Cboe Global Markets, Inc. · CBOE:CBOE

Cboe Global Markets — Q4 2023 Earnings Presentation

44 slides from Cboe Global Markets's earnings presentation, Feb 2, 2024

1. Slide 1: Fourth Quarter 2023 Earnings Presentation

   FOURTH QUARTER 2023 EARNINGS PRESENTATION February 2, 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 and Chief Accounting Officer Questions & Answers Fredric Tomczyk Dave Howson Jill Griebenow Chris I

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: 4Q23: Strong Adjusted Earnings and Record Net Revenue Cap a Record Year

   4Q23: Strong Adjusted Earnings and Record Net Revenue in Fourth Quarter Cap a Record Year* Net revenues grew 9% Y/Y, a product of continued strong transaction and non-transaction growth 18% increase in Derivatives Markets organic net revenue1 Total options average daily volume (ADV) up 2%, driven by

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: Unlocking Growth Up the Value Ladder Leveraging Global Derivatives and Securities Network

   Unlocking Growth Up the Value Ladder by Leveraging Cboe’s Global Derivatives and Securities Network North America Europe Asia Pacific ◆ Canadian Equities market share improved ◆ In 4Q23, Cboe BIDS Europe remained the ◆ Completed Cboe Japan tech migration and BIDS to 15.3% in 4Q23 from 13.6% in 4Q22

8. Slide 8: Reflecting on 2023 Trends

   Reflecting on 2023 Trends 2023 Highlights Expanding the Toolkit Record activity in SPX and VIX options Expanding the Existing VIX • SPX option volumes up 31% to a record 2.9mn contracts in 2023 Ecosystem Institutional • VIX option volumes up 40% to a record 743k contracts in 2023 • 1-Day VIX Index •

9. Slide 9: 2024 Derivative Drivers

   2024 Derivative Drivers SPX Options ADV vs. VIX & S&P500 Index Secular Drivers 4.0 140% 3.5 120% Contracts (million) Wider Adoption Expanded Access 3.0 100% 2.5 VIX Index • Rise of retail options trading • GTH volumes up 85% in 2023 80% for SPX 2.0 • 2024 catalysts: More 60% 1.5 platforms coming onl

10. Slide 10: Derivatives Product Innovation Builds on Strong Foundation

    Derivatives Product Innovation Builds on Strong Foundation Tuesday / Thursday Russell 2000 Index Options • On Jan 8, 2024, Cboe launched Tuesday and Thursday expiring Russell 2000 Index weekly options and Mini-Russell 2000 Index weekly options Writing XSP vs. • Provides daily expirations for investo

11. Slide 11: Data and Access Solutions: Driving Durable Growth

    Data and Access Solutions: Driving Durable Growth DnA growth trends have been strong: ◆ Averaged 13% year-over-year quarterly growth in total DnA gross revenues since 4Q21 ◆ Anticipate new opportunities across the data and access solutions ecosystem will help drive future growth ◆ Continued demand f

12. Slide 12: 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 Derivatives ◆ Targeting >150mn retail accounts with smaller & more flexible products2 ◆ Der

13. Slide 13: Financial Overview and Guidance

    FINANCIAL OVERVIEW AND GUIDANCE Jill Griebenow, EVP, CFO and CAO 13

14. Slide 14: 4Q23 Financial Summary

    4Q23 Financial Summary Net Revenue (in millions) $499mn $457 $471 $467 $481 $499 Net Revenue +9% Y/Y 4Q22 1Q23 2Q23 3Q23 4Q23 Adjusted EBITDA¹ (in millions) $321mn $292 $310 $293 $321 $321 Adjusted EBITDA¹ 66.7% +10% Y/Y 63.9% 65.8% 64.3% 62.8% (Adjusted EBITDA margin¹ of 64.3%) 4Q22 1Q23 2Q23 3Q23

15. Slide 15: 4Q23 Net Revenue by Segment and Key Drivers

    4Q23 Net Revenue by Segment1 and Key Drivers Net Revenue Segment 4Q23 Key Drivers (in millions) $499.0 Net Rev. Growth Key Drivers $457.1 Options ◆ Higher index options trading volume and RPC +15% CBOE - C2 - BZX - ◆ Strong growth in access and capacity and EDGX proprietary market data fees N.A. Equ

16. Slide 16: Grew 4Q23 Data and Access Solutions Net Revenue 7% YoY Organically

    Grew 4Q23 Data and Access Solutions Net Revenue 7% YoY Organically1 Introduced 2024 organic net revenue growth rate1 target for Data and Access Solutions business of 7-10%, in line with our medium-term guidance2  4Q23 Data and Access Solutions net revenue of $135 million up 7% YoY organically1 Data

17. Slide 17: 4Q23 Adjusted Operating Expenses Up 9%

    4Q23 Adjusted Operating Expenses1 Up 9%, Driven by Compensation and Benefits and Technology  4Q23 expense increase driven by higher compensation and benefits and technology support services  $19 million increase in compensation-related expenses  $3 million increase in technology support services

18. Slide 18: 2024 Guidance

    2024 Guidance 1 2024 Guidance 2024 Full-Year Guidance as of 2023 Actual2 ($ in millions) Feb. 2, 2024 3 Data and Access Solutions organic net revenue growth rate 7 to 10% 7% Total organic net revenue growth rate 5 to 7% 10% 4 Adjusted operating expenses $798 to 808 $750.5 implied growth rate 6 to 8%

19. Slide 19: Medium-Term Organic Revenue Guidance vs. Performance

    Medium-Term Organic Revenue Guidance vs. Performance Annual Net Revenue Medium-Term Annual DnA Revenue Guidance Medium Term 5-7% Organic Growth Target1 Medium Term 7-10% Organic Growth Target1 10% 7% 7% 5% 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 2024 Average Growth 2024 Growth Ta

20. Slide 20: Efficient Allocation of Capital to Create Long-Term Shareholder Value

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

21. Slide 21: 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 ◆

22. Slide 22: Q&A

    Q&A 22

23. Slide 23: Appendix

    Appendix © 2023 Cboe Exchange, Inc. All rights reserved. 23

24. Slide 24: Options 4Q23 Net Revenue Up 15%

    Options 4Q23 Net Revenue Up 15%, Reflecting Y/Y Increase in ADV and Recurring Non-transaction Revenue Options Selected Revenue Data ($ in millions) 4Q23 4Q22 Chg 2023 2022 Chg ◆ Higher transaction fees from Net Revenue $314.5 $273.2 15% $1,169.2 $983.2 19% index options given stronger Net transactio

25. Slide 25: N.A. Equities 4Q23 Net Revenue Down 10%

    North American (N.A.) Equities 4Q23 Net Revenue Down 10% Driven by Lower N.A. Equities Net Capture N.A. Equities Selected Revenue Data 4Q23 4Q22 Chg 2023 2022 Chg ◆ U.S. equities transaction and ($ in millions) Net Revenue $86.3 $96.4 -10% $365.3 $378.9 -4% clearing fees were impacted by Net transac

26. Slide 26: Europe and APAC Net Revenue Up 9%

    Europe and APAC Net Revenue up 9% for 4Q23, Driven by Non- Transaction Growth Europe and APAC Selected Revenue Data 4Q23 4Q22 Chg 2023 2022 Chg ◆ Market data, access fees and other ($ in millions) Net Revenue $48.0 $44.2 9% $190.2 $196.1 -3% were up a combined 14% in 4Q23 Net transaction and clearin

27. Slide 27: Futures 4Q23 Net Revenue Up 21%

    Futures 4Q23 Net Revenue up 21%, Higher Volumes, Access and Capacity Fees, and Market Data Futures Selected Revenue Data 4Q23 4Q22 Chg 2023 2022 Chg ◆ Higher volumes drove an increase in ($ in millions) Net Revenue $32.4 $26.8 21% $125.1 $116.0 8% net transaction and clearing fees Net transaction an

28. Slide 28: Global FX 4Q23 Net Revenue Up 12%

    Global FX Net 4Q23 Revenue Up 12% FX Selected Revenue Data ◆ Revenue increase driven by higher 4Q23 4Q22 Chg 2023 2022 Chg volumes and continued market share ($ in millions) gains Net Revenue $18.9 $16.9 12% $73.5 $67.9 8% ◆ Market share hit a record at 21.3% for Net transaction and clearing fees¹ 1

29. Slide 29: Fourth Quarter 2023 Financial Overview

    Fourth Quarter 2023 Financial Overview Adjusted Financial Results¹ 4Q23 4Q22 % Chg 2023 2022 % Chg ($ in millions, except per share) Net Revenue² $499.0 $457.1 9% $1,918.0 $1,741.7 10% Adjusted Operating Expenses¹ $191.7 $176.6 9% $750.5 $652.2 15% Adjusted Operating Income¹ $307.3 $280.5 10% $1,167

30. Slide 30: Net Revenue Detail

    Net Revenue Detail Net Revenue1 ◆ Derivatives Markets driven 4Q23 4Q22 % Chg 2023 2022 % Chg (in millions) by strong transaction and Cash and Spot Markets $86.9 $97.1 -11% $366.5 $406.7 -10% clearing fees Data and Access Solutions 135.2 125.8 7% 530.1 487.8 9% ◆ Data and Access Solutions Derivatives

31. Slide 31: 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

32. Slide 32: 0DTE Adding Stability to SPX Volumes

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

33. Slide 33: M&A Integration Translating to Long-Term Growth Opportunities

    M&A Integration Translating to Long-Term Growth Opportunities Transaction Strategic Rationale Integration Progress Integration & Planned Organic Growth Focus1 FT Options - Enhanced Proprietary Products - Hanweck enhanced ticker plant infrastructure supporting - Foundation for risk distribution of da

34. Slide 34: Cboe's Commitment to ESG Initiatives

    Cboe’s Commitment to ESG Initiatives Environmental Social Governance ◆ Scope 3 Emissions: Calculated and disclosed ◆ Cboe Empowers: Community engagement ◆ Independent Board: 10 of the 11 Directors are Scope 3 emissions in several categories for 2022, program that provides mentorship, scholarships an

35. Slide 35: Non-GAAP Information

    Non-GAAP Information © 2023 Cboe Exchange, Inc. All rights reserved. 35

36. Slide 36: 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

37. Slide 37: Reconciliation of Net Transaction and Clearing Fees by Segment

    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 March 31 (in millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Transaction and cl

38. Slide 38: Reconciliation of Net Revenues to Constant Currency

    Non-GAAP Information Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Twelve Months Net Revenue (in millions) Ended, Ended, Dec 31, 2023 Dec. 31, 2023 Europe and Asia Pacific net revenues $48.0 $190.2 Constant currency adjustment (1.9) (0.4) 1 Europe and Asia Pac

39. Slide 39: Reconciliation of Net Revenue by Revenue Caption

    Non-GAAP Information Reconciliation of Net Revenue by Revenue Caption Reconciliation of Net Revenue by Revenue Caption Cash and Data and Derivatives Cash and Data and Derivatives For the Three Months Ended Spot Markets Access Solutions Markets Total For the Twelve Months Ended Spot Markets Access So

40. Slide 40: Reconciliation of Net Income to Non-GAAP

    Non-GAAP Information Non-GAAP Information (in millions, except per share amounts) 1Q22 2Q22 3Q22 4Q22 2022 1Q23 2Q23 3Q23 4Q23 2023 Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP (1) This amount includes ongoing acquisition related costs primarily from the Net income alloc

41. Slide 41: EBITDA Reconciliations

    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)

42. Slide 42: Adjusted Debt to EBITDA - Trailing Twelve Months

    Non-GAAP Information Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 1Q23 2Q23 3Q23 4Q23 LTM Net income allocated to common stockholders $ 172.6 $ 167.0 $ 207.1 $ 210.8 $ 757.5 Interest expense, net 15.1 13.9 11.9 9.5 50.4 Income tax provision 74.8 74.0 61.9 75.5 286.2 Depreciation a

43. Slide 43: 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

44. Slide 44: Thank You

    THANK YOU 44

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