Cboe Global Markets, Inc. · CBOE:CBOE

Cboe Global Markets — Q1 2024 Earnings Presentation

40 slides from Cboe Global Markets's earnings presentation, May 3, 2024

1. Slide 1: First Quarter 2024 Earnings Presentation

   FIRST QUARTER 2024 EARNINGS PRESENTATION May 3, 2024

2. Slide 2: Agenda

   Agenda Fredric Tomczyk Chief Executive Officer Strategic Review Dave Howson Executive Vice President, Global President Jill Griebenow Financial Review Executive Vice President, Chief Financial Officer Questions & Answers Fredric Tomczyk Dave Howson Jill Griebenow Chris Isaacson Executive Vice Presid

3. 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

4. Slide 4: Strategic Review and Outlook

   STRATEGIC REVIEW AND OUTLOOK Fredric Tomczyk, CEO Dave Howson, Global President 4

5. Slide 5: 1Q24: Record Net Revenue in First Quarter

   1Q24: Record Net Revenue in First Quarter* Net revenues grew 7% Y/Y, a product of continued strong transaction and non-transaction growth 8% increase in Derivatives Markets organic net revenue1 Total options average daily volume (ADV) up 1%, driven by a 14% increase in index options Total options ra

6. Slide 6: CEO's Three Key Priorities

   CEO’S Three Key Priorities Sharpen Cboe’s Strategic Focus Around Structural Trends and Core Strengths  • • Structural Trends Globalization of markets Rise of retail • • Core Strengths Global footprint Technology • Demand for data • Product innovation Effectively Allocate Capital  • • Maintain a fl

7. Slide 7: Derivatives Continues to Execute, Well Positioned for Future

   Derivatives Continues to Execute, Well Positioned for Future SPX Derivatives Results Remain Steady Month ADV Quarter ADV 1 October 2023 3,478,115 Q4 '23 3,270,211 • Derivatives net revenues up 8% y/y in 1Q24 2 January 2024 3,281,481 Q2 '24TD* 3,268,872 • Monthly SPX ADV Durability: Three of the last

8. Slide 8: Data and Access Solutions: Driving Durable Growth

   Data and Access Solutions: Driving Durable Growth DnA growth trends have been strong: Data & Access Solutions Gross Revenue (in millions) ◆ 12% CAGR in first quarter DnA gross revenues since 1Q21 $140 $129 ◆ Anticipate new opportunities across the data and access $119 $101 49 solutions ecosystem wil

9. Slide 9: Unlocking Global Growth Potential

   Unlocking Global Growth Potential North America | Europe | Asia Pacific North America Europe Asia Pacific ◆ Canadian equities market share improved ◆ Cboe Europe was the region’s largest ◆ Grew Cboe Australia equities market share to 15.3% in 1Q24 from 14.3% in 1Q23 exchange by value traded during t

10. Slide 10: Executing on Growth Priorities

    Executing on Growth Priorities Rise of Retail Multi-Asset Trading Shorter Duration, Tailored Products Drivers     Greater Global Access  Demand for Data  Macro Uncertainty More Data Progress Opportunity Global Derivatives ◆ Targeting >150mn retail accounts with ◆ Derivatives delivered 8% y/y o

11. Slide 11: Financial Overview and Guidance

    FINANCIAL OVERVIEW AND GUIDANCE Jill Griebenow, EVP, CFO 11

12. Slide 12: 1Q24 Financial Summary

    1Q24 Financial Summary $502 $502mn $471 $418 $366 Net Revenue +7% Y/Y 1Q21 1Q22 1Q23 1Q24 $337mn $337 $310 $281 $250 Adjusted EBITDA¹ +9% Y/Y 68.5% 67.3% 65.8% 67.2% (Adjusted EBITDA margin¹ of 67.2%) 1Q21 1Q22 1Q23 1Q24 $2.15 $2.15 $1.73 $1.90 $1.53 Adjusted Diluted EPS¹ +13% Y/Y 1Q21 1Q22 1Q23 1Q2

13. Slide 13: 1Q24 Net Revenue by Segment and Key Drivers

    1Q24 Net Revenue by Segment1 and Key Drivers Net Revenue Segment 1Q24 Key Drivers (in millions) Net Rev. Growth Key Drivers $502.1 Options ◆ Higher index options trading volume and RPC $471.4 +10% CBOE - C2 - BZX - ◆ Strong growth in access and capacity and EDGX proprietary market data fees N.A. Equ

14. Slide 14: Grew 1Q24 Data and Access Solutions Net Revenue 8% YoY Organically

    Grew 1Q24 Data and Access Solutions Net Revenue 8% YoY Organically1 Reaffirmed 2024 organic net revenue growth rate1 target for Data and Access Solutions business of 7-10%, in line with our medium-term financial targets2 Data & Access Solutions Gross Revenue  1Q24 Data and Access Solutions net reve

15. Slide 15: 1Q24 Adjusted Operating Expenses Up 4%

    1Q24 Adjusted Operating Expenses1 Up 4%, Driven by Compensation and Benefits and Technology  1Q24 expense increase driven by higher compensation and benefits and technology support services  $5 million increase in compensation-related expenses  $2 million increase in technology support services A

16. Slide 16: 2024 Guidance

    2024 Guidance 1 2024 Guidance 2024 Guidance 2024 Full-Year Guidance as of as of 2023 Actual2 ($ in millions) May 3, 2024 Feb. 2, 2024 3 Data and Access Solutions organic net revenue growth rate 7 to 10% 7 to 10% 7% Total organic net revenue growth rate higher end of 5 to 7% 5 to 7% 10% 4 Adjusted op

17. Slide 17: Efficient Allocation of Capital to Create Long-Term Shareholder Value

    Efficient Allocation of Capital to Create Long-Term Shareholder Value June 30, Sept. 30, Dec. 31, Mar. 31, Preserving balance sheet flexibility remains a priority Debt Outstanding ($ in millions) 2023 2023 2023 2024  Capital allocation priorities include: 3.650% Senior Notes (10Y; Due 2027) $650 $6

18. Slide 18: Positioned to Innovate, Integrate and Grow to Create Value

    Positioned to Innovate, Integrate and Grow to Create Value Innovate to capture growing Integrate across ecosystem Grow by accessing untapped demand for trading products to increase efficiency and addressable markets and data services, globally better serve customers ◆ Proven organic investment and ◆

19. Slide 19: Q&A

    Q&A 19

20. Slide 20: Appendix

    Appendix © 2023 Cboe Exchange, Inc. All rights reserved. 20

21. Slide 21: Options 1Q24 Net Revenue Up 10%

    Options 1Q24 Net Revenue Up 10%, Reflecting Y/Y Increase in ADV and Recurring Non-Transaction Revenue Options Selected Revenue Data ($ in millions) 1Q24 1Q23 Chg ◆ Higher transaction fees from index Net Revenue $307.4 $280.7 10% options given stronger volumes and RPC Net transaction and clearing fee

22. Slide 22: North American Equities 1Q24 Net Revenue Down 1%

    North American (N.A.) Equities 1Q24 Net Revenue Down 1% Driven by Lower Industry Market Data N.A. Equities Selected Revenue Data 1Q24 1Q23 Chg ($ in millions) Net Revenue $92.6 $93.1 -1% ◆ Industry market data declined 10% as Net transaction and clearing fees¹ $29.4 $29.7 -1% compared to 1Q23 Market

23. Slide 23: Europe and APAC Net Revenue up 10% for 1Q24

    Europe and APAC Net Revenue up 10% for 1Q24, Driven by Non- Transaction Growth Europe and APAC Selected Revenue Data 1Q24 1Q23 Chg ($ in millions) Net Revenue $54.1 $49.3 10% Net transaction and clearing fees¹ $26.3 $26.2 0% ◆ Market data, access fees and other were up a Net transaction fees 19.5 18

24. Slide 24: Futures 1Q24 Net Revenue Down 2%

    Futures 1Q24 Net Revenue Down 2% Given Lower Volumes Futures Selected Revenue Data 1Q24 1Q23 Chg ◆ Lower volumes drove a decrease in ($ in millions) net transaction and clearing fees Net Revenue $30.5 $31.1 -2% Net transaction and clearing fees¹ $23.5 $24.8 -5% ◆ Access and capacity and market data

25. Slide 25: Global FX Net 1Q24 Revenue Down 1%

    Global FX Net 1Q24 Revenue Down 1% FX Selected Revenue Data 1Q24 1Q23 Chg ($ in millions) ◆ Revenue decrease driven by slightly Net Revenue $18.4 $18.5 -1% lower net capture rate Net transaction and clearing fees¹ 15.2 15.5 -2% ◆ Market share increased by 1.3% as Non-transaction revenue 3.2 3.0 7% c

26. Slide 26: First Quarter 2024 Financial Overview

    First Quarter 2024 Financial Overview Adjusted Financial Results¹ 1Q24 1Q23 % Chg ($ in millions, except per share) Net Revenue² $502.1 $471.4 7% Adjusted Operating Expenses¹ $192.9 $186.2 4% Adjusted Operating Income¹ $309.2 $285.2 8% Adjusted Operating Margin ¹ 61.6% 60.5% 1.1pts Adjusted Net Inco

27. Slide 27: Net Revenue Detail

    Net Revenue Detail 1 Net Revenue 1Q24 1Q23 % Chg ◆ Derivatives Markets driven by strong (in millions) transaction and clearing fees Cash and Spot Markets $97.3 $97.2 -- Data and Access Solutions 137.7 127.2 8% ◆ Data and Access Solutions benefited from 8% strong new subscription / unit growth Deriva

28. Slide 28: Focused on Growing the Proprietary Index Suite

    Focused on Growing the Proprietary Index Suite Index customers at Cboe typically use the toolkit of Cboe proprietary products interchangeably or in tandem, depending on market conditions ◆ Plan to further penetrate existing markets with an emphasis on education, targeting key market segments and geo

29. Slide 29: 0DTE Adding Stability to SPX Volumes

    0DTE Adding Stability to SPX Volumes SPX Volume by Expiration 3.8 3.5 3.3 3.2 3.2 3.3 3.1 3.2 3.3 2.8 2.9 2.9 2.9 3.0 3.0 2.6 2.6 2.7 2.7 2.7 2.7 2.6 2.8 48% 2.2 2.3 2.1 2.2 45%45%50%47%47%50% 2.3 44%43% 42% 43% 50% 47% 1.8 1.7 44%43%44%42% 45%45% 1.7 1.8 37% 46% 1.8 32% 22%24% 42%44% 22%26% 1.3 Thu

30. Slide 30: Non-GAAP Information

    Non-GAAP Information © 2023 Cboe Exchange, Inc. All rights reserved. 30

31. Slide 31: 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

32. Slide 32: 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 Digital Total June 30 (in millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Transaction and cle

33. Slide 33: Non-GAAP Information

    Non-GAAP Information Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Net Revenue (in millions) Ended, Mar 31, 2024 Europe and Asia Pacific net revenues $54.1 Constant currency adjustment (0.7) 1 Europe and Asia Pacific net revenues in constant currency $53.4 1 N

34. Slide 34: Non-GAAP Information

    Non-GAAP Information Reconciliation of Net Revenue by Revenue Caption Cash and Data and Derivatives For the Three Months Ended Spot Markets Access Solutions Markets Total Mar. 31 (in millions) 2024 2023 2024 2023 2024 2023 2024 2023 Transaction and clearing fees $ 305.2 $ 311.9 $ - $ - $ 413.3 $ 420

35. Slide 35: Non-GAAP Information

    Non-GAAP Information (1) This amount includes ongoing acquisition related costs primarily from the Company’s Cboe Digital, Cboe Canada, Cboe Japan and Cboe Australia acquisitions. (2) This amount represents the amortization of acquired intangible assets related to the company’s acquisitions. (3) Thi

36. Slide 36: Non-GAAP Information

    Non-GAAP Information Non-GAAP Information (in millions, except per share amounts) 1Q21 2Q21 3Q21 4Q21 2021 1Q22 2Q22 3Q22 4Q22 2022 (1) This amount includes professional fees (which includes fees associated Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP with the valuation

37. Slide 37: 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)

38. Slide 38: Non-GAAP Information

    Non-GAAP Information Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 2Q23 3Q23 4Q23 1Q24 LTM Net income allocated to common stockholders $ 167.0 $ 207.1 $ 210.8 $ 208.3 $ 793.2 Interest expense, net 13.9 11.9 9.5 8.9 $ 44.2 Income tax provision 74.0 61.9 75.5 82.6 $ 294.0 Depreciatio

39. Slide 39: Disclaimer

    Disclaimer The iBoxx iShares $ High Yield Corporate Bond Index and the iBoxx iShares $ Investment Grade Corporate Bond Index (“iBoxx iShares $ Corporate Bond Indices”) are products of S&P Dow Jones Indices LLC or its affiliates or licensors (“S&P DJI”) and have been licensed for use by Cboe Exchange

40. Slide 40: Thank You

    THANK YOU 40

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