Slide 1: First Quarter 2023 Earnings Presentation
FIRST QUARTER 2023 EARNINGS PRESENTATION MAY 5, 2023
Slide 2: Agenda
AGENDA Edward Tilly Strategic Review Chairman 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 Howson Executive
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 and CEO 4
Slide 5: 1Q23: Record Levels of Net Revenue and Adjusted Earnings to Start 2023
1Q23: Record Levels of Net Revenue and Adjusted Earnings to Start 2023* Net revenues grew 13% Y/Y, a product of strong transaction and non-transaction growth 29% increase in Derivatives Markets organic net revenue¹ ADV up 49% in index options and 1% in multi-listed options 9% increase in Data and
Slide 6: Top Strategic Growth Priorities
TOP STRATEGIC GROWTH PRIORITIES Sizing the Key Trends Market Opportunity Cboe Progress Growth Potential ◆ Globalization ◆ Targeting >150mn retail ◆ Derivatives initiatives ◆ Derivatives delivered 29% y/y organic net ◆ Access to multi-asset accounts with smaller & more expected to contribute 2- reven
Slide 7: Global Derivatives: Extending the Market Potential
GLOBAL DERIVATIVES: EXTENDING THE MARKET POTENTIAL Record SPX Activity Driven by Innovation - 1Q23 ADV of 2.8mn contracts, single-day record on 3/10/23 of 4.2mn contracts Any Time Any Day Prop products available 24 hours a day, 5 days a week SPX Weeklys Drive Same-Day Trading Strategies • Record SPX
Slide 8: Derivatives Product Innovation Builds on Strong Foundation
DERIVATIVES PRODUCT INNOVATION BUILDS ON STRONG FOUNDATION 1-Day VIX • Cboe 1-Day Volatility Index (VIX1D) seeks to measure the expected volatility of the S&P 500 Index over the current trading day (i.e., single trading day volatility) • Aggregates the weighted prices of P.M.-settled SPX (SPXW) opti
Slide 9: Data and Access Solutions: Driving Durable Growth
DATA AND ACCESS SOLUTIONS: DRIVING DURABLE GROWTH Data & Access Solutions Gross Revenue DnA growth trends have been strong: (in millions) ◆ Averaged 17% year-over-year quarterly growth in $129 total DnA gross revenues since 1Q21 $114 $119 $124 $126 $128 $110 $101 $103 ◆ Anticipate new opportunities
Slide 10: Building an Unrivaled Global Derivatives and Securities Network
BUILDING AN UNRIVALED GLOBAL DERIVATIVES AND SECURITIES NETWORK Europe ◆ Grew year-over-year European equities market share by three percentage points to 24.9% in 1Q23 ◆ In 1Q23, Cboe was Europe's largest stock exchange and Cboe BIDS Europe was the largest European block trading platform1 ◆ Cboe Cle
Slide 11: Harvesting Investments Across Seasons to Drive Consistent Growth
HARVESTING INVESTMENTS ACROSS SEASONS TO DRIVE CONSISTENT GROWTH More Data 24x5 / GTH Tuesday / Thursday Expiry Near-Term BIDS Canada Contributors Data and Access Solutions Cboe Global Cloud Cash & Medium- Spot Term European Derivatives Markets Contributors Indices / ESG BIDS Asia1 Derivatives Long-
Slide 12: Financial Overview and Guidance
FINANCIAL OVERVIEW AND GUIDANCE Brian Schell EVP, CFO and Treasurer 12
Slide 13: 1Q23 Financial Summary
1Q23 FINANCIAL SUMMARY Net Revenue (in millions) $471mn $457 $471 $418 $424 $442 Net Revenue +13% Y/Y 1Q22 2Q22 3Q22 4Q22 1Q23 Adjusted EBITDA¹ (in millions) $310mn $281 $274 $287 $292 $310 Adjusted EBITDA¹ 67.3% +10% Y/Y 64.7% 64.9% 63.9% 65.8% (Adjusted EBITDA margin¹of 65.8%) 1Q22 2Q22 3Q22 4Q22
Slide 14: 1Q23 Net Revenue by Segment and Key Drivers
1Q23 NET REVENUE BY SEGMENT1 AND KEY DRIVERS Net Revenue (in millions) $471.4 Segment 1Q23 Key Drivers Net Rev. Growth Key Drivers Options ◆ Higher index options trading volume and $418.1 CBOE - C2 - BZX - RPC EDGX +28% ◆ Strong organic growth in access and capacity and market data fees N.A. Equitie
Slide 15: Grew Data and Access Solutions Net Revenue 9% YoY
GREW DATA AND ACCESS SOLUTIONS NET REVENUE 9% YOY, ORGANIC GROWTH OF 6%1 Targeted 2023 organic net revenue growth rate for Data and Access Solutions business of 7-10%, in line with our medium-term guidance2 1Q23 Data and Access Solutions net revenue of $127 million Data & Access Solutions Gross Re
Slide 16: 1Q23 Adjusted Operating Expenses Up 28%
1Q23 ADJUSTED OPERATING EXPENSES UP 28%, DRIVEN BY ACQUISITIONS AND COMPENSATION AND BENEFITS 1Q23 expense increase driven by addition of Cboe Digital and NEO acquisition, as well as higher compensation and benefits $29 million increase in compensation-related expenses $4 million increase in p
Slide 17: Adjusted Operating Expense Guidance for 2023
ADJUSTED OPERATING EXPENSE GUIDANCE FOR 20231 $56-62 ($ in millions) $769-779 Core Growth 9 percentage ~6% points of growth ~3% CAT build $28-30 $685-6871 $33-35 $6521 2022 Adj 2022 Normalized 2022 Growth Core Expense 2023 Operating Acquisitions run rate Investments Growth Adj Operating Expenses Exp
Slide 18: Updated 2023 Guidance
UPDATED 2023 GUIDANCE 2023 Guidance 2023 Guidance 2023 Full-Year Guidance 1, 2 2022 Actual3 as of as of ($ in millions) May 5, 2023 Feb. 3, 2023 Data and Access Solutions4 organic net revenue growth rate 7 to 10% 7 to 10% 12% Net revenue growth from acquisitions held <12 months 0.5% 0.5% 2% Total or
Slide 19: 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 20: 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 demand for trading products to increase efficiency and untapped addressable and data services, globally better serve customers markets ◆ Increase access to data p
Slide 21: Q&A
Q&A Cboe Confidential 21
Slide 22: Appendix
APPENDIX Cboe Confidential 22
Slide 23: Options 1Q23 Net Revenue Up 28%
OPTIONS 1Q23 NET REVENUE UP 28%, REFLECTING Y/Y INCREASE IN ADV AND RECURRING NON-TRANSACTION REVENUE ◆ Higher transaction fees from index options given stronger volumes and RPC ◆ Access and capacity fees plus proprietary market data were up a combined 9% Options Selected Revenue Data 1Q23 1Q22 Chg
Slide 24: North American Equities 1Q23 Net Revenue Flat
NORTH AMERICAN (N.A.) EQUITIES 1Q23 NET REVENUE FLAT, CONTRIBUTION FROM NEO OFFSET BY N.A. EQUITIES INDUSTRY VOLUMES AND MARKET SHARE ◆ Net revenue reflects $5.6 million contribution from NEO ◆ U.S. equities transaction and clearing fees were impacted by lower industry volumes and market share ◆ Acc
Slide 25: Europe and APAC Net Revenue Down 14% for 1Q23
EUROPE AND APAC NET REVENUE DOWN 14% FOR 1Q23, DRIVEN BY LOWER INDUSTRY VOLUMES AND CURRENCY HEADWINDS ◆ Net revenue decrease reflects $3.5 million impact from stronger USD in 1Q23 vs. 1Q221 ◆ Cboe Europe’s overall equities market share was 24.9% in 1Q23 versus 21.8% in 1Q22 ◆ In 1Q23, Cboe was Euro
Slide 26: Futures 1Q23 Net Revenue Flat
FUTURES 1Q23 NET REVENUE FLAT, VOLUME DECLINES OFFSET BY ACCESS AND CAPACITY FEES ◆ Flat revenue performance as compared to 1Q22 ◆ Lower volumes drove a decline in net transaction and clearing fees ◆ Access and capacity saw strong year-over-year improvement during the quarter Futures Selected Revenu
Slide 27: Global FX Net 1Q23 Revenue Up 8%
GLOBAL FX NET 1Q23 REVENUE UP 8% ◆ Revenue increase driven by higher volumes and continued market share gains ◆ Market share hit a record at 19.0% for the quarter FX Selected Revenue Data 1Q23 1Q22 Chg ($ in millions) Net Revenue $18.5 $17.1 8% Net transaction and clearing fees¹ 15.5 14.4 8% Non-tra
Slide 28: First Quarter 2023 Financial Overview
FIRST QUARTER 2023 FINANCIAL OVERVIEW Adjusted Financial Results¹ 1Q23 1Q22 % Chg ($ in millions, except per share) Net Revenue² $471.4 $418.1 13% Adjusted Operating Expenses¹ $186.2 $145.8 28% Adjusted Operating Income¹ $285.2 $272.3 5% Adjusted Operating Margin ¹ 60.5% 65.1% -4.6pts Adjusted Net I
Slide 29: 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 Revenue1 1Q23 1Q22 % Chg (in millions) Cash and Spot Markets $97.2 $110.3 -12% Data and Access Solutions 127.2 116.5 9% Derivat
Slide 30: Expense Bridge Summary
EXPENSE BRIDGE SUMMARY Prioritizing investments to: Adjusted Operating Expenses Bridge for 2021 to 2022 ($ in millions) ◆ Broaden geographic footprint (Cboe APAC, Euro derivs) Contribution to ◆ Leverage core capabilities (24x5, BIDS and Nanos) and 2021 Adjusted Operating Expenses¹ $ 531 Actual y/y g
Slide 31: Focused on Growing the Proprietary Index Suite
FOCUSED ON GROWING THE 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 geographies
Slide 32: Cboe's Commitment to ESG Initiatives
CBOE’S COMMITMENT TO ESG INITIATIVES Environmental Social Governance ◆ Committing to Net Zero: Cboe is committing to ◆ Cboe Empowers: Community engagement ◆ Independent Board: 12 of the 13 Directors reaching net zero emissions across our operations program that provides mentorship, scholarships are
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
Slide 34: Non-GAAP Information
NON-GAAP INFORMATION Cboe Confidential 34
Slide 35: 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 36: 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) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Transaction and cle
Slide 37: Non-GAAP Information
NON-GAAP INFORMATION Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Ended, Net Revenue (in millions) March 31, 2023 Europe and Asia Pacific net revenues $49.3 Constant currency adjustment 3.5 Europe and Asia Pacific net revenue in constant currency $52.8 37
Slide 38: 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 March 31 (in millions) 2023 2022 2023 2022 2023 2022 2023 2022 Transaction and clearing fees $ 311.9 $ 395.5 $ - $ - $ 420.6 $
Slide 39: Non-GAAP Information
Non-GAAP Information (in millions, except per share amounts) 1Q22 2Q22 3Q22 4Q22 2022 1Q23 Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP Net income allocated to common stockholders $ 109.2 $ (184.5) $ 149.6 $ 159.0 $ 234.2 $ 172.6 Acquisition-related expenses (1) 2.0 14.3
Slide 40: 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 41: Non-GAAP Information
NON-GAAP INFORMATION Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 2Q22 3Q22 4Q22 1Q23 LTM Net income allocated to common stockholders $ (184.5) $ 149.6 $ 159.0 $ 172.6 296.5 Interest expense, net 14.6 15.3 15.7 15.1 60.7 Income tax provision (72.3) 78.8 76.1 74.8 157.4 Depreciatio
Slide 42: Thank You
THANK YOU Cboe Confidential 42