Market Overview - The market has been experiencing a significant upward trend, reaching record levels for indices such as the S&P, Dow, and Nasdaq, with volatility decreasing [2][11] - There has been a notable increase in VIX options trading, with 60,000 contracts bought recently, indicating expectations of potential volatility spikes [3][9] Federal Reserve Insights - The Federal Reserve is anticipated to announce a quarter-point interest rate hike, which is widely expected by the market [6][14] - Jerome Powell's communication style is highlighted as a potential risk for market sentiment, with a suggestion that he should limit his remarks to avoid miscommunication [5][6] Volatility and Options Trading - Large options trades in the VIX suggest that traders are positioning for potential volatility increases, with some buying spreads that could benefit from a rise above 20 [8][10] - The current VIX level is around 16.50, with traders looking for a possible spike, which could be a hedge against market downturns [3][10] Precious Metals Performance - Gold and silver have seen substantial gains, with both up over 40% year-to-date, driven by factors including currency fluctuations [13][14] - The GLD ETF has been a focal point for options activity, indicating strong investor interest in gold [13] Stock Recommendations - Companies such as Amazon, Oracle, Tesla, and Google are highlighted as having strong upside potential, with positive market activity noted for these stocks [16][17][18] - Google, in particular, is recognized for its unexpected investments and performance, suggesting continued growth potential [18]

© 2025 Cboe Exchange, Inc. All rights reserved. SECOND QUARTER 2025 EARNINGS PRESENTATION August 1, 2025 Agenda | Business Review | Craig Donohue | | --- | --- | | | Chief Executive Officer | | Financial Review | Jill Griebenow | | | Executive Vice President, Chief Financial Officer | | Questions & Answers | Craig Donohue | | | Jill Griebenow | | | Dave Howson | | | Executive Vice President, Global President | | | Chris Isaacson | | | Executive Vice President, Chief Operating Officer | | | Cathy Clay | | | ...

Financial Data and Key Metrics Changes - Cboe Global Markets reported a 5% year-over-year increase in net revenue for Q4 2024, totaling $524.5 million, and a 2% increase in adjusted diluted earnings per share to $2.1 [6][34] - For the full year 2024, net revenue grew 8% to a record $2.1 billion, with adjusted diluted earnings per share increasing 10% to a record $8.61 [7][34] - Adjusted operating expenses rose by 6% for the year, stabilizing margins and leading to a 10% improvement in adjusted diluted earnings per share [8][34] Business Line Data and Key Metrics Changes - The derivatives business saw an 8% increase in organic net revenue, with total volume across Cboe's options exchanges reaching 3.8 billion contracts traded in 2024 [8][18] - Cash and spot markets experienced a 10% increase in organic net revenue, driven by healthy trading volumes across all regional equities markets [10][26] - DataVantage business reported a 7% increase in organic net revenue, supported by technology investments that optimized access and insights [9][30] Market Data and Key Metrics Changes - In the derivatives market, SPX options volume reached a record average daily volume (ADV) of 3.1 million contracts, while VIX options ADV hit a record 830,000 contracts [9][18] - The Europe and Asia Pacific segment delivered a 17% year-over-year net revenue growth in Q4, driven by higher transaction and clearing fees [29][37] - The U.S. equities market saw a 28% increase in net transaction and clearing fees during Q4, contributing to a 10% year-over-year revenue increase for the segment [27][34] Company Strategy and Development Direction - Cboe is focused on leveraging secular trends such as the rise of retail investors and the globalization of markets to enhance its derivatives ecosystem [10][11] - The company plans to invest in technology and education to broaden access to its products, particularly in the retail space [14][21] - Cboe's strategic framework emphasizes organic growth opportunities and disciplined capital allocation, moving away from M&A focus [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the pro-business environment under the new administration, despite ongoing geopolitical uncertainties [12][13] - The company anticipates continued growth in options trading and retail investor participation, with a focus on education and access [13][21] - Cboe expects 2025 to be a transformational year, leveraging a strong talent pool to enhance customer access and education [26][32] Other Important Information - Cboe returned $454 million to shareholders in 2024 through dividends and share repurchases, representing 50% of adjusted earnings [46] - The company has a strong balance sheet with $880 million in adjusted cash and a low average leverage ratio of 1.1 times [46][47] - Cboe's technology platform was rebranded as Civo Titanium, reflecting its commitment to delivering best-in-class trading technology [15][91] Q&A Session Summary Question: DataVantage revenue guidance - A participant inquired about the mid to high single-digit revenue growth range for DataVantage, noting it appears weaker than previous guidance. Management clarified that the new guidance aligns with market standards and remains consistent with prior ranges [55][56] Question: Robinhood index options uptake - A question was raised regarding the uptake of index options on Robinhood. Management reported that the rollout exceeded expectations, with increased usage of complex strategies and a focus on joint marketing and education to drive further adoption [58][60][62] Question: AI initiatives - An inquiry was made about AI initiatives to help customers generate revenue. Management indicated that while there are no immediate revenue opportunities, significant internal investments in AI are being made to improve productivity and develop new products [65][67] Question: Capital allocation and M&A strategy - A participant asked about the lack of share repurchases and the current M&A strategy. Management explained that share repurchases remain a key part of the capital allocation strategy, while M&A will focus on strategic and financial sense [70][72][73] Question: U.S. Equities trading hours - A question was posed about the opportunity set for extending U.S. equities trading hours. Management discussed the demand for extended trading hours and the need for regulatory approvals, indicating readiness to implement changes once infrastructure is in place [75][78][80] Question: Price increases for options - A participant inquired about price increases for options and their influence on retail adoption. Management explained that pricing changes are dynamic and focused on balancing market share with revenue optimization, with a strong emphasis on education for retail investors [85][88]