Q2 2025 Cboe Global Markets Inc Earnings Call

Remarks. There will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, thank you. It is now my pleasure to turn the call over to Ken Hill head of investor relations. You may begin your conference.

Ken Hill: Good morning, and thank you for joining us for our Q2 earnings conference call. On the call today, Craig Donahue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Dave Howson, our Global President, will provide some comments as he hands his responsibilities to Chris Isaacson, our Chief Operating Officer, and Kathy Clay, our Global Head of Derivatives, who will join us for Q&A. We will conclude our prepared remarks with Jill Griebenow, our Chief Financial Officer, who will provide an overview of our financial results for the quarter as well as discuss our 2025 financial outlook. Following their comments, we will open the call to Q&A. I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each.

Good morning, and thank you for joining us. For our second quarter earnings conference, call on the call today. Craig Donahue, our CEO will discuss our performance for the quarter and provide an update on our strategic initiatives. Dave Howen, our Global president will provide some comments as he hands his responsibilities to Chris, Isaacson our chief operating officer and Kathy. Clay, our Global head of derivatives, who will join us for Q&A?

We will conclude our prepared remarks with Jill, grajewo. Our Chief Financial Officer who will provide an overview of our financial results for the quarter as well as discuss our 2025 Financial Outlook.

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

Ken Hill: A downloadable copy of the slide presentation is available on the investor relations portion of our website. During our remarks, we will make some forward-looking statements which represent our current judgment on what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, after this conference call. During the earnings call, we will be referring to non-GAAP measures as defined and reconciled in our earnings material.

I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the investor relations portion of our website.

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 4 looking statements are not guarantees the future performance, and involve certain assumptions, risks and uncertainties actual outcomes, and results May differ materially from what is expressed or implied in any forward-looking statements.

Please refer to our 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 4- looking statements, whether as a result of new information future events or otherwise, after this conference call,

Ken Hill: I would like to turn the call over to Craig.

Craig Donohue: Good morning. Thank you for joining us today to discuss our second quarter results. Having assumed the CEO role in early May, I have been impressed by the outstanding results Cboe delivered while navigating an evolving macro landscape as well as a variety of corporate developments. During the second quarter, Cboe grew net revenue 14% year over year to a record $587 million and adjusted diluted EPS by 14% to $2.46. These results were again driven by robust volumes across our derivatives franchise, both in multi-list and proprietary index option products, strong new sales growth in our Cboe data and access solutions business, resilient industry volumes in our cash and spot markets, and disciplined expense management. Building on a theme we've seen gain traction in recent quarters, the second quarter's strength was broad-based.

during the earnings call, we will be referring to non-gaap measures as defined in reconciled in our earnings material. Now if you'd like to turn the call over to Craig,

Good morning, thank you for joining us today to discuss our second quarter results.

Having assumed the CEO role in early may. I have been impressed by the outstanding results, sibo delivered, while navigating and evolving macro landscape, as well as a variety of corporate developments.

During the second quarter sibo, grew, net revenue, 14% year-over-year to a record 587 million, and adjusted diluted EPS by 14% to $2.46.

These results were again driven by robust volumes across our derivatives franchise, both in multi-list and proprietary index option products.

Strong new sales growth in our sibo data, Vantage business.

Resilient industry volumes in our cache and spot markets, and disciplined expense management.

Craig Donohue: All three categories—derivative markets, cash and spot markets, and data and access solutions—produced double-digit net revenue growth on a year-over-year basis, contributing to record first-half results for the firm. Taking a closer look at the second quarter trends, our derivatives franchise delivered a record quarter with organic net revenue increasing 17% year over year. Options volumes increased on the back of heightened market volatility as investors used options to help manage risk in a quarter marked by both sharp sell-offs and even sharper rebounds. In our multi-list options business, net transaction and clearing fees revenue was up a robust 32% given higher industry volumes and positive pricing trends. In our proprietary products, SPX options volumes jumped 21% year over year to a new record average daily volume of 3.7 million contracts, while mini-SPX options' average daily volume rose 50% to a record 108,000 contracts.

Building on a theme, we've seen gain Traction. In recent quarters. The second quarter strength was broad-based. All 3 categories, derivative markets cash and spot markets, and data, Vantage produced double digit, net revenue growth on a year-over-year basis contributing to record first, half results for the firm.

Taking a closer look at the second quarter Trends, our derivatives franchise delivered, a record quarter with Organic, net revenue, increasing, 17% year-over-year.

On the back of heightened Market volatility, as investors used options to help manage risk in a quarter marked by both sharp sell-offs and even sharper rebounds.

In our multi-list options, business, net transaction and clearing fees Revenue was up a robust 32%, given higher industry volumes and positive pricing trends.

Craig Donohue: Even more importantly, the second quarter demonstrated the full utility of our S&P 500 volatility toolkit as well as the resilience of our diverse customer base. As volatility surged in April, traders gravitated to our established SPX and VIX contracts for liquidity and market depth, with SPX options setting a single-day record of 6 million contracts on April 4th. Much of the increase in April came from institutional investors using index options to hedge, particularly longer-dated options, which saw the biggest increase relative to other tenors. While institutional activity was robust in April, retail traders pulled back, as evidenced by a decreasing share of zero DTE volume in April. While retail investors tend to step back when volatility jumps unexpectedly, as it did in April, they typically reengage once volatility moderates, which is what we observed in May and June.

In our proprietary products, SPX options, volumes jumped, 21% year-over-year to a new record, average daily volume of 3.7 million contracts. While many SPX options, average, daily volume Rose, 50% to a record 108,000 contracts.

Setting a single day record of 6 million contracts on April 4th.

Much of the increase in April came from institutional investors using index options to hedge, particularly longer-dated options, which saw the biggest increase relative to other tenors.

Craig Donohue: SPX zero DTE volumes rebounded to new highs, ending June with a new record monthly ADV of 2.2 million contracts. We've highlighted the resilience of SPX zero DTE trading in the past, and it's encouraging to see it reaffirmed once again last quarter. In the past year alone, we've seen the VIX index hit a high of 60 twice, and SPX intraday volatility jumped to a post-global financial crisis high. Through it all, SPX zero DTE options have continued to grow, propelled by wider adoption and new use cases. In Q2, they made up a record 57% of overall SPX options volume. Looking ahead, we remain positive about the growth potential of options as an asset class and our proprietary index options franchise. Continued uncertainty regarding monetary and trade policy is expected to support the continued use of options to dynamically manage risk.

while institutional activity was robust in April, retail, Traders pulled back as evidenced by decreasing share of zero, DTE volume in April, while retail investors tend to step back when volatility jumps unexpectedly as it did in April, they typically re-engage once volatility moderates, which is what we observed in May and June

SPX 0dte volumes rebounded to new highs ending June, with a new record monthly. ADV of 2.2 million contracts.

We've highlighted the resilience of SPX 0dte, trading in the past and it's encouraging to see it reaffirmed once again. Last quarter.

In the past year alone, we've seen the VIX Index hit a high of 60 twice and SPX intraday volatility, jumped to a post-global financial crisis, High through it all, SPX, 0dte options, have continued to grow propelled by wider, adoption and new use cases.

In Q2 they made up a record 57% of overall, SPX options, volume.

Looking ahead, we remain positive about the growth potential of options as an asset class and our proprietary index options franchise.

Craig Donohue: Structural factors such as increasing retail participation and international expansion should provide further tailwinds. Anecdotally, we see encouraging signs from international brokers. They continue to expand access by extending trading hours and by increasing functionality for complex and simple orders across Cboe's proprietary index product set and a greater number of symbols. These efforts are well aligned with Cboe's initiatives to deliver education and local market intelligence to a global audience. Moving to cash and spot markets, second quarter net revenue was up a strong 11% as our European cash equities business continued to drive robust performance for the category. Led by the strength in Europe, our Europe and Asia-Pacific segment delivered the strongest year-over-year percentage growth of any Cboe segment for the fourth quarter in a row, achieving an impressive 30% increase.

Continued uncertainty regarding monetary and trade policy is expected to support the continued. Use of options to dynamically manage risk.

Structural factors such as increasing, retail participation and international expansion should provide further Tailwind.

Anecdotally, we see encouraging signs from International Brokers. They continue to expand access by extending trading hours and increasing functionality for complex and simple orders across Syos' proprietary index product set and a greater number of symbols. These efforts are well aligned with Cboe initiatives to deliver education and local market intelligence to a global audience.

Moving to cash and spot markets. In the second quarter, net revenue was up a strong 11% as our European cash equities business continued to drive robust performance for the category.

Craig Donohue: The increase was driven by a 39% year-over-year growth in net transaction and clearing fees, resulting from strong industry volumes and solid market share gains in Europe across our portfolio of products. Higher non-transaction revenues in the segment also contributed to the growth, with revenue up 21% year over year. In other areas of global equities, last week we announced the decision, subject to consultation with regulators, to close our Japan equities business on August 29. This will include the Cboe Japan proprietary trading system and Cboe BIDS Trading Japan business. This decision reflects our philosophy of directing resources to the highest potential return activities across our organization, specifically exiting the equities business and redeploying time, energy, and investment dollars to supporting Japanese customers through our derivatives and market data capabilities. We continue to see great demand from Japanese market participants for access to international markets, U.S.

Led by the strength in Europe, our Europe and Asia-Pacific segment delivered the strongest year-over-year percentage growth of any Cboe segment for the fourth quarter in a row, achieving an impressive 30% increase.

The increase was driven by a 39% year-over-year. Growth in net, transaction and clearing fees, resulting from strong industry, volumes and solid market share gains in Europe. A cross our portfolio of products.

Higher non-transaction revenues in the segment. Also contributed to the growth with Revenue up 21% year-over-year.

In other areas of global equities. Last week, we announced the decision subject to consultation with Regulators to close our Japan equities business on August 29th.

This will include the sibo, Japan proprietary trading system and sibo bids Japan business.

This decision, reflects our philosophy of directing resources to The Highest Potential return activities across our organization. Specifically, exiting, the equities business and redeploying, time energy and investment dollars to supporting Japanese customers through our derivatives and Market data capabilities. We continue to see great demand from Japanese Market participants for

Craig Donohue: and European market data, and our global derivative products. To support these efforts, Cboe will maintain a presence in Japan focused on sales and client engagement. Turning to our data vantage business, net revenue for the category improved by 11% on a year-over-year basis. During Q2, we saw a positive contribution from all three major components of data vantage, with subscription-based data, analytics, and index products producing strong year-over-year gains. Looking more closely at the Q2 dynamics, international demand remains a key driver of new data sales, with roughly 45% occurring outside the U.S. in Q2. We are looking to accelerate that growth with new hires to lead our market data sales as well as our analytics and indices businesses in the Asia-Pacific region.

Access to international markets, U.S. and European market data, and our global derivative products.

To support these efforts. Sibo will maintain a presence in Japan focused on sales and client engagement.

subscription-based data analytics and index products producing strong year-over-year gains

looking more closely at the second quarter Dynamics. International demand remains a key driver of new data sales with roughly 45% occurring outside the US in the second quarter.

Craig Donohue: Beyond strengthening our sales capabilities, we are leveraging new technologies and developing new products to enhance our offerings. We are accelerating the migration of our derivatives data to the cloud and actively exploring new global access points where we see growing demand. On the product front, we are leaning into the secular trend in derivatives-based ETFs while leveraging our expertise to create indices in partnership with our index providers and issuers. On access, our dedicated cores offering, which provides superior performance and determinism, continued to perform well as we see the benefits of reallocating resources to revenue-enhancing activities. The interconnectedness and importance of the data vantage business at Cboe should not be understated.

We are looking to accelerate that growth with new hires to lead our market data sales as well as our analytics and industries businesses in the Asia-Pacific region.

Beyond strengthening our sales capabilities, we're leveraging, new technologies and developing new products to enhance our offerings. We're accelerating the migration of our derivatives data to the cloud and actively exploring new Global access points where we see growing demand.

On the product front, we're leaning into the secular trend and derivatives-based ETFs, while leveraging our expertise to create indices in partnership with our index providers and issuers.

On access. Our dedicated core is offering, which provides Superior performance and determinism continue to perform well. As we see the benefits of reallocating resources to revenue, enhancing activities, the interconnectedness and importance of the data Vantage business at sibo, should not be understood.

Craig Donohue: Each enhancement to our market access layer, subscription-based data sales, and even real-time values from the index business provide an ecosystem benefit to Cboe in the form of better customer engagement and improved activity levels for our trading businesses. Before I conclude this portion of my remarks, I want to take a moment to sincerely thank Dave Howson for his contributions during his time here at Cboe. While we will miss Dave, I also could not be more pleased to elevate Chris and Kathy, both of whom are strong and proven leaders here at Cboe. Cboe is on solid footing, and we are well positioned to deliver on the opportunities ahead. Now, I will turn the call over to Dave to say a few words.

Each enhancement to our market access layer, subscription-based data sales, and even real-time values from the index business provides an ecosystem benefit to Cboe in the form of better customer engagement and improved activity levels for our trading businesses.

Dave Howson: Thank you, Craig. I just wanted to briefly take the opportunity to express my gratitude to all of my colleagues here at Cboe and our customers that have taught me so much over the years. I am proud to have been part of such transformational change over the last 12 years as part of the Cboe and BIDS Trading management team, and in particular, the last three years as President, over which time we've expanded our global presence through establishing a one Cboe mindset. The firm's success has been a collective achievement as we've managed through a tremendous amount of change while laying the foundation for future success. I am grateful to be able to hand things off to such capable leaders in Chris and Kathy as I return home to be closer to my family. I have known Chris and Kathy for 12 and 8 years, respectively.

Before I conclude this portion of my remarks, I want to take a moment to sincerely. Thank Dave hen for his contribution during his time here at sibo while we'll miss. Dave, I also could not be more pleased to elevate, Chris and Kathy, both of whom are strong and proven leaders here at sibo. Sibo is on solid footing and we are well, positioned to deliver on the opportunities ahead. And now I'll turn the call over to Dave to say a few words.

Thank you. I just wanted to take this opportunity to express my gratitude to all of my colleagues here at Cboe and our customers who have taught me so much over the years.

I am proud to have been part of such transformational change over the last 12 years as part of the sibo and bat management team and in particular the last 3 years as president

Over the course of time, we've expanded our global presence through establishing a 1 SIBO mindset.

The Firm success has been a collective achievement as we've managed through a tremendous amount of change while laying the foundation for future success.

I am grateful to be able to hand things off to such capable leaders in Chris and Kathy, as I returned home, to be closer to my family.

Dave Howson: They are not only both long-time close partners but seasoned leaders and respected market practitioners with a track record of driving innovation in the industry. Before I hand it over to Jill for the financial update, I want to say a heartfelt thank you to the analyst and investor community. I have enjoyed engaging with you all on earnings calls and at numerous conferences over the years and will truly miss our interactions. Now, I will turn the call over to Jill.

I have known Chris and Kathy, for 12 and 8 years respectively.

They are not only both longtime close partners but seasoned leaders and respected market practitioners with a track record of driving innovation in the industry.

And before I hand it over to Jill for the financial update I want to say a heartfelt thank you to the analyst and investor community.

I have enjoyed engaging with you all on earnings calls and numerous conferences over the years and will truly miss our interactions.

Jill Griebenow: Thanks, Dave. Cboe posted another strong quarter with adjusted diluted earnings per share up 14% on a year-over-year basis to $2.46. I will provide some high-level takeaways from this quarter's operating results before going through segment results. Net revenue increased 14% versus the second quarter of 2024 to finish at a record $587 million, with each of our categories producing healthy year-over-year growth. Specifically, derivatives markets net revenues grew 17%, data and access solutions net revenues grew 11%, and cash and spot markets net revenues grew 11%. Adjusted operating expenses of $213 million were up 8% on a year-over-year basis. Adjusted operating EBITDA of $387 million grew 19%, and adjusted operating EBITDA margin expanded by 2.3 percentage points to 65.8% versus the second quarter of 2024, reflecting strong performance across our businesses as well as disciplined expense management.

Now, I will turn the call over to Jill.

Thanks, Dave. Zibo posted another strong quarter, with adjusted diluted earnings per share up 14% on a year-over-year basis to $2.46.

I will provide some high-level takeaways from this quarter's operating results before going through segment results.

Net revenue increased 14% versus the second quarter of 2024 to finish at a record $587 million, with each of our categories producing healthy year-over-year growth.

Specifically, derivatives markets, net revenues, grew, 17% data Vantage, net revenues, grew 11% and cash and spot markets. Net revenues, grew 11% adjusted, operating expenses of 213. Million were up 8% on year-over-year basis.

Jill Griebenow: Turning to the key drivers by segment, our press release in the appendix of our slide deck includes information detailing the key metrics for our business segments. I will provide some highlights for each. The options segment delivered its fourth consecutive quarter of record net revenue with 19% year-over-year growth. Total options ADV was up 20%, with a 17% increase in index options volume and a 22% increase in multi-listed options volume. North American equities net revenue was roughly flat on a year-over-year basis. Access and capacity fees increased 16% as compared to the second quarter of 2024, and industry volumes supported the transaction side of the businesses. Europe and APAC produced another quarter of record net revenue with a 30% year-over-year increase, reflecting particularly strong growth in Europe. Net transaction and clearing fees for the segment were up 39%, while non-transaction revenues were up a combined 21%.

For reflecting on strong performance across our businesses, as well as disciplined expense management.

Turning to the key drivers by segment, our press release in the appendix of our slide deck include information, detailing the key metrics for our business segments, so I'll provide some highlights for each the option. Segment delivered, its fourth consecutive quarter of record, net revenue with 19% year-over-year growth

Total options evv was up, 20% with a 17% increase in index options volume and a 22% increase in multi listed options. Volume North, American, equities, net revenue was roughly flat on a year-over-year basis.

Access and capacity fees increased 16% as compared to the second quarter of 2024 in Industry volume supported the transaction side of the businesses.

Jill Griebenow: Futures net revenue decreased 14% from the second quarter of 2024, primarily due to lower volume. Finally, our global FX segment also achieved another quarter of record net revenue with 19% year-over-year growth, driven by a 17% increase in average daily notional value. Looking at our Cboe data and access solutions business, net revenues were up 11% on an organic basis in the second quarter. Net revenue growth continued to be led by strong new subscription and unit sales, which accounted for roughly three quarters of the total net revenue growth for the quarter. The remaining growth was attributable to pricing changes, which continue to play a more modest role in our data and access solutions growth strategy. As Craig mentioned, we remain focused on scaling our product set by leveraging our advanced technology and differentiated product offerings.

Europe and APAC produced. Another quarter of record net revenue with a 30% year-over-year, increase reflecting particularly strong growth in Europe. Net transaction and clearing fees for the segments were up. 39% while non-transaction revenues were up a combined 21%. Futures net revenue decreased 14% from the second quarter of 2024, primarily due to lower volumes.

And finally, our Global FX segment. Also achieved another recorder of record net revenue with 19% year-over-year. Growth driven by a 17% increase in average daily notional value.

Looking at our sibo data, Vantage business, net revenues were up, 11% on an organic basis in the second quarter. Net revenue. Growth continued to be led by strong new subscription and unit sales, which accounted for roughly 3/4 of the total. Net revenue growth for the quarter. The remaining growth was attributable to pricing changes, which continue to play a more modest role in our data Vantage growth strategy.

Jill Griebenow: We believe these additions, combined with ongoing brand investments and a sharpened focus on sales outcomes, position data and access solutions for sustained long-term growth. Turning to expenses, total adjusted operating expenses were $213 million for the quarter and up 8% on a year-over-year basis. Higher compensation and benefits, depreciation and amortization, and technology support services expenses were partially offset by a year-over-year decline in travel and promotional, as well as professional fees and outside services expenses. Moving to our 2025 guidance, we are lowering our full-year expense guidance range to $832 to $847 million from $837 to $852 million. This decrease reflects our year-to-date operating discipline and the impact from our decision to close our Japanese equities business, partially offset by higher incentive compensation.

as Craig mentioned, we remain focused on scaling our product set by leveraging, our advanced technology and differentiated product offerings

We believe these additions combined with ongoing brand investments in a sharpened focus on sales, outcomes position data, Vantage for sustained long-term growth.

Turning to expenses, total adjusted, operating expenses were 213 million for the quarter and up 8% on a year-over-year basis.

Higher compensation, and benefits, depreciation, and amortization. And Technology. Support services expenses were partially offset by a year-over-year decline in travel and promotional, as well as professional fees and outside Services expenses.

Moving to our 2025 guidance. We are lowering our full year. Expense guidance range to 832 to 847 million from 837 to 852 million.

Jill Griebenow: Regarding the wind-down of our Japanese equities business, we expect to record an estimated pre-tax charge of approximately $5 million in the third quarter of 2025, primarily related to non-cash impairment of indefinite lived intangible assets and technology-related software. This charge is expected to be excluded from adjusted operating expenses. From an expense savings perspective, we expect the impact on adjusted operating expenses to be in the range of $2 to $4 million in 2025. Going forward, savings are expected to be in the $10 to $12 million range on a normalized annual basis. Partially offsetting some of the lower expense components mentioned, our updated guidance also factors in a higher bonus accrual, given both our strong year-to-date revenue trends as well as our healthy expectations for the second half of the year. In addition, we anticipate some reacceleration in marketing spend throughout the remainder of 2025.

This decrease reflects our year-to-date operating discipline and the impact from our decision to close our Japanese equities business, partially offset by higher incentive compensation.

Regarding the wind down of our Japanese equities business, we expect to record an estimated pre-tax charge of approximately $5 million in the third quarter of 2025.

Primarily related to non-cash impairment of indefinite-lived intangible assets and technology-related software.

This charge is expected to be excluded from adjusted operating expenses.

From an expense savings perspective, we expect the impact on adjusted operating expenses to be in the range of $2 million to $4 million in 2025.

Going forward, savings are expected to be in the $10 million to $12 million range on a normalized annual basis.

Partially offsetting some of the lower expense components, we mentioned our updated guidance also factors in a higher bonus accrual given both our strong year-to-date revenue trends as well as our healthy expectations for the second half of the year.

Jill Griebenow: Overall, we believe our expense guidance range provides flexibility to invest in the business while also positioning us to deliver on our shareholder return objectives. Looking at our full-year guidance more broadly, we are increasing our full-year total organic net revenue growth guidance range to high single digits from mid to high single digits, given our strong first-half results. We are reaffirming our data and access solutions organic net revenue growth range of mid to high single digits, following solid year-to-date trends and a steady outlook for the second half of 2025. Our full-year guidance range for CapEx remains at $75 million to $85 million, and we are lowering our expectation for depreciation and amortization to $53 million to $57 million from $55 million to $59 million range.

in addition, we anticipate some re acceleration in marketing spend throughout the remainder of 2025

overall, we believe our expense guidance range provides flexibility to invest in the business while also positioning us to deliver on our shareholder return objectives.

Looking at our full year, guidance more broadly, we are increasing our full year total organic, net revenue growth guidance range to high single digits from mid to high single digits given our strong first half results.

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. While we don't provide formal guidance on interest income or interest expense, we expect that interest expense net of interest income will be approximately $1 million in the third quarter of 2025. On the capital front, we remain pleased with the health of our financial position, exemplified by the $1.2 billion of adjusted cash on our balance sheet, an attractive debt profile, and a leverage ratio of 1.0 times. In the second quarter, we repurchased $35 million in shares, bringing year-to-date repurchases to $65 million. Alongside our share repurchase activity, we returned $66 million to shareholders in the form of a $0.63 dividend during the quarter.

We are reaffirming our data manage organik, net revenue, growth range of mid to high single digits following solid. Year-to-date Trends in a steady outlook for the second half of 2025, our full year. Guidance range for capex remains at 75 to 85 million and we are lowering our expectation for depreciation and amortization to 53 to 57 million from 55, to 59 million range. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30 and a half percent for the full year.

in the third quarter of 2025,

on the Capitol Front, we remain pleased with the health of our financial position exemplified by the 1.2 billion dollars of adjusted cash on our balance, sheet, and attractive, debt profile and a leverage ratio of 1.0 times.

In the second quarter, we repurchased 35 million in shares, bringing year-to-date repurchases to 65 million.

Jill Griebenow: Looking ahead, we remain focused on effectively allocating capital while leveraging our flexible balance sheet and free cash flow profile to produce sustainable shareholder value. Lastly, I want to provide an update on our investment in the Seven Rich Funds holding Trading Technologies. This week, Trading Technologies announced an investment transaction that is expected to result in Cboe fully exiting its investment in the Seven Rich Fund that currently owns Trading Technologies. The transaction is expected to close in the fourth quarter of 2025 after regulatory clearance. Cboe expects the transaction to result in the gain recorded against the June 30, 2025 carrying value of its investment in the Seven Rich Fund.

Alongside our share repurchase activity. We returned 66 million to shareholders in the form of a 63 Cent dividend during the quarter.

Looking ahead, we remain focused on effectively allocating capital while leveraging our flexible balance sheet and free cash flow profile to produce sustainable shareholder value.

Lastly, I want to provide an update on our investment in the 7g funds, holding trading Technologies,

This week trading Technologies announced an investment transaction that is expected to result in sibo. Fully exiting. Its investment in the 7rg fund that currently owns trading Technologies.

The transaction is expected to close in the fourth quarter of 2025 after regulatory clearance.

Jill Griebenow: While I cannot provide any incremental details around the potential gain until the transaction is complete, I will note that consistent with our historical treatment of minority investment gains and losses at sale, we anticipate adjusting out any future impact incurred with the exit of this investment from our non-GAAP metrics. Now, I'd like to turn it back over to Craig for some closing comments before we open it up to Q&A.

Sibo expects the transaction to result in the gain recorded against the June 30th, 2025 carrying value of its investment in the 7g fund.

Well, I cannot provide any incremental details around the potential gain until the transaction is complete. I will note that, consistent with our historical treatment of minority investments, gains and losses at sale. We anticipate adjusting out any future impact incurred with the exit of this investment from our non-GAAP metrics.

Craig Donohue: Thank you, Jill. While I have only been in the CEO role at Cboe for a few months, I wanted to leave you with some of my early impressions of the company and what you can expect from me and our senior leadership team moving forward. First, I have been impressed by the power of Cboe's suite of cash, data and access solutions, and derivatives products, our global presence, and our market-leading technology, all underpinned by a highly capable management team and associate base. As reflected in today's results, our portfolio of businesses is performing at a very high level. At the same time, with the continued guidance and support of our board, we are an organization that remains committed to improving, adapting, and positioning ourselves to deliver more value to shareholders over time.

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

Thank you, Jill.

While I have only been in the CEO role at sibo for a few months, I wanted to leave you with some of my early impressions of the company and what you can expect from me and our senior leadership team, moving forward first, I have been impressed by the power of sibo, Suite of cache data and derivatives products.

Our global presence and our market-leading technology.

All underpinned by a highly capable management team and Associate base.

As reflected in today's results, our portfolio of businesses is performing at a very high level.

Craig Donohue: This not only means exploring organic and inorganic investment opportunities around key capabilities but optimizing the growth and profitability in our core businesses. We are committed to bringing a rigorous financial discipline to how we allocate capital, both dollars and people, across the firm. Our decision to close our Japanese equities business was representative of that thought process in action. Moving forward, we remain committed to continually assessing our business portfolio to produce the best long-term returns for shareholders. As I mentioned, clearly, several areas at Cboe are performing exceptionally well, from cash to data to derivatives. The Q2 was an outstanding one, and the record first-half results showcase the power of the business. Heading into the second half of the year, I am energized by the opportunities ahead. I would now like to turn the call back over to Ken for questions and answers.

At the same time, with the continued guidance and support of our board. We are an organization that remains committed to improving adapting and positioning ourselves to deliver more value to shareholders over time.

This not only means exploring organic and inorganic investment opportunities around key capabilities, but optimizing the growth and profitability in our core businesses.

We are committed to bringing a rigorous Financial discipline to how we allocate Capital both dollars and people across the firm.

Our decision to close our Japanese. Equities business, was representative of that thought process in action.

Moving forward, we remain committed to continually assessing our business portfolio to produce the best long-term returns for shareholders.

Ken Hill: At this point, we would 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 will take a second question.

As I mentioned, clearly several areas at sibo are performing, exceptionally well from cash to data to derivatives the second quarter was an outstanding 1 and the record first, half results showcase the power of the business heading into the second half of the year, I am energized by the opportunities ahead. I'd now like to turn the call back over to Ken for questions and answers.

At this point, we will 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.

Tina: Again, to ask a question, simply press star one on your telephone keypad. Our first question comes from the line of Patrick Moley with Piper Sandler. Thank you. Please go ahead.

Again, to ask a question, simply press *1 on your telephone keypad, and our first question comes from the line of Patrick Mully with Piper Sandler. Thank you, please go ahead.

Analyst (various): Yes, good morning, and thanks for taking the question. Craig, welcome. Really looking forward to working with you. I was hoping, you know, you talked a little bit about it, but I was hoping you could just maybe speak to the one or two key priorities that you have in coming into the role and how that might differ from previous leadership. Then, more recently, one of the things Fred Tomczyk had talked about was an openness to doing potentially, you know, needle-moving M&A. Just given your experience with larger-scale M&A, how are you thinking about the inorganic growth opportunity for Cboe Global Markets, Inc. going forward?

Craig Donohue: Okay. Thanks, Patrick. Good morning. I would say coming into the role, first of all, I am very impressed with the team and the strategy that we have had in place. I think that strategy is producing great results for the company. I am going to continue to work with the team to be very focused on optimizing growth in our core and leaning into the secular trends that are supporting, I think, fantastic growth dynamics in our proprietary and multi-list derivative products as well as our data and access solutions businesses. In terms of M&A, even though I have obviously a strong background in that, I guess what I would say is that is something that we will be working on as a team over time.

Yes. Good morning and thanks for making the question. Um Craig welcome really looking forward to working with you. I was hoping you know you talked a little bit about it but I was hoping you could just maybe speak to the 1 or 2 key priorities. Um that you have in coming into the role and how that might differ from previous leadership and then you know more recently Fred it's 1 of the things Fred had talked about was an openness to doing potentially you know, needle moving m&a. Uh and just giving your experience with larger scale m&a, how are you thinking about the inorganic growth opportunity for sibo going forward?

Strategy that we have had in place. Um, and I think that strategy is producing great results for the company. Um, I'm going to continue to work with the team to be very focused on, you know, optimizing growth and our

Craig Donohue: Anything that we choose to do is going to be something that has to be compelling from both a strategic and a financial rationale perspective. There is nothing that we need to do right now. We have got a very flexible balance sheet. My feeling is we should look at all of our growth opportunities, focus on optimizing the core, look at things we can do to grow around and outside of our core, but we will remain opportunistically focused on whether there are also opportunities for us to consider growing inorganically. That is something that we will work on over time.

core and leaning into the secular trends that are supporting. I think fantastic growth Dynamics in our proprietary and multi-list derivative products as well as our data Advantage, uh, businesses, you know, in terms of, you know, m&a. Um, and even though I have obviously a strong background in that, um, I guess what I would say is, you know, that's something that we'll be working on as a team over time. Um, anything that we choose to do is going to be something that has to be compelling from both the Strategic and the financial rationale perspective. Um, there's nothing that we need to do right now. We've got a very flexible balance sheet. Um, but you know, my feeling is we should look at all of our growth opportunities, focus on optimizing, the core. Look at things we can do to grow around and outside of our core. Um but will remain opportunistically focused on whether there are also opportunities for us to consider growing in organically, but that's something that we'll work on over time.

Tina: Your next question comes from the line of Dan Bannon with Jefferies. Please go ahead.

And your next question comes from the line of Dan, Bannon with Jeffrey's please go ahead.

Analyst (various): Great. Good morning, Craig. Welcome back to the quarterly earnings cycle. Just to follow up on your previous comments here, just optimization you have mentioned a few times, and obviously, you have already proactively made the changes with Japan. But where are you in just kind of the evaluation of the businesses in your footprint, and how should we think about greater optimization or more changes like you have already done in the near term?

Uh, great, good morning, Greg. Uh, welcome back to the quarterly earning cycle. Um, just to follow up on your your, your previous comments here. Just optimization you've mentioned a few times. And obviously, you've already proactively made the changes with Japan. But where where are you? And just kind of the evaluation of the businesses in your footprint and how should we think about greater optimization or more changes like you've already done in the near term?

Craig Donohue: Well, I think, you know, obviously, we've got really great dynamic growth across our whole business portfolio, but I'm working with the team to look at everything that we're doing. We're doing that in a rigorous way. We're trying to make sure that the end goal is to just make sure that we're allocating all of our capital, both financial and especially human capital, to taking advantage of our best growth opportunities. I've been impressed so far, and I think the Japan equities decision is an example of that. You know, people are being rigorous and thoughtful about where we can best redeploy our capabilities. That's something that we're just going to keep doing. We have a very broad business.

Well, I think, you know, obviously we've got really great dynamic growth across our.

Craig Donohue: There's been a lot of things that Cboe's tried to do over the last, you know, five or six years, and we're just going to stay focused on that because I want to make sure that all of our resources are focused on our best growth opportunity.

Business portfolio. But, um, I'm working with the team to look at everything that we're doing. We're doing that in a rigorous way. We're trying to make sure that, um, the end goal is to just make sure that we're allocating all of our capital, both financial and especially human capital, to taking advantage of our best growth opportunities. Um, and I've been impressed so far. I mean, I think the Japan equity decision is an example of that. Um, you know, people are being rigorous and thoughtful about where we can best redeploy our capabilities. Um, so that's something that we're just going to keep doing. Um, we have a very broad business; there's been a lot of things that Cboe tried to do over the last, you know, 5 or 6 years. And we're just going to stay focused on that because I want to make sure.

That all of our resources are focused on our best growth opportunities.

Tina: Our next question comes from the line of Ben Budish with Barclays. Please go ahead.

Our next question comes from the line of Ben Buddhist with Barclays. Please go ahead.

Analyst (various): Maybe a narrower question just on the data and access solutions guidance for the year. When I look at the sequential step up in data and access solutions revenues, it looked like it was quite robust this quarter. If the next couple of quarters look similar, like maybe the last three or four quarters, it sounds like the guidance might prove to be conservative. Just curious if there is anything we should be thinking about in terms of the revenue model. Is there any reason that revenues should not continue to sort of step up sequentially? Could you perhaps remind us like the various components and key drivers, new unit sales, pricing, things like that as we are kind of fine-tuning our models here? Thank you.

Kathy Clay: Yeah, happy to, Ben. This is Kathy. We remain confident in our full-year guidance, just recognizing that quarterly results will fluctuate, some, you know, landing above and some below the expected range. But we are on track to deliver against our full-year objectives. Regarding Q2, you may recall that last year's first-half performance created a favorable comparison for Q1 and Q2 of this year. Our business has started out on strong footing. There's no denying that across all of our verticals of data and analytics and our index business. But it has been further supported by the momentum of the newer initiatives that Craig talked about, a dedicated course, for example, which is really starting to bear fruit. Looking ahead, we do believe that data vantage is well positioned for sustained long-term growth. We continue to invest in our global access and expand where we do business.

Maybe a narrower question just on the uh date of Vantage guide for the year. Um, when I look at the sequential step up in in data Vantage revenues look, like it was quite robust this quarter. And if the next couple of quarters look, similar like maybe the last like 3 or 4 quarters, it sounds like the, you know, it seems like the guidance might prove to be conservative, um, just curious, uh, if there's anything we should be thinking about, in terms of, you know, the revenue model. Is there any reason that revenues shouldn't continue to sort of Step Up sequentially? Um, could you perhaps remind us like the various components, uh, and key drivers? You know, new unit sales pricing, things like that. Um, as we're kind of fine-tuning our models here. Thank you.

We remain confident in our full year Guidance. Just recognizing that quarterly results will fluctuate some, you know, landing above and some below the expected range. Uh but we are on track to deliver against our full year objectives regarding Q2, you may recall that last year's first half performance created a favorable comparison for q1 and Q2 of this year our business has started out on strong footing. There's no denying that across all of our vehicles of data and analytics and our index business, but it has been further supported by the momentum of the newer initiatives that Craig,

Kathy Clay: We are seeing about 45% of new recurring sales from outside of the U.S. We're really leaning into our new distribution channels like Cboe Global Cloud, where 85% of our sales are from international clients. We're leaning into strengthening our sales execution, making sure that the derivatives team and the data vantage team across the globe are really working hand in hand because we know that the data sales often are a precursor or leading indicator of the derivatives volumes that we might enjoy. We're really just leaning into additional distribution capabilities, the new product suites, and our technological capabilities going forward. So very confident in the full guide that we give.

Derivatives volumes that we might enjoy. So we're really just leaning into additional distribution, uh, capabilities a new product, uh, Suites and our, uh, technological capabilities going forward. So very confidence in the full, uh, guide that we give

Tina: Your next question comes from the line of Eli Abaud with Bank of America. Please go ahead.

Your next question comes from the line of Eli about with Bank of America. Please go ahead.

Analyst (various): Good morning. Thanks for taking the question. I wanted to drill down into the long-term growth algorithm for index options volume. When zero DTE starts to reach maturity, whenever that may be, what new themes, geographies, or products do you have the most conviction can provide that next leg of growth?

Good morning. Thanks for taking the question. I I wanted to drill down into the long-term growth algorithm for index options volume. When zero, DTE starts to reach maturity, whenever that may be what new themes geographies or products, you have the most conviction can provide that next leg of growth.

Kathy Clay: It's a good question. Zero DTEs, you know, we continue to just be confident that these volumes are quite sustainable. When we think about our expansion with retail broker-dealers, both in the U.S. and abroad, we feel that there's still a lot of surface area of opportunity here. Retail traders tend to start trading in other products, and then as their sophistication level rises, they move into the index option complex, primarily for the benefits of index options in general, the cash settlement, the European exercise, potential tax treatment benefits.

Kathy Clay: We really think as we continue to partner more with our retail broker-dealer clients, and that means co-marketing agreements where we actually get a little better view into the data that comes from those partners of ours, as well as really we're in very early innings in the Asia-Pacific region where we see incredible demand for our products and our data. We really think that this is early innings to sustain the zero DTE complex. If you look at really just some of the numbers in the STX options in general, you know, we've hit three daily records this year, two in April and just one recently on July 31st. We really think the secular tailwinds for this space are strong, the appetite from the retail traders to move up in the curve. We really think both of these things really drive future sustainability and growth.

It's a good question, zero DTE. You know, we continue to just be confident that these volumes are quite sustainable. When we think about our uh expansion with retail broker dealers, both in the US and abroad, we feel that there's still a lot of surface area of opportunity here. Retail Traders tend to start trading in other products and then as their sophistication level rises, they move into the index. Option complex, primarily for the benefits of index options in general, the cash settlements, the European exercise, potential tax treatment benefits. So we really think as we continue to partner more with our retail broker dealer clients and that means co-marketing agreements, where we actually get a little better view into the data that comes from those partners of ours. As

As well as really were in very early innings in the Asia Pacific region where we see incredible demand for our products and our data. Including, uh, we really think that this is early Innings to, to sustain the zero DTE complex. And if you look at really just some of the numbers in the SPX options in general, you know, we get 3 Daily records, this year 2 in April and just 1 recently on July 31st. So we really think the the secular Tailwinds for this space are strong but appetite from the retail Trader to move up in the curve. We really think both of these things really Drive future sustainability and growth.

Tina: Your next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please go ahead.

Your next question comes from the line of Ashish chhabra with RBC Capital markets. Please go ahead.

Analyst (various): Thanks for taking my question. Maybe just a question on the competitive environment of single stock zero DTE and how that is evolving and what does it mean for the STX index options going forward? Thanks.

Kathy Clay: We actually see the single stock zero DTEs as not cannibalistic to the index option zero DTE, more for the ETF zero DTE space. We really feel that the difference between single stock options, things I just talked about, cash settlement, European exercise, really they are a completely different animal. We see a lot of retail traders coming into the single stocks or the ETF options and then migrating into the index option space as that level of sophistication of that trader continues to grow. We are very optimistic as we see new entrants come into the option space, but then begin that journey of sophistication through ever-increasing new data and analytics that these retail broker platforms are providing them. It is no surprise that the retail broker-dealer platforms are investing heavily in new analytics and new functionalities to really court that active retail trader segment.

Hello. Thanks for taking my question. Maybe just a question on, uh, the competitive environment of single stock zero DT. And how that's like, how that's evolving. And what does it mean for the index? SPX index options going forward. Thanks.

We actually.

See the single stock zero DTE.

More for the ETF 0dt space. We really feel that the difference between single stock options, things, I just talked about cast settlement European exercise, really, they're completely different animals and we see a lot of retail Traders coming into the single Stacks or the ETF options and then migrating into the index option space as that level of sophistication.

Kathy Clay: That is a great development for us to partner with the retail broker-dealers as they really try to secure additional engagement from their active trader base.

That Trader continues to grow and we're very optimistic as we see new entrance. Come into the option space but then begin that journey of sophistication through ever increasing. Uh, new data and analytics that these retail broker platforms, are providing them. It's no surprise that the retail broker dealer platforms are investing heavily in new analytics and new functionalities to really court that active uh retail trade or segments. So it's a great development for us to partner with the retail broker dealers, as they really try to secure additional engagement from their active Trader base.

Tina: Your next question comes from the line of Alex Cram with UBS. Please go ahead.

Your next question comes from the line of Alex. Cramp with UBS. Please go ahead.

Analyst (various): Yes, hey, good morning, everyone. Craig, welcome. I look forward to working with you again. It has been a while. In terms of strategic priorities, one of the most important relationships that Cboe has is probably the one with S&P Global on your index relationship, which obviously is a big part of your business. I know the renewal of that is still several years out, but since you just stepped into the new role, I am just wondering how you view that relationship and to what degree you should have appetite to maybe change the structure a little bit longer term to make it a little bit longer term since you do not want to go through this habit of having to renew this every few years. I am just wondering how you view that whole relationship and how you could change it.

Yes. Hey, good morning everyone. And, uh, Craig, welcome. Look forward to working with you again. It's been a while. Um, look, um,

Craig Donohue: Yeah, thank you for the question, Alex, and good to hear from you. I would say just philosophically, I have the same view here at Cboe as I did at CME, which is, S&P is a really long-term and deeply valued partner. I think we've had a long and very successful relationship. We see the world the same way, and I think we have a lot of the same goals and objectives when it comes to how to successfully grow the franchise. That's something that we'll be continuing to work on with them.

In terms of, uh, strategic priorities, 1 of the most important relationships that sibo has is probably the 1 with S&P Global on your index relationship, which obviously is a big part of your business. I know the the renewal of that is still several years out. But since you just stepped into the new role just wondering how you view that relationship and to what degree that you should have appetite to maybe change the structure a little bit longer term, to make it, you know, a little bit longer terms since, you know you don't want to go through this um have it of having to renew this every few years. So, just wondering how you view that whole relationship and how you can change it.

The same.

Craig Donohue: I don't really have a lot to say at this point on that other than, I think, applying that same kind of long-term commitment to making sure that our relationship is mutually beneficial and that we can grow together and that we bring innovation and growth to our segment of the S&P landscape is critical from their perspective as well as ours. We'll continue to work on it. Obviously, as much as possible, we've been together for more than 40 years. I'd like to see that continue for at least another 40 years, and we have to find the way to do that with our partners at S&P.

Uh, goals and objectives when it comes to how to successfully grow the franchise. Um, so, you know, that's something that will be continuing to work on with them. I don't really have a lot to say at this point on that other than, you know, I think, you know, applying that same kind of long-term commitment to making sure that our relationship is mutually beneficial and that we can grow together. Um, and that we bring, you know, Innovation and growth to our segments of the S&P landscape is critical from their perspective as well as ours. So we'll continue to work on it. I mean obviously um as much as possible we've been together for more than 40 years, I'd like to see that continue for at least another 40 years and we have to find the way to do that with our partners at S&P.

Tina: Your next question comes from the line of Owen Lau with Oppenheimer. Please go ahead.

Analyst (various): Good morning, and thank you for taking my question. Could you please give us an update of thought on attacking the globalization theme? Is there anything you would do differently over the next 12 months, and how do you plan to capture this opportunity here? Thanks a lot.

Your next question comes from the line of Owen law with Oppenheimer. Please go ahead.

Good morning, and thank you for taking my question. Uh, could you please give us an update of thought on the attacking, the globalization theme? Uh, you say anything, you would do differently over the next 12 months, and how do you plan to capture these opportunities here? Thanks a lot.

Chris Isaacson: Hey, good morning, Owen. This is Chris Isaacson. I think if I am understanding your question about globalization, I think Kathy mentioned this quite a bit in answering the data vantage question. Where we see greatest opportunities globally is to continue to, through the import-export discussion, really importing flow from outside the U.S. into our markets, especially into the U.S. markets and our derivatives products. That usually starts with data, and Kathy covered that really well with the data vantage. We are seeing 45% of sales outside the U.S. and 85% of Cboe Global Cloud outside the U.S. Hopefully, that answers your question, Owen. If it did not, feel free to get back in the queue and ask again.

Hey good morning Owen. This is Chris Isaacson. I think if I'm understanding your question about globalization I think Kathy mentioned this quite a bit in answering the date of Vantage question.

Uh, where we see greatest opportunities globally is to continue to, uh, through the import export discussion, really importing flow from from outside, the US into our markets, especially into the US markets, and our derivatives products, but usually starts with data and Kathy covered that really well with the date of Vantage, we're seeing um 45% of sales outside the US and 85% of cable Global Cloud outside the US. So hopefully that answers your question Owen. If it didn't feel free to get back in the queue and ask again.

Tina: Your next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.

Analyst (various): Great, thanks. Thanks for taking my question and welcome back, Craig. Looking forward to working with you as well. Maybe if I can sort of zoom out, Craig, and just your perspective on how the securities exchange industry has evolved and how you think it might evolve in the future. What I am really getting at is from a number of different angles, retail client engagement, whether you see that as classically cyclical or there is a much stronger structural trend there, and then the movement towards 24/7 trading and then potential adoption of tokenization, and whether you think U.S. regulators, how heavy of a lift is it to bring this on? How are you thinking about, if you are believing in that, how are you thinking about your position and what you might do to leverage these trends?

Next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.

Great thanks. Uh, thanks for taking my question and welcome. Uh, welcome back Greg, we're looking forward to working with you as well. Um, maybe maybe, um, if if I can sort of zoom out, um, uh, Craig and just just your perspective on, you know, the how the Securities Exchange industry has evolved and how you think it might evolve, you know, uh, in in the future and then what I'm really getting at is from a number of different angles. Um, you know, retail client engagement. Um you know whether you see that as uh as classically cyclical or or there's a, you know, a much stronger.

Craig Donohue: Thank you for the question. I would say that I think what we are seeing, and I think this has been borne out now for the last five or six, seven years, is I do not think the retail trend is cyclical. I think it is a long-term trend. I think there is a continued growth in sophistication, and that is a trend that I think will continue. We intend to try to keep leaning into that. We are living in a very dynamic environment, and so when you think about exchange companies, exchange companies have become quite diverse and very broad in the total portfolio of businesses that they now represent. That is how we are thinking about ourselves also, is making sure that we remain relevant and competitive and have the opportunity to grow beyond our traditional core.

Infrastructural Trend there and then the movement towards 24/7 trading, uh, and then potential adoption of tokenization. And and whether you think, um, you know, us Regulators, uh, you know, how how, how heavy of a lift is it to bring this on and then, you know, how, how do, how are you thinking about, uh, if you're believing in that, how how are you thinking about your position, and what you might do to, um, you know, to to uh, to leverage these uh trends.

Yeah, well thank you for the for the question. Um, you know, I would say that I think what we're seeing and I think this has been borne out now for, you know, the last 5 or 6, you know, 7 years is I I don't think the retail trend is is is is sort of cyclical. I mean, I think it's a long-term Trend. I think there's a continued sort of growth in um, sophistication. And um, that's a trend that I think will continue. So we intend to try to keep

Leaning into that. Um, I mean, we we're living in a very Dynamic environment. And so, when you think about, you know, exchange companies, I mean, exchange companies have become quite diverse and very broad, um, in the, you know, total portfolio of businesses that they now represent. Um, and so, you know, that's how we're thinking about ourselves. Also, is making sure that we remain relevant and competitive and have the opportunity to grow.

Craig Donohue: Looking at digitization, tokenization, event and prediction markets, these are all things that are starting to, especially with the growth of retail, increasingly come into our "traditional world." We are looking at all of that and thinking about where our place will be in that. I cannot give you a specific idea of exactly where we are going to go in that, but we are cognizant of this broader landscape and these larger changes that are happening, and we want to make sure that we are able to compete and provide value in that evolving landscape.

Larger changes that are happening. Um, and we want to make sure that we're able to compete and provide value and that kind of evolving landscape.

Tina: Your next question comes from the line of Kyle Vaught with KBW. Please go ahead.

Your next question comes from the line of Kyle zalt with KBW. Please go ahead.

Analyst (various): Hey, good morning. Craig, like all the comments of everyone else, looking forward to working with you. We are at much later stages of direct exchange consolidation, at least relative to the last time you were an exchange CEO. Since then, many of your peer exchanges have since turned towards other non-trading businesses, such as information services, as a pathway for inorganic growth. I guess, what are your thoughts on that strategy of diversifying away from trading-oriented businesses as an exchange operator? Is a move towards non-transaction revenues a part of the larger goal in terms of inorganic growth for you, or how do you view that as a part of your inorganic strategy?

Um, so Craig, uh I I go to the comments of everyone else looking forward to working with you. Um, we we're at much later stages of direct exchange consolidation at least relative to the last time you were an exchange CEO. And since that many of your peer exchanges have since turned towards other non-trading, businesses such as Information Services as a pathway for inorganic growth,

Craig Donohue: Yeah, no, I appreciate your question. Let me just sort of say, obviously, I think this is about my third or fourth month in the seat, and so there's an awful lot of work that I have to do here with my team and my colleagues in thinking about, if we were to pursue inorganic growth through mergers and acquisitions, kind of how we would think about that and where we would want to go. I'm not really prepared to answer that question today other than to say, I'm certainly very cognizant of exactly what you described. The exchange company landscape has matured and evolved over the course of the last 15 years. We see a number of our peer companies that have done, I think, a very effective job at expanding beyond the traditional core of what an exchange company is.

Yes, what what are your thoughts on that strategy of diversifying away from Trading oriented businesses as an exchange operator? Um, and is a move towards, uh, non-transaction revenues a part of the, the, the larger, um, goal in terms of of inorganic growth for you or kind of, how do you view that as a part of your inorganic strategy?

Yeah, no, I appreciate your question. I mean, let me just uh

sort of say, you know, obviously, I think this is

About my third or fourth month in the seat. And so, um, there's an awful lot of work, uh, that I have to do here with my, my team and my colleagues. And thinking about, um, you know, if we were to pursue inorganic growth, through mergers and Acquisitions, kind of how we would think about that and where we would want to go. So, I'm not really prepared to answer that question today, other than to say, you know, I'm certainly very cognizant of exactly what you described. Um, you know, the exchange company landscape has matured and evolved. Um,

Craig Donohue: They've created a level of diversity not only in terms of the composition of the business but the composition of the revenues and earnings that is compelling. So we're cognizant of it. We're thinking about it in a very broad way. But at the same time, take you back to my earlier comments, we have a great core business that's growing. There's lots more growth to be had, we think. So we're in a strong position, but we're going to be very disciplined, very rigorous, and I think conservative in how we think about if we were to employ that sort of growth, tactic of inorganic growth. We want to do that very thoughtfully and meaningfully.

You know, over the course of the last, you know, 15 years and, you know, we see a number of our peer companies that have done. I think a very effective job at expanding beyond the traditional core of what an exchange company is. Um, and they've created, you know, a level of diversity, not only in terms of the composition of the business, but the composition of the revenues and earnings, um, that is compelling. So, we're cognizant of it. We're thinking about it in a very broad way. Um, but at the same time, take you back to my earlier comments. Um, you know, we have a great Core Business, that's growing. There's lots more growth to be had, we think? And so we're in a strong position, but we're going to be very disciplined, very rigorous and I think, conservative and how we can

think about if we were to employ that sort of growth

You know, tactic of of inorganic growth. Um, we want to do that in a very thoughtful and meaningful way.

Tina: Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please go ahead.

Our next question comes from the line of Michael Cyprus with Morgan Stanley. Please go ahead.

Analyst (various): Hey, good morning. Thanks for taking the question. I wanted to circle back to some of the commentary on the tokenization and blockchain, more of an industry bigger picture focused question. Given all the advancements that we are seeing in technology and the evolving regulatory backdrop, I would just be curious of your views around tokenization and blockchain. What use cases do you find to be most compelling? What are some of the hurdles, roadblocks as you think about implementation across the industry that could ultimately, if resolved, overcome how that might be overcome that may lead to broader adoption as this technology has been around for many years? So, curious your views around what the big unlock might be and what implications might this have for the industry. Thank you.

Chris Isaacson: Hi, Michael. Good morning. Thanks for the question. It is certainly the hot topic of the day, but as you say, tokenization, the topic has been around for a while. It does seem to be getting a lot more traction and a lot of discussion right now around U.S. equities and what would the application be there. I think there were some questions earlier about 24/7 and greater access to the U.S. To the extent tokenization can allow for greater access or the entry of more 24/7 trading, we would welcome that. However, you need to work through some of the issues that come along with tokenization, like counterparty restrictions and KYC/AML. You need to think about, these are still securities as there has been a lot of discussions with regulators about.

Hey, good morning. Thanks for taking the question. Uh, once the circle back to some of the commentary on the tokenization and and blockchain more of an industry. Bigger picture of focused question, just giving all the advancements that we're seeing in technology the evolving regulatory backdrop, I'd just be curious your views on around tokenization blockchain. What use cases do you find think to be most compelling? What are some of the hurdles roadblocks as you think about implementation across the industry? That could ultimately, if resolved overcome? How how that might be overcome that may lead to broader? Um, adoption. As this technology has been around for many years. So, curious your views around what the big unlock might be and then what implications might this have for the industry. Thank you.

Hi Michael. Good morning, thanks for the question. It's certainly the hot topic of the day but as you say tokenization the topic has been around for a while.

It does seem to be getting a lot more traction and as we a lot of discussion right now around actually us equities and and what would the application be there? Um, I think, you know, so some questions earlier about 24 by 7 and greater access to the US, and to the extent, tokenization can allow for greater access or um, the the entry of more 24 by 7 trading. We would welcome that. However, you need to work through, um, some of the issues that come along with tokenization. Um, like counterparty restrictions and kyc AML,

Conference Center Host: it is tokenized, it still can be a security. You need to think about what are the problems that are being solved by tokenization and whether or not they should apply to the most liquid assets like U.S. equities that already trade extremely well. I think especially the unlock here is really about 24 by 7 and greater access from those outside the U.S. into the U.S.

Securities as there's been a lot of discussions with Regulators about, even though it's tokenized, it still can be a security. So need to think about what is the, the problems that are being solved by tokenization, and whether or not they should apply to the most liquid assets like us. Equities that are already trade extremely well. But I think especially the the unlock here is really about 24 by 7 and greater access from those outside the US into the US.

Tina: Your next question comes from the line of Chris Allen with Citigroup. Please go ahead.

Your next question comes from the line of Chris Allen with Citi group. Please go ahead.

David Howson: Yeah, morning everyone. Welcome back. Wanted to circle back on single stock zeros. Just based on our internal discussions, there is definitely an industry push here and expectations of probably getting swamped sometime early next year. I was just wondering, do you see any potential for the structure here to change to overcome some of the problems that Kathy talked about before? Any specific issues that would prevent these to be launched? Any color on just how much of an impact you see on SPX zeros during maybe on days when Mag 7 stocks announce earnings and things like that?

Yeah, morning everyone. Uh Craig, welcome back. Um, wanted to Circle back on single stock uh zeros. Um and just um based on our internal discussions, do do stuff in Industry push here and expectations probably because Swan sometime early next year so I was just wondering um is do you see any potential for the structure here to change to overcome some of the problems with Kathy talked about before any specific issues that would prevent um these to be launched and then any color on just uh how much of an impact uh you see on SPX zeros uh during uh maybe on days when uh mag 7 stocks uh now it turns into things like that.

Ken Hill: Yeah, it is a hot topic, just like tokenization, when we think about expanding access to zero DTEs and single stocks. The industry is kind of digesting what this means in terms of how to do basic things like how do we process corporate actions? How do we make sure that the end investors are safe for additional earnings announcement type activity? So there is definitely an appetite to expand into more expiries for single stocks, and we are all for that. We believe, again, that when we bring retail traders into products that they want to trade because they like the name or they are interested in the theme, they eventually grow in that journey of sophistication and find their way to index options.

Ken Hill: We compete in the multi-list space and all of these initiatives for the single stocks. We are watching very closely as the industry gets through these conversations about how do we do this in a proper way so that we have broad adoption and participation from all the market participants that would need to have access and need to feel safe in this new environment. We are there, and when they come to life, we will list them day one. We will be there as well.

Yeah, it is a Hot Topic just like tokenization when we think about expanding access to uh, zero DTE and single stocks and the industry is kind of digesting what this means in terms of how to do basic things. Like, how do we process corporate actions? How do we make sure that the end investor is, is safe for additional earnings announcements type activity. So, there is definitely an appetite to expand into more expertise for single stocks, uh, and we're all for that. We, we believe again that when we bring retail Traders into products that they want to trade because they like the name or they're interested in the theme, they eventually grow in that journey of sophistication and find their way to index options. And so, you know, we compete in the multi-list space and all of these, um, initiatives for the single stocks, uh, we're watching very closely as the industry gets through these conversations about how do we do this in a proper way so that we have broad adoption and participation from all the market participants that

Would need to have access and need to be um uh, feel safe in this new environment, but we're there. And when when they come to to Life, we'll list them day 1. We'll be there as well.

Tina: To ask a question, press star one on your telephone keypad. Our next question comes from the line of Eli Abaud with Bank of America.

Again to ask a question press star 1 on your telephone keypad. And our next question comes from the line of Eli about with Bank of America.

Conference Center Host: Hi, thanks for taking the follow-up. I believe the changes to the OCC margin model will become effective this fall. How material are you anticipating that event to be? In particular, do you think the margining changes will affect the growth trajectory of zero DTE?

Hi. Thanks for taking the follow-up, I believe the changes to the OCC margin model become effective. This fall. How material are you anticipating that event to be? And in particular, do you think the margining changes will affect the growth trajectory of zero DTE?

Ken Hill: Great question. A hot topic, really, of last year about what the impact of the OCC new margin requirements were going to be. I have to commend the OCC for really taking the time and listening to industry participants. They did that really well, giving everyone a little bit more opportunity to understand what the full impact of those OCC changes would be. The industry has had time to really think about what they need to do to minimize the impact. I think we are in a really good position, different position probably from this time last year, where I think the estimate was about 5% capital requirement impact, down to about 1% of the new estimation. When we talk to market participants, where this was really a put-out-the-fire issue last year, we are not hearing that.

Great question. Hot Topic, uh, really of last year about what the impact of the

Ken Hill: We believe market participants have adjusted and digested and are ready for the changes that are coming this fall at OCC.

new margin requirements were going to be. I I have to commend the OCC for really taking the time and listening to Industry. Participants, they did that really well giving everyone a little bit more opportunity to understand what the full impact of those OCCC changes would be. And the industry has had time to really think about what they need to do, to minimize the impact. And so, I think we're in a really good position in different positions. Probably, from this time last year, where I think the estimate was about 5%. Uh, Capital requirement impact, uh, down to about 1% of the new estimation. So when we talked to Market participants where this was really a put out the fire issue last year, we're not hearing that we we we believe Market participants have adjusted and digested and are ready for the changes that are coming this fall at OCC.

Tina: With no further questions in queue, I will now turn the call back over to the management team for closing remarks.

1 with no further questions in queue, I will now turn the call back over to the management team for closing remarks.

Craig Donohue: Great. I just want to thank everybody for joining us today. It is good to be back. I am enjoying working with the team and looking forward to a great last half of the year. We will see you next time.

Great. I just want to thank everybody for um joining us today. Um it is good to be back. Um, I'm in

to a great plastic.

Here. And

Tina: Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.

Thank you again for joining us today. This does conclude today's presentation. You may now disconnect