Earnings call transcript: Cboe Global Q2 2025 sees record revenue, EPS rise

Cboe Global Markets Inc. reported record net revenue of $587 million for Q2 2025, marking a 14% increase year-over-year. The company also saw a 14% rise in adjusted diluted earnings per share (EPS) to $2.46. Despite the absence of forecast data, Cboe’s stock showed a positive movement, climbing 1.61% to $233.87 in premarket trading, reflecting investor confidence in its strong financial performance and strategic advancements.

Key Takeaways

• Record Q2 net revenue of $587 million, up 14% YoY.
• Adjusted diluted EPS increased by 14% to $2.46.
• Options segment revenue grew by 19%.
• Premarket stock price increased by 1.61% to $233.87.
• Cboe is closing its Japanese equities business, expecting up to $12 million in annual savings.

Company Performance

Cboe Global Markets demonstrated robust growth in Q2 2025, achieving record revenue and significant earnings improvements. The company’s strategic focus on expanding its options and derivatives segments paid off, with notable increases in trading volumes and international market penetration. The closure of its Japanese equities business is expected to streamline operations and reduce expenses, aligning with its optimization strategy.

Financial Highlights

• Revenue: $587 million, up 14% YoY.
• Adjusted diluted EPS: $2.46, up 14% YoY.
• Adjusted operating EBITDA: $387 million, a 19% increase.
• EBITDA margin: 65.8%, up 2.3 percentage points.

Market Reaction

Cboe’s stock price rose by 1.61% in premarket trading, reaching $233.87. This increase reflects positive investor sentiment following the company’s strong quarterly performance and strategic initiatives. The stock remains within its 52-week trading range, with a high of $255.27 and a low of $187.30, indicating steady investor confidence.

Outlook & Guidance

Cboe increased its full-year organic net revenue growth guidance to high single digits, maintaining its DataVantage growth outlook. The company projects capital expenditures between $75 million and $85 million and an effective tax rate of 28.5% to 30.5%. These projections underscore Cboe’s commitment to optimizing its core businesses and exploring new growth opportunities.

Executive Commentary

CEO Craig Donohue emphasized the company’s growth potential, stating, "We have a great core business that’s growing, there’s lots more growth to be had." He also noted the sustainability of 0DTE options, highlighting their long-term potential. Donohue expressed optimism about Cboe’s strategic alignment with S&P Dow Jones Indices, enhancing its competitive edge.

Risks and Challenges

• Market volatility could impact trading volumes and revenue.
• Regulatory changes in derivatives markets may affect operations.
• Global economic uncertainties could influence investor behavior.
• Technological advancements by competitors may pressure Cboe’s market share.
• Currency fluctuations could impact international revenue.

Overall, Cboe Global Markets Inc. continues to demonstrate strong financial health and strategic foresight, positioning itself well for future growth amid evolving market conditions.

Full transcript - Cboe Global Markets Inc (CBOE) Q2 2025:

Conference Operator (Tina), Conference Operator: Thank you for standing by. My name is Tina and I will be your conference operator today. At this time I would like to welcome everyone to the Cboe Global Markets second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press STAR one again. Thank you. It is now my pleasure to turn the call over to Ken Hill, Head of Investor Relations. You may begin your conference.

Craig Donohue, CEO, Cboe Global Markets: Good morning and thank you for joining us for our second quarter earnings conference call. On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Dave Howson, our Global President, will provide some comments as he hands his responsibilities to Chris Isaacson, our Chief Operating Officer, and Catherine Clay, our Global Head of Derivatives, who will join us for Q and A. We will conclude our prepared remarks with Jill Griebenow, our Chief Financial Officer, who will provide an overview of our financial results for the quarter as well as discuss our 2025 financial outlook. Following their comments, we will open the call to Q and A. I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each.

A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we’ll make some forward-looking statements which represent our current judgment on what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events, or otherwise after this conference call. During the earnings call, we will be referring to non-GAAP measures as defined and reconciled in our earnings material.

Now I’d like to turn the call over to Craig. Good morning. Thank you for joining us today to discuss our second quarter results. Having assumed the CEO role in early May, I have been impressed by the outstanding results Cboe Global Markets delivered while navigating an evolving macro landscape as well as a variety of corporate developments. During the second quarter, Cboe Global Markets grew net revenue 14% year over year to a record $587 million and adjusted diluted EPS by 14% to $2.46. These results were again driven by robust volumes across our derivatives franchise both in multi-listed and proprietary index option products, strong new sales growth in our Cboe DataVantage business, resilient industry volumes in our cash and spot markets, and disciplined expense management. Building on a theme we’ve seen gain traction in recent quarters, the second quarter strength was broad-based.

All three categories—derivative markets, cash and spot markets, and DataVantage—produced double-digit net revenue growth on a year-over-year basis, contributing to record first half results for the firm. Taking a closer look at the second quarter trends, our derivatives franchise delivered a record quarter with organic net revenue increasing 17% year over year. Options volumes increased on the back of heightened market volatility as investors used options to help manage risk. In a quarter marked by both sharp sell-offs and even sharper rebounds, in our multi-listed options business, net transaction and clearing fees revenue was up a robust 32% given higher industry volumes and positive pricing trends. In our proprietary products, SPX options volumes jumped 21% year over year to a new record average daily volume of 3.7 million contracts, while mini SPX options average daily volume rose 50% to a record 108,000 contracts.

Even more importantly, the second quarter demonstrated the full utility of our S&P 500 volatility toolkit as well as the resilience of our diverse customer base. As volatility surged in April, traders gravitated to our established SPX and VIX contracts for liquidity and market depth, with SPX options setting a single-day record of 6 million contracts on April 4. Much of the increase in April came from institutional investors using index options to hedge, particularly longer-dated options, which saw the biggest increase relative to other tenors. While institutional activity was robust in April, retail traders pulled back as evidenced by decreasing share of 0DTE volume in April.

While retail investors tend to step back when volatility jumps unexpectedly as it did in April, they typically re-engage once volatility moderates, which is what we observed in May and June. SPX 0DTE volumes rebounded to new highs, ending June with a new record monthly ADV of 2.2 million contracts. We’ve highlighted the resilience of SPX 0DTE trading in the past, and it’s encouraging to see it reaffirmed once again last quarter. In the past year alone we’ve seen the VIX index hit a high of 60 twice and SPX intraday volatility jumped to a post global financial crisis high. Through it all, SPX 0DTE options have continued to grow, propelled by wider adoption and new use cases. In Q2, they made up a record 57% of overall SPX options volume.

Looking ahead, we remain positive about the growth potential of options as an asset class and our proprietary index options franchise. Continued uncertainty regarding monetary and trade policy is expected to support the continued use of options to dynamically manage risk. Structural factors such as increasing retail participation and international expansion should provide further tailwinds. Anecdotally, we see encouraging signs from international brokers. They continue to expand access by extending trading hours and by increasing functionality for complex and simple orders across Cboe’s proprietary index product set and a greater number of symbols. These efforts are well aligned with Cboe’s initiatives to deliver education and local market intelligence to a global audience. Moving to cash and spot markets, second quarter net revenue was up a strong 11% as our European cash equities business continued to drive robust performance for the category led by the strength in Europe.

Our Europe and Asia Pacific segment delivered the strongest year over year percentage growth of any Cboe segment for the fourth quarter in a row, achieving an impressive 30% increase. The increase was driven by a 39% year over year growth in net transaction and clearing fees resulting from strong industry volumes and solid market share gains in Europe across our portfolio of products. Higher non-transaction revenues in the segment also contributed to the growth, with revenue up 21% year over year in other areas of global equities. Last week we announced the decision, subject to consultation with regulators, to close our Japan equities business on August 29. This will include the Cboe Japan Proprietary Trading System and Cboe BID Japan business.

This decision reflects our philosophy of directing resources to the highest potential return activities across our organization, specifically exiting the equities business and redeploying time, energy, and investment dollars to supporting Japanese customers through our derivatives and market data capabilities. We continue to see great demand from Japanese market participants for access to international markets, U.S. and European market data and our global derivative products. To support these efforts, Cboe Global Markets will maintain a presence in Japan focused on sales and client engagement. Turning to our DataVantage business, net revenue for the category improved by 11% on a year-over-year basis. During the second quarter, we saw a positive contribution from all three major components of DataVantage, with subscription-based data analytics and index products producing strong year-over-year gains.

Looking more closely at the second quarter dynamics, international demand remains a key driver of new data sales, with roughly 45% occurring outside the U.S. in the second quarter. We are looking to accelerate that growth with new hires to lead our market data sales as well as our analytics and indices businesses in the Asia Pacific region. Beyond strengthening our sales capabilities, we’re leveraging new technologies and developing new products to enhance our offerings. We’re accelerating the migration of our derivatives data to the cloud and actively exploring new global access points where we see growing demand. On the product front, we’re leaning into the secular trend in derivatives-based ETFs while leveraging our expertise to create indices in partnership with our index providers and issuers.

On access, our dedicated CORS offering, which provides superior performance and determinism, continued to perform well as we see the benefits of reallocating resources into revenue-enhancing activities. The interconnectedness and importance of the DataVantage business at Cboe Global Markets should not be understated. Each enhancement to our market access layer, subscription-based data sales, and even real-time values from the index business provide an ecosystem benefit to Cboe Global Markets in the form of better customer engagement and improved activity levels for our trading businesses. Before I conclude this portion of my remarks, I want to take a moment to sincerely thank Dave Howson for his contributions during his time here at Cboe Global Markets.

While we’ll miss Dave, I also could not be more pleased to elevate Chris and Catherine, both of whom are strong and proven leaders here at Cboe Global Markets. Cboe Global Markets is on solid footing and we are well positioned to deliver on the opportunities ahead. Now I’ll turn the call over to Dave to say a few words. Thank you, Craig. I just wanted to briefly take the opportunity to express my gratitude to all of my colleagues here at Cboe Global Markets and our customers that have taught me so much over the years. I am proud to have been part of such transformational change over the last 12 years as part of the Cboe Global Markets and BATS management team, and in particular the last three years as President, over which time we’ve expanded our global presence through establishing a 1 Cboe mindset.

The firm’s success has been a collective achievement as we’ve managed through a tremendous amount of change while laying the foundation for future success. I am grateful to be able to hand things off to such capable leaders Chris and Catherine as I return home to be closer to my family. I have known Chris and Catherine for 12 and 8 years, respectively. They are not only both long-time close partners, but seasoned leaders and respected market practitioners with a track record of driving innovation in the industry. Before I hand it over to Jill for the financial update, I want to say a heartfelt thank you to the analyst and investor community. I have enjoyed engaging with you all on earnings calls and numerous conferences over the years and will truly miss our interactions. Now I will turn the call over to Jill.

Conference Operator (Tina), Conference Operator: Thanks Dave. Cboe Global Markets posted another strong quarter with adjusted diluted EPS up 14% on a year-over-year basis to $2.46. I will provide some high-level takeaways from this quarter’s operating results before going through segment results. Net revenue increased 14% versus the second quarter of 2024 to finish at a record $587 million, with each of our categories producing healthy year-over-year growth. Specifically, derivatives markets net revenues grew 17%, DataVantage net revenues grew 11%, and cash and spot markets net revenues grew 11%. Adjusted operating expenses of $213 million were up 8% on a year-over-year basis. Adjusted operating EBITDA of $387 million grew 19%, and adjusted operating EBITDA margin expanded by 2.3 percentage points to 65.8% versus the second quarter of 2024, reflecting strong performance across our businesses as well as disciplined expense management.

Turning to the key drivers by segment, our press release and the appendix of our slide deck include information detailing the key metrics for our business segments, so I’ll provide some highlights for each. The options segment delivered its fourth consecutive quarter of record net revenue with 19% year-over-year growth. Total options ABV was up 20% with a 17% increase in index options volume and a 22% increase in multi-listed options volume. North American equities net revenue was roughly flat on a year-over-year basis. Access and capacity fees increased 16% as compared to the second quarter of 2024, and industry volumes supported the transaction side of the businesses. Europe and APAC produced another quarter of record net revenue with a 30% year-over-year increase, reflecting particularly strong growth in Europe. Net transaction and clearing fees for the segment were up 39%, while non-transaction revenues were up a combined 21%.

Futures net revenue decreased 14% from the second quarter of 2024, primarily due to lower volumes. Finally, our Global FX segment also achieved another quarter of record net revenue with 19% year-over-year growth, driven by a 17% increase in average daily notional value. Looking at our Cboe DataVantage business, net revenues were up 11% on an organic basis in the second quarter. Net revenue growth continued to be led by strong new subscription and unit sales, which accounted for roughly three-quarters of the total net revenue growth for the quarter. The remaining growth was attributable to pricing changes, which continue to play a more modest role in our DataVantage growth strategy. As Craig mentioned, we remain focused on scaling our product set by leveraging our advanced technology and differentiated product offerings.

We believe these additions, combined with ongoing brand investments and a sharpened focus on sales outcomes, position DataVantage for sustained long-term growth. Turning to expenses, total adjusted operating expenses were $213 million for the quarter and up 8% on a year-over-year basis. Higher compensation and benefits, depreciation and amortization, and technology support services expenses were partially offset by a year-over-year decline in travel and promotional as well as professional fees and outside services expenses. Moving to our 2025 guidance, we are lowering our full-year expense guidance range to $832 to $847 million from $837 to $852 million. This decrease reflects our year-to-date operating discipline and the impact from our decision to close our Japanese equities business, partially offset by higher incentive compensation.

Regarding the wind down of our Japanese equities business, we expect to record an estimated pre-tax charge of approximately $5 million in the third quarter of 2025, primarily related to non-cash impairment of indefinite-lived intangible assets and technology-related software. This charge is expected to be excluded from adjusted operating expenses. From an expense savings perspective, we expect the impact on adjusted operating expenses to be in the range of $2 to $4 million in 2025. Going forward, savings are expected to be in the $10 to $12 million range on a normalized annual basis, partially offsetting some of the lower expense components mentioned. Our updated guidance also factors in a higher bonus accrual given both our strong year-to-date revenue trends as well as our healthy expectations for the second half of the year. In addition, we anticipate some reacceleration in marketing spend throughout the remainder of 2025.

Overall, we believe our expense guidance range provides flexibility to invest in the business while also positioning us to deliver on our shareholder return objectives. Looking at our full-year guidance more broadly, we are increasing our full-year total organic net revenue growth guidance range to high single digits from mid to high single digits. Given our strong first half results, we are reaffirming our DataVantage organic net revenue growth range of mid to high single digits following solid year to date trends and a steady outlook for the second half of 2025. Our full year guidance range for CapEx remains at $75 million to $85 million, and we are lowering our expectation for depreciation and amortization to $53 million to $57 million from the $55 million to $59 million range.

We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30.5% for the full year. While we don’t provide formal guidance on interest income or interest expense, we expect that interest expense net of interest income will be approximately $1 million in the third quarter of 2025. On the capital front, we remain pleased with the health of our financial position exemplified by the $1.2 billion of adjusted cash on our balance sheet, an attractive debt profile, and a leverage ratio of 1.0 times. In the second quarter, we repurchased $35 million in shares, bringing year to date repurchases to $65 million. Alongside our share repurchase activity, we returned $66 million to shareholders in the form of a $0.63 dividend during the quarter.

Looking ahead, we remain focused on effectively allocating capital while leveraging our flexible balance sheet and free cash flow profile to produce sustainable shareholder value. Lastly, I want to provide an update on our investment in the Seven Ridge Fund holding Trading Technologies. This week, Trading Technologies announced an investment transaction that is expected to result in Cboe Global Markets fully exiting its investment in the Seven Ridge Fund that currently owns Trading Technologies. The transaction is expected to close in the fourth quarter of 2025 after regulatory clearance. Cboe Global Markets expects the transaction to result in the gain recorded against the June 30, 2025 carrying value of its investment in the Seven Ridge Fund.

While I cannot provide any incremental details around the potential gain until the transaction is complete, I will note that consistent with our historical treatment of minority investment gains and losses at sale, we anticipate adjusting out any future impacts incurred with the exit of this investment from our non-GAAP metrics. Now I’d like to turn it back over to Craig for some closing comments before we open it up to Q&A.

Craig Donohue, CEO, Cboe Global Markets: Thank you, Jill. While I have only been in the CEO role at Cboe Global Markets for a few months, I wanted to leave you with some of my early impressions of the company and what you can expect from me and our Senior Leadership Team moving forward. First, I have been impressed by the power of Cboe Global Markets’ suite of cash, data, and derivatives products, our global presence, and our market-leading technology, all underpinned by a highly capable management team and associate base. As reflected in today’s results, our portfolio of businesses is performing at a very high level. At the same time, with the continued guidance and support of our Board, we are an organization that remains committed to improving, adapting, and positioning ourselves to deliver more value to shareholders over time.

This not only means exploring organic and inorganic investment opportunities around key capabilities, but optimizing the growth and profitability in our core businesses. We are committed to bringing a rigorous financial discipline to how we allocate capital, both dollars and people, across the firm. Our decision to close our Japanese equities business was representative of that thought process in action. Moving forward, we remain committed to continually assessing our business portfolio to produce the best long-term returns for shareholders. As I mentioned, clearly several areas at Cboe Global Markets are performing exceptionally well, from cash to data to derivatives. The second quarter was an outstanding one, and the record first half results showcase the power of the business. Heading into the second half of the year, I am energized by the opportunities ahead. I’d now like to turn the call back over to Ken for questions and answers.

At this point, we’d be happy to take questions. We ask that you please limit your question to one per person to allow time to get to everyone. Feel free to get back in the queue, and if time permits, we’ll take a second question.

Conference Operator (Tina), Conference Operator: To ask a question, simply press star one on your telephone keypad. Our first question comes from the line of Patrick Moley with Piper Sandler. Thank you. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Yes, good morning and thanks for taking the question. Craig, welcome. Really looking forward to working with you. I was hoping, you know, you talked a little bit about it, but I was hoping you could just maybe speak to the one or two key priorities that you have in coming into the role and how that might differ from previous leadership. More recently, Fred, one of the things Fred had talked about was an openness to doing potentially needle moving M&A. Just given your experience with larger scale M&A, how are you thinking about the inorganic growth opportunity for Cboe Global Markets going forward? Okay, thanks. Patrick, good morning. I would say coming into the role, first of all, I mean, I’m very impressed with the team and the strategy that we have had in place and I think that strategy is producing great results for the company.

I’m going to continue to work with the team to be very focused on optimizing growth in our core and leaning into the secular trends that are supporting, I think, fantastic growth dynamics in our proprietary and multi-listed derivatives products as well as our DataVantage businesses. In terms of M&A, even though I have obviously a strong background in that, I guess what I would say is that’s something that we’ll be working on as a team over time. Anything that we choose to do is going to be something that has to be compelling from both the strategic and a financial rationale perspective. There’s nothing that we need to do right now. We’ve got a very flexible balance sheet.

My feeling is we should look at all of our growth opportunities, focus on optimizing the core, look at things we can do to grow around and outside of our core. We’ll remain opportunistically focused on whether there are also opportunities for us to consider growing inorganically. That’s something that we’ll work on over time.

Conference Operator (Tina), Conference Operator: Your next question comes from the line of Dan Fannon with Jefferies. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Great. Good morning, Greg. Welcome back to the quarterly earnings cycle. Just to follow up on your previous comments here, just optimization you’ve mentioned a few times and obviously you’ve already proactively made the changes with Japan, where are you in the evaluation of the businesses in your footprint and how should we think about greater optimization or more changes like you’ve already done in the near term? I think obviously we’ve got really great dynamic growth across our whole business portfolio. I’m working with the team to look at everything that we’re doing. We’re doing that in a rigorous way. We’re trying to make sure that the end goal is to just make sure that we’re allocating all of our capital, both financial and especially human capital, to taking advantage of our best growth opportunities. I’ve been impressed so far.

I think the Japan equities is an example of that. People are being rigorous and thoughtful about where we can best redeploy our capabilities. That’s something that we’re just going to keep doing. We have a very broad business. There’s been a lot of things that Cboe Global Markets has tried to do over the last five or six years and we’re just going to stay focused on that because I want to make sure that all of our resources are focused on our best growth opportunities.

Conference Operator (Tina), Conference Operator: Our next question comes from the line of Ben Budish with Barclays. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Maybe a narrower question just on the DataVantage guide for the year. When I look at the sequential step up in DataVantage revenues, it looked like it was quite robust this quarter. If the next couple of quarters look similar, like maybe the last three or four quarters, it sounds like, you know, it seems like the guidance might prove to be conservative. Just curious if there’s anything we should be thinking about in terms of the revenue model. Is there any reason that revenues shouldn’t continue to step up sequentially? Could you perhaps remind us the various components and key drivers, new unit sales, pricing, things like that, as we’re fine tuning our models here. Thank you.

Conference Operator (Tina), Conference Operator: Happy to, Ben, this is Kathy. We remain confident in our full year guidance, just recognizing that quarterly results will fluctuate, some landing above and some below the expected range, but we are on track to deliver against our full year objectives. Regarding Q2, you may recall that last year’s first half performance created a favorable comparison for Q1 and Q2 of this year. Our business has started out on strong footing. There’s no denying that across all of our verticals of data and analytics and our index business. It has been further supported by the momentum of the newer initiatives that Craig talked about, a dedicated quarter for example, which is really starting to bear fruit. Looking ahead, we do believe that DataVantage is well positioned for sustained long term growth. We continue to invest in our global access and expand where we do business.

We are seeing about 45% of new recurring sales from outside of the U.S. We’re really leaning into our new distribution channels like Cboe Global Cloud where 85% of our sales are from international clients. We’re leaning into strengthening our sales execution, making sure that the derivatives team and the DataVantage team across the globe are really working hand in hand because we know that the data sales often are a precursor or leading indicator of the derivatives volumes that we might enjoy. We’re really just leaning into additional distribution capabilities, new product suites, and our technological capabilities going forward. Very confident in the full guide that we give. Your next question comes from the line of Eli Aboud with Bank of America. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Good morning. Thanks for taking the question. I wanted to drill down into the long-term growth algorithm for index options volume. When 0DTE starts to reach maturity, whenever that may be, what new themes, geographies, or products you have the most conviction can provide that next leg of growth?

Conference Operator (Tina), Conference Operator: Good question, 0DTE. We continue to just be confident that these volumes are quite sustainable. When we think about our expansion with retail broker dealers both in the U.S. and abroad, we feel that there’s still a lot of surface area of opportunity here. Retail traders tend to start trading in other products, and then as their sophistication level rises, they move into the index option complex primarily for the benefits of index options in general: the cash settlement, the European exercise, potential tax treatment benefits.

We really think as we continue to partner more with our retail broker dealer clients, and that means co-marketing agreements where we actually get a little better view into the data that comes from those partners of ours, as well as really we’re in very early innings in the Asia-Pacific region where we see incredible demand for our products and our data, including we really think that this is early innings to sustain the zero DTE complex. If you look at really just some of the numbers in SPX options in general, you know, we hit three daily records this year, two in April and just one recently on July 31. We really think the secular tailwinds for this space are strong, that appetite from the retail trader to move up in the curve. We really think both of these things really drive future sustainability and growth.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Thanks for taking my question. Maybe just a question on the competitive environment of single stock zero DTE and how that’s like, how that’s evolving and what does it mean for the index SPX options going forward. Thanks.

Conference Operator (Tina), Conference Operator: We actually see the single stock 0DTEs as not cannibalistic to the index option 0DTEs, more for the ETF 0DTE space. We really feel that the difference between single stock options, things I just talked about, cash settlement, European exercise, really, they’re completely different animals. We see a lot of retail traders coming into the single stocks or the ETF options and then migrating into the index option space as that level of sophistication of that trader continues to grow. We’re very optimistic as we see new entrants come into the option space, then begin that journey of sophistication through ever-increasing new data and analytics that these retail broker platforms are providing them. It’s no surprise that the retail broker-dealer platforms are investing heavily in new analytics and new functionalities to really court that active retail trader segment.

It’s a great development for us to partner with retail broker-dealers as they really try to secure additional engagement from their active trader base. Your next question comes from the line of Alex Kramm with UBS. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Yes. Hey, good morning everyone and Craig, welcome. Look forward to working with you again. It’s been a while. In terms of strategic priorities, one of the most important relationships that Cboe Global Markets has is probably the one with S&P Dow Jones Indices on your index relationship, which obviously is a big part of your business. I know the renewal of that is still several years out, but since you just stepped into the new role, just wondering how you view that relationship and to what degree you should have appetite to maybe change the structure a little bit longer term to make it, you know, a little bit longer term since, you know, you don’t want to go through this habit of having to renew this every few years. Just wondering how you view that whole relationship and how you could change it.

Thank you for the question, Alex, and good to hear from you. I would say just philosophically, I have the same view here at Cboe Global Markets as I did at CME, which is S&P Dow Jones Indices is a really long term and deeply valued partner. I think we’ve had a long and very successful relationship. We see the world the same way and I think we have a lot of the same goals and objectives when it comes to how to successfully grow the franchise. That’s something that we’ll be continuing to work on with them.

I don’t really have a lot to say at this point on that other than I think applying that same kind of long term commitment to making sure that our relationship is mutually beneficial and that we can grow together and that we bring innovation and growth to our segment of the S&P landscape is critical from their perspective as well as ours. We’ll continue to work on it. Obviously, as much as possible. We’ve been together for more than 40 years. I’d like to see that continue for at least another 40 years. We have to find the way to do that with our partners at S&P Dow Jones Indices.

Conference Operator (Tina), Conference Operator: Your next question comes from the line of Owen Lau with Oppenheimer. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Good morning and thank you for taking my question. Could you please give us an updated thought on attacking the globalization theme? Is there anything you would do differently over the next 12 months and how do you plan to capture this opportunity here? Thanks a lot. Hey, good morning, Owen. This is Chris Isaacson. I think if I’m understanding your question about globalization, I think Catherine mentioned this quite a bit in answering the DataVantage question. Where we see greatest opportunities globally is to continue to, through the import export discussion, really importing flow from outside the U.S. into our markets, especially into the U.S. markets and our derivatives products. That usually starts with data. Catherine covered that really well with DataVantage. We’re seeing 45% of sales outside the U.S. and 85% of civil global cloud outside the U.S., so hopefully that answers your question, Owen.

If it didn’t, feel free to get back in the queue and ask again.

Conference Operator (Tina), Conference Operator: Your next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Great, thanks. Thanks for taking my question and welcome back, Greg. Looking forward to working with you as well. Maybe if I can sort of zoom out, Craig, and just your perspective on how the securities exchange industry has evolved and how you think it might evolve in the future. What I’m really getting at is from a number of different angles, retail client engagement, whether you see that as classically cyclical or there’s a much stronger structural trend there, and then the movement towards 24/7 trading and then potential adoption of tokenization and whether you think U.S. regulators, how heavy of a lift is it to bring this on. How are you thinking about if you’re believing in that, how are you thinking about your position and what you might do to leverage these trends? Yeah, thank you for the question.

I would say that I think what we’re seeing, and I think this has been borne out now for the last five or six, you know, seven years, is I don’t think the retail trend is sort of cyclical. I mean, I think it’s a long-term trend. I think there’s a continued sort of growth in sophistication and that’s a trend that I think will continue. We intend to try to keep leaning into that. I mean, we’re living in a very dynamic environment. When you think about exchange companies, I mean, exchange companies have become quite diverse and very broad in the total portfolio of businesses that they now represent. That’s how we’re thinking about ourselves also, making sure that we remain relevant and competitive and have the opportunity to grow beyond our traditional core.

Looking at digitization, tokenization, event and prediction markets, these are all things that are starting to, especially with the growth of retail, kind of increasingly come into our quote, unquote traditional world. We’re looking at all of that and thinking about where our place will be in that. I can’t give you kind of a specific idea of exactly where we’re going to go in that, but we’re cognizant of this broader landscape and these larger changes that are happening. We want to make sure that we’re able to compete and provide value in that kind of evolving landscape.

Conference Operator (Tina), Conference Operator: Your next question comes from the line of Kyle Voigt with KBW. Please go ahead. Hey, good morning.

Craig Donohue, CEO, Cboe Global Markets: Craig, I’ll echo the comments of everyone else. Looking forward to working with you. We’re at much later stages of direct.

Conference Operator (Tina), Conference Operator: Exchange consolidation, at least relative to the.

Craig Donohue, CEO, Cboe Global Markets: Last time you were an exchange CEO. Since then, many of your peer exchanges have turned towards other non-trading businesses, such as information services, as a pathway for inorganic growth. Yes. What are your thoughts on that strategy of diversifying away from trading-oriented businesses as an exchange operator? Is a move towards non-transaction revenues a part of the larger goal?

Conference Operator (Tina), Conference Operator: In terms of inorganic growth for you, how do you view it?

Craig Donohue, CEO, Cboe Global Markets: that as a part of your inorganic strategy? Yeah, no, I appreciate your question. I mean, let me just sort of say, obviously I think this is about my third or fourth month in the CEO seat, so there’s an awful lot of work that I have to do here with my team and my colleagues and thinking about, if we were to pursue inorganic growth through mergers and acquisitions, kind of how we think about that and where we want to go. I’m not really prepared to answer that question today other than to say, I’m certainly very cognizant of exactly what you described. The exchange company landscape has matured and evolved over the course of the last 15 years. We see a number of our peer companies that have done, I think, a very effective job at expanding beyond the traditional core of what an exchange company is.

They’ve created a level of diversity not only in terms of the composition of the business, but the composition of the revenues and earnings that is compelling. We’re cognizant of it, we’re thinking about it in a very broad way. At the same time, take you back to my earlier comments. We have a great core business that’s growing, there’s lots more growth to be had, we think. We’re in a strong position, but we’re going to be very disciplined, very rigorous and I think conservative in how we think about if we were to employ that sort of growth tactic of inorganic growth, we want to do that in a very thoughtful and meaningful bullet.

Conference Operator (Tina), Conference Operator: Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Hey, good morning. Thanks for taking the question. Want to circle back to some of the commentary on the tokenization and blockchain, more of an industry bigger picture focused question. Just given all the advancements that we’re seeing in technology, the evolving regulatory backdrop, I’d just be curious your views on around tokenization, blockchain. What use cases do you think, find thing to be most compelling? What are some of the hurdles, roadblocks, as you think about implementation across the industry that could ultimately, if resolved, overcome how that might be overcome that may lead to broader adoption as this technology has been around for many years. Curious your views around what the big unlock might be and then what implications might this have for the industry. Thank you. Hi Michael, good morning. Thanks for the question. It’s certainly the hot topic of the day.

As you say, tokenization, the topic has been around for a while. It does seem to be getting a lot more traction and there is a lot of discussion right now around actually U.S. equities and what would the application be there? I think there were some questions earlier about 24 by 7 and greater access to the U.S., and to the extent tokenization can allow for greater access or the entry of more 24 by 7 trading, we would welcome that. However, you need to work through some of the issues that come along with tokenization like counterparty restrictions and KYC AML. You need to think about, you know, these are still securities as there’s been a lot of discussions with regulators about even though it’s tokenized, it still can be a security.

Need to think about what is the problems that are being solved by tokenization and whether or not they should apply to the most liquid assets like U.S. equities that already trade extremely well. I think especially that the unlock here is really about 24 by 7 and greater access from those outside the U.S. into the U.S.

Conference Operator (Tina), Conference Operator: Your next question comes from the line of Chris Allen with Citigroup. Please go ahead.

Craig Donohue, CEO, Cboe Global Markets: Yeah. Morning everyone. Craig, welcome back. Wanted to circle back on single stock zeros and just based on our internal discussions, there’s definitely an industry push here and expectation it probably gets launched sometime early next year. I was just wondering do you see any potential for the structure here to change to overcome some of the problems that Kathy talked about before, and any specific issues that would prevent these to be launched, and then any color on just how much of an impact you see on SPX Zeros during maybe on days when Mag 7 stocks announce earnings and things like that.

Conference Operator (Tina), Conference Operator: Yeah, it is a hot topic. Just like tokenization when we think about expanding access to zero DTEs and single stocks, and the industry is kind of digesting what this means in terms of how to do basic things like how do we process corporate actions, how do we make sure that the end investor is safe for additional earnings announcements type activity. There is definitely an appetite to expand into more expiries for single stocks and we’re all for that. We believe again that when we bring retail traders into product that they want to trade because they like the name or they’re interested in the theme, they eventually grow in that journey of sophistication and find their way to index options.

You know we compete in the multi-listed space and all of these initiatives for the single stock, we’re watching very closely as the industry gets through these conversations about how do we do this in a proper way so that we have broad adoption and participation from all the market participants that would need to have access and they’d feel safe in this new environment. We’re there and when they come to life we’ll list them day one, we’ll be there as well. Again, to ask a question, press Star one on your telephone keypad and our next question comes from the line of Eli Abowd with Bank of America.

Craig Donohue, CEO, Cboe Global Markets: Hi, thanks for taking the follow up. I believe the changes to the OCC margin model become effective this fall. How material are you anticipating that event to be? In particular, do you think the margining changes will affect the growth trajectory of zero DTE?

Conference Operator (Tina), Conference Operator: Great question. A hot topic really of last year about what the impact of the OCC new margin requirements were going to be. I have to commend the OCC for really taking the time and listening to industry participants. They did that really well, giving everyone a little bit more opportunity to understand what the full impact of those OCC changes would be. The industry has had time to really think about what they need to do to minimize the impact. I think we’re in a really good position, different position probably from this time last year where I think the estimate was about 5% capital requirement impact down to about 1% is the new estimation. When we talk to market participants where this was really a put out the fire issue last year, we’re not hearing that.

We believe market participants have adjusted and digested and are ready for the changes that are coming this fall at OCC. With no further questions in queue, I will now turn the call back over to the management team for closing remarks.

Craig Donohue, CEO, Cboe Global Markets: Great. I just want to thank everybody for joining us today. It is good to be back. I’m enjoying working with the team and looking forward to a great last half of the year. We’ll see you next time.

Conference Operator (Tina), Conference Operator: Thank you again for joining us today. This does conclude today’s presentation. You may now disconnect.

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