Cboe Global Markets, Inc. · CBOE:CBOE
Cboe Global Markets — Q2 2024 Earnings Presentation
40 slides from Cboe Global Markets's earnings presentation, Aug 2, 2024
Slide 1: Second Quarter 2024 Earnings Presentation
SECOND QUARTER 2024 EARNINGS PRESENTATION August 2, 2024
Slide 2: Agenda
Agenda Fredric Tomczyk Chief Executive Officer Business 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 Preside
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,”
Slide 4: Quarterly Recap and Outlook
QUARTERLY RECAP AND OUTLOOK Fredric Tomczyk, CEO Dave Howson, Global President 4
Slide 5: 2Q24: Record Net Revenue in Second Quarter
2Q24: Record Net Revenue in Second Quarter* Net revenues grew 10% Y/Y, a product of continued strong transaction and non-transaction growth 11% increase in Derivatives Markets organic net revenue1 Total options ADV up 1%, driven by a 9% increase in index options ADV Total options rate per contract (
Slide 6: Sharpening The Strategic Focus
Sharpening The Strategic Focus Well Positioned for Strong Global Investor Demand for the US Market Foreign Holdings of US Equities1 in trillions 16 18% ~45% 17% 14 17% $13.7 $13.7 12 16% of the $109T 2023 global $12.2 equity marketplace 10 15% represented by the US2 $9.2 8 $8.6 14% $8.1 $7.2 6 $6.4
Slide 7: Derivatives Continued to Execute, Well Positioned for Future
Derivatives Continued to Execute, Well Positioned for Future Results Remained Durable Amidst Low Volatility Environment Derivatives net revenue up 11% y/y in 2Q24 SPX and VIX Options ADV vs. Average VIX Level 30 SPX Options ADV increased 9% y/y, with April representing the 25 3rd highest monthly ADV
Slide 8: Unlocking Global Growth Potential
Unlocking Global Growth Potential North America | Europe | Asia Pacific ◆ Canadian equities market share ◆ Cboe Europe remained Europe’s ◆ Grew Cboe Australia equities market improved to 15.0% in 2Q24 from leading market share during share to 20.8% for 2Q24 from 18.2% in 14.5% in 2Q23 continuous tra
Slide 9: Data and Access Solutions: Driving Durable Growth
Data and Access Solutions: Driving Durable Growth Many Avenues of Potential Growth Distribution as a Service Packaging our Global Content Expanding Global Data Distribution Distributing 3rd party data across the Cboe network Providing a cohesive, low-cost global data offering Improving global access
Slide 10: Executing on Growth Priorities
Executing on Growth Priorities Progress Opportunity More Data Global Derivatives ◆ Derivatives delivered 11% y/y organic net revenue growth1 in 2Q24 ◆ Targeting >150mn retail accounts with smaller & more flexible products2 ◆ 0DTE SPX trading made up 48% of 2Q24 SPX activity and volume was up 18% y/y
Slide 11: Financial Overview and Guidance
FINANCIAL OVERVIEW AND GUIDANCE Jill Griebenow, EVP, CFO 11
Slide 12: 2Q24 Financial Summary
2Q24 Financial Summary $514 $1,016 $467 $939 $424 $842 $514mn $351 $716 Net Revenue +10% Y/Y 2Q21 2Q22 2Q23 2Q24 2021 YTD 2022 YTD 2023 YTD 2024 YTD $341 $341mn $678 $293 $604 $274 $556 $234 $484 Adjusted EBITDA¹ 66.6% 67.6% 66.3% 66.7% +16% Y/Y 64.7% 62.8% 66.0% 64.3% (Adjusted EBITDA margin¹ of 66
Slide 13: 2Q24 Net Revenue by Segment and Key Drivers
2Q24 Net Revenue by Segment1 and Key Drivers Net Revenue Segment Net Rev. Growth Key Drivers in millions Options ◆ Higher index options trading volume +10% $513.8 CBOE - C2 - BZX - +8% ◆ Increased total options RPC EDGX $467.1 Higher net transaction and clearing fees N.A. Equities ◆ BYX - BZX - EDGA
Slide 14: Grew 2Q24 Data and Access Solutions Net Revenue 5% YoY Organically
Grew 2Q24 Data and Access Solutions Net Revenue 5% YoY Organically1 Expect 2024 organic net revenue growth rate1 target for Data and Access Solutions business to finish at lower end of 7-10% guidance range2 ❖ 2Q24 Data and Access Solutions net revenue of $140 million Data & Access Solutions Gross Re
Slide 15: 2Q24 Adjusted Operating Expenses Up 2%
2Q24 Adjusted Operating Expenses1 Up 2%, Driven by Compensation and Benefits and Professional Fees Adjusted Operating Expenses¹ ❖ 2Q24 expense increase driven by higher 2Q24 2Q23 $ Chg % Chg (in millions) compensation and benefits and Compensation and benefits $115.3 $106.5 $8.8 8% professional fees
Slide 16: 2024 Guidance
2024 Guidance 1 2024 Guidance 2024 Guidance 2024 Guidance 2024 Full-Year Guidance as of as of as of 2023 Actual ($ in millions) August 2, 2024 May 3, 2024 February 2, 2024 3 2 Data and Access Solutions organic net revenue growth rate lower end of 7 to 10% 7 to 10% 7 to 10% 7% 2 Total organic net rev
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) Sep. 30, Dec. 31, Mar. 31, Jun. 30, Preserving balance sheet flexibility remains 2023 2023 2024 2024 a priority 3.650% Senior Notes (10Y; Due 2027) $650 $650 $650 $650 1.625% Senior Notes (10Y; Due
Slide 18: Positioned to Innovate, Integrate and Grow to Create Value
Positioned to Innovate, Integrate and Grow to Create Value Innovate to capture growing Integrate across ecosystem Grow by accessing untapped demand for trading products to increase efficiency and addressable markets and data services, globally better serve customers ◆ Proven organic investment and ◆
Slide 19: Q&A
Q&A 19
Slide 20: Appendix
Appendix © 2023 Cboe Exchange, Inc. All rights reserved. 20
Slide 21: Options 2Q24 Net Revenue Up 8%
Options 2Q24 Net Revenue Up 8%, Reflecting Higher Index Options Transaction Fees Options Selected Revenue Data 2Q24 2Q23 Chg ($ in millions) ◆ Higher transaction fees from index Net Revenue $306.7 $283.2 8% Net transaction and clearing fees¹ $267.7 $240.4 11% options given stronger volumes and RPC I
Slide 22: North American Equities 2Q24 Net Revenue Up 8%
North American (N.A.) Equities 2Q24 Net Revenue Up 8%, Driven by Higher Net Transaction and Clearing Fees N.A. Equities Selected Revenue Data 2Q24 2Q23 Chg ($ in millions) ◆ Net transaction and clearing fees1 were Net Revenue $98.3 $90.8 8% Net transaction and clearing fees¹ $35.3 $28.3 25% up 25% M
Slide 23: Europe and APAC 2Q24 Net Revenue Up 15%
Europe and APAC 2Q24 Net Revenue Up 15%, Reflecting Transaction and Non-Transaction Revenue Growth Europe and APAC Selected Revenue Data 2Q24 2Q23 Chg ($ in millions) Net Revenue $54.3 $47.3 15% ◆ Market data, access fees and other were up Net transaction and clearing fees¹ $26.4 $23.1 14% a combine
Slide 24: Futures 2Q24 Net Revenue Up 19%
Futures 2Q24 Net Revenue Up 19%, Driven by Y/Y Increase in ADV Futures Selected Revenue Data 2Q24 2Q23 Chg ($ in millions) ◆ A 28% Y/Y increase in ADV drove an increase Net Revenue $34.8 $29.2 19% Net transaction and clearing fees¹ $28.1 $22.4 25% in net transaction and clearing fees Access and capa
Slide 25: Global FX 2Q24 Net Revenue Up 11%
Global FX 2Q24 Net Revenue Up 11% FX Selected Revenue Data 2Q24 2Q23 Chg ($ in millions) ◆ Net transaction and clearing fees1 were Net Revenue $19.8 $17.8 11% Net transaction and clearing fees¹ $16.6 $14.7 13% up 13% Non-transaction revenue $3.2 $3.1 3% ◆ Market share increased by 0.7% as FX Key Ope
Slide 26: Second Quarter 2024 Financial Overview
Second Quarter 2024 Financial Overview Adjusted Financial Results Delete 1 footnote 2Q24 2Q23 Chg ($ in millions, except per share) and adjust below Net Revenue 1 to 1/2 $513.8 $467.1 10% Adjusted Operating Expenses 2 $197.1 $192.3 2% Adjusted Operating Income2 $316.7 $274.8 15% Adjusted Operating M
Slide 27: Net Revenue Detail
Net Revenue Detail 1 Net Revenue 2Q24 2Q23 % Chg ◆ Cash and Spot Markets driven by strong (in millions) transaction and clearing fees Cash and Spot Markets $103.7 $90.3 15% ◆ Derivatives Markets driven by solid Data and Access Solutions $139.6 $133.0 5% Derivatives Markets $270.5 $243.8 11% transact
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
Slide 29: 0DTE Adding Stability to SPX Volumes
0DTE Adding Stability to SPX Volumes SPX Volume by Expiration in millions of contracts 4.0 Thursday expiration Tuesday introduced 3.5 3.5 May 11, 2022 3.3 3.2 3.3 expiration 3.1 3.2 3.2 introduced 3.0 3.0 3.0 April 18, 2022 2.9 2.9 2.9 3.0 2.8 2.8 2.7 2.7 2.7 2.7 2.6 2.6 2.6 2.5 2.3 2.2 2.2 2.1 2.0
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 June 30 (in millions) 2024 2023 2024 2023 2024 2023 2024 2023 Transaction and clearing fees $ 283.6 $ 279.0 $ - $ - $ 414.0 $ 406.7 $ 697.6 $ 685.7 Access and capacity
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 Sept 30 (in millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Transaction and clearing fees $ 384.6 $ 377.7 $ 221.9 $ 26
Slide 32: Non-GAAP Information
Non-GAAP Information © 2023 Cboe Exchange, Inc. All rights reserved. 32
Slide 33: 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 34: Non-GAAP Information
Non-GAAP Information Reconciliation of GAAP Net Revenues to Net Revenues in Constant Currency Three Months Three Months Six Months Six Months Net Revenue (in millions) Ended, Ended, Ended, Ended, June 30, 2024 June 30, 2024 June 30, 2024 June 30, 2023 Europe and Asia Pacific net revenues $54.3 $47.3
Slide 35: Non-GAAP Information
Non-GAAP Information Non-GAAP Information (in millions, except per share amounts) 1Q23 2Q23 3Q23 4Q23 2023 1Q24 2Q24 (1) This amount includes ongoing acquisition-related costs primarily from the Company’s Cboe Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP Digital, Cboe Ca
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
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)
Slide 38: Non-GAAP Information
Non-GAAP Information Adjusted Debt to EBITDA - Trailing Twelve Months¹ (in millions) 3Q23 4Q23 1Q24 2Q24 LTM Net income allocated to common stockholders $ 207.1 $ 210.8 $ 208.3 $ 139.7 $ 765.9 Interest expense, net 11.9 9.5 8.9 8.2 $ 38.5 Income tax provision 61.9 75.5 82.6 62.6 $ 282.6 Depreciation
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
Slide 40: Thank You
THANK YOU 40