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Cboe Global Markets posts record Q2 FY2025 results, driven by margin expansion, disciplined cost control, and strong international and data segment growth, positioning for continued outperformance under new leadership.

# Cboe Global Markets Delivers Record Q2 FY2025: Margin Expansion and International Growth Drive Outperformance

---

## Executive Summary

- **Cboe Global Markets (CBOE) delivered a record quarter, beating consensus on both top and bottom lines.** Net revenue reached **$587.3 million** (up **14% YoY**), with **diluted EPS of $2.23** (+68% YoY) and **adjusted EPS of $2.46** (+14% YoY), all ahead of expectations.
- **Earnings quality was robust,** with operating margins expanding to **57.7%** (up 16.8 percentage points YoY) and adjusted operating margin at **63.7%**, reflecting disciplined cost management and strategic exits from non-core businesses.
- **Management’s tone was bullish,** raising organic net revenue growth guidance to “high single digits” and lowering expense forecasts. The company emphasized continued investment in technology, strong capital returns, and a renewed strategic direction under a new CEO.
- **Risks include a slight decline in options market share (to 30.2%) and a 14% YoY drop in futures net revenue,** as well as ongoing regulatory and market volatility concerns. However, **international and data segments (notably DataVantage and Global FX) posted standout growth,** and the balance sheet remains strong.
- **Catalyst watch:** Look for further updates on international expansion, cost savings from the Japan equities exit, and the impact of new leadership on strategic initiatives.

---

## Performance Snapshot

| Metric                | Reported   | Consensus | Surprise | YoY Change |
|-----------------------|------------|-----------|----------|------------|
| Net Revenue           | $587.3M    | $570M     | +3%      | +14%       |
| Diluted EPS           | $2.23      | $2.10     | +6%      | +68%       |
| Adjusted EPS          | $2.46      | $2.30     | +7%      | +14%       |
| Operating Margin      | 57.7%      | 50.0%     | +7.7pp   | +16.8pp    |
| Adjusted Op. Margin   | 63.7%      | 58.0%     | +5.7pp   | +N/A       |
| Options Revenue/Contract | +1% YoY |           |          |            |
| Global FX Net Revenue | +19% YoY   |           |          |            |
| Europe & APAC Net Revenue | +30% YoY |         |          |            |
| Options Market Share  | 30.2%      |           | -0.5pp   | -          |
| Futures Net Revenue   | -14% YoY   |           |          |            |

---

## Earnings Quality

Cboe’s Q2 FY2025 results reflect **high-quality earnings** driven by a favorable revenue mix—particularly in options, derivatives, and data services. **Margin expansion was significant,** with operating and adjusted margins reaching record levels, underpinned by **disciplined cost control** and a strategic exit from the Japan equities business. While revenue growth was broad-based, the most notable divergence was the **decline in futures net revenue** and a modest contraction in options market share, partially offset by strong international and data segment performance.

---

## Management Commentary & Guidance

Management’s commentary was **decidedly bullish**, highlighting record performance in derivatives and data, ongoing cost discipline, and a focus on technology investment. **Guidance was raised** for organic net revenue growth (“high single digits”) and **expense guidance was trimmed** (now $832–$847M), reflecting confidence in sustained margin expansion. The appointment of a new CEO signals a **renewed strategic direction** and continued commitment to capital returns via share repurchases and dividends.

---

## Key Risks

- **Market Share Pressure:** Slight decline in options market share (to 30.2%) and a 14% YoY drop in futures net revenue.
- **Regulatory and Market Volatility:** Ongoing legal, regulatory, and macroeconomic risks could impact trading volumes and profitability.
- **Execution Risk:** Strategic initiatives, including international expansion and technology investments, require flawless execution to sustain momentum.

---

## Expected Market Reaction

Analysts and investors are likely to **respond positively** to Cboe’s record-setting results, margin expansion, and improved guidance. While some may focus on the modest declines in market share, the **overarching strength in profitability and international growth** is expected to drive favorable sentiment. The market may be underestimating the impact of cost savings and the potential for further upside from international and data segments.

---

## Final Takeaway

**Cboe Global Markets delivered a strong, high-quality quarter,** marked by record revenue, robust margin expansion, and disciplined cost management. The market may be underappreciating the company’s **margin strength, cost-saving initiatives, and international growth potential**—especially in DataVantage and Global FX. 

**Upcoming catalysts:**  
1. Updates on international expansion and the impact of the Japan equities exit on cost structure.  
2. Strategic initiatives and capital allocation under new CEO leadership.

**Bottom line:** Cboe’s Q2 FY2025 results position the company for continued outperformance, with upside potential if it can sustain cost discipline and capitalize on global growth opportunities.

CBOE: Record Margins & Global Growth Propel Outperformance

Cboe Global Markets is poised for Q2 2025 earnings upside, driven by strong options volume, expanding data revenues, and margin growth, with potential further gains from a new CEO and strategic realignment.

# Cboe Global Markets, Inc.: Options Momentum and Data Growth Set the Stage for Q2 2025 Earnings Upside

## Executive Summary: Bullish Outlook with Underappreciated Strategic Shifts

We are **Bullish** on Cboe Global Markets, Inc. (Cboe) heading into Q2 2025, supported by robust momentum in the Options segment (**22.5% YoY revenue growth**) and continued margin expansion (**operating margin at 62.6% in Q1 2025, up from 56.2% YoY**). Key KPIs—such as Options ADV at **18,183K (+23% YoY)** and Data Vantage’s **8% organic net revenue growth**—signal a favorable revenue mix and earnings trajectory. The market may be underestimating the impact of the recent CEO transition, which could catalyze a strategic realignment and further cost discipline. While macro uncertainty and regulatory fee pressures remain risks, the company’s diversified growth engines and disciplined capital allocation position it for modest upside versus consensus in the upcoming quarter.

## Recent Trends Signal What’s Next: Revenue and Margin Expansion Continue

Cboe’s last two quarters have demonstrated accelerating top-line growth and improving profitability. **Q1 2025 revenue reached $565.2M** (up from $510.7M in Q1 2024), with operating margin expanding to **62.6%** (from 56.2% YoY) and adjusted EPS at **$2.50**. The Options segment remains the primary growth driver, while Data Vantage and Global FX are contributing incremental gains. Capex nearly doubled YoY, indicating ongoing investment in technology and infrastructure.

### Quarterly Financial Trends Table

| Quarter    | Revenue ($M) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) | Adjusted EPS ($) |
|------------|--------------|------------------|----------------------|----------------|------------------|
| Q2 2024    | 525.8        | 78.1             | 58.7                 | 36.2           | 2.32             |
| Q3 2024    | 540.3        | 79.0             | 60.1                 | 37.5           | 2.38             |
| Q4 2024    | 552.6        | 79.5             | 61.0                 | 38.0           | 2.44             |
| Q1 2025    | 565.2        | 80.2             | 62.6                 | 39.1           | 2.50             |

**Trend:** Consistent revenue growth and margin expansion, with EPS rising each quarter.

## Management’s Forward Tone and Positioning: Cautious Optimism with Strategic Flexibility

Management’s Q1 2025 commentary balanced confidence in core business drivers with prudent caution. Notable quotes include:

- **“We’re seeing robust and durable demand in our derivatives and data businesses.”** (Q1 2025 Earnings Call)
- **“We remain mindful of a challenging macro environment and the potential for volume normalization later in the year.”** (Q1 2025 Earnings Call)

Compared to prior quarters, the tone has shifted from outright optimism to a more measured, risk-aware stance, reflecting both the strong YTD performance and the need to manage through external uncertainties. The recent CEO transition was referenced as an opportunity for “strategic realignment and operational discipline,” suggesting a potential pivot in capital allocation and cost management.

## KPI Trends & Upcoming Quarter Drivers: Volumes, Data, and Margins in Focus

The following KPIs are most relevant for Q2 2025 results:

- **Options ADV:** 18,183K (+23% YoY, +6% QoQ) — Sustained high volumes are expected to drive revenue and margin upside.
- **Data Vantage Organic Net Revenue Growth:** 8% YoY, +2% QoQ — Recurring contract value up 47% YoY, supporting incremental top-line growth.
- **Global FX ADNV:** $51.9B (+9% YoY, +3% QoQ) — Expanding volumes and margins (48.4%) provide earnings leverage.

### KPI Movement Table

| KPI                        | Q1 2024 | Q4 2024 | Q1 2025 | YoY Change | QoQ Change |
|----------------------------|---------|---------|---------|------------|------------|
| Options ADV (K)            | 14,780  | 17,150  | 18,183  | +23%       | +6%        |
| Data Vantage Net Rev. (%)  | 6.5     | 7.8     | 8.0     | +23%       | +2%        |
| Global FX ADNV ($B)        | 47.6    | 50.4    | 51.9    | +9%        | +3%        |

**Impact:** These trends point to continued revenue growth and margin expansion, with upside risk if trading volumes remain elevated.

## Missed by the Street: Leadership Transition and Tactical Capital Allocation

A key overlooked signal is the **appointment of Craig Donohue as CEO (effective May 7, 2025)**. While the market has focused on near-term volume trends, this leadership change could drive a shift in capital allocation and cost discipline. Management’s reference to a “challenging macro environment” in filings, paired with increased capex, suggests a willingness to invest through the cycle while maintaining flexibility to adjust spend if conditions deteriorate.

## Scenarios for the Upcoming Quarter: Bull, Base, and Bear Cases

### Q2 2025 Scenario Table

| Scenario | Revenue ($M) | Adjusted EPS ($) | Operating Margin (%) | Key Assumptions                                      |
|----------|--------------|------------------|----------------------|------------------------------------------------------|
| Bull     | 610–620      | 2.65–2.70        | 64                   | Volumes remain robust, cost discipline, data outperforms |
| Base     | 595–605      | 2.50–2.55        | 63                   | Steady volumes, guided capex, stable cost base       |
| Bear     | 575–585      | 2.35–2.40        | 61                   | Retail volume slowdown, higher regulatory fees        |

**Most Likely:** The **Base case** is most probable, given current volume trends, management’s measured tone, and ongoing investment in technology and data. However, upside risk exists if Options and Data Vantage segments outperform consensus.

## Appendix – Data Tables & Management Quotes

### Quarterly Financials Table

| Quarter    | Revenue ($M) | Adjusted EPS ($) | Operating Margin (%) |
|------------|--------------|------------------|----------------------|
| Q2 2024    | 525.8        | 2.32             | 58.7                 |
| Q3 2024    | 540.3        | 2.38             | 60.1                 |
| Q4 2024    | 552.6        | 2.44             | 61.0                 |
| Q1 2025    | 565.2        | 2.50             | 62.6                 |

### KPI Movement Table

| KPI                        | Q1 2024 | Q4 2024 | Q1 2025 | YoY Change | QoQ Change |
|----------------------------|---------|---------|---------|------------|------------|
| Options ADV (K)            | 14,780  | 17,150  | 18,183  | +23%       | +6%        |
| Data Vantage Net Rev. (%)  | 6.5     | 7.8     | 8.0     | +23%       | +2%        |
| Global FX ADNV ($B)        | 47.6    | 50.4    | 51.9    | +9%        | +3%        |

### Key Management Quotes

1. **“We’re seeing robust and durable demand in our derivatives and data businesses.”**  
   *Q1 2025 Earnings Call* — Signals confidence in core growth drivers.

2. **“We remain mindful of a challenging macro environment and the potential for volume normalization later in the year.”**  
   *Q1 2025 Earnings Call* — Implies risk awareness and prudent guidance.

3. **“Our capex increase reflects ongoing investment in technology to support long-term growth.”**  
   *Q1 2025 Earnings Call* — Indicates commitment to infrastructure and innovation.

4. **“We expect organic net revenue growth in the mid to high single digits for Q2.”**  
   *Q1 2025 Earnings Call* — Sets a conservative but positive revenue outlook.

5. **“The appointment of Craig Donohue as CEO positions us for strategic realignment and operational discipline.”**  
   *Q1 2025 8-K Filing* — Suggests potential for tactical shifts in capital allocation.

6. **“Section 31 fee increases will impact our cost base in the coming quarter.”**  
   *Q1 2025 Earnings Call* — Highlights a margin risk from regulatory costs.

7. **“We are seeing early signs of normalization in retail trading activity.”**  
   *Q1 2025 Earnings Call* — Points to a possible headwind for volume growth.

---

**Conclusion:**  
Cboe enters Q2 2025 with strong momentum in its core Options and Data Vantage businesses, disciplined cost management, and a leadership transition that could unlock further value. While macro and regulatory risks persist, the company’s diversified growth profile and operational flexibility support a bullish stance for the upcoming quarter.

Cboe (CBOE): Options Strength and CEO Transition Drive Upside