Cboe Global Markets (CBOE:CBOE) Q3 2025 Earnings Call

0:00 Hello everyone. Thank you for joining us and welcome to the SIBO Global Markets Third Quarter Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute. I will now hand the call over to Ken Hill, Head of Investor Relations. Please go ahead. Good morning, and thank you for joining us for our third quarter earnings conference

0:30 call. On the call today, Craig Donahue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Joe Greveno, our chief financial officer, will then provide an overview of our financial results for the quarter, as well as discuss our 2025 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our chief operating officer, Prashant Bhatia, our head of enterprise strategy and corporate development, and Rob Hawking, our global head of derivatives. I would like to point out this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the investor relations portion of the website. During our remarks, we will make some forward-looking statements, which represent our current judgment on what the future may hold.

1:20 And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filing with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, after this conference call. During the call this morning, we'll be referring to non-GAAP measures as defined and reconciled in our earnings materials. Now, I'd like to turn the call over to Craig. Good morning. Thank you for joining us today to discuss our third quarter results. Our performance this quarter underscores how CBOE is operating from a position of strength, a result of our world-class products, platforms, and people.

2:15 We're building on that momentum and sharpening our strategic focus designed to unlock even greater value and opportunities for growth. Following the conclusion of a rigorous review of our businesses, we will initiate a sales process for our SIBO Australia and SIBO Canada businesses. We will discontinue our U.S. and European corporate listings efforts and we will reduce our costs related to our U.S. and European ETP listings businesses,

2:46 SIBO Europe Derivatives Exchange, and several of our smaller risk and market analytics businesses. This strategic realignment ensures SIBO is well positioned in a dynamic and evolving market and strengthens our long-term vision to be a global derivatives leader. These changes will be accretive to earnings, and Jill will discuss in her prepared remarks how these actions strengthen our financial position and unlock new growth opportunities. I'd like to express our deep appreciation to all our team members for their dedication and hard work in supporting each of these businesses. While our Australian and Canadian equities businesses are performing well, we've determined that they fall outside of our core focus and strategy.

3:34 We are grateful to our regulators in Australia and Canada for the support and collaboration they have shown us, and we will work closely with them to ensure a smooth transition for all of our key stakeholders. With this renewed focus, we are directing greater attention to our core businesses, which are operating from a position of strength. We see tremendous opportunities across index and multi-list options, futures, U.S. and European equities, and FX, inclusive of data vantage. Leveraging these core areas of strength for SIBO and the strong secular growth trends supporting them, we believe we are well positioned to fully capture their growth and earnings potential as we strengthen our competitive positioning.

4:25 Turning out of the third quarter, SIBO grew net revenue 14% year-over-year to a record $605.5 million, and adjusted diluted EPS increased a robust 20% to a record $2.67. These results were again driven by strong volumes in both our multi-list and proprietary index option products, solid new sales growth in our SIBO data vantage business, robust industry volumes in our cash and spot markets, and continued strong expense discipline. Most importantly, our performance once again underscored the durability of our net revenue generation, with strength evident across nearly every segment of our business.

5:11 In fact, in the third quarter, all three of our revenue categories – derivatives markets, cash and spot markets, and data vantage – posted double-digit net revenue growth. As we head into the final months of the year, we look forward to building on those broad-based trends. Taking a closer look at the third quarter trends by category, our derivatives franchise delivered another record quarter with net revenue increasing 15% year-over-year. In our multi-list options business, net transaction and clearing fees revenue was up a solid 14%, given higher industry volumes and positive market share trends.

5:56 While the multi-list options space remains highly competitive, SIBO is well positioned to benefit from strong secular trends, having taken meaningful steps to deepen our talent pool in the options space, while actively pursuing thoughtful regulatory reforms that support both the industry and investors. On the index options side, net transaction and clearing fees revenue was up a strong 19% as our proprietary SPX options complex set new records powered by robust growth in zero DTE options trading. SPX zero DTE average daily volume surged 62% year over year, while overall SPX ADV increased 26% to a record 3.9 million contracts.

6:49 Zero DTE options made up over 61% of SPX volumes, up from a 48% share a year ago. We saw a similar dynamic in many SPX options, where zero DTE ADV more than doubled over the past year and drove an impressive 66% increase in total ADV during the quarter. Zero DTE options now make up roughly half of mini SPX volume, up from 35% a year ago. In our proprietary options business, it's noteworthy that nine of the 10 highest average daily volume months occurred in 2025, with September ranking as the third highest month on record, only behind March and October, month-to-date activity.

7:43 In fact, our largest SPX day on record occurred on October 10th, with 6.4 million SPX contracts traded and a record 33.2 million total options contracts traded across our index and multi-list products. It's also worth noting that growth in our zero DTE options franchise reflects not only wider adoption and broader access, but it's also a result of CBOE's distinct advantages in product innovation, contract design, and market structure. We look forward to leaning into these advantages with our new MAG-10 index options and futures launch, subject to regulatory approval, giving investors a simpler way to gain exposure to the AI and tech theme and a more precise way to manage risk using cash-settled European-style options.

8:40 While SPF volumes in the third quarter were robust, our VIX products faced a more stable macro backdrop and lower realized volatility. The continued growth in our index options, despite the lower activity in our VIX complex, highlights the strength and versatility of CBOE's comprehensive volatility toolkit. Looking ahead, we remain positive on the outlook for our core derivatives business. With trade tensions, a government shutdown, and more uncertain economic outlook, we see investors continuing to utilize options to manage risk. Secular trends of increasing retail participation and international expansion should provide further tailwinds.

9:27 We continue to onboard more international brokers as global customers seek exposure to U.S. financial markets. Moving to cash and spot markets, net revenue was up a strong 14% as our European cash equities business continued to drive robust performance for the category. Led by another quarter of strength in our European transaction businesses, the Europe and Asia Pacific segment delivered the strongest year-over-year net revenue percentage growth any SIBO segment for the fifth quarter in a row, achieving an impressive 24% increase. This was driven by a 35% year-over-year growth in net transaction and clearing fees, resulting from strong industry volumes, solid market share gains, and a higher net capture.

10:18 Global FX also made another solid contribution, growing net revenue 13% year-over-year in Q3. Over a longer time horizon, FX has delivered quarterly year-over-year net revenue growth in 17 of the last 18 quarters, speaking to the durability of this segment's revenue generation. Turning to DataVantage, net revenue increased by 12% on a year-over-year basis, reflecting continued momentum across our platform. Notably, nearly 90% of the growth across our market data and access businesses was driven by a new unit and new sales as opposed to pricing. This growth speaks to the sizable demand for SIBO's data and access products, including our newer offerings, dedicated cores, and timestamping.

11:12 Now I'll turn the call over to Jill to walk through the details of our financials and guidance for the quarter. Thanks, Craig. Siebel posted another strong quarter with adjusted diluted earnings per share of 20% on a year-over-year basis to $2.67. I will provide some high-level takeaways from this quarter's operating results before going through segment results. Net revenue increased 14% versus the third quarter of 2024 to finish at a record $605.5 million, with each of our categories producing healthy year-over-year growth. Specifically, derivatives markets net revenues grew 15%, data vantage net revenues grew 12%, and cash and spot markets net revenues grew 14%.

11:58 Adjusted operating expenses of $210 million were up 3% on a year-over-year basis. Adjusted operating EBITDA of $409 million grew 21%, and adjusted operating EBITDA margin expanded by 3.8 percentage points to 67.5%. versus the third quarter of 2024, demonstrating both our strong business performance and disciplined expense management. Turning to the key drivers by segment, our press release and the appendix of our slide deck include information detailing the key metrics for our business segments, so I'll provide some highlights for each. The options segment delivered its fifth consecutive quarter of record net revenue with 19% year-over-year growth. Siebel total options ADV was up 26%, with a 15% increase in index options volume and a 31% increase in multi-listed options volume.

12:51 North American equities net revenue increased 6% on a year-over-year basis. Access and capacity fees increased 10% as compared to the third quarter of 2024, and stronger industry volumes helped temper softer net capture and market share in our transaction net revenues. Europe and APAC produced 24% year-over-year net revenue growth, reflecting another quarter of strong growth in Europe. Net transaction and clearing fees for the segment were up 35%, while non-transaction revenues were up a combined 14%. Futures net revenue decreased 22% from the third quarter of 2024, primarily due to lower volumes. And finally, global FX net revenue was up 13% on a year-over-year basis, driven by a 3% increase in average daily notional value and a 9% increase in net capture.

13:42 Looking at our SIBO DataVantage business, net revenues were up 12% on an organic basis in the third quarter. Building on the solid year-to-date trend, revenue growth was again driven by strong new subscription and unit sales. New sales represented nearly 90% of market data and access solutions revenue growth in the quarter, with the remainder coming from pricing changes. As Craig discussed, we are encouraged by the sales momentum occurring across our new product offerings. Turning to expenses, total adjusted operating expenses were $210 million for the quarter and up 3% on a year-over-year basis. The increase was primarily driven by higher compensation and benefits expense as a result of our strong revenue trends, which have increased our bonus incentive accrual. Before moving to our 2025 guidance update, I would like to discuss the anticipated financial impact of the business decisions announced earlier this morning. While we are still working through these changes with our key stakeholders, we do not anticipate that these actions will have a material impact on our 2025 total organic net revenue growth or our 2025 adjusted operating expenses, and they are fully captured in our updated guidance.

14:53 On a go-forward basis, we expect the annualized run rate impact of both today's announcements and the completed wind down of our Japanese equities business to be accretive to our earnings, resulting in roughly a 3% reduction in net revenue and an 8 to 10% reduction in adjusted operating expenses using the 2025 guided ranges as a baseline. That being said, realizing the full impact of the actions will take time as we work through the various realignment actions and sales processes. We will look to provide a more fulsome progress update to help calibrate the timing of various impacts when we announce our 2026 guidance during fourth quarter earnings in February. Moving to our full-year 2025 guidance, we are increasing our full-year total organic net revenue growth guidance range to low double-digit to mid-teens from high single-digit given our strong year-to-date results and fourth quarter trends.

15:49 We are increasing our data vantage organic net revenue growth range to high single-digit to low double-digit from mid to high single-digit following stronger than expected year-to-date growth. We are lowering our full year adjusted operating expense guidance range to 827 to 842 million from 832 to 847 million. This decrease reflects our year-to-date operating discipline as well as reduced expectations for depreciation and amortization expenses, partially offset by higher incentive compensation given our healthy revenue generation. We are lowering our full year guidance range for CapEx to $73 to $83 million from $75 to $85 million, and we are also lowering our expectation for depreciation and amortization to $50 to $54 million from $53 to $57 million.

16:41 We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30.5% for the full year. And while we don't provide formal guidance on interest income or interest expense, we expect that interest expense, net of interest income, will be approximately $3 million in the fourth quarter. On the capital front, our adjusted cash position of $1.5 billion and leverage ratio of 1.0 times demonstrate our healthy balance sheet. In addition, Moody's recently upgraded our credit rating by one notch to A2, reflecting the strength of our financial profile. In the third quarter, we returned $76 million to shareholders in the form of a 72-cent dividend, representing a 14% year-over-year increase in our quarterly dividend.

17:32 Turning to our investment in the Seven Ridge Fund Holding Trading Technologies, the transaction detailed in last quarter's earnings call is expected to close in the fourth quarter of 2025, subject to regulatory approval. As of September 30, 2025, the carrying value of the investment reflects assumptions including the agreed sales price, related to the estimated fair value of trading technologies. A gain of $45.6 million is included in our earnings on investments for the third quarter, but the impact has been adjusted out of our non-GAAP income statement. In the fourth quarter, we anticipate recognizing an incremental gain upon the final closure of the transaction. Similar to the third quarter, we will adjust the gain out of our non-GAAP income statement.

18:17 As an organization, we are focused on optimizing capital deployment to strike the right balance between margin efficiency and investment in emerging growth trends following our review. And while the decision process to strategically realign our business portfolio is complete, our commitment to continuously assessing new opportunities and optimizing our businesses will be unwavering. We will maintain a disciplined approach to assessing all aspects of our business, with a clear emphasis on driving revenue growth and enhancing profitability to maximize shareholder returns. Now, I'd like to turn it back over to Craig for some closing comments before we open it up to Q&A. Thank you, Jill. As Jill highlighted, our business is operating from a position of exceptional strength, and we now have a clear path to unlock even greater value.

19:06 The strategic realignment of our business portfolio and human capital allows us to focus on optimizing our core businesses for further growth and profitability and pursue opportunities in emerging growth areas. While we continue to undergo change, our continued success makes us a destination for talent. The realignment and focus on growth allows us to continue to build senior leadership talent across the organization. In the past six months, we have made key hires in strategy and corporate development, global derivatives, clearing, and data vantage. And yesterday, we announced another key hire as we welcomed J.J. Kinahan as head of retail expansion and alternative investment products.

19:56 J.J. is a well-regarded industry veteran in the retail brokerage space with deep expertise in equity derivatives markets. He brings a wealth of experience to the SIBO management team, and I look forward to working closely with him and Rob as we pursue new growth opportunities in the retail-oriented digital, crypto, and event contract space. We have made meaningful progress over the last six months, and we have a great deal more to do. I am energized by the momentum of the organization and excited to channel what we've learned into driving transformative change. I'll now turn the call over to Ken for Q&A. At this point, we'd be happy to take questions. We ask that you please limit your questions to one per person to allow time to get to everyone. Feel free to get back in the queue, and if time permits, we'll take a second question.

20:50 If you would like to ask a question at this time, please raise your hand. If you have dialed into today's call, please press star 9 to raise your hand and ensure you press star 6 to unmute yourself. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley with Piper Sandler. Patrick, please go ahead. Yes, good morning. Thanks for taking the question.

21:18 I thought maybe we start off, Craig, if you wouldn't mind just maybe just talk about some of the decisions made today as a result of the comprehensive review process. Why were CBOE Australia and Canada, why did you decide to initiate a sales process there? And then as we think about the proceeds that you'll receive from those transactions and some of the expenses that will be freed up, what specific areas of the business are you looking to kind of deploy that? capital into. Thank you, Patrick. Yeah, happy to address that. I mean, obviously, as you've heard us comment before, the review process is something that began under my predecessor, Fred Tomczyk. That process continued, but my goal since joining CBO has been to try to accelerate that process and reach a conclusion and send

22:54 further growth opportunities within those core businesses. And we also have further opportunities to optimize for greater profitability in each of those businesses. And so from a human capital perspective, I want to make sure that we're all focused on really, you know, the largest growth opportunities that we have in our current core business. And that's

23:21 At the same time, there's a lot of emerging growth trends in the industry that I feel align really well with our core capabilities. And so we're really starting to shift, as we've described during the call, and as Jill commented on, toward those new emerging growth opportunities. And so I want to make sure that we're focused on event and prediction markets, digital, I think they align well with our core capabilities in terms of what we've been able to achieve with the retail segment. Those are largely, at this point, retail-oriented product opportunities. I'd like to think that, you know, we've been an innovator in shorter-dated contracts through Zero DTE and event and predictions.

24:17 but that's something that we have demonstrable expertise and success in. And then, as you'll recall, I mean, we were also an early participant in digital markets. We still have a lot of our core capabilities in that area. So those are things that I want to make sure that we are focused on. I'll let Jill comment on reinvestment of capital.

24:45 is going to be kind of low capital intensity in terms of further investment in the business. So what I'm primarily focused on is the reallocation and reinvestment of our human capital. But it does free up opportunities for us to make sure that where we do need to invest capital in those new growth opportunities, that we have the agility and the ability to move quickly and do that. Yeah, so just a couple words on the reinvestment or the proceeds.

25:15 Investment, you know, I will say from an organic growth perspective, we have the flexibility to make investments into some of the areas that Craig mentioned. You know, as it stands now, we wouldn't expect those to be, you know, material. We will come back in, you know, February with our 2026 guidance, but really what this affords us is just incremental flexibility, the ability to invest where it makes sense, and then to Craig's point on the, you know, the strategic allocation of human capital as well to these higher growth areas.

25:47 Your next question comes from the line of Eli Abood with Bank of America. Please go ahead. Good morning. Thanks for taking the question. Can you help us understand the drivers behind the stronger outlook for your data vantage business? The past couple of years it's been a high single-digit grower. What has changed that's going to allow you to get north of that? And then do you expect you can hit that target even in years when volumes and capacity fees are down?

26:51 Yeah, so really, I mean, we've seen some outperformance in 2025, really pleased with the results there. As I commented in my prepared remarks, you know, about 90% of that incremental revenue has come from new units, new sales, and about 10% of that then from pricing. So we, again, pleased with the 2025 results that we've had to date, the outlook for Q4. But what I will say is, you know, different products have different adoption curves. This has been a good grower for us.

27:21 What we will do is, again, take a look and reassess our guidance. We'll come back, you know, in February with our update, you know, on the 26th outlook. Your next question comes from the line of Brian Bedell with Deutsche Bank. Brian, please go ahead. Great. Thanks, everyone. Can you hear me okay? Yeah. Awesome. Great. Good morning. Thanks for taking my question. Maybe just to focus in on the retail strategy and JJ's game plan for maybe just sort of expand more on how you might be doing this differently, the connection with other brokers, online brokers, the potential white space that you have there because I know you're already connected with it with a lot of retail participants. And then if you can talk a little bit more about the prediction markets, how that weaves into the retail strategy. What's the timing of when you think you might start to launch event contracts? And I don't know if there's any view on pricing of those yet.

28:32 Yeah. Hi, Brian. Prashant here. Just real quick on prediction markets. You know, we see broad-based interest in prediction markets. We think it aligns well with a cross-section of secular trends. increased retail participation, the appetite for short-dated options.

28:49 And again, smaller contract sizes, dollar-sized contracts, really the ultimate mini-contract. So we want to leverage our strengths and provide industry participants there with a neutral infrastructure platform. And we're thinking both on the exchange side and on the clearing side. So we think there's an opportunity there. You can expect our focus will be on financial investments. economic-related contracts when it comes to those products, and we're crafting a go-to-market plan, and we're providing updates there as we make

29:22 progress. So, yes, event prediction markets, clearly an area of interest for us. And so with options, every strike,

30:43 of the event prediction market, we're excited to work with those core partners and tap into the vast amount of liquidity that they provide each and every day. And to put that in perspective, an average of about 18 billion in premium trades each day in SPX options. And that event and prediction market year to date in similar products is less than 50 million in premium. So if we do this correctly, you know, we're really bringing these liquidity pools to that event and prediction space, which give us a real unique opportunity

31:19 to enter it and to grow. And so on the retail side, you know, you mentioned that we've led that charge. You've heard it already about the ultra short-dated options, the growth of that retail participation. In many ways, we view the event and prediction market as kind of an introductory product to help those investors in that journey to understanding more and complex

31:54 This is a process and really a formula we pioneered. By offering the right products, education, that's another real important one. You may have heard we just launched our OI learning management portal, which allows individual retail investors to expand and better understand these products. Then through all of these efforts, obviously hiring JJ was a big one with regards to four plus decades of

32:28 is crucial, and we really think we can build that long-term user base for SIBO. Your next question comes from the line of Chris Allen with Citi. Chris, please go ahead. Yeah, morning, everyone. Thanks for taking my question. I would love to hear your thoughts on the strategic realignment, particularly the sales of overseas, the international businesses, and how that fits with the international strategy for the data business, what quill you're seeing, good progress. Just love to hear, if I remember correctly, some of the deals that were done, they were done to expand global footprint to drive data sales. So now you point back to help us think about that strategy moving forward.

33:19 Yeah. Thanks, Chris. So, you know, when we went through the process to evaluate our portfolio of businesses, we looked at each of these businesses from a strategic lens, from a financial lens, and from a growth potential perspective.

33:33 And when it came down to our Australia and Canadian businesses, they both performed quite well. But we simply determined that we had better opportunities to drive meaningful growth for SIBO in other areas. And that's why we decided to pursue a sale there. And, you know, when you talk about some of the linkages to data, these are core local market platforms in the Canadian market and the Australian market.

34:03 In terms of our data, a lot of our data sales aren't really driven by having a local exchange presence. So we see an enormous amount of demand for our data throughout APAC. We've added salespeople. We've added marketing resources in those regions. And it really drives a lot of access from clients overseas. When you look at the connectivity we have with APAC brokers and how we continue to grow that, There's an enormous demand around the secular trend

34:36 of flows with the U.S. being a destination. So we don't think it's going to have an impact from that perspective at all. These were more local market exchanges that are performing well. So we made the decision really driven by where we find, you know, the biggest growth opportunities going forward so we can drive focus there.

34:59 A reminder, if you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star 9 on your telephone keypad to raise your hand and star 6 to unmute. Your next question comes from the line of Anthony Corbin with Goldman Sachs. Anthony, please go ahead. Hey, good morning. This is Anthony Allen for Alex. Maybe just on prediction markets, how are you thinking about M&A versus a less capital-intensive

35:29 partnership? And do you see any risk of cannibalization to your existing short-dated product suite?

35:56 is a launch plan that's focused on organic efforts. Your next question comes from the line of Ashish Savadra with RBC. A reminder to please press star 6 on your telephone keypad to unmute.

36:15 Hi, thanks for taking my question. I just wanted to follow up on the earlier question. And as you think completed your strategic review, how are you thinking about organic investments going forward, but also like inorganic investment broadly outside across all the spaces, including the data vantage space? Thank you. Yeah, I'll start. Jill and others may want to comment too, but I mean, we do see opportunities for I mean, obviously, with the focus on, you know, adding scale in derivatives generally, event and prediction markets, retail-oriented digital and crypto products, there are opportunities for us to invest further in our, you know, clearing

37:06 capabilities, both in Europe and also in the U.S., trading hours so those are some of the kinds of things that we would be looking at I mean obviously we also have a very successful and growing business in

37:38 both index options and in multi list and so there are also investment opportunities there especially in multi list in terms of how we can better facilitate you know more liquidity and more trading volume so there's a there's a range of things that that we will be focused on in terms of investment. And that's a big part, as I said, of this whole strategic pivot is really making sure that we're extracting as much growth and profitability as we can, not only from our current core businesses, but from these other areas that we'd like to pivot and shift to.

38:15 We have a follow-up question from Eli Abood of Bank of America. Eli, please go ahead. Thanks for taking the follow-up. You highlighted how data advantage revenue growth is being disproportionately driven by international unit sales. In past calls, I think you've said about 50% of the incremental growth comes from international. I was hoping you could break that down a little bit further and are international users consuming your data? Is the growth concentrated in one particular channel? And then how do we square your outsized international

38:50 data growth with the fact that global trading hours are still a relatively small part of your total volumes? Yeah, so I'd say a couple things on data vantage. In terms of the growth we're seeing overseas, it's absolutely driven by a lot of our an appetite for data, or U.S. proprietary market data, and we're seeing high demand for that. In terms of global trading hours, it's not as correlated, the data sales there, as to GTH volumes. So we're not seeing a high correlation there. The demand is coming, and they are trading within the 24-hour,

39:30 five-day videos that we have. So we're seeing good demand and appetite there. And when you look across the DataVantage platform, we're not only seeing growth on the data side, we're seeing growth on the index side, we're seeing growth in our risk and market analytics platforms as well. So it's pretty broad-based growth. Again, with any kind of sales-oriented business, you end up with some variability quarter to quarter depending on when sales hit. This was just a particularly strong quarter for us.

40:01 We continue to think we're well-positioned going forward. So story there and all that growth is really organically driven. And to put a finer point on the GTH hours point and how that doesn't tell the full story, given the larger liquidity pools in our regular trading hours session, a lot of international participants that are still buying the data and need the data for trading are trading during those regular trading hours sessions as well. And so I think we're using that from the stance of you continue to build the liquidity

40:33 pools. We have them A lot of those trading in the international space are doing it during the regular trading

41:24 Your next question comes from the line of Ben Budish with Barclays. Ben, a reminder to press star six on your telephone keypad to unmute your line. Ben, a reminder to press star six on your telephone keypad to unmute your line. Hi. Good morning. Sorry about that, and thanks for taking the question. Wanted to ask a higher-level question about AI. It's something we've heard a lot about from some of your Exchange peers this learning

41:57 cycle. Just wondering if you could share any high-level thoughts, you know, how might that help you in terms of new data and analytics products? How do you think about, you know, potential to increase efficiency in your operations? I think your margins are already quite high. But, you know, how are you thinking about opportunities either on the product side or internally to employ more or deploy more AI capabilities?

42:21 Thank you. I'm glad to take that. AI Olympics and AI champions and the winners in the Olympics, and we then go implement

44:18 those projects because they are delivering great value for us. So we are, frankly, all in on AI because we think it has tremendous power to unlock greater productivity. You've heard a lot of this call about human capital, and we have great people here. We want to make sure that we fully leverage those great people.

44:39 And a reminder again, if you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand. And when it is your turn, please press star six on your telephone keypad to unmute your line. We will now move to Kyle Voigt of KBW. Kyle, a reminder to press star six on your telephone keypad to unmute your line. Hey, good morning, everyone. You noted opportunities in the multi-list options market multiple times today on the call. I don't want to say that multi-list hasn't been a priority for CBOE, but maybe it seems like it's going to be more of a focus of investment for CBOE moving forward. As you noted, it's a very competitive space.

45:26 So just wondering what you think you could do differently in that market versus the way CBOE has looked at and addressed that market over the past several years. to be seen going forward. As you mentioned, multi-list is core to SIBO, and it's an area we're going to be heavily focused on competing in. Industry volumes are up 20% year over year. Retail is driving much of that growth. Options adoption amongst retail is still in the early innings. So we really see plenty of runway ahead. As far as the multi-list landscape, yeah, you touched on it. It's highly competitive.

46:11 In early 2026, I think we'll be up to 20 exchanges in the space.

46:17 That said, you know, SIBO still commands over 24% of the multi-list market share and is number one in overall industry market share with just under 31%. So we feel we're playing from a position of strength. Earlier this year, we made several additions to our U.S. team. Megan Dugan joined us from NYSE in February. We also added Gary Hoffman.

46:48 multi-list options. I know I look forward to working with them, and we're going to be focused on, you know, increasing our competitiveness. On the functionality side, you know, we're really working on a host of, I would say, market structure and pricing improvements across our different exchange medallions, things like liquidity adding incentives for market makers, competitive rebate program for customers bringing flow to SIBO. But, you know, ultimately, we feel we're well- revenue capture. Your next question comes from the line of Michael Cypress with Morgan Stanley.

48:03 Michael, please go ahead. A reminder to press star six on your telephone keypad to unmute your line. Hey, good morning, guys. Hopefully you can hear me okay. Just thanks for taking the question. I wanted to ask about AI to your earlier point. I just hope you could elaborate a little bit on what products might make sense if you look out over the next 12 to 24 months and then also more longer term, how you might see AI helping contribute to revenues at SIBO over time. Yeah, that's a good question. You know, I'm going to have a complete answer. I think one product I'll point out that's not really AI-related, but one way to open closed products, for instance, regarding SPX, has had great uptake.

49:06 It's not really an AI product, but it's something that's surprisingly simple, but very, very high demand. So we think we can surface more product ideas from AI or outside of AI. We just use it as one of the main tools. Yeah, and I would add, as Chris as we go.

49:59 Your next question is a follow-up from Brian Bedell from Deutsche Bank. Brian, please go ahead. Great. Thanks so much for taking my follow-up. Maybe just zooming back out on the global strategic pivot. So as we think of what you plan to divest of, should we be thinking of the future global footprint for SIBO as largely being U.S. and European-centric? Maybe just comment on your commitment to continuing to have a leading market share in European equities trading. And then... And I would presume the global strategy is then more, you know, coming from the U.S., as you kind of talked about in this call. And then just to confirm, Joe, I think you mentioned that the early view of the impact of this financially would be a 3% reduction in revenue, 8% to 10% reduction in OPEC.

50:55 So that would indicate that the businesses you're divesting from were, you know, break-even or losing money. I just want to confirm that. Brian, I'll start and just say that I think what you said is right. I mean, obviously, we have very large and successful businesses. European cash equities. I mean, we've been really pleased with the growth and the results that we're seeing there. We see between European equities and European clearing a lot of future growth potential and some new ideas that we're working on there. I think the takeaway is that, you know, we don't feel that our presence in Australia, Japan, or Canada are really vital to the continued globalization strategies It's really more along the lines of the things that you've heard us been commenting on during the call, which is.

52:35 and I'll let Jill So we remain very, very global. And I also say we're deploying infrastructure where necessary globally to touch those customers so they can come back to the U.S. or other markets. So, yeah, this is a strategic pivot, but we will remain very global. And it's a general.

53:35 Yes, so as it relates to the financial piece, just wanted to clarify that the percentage amounts that we included in today's call is they relate to the aggregate, you know, portfolio or collection of actions. Those figures are not specific to just Canada and Australia together. And then also further clarification is that those ranges also include the previously disclosed action that we're taking to wind down the SIBO Japan business. So when you look at the collection of actions, you know, as mentioned, we expect the impact on overall net revenue from all of these actions taken together to be, let's say, roughly 3% of what our guided 2025 ranges would be. But then from an operating expense savings, we expect to save somewhere in the amount of 8% to 10%. So as we did refer to in our prepared remarks, We do expect the collective action of these items to result in accretion overall earnings.

54:35 Again, it will take time. We're in the very early stages of the sales processes of these. Obviously, some of the enhancements we're looking to make, but again, overall, we do expect this to be accretive to earnings. Your next question is a follow-up from Anthony Corbin with Goldman Sachs. Anthony, please go ahead. Hey, thanks for the follow-up. I wanted to know how you're thinking about the net impact to expense growth over time from the cost savings from today's announcement and Japan wind down versus the incremental spend needed to support retail expansion and the build-out of prediction markets. So, obviously, I'm not ready to share 2026 guidance just yet, but I think, you know, if you look at the results, you know, that we've communicated here, 2025, year-to-date, where we're looking to land from an updated guidance perspective, what I will say is, you know, disciplined expense management is – it continues to be top of mind.

55:36 But we're also very committed to investing in long-term growth. So, again, just – 2026 and early February. But we will be committed to striking the right balance between the disciplined expense management and the generation of future revenue. Obviously, that takes, you know, dollars to invest organically to stem that. But we will be very, very disciplined in, again, just maintaining disciplined expense growth rates going forward. Your next question is a follow-up from Ben Budish of Barclays. Ben, please go ahead. Hi, thank you for taking my follow-up. I was wondering if you could talk a little bit about your expectations for expanding trading hours.

56:25 I think there was a press release from maybe a week or two ago about looking to add a morning session, I think starting at 7.30 and expanding the afternoon to 4.15. Just curious, you know, I think the release that you expect this would be, you know, a meaningful step on the way towards 24-5, but, you know, those hours in particular would capture a lot of other sort of economic data releases. So just curious, like, with that in mind, you know, based on what you see historically, you know, how do you think about, you know, capturing that time might impact your SPX volumes in particular? Yeah, thanks, Ben. I'll start out. Maybe Chris can add something if you'd like. Yeah, as you referenced on October 20th, a four Eastern time regular trading session.

57:13 You know, if approved, we would be adding a morning session from 730 to 925 Eastern time and a post-close session from four to 415. Additionally, our plan is to start with call it roughly 25 names that represent the highest market cap, you know, the most liquid names across the underlying options and equities. You know, as you mentioned, this is in response to the surge that we've seen and it really begins to acclimate investors trading. You know, as the industry continues Your next question comes from the line of Michael Cypress from Morgan Stanley with a

59:22 follow-up. Michael, please go ahead. A reminder to press star six to unmute. Thanks for taking the follow-up. Just wanted to ask about prediction markets and crypto. I was hoping you could elaborate on your aspirations there. What steps might you be taking over the next 12 to 24 months, and how do you see this contributing to CBOE over the next couple of years, and to what extent might inorganic steps might help accelerate the timeframe to scale? How are you thinking about that? Yeah, I think in terms of prediction markets, you know, we're going to start with, what we would call financial and economic contracts. Digital is definitely something we'll explore. There's a lot of demand and activity there as well.

1:00:09 So we will look at that. As Craig said earlier, our view is we've got the... things like that. Obviously, there'll be partnerships involved. Think about the retail client base and the demand we're seeing there. We'll look to establish partnerships with retail platforms that want an industry utility-type platform. And, you know, when we think broadly around things like, you know, M&A, not relatively related to the prediction markets, but we're always interested a financial rationale. There's nothing we need to do there today, but we're always open to that. You've heard Jill talk about how strong our balance sheet is, so we'll just keep our options open.

1:01:09 Yeah, and I'm even more specific that crypto derivatives and perpetual futures front, obviously the market's growing rapidly. We've seen nice growth in our new Bitcoin index options since we've launched them in December of last year. ETF issuers in particular have gravitated expect more to come. And then we're also preparing to launch Bitcoin and Ether continuous futures. Now, these are long-dated futures, cash settled, designed to provide access to that perpetual-style future in a U.S.-regulated environment.

1:01:58 The launch, obviously, has been slowed down a little bit by the government shutdown, but we're hopeful to get them out into the market soon. But we really see this, you know, even crypto events, advantage. And I'll just reiterate, like I said yesterday, you know, or not yesterday, but like we announced yesterday, you know, we're really excited to have JJ coming in. I don't think you can underpin the four decades of experience serving this client base. And so, you know, as he stands up this new vertical, I think, you know, be excited about what's more to come.

1:02:44 There are no further questions at this time. I will now hand it back to the management team for closing remarks. Well, thank you very much for joining us. I just want to say on behalf of all of us that this is a really exciting time for us. We are happy to be completing the business reviews, making the strategic realignment of the business. I want to thank all the people that have worked so hard to make us successful in these different areas that we've tried to work on, and we look forward to talking with you again next quarter. This concludes today's call. Thank you for attending. You may now disconnect.