Cboe Global Markets, Inc. · CBOE:CBOE

Cboe Global Markets — Q3 2023 Earnings Presentation

45 slides from Cboe Global Markets's earnings presentation, Nov 3, 2023

1. Slide 1: Third Quarter 2023 Earnings Presentation

   THIRD QUARTER 2023 EARNINGS PRESENTATION November 3, 2023

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: 3Q23: Record Net Revenue and Adjusted Earnings

   3Q23: Record Net Revenue and Adjusted Earnings* Net revenues grew 9% Y/Y, a product of continued strong transaction and non-transaction growth 15% increase in Derivatives Markets organic net revenue1 ADV up 28% in index options and 2% in multi-listed options 9% increase in Data and Access Solutions

6. Slide 6: Cboe's Areas of Focus

   Cboe’s Areas of Focus CEO’s Three Key Priorities Sharpen Cboe’s Strategic Focus Effectively Allocate Capital Develop Talent and Enhance Succession Planning © 2023 Cboe Exchange, Inc. All rights reserved. 6

7. Slide 7: 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 15% y/y organic net ◆ Access to multi-asset accounts with smaller & more expected to contribute 2- reven

8. Slide 8: Expanding the Toolkit Any Day Any Time

   Expanding the Toolkit Solutions for every use case, from the smallest retail client to the most complicated financial institution Any Day Any Time Every Customer Daily expirations for maximum precision Prop products available 24 hours a Retail to institutional, the global in risk management: day, 5

9. Slide 9: Derivatives Product Innovation Builds on Strong Foundation

   Derivatives Product Innovation Builds on Strong Foundation Proprietary Benchmark Indices • Cboe S&P 500 Dispersion Index (DSPX) • Cboe/CDX NA High Yield 1-Month Volatility Index (ticker symbol: VIXHY) • Cboe/CDX NA Investment Grade 1-Month Volatility Index (ticker symbol: VIXIG) Writing XSP vs. • Cb

10. Slide 10: Data and Access Solutions: Driving Durable Growth

    Data and Access Solutions: Driving Durable Growth DnA growth trends have been strong: ◆ Averaged 14% year-over-year quarterly growth in total DnA gross revenues since 3Q21 ◆ Anticipate new opportunities across the data and access solutions ecosystem will help drive future growth ◆ Global indices ◆ P

11. Slide 11: Building an Unrivaled Global Derivatives and Securities Network

    Building an Unrivaled Global Derivatives and Securities Network Europe ◆ In 3Q23, Cboe BIDS Europe remained the largest European block trading platform1 North America ◆ Cboe Clear Europe market share2 grew to ◆ Monthly high ADV of more than 3.9mn index options traded in Sept 2023 34% in 3Q23 from 33

12. Slide 12: Harvesting Investments Across Seasons to Drive Consistent Growth

    Harvesting Investments Across Seasons to Drive Consistent Growth More Data  24x5 / Global Trading Hours  0DTE / Daily Expiries Near-Term  BIDS Canada Contributors Data & Access  Dispersion1 Solutions Medium-  European Derivatives Term  Cboe Global Cloud Cash & Contributors Spot  Indices / ESG

13. Slide 13: Financial Overview and Guidance

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

14. Slide 14: 3Q23 Financial Summary

    3Q23 Financial Summary Net Revenue (in millions) $481mn $442 $457 $471 $467 $481 Net Revenue +9% Y/Y 3Q22 4Q22 1Q23 2Q23 3Q23 Adjusted EBITDA¹ (in millions) $321mn $287 $292 $310 $293 $321 Adjusted EBITDA¹ 66.7% +12% Y/Y 64.9% 63.9% 65.8% 62.8% (Adjusted EBITDA margin¹ of 66.7%) 3Q22 4Q22 1Q23 2Q23

15. Slide 15: 3Q23 Net Revenue by Segment and Key Drivers

    3Q23 Net Revenue by Segment1 and Key Drivers Net Revenue Segment 3Q23 Key Drivers (in millions) $480.5 Net Rev. Growth Key Drivers $442.4 Options ◆ Higher index options trading volume and RPC +14% CBOE - C2 - BZX - ◆ Strong growth in access and capacity and EDGX proprietary market data fees N.A. Equ

16. Slide 16: Grew Data and Access Solutions Net Revenue 9% YoY Organically

    Grew Data and Access Solutions Net Revenue 9% YoY Organically1 Reaffirmed targeted 2023 organic net revenue growth rate1 for Data and Access Solutions business of 7-10%, in line with our medium-term guidance2  3Q23 Data and Access Solutions net revenue of $135 million up 9% YoY1 organically Data &

17. Slide 17: 3Q23 Adjusted Operating Expenses Up 4%

    3Q23 Adjusted Operating Expenses1 Up 4%, Driven by Technology, Professional Services, and Travel and Promotional  3Q23 expense increase driven by higher technology support services, professional fees and outside services, and travel and promotional  $6 million increase in technology support servic

18. Slide 18: Adjusted Operating Expense Guidance for 2023

    Adjusted Operating Expense Guidance for 20231 ($ in millions) $51-55 $754-762 $21-24 $30-31 $6521 2022 Adj Growth Core 2023 2022 Operating Investments Expense Adj Operating Acquisitions Expenses Growth Expenses Growth Rate Growth Core Total Organic Inorganic Total Composition Investments Growth Grow

19. Slide 19: Updated 2023 Guidance

    Updated 2023 Guidance 1, 2 2023 Guidance 2023 Guidance 2023 Guidance 2023 Guidance 3 2023 Full-Year Guidance 2022 Actual as of as of as of as of ($ in millions) November 3, 2023 August 4, 2023 May 5, 2023 Feb. 3, 2023 Data and Access Solutions4 organic net revenue growth rate 7 to 10% 7 to 10% 7 to

20. Slide 20: 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

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 3Q23 Net Revenue Up 14%

    Options 3Q23 Net Revenue Up 14%, Reflecting Y/Y Increase in ADV and Recurring Non-transaction Revenue Options Selected Revenue Data 3Q23 3Q22 Chg ($ in millions) ◆ Higher transaction fees from index options Net Revenue $290.8 $255.5 14% given stronger volumes and RPC Net transaction and clearing fee

25. Slide 25: North American Equities 3Q23 Net Revenue Down 2%

    North American (N.A.) Equities 3Q23 Net Revenue down 2% Given N.A. Equities Industry Volumes and Market Share N.A. Equities Selected Revenue Data 3Q23 3Q22 Chg ($ in millions) ◆ U.S. equities transaction and clearing fees Net Revenue $95.1 $96.7 -2% were impacted by lower industry volumes Net transa

26. Slide 26: Europe and APAC Net Revenue up 2% for 3Q23

    Europe and APAC Net Revenue up 2% for 3Q23, Driven by Non- Transaction Growth Europe and APAC Selected Revenue Data 3Q23 3Q22 Chg ($ in millions) ◆ Market data, access fees and other were up a Net Revenue $45.6 $44.5 2% Net transaction and clearing fees¹ $20.9 $23.5 -11% combined 18% in 3Q23 Net tra

27. Slide 27: Futures 3Q23 Net Revenue up 14%

    Futures 3Q23 Net Revenue up 14%, Higher Volumes, Access and Capacity Fees, and Market Data Futures Selected Revenue Data 3Q23 3Q22 Chg ◆ Higher volumes drove an increase in net ($ in millions) Net Revenue $32.4 $28.4 14% transaction and clearing fees Net transaction and clearing fees¹ $25.4 $22.3 14

28. Slide 28: Global FX Net Revenue Up 6%

    Global FX Net 3Q23 Revenue Up 6% FX Selected Revenue Data 3Q23 3Q22 Chg ◆ Revenue increase driven by higher volumes and ($ in millions) continued market share gains Net Revenue $18.3 $17.3 6% Net transaction and clearing fees¹ 15.3 14.6 5% ◆ Market share hit a record at 20.2% for the quarter Non-tra

29. Slide 29: Third Quarter 2023 Financial Overview

    Third Quarter 2023 Financial Overview Adjusted Financial Results¹ 3Q23 3Q22 % Chg ($ in millions, except per share) Net Revenue² $480.5 $442.4 9% Adjusted Operating Expenses¹ $180.3 $172.8 4% Adjusted Operating Income¹ $300.2 $269.6 11% Adjusted Operating Margin ¹ 62.5% 60.9% 1.6pts Adjusted Net Inc

30. Slide 30: Net Revenue Detail

    Net Revenue Detail 1 Net Revenue 3Q23 3Q22 % Chg ◆ Derivatives Markets driven by strong (in millions) transaction and clearing fees Cash and Spot Markets $92.1 $98.1 -6% Data and Access Solutions 134.7 123.9 9% ◆ Data and Access Solutions benefited from Derivatives Markets 253.7 220.4 15% strong new

31. Slide 31: 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 ◆ Leverage core capabilities (Derivatives toolkit) and 2021 Adjusted Operating Expenses¹ $ 531 Actual to y/y gr

32. Slide 32: 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

33. Slide 33: 0DTE Adding Stability to SPX Volumes

    0DTE Adding Stability to SPX Volumes SPX Volume by Expiration 3.8 3.5 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 2.3 48% 2.2 2.1 2.2 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 expiration introduced May 11

34. Slide 34: 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

35. Slide 35: 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

36. Slide 36: Non-GAAP Information

    Non-GAAP Information © 2023 Cboe Exchange, Inc. All rights reserved. 36

37. Slide 37: 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

38. Slide 38: Non-GAAP Information

    Non-GAAP Information Reconciliation of Net Transaction and Clearing Fees by Segment For the Three Months Europe and Asia Ended Options N.A. Equities Pacific Futures Global FX Digital Total Dec 31 (in millions) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Transaction and clea

39. Slide 39: Non-GAAP Information

    Non-GAAP Information Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Nine Months Net Revenue (in millions) Ended, Ended, Sept 30, 2023 Sept 30, 2023 Europe and Asia Pacific net revenues $45.6 $142.2 Constant currency adjustment (2.4) 1.5 Europe and Asia Pacific

40. Slide 40: Non-GAAP Information

    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

41. Slide 41: Non-GAAP Information

    Non-GAAP Information Non-GAAP Information (in millions, except per share amounts) 1Q22 2Q22 3Q22 4Q22 2022 1Q23 2Q23 3Q23 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 $ 167.0 $

42. Slide 42: 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)

43. Slide 43: Non-GAAP Information

    Non-GAAP Information Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 4Q22 1Q23 2Q23 3Q23 LTM Net income allocated to common stockholders $ 159.0 $ 172.6 $ 167.0 $ 207.1 $ 705.7 Interest expense, net 15.7 15.1 13.9 11.9 56.6 Income tax provision 76.1 74.8 74.0 61.9 286.8 Depreciation

44. Slide 44: 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

45. Slide 45: Thank You

    THANK YOU 45

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