Cboe Global Markets, Inc. · CBOE:CBOE
Cboe Global Markets — Q1 2022 Earnings Presentation
38 slides from Cboe Global Markets's earnings presentation, Apr 29, 2022
Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 Earnings Presentation April 29, 2022
Slide 2: Agenda
Agenda Strategic Review Edward Tilly Chairman, President and Chief Executive Officer Financial Review Brian Schell Executive Vice President, Chief Financial Officer and Treasurer Questions & Answers Edward Tilly Brian Schell Chris Isaacson Executive Vice President, Chief Operating Officer Dave Howso
Slide 3: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. You can identify these statements by forward-looking words su
Slide 4: Strategic Review and Outlook
Strategic Review and Outlook Edward Tilly Chairman, President and CEO
Slide 5: 1Q22: A Quarter of Record Revenue and Earnings
1Q22: A Quarter of Record Revenue and Earnings Net revenues grew 14% YoY, backed by strong transaction and non-transaction growth 5% increase in Cash and Spot Markets net revenue, 2% organic net revenue growth¹ ADNV traded on Cboe European Equities up 71% Includes associated transaction and clea
Slide 6: Top Strategic Growth Priorities
Top Strategic Growth Priorities Sizing the Key Trends Market Opportunity Cboe Progress Growth Potential ◆ Globalization ◆ > $33bn annual spend on ◆ Targeting organic net ◆ Delivered 12% organic net revenue ◆ Access to multi-asset financial market data¹ revenue growth of 7-10% growth6 in 1Q22 Data an
Slide 7: Global Derivatives: Positioned To Drive Growth
Global Derivatives: Positioned To Drive Growth Increasing access for market participants and leveraging our core products 24x5 Tuesday / Thursday Expiry European Derivatives Providing Attractive Leveraging Cboe’s Core Strength Gaining Traction, More Innovation Coming Return on Investment • Expanded
Slide 8: Planned Acquisition of ErisX
Planned Acquisition of ErisX Our planned acquisition of ErisX¹, coupled with broad industry participation and support, will help us bring the regulatory framework, transparency, infrastructure and data solutions of traditional markets to the digital asset space ErisX¹ is expected to provide Cboe acc
Slide 9: Harvesting Investments Across Seasons to Drive Consistent Growth
Harvesting Investments Across Seasons to Drive Consistent Growth More Data 24x5 Tuesday / Thursday Expiry Near-Term Contributors BIDS Canada Data and Access Cboe Global Cloud Solutions European Derivatives Cash & Medium-Term Contributors Cboe Digital Spot Indices / ESG Markets BIDS Asia1 Long-Term D
Slide 10: Financial Overview and Guidance
Financial Overview and Guidance Brian Schell EVP, CFO and Treasurer
Slide 11: 1Q22 Financial Summary
1Q22 Financial Summary Net Revenue (in millions) $418MM $366 $351 $370 $391 $418 Net Revenue +14% Y/Y 1Q21 2Q21 3Q21 4Q21 1Q22 Adjusted EBITDA¹ (in millions) $281MM 68.5% 66.6% 64.8% 67.5% 67.3% Adjusted EBITDA¹ $264 $281 +12% Y/Y $250 $234 $240 (Adjusted EBITDA margin of 67.3%) 1Q21 2Q21 3Q21 4Q21
Slide 12: 1Q22 Net Revenue by Segment and Key Drivers
1Q22 Net Revenue by Segment and Key Drivers Net Revenue Segment 1Q22 Key Drivers (in millions) $418.1 ◆ Net revenue up 21% Options ◆ Higher options trading volume, market share and RPC $365.51 CBOE - C2 - BZX - EDGX ◆ Strong organic growth in access and capacity and market data fees ◆ Net revenue do
Slide 13: Grew Data and Access Solutions Revenue 18% YoY
Grew Data and Access Solutions Revenue 18% YoY, Organic Growth of 12%1, Exceeded Targeted Growth Rate Increased targeted 2022 organic growth rate for Data and Access Solutions business to 8-11% from 7-10%, ahead of our medium-term guidance2 1Q22 Data and Access Solutions net revenue of $116.5 mill
Slide 14: 1Q22 Adjusted Operating Expenses Up 17%, Primarily Driven by Acquisitions
1Q22 Adjusted Operating Expenses Up 17%, Primarily Driven by Acquisitions 1Q22 expense increase primarily driven by addition of Chi-X Asia Pacific $9 million increase in compensation-related expenses $4 million increase in professional fees and outside services primarily due to higher legal fe
Slide 15: Adjusted Operating Expenses with ErisX and NEO
Adjusted Operating Expenses with ErisX2 and NEO2 ($ in millions) $30-35 $647-660 $10 $617 - 625 $23-26 $31-36 $22 $5531 $5311 2022 2021 Adj 2021 Normalized 2021 Core Expense Revenue Infrastructure 2022 Adj Operating Adj Operating ErisX and NEO2 Operating Acquisitions run rate Growth of ~6% Investmen
Slide 16: Updated Guidance Reaffirms Confidence in Medium-Term Targets
Updated Guidance Reaffirms Confidence in Medium-Term Targets 2022 Guidance 2022 Guidance 2022 Full-Year Guidance 1, 2 as of as of 2021 Actual3 ($ in millions) Apr. 29, 2022 Feb. 4, 2022 Data and Access Solutions4 organic revenue growth rate 8 to 11% 7 to 10% 15% Net revenue growth from acquisitions
Slide 17: Efficient Allocation of Capital to Create Long-Term Shareholder Value
Efficient Allocation of Capital to Create Long-Term Shareholder Value Preserving balance sheet flexibility remains a priority Capital allocation priorities include: ◆ Investing in the growth of our business ◆ Inorganic opportunities to facilitate growth strategy ◆ Consistent dividend payments and
Slide 18: Positioned to Innovate, Integrate and Grow to Create Value
Positioned to Innovate, Integrate and Grow to Create Value Innovate to capture growing demand Integrate across ecosystem to Grow by accessing untapped for trading products and data services, increase efficiency and better serve addressable markets globally customers ◆ Increase access to data product
Slide 19: Q&A
Q&A Appendix 19
Slide 20: Appendix
Cboe Appendix
Slide 21: Options 1Q22 Net Revenue Up 21%
Options 1Q22 Net Revenue Up 21%, Reflecting Y/Y Increase in ADV and Recurring Non-transaction Revenue ◆ Higher transaction fees from index and multi-listed options given stronger volumes, market share and RPC ◆ Access and capacity fees plus proprietary market data were up a combined 25% Options Sele
Slide 22: North American Equities 1Q22 Net Revenue Down 3%
North American (N.A.) Equities 1Q22 Net Revenue Down 3%, Driven by Softer Industry Volumes ◆ U.S. equities transaction and clearing fees were impacted by lower year-over-year industry volumes given difficult 1Q21 comparisons ◆ Access and capacity fee growth remains strong, up 11% as compared to 1Q21
Slide 23: Europe and APAC Net Revenue Up 37% for 1Q22
Europe and APAC Net Revenue Up 37% for 1Q22, Helped by Higher Volumes and Inclusion of Cboe Asia Pacific ◆ Net revenue increase reflects $8.4 million contribution from Cboe Asia Pacific and higher activity levels ◆ Increase in net transaction fees, driven by strong increases in European equities tra
Slide 24: Futures 1Q22 Net Revenue Up 2%
Futures 1Q22 Net Revenue Up 2%, Reflecting Steady Volumes and RPC ◆ Revenue increase driven by minor contributions from both transaction and non-transaction revenues ◆ Activity levels and RPC were relatively flat to 1Q21 levels Futures Selected Revenue Data 1Q22 1Q21 Chg ($ in millions) Net Revenue
Slide 25: Global FX Net 1Q22 Revenue Up 16%
Global FX Net 1Q22 Revenue Up 16% ◆ Revenue increase driven by higher volumes and slightly higher net capture within transaction revenue ◆ Market share increased to 17.3% FX Selected Revenue Data 1Q22 1Q21 Chg ($ in millions) Net Revenue $17.1 $14.7 16% Net transaction and clearing fees¹ 14.4 12.4 1
Slide 26: First Quarter Financial Overview
First Quarter Financial Overview Adjusted Financial Results¹ 1Q22 1Q21 % Chg ($ in millions, except per share) Net Revenue² $418.1 $365.5 14% Adjusted Operating Expenses¹ 145.8 124.6 17% Adjusted Operating Income¹ $272.3 $240.9 13% Adjusted Operating Margin ¹ 65.1% 65.9% -0.8pts Adjusted Net Income
Slide 27: Net Revenue Detail
Net Revenue Detail ◆ Derivatives Markets driven by strong transaction and clearing fees ◆ Data and Access Solutions benefited from strong new subscription / unit growth Net Revenue 1Q22 1Q21 % Chg (in millions) Cash and Spot Markets $110.3 $105.3 5% Data and Access Solutions 116.5 98.6 18% Derivativ
Slide 28: Expense Bridge Summary
Expense Bridge Summary Adjusted Operating Expenses Bridge for 2020 to 2021 Prioritizing investments to: ($ in millions) 2020 adjusted operating expenses¹ $ 416 • Broaden geographic footprint (Chi-X, Euro derivs) Acquisitions 49 • Leverage core capabilities (24x5, BIDS and Nanos) and Non-recurring sa
Slide 29: Focused on Growing Highest-Margin Proprietary Index Suite
Focused on Growing Highest-Margin Proprietary Index Suite Index customers at Cboe typically use SPX and VIX options and futures interchangeably or in tandem, depending on market conditions ◆ Plan to further penetrate existing markets with an emphasis on education, targeting key market segments and g
Slide 30: Cboe's Commitment to ESG Initiatives
Cboe’s Commitment to ESG Initiatives Environmental Social Governance ◆ Carbon credits: Offset our Scope 1 and 2 ◆ Cboe Empowers: Community engagement ◆ Independent Board: 13 of the 14 Directors emissions from 2020 and our Scope 3 program that provides mentorship, are independent emissions from our 2
Slide 31: Non-GAAP Information
Cboe Non-GAAP Information
Slide 32: Non-GAAP Information
Non-GAAP Information In addition to disclosing results determined in accordance with GAAP, Cboe Global Markets has disclosed certain non-GAAP measures of operating performance. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GA
Slide 33: Non-GAAP Information
Non-GAAP Information Reconciliation of Net Transaction and Clearing Fees by Segment For the Three Months Ended Options N.A. Equities Europe and Asia Pacific Futures Global FX Total June 30 (in millions) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Transaction and clearing fees $ 283.2
Slide 34: Non-GAAP Information
Non-GAAP Information Reconciliation of Net Revenue by Revenue Caption – Cash and Data and Derivatives Spot Markets For the Three Months Ended Access Solutions Markets Total March 31 (in millions) 2022 2021 2022 2021 2022 2021 2022 2021 Transaction and clearing fees $ 395.5 $ 428.9 $ - $ - $ 374.1 $
Slide 35: Non-GAAP Information
Non-GAAP Information (in millions, except per share amounts) 1Q21 2Q21 3Q21 4Q21 2021 1Q22 Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP Net income allocated to common stockholders $ 136.8 $ 105.2 $ 120.0 $ 165.3 $ 527.3 $ 109.2 Acquisition-related expenses (1) 3.4 1.8 6.
Slide 36: Non-GAAP Information
Non-GAAP Information EBITDA Reconciliations EBITDA (earnings before interest, income taxes, depreciation and amortization) and Adjusted EBITDA are widely used non-GAAP financial measures of operating performance. EBITDA margin represents EBITDA divided by revenues less cost of revenues (net revenue)
Slide 37: Non-GAAP Information
Non-GAAP Information Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 2Q21 3Q21 4Q21 1Q22 LTM Net income allocated to common stockholders $ 105.2 $ 120.0 $ 165.3 $ 109.2 $ 499.7 Interest expense, net 12.3 11.7 11.1 10.8 45.9 Income tax provision 73.7 53.4 44.3 115.3 286.7 Depreciation
Slide 38: Cboe.com
Cboe Cboe.com