Q1 2025 Earnings Call Transcript

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

I would now like to turn the call over to Ken Hill, Treasurer and Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for our first quarter earnings conference call. On the call today, Fred Tomczyk, our CEO, and Dave Howson, our Global President, will discuss our performance for the quarter and provide an update on our strategic initiatives. Then, Jill Griebenow, our Chief Financial Officer, will 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. I'd like to point out that 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 our website.

During our remarks, we will make some forward-looking statements, representing our current judgment on what the future may hold. 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 filings 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 material. Now I'd like to turn the call over to Fred.

Good morning, and thank you for joining us today. Before I dive into our results, I want to express my support for the announced appointment of Craig Donahue as Cboe's new CEO. Craig is a seasoned visionary leader who brings a wealth of experience to the role and is deeply respected across the industry. The board believes he is the right leader to take Cboe into the future.

I'll share more about the planned transition a little later in the call, but let me first recap our strong results. During the first quarter, Cboe grew net revenue 13% year over year to a record $565 million and adjusted diluted earnings per share by 16% to a record $2.50. These results were driven by strong volumes across our derivatives franchise, both in multi-list and our proprietary index option products, strong performance in our cash and spot markets, continued global expansion of our DataVantage business, and disciplined expense management. While the robust option volumes were especially notable for the quarter, the broad-based results across each category—derivative markets, cash and spot markets, and DataVantage—were strong and contributed to the record quarterly growth.

The derivatives business delivered a record quarter with organic net revenue increasing 16% year over year, as traders and investors utilized our flagship VIX and S&P 500 index option products across an ever-changing and marked environment, helping to respond to geopolitical events, market volatility, and the macroeconomic uncertainty around the globe. We saw strong volumes across our suite of index option products, with first quarter ADV in the SPX contract increasing 13% year over year and ADV in the XSP contract increasing 61% year over year. We also saw solid performance in our volatility product suite during the first quarter, with VIX options ADV increasing 33% and VIX futures ADV increasing 13%.

Volumes across our index and multi-list products remained elevated in April, as the tariff announcements created significant volatility and uncertainty in global markets, fueling a robust start to the second quarter. Given the secular and cyclical tailwinds in place, we are well-positioned as investors continue to utilize options in their portfolio and trading strategies. Our DataVantage business performed well during the quarter, with organic net revenue increasing 8% year over year. We continue to see durability in this business as we leverage our global network and ecosystem of DataVantage solutions to drive growth.

Our cash and spot markets also performed well during the quarter, as organic net revenue increased 10%, driven by healthy trading volumes and growth across all of our regional equities. Overall, it was an excellent quarter for both transaction and non-transaction revenue growth to start the year. Looking forward, we remain laser-focused on executing our longer-term strategy, including investing in the continued growth of our core business, global derivatives, increasing recurring revenue opportunities through DataVantage, harnessing the power of our global network and client base to expand product reach and access, capitalizing on the demand for access to the US capital market, leveraging our superior technology to help drive innovation and product development, and disciplined allocation of resources and capital towards the long-term secular growth trends.

As witnessed during the first quarter, our strategic focus is well-aligned to the secular trends we see in the capital markets and leverages our core strengths. We see significant opportunity in the Asia Pacific region, where we see growing demand for our index option products, which serve as an efficient and accessible way to gain exposure to the US market. We see a solid pipeline of clients in the region, and during the first quarter, we onboarded new clients in Korea and Taiwan to offer our proprietary products. We see this as a long-term secular growth trend, and we are excited about the early signs of growth and penetration in this market.

Turning to our DataVantage business, our global footprint continued to help drive results during the quarter. Leveraging Cboe data-managed products will be key to helping our Asia Pacific customers gain the access they need to US markets, and we're working diligently to make that more seamless and accessible. More recently, we've also seen increased interest for European market data amongst our Asia Pacific customers, reinforcing the power of our global network to provide our customer base with the data and access they need across global markets. Additionally, we remain focused on product innovation across our ecosystem and unlocking access to US markets for international investors.

Whether it be through increased accessibility, new products, or education, we will continue to help people access liquidity and efficiency of the US markets while also providing trusted markets in local regions around the world. To that end, in the first quarter, we completed our final equities exchange migration to Cboe Titania, our best-in-class exchange technology platform. During the recent market turbulence, our exchanges have demonstrated remarkable resilience and reliability, which is critical to our customers. We will continue to invest in our exchange technology platform to help ensure we have durable technology powering our markets and driving innovation for our customers.

I'll now turn the call over to Dave to talk in more detail about the business line results.

Thanks, Fred. Starting with our derivatives business, net revenues increased a robust 16% to a record $309 million in the first quarter. We saw activity accelerate throughout the period to produce record total options average daily volumes across our four options exchanges. Notably, we reached all-time quarterly, monthly, and single-day highs in SPX during the first quarter.

XSP, our mini SPX product, reached a new quarterly record, and overall proprietary index options ADV achieved all-time quarterly and monthly highs. Looking a little deeper into the drivers of the record activity, option volume surged on the back of heightened geopolitical volatility as investors turned to options to help navigate the increasingly uncertain macro outlook. SPX options volumes increased 13% year over year to a record 3.6 million contracts, while VIX option volumes jumped almost 33% to an ADV of 948,000 contracts. The growth in our SPX options franchise was led by a continued rise in zero DTE options trading.

This was on the back of two factors: First was the fast-moving nature of headlines coming from this administration as investors turned to zero-day options to help monetize the increase in intraday volatility. Second was expanded access, with Robinhood rolling out index options to all its customers in late January. Zero DTE option volumes averaged almost 2 million contracts in Q1, up 29% year over year and making up a record 55% share of overall SPX volume. In this headline-driven market, the ability to trade in and out of risk at all hours of the day became ever more important, especially as we expand our customer base internationally.

Index option volume in our global trading hours hit a record last quarter, up 36% year over year. Over 253,000 SPX options traded during overnight hours on January when the deep sea headlines hit the market, more than during the November US election. That record has since been broken multiple times in April as trade tensions escalated. Outside of our established SPX and VIX franchise, we're also seeing encouraging growth in several new products.

Most notably, our new Bitcoin index options tickers CBTX and MBTX, since their December launch. ETF issuers, in particular, have gravitated toward our product by introducing options-based strategies on Bitcoin. Already, 15 ETFs are using CBTX and MBTX options in their strategies, with more expected to come. MBTX options volumes hit a record high of over 27,000 contracts in March, equivalent to $527 million in notional.

We're excited to expand on our Bitcoin offering with Cboe FTSE Bitcoin index futures, which launched in April. Besides crypto, we also saw a healthy uptick in our corporate bond futures. Open interest in our high-yield futures recently hit a record high of $901 million in notional value, while open interest in our investment-grade futures jumped to $547 million. As credit market volatility picks up, we expect continued growth and adoption in these products.

The breadth and strength of the Cboe toolkit was on full display to start the year. Be it early in the quarter as investors made tactical shifts with the use of zero DTE SPX options or navigated more outsized volatility events with Cboe's VIX options and futures. As we head into the second quarter, volatility has remained elevated with trade tensions, recession risk, and potential inflation shock. The need for both retail and institutional investors to use options to dynamically manage positions, hedge exposures, and generate income only increases.

Already in the second quarter, we've seen SPX volumes hit an all-time high of 6 million contracts in April, with quarter-to-date proprietary product ADV running above previous quarterly and annual records. Moving to cash and spot market, first quarter revenue was up 10% as each region contributed to the upside. With Cboe Canada successfully migrating to Cboe Titanium during the quarter, we now have all our equities and derivatives markets across North America, UK, Europe, Australia, and Japan running on Cboe Titanium. The resiliency of the platform has been on full display in 2025 as we have seen record volumes and activity in many of our markets.

For context, in April, we seamlessly processed over 1 trillion orders, quotes, and market data events across our 27 global markets. In today's environment, having a globally consistent, locally optimized technology platform is a differentiated strength that will help Cboe to expand access to its market data, products, and services to customers around the world. In North American equities, net revenue was up 2% as increased non-transaction revenue was partially offset by lower net transaction and clearing fees versus the first quarter of 2024. In the US, industry activity levels have been healthy, but the benefit was muted by a smaller addressable market for Cboe, with total volume transacted off-exchange or during auctions hitting 56% for the first quarter, or six percentage points higher than Q1 2024 levels.

On the non-transaction side, we've seen durable demand for our access services and data products. Our Europe and Asia Pacific segment delivered the strongest year-over-year percentage growth of any segment for the third quarter in a row, printing an impressive 18% increase, or 22% on a constant currency basis. The increase was driven by higher net transaction and clearing fees, up 30% in the first quarter behind strong industry volumes and solid market share trends. We remain excited about our prospects in these regions, both for the opportunity to grow share in local markets as well as the ability to import activity back to the US given the continued demand by global participants.

Turning to DataVantage, net revenue grew over 8% in the first quarter with solid increases in all three components of our DataVantage business: real-time market data, analytics, and indices. Also of note in Q1, we saw new recurring annual contract value (ACV) increase 47% year over year, a strong leading indicator for our business. As we redeploy a greater proportion of our technology resources to revenue-generating activities, we look forward to building on our positive 2025 sales trends. Taking a closer look at some of the first quarter dynamics, 55% of new data sales occurred outside the US.

With efforts to improve access to the US and European markets for global investors by increasing our APAC sales force, adding more brokers in the region, as well as rounding out our market intelligence group with local expertise, we are looking to lean into this secular trend. We believe getting our data in the hands of more customers around the globe is not only beneficial for our DataVantage business but enhances our trading businesses as well. Historically, we have seen customers increase data consumption ahead of implementing trading strategies in new markets. In this case, international investors analyzing and back-testing ahead of putting money to work in the US or Europe.

The first quarter showcased the breadth and durability of the Cboe model. We look forward to building on the strong Q1 results and robust start to the second quarter through continued enhancements to our education efforts, broadening access to our markets, and leveraging a differentiated set of products for investors around the world. With that, I will turn the call over to Jill.

Thanks, Dave. Cboe posted a record first quarter, with adjusted diluted earnings per share up 16% on a year-over-year basis to $2.50. First quarter results reflected strength across our ecosystem and in each of our business segments. I will provide some high-level takeaways from this quarter's operating results before going through segment results. Our first quarter net revenue increased 13% versus the first quarter of 2024 to finish at $565 million, with each of our categories producing healthy year-over-year growth.

Specifically, derivatives markets net revenues grew 16%, cash and spot markets net revenues grew 10%, and DataVantage net revenues grew over 8%. Adjusted operating expenses of $192 million were roughly flat on a year-over-year basis. Driven by our strong business results and disciplined expense management, adjusted operating EBITDA of $385 million grew 20%, and adjusted operating EBITDA margin expanded by 4.3 percentage points to 68.1% versus the first quarter of 2024. 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 segment, so I'll provide some highlights for each.

The options segment delivered another quarter of record net revenue with percent year-over-year growth. Total options ADV was up 23%, with a 17% increase in index options volume and a 25% increase in multi-listed options volume. North American equities net revenue increased 2% on a year-over-year basis. Access and capacity fees increased 16% as compared to the first quarter of 2024, partially offset by a 9% decline in net transaction and clearing fees.

The Europe and APAC segment produced record net revenue, with an 18% year-over-year increase resulting from strong growth across both transaction and non-transaction revenues. Net transaction and clearing fees were up 30%, while non-transaction revenues were up a combined 8%. Futures net revenue increased 8% from the first quarter of 2024, with higher net transaction and clearing fees reflecting a 13% increase in ADV. And finally, Global FX record net revenue increased 16%, driven by higher net transaction and clearing fees.

Looking at Cboe's DataVantage business, net revenues were up over 8% on an organic basis in the first quarter. The ability to match an expanding product set with an increasing global sales presence and cloud distribution capabilities is a compelling combination. We saw this benefit play out more recently with our dedicated course offering and time-stamping services, and we believe the future remains bright as we plan to continue to redeploy technology resources to revenue-enhancing activities. Turning to expenses, total adjusted operating expenses were $192 million for the quarter and roughly flat on a year-over-year basis.

Lower other expenses as well as travel and promotional expenses were partially offset by higher technology support services and depreciation and amortization expenses. Despite the first quarter favorability, we are leaving our full-year expense guidance range unchanged at $837 million to $852 million. Our full-year guidance takes into account the first quarter expense benefit from timing-related elements in our marketing spend. Moving forward, we would expect to see marketing-related costs reaccelerate.

In addition, given the continued strong results in April, we're projecting an uptick in short-term incentives in our compensation and benefits line. And finally, our guidance framework captures the expected expense impact of our CEO transition. Overall, we are pleased to be in the advantageous position to invest in our business, expanding areas like our global sales efforts, and making further marketing campaign enhancements to advance investor education for our index options products globally, all while maintaining our strong operating efficiency to drive durable returns for shareholders. Looking at our 2025 guidance more broadly on slide 16, we are increasing our full-year total organic net revenue growth guidance range to mid to high single digits from mid-single digits given the robust start to the year and confidence we have in our markets and products to provide utility to customers moving forward.

We are reaffirming our DataVantage organic net revenue growth range of mid to high single digits on the back of solid first quarter results. And as mentioned, we are reaffirming our full-year adjusted expense guidance range of $837 million to $852 million. Rounding out the remaining pieces of our guidance, our full-year guidance range for CapEx remains at $75 million to $85 million, and depreciation and amortization is expected to be in the $55 million to $59 million range. 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 in the $2 million to $3 million range in the second quarter of 2025. Turning to our balance sheet, we remain in a strong financial position, with over $1 billion of adjusted cash on our balance sheet, an attractive debt profile with medium-term fixed rates averaging 2.8%, and a low leverage ratio of 1.0 times. We resumed open market share repurchases following our fourth quarter earnings call on February 7 and repurchased $30 million in shares during the remainder of the first quarter.

We have continued our opportunistic repurchase activity to start the second quarter, with an incremental $5 million in shares bought back in April. Complementing our share repurchase activity, we returned a total of $66 million to shareholders in the form of a $0.63 dividend during the first quarter. Moving forward, we remain focused on leveraging our flexible balance sheet and healthy free cash flow profile to produce durable returns for shareholders. Now I'd like to turn the call back over to Fred for some closing comments before we open it up to Q&A.

The year is off to a strong start with an excellent first quarter and a robust beginning to the second quarter. And while volumes may ease from the exceptional levels seen in recent months, we believe the market ecosystem remains healthy and supportive of volume growth moving forward. Cboe is well-positioned for Craig Donahue to take the reins. Many of you know Craig from his days at CME, where his track record speaks for itself.

Craig brings decades of experience in the global derivatives markets and a history of driving growth and innovation to Cboe. His visionary leadership, deep experience, industry relationships, and proven track record in global financial markets make him an excellent individual to take the helm as CEO of Cboe. When I moved from the board to CEO eighteen months ago, my priorities were to stabilize the organization, sharpen our strategic focus, bring a more disciplined approach to capital allocation, and leadership development and succession. Together with the strong management team, we have achieved these goals, and I'm proud of the results we have delivered.

We are now executing on an orderly and well-planned CEO succession strategy. Craig will assume the CEO seat on May 7, upon which point I will transition to an advisory role through to June. I look forward to working closely with him on a seamless transition and returning to my role as a non-employee director of the board. I am pleased to leave things in Craig and the executive management team's very capable hands.

Having accomplished each of my goals as CEO, it's been an honor to lead this great company over the past eighteen months. I am incredibly proud of our achievements and optimistic about the future of Cboe. I will now turn the call back over to Ken for Q&A.

At this point, we'd be happy to take questions. We ask that you please limit your question 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.

Your first question comes from the line of Patrick Moley with Piper Sandler. Your line is open.

Yes, good morning. How are you all doing? Great. So my question was on the appointment of Mr.

Donahue as CEO. Fred, you touched on it a little bit. Was hoping you could just elaborate maybe on what the CEO search process looked like and the decision to ultimately choose Mr. Donahue.

And then specifically, outside of his experience leading a publicly traded US exchange, what sort of skills or qualities did you and the board feel like he possessed that made him the right person for the job? Thanks.

And it's Donahue. Donahoe. But anyway, that's we'll stop there. I mean, the process has been going on for quite a while.

I mean, at the board level, our board is very much focused on strategy, risk management, and also on leadership development and succession. So that's a top priority. It's been discussed over my whole tenure at literally every meeting. The process was very thoughtful, very disciplined.

It looked at both internal candidates and the board also wanted to consider external candidates. Obviously, we had certain characteristics we were looking at, and Craig ticked all those boxes. With a combination of his global derivatives experience, his previous CEO experience, his strong track record of success, and his reputation throughout the industry and with regulators and shareholders and things like that. So at the end of the day, the board, after considerable deliberation, thought that Craig was the right person for Cboe at this time.

Our next question comes from the line of Chris Allen with Citigroup.

Yes. Good morning, everyone. Thanks for taking the question. Forward to working with Craig again. One, as you pointed out in the release announcement, Craig handled $20 billion of deals for CME. So wondering how you're framing the inorganic growth opportunities moving forward, whether anything changed on that front, and how do you view the environment from that perspective?

You know, as we as I've said, you know, we've built up a strong balance sheet. We've taken a very disciplined approach to capital allocation. We sharpened our organic strategy, and we're actually returning capital dividends and opportunistic share repurchases. Obviously, we're sitting on a fair bit of cash as everyone recognizes.

I think the company's in a good position to consider all of its options. One of the things that interested Craig in this role is all of those things and Cboe's position in the market. And as we look forward, you know, he's very much focused on growing the company both organically and to a certain extent, inorganically, but we'll be very much focused on doing things that make strategic and financial sense and move the needle and create value in the long term for our shareholders. That's really what his focus is coming in.

And, you know, we just think he's the right person to take us forward at this time.

Our next question comes from the line of Ben Budish with Barclays. Your line is open.

Hi, good morning and thank you for taking the question. Maybe you could dig into retail a little bit more. On the I think in the last earnings call, you said you called out faster adoption of index options than expected at Robinhood. It looks like the SPX volumes were quite robust in the quarter.

So curious if you could give us any updates. Curious on Robinhood in particular, but also retail broadly. How is retail sort of responding in April versus maybe institutional what kind of behavior you're seeing there? Thank you.

Yes. Thanks, Ben, for the question. As you pointed out, great Q1. Good engagement as we mentioned in February Robinhood came on board quicker than we expected and the ramp-up was greater than we'd expected. We saw good utilization across the toolkit there with the majority of the activity in SPX.

And really, I guess, I'll take the opportunity to talk a little bit about the characteristics that we've seen from retail in Q3 and that has prevailed throughout Q2, just to give you a flavor and a setup of what we might expect going forward. And the first comment I've made is that retail behavior has been remarkably disciplined. And what do I mean by that? We're looking at the strategies they deploy when they're opening trade 95% of those in SPX zero DTE.

What we call caps risk, where the maximum loss is known at the point of entry. But what we've seen throughout Q1 and indeed in April, when we see these extreme volatility spikes, we see retail investors remain engaged and take a really disciplined approach. Around their approach to market. That means they make up less of the volume increases around those volatility spikes.

But the key point here is that as we've seen in points of history, we see retail come back after those extreme volatility spikes have abated. Whether that be COVID-19, August of last year, or indeed April. And so what we've seen from an exchange perspective there actually, really marries up with what we're hearing from our customers. You're hearing from some of our customers on their earnings call, which is that retail remain engaged and remained really quite successful throughout Q1 into Q2. And when we look at the outlook and we look back at that disciplined approach that retail has taken, really have a constructive view for the ongoing retail engagement in our volatility toolkit.

Your next question comes from the line of Dan Fannon with Jefferies LLC. Your line is open.

Thanks. Good morning. So Asia has been a particular focus of growth you highlighted a few regions where you're seeing some success. Can you talk about the level of investment that you're putting into that region, where you sit in terms of salespeople, and platforms that you're either on or trying to basically contextualize what the opportunity is in terms of additional platforms for you to access?

Yeah. Absolutely. We've seen really good traction coming into this year. Believe that's evidenced by some of the key data points I'll give you here in the data consumption is often a lead indicator of the appetite for trading.

And we saw 55% of our data sales come internationally this year with a particular strength in the Asia Pacific region. Data consumption and demand and growth there really continuing. And then you look more broadly at ACV and DataVantage, and that grew 47% in Q1. So really strong demand for data during these times in particular from the Asia Pacific region. Then when we look at the brokerage firms across the region, that be Korea, Taiwan, Thailand, Malaysia, seeing some really good onboarding through the direct channels with customers.

Coming onboard in Q1 from Korea, for example. With more to come in Q2 and Q3. So that demand remaining and that need to provide access to the US pool of equity bond risk that we have here at Cboe really, really persisting. In terms of our investment there, obviously, that's all within the expense guide that we've given. But it's really around new salespeople.

We've got boots on the ground with natural language speakers in a variety of countries now, Singapore, Hong Kong, Japan, who will also travel within the region. Then we've got marketing efforts, you know, particular digital channel marketing that we're really focusing on seeing some good returns there. And then it's about education and market intelligence. We've hired some really great people to work with Mandy Du in New York.

Out there in the region to really promote and really talk about the product set and the utilization. I guess the last thing I'll say there is that we see direct engagement but also indirect engagement with local, for example, Korean customers launching buffer protect products in the market. So direct and indirect interest in our volatility toolkit really coming from the region. So remain optimistic for our outlook there.

Your next question comes from the line of Alex Kramm with UBS. Your line is open.

Guess I want to follow-up on Ben's question from earlier. Partially on the retail. But really, an observation in the second quarter so far that your index volumes while they're up a lot quarter over quarter, year over year, they're lagging probably some other markets out there, equities, futures, etcetera. So just wondering, is that really a function of what you spoke about earlier, your retail and maybe more discipline, or are there other drivers maybe on the institutional side that may have not favored index options much relative to other, I guess, ways to express risk?

Management.

Yes. Alex, certainly, we liked April, it was our second highest SPX month certainly after our first highest SPX month in March. For us, what we see, as you mentioned there, that institutional engagement in all those extreme volatility data I mentioned before, that's when we see institutional also really step up on those days. Adjusting and repositioning their portfolios for the longer term.

And we see really good market share when we look at that SPX options versus the rest of the S&P complex, whether that be the e-mini options or the SPY options there, you still see good traction and good market shareholding. No real concerns kind of the engagement from institutional and the overall platform. And then you just look at the macro setup for the rest of the year. You look at uncertainty on the policy front on the economy.

The elevated VIX term structure is a necessity to manage your portfolio hedge risk in the largest equity bolt on in the world, which is SPX options.

Your next question comes from the line of Kyle Voigt with KBW. Your line is open.

Good morning, everyone. We have good ask a question on capital return. The buyback activity was relatively light in the quarter. Just curious how much of that was related to wanting to or needing to wait until the CEO announced was finalized.

With leverage now at one times and, I think, cash in the balance sheet over a billion dollars, wanted to get your updated thoughts on whether you're open to kinda restarting a more normal cadence to buyback activity with free cash flow. Whether you'd still like to deleverage further from here on a net basis?

Thanks for the question, and good morning, Kyle. I think, so a couple of factors at play that came into account with the first quarter repurchases we've messaged that we'll be opportunistic. And just to remind you, we were actually locked out of the market until, you know, the February 7, earnings call. So couldn't actually be in there, let's call it, the first six months of 2025. And then also, the stock's doing well.

So, also, you know, during 2025, hit a new all-time high share price. So really being opportunistic, taking a very long-term view as it relates to share repurchase activity. But I think, you know, with the dry powder, do have, it's a great position to be in that, especially in these market conditions. If we do sense weakness in the share price, you know, we can get in there behind it.

And, you know, buy quite a few shares back. As to, you know, prioritizing capital towards delevering, I would say no. Would look at share repurchases prior to delevering. As you mentioned, you know, leverage ratio one point zero times.

And if you look at the stack of debt we have outstanding, it's three tranches of fixed-rate senior notes average around 2.8%. So in this environment, definitely would see a higher return on share repurchases as opposed to prioritizing delevering.

Your next question comes from the line of Ashish Sabadra with RBC. Your line is open.

Thanks for taking my question. Zero DTE obviously has ramped up significantly from low 20% back in Jan 2022 to now mid-fifties in March of 2025. I was just wondering if you could share any perspective on how these trends might evolve, particularly in light of VIX starting to normalize. But also growing adoption of these strategies by both retail and institutional investors. Thanks.

Thanks for the question. You pointed out rightly that there's been some really good growth. It's nearly in fact, it's three years since we launched the Tuesday and Thursday expirations for SPX. Couple of data points really for Q1 is that SPX zero DTE grew by 29% year over year, XSP zero DTE grew by 50%, and Russell zero DTE grew by 59%.

So we see continued engagement in there by end investors, by customers into the shorter end of the curve to manage risk and be more flexible and nimble around the evolving news headlines. And really, this is very much the outlook, the secular trend is to the short trend of the curve. The macro setup means you need to be nimble around events. Manage that portfolio delta in a more precise basis.

So for us, we see the continued engagement there. But we do see variations depending on the day as we just talked about before extreme vol spike. People tend to then manage the longer-term portfolio positions that go further out in the curve four weeks plus and then come back again to that more consistent churn zero DTE. But one thing we've mentioned a few quarters ago now worth reminding is that liquidity providers find this deep rich pool of liquidity a great place to hedge those positions that they've just gone into from the initiating side of the trade.

So we see the ecosystem being really robust. We see it being really diverse within a range of customers really exercising different strategies there. So really healthy ecosystem and a really balanced ecosystem as well. And that's a great thing we see buyers versus sales being really balanced.

Put call ratios remaining to be around one there. So healthy outlook for zero DTE as we look forward. We bring more users internationally and locally and more use cases to bear as customers begin to launch product on zero and one DTE. So again, good signs for a constructive outlook on further growth, further engagement in the platform in general.

Specifically in zero DTE.

Your next question comes from the line of Emily Bout with Bank of America. Your line is open.

Good morning. Thanks for taking the question. Can you talk about the status of your option on trading technologies? When does that option expire? Can you share any more details on the terms of that agreement? And then is there any strategic value in having more screen real estate and a larger pre-trade footprint for Cboe?

You know, just as it relates to the option itself, can clarify that we have not exercised the option. Also, the option has not expired. Beyond that, don't have much to share on that. You know, obviously, we look at things that make strategic and financial sense. But, again, the option hasn't expired, and we have not exercised it.

Your next question comes from the line of Brian Bedell with Deutsche Bank. Your line is open.

Great. Thanks. Good morning, folks. Thanks for taking my question, and congrats on getting Craig.

That's fantastic. Looking forward to working with him as well. My question for Dave, linking the DataVantage with organic revenue growth. So, good to see the Non-U.S. portion of the sales increase.

And as you mentioned, it's a good leading indicator typically for setting up trading volume. So looking at the organic growth guide revised up to mid to high single digit, it looks like you're kind of run rating the first quarter on that just trying to get a sense of the conservatism in that considering you know, the potential for organically growing your products. You know, obviously, if we get a dramatic pullback in volumes, could pressure that. But just I guess, your confidence around the organic growth given the leading indicators you're seeing on the data side?

Yes. Thanks very much for the question, Brian. Yes. So DataVantage over 8% growth in the first quarter.

Good results. Good ATB growth, 47% up there. And that's off the back of 18% in 2024. Predicting the future is tough, particularly in today's macro setup. So we've taken a good view based on what we see for the rest of the year, and that's something we'll update quarter as we go through.

But as with the other questions on the call, we see a good setup for the secular trends coming together with that macro setup. To give us plenty of avenues to explore for incremental organic growth internationally with retail options product innovation, more generally. So we've got a constructive outlook, as I mentioned, for the rest of the year. And guides are exactly that now.

Guides, and we'll update them each quarter as we go.

Your next question comes from the line of Owen Lau with Oppenheimer. Your line is open.

Hi. Good morning. Thank you for taking my questions. So for your expense guidance, I hear that your comp and marketing expense will increase in our quarters.

But your comp ratio in the first quarter was, like, based on my math, was, like, 20.6%. I'm just wondering how we should think about the more normalized comp ratio excluding the strong April revenue performance. And how much conservatism you have baked into your expense guidance? Thanks a lot.

I would say, as we alluded to, keeping the expense guidance as it stands. Part of that is due to, again, just timing that occurred with first quarter spend and planned timing that's coming for Q2, three, and four, very much in line with our initial year estimates there. As to the amounts, the timing. The piece that I think is variable from an expense perspective is we did have a fantastic start to the year, you know, very strong first quarter coupled with and also very strong April.

So what that does is it's the short-term incentive accrual that I would expect to see an uplift in over the course of the year, particularly for April and into Q2. But, again, that is well within the confines of the initial year expense guidance that we set. So we'll continue to monitor this, you know, come back in early August with any updates there, but feel pretty confident with that expense guide range that we've set at the beginning of the year and it held for this quarter.

Your next question comes from the line of Michael Cyprys with Stanley. Your line is open.

Good morning. Thanks for taking the question. Just wanted to ask about retail. Curious your thoughts around taking the ZeroDTE success and bringing that to intraday options.

Just curious what's your appetite for that. What hurdles might need to be overcome, and your sort of thoughts on how you might approach that? And then just more broadly on retail, as you look at the product toolkit that you have today, just curious where you're most excited about for what's next to come with retail with the existing toolkit. What new innovations might you be able to bring to the marketplace?

I'm curious your views on prediction markets and to what extent might Cboe have interest in capturing retail interest from that, any particular categories? That may be more interesting to you than others? Thank you.

Great. Thanks, Michael. You got a three for one in that question there. So we'll go through them as they came.

Intraday options is something obviously we talk about as with many things that we talk about with customers in terms of incremental exposures. For us at the moment, the runway for new users and use cases in the existing ecosystem volatility toolkit particular, is healthy. We've done a lot of work to chop that. So it's not something we're actively looking at at this point.

In terms of most excited about for retail, I think it goes back to the earlier responses as well. It's the disciplined approach that we see coming through from retail. That really considered approach to high volatility environments of volatility spikes as we go through that. It's been encouraging to see retail use the full breadth of the toolkit, not just SPX where the majority of the flow goes, but also VIX options and also XSP which was a record quarter in Q1 as well.

And then when you think more broadly about Roy and the entry point to option strategies, it's a usage and the growth of those derivative income funds of those defined outcome of buffer protect funds where you've got the ability to access an option strategy not deploying it and looking after it yourself. And then thinking about our diversification into other asset classes and building ecosystems around those, there's obviously Bitcoin ETF listings. We've got our Bitcoin ETF index. We've got our options on that Bitcoin ETF index, which are trading nicely, and we've got people and issuers launching products on those two index options products on MBTX and CBTX.

Really nice ecosystem around crypto there for customers to engage in. And then in order to provide incremental hedges there, we launched the Cboe FTSE Bitcoin index futures early this week, which has seen some early trades as customers engage in that ecosystem there. So that crypto ecosystem really coming together nicely. And we're aiming to migrate our digital futures onto CFE later this year itself.

And then finally, question number three, was around prediction market and the events space there. Clearly, we are led by our customers. We have deep conversations with our customers about the evolving trends more broadly in the marketplace. And here, there's a lot of discussion with regulators which we'll continue to be engaged in.

We'll talk to customers. It's a fairly nascent space at this point with the most of the activity around sports coming through there. So certainly an interesting area for the industry to discuss and work out how a trusted, robust, transparent ecosystem can really be brought to bear there.

Your next question comes from the line of Kenneth Worthington with JPMorgan. Your line is open.

Hi. Good morning. This is Madeline Daleiden on for Ken. Thanks for taking our question. We just had a question on open interest trends, particularly in your VIX franchise. So now a few weeks out from that early April volatility are you noticing any change in behavior, whether institutional or retail or perhaps even deleveraging at this time? Thank you.

Big, so for the interest details, don't have at my fingertips at this point. What we have seen in the VIX options and futures complex is particularly in the start of Q1 is strong engagement around fixed call and call spreads, which allowed our customers to position themselves for risk. And then later on, say, in April, we saw monetization of those hedges enrolling those hedges. It's really modulating depending on the environment as customers flex between the toolkit of whether it be fixed options and futures.

Or the SPX product set and it moves in a very fluid manner throughout time depending on the market environment and the outlook. So we can get you the volume, the open interest numbers, but really it's about the toolkit and moving between the products and the activity there. There's a key thing to focus on.

Your next question comes from the line of Anthony Corbin with Goldman Sachs. Your line is open.

Hi. Good morning, everyone. This is Anthony on for Alex. Maybe a follow-up to Michael's earlier question.

How do you view the competitive landscape evolving in the index option suite from products like prediction markets and levered ETFs? And there were some recent headlines on Nasdaq launching single stock zero day option. So what gives Cboe the competitive advantage to maintain share and products with relatively similar use cases? Thanks.

Yes. Thank you for the question there. And certainly, when our customers talk to us about what we see in the data, it's just depth and the richness of the liquidity that we've got across the volatility toolkit that we've been talking about. The complementary nature of VIX, of SPX and the additive products that we've been launching in recent times, whether it be Verits, futures or VIX options on futures, giving you a great toolkit, some fantastic depth of liquidity there.

Institutional assets allocated and benchmarked to that S&P 500, which needs to be managed over $15 trillion I believe. And also, when you look at the ecosystem we've built up electronically and with the trading floor itself, by 20% of flow takes place, it's the diversity of use cases that we've got now. Within that ecosystem. It takes years to build and it has its own inertia and its own traction.

It's very hard to crack that with a new look-alike product you look at that diversity and the balance as well in the ecosystem. One thing I'd like you to take away is that the ecosystem we've built with this volatility toolkit is incredibly balanced. When a particular user type or use case steps back, another one steps forward, and then couple that with a disciplined approach which our customers take 95% cap risk into that liquid ecosystem and the level of activity across tenants. So I would say the breadth, the depth of liquidity diversity of use cases and the decades of innovation that we've put into the platform really gives them a very strong position to continue to innovate around.

Your next question comes from the line of Alex Kramm with UBS. Your line is open.

Yeah. Hey, guys. Just a quick follow-up, and maybe this is a little bit too big picture for today. But over the last few quarters, you've talked a lot about, and it came up today again, exporting the US markets globally.

But I think over the last couple of months, there's been a lot more of this theme of capital flow into other global regions, into Europe, Asia, etcetera, and away from the US. And you mentioned the market data demand in Europe already, but I'm just wondering if this is a theme you feel like you're prepared for or you think you wanna lean in more. You obviously have a lot of global assets, but just wondering if you think if that really plays out that you have everything in your toolkit for that. Thanks.

Yes, Alex. We think the long-term secular trends have really driven the results in the business today more than likely to continue. And all the signs are certainly pointing that way. You mentioned it before.

I put a few data points the growth in data internationally 55% there. The onboarding we see from customers continues. It continues in Korea. Thailand, Malaysia, Taiwan, throughout the Asia Pacific region yet that the need and the desire to have access to US market exposure continues.

And consider that global companies in the S&P 500 with 30% of revenue coming internationally. So it's a global ecosystem with a deep liquidity pool. And then we see real investment coming through from our customers. Global trading hour support is not a small lift, and we see wholesalers building that out for later this year.

So really, those long-run secular trends continue the data, the engagement from our customers continues to receive. No real evidence for us to be concerned or to change tack from what we're already doing.

Okay. Thank you for everyone for joining us today. You know, based on the results that we've just walked through, we've had a strong start to the year. And our ecosystem continues to work well for us and for our customers.

Having accomplished what I set out to do eighteen months ago, now is the right time for me to return to the board. I'm optimistic about the future of Cboe. We have a strong management team, a clear strategic focus, strong balance sheet and financial position, we're now bringing in a strong and experienced successor in Craig Donahue. I wish everyone the best.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.