Cboe Global Markets (BATS:CBOE) FY Conference Transcript

Summary of Cboe Global Markets FY Conference Call (September 08, 2025) Company Overview - Company: Cboe Global Markets (BATS:CBOE) - New CEO: Craig Donahue, who has shifted the company's strategy towards a sharper focus on index options and data after a period of heavy acquisitions [3][5] Key Industry Insights - Market Volatility: The VIX index reached its third highest level in the last twenty years, indicating significant market volatility, which is beneficial for Cboe as it attracts customers seeking to manage risk [9][10] - Customer Behavior: Strong performance across all customer segments, with a structural rather than cyclical demand for options products [10][11] Growth Strategy - Focus on Core Business: Cboe is optimizing its core business and exploring growth opportunities around it, particularly in index options and data services [6][8] - Exit from Japanese Equities: The decision to exit the Japanese equities business reflects a focus on financial rigor and growth potential [6][50] - Retail Trading Growth: There is substantial growth potential in retail trading of index options, with many brokerage firms like Robinhood and Interactive Brokers expanding their offerings [13][14] Market Opportunities - Total Addressable Market (TAM): The retail trading market for index options is significant, with only a small percentage of accounts currently authorized to trade options [14] - International Expansion: Cboe is focusing on international growth, particularly in Asia Pacific, through partnerships and education [15][19] - Short-Dated Options: The popularity of zero DTE (days to expiration) options is increasing, indicating further growth potential in this segment [22][23] Product Performance - XSP Growth: The XSP product has seen substantial growth, with a year-over-year increase of over 40% in July and doubling in August, driven by factors such as cash settlement and tax treatment [20][21] - DataVantage Performance: DataVantage has experienced over 10% growth in Q2, with 45% growth internationally, highlighting the importance of data services in Cboe's strategy [31][32] Regulatory Environment - Favorable Landscape: The current regulatory environment is seen as favorable for innovation and competition, with a focus on streamlining regulations [47][48] - Market Integrity: Cboe emphasizes the importance of maintaining market integrity while adapting to new entrants and disruptive innovations [48] M&A and Capital Allocation - M&A Strategy: The focus is currently on optimizing core operations rather than pursuing mergers and acquisitions, with a high bar for any potential deals [56][58] - Recurring Revenue Models: There is an interest in exploring opportunities that could provide a blend of recurring revenue alongside transaction-based income [59][62] Competitive Landscape - Intense Competition: The competitive environment in U.S. equities is described as intense, with a shift towards dark markets, but Cboe maintains a dominant position in multi-listed options [63][65] Financial Performance - High Margins: Cboe operates with high margins, and while there is potential for margin expansion, the focus remains on operational efficiency and growth opportunities [68][70] Conclusion Cboe Global Markets is strategically positioning itself for growth in the index options and data services sectors while navigating a complex regulatory environment and intense competition. The company is focused on optimizing its core business and exploring international opportunities, particularly in the retail trading space.