Q1 2025 Cboe Global Markets Inc Earnings Call
Kate: Thank you for standing by. My name is Kate and that will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets first quarter earnings call.
Kate: All lines have been placed on mute to prevent any background noise. [inaudible]
Kate: As for the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press start, follow with the number one on your telephone keypad. If you would like to withdraw your question, press start one again. Thank you. I would no like to turn the call over to Ken Hill, Treasurer and Head of Investor Relations. Please go ahead. Thank you.
Ken Hill: Good morning and thank you for joining us for our first quarter earnings conference call.
Speaker Change: On the call today, Fred Tomczyk, our CEO and Dave Howson, our global president, will discuss our performance for the quarter, provide an update on our strategic initiative. Then, Jill Griebenow, our chief financial officer, will provide an overview of our financial results for the quarter, as well as discuss our 2025 financial outlook.
Ken Hill: Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer.
Ken Hill: I'd like to point out this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website.
Ken Hill: During 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 the future performance and involve certain assumptions, risks, and uncertainties.
Ken Hill: Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise after this conference call.
Ken Hill: During the call this morning, we will be referring to non-GAAP measures as to find and reconciled in our Ernie's material.
Now, I'd like to turn the call over to Fred.
Good morning, and thank you for joining us today.
Ken Hill: Before I dive into our results, I want to express my support for the announced appointment of Craig Donavue as CBO's new CEO .
Ken Hill: Craig is a seasoned visionary leader who brings a wealth of experience to the wall and is deeply respected across the industry.
Ken Hill: The board believes he is the right leader to take CBOE into the future.
Speaker Change: I'll share more about the plan transition a little later in the call, but let me first recap our strong results.
Speaker Change: During the first quarter, Cboe Net revenue, 13% year-over-year to a record $565 million, and adjusted a diluted earnings per share by 16% to a record $2.50.
Speaker Change: These results were driven by strong volumes across our derivatives franchise, both in multi-list and our proprietary index option products.
Strong performance in our cash and spot markets. [inaudible]
continued global expansion of our data vantage business.
Speaker Change: While the robust option volumes were especially notable for the quarter, the broad race results across each category.
Speaker Change: derivative markets, cash and spot markets, and data advantage were strong and contributed to the record quarterly growth.
across and ever changing a mark environment.
Pulitality, and the macroeconomic uncertainty around the globe.
Speaker Change: We saw strong volumes across our suite of index option products.
Speaker Change: with first quarter ADV in the SPX contract, increasing 13% year-over-year, and ADV in the XSP contract, increasing 61% year-over-year [inaudible]
Speaker Change: We also saw solid performance in our volatility product suite during the first quarter with fixed options ADV increasing 33% and VIX Futures ADV increasing 13%.
Speaker Change: Volumes across our index and multilist products remained elevated in April , as the tariff announcements created significant volatility and uncertainty in global markets, fueling a robust start to the second quarter.
Speaker Change: Given the secular and cyclical tailwinds in place, we are well positioned as investors continue to utilize options in their portfolio and trading strategies.
Speaker Change: Our data-vanish business performed well during the quarter, with organic net revenue increasing 8% year-over-year [inaudible]
Speaker Change: We continue to see durability in this business as we leverage our global network and ecosystem of data and access solutions to the drive growth.
Speaker Change: Our cash and spot markets also perform well during the quarter as organic net revenue increased 10 percent.
Speaker Change: Driven by healthy trading volumes and growth across all of our regional equity markets.
Speaker Change: Overall, it was an excellent quarter for both transaction and non-transaction revenue growth to start the year.
Looking forward, we remain laser focused on executing our longer-term strategy.
Speaker Change: including investing in the continued growth of our core business, Global Doromunus.
Increasing recurring revenue opportunities through data advantage. [inaudible]
Speaker Change: Harnessing the power of a global network and client-based to expand product reach and access.
Speaker Change: Capitalizing on the demand for access to the U.S. Capitol Market.
Speaker Change: Leveraging our superior technology to help drive innovation of product development.
Speaker Change: and Discipline Allocation of Resources and Capital Tours, the long-term secular growth trends.
Speaker Change: and many more. Thank you. Thank you. Thank you. Thank you.
Speaker Change: As witnessed during the first quarter, our strategic focus is well aligned to the secondary trends we see in the capital markets and leverages our core strengths.
Speaker Change: We see significant opportunities in the use of Pacific region where we see growing demand for our index option products which serve as an efficient and accessible way to gain exposure to the US market.
Speaker Change: We see a solid pipeline of clients in the region and during the first quarter, we onboarded new clients in Korea and Taiwan to offer our proprietary products.
Speaker Change: We see this as a long-term secular growth trend and we are excited about the early signs of growth and penetration in this market.
Speaker Change: Sigh 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Speaker Change: Turning to our data vantage business, our Global Footprint continued to help drive results during the quarter.
Speaker Change: Leveraging Cboe data damage products will be key to helping our Asia-Pacific customers gain the access they need to U.S. markets and we're working diligently to make that more seamless and accessible.
Speaker Change: and more recent that we've also seen increased interest for European market data amongst our Asia-Pacific customers.
Speaker Change: Reinforcing the power of our global network to provide our customer base with a data in access to need across global markets.
Speaker Change: Additionally, we remain focused on product innovation across our ecosystem and unlocking access to US markets for international investors.
Speaker Change: Whether it be through increased accessibility, new products or education will continue to help people access the liquidity and efficiency of the US markets, while also providing trusted markets in local regions around the world. [inaudible]
Speaker Change: To that end, in the first quarter, we completed our final equity exchange migration to Cboe Titanium, our best-in-class exchange technology platform.
Speaker Change: During the recent market turbulence, our exchanges have demonstrated remarkable resilience and reliability, which is critical to our customers.
Speaker Change: We will continue to invest in our exchange technology platform to help ensure we have durable technology powering on markets and driving innovation for our customers.
Speaker Change: Lau turned the call over to Dave to talk in more detail about the business line results.
Dave Howson: Thanks Fred. Starting with our derivatives business, net revenues increased a robust 16% to a record $309 million in the first quarter. We saw activity accelerate throughout the period to produce record total options, average daily volumes across our four options exchanges.
Dave Howson: Notably, we reached all-time quarterly, monthly and single-day highs in SPX during the first quarter.
Dave Howson: XSP, our mini SBX product, reached a new quarterly record and overall proprietary index options ADV achieved all-time quarterly and monthly highs.
Dave Howson: Looking a little deeper into the drivers of the record activity, option volume surged on the back of heightened geopolitical volatility as investors turned to options to help navigate the increasing uncertain macro outlook.
Dave Howson: SBX Options Volumes increased 13% year over year to a record ADV of 3.6 million contracts, while VIX Options Volumes jumped almost 33% to an ADV of 948,000 contracts.
Dave Howson: The growth in our SBX options franchise was led by a continued rise in zero DTE options trading. This was on the back of two factors.
Dave Howson: First was the fast-moving nature of headlines coming from this administration as investors turned to zero day options to help monetize the increase in intraday volatility.
Dave Howson: Second was expanded access with Robin Hood rolling out index options to all its customers in late January .
Dave Howson: Zero DTE, option volumes averaged almost two million contracts in Q1, up 29% year over year, and making up a record 55% share of overall SBX volume.
Dave Howson: Over 253,000 SPX options traded during overnight hours on January the 27th, when the deep-seek headlines hit the market, more than during the November US election.
Dave Howson: That record has since been broken multiple times in April as trade tensions escalated [inaudible]
Dave Howson: Outside of our established SBX and VIX franchise, we're also seeing encouraging growth in several new products.
Dave Howson: ETF issuers, in particular, have gravitated toward our products by introducing options-based strategies on Bitcoin.
Dave Howson: Already, 15 ETS are using CBTX and MBTX options in their strategies with more expected to come.
Dave Howson: MBTX options volumes hit a record high of over 27,000 contracts on March 31st, equivalent to $527 million in national.
Dave Howson: We're excited to expand on our Bitcoin offering with CBO Futsi Bitcoin Index Futures which launched on April 28th.
Dave Howson: Besides Krypton, we also saw a healthy uptick in our corporate bond futures. Open interest in our high-yield futures recently hit a record high of $901 million dollars in national value, while open interest in our investment grade futures jumped to $547 million. Thank you for your time, and I'll see you in the next video.
Dave Howson: As credit market volatility picks up, we expect continued growth and adoption in these products.
Dave Howson: The breadth and strength of the SIBO talk it was on full display to start the year, be it early in the quarter as investors made tactical shifts with the use of zero DTSBX options or navigated more outside volatility events with SIBO's big options and futures.
Dave Howson: As we head into the second quarter, volatility has remained elevated with trade tensions, recession risk and potential inflation shocks.
Dave Howson: The need for both retail and institutional investors to use options to dynamically manage positions, hedge exposures and generate income only increases.
Dave Howson: Already in the second quarter, we've seen SBX volumes hit an all-time high of six million contracts on April the 4th, with quarter to date proprietary product ADV running above previous quarterly and annual records. [inaudible]
Dave Howson: Moving to cash and spot markets, first quarter revenue was up 10% as each region contributed
Dave Howson: with Cbo Canada successfully migrating to Cbo Titanium during the quarter. We now have all our equities and derivatives markets across North America, UK, Europe , Australia, and Japan running on Cbo Titanium.
Dave Howson: The resiliency of the platform has been on full display in 2025 as we have seen record volumes and activity in many of our markets.
Dave Howson: In today's environment, having a globally consistent, locally optimized technology platform is a differentiated strength that will help Cbo to expand access to its markets, data, products and services to customers around the world.
Dave Howson: In North American equities, net revenue was up 2% as increased non-transaction revenue was partially offset by lower net transaction and clearing fees versus the first quarter of 2024.
Dave Howson: But the benefit was muted by a smaller addressable market for SIBO, with total volume transacted off-exchange or during auctions hitting 56% for the first quarter or six percentage points higher than Q1 2024 levels.
Dave Howson: On the non-transaction side, we've seen durable demand for access services and data products.
Dave Howson: A Europe and Asia Pacific segment to live the strongest year over year percentage growth of any segment for the third quarter in a row, printing an impressive 18% increase or 22% on a constant currency basis.
Dave Howson: The increase was driven by higher net transaction and clearing fees, up 30% in the first quarter behind strong industry volumes and solid market share trends.
Dave Howson: We remain excited about our prospects in these regions, both for the opportunity to grow share in local markets as well as the ability to import activity back to the US, given the continued demands by global participants.
Dave Howson: Turning to Data Vantage, net revenue grew over 8% in the first quarter, with solid increases in all three components of our Data Vantage business. Real-time market data, analytics and indices.
Dave Howson: Also of noting Q1, we saw new recurring annual contract values ACV increase 47% year-over-year, a strong leading indicator for our business.
Dave Howson: As we redeploy a greater proportion of our technology resources to revenue generating activities, we look forward to building on our positive 2025 sales trends.
Dave Howson: Taking a closer look at some of the first quarter dynamics, 55% of new data cells occurred outside the US.
Dave Howson: with efforts to improve access to the US and European markets for global investors by increasing our APAC Salesforce, adding more brokers in the region as well as rounding out our market intelligence group with a local expertise. We are looking to lean into this secular trend.
Dave Howson: We believe getting our data in the hands of more customers around the globe is not only beneficial for our data vantage business but enhances our trading businesses as well.
Dave Howson: Historically, we have seen customers increase data consumption ahead of implementing trading strategies in new markets.
Dave Howson: In this case, international investors, analysing and back testing ahead of putting money to work in the US or Europe .
Dave Howson: The first quarter showcased the breadth and durability of the SIBO model.
Dave Howson: We look forward to building on the strong Q1 results and robust start to the second quarter through continued enhancements to our education efforts, broadening access to our markets and leveraging our differentiated set of products for investors around the world. With that, I will turn the call over to Jill.
Jill Griebenow: Thanks Dave, Cboe posted a record first quarter with adjusted deluded earnings per share of 16% on a year-over-year basis to $2.50
Jill Griebenow: First-quarter results reflected strength across our ecosystem and in each of our business segments. I will provide some high-level takeaways from this quarter's operating results before going through segment results.
Jill Griebenow: Our first quarter net revenue increased 13% versus the first quarter of 2024 to finish at 565 million, with each of our categories producing healthy year over year growth.
Jill Griebenow: Specifically, derivatives markets net revenues grew 16%, cash and spot markets net revenues grew 10%, and data damage net revenues grew over 8%.
Jill Griebenow: Adjusted operating expenses of $192 million were roughly flat on a year-over-year basis.
Jill Griebenow: Driven by our strong business results in disciplined expense management, adjusted operating EBITDA of 385 million grew 20%, and adjusted operating EBITDA margin expanded by 4.3% to 68.1% versus the first quarter of 2024.
Jill Griebenow: Turning to the key drivers by segment, our press release and the appendix of our slide deck include information detailing the key metrics for our business segment, so I'll provide some highlights for each.
Jill Griebenow: The option segment delivered another quarter of record net revenue with 15% year-over-year growth.
Jill Griebenow: Total options ADV was at 23%, what they 17% increase in index options volume, and a 25% increase in multi-listed options volume.
Jill Griebenow: North American equities net revenue increased 2% on a year of rear basis. Access and capacity fees increased 16% as compared to the first quarter of 2024, partially offset by a 9% decline in net transaction and clearing fees. [inaudible]
Jill Griebenow: The Europe and APEC segment produced recordment revenue with an 18% year-over-year increase resulting from strong growth across both transaction and non-transaction revenues.
Jill Griebenow: Net Transaction and Clearing Fees were up 30%, while non-transaction revenues were up a combined 8%, Futures Net Revenue increased 8% from the first quarter of 2024, with higher net transaction and clearing fees reflecting a 13% increase in ADD.
Jill Griebenow: And finally, Global FX Recordnet Revenue increased 16% driven by higher net transaction and clearing fees.
Jill Griebenow: Looking at Cboe's data vantage business, net revenues were up over 8% on an organic basis in the first quarter.
Jill Griebenow: The ability to match an expanding product set with an increasing global sales presence and cloud distribution capabilities is a compelling combination.
Jill Griebenow: We saw the benefits play out more recently with our dedicated course offering in time stamping services and we believe the future remains bright as we plan to continue to redeploy technology resources to revenue enhancing activities.
Jill Griebenow: Turning to expenses, total adjusted operating expenses were $192 million for the quarter, and roughly flat on a year-over-year basis.
Jill Griebenow: Lower other expenses, as well as travel and promotional expenses were partially offset by higher technology support services and appreciation and amortization expenses.
Jill Griebenow: Despite the first quarter's favorability, we are leaving our full-year expense guidance range unchanged at 837 to 852 million.
Jill Griebenow: Our full year guidance takes into account the first quarter expense benefit from timing-related elements in our marketing spend.
Jill Griebenow: Moving forward, we would expect to see marketing related costs re-accelerate. In addition, given the continued strong results in April , we're projecting an uptick in short-term incentives and our compensation and benefits line. And finally, our guidance framework captures the expected expense impact of our CEO transition.
Jill Griebenow: Overall, we are pleased to be in the advantageous position to invest in our business.
Jill Griebenow: Expanding areas like our global sales efforts and making further marketing campaign enhancements to advance investor education for our index options products globally. All while maintaining our strong operating efficiency to drive durable returns for shareholders.
Jill Griebenow: Looking at our 2025 guidance more broadly on slide 16, we are increasing our full-year total organic net revenue growth guidance range to mid to high single digits from mid single digits, given the robust start to the year and confidence we have in our markets and products to provide utility to customers moving forward.
Jill Griebenow: We are reaffirming our data vantage organic net revenue growth range of mid to high single digits on the back of solid first quarter result.
Jill Griebenow: And as mentioned, we are reaffirming our full-year adjusted expense guidance range of 837 to 852 million.
Jill Griebenow: Rounding out the remaining pieces of our guidance, our full year guidance range for CAPEX remains at 75 to 85 million and appreciation and amortization is expected to be in the $55 to $59 million range.
Jill Griebenow: We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30.5% for the full year.
Jill Griebenow: And while we don't provide formal guidance on interest income or interest expense, we expect that interest expense net of interest income will be in the two to three million dollar range in the second quarter of 2025.
Jill Griebenow: Turning to our balance sheet, we remain in a strong financial position with over $1 billion of adjusted cash on our balance sheet, an attractive debt profile with medium-term fixed rates averaging 2.8% and a low leverage ratio of 1.0 times.
Jill Griebenow: We resumed open market share repurchases following her fourth quarter earnings call on February 7th and repurchased $30 million in shares during the remainder of the first quarter.
Jill Griebenow: We have continued our opportunistic repurchase activity to start the second quarter, with an incremental $5 million in shares bought back in April . Complementing our share repurchase activity, we return to total of $66 million to shareholders in the form of a 63 cent dividend during the first quarter.
Jill Griebenow: Moving forward, we remain focused on leveraging our flexible balance sheet and healthy free cash flow profile to produce durable returns for shareholders.
Jill Griebenow: Now, I'd like to turn the call back over to Fred for some closing comments before we open it up to Q&A.
Fred Tomczyk: Thanks, Jill. The year is off to a strong start with excellent first quarter and will buzz beginning to the second quarter.
Jill Griebenow: And while volumes may ease from the exceptional level seen in recent months, we believe the market ecosystem remains healthy and supportive of volume growth moving forward.
Speaker Change: Cibo was well positioned for Craig Donahue to take the reins. [inaudible]
Speaker Change: Many of you know Craig from his days at CME, whereas track record speaks for itself. [inaudible]
Speaker Change: Craig brings decades of experience in the global derivatives markets and a history of driving growth and innovation to Sebel
His visionary leadership, deep experience, [inaudible]
Speaker Change: Industry relationships, improving track record and global financial markets, make him an excellent individual to take the helm as CEO of Cibo.
Speaker Change: When I moved from the board to CEO 18 months ago, my priorities were to stabilize the organization, sharpen our strategic focus, bring a more disciplined approach to capital allocation and leadership development and succession.
Speaker Change: Together with the strong management team we have achieved these goals and I'm proud of the results we have delivered.
Speaker Change: We are now executing on an orderly and well planned CEO succession strategy.
Speaker Change: Craig will assume the CEO seat on May 7th, upon which point I will transition to an advisory
Speaker Change: I look forward to working closely with him on a seamless transition and returning to my role as a non-employee director of the board.
Speaker Change: I am pleased to lead things in Craig and the Executive Management team's very capable hands, having accomplished each of my girls as CEO .
Speaker Change: He's been in an honor to lead this great company over the past 18 months and I am incredibly proud of our achievements and optimistic above the future of Seaval.
Ken Hill: I will now turn the call back over to Ken for Q&A.
Ken Hill: At this point, we'd be happy to take questions. We ask that you please limit your question to one per person to allow time to get to everyone. Feel free to get back in the queue and if time permits we'll take a second question.
Speaker Change: Your first question comes from the line of Patrick Moley with Byper Sandler, your line is open.
Desk Good Morning, how are y'all doing?
Speaker Change: My question was on the appointment of Mr. Donahoe with CEO . I don't know.
Speaker Change: Choose Mr. Donahoe, and then specifically, you know, outside of his experience leading a publicly traded US exchange, what sort of skills or qualities did you and the board feel like you possessed that made him the right person for the job. Thanks.
Speaker Change: And it's Donna Hugh, Donna Holmes, but anyway, that's a full stop there. I mean, the process has been going on quite a while at a forward level.
Speaker Change: Our board is very much focused on strategy, risk management, and also on leadership development and successions, so that's a top.
Speaker Change: Top priority has been discussed over my whole tenure at literally every meeting. The process was very thoughtful, very disciplined. It looked at both internal candidates and the board also wanted to consider external candidates. [inaudible]
Speaker Change: Obviously we had certain characteristics where we were looking at and Craig took all those boxes.
with the combination of his global derivatives experience. [inaudible]
Speaker Change: his previous CEO experience, his strong front record of success and his reputation throughout the industry and with regulators and shareholders and things like that.
Speaker Change: So, at the end of the day, the board, after considerable deliberation, thought that Craig was the right person for Cebow at this time.
© The Bulletproof Executive 2013
Speaker Change: Our next question comes from the line of Chris Allen with City Group, your line is open.
Chris Allen: Yeah, morning, everyone. Thanks for taking the question. I look forward to working with Craig again.
Speaker Change: As you pointed out in the release announcement, Craig handled $20 billion of deals for CMA, so I'm wondering how you're framing the inorganic growth opportunities and moving forward, whether they change on that front and how do you view the environments and that perspectives?
Speaker Change: As I've said, we've built up a strong balance, we've taken a very disciplined approach to capital allocation.
Speaker Change: We sharpened our organic strategy, and actually returning capital through dividends and opportunistic
Speaker Change: Obviously, we're sitting on a fair bit of cash as everyone recognizes. I think the company's in a good position to consider all of its options. One of the things that interests Craig in this role is all of those things and see most position in the market. Thank you, Mr. Mayor M.
Speaker Change: As we look forward, he's very much focused on growing the company.
both organically and, to a certain extent, inorganically.
Speaker Change: And move the needle and create value in the long-term for our shareholders. That's really...
Speaker Change: What his focus is coming in and we just think he's the right person to take us forward at this time
Speaker Change: Our next question comes from the line of Ben Budish with Barclays. Your line is open.
Ben Budish: Hi, good morning and thank you for taking the question. You could dig into retail a little bit more. On the last earnings call, you called out faster adoption of index options than expected at Robinhood. It looks like the SPX volumes were quite robust in the quarter, so curious if you could give us any updates. Curious on Robinhood in particular, but also retail broadly, how is retail responding in April versus maybe institutional behavior? Thank you. Thank you.
Ben Budish: Yeah, thanks Ben for the question. As you point out, Craig Q1, we're a good engagement as we mentioned in February . Robin Hood came on board, quicker than we expected and the ramp up was...
Ben Budish: And really, I guess I'll take the opportunity to talk a little bit about the characteristics that we've seen from retailing queue, one hand that has prevailed throughout queue two, just to give you a flavour and a set up, what we might expect going forward. And first common of make is that retail behaviour has been remarkably disciplined.
Ben Budish: Now what do I mean by that? We're looking at the strategies they deploy when the opening trades 95% of those in SBX zero DTE but what we call cap's risks where the maximum loss is known at the point of entry
Ben Budish: But what we've seen throughout G1 and indeed in the start of April , when we see these extreme volatility spikes, we see retail investors remain engaged but take a really disciplined approach around their approach to the market.
Ben Budish: That means they make up less of the volume increases around those volatility spikes. [inaudible]
Ben Budish: But the key point here is that, as we've seen in points of history, we see retail come back after those volatile, extreme, volatility spikes have evaded, whether that be COVID-19, August of last year, or indeed the start of April .
Ben Budish: And so what we've seen from an exchange perspective there actually really marries up with what we're hearing from our customers and you're hearing from some of our customers on their earnings call which is the retail remain engaged and remained really quite successful throughout the Q1 into
Ben Budish: Xu, too, and when we look at the outlook and we look back at that discipline and approach to retail and taking, we really have a constructive view for the ongoing retail engagement in our volatility toolkit.
Speaker Change: Your next question comes from the line of Dan Fannon with Jeffrey's LLC. Your line is open.
Dan Fannin: Thanks. Good morning. So Asia has been a particular focus of growth. You highlighted a few regions where you're seeing some success. Can you talk about the level of investment that you're putting into that region where you sit in terms of salespeople and platforms that you're either on or trying to basically contextualize what the opportunity is in terms of additional platforms for you to access. Thank you very much.
Dan Fannin: for Trading, and we saw 55% of our data cells come internationally with a particular strength.
Dan Fannin: in the Asia Pacific region. So, data consumption and demand and growth there, really continuing and then you look more broadly at ACV and data vantage in that group, 47% in June , once a really strong demand for data during these times in particular from the Asia Pacific region. Thank you.
Dan Fannin: Then when we look at the brokerage firms across the region, whether that be Korea, Taiwan, Thailand, Malaysia, we've seen some really good onboarding.
Dan Fannin: through the direct channels with customers coming on board in Q1 from Korea, for example, with more to come in Q2 and Q3, so that demand...
Remaining in that need to provide access to the US [inaudible]
Speaker Change: Paul of Equity Volary, that we have here at Cboe, really, really persisting. [inaudible]
Speaker Change: It turns of our investment there, obviously that's all within the expense cards that we've given, but it's really around new sales people, we've got boots on the ground with natural language speakers in a variety of countries now Singapore, Hong Kong, Japan and Japan.
Um...
Speaker Change: who also travel within the region, they've got marketing efforts, you know, particular digital channel marketing that we're really focusing on since and good returns there. And then it's about education and market intelligence. We've hired some really great people to work with Mandy Xu in New York out there in the region to really promote and really talk about the products and the utilization. And we've hired some really great people to work with Mandy Xu in New York out there in the region.
Speaker Change: I guess the last thing I'll say there is that we see direct engagement but also indirect engagement with local, for example, Korean customers launching
Speaker Change: Buffer protect products of the market, so direct and indirect interest in our volatility toolkit, really tell me from the region, so remain optimistic for our outlook there.
Thank you. Thank you.
Speaker Change: Your next question comes from the line of Alex Kramm with UBS, your line is open. [inaudible]
Yes, hey, good morning everyone.
Alex Kram: I guess I want to follow up on Ben's question from earlier, partially on the retail, but really an observation in the second quarter so far that your index volumes, while they're up a lot, quarter of a quarter, you're lagging, probably some other markets out there, equities, futures, et cetera, so just wondering...
Alex Kram: Is that really a function for you to spoke about earlier? Your retail exposure may be more disciplined, or are there other drivers, maybe on the institutional side that may have not favored index options much relative to other, I guess, ways to express risk management?
and equitable in the real world, which is SPX options.
and many others. Thank you. Thank you.
Speaker Change: Your next question comes from the line of Kyle Voigt with KBW. Your line is open.
Speaker Change: Hi, good morning, everyone. We've asked a question on capital return. The buyback activity was relatively light in the quarter. Just curious how much of that was related to wanting to or needing to wait until the CEO announcement was finalized.
Speaker Change: And with leverage now at one times, and I think cash in the balance sheet over a billion dollars, just wanted to get your updated thoughts on whether you're open to kind of restarting a more normal cadence to buy a back activity with free cash flow or whether you'd still like to de-laborate further from here on a net basis.
Speaker Change: Thanks for the question and good morning, Kyle. I think a couple factors that play that came into account with the first quarter repurchases.
Speaker Change: We've messaged that will be opportunistic and just to remind you, we were actually locked out of the market until you know the February 7th earnings call so couldn't actually be in their list call at the first six months of 2025 25
Speaker Change: and then also the stocks doing well. So also, you know, during 2025, we've hit a new all-time high share price. So...
Speaker Change: Really being opportunistic, taking a very long-term view as it relates to share repurchase activity [inaudible]
Speaker Change: But I think, you know, with the dry powder we do have, it's a great position to be in that, especially in these market conditions, if we do sense weakness in the share price, you know, we can't get in there behind it [inaudible]
Speaker Change: and by quite a few shares back. As to prioritizing capital towards delivering, I would say no.
Speaker Change: Would look at share references prior to delivering, as you mentioned, you know, leverage ratio 1.0 times, and if you look at the stack of debt we have outstanding, it's three tranches of fixed rate senior notes.
Speaker Change: Average around 2.8% so in this environment, definitely would see a higher return on share of repurchases as opposed to prioritizing de-levering.
Thank you. Thank you.
Speaker Change: Your next question comes from the line of Ashish Sabadra, with RBC, your line is open.
Speaker Change: It's not taking my question. Zero DTE obviously has ramped up significantly from low 20% back in Jan 2022 to now mid 50s in March of 25. I was just wondering if you could share any perspective on how these trends might evolve, particularly in light of wicks starting to normalize, but also growing adoption of these strategies by both retail and institutional investors. Thanks.
Speaker Change: Yeah, thanks for the question. You point out rightly that there's been...
Speaker Change: Some really good growth, it's nearly, in fact it's three years since we launched the Tuesday and Thursday explorations for SBX.
Speaker Change: A couple of data points really for Q1 is that SBX 0DT grew by 29% year-of-year, XSP 0DT grew by 150% and Russell 0DT grew by 59%. So we see continued engagement in there by end investors by customers to into the short-round of the curve to manage risk and be more flexible and nimble around the evolving news headlines and really this is...
Speaker Change: Portfolio positions that go further out in the care of four weeks plus and then come back again to that more consistent churn.
Speaker Change: Remaining to be around around one there so healthy outlook for zero DTE as we look forward but we bring more users internationally and locally and more use cases to bear as customers begin to launch product on zero and one DTE. So again good signs for a constructive outlook on...
Speaker Change: Further growth, further engagement in the platform in general, but specifically in ZeroDT. [inaudible]
Speaker Change: Your next question comes from the line of failure boat with Bank of America, your line is open.
Speaker Change: Good morning, thanks for taking the question. Can you talk about the status of your option on trading technologies? When does that option expire? Can you share any more details on the terms of that agreement? And then, is there any strategic value in having more screen real estate and a larger pre-trade footprint for SIBO? No.
Speaker Change: You know, just as it relates to the option itself, can clarify that we have not exercised the option and also the option has not expired. Beyond that, don't have much to share on that. Obviously, we look at things that make strategic and financial sense, but again, the option has expired and we have not exercised it. The option has expired and we have not exercised the option and also the option has expired and we have not exercised the option.
Speaker Change: Your next question comes from the line of Brian Bedell, the Deutsche Bank. Your line is open.
Brian Biddle: Great, thanks, good morning folks. Thanks for taking my question and congrats on getting Craig. That's fantastic looking forward to working with him.
Speaker Change: as well. A question for Dave, linking the date of anage with organic revenue growth suit.
Speaker Change: So, the good to see the non-US portion of the sales increase and as you mentioned it's a good leading indicator typically for setting up
Speaker Change: Training Volume, so looking at the organic growth guide revised up to mid to high single digit.
Speaker Change: It looks like you're kind of run rating the first quarter on that, so just trying to get a sense of the conservatism in that considering the potential for organically growing your products [inaudible]
Speaker Change: You know, obviously if we get a dramatic pullback and volumes, that could pressure that, but just I guess you're a confidence around the organic growth, given the leading indicators you're seeing on the data set.
Yes, thanks very much for the question, Brian .
Speaker Change: Yes, so, date of vantage, over 8% growth in first quarter.
Speaker Change: Setup, so we've taken a good view based on what we see for the rest of the year and that's something we'll update each quarter as we go through but as with the other questions on the call, we see a good set up for the second trends coming together with a macro set up to give us plenty of avenues to explore for incremental organic growth internationally with retail options, product innovation. So let's move on to the next question.
Speaker Change: More generally so we've got a constructive outlook as I mentioned for the rest of the year and guides all exactly that now, guides and we'll update them each quarter as we go.
Yeah.
Speaker Change: Your next question comes from the line if all in Lau with Lopenheimer. Your line is open.
Hi, good morning. Thank you for taking my questions.
Speaker Change: So for your expense guidance, I hear that your common marketing expense will increase in out quarters.
Speaker Change: But your comm ratio in the first quarter was like based on my math was like 20.6%. I'm just wondering how we should think about the more normalized comm ratio excluding the strong April revenue performance and how much conservatism you have picked into your expense guidance. Thanks a lot.
Speaker Change: I would say as we alluded to keeping the expense guidance as it stands.
Speaker Change: Part of that is due to, again, just timing that occurred with first quarter spend in planned timing that's coming for Q2, 3 and 4 very much in line with our initial year estimates there as to the amounts of the timing
Speaker Change: The piece that I think is variable from an excess perspective is we did have a fantastic start to the year, very strong first quarter
Speaker Change: Coupled with and also very strong April . So what that does is it's the short-term incentive accrual that I would expect to see an uplifting over the course of the year, particularly for April and Indicute 2.
Speaker Change: But again, that is well within the confines of the initial year expense guidance that we set. So we'll continue to monitor to those, you know, come back in early August with any updates there but feel pretty confident with that expense guide range that we've set at the beginning of the year and at health for this quarter. Thank you very much for your time.
David Howson, David Howson
Thanks.
Speaker Change: Your next question comes from the line of Michael Cyprys with Morgan Stanley , your line is open.
Speaker Change: Good morning. Thanks for taking the question. I just wanted to ask about retail. Here is your thoughts around taking.
Speaker Change: The 0-T, 0-T-T success, and bring that to intraday options. Just curious what's your appetite for that, what hurdles might need to be overcome.
Speaker Change: and your sort of thoughts on how you might approach that. And then just more broadly on retail as you look at the product toolkit that you have today, just curious where you're most excited about for what's next to come with retail, with the existing toolkit, what new innovations might you be able to bring to the marketplace and curious your views on prediction markets. Thank you very much.
Speaker Change: To what extent might Cboe have interested in capturing the retail interest from that? Any particular categories that may be more interesting to you than others? Thank you.
Speaker Change: We talk about, as with many things that we talk about with customers in terms of incremental exposures. For us at the moment, the runway for new users and use cases in the existing. Thank you very much.
Speaker Change: Ecosystem and Volatility Toolkit in particular is healthy, we've done a lot of wood to chop that so it's not something where we're actively looking at this point.
Speaker Change: In turn the most excited about for retail, I think it goes back to the year earlier.
Speaker Change: Response as well, it's the disciplined approach that we see coming through from real detail that really considered approach to high volatility environment of volatility.
Speaker Change: Spike, as we go through that, it's been encouraging to see Rita actually use the full breadth of the toolkit, not just SBX where the majority of the flow goes but also VIX options and also XSP, which was a record quarter in Q1 as well.
Speaker Change: And then when you think more broadly about retail and the entry point to option strategies, it's a usage in the growth of those derivative income funds or those defined outcome or buffer protect funds where you've got the ability to access an option strategy without deploying it and looking after it yourself.
Speaker Change: And then thinking about our diversification into other asset classes and building ecosystems around those there's obviously big coin ETF listings.
Then we've got our Bitcoin ETF index [inaudible]
Speaker Change: We've got our options on that Bitcoin ETF index which are trading nicely and we've got people and issues lodging products on those two index options products on MBTX and CBTX so really nice ecosystem around crypto there for customers to engage it [inaudible] We've got our options on MBTX and we've got our options on MBTX and we've got our options on MBTX
Speaker Change: And then, in order to provide incremental hedges there, we launched the CBO FTSE Bitcoin index futures earlier this week, which has seen some early trades as customers engaged in that ecosystem there. So, that crypto ecosystem really coming together nicely. And we're aiming to migrate our digital futures onto CFE later in this year itself.
Speaker Change: through there. So certainly an interesting area for the industry to discuss and work out how a trusted robust transparent ecosystem to really be brought to bear that.
Speaker Change: Your next question comes from the line of Kenneth Worthington with JP Morgan, your line is open.
Speaker Change: Hi, good morning. This is Madeline Delayden, non-forken. Thanks for taking our question. We just had a question on open interest trends particularly in your VIX franchise. So, now a few weeks out from that early April volatility, are you noticing any change in behavior, whether institutional retail or perhaps even de-leveraging at this time? Thank you. Thank you.
Speaker Change: Vicks over the interest detail I don't have at my fingertips at this point. What we have seen in the Vicks.
and your focus on.
Speaker Change: Your next question comes from the line of Anthony Carman with Goldman Sachs, if your line is open.
Speaker Change: Hi, good morning, everyone. This is Anthony Allen for Alex. Maybe a follow-up to Michael's earlier question. How do you view the competitive landscape evolving and the index options suite from products like prediction markets and leverage DTS?
Speaker Change: and there were some recent headlines on NASDAQ launching single-stock zero-day options, so what gives Cbo the competitive advantage to maintain share and products with relatively similar use cases? Thanks.
Speaker Change: Yeah, thank you for the question and certainly what our customers talk to us about what we see in the data is just a death.
Speaker Change: and the richness of the liquidity that we've got across the volatility toolkit that we've been talking about, the complementary nature of X of SBX, and the additive products that we've been launching in recent times, whether it be variants.
Speaker Change: Futures or Fix Options on Futures giving you a great toolkit, some fantastic depth of liquidity there, institutional assets allocated in benchmark to that S&P 500 which need to be managed over 15 trillion dollars I believe.
Speaker Change: And also, when you look at the ecosystem we've build up electronically and with the trading floor itself, where 20% of flow takes place
Speaker Change: It's the diversity of use cases that we've got now within that ecosystem. It takes years to build and it has its own inertia and its own traction. It's very hard to crack that with a new look-alike product.
Speaker Change: When you look at that diversity and the balance as well in the YouTube system, once they are likely to take away is that the ecosystem we've built with this volatility toolkit is incredibly balanced.
Speaker Change: When a particular use type or use case steps back, another one steps forward and then couple that with a disciplined approach without which our customers take 95% cap risk into that liquid ecosystem and the level of activity across tennis. So I would say the breadth, the depth, the liquidity, diversity of use cases and the decades of innovation that we've put into the platform really gives a very strong position to continue to innovate around. Thank you very much.
Speaker Change: Your next question comes from the line of Alex Kramm with UBS. Your line is open.
Thank you.
Speaker Change: Yeah, hey guys, just a quick follow up and maybe this is a little bit too big picture for today, but...
Speaker Change: Over the last few quarters you've talked a lot about and it's came up today again exporting the US markets globally but...
Speaker Change: I think over the last couple months there's been a lot more of this theme of capital flow.
Speaker Change: into other global regions, into Europe , Asia, et cetera, and away from the US, and you mentioned the market data demand in Europe already, but I'm just wondering. [inaudible]
Speaker Change: If this is a theme you feel like you're prepared for, or you think you want to lean in more, you obviously have a lot of global assets but just wondering if you think if that really plays out, that you have everything in your toolkit for that, thanks [inaudible]
Speaker Change: Yeah, like within the long-term secular trends that have really driven the results in the business today are more than likely
Speaker Change: to continue at all the signs of certainly pointing that way, and you mentioned it before I've put a few data points.
The growth in data internationally 55% met [inaudible]
Speaker Change: The onboarding we see from customers continues, it continues in Korea, Thailand, Malaysia, Taiwan
Speaker Change: throughout the Asia-Pacific region yet that the need and the desire to have access to the U.S. markets exposure continues and consider that global companies in the S&P 500 with 30% of revenue coming internationally. So it's a global ecosystem with a deep liquidity pool.
Speaker Change: Let me see real investment coming through from our customers. Global trading, our support is not a small left and we see wholesalers building that out for later this.
Speaker Change: This year, so really those long on-cycle trends continue the data, the engagement from our customers continue so we see with no real evidence for us to be concerned or to change tack from what we're already doing.
Thank you for joining us.
In terms of...
Thank you.
Speaker Change: I will turn the call over to management for closing remarks.
Speaker Change: Okay, thank you for everyone for joining us today. You know, based on the results that we've just walked through because of strong start to the year and our ecosystem continues to work well for us and for our customers.
Speaker Change: Having accomplished what I set out to do 18 months ago, now is the rain time for me to return to the board. I'm optimistic about the future of Siebel. We have a strong management team.
Speaker Change: A clear strategic focus, strong balance sheet financial position, and we're not bringing in a strong and experienced successor, and Craig Donney. I wish everyone the best. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.