Cboe Global Markets Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Patrick Moley - Piper Sandler & Co. - Analyst : On the DnA revenue guidance, Jill, you said you expect to see a step-up in the fourth quarter that's going to get you to the low end of that 7% to 10% range. Can you maybe just elaborate on what you're seeing there and the drivers? And then is this indicative of a more sustainable step-up or acceleration in DnA revenues? Or is it more so just related to timing of some of those cash collections and enterprise sales?

Question: Benjamin Budish - Barclays Bank PLC - Analyst : I imagine in the near term, you're focused on some of the more recent opportunities. Robinhood had some of the other global brokers you've announced, I think, earlier in the year that added some Cboe products. But as you think further out, how do you think about continuing to expand that opportunity set. Are there other major brokers in the US or elsewhere that don't have access to the full suite of Cboe products? Or is the opportunity really about sort of bringing more education to that kind of big chunk of customers who are either not enabled for options or not using the regulator? How do you think about those two different opportunity sets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 12:30PM, CBOE.Z - Q3 2024 Cboe Global Markets Inc Earnings Call

Question: Dan Fannon - Jefferies - Analyst : My question is for Fred. A year ago, on your first call, you talked about narrowing focus and margin improvement and capital return. And then as we sit here today, we see inorganic back on the table again, and I think talking about that a little bit more. So curious about kind of what the change in the strategic focus really was from a year ago to today and how we should think about inorganic versus organic growth priorities and capital return going forward?

Question: Alexander Kramm - UBS Investment Bank - Analyst : Just in terms of some of the new initiatives, maybe give us an update on the VIX options on futures. I know it has only been a couple of weeks, but obviously, very limited volume so far. Just -- I know there's a lot going on in the world, but just trying to get an update where you are in terms of bringing on market participants and liquidity? And what has the feedback been so far?

Question: Anthony Corbin - Goldman Sachs Group, Inc. - Analyst : This is Anthony on for Alex. You mentioned pricing role and DnA revenue acceleration. I was wondering like what is the typical percentage increase we should be expecting across this revenue base from pricing increases and then what are your expectations for pricing increases into 2025?

Question: Owen Lau - Oppenheimer & Co. Inc. - Analyst : So going back to Robinhood, I think it's an exciting partnership, but when do you expect Cboe to get more meaningful volume? You mentioned 24 million users, 4% trade options. How big is the addressable market, and is there anything Cboe can do to help drive higher volume in this channel?

Question: Craig Siegenthaler - BofA Securities - Analyst : My question is on the strategic review. So now that it's complete, how is the Board thinking about divestments? And we know you shut down the spot crypto exchange earlier this year. Are there other noncore assets that you can divest or close that would enhance margins and profits.

Question: Ashish Sabadra - RBC Capital Markets - Analyst : I just wanted to drill down further on the DnA acceleration and wanted to better understand the plans for further expanding the Dedicated Cores as well as the rollout of the Cboe cloud, how is that going now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 12:30PM, CBOE.Z - Q3 2024 Cboe Global Markets Inc Earnings Call

Question: Ashish Sabadra - RBC Capital Markets - Analyst : The rollout of Cboe cloud.

Question: Kyle Voigt - Keefe, Bruyette, & Woods, Inc. - Analyst : So introducing every day expirations in SPX has obviously been really successful in growing the SPX volume pie, introducing new strategies, and hedging opportunities for your clients. I'm just curious if you've seriously considered adding additional expirations to SPX from here in terms of intraday or multiple expirations per day? What are the operational challenges with potentially doing that? And how close could that be?

Question: Bill Katz - TD Cowen - Analyst : So I've heard two themes today: one is sort of top line growth. But the second one is a fair amount of investment spending. I think you've said boots on the ground for a bit of time as well. How should we be thinking about at least preliminary, the rate of core expense growth for next year? And I noticed your EBITDA margin actually slipped a couple of percentage points, both quarter-on-quarter and year-on-year. So -- are we close to peak margin for the business as you think about maybe the in-play between revenue and expense growth.

Question: Madeline Daleiden - JPMorgan - Analyst : This is Madeline Daleiden on for Ken. We have a quick one on multi-listed options. The market share loss that you've been seeing 2024 to date versus '23 comps, we think from competition, seems to have reaccelerated in the third quarter. First, is this the correct read? And second, is there anything you can do or are doing to combat such share loss?

Question: Chris Allen - Citi - Analyst : Just kind of following up on a couple of the prior questions. Just trying to think about how the investment needs for growth moving forward. I mean, you obviously have a strong balance sheet, free cash flow, flexible balance sheet, a good position there. You basically have a lot of talent that has been integrated, but you can repurpose them to drive growth. And then you're investing overseas in the international front. Just wondering if you could frame out like the magnitude of investment you need to drive growth from here. And maybe some color just where are you investing on the talent side or internationally specifically?