Cboe(US:CBOE)2025-05-02 12:18PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, are presented Condensed Consolidated Balance Sheets Total assets grew to $8.67 billion, driven by a significant rise in margin deposits and clearing funds Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,667.3 | $7,789.1 | | Cash and cash equivalents | $1,047.2 | $920.3 | | Margin deposits, clearing funds | $1,623.0 | $845.5 | | Goodwill | $3,132.0 | $3,124.2 | | Total Liabilities | $4,215.2 | $3,509.5 | | Margin deposits, clearing funds | $1,623.0 | $845.5 | | Long-term debt | $1,441.5 | $1,441.0 | | Total Stockholders' Equity | $4,452.1 | $4,279.6 | Condensed Consolidated Statements of Income Total revenues increased 25% year-over-year to $1.195 billion, resulting in a 20% rise in net income Q1 2025 vs. Q1 2024 Income Statement (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $1,195.0 | $957.2 | | Revenues less cost of revenues | $565.2 | $502.1 | | Operating income | $353.9 | $282.4 | | Net income | $250.6 | $209.5 | | Diluted earnings per share | $2.37 | $1.96 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $912.9 million, with financing activities using $114.5 million Cash Flow Summary (in millions) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $912.9 | $895.6 | | Net cash used in investing activities | $(19.7) | $(13.3) | | Net cash used in financing activities | $(114.5) | $(168.6) | | Increase in cash, cash equivalents, and restricted cash | $904.4 | $688.7 | Notes to Condensed Consolidated Financial Statements The company reorganized its reportable segments from six to five, effective January 1, 2025 - Effective January 1, 2025, the Company reorganized its reportable segments from six to five: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX36 - The former Digital segment's operating results are now prospectively included within the Futures reporting segment as of Q1 202537 Disaggregated Revenue by Type - Q1 2025 (in millions) | Revenue Type | Cash and Spot Markets | Data Vantage | Derivatives Markets | Total | | :--- | :--- | :--- | :--- | :--- | | Transaction and clearing fees | $341.0 | $— | $491.6 | $832.6 | | Access and capacity fees | $— | $97.8 | $— | $97.8 | | Market data fees | $15.7 | $54.0 | $8.1 | $77.8 | | Regulatory fees | $120.7 | $— | $41.1 | $161.8 | | Total | $500.9 | $152.5 | $541.6 | $1,195.0 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 25% increase in total revenues driven by higher trading volumes and Section 31 fees Financial Summary - Q1 2025 vs Q1 2024 (in millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $1,195.0 | $957.2 | 25% | | Revenues less cost of revenues | $565.2 | $502.1 | 13% | | Operating income | $353.9 | $282.4 | 25% | | Net income | $250.6 | $209.5 | 20% | | Adjusted diluted EPS | $2.50 | $2.15 | 16% | - As of January 1, 2025, the company operates five reportable business segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX226228 Results of Operations Total revenues grew 25% to $1.195 billion, while operating expenses fell 4% to $211.3 million - Total revenues increased by $237.8 million (25%), primarily due to higher volumes and a significant increase in the Section 31 fee rate to $27.80 per million282284286 - Total operating expenses decreased by $8.4 million (4%), mainly due to a $7.0 million decline in depreciation and amortization expense299302 Segment Operating Results All five business segments reported growth in revenues less cost of revenues, led by the Options segment Revenues Less Cost of Revenues by Segment - Q1 2025 vs Q1 2024 (in millions) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Options | $352.4 | $307.4 | 15% | | North American Equities | $94.6 | $92.6 | 2% | | Europe and Asia Pacific | $64.1 | $54.1 | 18% | | Futures | $32.8 | $30.5 | 8% | | Global FX | $21.3 | $18.4 | 16% | | Total | $565.2 | $502.1 | 13% | - The Options segment's growth was driven by a 17% increase in index options ADV and a 25% increase in multi-listed options ADV330 - The Europe and Asia Pacific segment's performance was boosted by a 39% increase in Cboe European Equities matched ADNV and a 40% increase in trades cleared336 Liquidity and Capital Resources The company maintained a strong liquidity position while returning capital through dividends and share repurchases - During Q1 2025, the company paid cash dividends of $0.63 per share, totaling $66.4 million189 - The company repurchased 144,753 shares for $30.0 million during the quarter, with $649.8 million remaining under its share repurchase authorization185367368 - Total debt outstanding was $1.44 billion as of March 31, 2025, consisting entirely of fixed-rate Senior Notes362363 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks including foreign currency fluctuations, credit risk, and interest rate risk - The company has significant exposure to foreign currency risk, where a 10% adverse fluctuation would negatively impact revenues less cost of revenues by a combined $6.1 million379 - Credit risk from trading is largely mitigated as central counterparties guarantee clearance and settlement for most transactions on its exchanges384371 - Interest rate risk is limited as the company's $1.44 billion in debt is all fixed-rate395 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period398 - No material changes to internal control over financial reporting occurred during the first quarter of 2025399 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company details ongoing legal challenges to SEC rules regarding equity access fees and order management systems - The company is legally challenging the SEC's Final Rules that reduce the equity access fee cap, which could materially impact its U.S. equities transaction revenue402403404 - Cboe filed a Petition for Review challenging the SEC's disapproval of its proposed rule concerning exchange-affiliated Order and Execution Management Systems (OEMS)405406 Item 1A. Risk Factors Material risks are highlighted, with an emphasis on the complexities associated with the company's global operations - The company faces increased risks from its global operations, including currency fluctuations, complex compliance requirements, and geopolitical conditions409 - Global trade policies, such as tariffs, could increase the cost of technology and services, potentially having a material adverse impact on business and results412 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased $30.0 million of its common stock during the quarter under its share repurchase program Share Repurchases - Q1 2025 | Metric | Value | | :--- | :--- | | Total Shares Purchased | 144,753 | | Average Price Paid per Share | $207.04 | | Total Purchase Price | $30.0 million | | Remaining Authorization | $649.8 million | Item 5. Other Information Two executive officers adopted Rule 10b5-1(c) securities trading plans during the first quarter of 2025 - Executive Vice Presidents Christopher Isaacson and Catherine Clay adopted Rule 10b5-1 trading plans for the sale of company securities during the quarter421422 Item 6. Exhibits Exhibits filed with the Form 10-Q include a license agreement amendment, officer certifications, and XBRL data