Comstock/Stockbyte via Getty Images Introduction: Questions That Answer Themselves Speakers should take a beat once in a while—for breath and for questions. The most relevant question on any agenda must be, for the person who asked it, their question. The start of a year is a fine season to take that beat, so this Commentary centers on questions that recently came our way. Let us begin with two verbatim client questions, from October and December, which were publicly answered shortly thereafter by TPL i ...

Core Insights - Cboe Global Markets (CBOE) stock reached a record high of 255.27 on August 11 and is poised for a potential new all-time high [1] - The Relative Strength Rating (RS Rating) for Cboe's stock increased to 71, up from 68 the previous day, indicating strong performance relative to the market [1] - Cboe Global Markets has shown market leadership with its RS Rating moving into the 80-plus range, reflecting its strong position in the securities market [4] Performance Metrics - Cboe Global Markets achieved a Relative Strength Rating of 81, indicating a significant improvement in market performance [4] - The Composite Rating for Cboe Global Markets has climbed to 97, showcasing its strong overall performance compared to peers [4] - The stock market is experiencing mixed results, with Cboe's performance standing out amidst trading volatility [4]

Financial Data and Key Metrics Changes - Cboe reported a 14% year-over-year increase in net revenue, reaching a record $587 million, and adjusted diluted EPS also rose by 14% to $2.46 [6][20] - Adjusted operating expenses increased by 8% year-over-year to $213 million, while adjusted operating EBITDA grew by 19% to $387 million, resulting in an adjusted operating EBITDA margin expansion of 2.3 percentage points to 65.8% [20][24] Business Line Data and Key Metrics Changes - Derivatives markets net revenues grew by 17%, with options volumes increasing significantly due to heightened market volatility [7][20] - The Options segment achieved a record net revenue growth of 19% year-over-year, with a 20% increase in total Options average daily volume [21] - DataVantage business net revenue improved by 11% year-over-year, driven by strong new subscription and unit sales [14][23] Market Data and Key Metrics Changes - The European cash equities business drove an 11% increase in cash and spot markets net revenue, with Europe and Asia Pacific segments achieving a 30% year-over-year growth [12][22] - Net transaction and clearing fees in the Europe and APAC segment rose by 39% year-over-year, reflecting strong industry volumes [12][22] Company Strategy and Development Direction - The company is focused on optimizing growth in core businesses while exploring organic and inorganic investment opportunities [31][32] - Cboe's decision to close its Japan equities business reflects a strategy to redirect resources to higher potential return activities [13][26] - The management emphasizes the importance of capital allocation and is committed to assessing the business portfolio for long-term shareholder returns [32][78] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential of options as an asset class, driven by continued uncertainty in monetary and trade policy [11][31] - The company remains committed to enhancing its product offerings and expanding its global presence, particularly in the Asia Pacific region [15][66] Other Important Information - Cboe expects to record a pretax charge of approximately $5 million related to the wind down of its Japanese equities business, which will be excluded from adjusted operating expenses [26] - The company repurchased $35 million in shares during the quarter, with year-to-date repurchases totaling $65 million [28] Q&A Session Summary Question: Key priorities for the new CEO - The new CEO emphasized optimizing growth in core businesses and exploring compelling inorganic growth opportunities, while maintaining a flexible balance sheet [38][39] Question: Evaluation of business footprint - The CEO indicated that the company is rigorously evaluating all business operations to ensure capital is allocated to the best growth opportunities [42] Question: DataVantage revenue guidance - Management remains confident in the full-year guidance for DataVantage, noting strong momentum in new subscription sales and international demand [46][49] Question: Long-term growth for index options volume - The management highlighted the sustainability of zero DTE volumes and the potential for growth through retail broker partnerships and international expansion [51][53] Question: Competitive environment for single stock zero DTE - Management sees single stock zero DTEs as complementary to index options, with retail traders likely to migrate to index options as their sophistication increases [55][56] Question: Relationship with S&P Global - The CEO reaffirmed the long-term partnership with S&P Global and the importance of mutual growth and innovation [60][63] Question: Globalization strategy - The company is focused on importing flow from outside the U.S. into its markets, leveraging data as a key driver for growth [66] Question: Industry evolution and retail engagement - Management views the growth in retail engagement as a long-term trend and is committed to remaining relevant in a dynamic environment [71][73]