Cboe Global Markets, Inc. · CBOE:CBOE

Cboe Global Markets — Q3 2024 Earnings Presentation

40 slides from Cboe Global Markets's earnings presentation, Nov 1, 2024

  1. Slide 1: Third Quarter 2024 Earnings Presentation

    THIRD QUARTER 2024 EARNINGS PRESENTATION November 1, 2024 © 2024 Cboe Exchange, Inc. All rights reserved.

  2. Slide 2: Agenda

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

  3. Slide 3: Disclosures

    Disclosures Forward-Looking Statements 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 such as “may,” “might,”

  4. Slide 4: Quarterly Recap and Outlook

    QUARTERLY RECAP AND OUTLOOK Fredric Tomczyk, CEO Dave Howson, Global President 4

  5. Slide 5: 3Q24: Record Net Revenue in Third Quarter

    3Q24: Record Net Revenue in Third Quarter* Net revenues grew 11% Y/Y, a product of continued strong transaction and non-transaction growth 13% increase in Derivatives Markets organic net revenue1 Total options ADV up 2%, driven by a 13% increase in index options ADV Total options rate per contract (

  6. Slide 6: Sharpening the Strategic Focus

    Sharpening the Strategic Focus Progress Made Moderated Revised approach to Shifted capital Reallocated expense growth and M&A allocation strategy resources to core stabilized margins competencies Focused on integrating Returned $387 million4 to 2024 YTD1 adjusted shareholders throughout and improvin

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

    Derivatives Continued to Execute, Well Positioned for Future Uptick in Volatility Drove Increased Utilization of VIX Product Suite Derivatives net revenue up 13% y/y in 3Q24 SPX and VIX Options ADV vs. Average VIX Level 30 SPX Options ADV increased 7% y/y 25 20 VIX Options ADV increased 33% y/y 15 1

  8. Slide 8: Unlocking Global Growth Potential

    Unlocking Global Growth Potential North America | Europe | Asia Pacific ◆ North American Equities net ◆ Cboe Europe remained Europe’s ◆ Grew Cboe Australia Equities market transaction and clearing fees1 were up leading market share during share to 20.8% in 3Q24 from 17.9% in 10% as compared to 3Q23

  9. Slide 9: Data and Access Solutions: Driving Durable Growth

    Data and Access Solutions: Driving Durable Growth Many Avenues of Potential Growth Data Access Analytics & Execution Comprehensive suite of real-time, historical, and Global access across asset classes through a robust Proprietary analytics, platforms, and risk- reference data across asset classes t

  10. Slide 10: Executing on Growth Priorities

    Executing on Growth Priorities Progress Opportunity More Data Global Derivatives ◆ Derivatives delivered 13% y/y organic net revenue growth1 in 3Q24 ◆ Targeting >150mn retail accounts with smaller & more flexible products2 ◆ 0DTE SPX trading made up 48% of 3Q24 SPX activity and volume was up 7% y/y

  11. Slide 11: Financial Overview and Guidance

    FINANCIAL OVERVIEW AND GUIDANCE Jill Griebenow, EVP, CFO 11

  12. Slide 12: 3Q24 Financial Summary

    3Q24 Financial Summary $532 $1,548 $481 $1,419 $1,285 $532mn $442 $370 $1,086 Net Revenue +11% Y/Y 3Q21 3Q22 3Q23 3Q24 2021 YTD 2022 YTD 2023 YTD 2024 YTD $342mn $321 $342 $1,020 $287 $924 $843 $240 $723 Adjusted EBITDA¹ +7% Y/Y 64.8% 64.9% 66.7% 64.3% 66.6% 65.6% 65.1% 65.9% (Adjusted EBITDA margin

  13. Slide 13: 3Q24 Net Revenue by Segment and Key Drivers

    3Q24 Net Revenue by Segment1 and Key Drivers Net Revenue Segment Net Rev. Growth Key Drivers in millions Options ◆ Higher net transaction and clearing fees +11% $532.0 CBOE - C2 - BZX - +10% ◆ Higher index options trading volume EDGX ◆ Increased total RPC $480.5 Higher net transaction and clearing f

  14. Slide 14: Grew 3Q24 Data and Access Solutions Net Revenue 6% YoY Organically

    Grew 3Q24 Data and Access Solutions Net Revenue 6% YoY Organically1 Expect 2024 organic net revenue growth rate2 target for Data and Access Solutions business to finish at lower end of 7-10% guidance range3 Data & Access Solutions Gross Revenue  3Q24 Data and Access Solutions net revenue of in mill

  15. Slide 15: 3Q24 Adjusted Operating Expenses Up 13%

    3Q24 Adjusted Operating Expenses1 Up 13%, Driven by Compensation and Benefits & Travel and Promotional Adjusted Operating Expenses¹  3Q24 expense increase driven by 3Q24 3Q23 $ Chg % Chg (in millions) higher compensation and benefits & Compensation and benefits $118.3 $96.1 $22.2 23% travel and pro

  16. Slide 16: 2024 Guidance

    2024 Guidance 2024 Guidance 2024 Guidance 2024 Guidance 2024 Guidance 2024 Full-Year Guidance1 as of as of as of as of 2023 Actual ($ in millions) November 1, 2024 August 2, 2024 May 3, 2024 February 2, 2024 3 Data and Access Solutions organic net revenue growth rate lower end of 7 to 10% lower end

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

    Efficient Allocation of Capital to Create Long-Term Shareholder Value Debt Outstanding ($ in millions) Dec. 31, Mar. 31, Jun. 30, Sep. 30, Preserving balance sheet flexibility remains 2023 2024 2024 2024 a priority 3.650% Senior Notes (10Y; Due 2027) $650 $650 $650 $650 1.625% Senior Notes (10Y; Due

  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 3Q24 Net Revenue Up 10%

    Options 3Q24 Net Revenue Up 10%, Reflecting Higher Net Transaction and Clearing Fees1 Options Selected Revenue Data 3Q24 3Q23 Chg ($ in millions) ◆ Higher net transaction and clearing fees1 Net Revenue $320.9 $290.8 10% Net transaction and clearing fees¹ $284.2 $248.3 14% from index options given st

  22. Slide 22: North American Equities 3Q24 Net Revenue Up 3%

    North American (N.A.) Equities 3Q24 Net Revenue Up 3%, Driven by Higher Net Transaction and Clearing Fees1 N.A. Equities Selected Revenue Data 3Q24 3Q23 Chg ($ in millions) ◆ Net transaction and clearing fees1 were Net Revenue $98.0 $95.1 3% Net transaction and clearing fees¹ $31.9 $29.0 10% up 10%

  23. Slide 23: Europe and APAC 3Q24 Net Revenue Up 22%

    Europe and APAC 3Q24 Net Revenue Up 22%, Reflecting Transaction and Non-Transaction Revenue Growth Europe and APAC Selected Revenue Data 3Q24 3Q23 Chg ($ in millions) Net Revenue $55.6 $45.6 22% ◆ Market data, access fees and other were up Net transaction and clearing fees¹ $27.5 $20.9 32% a combine

  24. Slide 24: Futures 3Q24 Net Revenue Up 17%

    Futures 3Q24 Net Revenue Up 17%, Driven by Y/Y Increase in ADV Futures Selected Revenue Data 3Q24 3Q23 Chg ($ in millions) ◆ 19% Y/Y increase in ADV drove an increase in Net Revenue $38.0 $32.4 17% Net transaction and clearing fees¹ $31.0 $25.4 22% net transaction and clearing fees1 Access and capac

  25. Slide 25: Global FX 3Q24 Net Revenue Up 9%

    Global FX 3Q24 Net Revenue Up 9%, Driven by Higher Net Transaction and Clearing Fees1 FX Selected Revenue Data 3Q24 3Q23 Chg ($ in millions) ◆ Net transaction and clearing fees1 were Net Revenue $20.0 $18.3 9% Net transaction and clearing fees¹ $16.9 $15.3 10% up 10% Non-transaction revenue $3.1 $3.

  26. Slide 26: 3Q24 Financial Overview

    3Q24 Financial Overview Adjusted Financial Results Delete 1 footnote 3Q24 3Q23 Chg ($ in millions, except per share) and adjust below Net Revenue1 to 1/2 $532.0 $480.5 11% Adjusted Operating Expenses2 $204.0 $180.3 13% 2 Adjusted Operating Income $328.0 $300.2 9% Adjusted Operating Margin 2 61.7% 62

  27. Slide 27: Net Revenue Detail

    Net Revenue Detail 1 Net Revenue 3Q24 3Q23 % Chg ◆ Derivatives Markets driven by solid (in millions) transaction and clearing fees Cash and Spot Markets $103.3 $92.1 12% ◆ Cash and Spot Markets driven by solid Data and Access Solutions $142.5 $134.7 6% Derivatives Markets $286.2 $253.7 13% transacti

  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 ADV by Expiration in millions of contracts 4.0 Thursday 60% expiration Tuesday introduced 3.5 3.5 3.3 55% expiration May 11, 2022 3.2 3.2 3.3 3.1 3.2 3.2 introduced 3.0 3.0 3.1 2.9 2.9 3.0 3.0 50% 3.0 April 18, 2022 2.8 2.9 2.8 2.7 2.7 2.7 2.7 2.6 50% 50% 50%

  30. Slide 30: Net Revenue by Revenue Caption

    Net Revenue by Revenue Caption Cash and Data and Derivatives For the Three Months Ended Spot Markets Access Solutions Markets Total September 30 (in millions) 2024 2023 2024 2023 2024 2023 2024 2023 Transaction and clearing fees $ 288.9 $ 268.6 $ - $ - $ 437.0 $ 410.0 $ 725.9 $ 678.6 Access and capa

  31. Slide 31: Net Transaction and Clearing Fees by Segment

    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 Dec 31 (in millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Transaction and clearing fees $ 419.0 $ 392.7 $ 240.0 $ 255

  32. Slide 32: Non-GAAP Information

    Non-GAAP Information © 2023 Cboe Exchange, Inc. All rights reserved. 32

  33. Slide 33: Non-GAAP Information

    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 inc

  34. Slide 34: Non-GAAP Information

    Non-GAAP Information Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Three Months Nine Months Nine Months Ended, Ended, Ended, Ended, Net Revenue (in millions) September 30, September 30, September 30, September 30, 2024 2023 2024 2023 Europe and Asia Pacific ne

  35. Slide 35: Non-GAAP Information

    Non-GAAP Information Non-GAAP Information (1) This amount includes acquisition-related costs primarily from the Company’s Cboe Digital, Cboe (in millions, except per share amounts) 1Q23 2Q23 3Q23 4Q23 2023 1Q24 2Q24 3Q24 Canada, and Cboe Asia Pacific acquisitions, which is included in acquisition-re

  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) 4Q23 1Q24 2Q24 3Q24 LTM Net income allocated to common stockholders $ 210.8 $ 208.3 $ 139.7 $ 217.4 $ 776.2 Interest expense, net 9.5 8.9 8.2 1.4 $ 28.0 Income tax provision 75.5 82.6 62.6 90.5 $ 311.2 Depreciation

  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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