. Thanks.
Speaker Change: Sure so in the fourth quarter Simon.
Speaker Change: Total spend was about $22 million on the migration that was about $18 million within technology and about 4 million within professional services right.
Speaker Change: The total for the year to about 85.
Speaker Change: Within our guidance for 2025, including $115 million related to the migration.
Speaker Change: That will skew a bit more towards the technology side versus the professional services, just given where we are in our migration timeline.
Speaker Change: Our focus for this year.
Speaker Change: Continuing to migrate some of the non latency sensitive applications and we have a number of our clearing system.
Speaker Change: Our data systems, we're continuing that progression as we as we move through 2025 and continuing to work with our partner on the opportunities for building out additional capabilities and services for the client base to use that data in a more effective way.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: Thanks Sam.
Speaker Change: And that was our final question for today I will now turn the call back over to management for closing remarks.
Speaker Change: We want to thank you all for joining US today. We appreciate it very much look forward to any follow up questions. You may have and look forward to talking to you next quarter. Thank you very kindly all stay safe.
Speaker Change: Thank you all for your participation on today's conference call at this time all parties may disconnect.
Speaker Change: Yeah.