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01/11 03:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates a generally positive outlook with strong financial performance, product development, and market strategy. The Q&A section reveals confidence in growth prospects and strategic partnerships, though some responses were vague. Overall, the increased revenue guidance and global expansion plans suggest a positive sentiment, despite some uncertainties. The lack of a market cap prevents precise prediction, but the overall tone and strategic focus suggest a positive stock price movement in the short term.
Net Revenue $587 million, a 14% increase year-over-year. This growth was driven by robust volumes across derivatives, strong new sales growth in the Cboe Data Vantage business, resilient industry volumes in cash and spot markets, and disciplined expense management.
Adjusted Diluted EPS $2.46, a 14% increase year-over-year. This was attributed to strong performance across businesses and disciplined expense management.
Derivatives Markets Net Revenue 17% increase year-over-year. This was due to heightened market volatility, increased options volumes, and positive pricing trends.
SPX Options Volumes 21% increase year-over-year to a record average daily volume of 3.7 million contracts. This was driven by heightened market volatility and institutional investors using index options to hedge.
Mini SPX Options Average Daily Volume 50% increase year-over-year to a record 108,000 contracts. This was due to increased adoption and new use cases.
Cash and Spot Markets Net Revenue 11% increase year-over-year. This was driven by strong performance in the European cash equities business and market share gains in Europe.
Europe and Asia Pacific Segment Net Revenue 30% increase year-over-year. This was driven by a 39% growth in net transaction and clearing fees and a 21% increase in non-transaction revenues.
Data Vantage Net Revenue 11% increase year-over-year. This was driven by strong new subscription and unit sales, as well as pricing changes.
Adjusted Operating Expenses $213 million, an 8% increase year-over-year. This was due to higher compensation and benefits, depreciation and amortization, and technology support services expenses.
Adjusted Operating EBITDA $387 million, a 19% increase year-over-year. This was due to strong performance across businesses and disciplined expense management.
Adjusted Operating EBITDA Margin 65.8%, a 2.3 percentage point increase year-over-year. This reflects strong performance and disciplined expense management.
Options Segment Net Revenue 19% increase year-over-year. This was driven by a 20% increase in total options ADV, a 17% increase in index options volume, and a 22% increase in multi-listed options volume.
Futures Net Revenue 14% decrease year-over-year. This was due to lower volumes.
Global FX Segment Net Revenue 19% increase year-over-year. This was driven by a 17% increase in average daily notional value.
SPX options: SPX options volumes jumped 21% year-over-year to a new record average daily volume of 3.7 million contracts. Mini SPX options average daily volume rose 50% to a record 108,000 contracts.
SPX 0DTE options: SPX 0DTE volumes made up a record 57% of overall SPX options volume, with a new record monthly ADV of 2.2 million contracts in June.
Data Vantage: Net revenue improved by 11% year-over-year, driven by subscription-based data, analytics, and index products. International demand accounted for 45% of new data sales.
International expansion: Structural factors such as increasing retail participation and international expansion are expected to support growth. International brokers are expanding access by extending trading hours and increasing functionality for complex and simple orders.
European cash equities: European cash equities business drove a 30% year-over-year increase in the Europe and Asia Pacific segment, with net transaction and clearing fees up 39%.
Expense management: Adjusted operating expenses were $213 million, up 8% year-over-year, reflecting disciplined expense management. Full-year expense guidance was lowered due to the closure of the Japanese equities business.
Revenue growth: Net revenue increased 14% year-over-year to $587 million, with all categories (Derivatives Markets, Cash and Spot Markets, and Data Vantage) producing double-digit growth.
Closure of Japanese equities business: Cboe decided to close its Japan equities business to redirect resources to higher-return activities, such as derivatives and market data capabilities. This is expected to save $10-$12 million annually on a normalized basis.
Market Volatility: Heightened market volatility has led to increased options trading, but it also caused retail traders to pull back during periods of unexpected volatility, such as in April. This could impact trading volumes and revenue stability.
Retail Trading Behavior: Retail traders tend to step back during unexpected volatility spikes, which could lead to fluctuations in trading volumes and revenue.
Closure of Japanese Equities Business: The decision to close the Japanese equities business reflects a strategic shift but also involves a $5 million pretax charge and potential challenges in redeploying resources effectively.
Expense Management: While expenses are being managed, higher incentive compensation and reacceleration in marketing spend could pressure margins.
Regulatory and Market Access Challenges: The closure of the Japanese equities business and the need to consult with regulators highlight potential regulatory hurdles in international markets.
Dependence on SPX and VIX Products: A significant portion of revenue is driven by SPX and VIX options. Any decline in these products' popularity or market conditions affecting their trading could impact financial performance.
Economic and Monetary Policy Uncertainty: Uncertainty regarding monetary and trade policies is expected to continue, which could influence market dynamics and trading behavior.
Technology and Infrastructure Investments: Ongoing investments in technology, such as cloud migration and new product development, are critical but could strain resources if not managed effectively.
Expense Guidance: Cboe is lowering its full-year expense guidance range to $832 million to $847 million from $837 million to $852 million. This reflects year-to-date operating discipline and the impact of closing the Japanese equities business, partially offset by higher incentive compensation.
Revenue Growth Guidance: Cboe is increasing its full-year total organic net revenue growth guidance range to high single digits from mid- to high single digits, driven by strong first-half results.
Data Vantage Revenue Growth: The company reaffirms its Data Vantage organic net revenue growth range of mid- to high single digits, supported by solid year-to-date trends and a steady outlook for the second half of 2025.
Capital Expenditures: Full-year guidance for CapEx remains at $75 million to $85 million.
Depreciation and Amortization: Cboe is lowering its expectation for depreciation and amortization to $53 million to $57 million, from the previous range of $55 million to $59 million.
Effective Tax Rate: The effective tax rate on adjusted earnings is expected to be 28.5% to 30.5% for the full year.
Interest Expense: Interest expense, net of interest income, is expected to be approximately $1 million in the third quarter of 2025.
Japanese Equities Business Closure: The closure of the Japanese equities business is expected to result in expense savings of $2 million to $4 million in 2025, with normalized annual savings of $10 million to $12 million going forward.
Trading Technologies Investment Exit: Cboe expects to fully exit its investment in the 7RIDGE fund holding Trading Technologies, with the transaction expected to close in Q4 2025 after regulatory clearance. This is anticipated to result in a gain recorded against the June 30, 2025 carrying value of the investment.
Dividend Payment: Cboe returned $66 million to shareholders in the form of a $0.63 dividend during the second quarter.
Share Repurchase: Cboe repurchased $35 million in shares during the second quarter, bringing year-to-date repurchases to $65 million.
The earnings call highlights strong financial performance with increased revenue guidance and expense reduction. Closure of the Japanese equities business and strategic realignment indicate cost-saving measures, while new product developments and international growth in data sales support optimism. The Q&A reveals a strategic focus on organic growth, AI integration, and market expansion, despite some uncertainties. Overall, the positive guidance and strategic initiatives suggest a likely stock price increase.
The earnings call summary indicates a generally positive outlook with strong financial performance, product development, and market strategy. The Q&A section reveals confidence in growth prospects and strategic partnerships, though some responses were vague. Overall, the increased revenue guidance and global expansion plans suggest a positive sentiment, despite some uncertainties. The lack of a market cap prevents precise prediction, but the overall tone and strategic focus suggest a positive stock price movement in the short term.
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