Q4 2025 Earnings Call Transcript

Hello. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Kenneth Hill, head of investor relations. Ken, please go ahead.

Good morning, and thank you for joining us for the fourth quarter earnings conference call. On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Jill Griebenow, our Chief Financial Officer, will then provide an overview of our financial results for the quarter as well as discuss our 2026 financial outlook. Following their comments, we'll open the call to Q&A.

Also joining us for Q&A will be Christopher Isaacson, our Chief Operating Officer, Prashant Bhatia, our Head of Enterprise Strategy and Corporate Development, and Robert Hocking, Global Head of Derivatives. I would 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'll make some forward-looking statements, which represent our current judgment on what the future may hold. 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 statement. 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 Craig.

Good morning, and thank you for joining us to review our fourth quarter and full-year results. Cboe Global Markets, Inc. delivered record net revenue and adjusted earnings for the quarter and year, powered by continued strength across our core businesses. These results demonstrate how our products continue to resonate with a diverse group of users across regions and asset classes. We remain focused on extending this momentum as we execute on our strategic direction we laid out on our last earnings call.

Reducing our focus in certain areas while we redirect our time, talent, and capital to our core businesses and emerging opportunities. During the fourth quarter, Cboe grew net revenue 28% year over year to a record $671 million, and adjusted diluted EPS increased a robust 46% to a record $3.06. For the full year, Cboe delivered record net revenue of $2.4 billion, up 17% year over year, generating adjusted diluted EPS growth of 24% to $10.67 per share. The exceptional results in the fourth quarter were underpinned by double-digit net revenue growth in every segment and record results in each category at Cboe.

Specifically, strong volumes in both our multi-list and proprietary index option products drove the strength in the derivatives category. Solid new sales growth led to gains on our Cboe DataVantage business, and robust industry volumes propelled our cash and spot markets higher. While 2025 was an impressive year, we remain focused on sustaining and amplifying our momentum by leveraging the strong secular trends across our core businesses. Taking a closer look at the fourth quarter trends by category, our derivatives franchise delivered a record fourth quarter with net revenue increasing 38% year over year to cap a record year in which revenue grew 22%.

In our multi-list options business, net transaction and clearing fees revenue was up a strong 41% given higher industry volumes and positive pricing trends. The multi-list option space remains an area where we believe Cboe has a right to win, and we will continue to enhance our position within the industry to drive greater results over time. We're encouraged by the recent innovation in the space, underscored by the launch of Monday and Wednesday expirations for select multi-list names. While we are focused on educating market participants on the unique risks associated with single stock zero DTE trading, we believe these additions ultimately expand the toolkit available to investors.

This development complements our index options franchise by elevating awareness of the utility zero DTE strategies provide while allowing us to reinforce the advantages of index options. Namely, the larger notional size, diversified risk profile, and daily cash-settled structure as compared to single stock options. More broadly on the index options side, net transaction and clearing fees revenue was up a strong 40% as our proprietary SPX options complex set new records powered by robust growth in zero DTE options trading. SPX zero DTE ADV was up an impressive 66% year over year, while overall SPX ADV increased 39% to a record 4.3 million contracts.

Zero DTE options made up over 61% of SPX volumes, up from 51% share a year ago. We saw a similar dynamic in many SPX options where zero DTE ADV was up 135% as compared to 2024, making up just over half of the mini SPX volume to end the year. In our proprietary options business, it's worth noting that the 10 highest average daily volume months occurred in 2025 and 2026. In fact, nine of the 10 highest SPX days on record occurred in 2025 or 2026, pointing to the healthy momentum in the franchise today. We also saw growth in our VIX products.

Volume in both VIX futures and VIX options gained 15% last quarter amidst increased market uncertainty with two notable spikes in volatility, generating robust trading opportunities. For the third year in a row, VIX options set a new record in trading volume, averaging 862,000 contracts a day in 2025. As concerns rise over the concentration risk in US markets, we're seeing renewed interest in small-cap stocks for those looking to diversify their equity exposure away from large-cap tech. Volume in our Russell 2000 index options jumped 20% last quarter to reach their highest level in almost ten years.

We're excited to add 2000 index options to our global trading hour session starting this month, giving investors the opportunity to trade small-cap stocks around the clock. This will capitalize on the strong demand we have seen from international investors to access U.S. markets, with total volume in our GTH session up 34% last quarter. Looking ahead, we remain bullish on the outlook for our core derivatives franchise, anchored around strong retail demand, continued international growth, and further product innovation. Beyond these secular drivers, rising geopolitical tensions and increasing economic uncertainty should remain a tailwind for our products as investors turn to options to help better manage risk and generate income.

Moving to cash and spot markets, net revenue was up a strong 27%, as we saw solid growth in our cash equities business in Europe and North America as well as in our global FX business. Led by another quarter of strength in our European transaction business, the Europe and Asia Pacific segment delivered a 24% year over year increase in net revenue. This was driven by a 33% year over year growth in net transaction and clearing fees, given strong industry volumes, stable market share trends, and improved net capture dynamics. Higher non-transaction revenues in the segment also contributed to the growth, with revenue up 15% year over year.

North American Equities made a solid contribution with net transaction and clearing fees revenues up 18% given strong equity volumes in each of our markets. Non-transaction fees were also up double digits as our entire cash equity ecosystem benefited from the more active trading environment. Rounding out cash and spot markets, Global FX made another notable contribution, increasing net revenue 22% year over year in Q4. The fourth quarter results continue FX's long track record of revenue growth and caps an impressive 17% net revenue growth rate for 2025. Beyond the macro backdrop lifting activity across our cash and spot markets businesses, we are unlocking incremental revenue opportunities through our securities, financing transactions clearing service in Europe.

Launched in response to strong client demand, this service has leveraged XevoClear Europe's pan-European footprint to introduce central clearing to a securities lending market that has traditionally operated on a bilateral basis. This market plays a key role in enabling asset owners to earn additional income by lending out their portfolios, enhancing returns for beneficial owners. By bringing clearing to this market, our service can provide participants with meaningful capital and risk efficiencies. The first trades were executed in March 2025, and we have seen hundreds of new contracts across 15 active European settlement locations cleared every day between borrowers and lenders, with notional outstanding loan values exceeding €1 billion in January 2026. Turning now to DataVantage.

Net revenue increased by 9% on a year over year basis, reflecting continued momentum across our platform in the fourth quarter. Notably, roughly 90% of the growth across our market data and access businesses was again driven by new unit and new sales as opposed to pricing. This growth was underpinned by strong demand for access to our markets, a durable and growing international contribution, and favorable trends in our newer product offerings. If we look more broadly at the full-year results, net revenues increased 10% across the DataVantage platform.

Importantly, we saw each component of our DataVantage business—market data and access, indices, and risk market analytics—all trend higher on a year over year basis. Now I'll turn the call over to Jill to walk through the details of our financials and 2026 guidance.

Thanks, Craig. Stifel posted another record quarter with adjusted diluted earnings per share up 46% on a year over year basis to a record $3.06. I will provide some high-level takeaways from this quarter's operating results before going through the segment results. Net revenue increased 28% versus 2024, to finish at a record $671 million. We saw healthy growth in all categories, with the strongest growth coming from our derivatives business.

Specifically, derivatives markets net revenues grew 38%, cash and spot markets net revenues grew 27%, and DataVantage net revenues grew 9%. Adjusted operating expenses of $221 million were up 8% on a year over year basis. Adjusted operating EBITDA of $465 million grew 40%, and adjusted operating EBITDA margin expanded by 6.1 percentage points to 69.2%, a result of both our robust revenue results and disciplined expense management. The fourth quarter results capped a remarkable year at Cboe, where annual net revenue grew 17% to $2.4 billion, and adjusted earnings per share of $10.67 was up 24%, both setting new annual records.

Turning to the key drivers of the quarter 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 option segment delivered another quarter of record net revenue, increasing 34% year over year. The growth was driven by a 40% increase in net and clearing fees in the fourth quarter.

Total options ADV was up 24%, with a 35% increase in total index options volume and a 20% increase in multi-listed options volume. The rate per contract for our options business also increased 13% on a year over year basis, given a positive contribution from both our index and multi-list products. North American equities net revenue rose 17% versus 2024, with strong industry volumes driving an 18% increase in net and clearing fees. On the non-transaction side, market data fees grew 12%, and access and capacity fees increased 10%.

Europe and APAC produced 24% year over year net revenue growth. Net transaction and clearing fees were up 33%, while non-revenues were up a combined 15%. Futures net revenue increased 12% from 2024. The increase was primarily due to a 16% up in total ADV, given a resurgence of VIX activity during the quarter. And finally, global FX net revenue was up 22% on a year over year basis, driven by a 17% increase in average daily notional value and an 8% increase in net capture.

Looking at our Cboe DataVantage business, net revenues were up 9% year over year in the fourth quarter. Revenue growth was again underpinned by healthy new subscription and unit sales, representing approximately 90% of this quarter's growth, with the remainder coming from pricing changes. We remain encouraged by the success of our newer product offerings, including dedicated cores, time stamping services, and one-minute open-close data. Regionally, we saw incremental growth in index and market data sales, fueled by new brokers coming online in the Asia Pacific region.

Overall, we remain pleased with the multiple avenues of durable growth in our DataVantage business. Turning to expenses. Total adjusted operating expenses were $221 million for the quarter, up 8% on a year over year basis. This increase is reflective of higher compensation and benefits expense, which primarily resulted from our strong 2025 revenue growth, increasing our short-term incentive compensation.

Before detailing our 2026 guidance, I would like to provide a brief progress update on our strategic realignment over the past quarter and explain how these actions are reflected in our 2026 expectations. During the fourth quarter, we commenced the sales process for our Cboe Australia and Cboe Canada businesses. We have seen strong initial interest from potential buyers, and we will continue working towards an outcome that delivers a positive solution for all parties. Although we have initiated sales processes for Cboe Canada and Cboe Australia, we continue to operate those units as business as usual, and the revenue and expense contribution of each is included in our 2026 guidance.

We plan to provide updates as milestones are met in the sales process and detail any subsequent financial impacts. We have also ceased operations on our corporate listings businesses while driving efficiency in our growing US ETP listings business, and European ETP listings business, as well as several of our smaller risk and market analytics businesses. Our 2026 guidance fully incorporates the anticipated revenue and expense impacts from these actions. And finally, last year, we made the decision to explore ways to reduce our cost footprint for Cboe Europe derivatives exchange, referred to as FedEx.

As we further assess the business, it became clear that FedEx was unlikely to meet targeted revenue and profitability metrics given the retail investing landscape and market structure in Europe. And in January 2026, we made the decision to close FedEx. Our 2026 guidance includes the impact of our decision to wind down FedEx. The financial impact of the FedEx wind down is expected to be largely realized in 2026 and does not change the overall estimated revenue and expense impact ranges communicated on our October 31 earnings call related to our strategic realignment decision.

For full-year 2026, we are introducing the following guidance. We anticipate our DataVantage organic net revenue growth to be in the mid to high single-digit range, and we expect our total organic net revenue growth to be in the mid-single-digit range. We are also introducing our 2026 adjusted operating expense guidance range of $864 million to $879 million, representing 3.3% growth on the low end and 5.1% growth on the high end. Our guidance accounts for some modest inflation in our core expenses, along with the expected financial implications associated with the recently announced leadership transition, and provides room for incremental investment in emerging opportunities.

A few areas where we are excited to make some near-term incremental investments include expanding our securities financing transaction capabilities, as well as new product development around emerging event prediction markets. Our full-year guidance range for CapEx is $73 million to $83 million, and our depreciation and amortization is expected to be in the $56 million to $60 million range. We expect the effective tax rate on adjusted earnings under the current tax laws to come in at 27.5% to 29.5% for the full year, with the midpoint of the range 80 basis points below the 2025 rate as a result of an expected decrease in tax expense associated with uncertain tax positions.

And while we don't provide formal guidance on interest income or interest expense, we expect that interest income, net of interest expense, will be a $3 million to $4 million positive contributor for 2026. On the capital front, we continue to look for ways to effectively allocate capital and drive long-term durable shareholder returns. In the fourth quarter, we returned $76 million to shareholders in the form of a $0.72 per share dividend, bringing the total amount of dividends paid in 2025 to $284 million. Factoring in both share repurchases and dividends, Cboe returned a total of $350 million to shareholders in 2025. We enter 2026 with a great deal of balance sheet flexibility.

As evidenced by our adjusted cash position of $2.2 billion and a leverage ratio of 0.9 times. We are well-positioned to invest in organic or inorganic opportunities as well as redeploy capital to shareholders as dividends or opportunistic share repurchases. Moving forward, we remain focused on optimizing our capital deployment and look forward to delivering on long-term shareholder value objectives. Now I'd like to turn it back over to Craig for some closing comments.

Thank you, Jill. As we move forward as an organization, we are focusing more attention on driving results in our core businesses and preparing for emerging opportunities across our industry. We believe that capitalizing on those opportunities starts with having the right group of leaders in place. As we announced last week, we are thrilled to welcome Heidi Fisher to head our cash and spot markets businesses and Scott Johnston as our new COO.

Both bring a wealth of industry experience in their respective fields and strengthen our management capabilities across our core businesses at Cboe. I want to take a moment to express my sincere gratitude for the many contributions that Christopher Isaacson has made throughout his tenure at Cboe. From his early days as a founding BATS employee in 2005 to his meaningful contributions as a key member of our executive team and our COO, Chris has been an integral part of Cboe's growth and identity. Chris has embodied a Cboe-first mentality, and we are fortunate that he will continue to serve as an adviser through 2026. Now I'd like to turn the call to Chris to say a few words.

Thank you, Craig. First, I'd like to thank my Cboe colleagues for everything we've accomplished together and your trust over the past twenty-plus years. It's been an incredible run together. To the investor community, I'm grateful for your engagement and thought interest through the years.

It's been a privilege to build so many meaningful relationships with you during my time at BATS and Cboe. While leaving Cboe is certainly bittersweet for me, I'm excited for the opportunity to spend more time and be more fully present with my family. I feel there's no better time to pass the baton given the excellent momentum of the business under Craig's leadership, the recent strategic decisions we've made as an organization, and the support of a capable leadership team with long-tenured leaders as well as talented new ones coming into the organization. Thank you again.

And with that, I'll hand it back to Craig.

We have been incredibly deliberate in our efforts to strengthen leadership across our core businesses. This transition with Chris has been thoughtfully planned, and we are excited to bring in leaders of Heidi and Scott's caliber. With the addition of Heidi, Scott, and recent key hires in strategy and corporate development, global derivatives, clearing, and DataVantage, our management team has added an average of over twenty-five years of industry experience per hire. Importantly, these new hires are complemented by our efforts to elevate talent from within Cboe.

Given the depth of talent now in place across each of our core businesses, along with a robust regional leadership team of proven executives, I believe we are better positioned than ever to capitalize on the numerous opportunities ahead. 2025 was a remarkable year on many fronts, and we begin 2026 with a position of real strength supported by healthy secular tailwinds, a fortified and aligned leadership team, and a sharpened focus on each of our core businesses. With this foundation in place, we are well-prepared to build on our momentum and unlock even greater value for our shareholders in the years ahead.

I'll now turn the call back over to Ken for questions and answers.

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.

At this time, if you would like to ask a question, press star, then the number one, on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Patrick Moley with Piper Sandler. Please go ahead.

Yes. Good morning. So you guided to mid to high single-digit DataVantage revenue growth in 2026, which is consistent with what you've introduced guidance at the last few years. But more recently, you've been trending closer to high singles to low doubles.

And it seems like a lot of that's been driven by momentum internationally and the new unit sales. So could you just elaborate on the decision to maintain the mid- to high single revenue growth target? Should we interpret that as just general conservatism? Or are you expecting growth to slow over the next few quarters?

Thanks.

Hey, Patrick. Thanks for the question. So, you know, really, when we look to set the annual guidance, we look at it on a full-year basis as opposed to just the quarter-to-quarter piece. We continue to see the durability in the DataVantage business, but, yes, we set the guidance still very comfortable with that mid to high single-digit range.

But, again, some good momentum coming from new usage. The sales were about 10% coming from the pricing.

Yeah. And I think I'd add to that, you know, to Jill's point, just the timing of sales may vary quarter to quarter, but on an annual basis, we're pretty comfortable where we are. Just for some color around what's happening within DataVantage from a market data perspective, we see a lot of momentum from sales overseas, about 45% of our new data sales this quarter were from overseas clients, so that compares to about 35% a year ago. So we're seeing good momentum there.

If you look at our recurring sales, during the quarter, three out of our top five recurring sales came from clients in the Asia Pacific region. So we're seeing good momentum there similarly across our CGI businesses analytics businesses. The utilization of our products in option-embedded ETFs continues to be strong, and there's a lot of client demand for that. So we're really positive on the continued growth in that mid to single-digit range.

Okay. Thank you.

Your next question comes from the line of Daniel Thomas Fannon with Jefferies. Please go ahead.

Thanks. Good morning. Craig, I was hoping you could expand upon your comments around the single name zero DTE, you know, recent rollout and why you, I guess, what gives you confidence around that not cannibalizing potentially your index business and ultimately, you know, expanding the pie, I think, is how you described it. I was hoping to get a little bit more context around that.

Yes. Sure. Thanks, Dan. I'll start, but I'll turn it over really to Rob.

I mean, I think we view it as additive to the market. But, I mean, fundamentally, there's a lot of differences between, from the customer perspective, including, you know, from the risk aspect, a lot of differences between our SPX products and single name zero DTE. So we actually don't think that they will be cannibalistic. We think they'll just be additive to the market, but Rob, why don't you comment?

Yeah. And maybe I'll even, thanks, Craig. Maybe I'll even take a step back and just, this is obviously a popular question we're getting. So maybe just give an overview of what we've seen early days in the Monday, Wednesday trading as well as kind of to your cannibalization question.

So, so far, I think early uptake of the Monday, Wednesday options has been good. They're largely concentrated really in two names, NVIDIA and Tesla. At this point, we have a very small dataset, obviously, but Monday, Wednesday options are ranging between 10% to 30% of the total number of that are trading in the nine names that were launched. And so, you know, of these options, a lot of them have been picked or they've all been picked up by all the different exchanges.

We're pretty sure all the different retail broker platforms are offering them. From an access standpoint, we think, you know, we're there. On the cannibalization question with regards to SPX, you know, really that one, I think it helps to take a step back. And as Craig alluded to, you know, why are people trading each of these products and how differently they actually work.

You know, SPX tends to be more smooth because it's a diversified basket. You know? Price moves tend to be more macro-driven. They're well telegraphed.

Single names are different. They're driven by more company-specific news. Really means more gaps, call it sharper jumps, fatter tails. And so the strategies we see today in zero really better align with that smoother kind of intraday SPX price action.

The retail activity we're seeing is around the open and then again and call it the final hour of the close. Where people are trading that momentum trying to collect, you know, premium decay throughout the day. And so those strategies are really less suited to underliers whose prices, we'll call it, are more unpredictable with kind of those higher probabilities of gap moves. Now, you know, do I think that that will keep people from trading single name zero DTE?

Well, no. Investors will continue to develop new strategies and they'll introduce, you know, kind of these shorter tenors into their portfolios, but I think that will actually have a positive effect on industry volumes overall. I don't think they'll cannibalize for the reasons that, you know, trading both are differentiated enough that, you know, one is not a good replacement for the other. But I do think it's really important to note right now for investors that, you know, they'll have to deal with some really large fundamental differences in product design between trading single names in zero DTE and trading single name SPX.

And so, for example, SPX options are cash-settled and European style, while single name options are physically settled and American style. So that difference brings early exercise into play with single names. And so on expiration day, SPX zero DTE positions settle into cash based on the index print. There's no overnight exposure.

Your account gets debited or credited the next day. And really with single name options, instead, you end up with actual shares of stocks. I think that's really important for investors to understand. That means there's overnight risk.

It also means you have to unwind those stock positions the next day to get your capital freed up to put into new option strategies. And so if you're trying to run some of those higher turnover zero DTE strategies in single names that we've seen, those differences kind of really matter. And so, you know, kind of these fundamental contract differences are also why Cboe is really hyper-focused on investor education. We think that's important at this stage of the game to really ensure that investors understand the differences between these two products and they're not caught off guard with cash and or stock moving through their accounts unexpectedly at expiration.

So I know it's a long-winded answer. I think it's important to get all of those details out there because I like the introduction of Monday, Wednesday single names. I think it's good for volumes. But, really, we don't see them replacing SPX.

We'd rather see them additive to the system.

Great. Thank you.

Your next question comes from the line of Elias Abboud with Bank of America. Please go ahead.

Good morning. Thanks for taking my question. You completed a number of introducing broker onboardings in 2024 and 2025. I was hoping you could give us Robinhood, of course, but then also several APAC brokers. Any sense of the contribution of these new brokers to the strong SPX volumes in 2025? And then, what does the pipeline look like for further broker adds in 2026?

Yeah. This is Rob. Thanks, Elias. Maybe I'll take that question.

Don't get down to specific SPX attribution, but I can take it up one notch for you. As you mentioned, we continue to expand access to our core products. Robinhood was a great add. We continue to see their options volume grow, which is super exciting.

And they've been very public that they see good options growth in the midterm. I think I saw somewhere in an article, you know, they're estimating 40% to 45% kind of growth of options penetration. So we're excited about that. As you mentioned on the APAC side, we continue to see strong demand from international retail brokers and institutional clients wanting to connect to our exchanges, especially for SPX options, the Mega Tech, you know, the mega cap tech names are also in demand in our VIX.

You know, they voiced that they're very anxious to really tap the large US pools of liquidity that we have. Korea has been a success story for SPX Options with seven of the 10 identified local brokers that we've seen all offering now as options at this point. Put that in perspective, that's compared to zero online two years ago. So that's expanding.

We see that as a really good, you know, opportunity for growth. To give another region, Taiwan saw the first local retail broker launch of SPX and VIX options in Q4, and we're expecting others to follow this year, so more growth there. The continued demand keeps coming in. We see this volume not only showing up in some of our GTH sessions.

I think you heard in Craig's remarks how that is growing at a very fast pace, but we're also seeing it actually show up in our regular trading hour sessions. And we're just really encouraged by kind of that international demand coming into the US, and we see it as a large area of growth in the years to come.

Your next question comes from the line of Benjamin Budish with Barclays. Please go ahead.

Hi. Good morning, and thank you for taking the question. Don't think you've talked about prediction markets yet on the call. I know there's been some press indicating that you are either thinking about or having early discussions with brokers regarding sort of yes-no options.

So could you maybe give us an update of where you are in the thinking in terms of product design, conversations with, you know, just distribution partners, market makers, anything else that you could share? Thank you.

Yeah. Absolutely. We're excited about the continued growth in the event prediction markets. Really view this as a logical extension of Cboe's existing strengths.

And they provide a clear entry point for new customers and really a pathway to broader Cboe product adoption. As you've heard us mention, our current focus is on the financial and economic style contracts. That's where we think we have the deepest expertise, where our core products already sit, and where we believe we can deliver value immediately to our end users. By staying, I would say, close to our core, we can leverage really our technology, the existing product liquidity, which I think is important, and our market structure experience, while offering customers the regulatory certainty and reliability that comes with trading on our established regulated exchange.

I think that's important. You know, a few important points I think that's worth highlighting. You know, our first initial offerings will be securities products. We think that's the best way to reach the broadest set of end users, and it clearly differentiates what we're doing from a lot of the non-security-based platforms already in the market.

Second, these products will closely align with our SPX options ecosystem. We already see more than 200,000 SPX Zero DTE contracts trade every day, many of which, you know, those trades have the same kind of defined risk or, as you mentioned, all-or-nothing payout profiles that this newer investor is looking for. And so this provides a very natural connection and something we feel we can leverage into being successful in that prediction market space. And so from a regulatory standpoint, I think it's also important to mention we're encouraged by the recent comments from both chair Atkins and chair Selig, especially around drawing clear lines between what's considered a security versus a CSD regulated swap.

Their remarks reinforce the idea that securities products belong on a registered securities exchange, which really puts Cboe in a very strong position in the driver's seat, so to speak, with expanding into the space and then continuing the development. Now, the positive thing behind this regulatory clarity is it's giving people increased confidence, you know, as certainty improves, participation broadens, not just among individual investors, but also among retail brokerage platforms, which is important. You know, they've been previously cautious about entering the space, and so we think the timing is good with the added regulatory clarity, kind of how this product set intertwines with our existing, you know, SPX product set.

And so as far as when, I think that's always the last question we get, which is when do you think we'll launch? You know, right now, we're targeting a second-quarter launch. Assuming regulatory approval and really most importantly partner readiness as we need to launch these with the various partners we have in the industry such as OCC, and a lot of the retail broker platforms. But as we get closer, we'll continue to provide more updates.

But big picture, we're super excited about the space.

Alright. Thank you very much.

Your next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.

Great. Thanks. Good morning. Thanks for taking my question.

Maybe just a follow-on for that and then maybe just to add a question for Jill on the revenue guidance. With that. So, the second-quarter launch for the just to clarify, that's for the binary options, I believe. And then, I guess the follow-on question is, when do you would you expect to be launching the actual more traditional prediction market contracts?

Is that just coming in future the next quarter or two? Or is that a longer-term development? And then I know the expenses for developing these are in the guidance. Is there any revenue assumption from these embedded in the revenue guide as well?

And then, Jill, if you could just on that revenue expense guide, can you just reconfirm the part that you are including in that versus the commentary in the third-quarter call, I think the divestitures were 3% net revenue drop on an annualized basis with eight to 10% expense drop. Sounds like most of that's still in there because of the Canada and Australia commentary but just wanted to confirm.

So, yeah. Thanks, Brian. I can start with your questions around the event contracts. So second quarter is for and I'm not going to give too much detail because we're going to make a bigger splash on this, I think, in a little while here.

But it will be the all-or-none style combined with what we feel is a way to intertwine some of the spread trading that we see going on today in SPX. So that is what we're targeting for that second quarter. Once again, you know, think our core products think yes or no, but even a little bit of a different twist as a differentiator on that. And then once again, in the security space, we think that's super important.

On the other contracts, you know, as we gain traction and as we get our initial contracts up on retail broker platforms, as they build let's call it, the GUIs that are able to those contracts and really give the user experience what they're after, we'll look to expand that into what you referenced as the more, call it, traditional contracts more, you know, yes, no around an event style contract. But think of that, you know, as market adoption happens, that will be a steady rollout into the future.

Yeah. Ross, you might comment. I mean, what Rob is describing will still be focused on financial and economic events. But like this strategy. I like the synthesis on securities products. It capitalizes on, you know, hundreds of thousands of spread contracts that are trading every day in the market. And leverages our strengths in that way.

Okay. On securities, yeah, securities, do you mean single name company securities or index? Securities or both?

We'll be starting with index. That's just a natural fit at the moment. But that will potentially expand into other securities as well.

Okay.

Then to Craig's point real quick, you know, I mentioned the 200,000 SPX contracts we see each day trade. Those are in very, very tight minimum increment vertical spreads. And those minimum vertical, those minimum increment vertical spreads on expiration day have effectively a binary payout. A yes-no payout.

So we believe we're seeing event style contracts that can exist in SPX today. And so as I talk about this all-or-none new contract, combined with the spreads that we're seeing, I mentioned, the 200,000 contracts, 200,000 plus contracts we see, that's where we think we can offer a very positive securities-based in the indices to start product offering to the market.

And then just to pick up on the second half of your question as it relates to the guidance impact. So a couple of different components to your question. Let me know if I miss anything here. But the first one, that I'll address is just on your question as to what we're including from the 2026 revenue guide as it relates to the new prediction and event contract opportunities that Rob has spoken to.

I'll just say that there's, you know, a small contribution contemplated in the 2026 revenue guide, but we really do expect that to ramp more over time, and we'll continue to update our model as that becomes more clear. As it relates to the strategic realignment pieces and how those factor into the guidance, again, there are a few different tranches there that I tried to address in the prepared remarks, but we'll just take a couple of minutes here to further articulate and clarify those. So to your earlier point, we did communicate back in October that we expect the net impact of all of the realignment to result in about a 3% net revenue loss.

So there are pieces of that that are already contemplated in the 2026 revenue guide. So those would relate to the decision to wind down the Japan equities business, corporate listings, and then some of the optimizations we've made within the risk and market analytics business as well as any revenue contemplated from the FedEx initiative. So, again, those knowns are built into the 2026 guide. The piece that still lives within the 2026 revenue guidance, though, is the contribution that's contemplated from Cboe Canada and Cboe Australia.

Given that those businesses are still actively owned and operated by Cboe. As the sales progress progresses there and if and when there's an impact on either 2026 revenue or expense contributions from those businesses, we'll recast our guidance then communicate those impacts to the industry.

That's great. And the expenses, the related expenses to what you just described is also in and out expenses in for Canada and Australia expenses out for the other things that you've closed.

Correct. So, the 2026 expense guidance does include what we expect expenses to relate to Canada and Australia, correct? And then there will be somewhat of a timing lag on some of the we're doing. But for the most part, we do see a bit of savings then in 2026 from, you know, the Japan piece, corporate listings, the risk and market analytics optimization.

As well as the FedEx wind down. So those knowns are embedded within the 2026 expense guide.

Great. Thank you so much.

Your next question comes from the line of Alexander Kramm with UBS Financial. Please go ahead.

Hi, guys. Good morning. Thank you for the question. So a lot of the strategic initiatives that you've talked about meant to be organic build-outs.

That feels consistent. The balance sheet obviously continues to be in a really good place, so I was hoping you could refresh us on your latest thoughts around share repurchases or any other use of capital over the next kind of twelve to eighteen months.

You bet. So, I mean, if you look back historically, our return on capital is actually we get some of the highest returns on organic investments. So on the heels of the strategic realignment, obviously, we are pivoting away from certain areas of the business. But what that is allowing is both time and balance sheet flexibility to really invest in areas where we do see some promise.

So really looking to optimize around the core. A couple of the opportunities that we've mentioned today from an organic standpoint are the focused investments that we're making to further build out our securities financing transaction line of business as well as, you know, some of the product development and opportunities around the event prediction market. So we really are laser-focused on continuously looking at all of our core business lines to see what further enhancements or optimization we can make to generate that long-term revenue flow. That isn't to say, though, that share repurchases don't remain a priority.

We absolutely still will look to do those again on an opportunistic basis. We do also have a history of paying a quarterly dividend and also have increased that annually. If you look back to August 2025, we did announce a 14% increase to the dividend. Really, you know, we like the flexibility that we have at the moment.

We like the dry powder, and you know, we'll just continue to look to optimize the capital returns based upon the opportunities that are ahead of us.

Great. Thank you.

Your next question comes from the line of Alex Kramm with UBS Financial. Please go ahead.

Hey. Good morning, everyone. At the risk of asking Brian's question a little bit more specific on the expense side, Jill, of the 8% to 10% that you talked about on the last call, can you maybe just give us the number of how much of that is now basically out of the 2026 cost guide? Thank you.

Morning, Alex. No. We're not breaking it out on that discrete of a level. What I'll say, though, is there are quite a few tranches of things that are coming off and then, you know, some organic investments that we're making coupled with what I will say is, you know, the majority of the savings would come later on from some of the Canada, Australia pieces.

But like I said, we already are starting to see the full-year benefit of the Japanese equities piece as well as looking for a good portion of the FedEx component to come out. So it really is a balance there. You do see it reflected in the guide that we came out with. So, you know, you look at the lower end of the range, the $864 million, higher end of the range, that $879 million, that suggests, you know, somewhere of a 3.3% to a 5.1% expense guide.

Again, we will keep you updated over the course of the year as more becomes known with the timing of the Cboe Japan or Cboe Australia and Cboe Canada pieces. But, for now, again, feel good with that range that we've communicated given some of the pieces that are in motion.

Understood. Figured I needed to ask. I'll be back with a follow-up. Thanks.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please go ahead.

Thanks for taking my question. Was wondering if you could provide more color on the rollout of dedicated cores as well as talk about the new growth initiatives and new product roadmap within the DataVantage? Thanks.

Yeah. So in general, you know, some of the products we've rolled out over the last year or so include dedicated cores. Again, that's reducing latency. In terms of accessing our equity markets.

We've also rolled out time stamping and a one-minute open and closed dataset, and those are more focused on the datasets around our options exchanges. We've rolled those out. We started in the US, and then we took them across to markets in Europe. So those were some of the initiatives we had in place.

As we looked at 2026, we've got some new launches planned as well. There's an option-like dataset that we've just launched early this year. We're already seeing some strong interest in the Asia Pac region around that dataset. And there's something that we'll put in around the middle of the year, around Cboe clock service that has good potential as well as we work with clients who really understand some demand around that.

So we continue to innovate around new products and services that clients are really asking for. So we'll continue that rollout into '26 as well.

Thank you. That's great, Connor.

Your next question comes from the line of Jeffrey Schmidt with William Blair. Please go ahead.

Hi. Good morning. You discussed on the last call that you're working on pricing improvements for your exchanges. And, you know, whether it's market maker incentives, more attractive rebate programs, things like that. Could you provide us with an update on what you're doing there? Is that really for the multi-listed options? Thanks.

Hi. Yeah. This is Rob. I'll take that one.

And, yeah, it's for the multi-list space. We're still, it's an exciting space for us and really core to Cboe. As all the reports show, you know, industry volumes continue to grow at a staggering pace. And so this is an area we're heavily focused on.

But we'll say, as you point out, it's highly competitive. By early twenty-six here, we'll reach 20 exchanges in the space. But that said, you know, Cboe still controls, call it, around 22% market share in multi-list. And we're number one in overall market share.

So without getting into, as you mentioned, we're constantly evolving different functionality, the different pricing schemes. And we're always actively evaluating and working through all of those pricing enhancements across our different medallions, but it's I think it's important to point out that we're always very intentional about how we manage the dynamic between market share and revenue capture. So we don't see that as a static kind of trade-off. As market conditions change, we'll continuously adjust pricing and incentives to make sure we're maximizing that overall opportunity set for Cboe rather than optimizing for a single metric in a given quarter.

So that's kind of an ongoing thing, and it will continue to be an ongoing thing. On the more specific things we're doing, on the market structure side, we're preparing to launch multi-list trading during our limited GTH session. You've seen reports of that. That will pending regulatory approval later this year.

And then another one that I think is important to mention that I'm not sure we've mentioned before, we're engaging with industry participants on the potential for options, the options regulatory fee or for form as you hear it referenced. Now ORF is a per contract fee charged on option trades to help pay for market regulation and oversight, and ORF is assessed on customer trades regardless of which exchange the trade is actually executed on. So the fee is used by options exchanges to fund their regulatory responsibilities, but because there are many options exchanges, as I mentioned 20 here in the first part of 2026. ORF can be charged by multiple venues on the same cleared trade, which is why it's become really a point of focus and discussion across the industry.

Because as the number of exchanges grow, the cumulative burden on customer trades increases. Which is why the, you know, the industry, the derivatives industry has been discussing this offer form and aligning fees more closely with where trades actually occur to reduce friction, cost, improve overall market efficiency. And so this initiative is important to us. It's one Cboe firmly believes in is supportive of aligning fees with where the actual trades are done.

And we feel, you know, overall, if you look at our approach towards pricing, extending GTH or for form, we still feel we're positioned well to remain an industry leader in multi-list.

Okay. Thank you.

Your next question comes from the line of Ken Worthington with JPMorgan. Please go ahead.

Good morning. This is Natalie Daleiden on for Ken. Appreciate your earlier comments on single name cannibalization risk. But may you provide some more context or help us size the capital efficiencies customers could realize when trading across the new, you know, shorter duration equity risk management tools, whether it be single name zero DTE, the MAG10 index you launched, binary options, when trading in conjunction with the legacy S&P index stakes.

Sure. Want me to? Yeah. You can start.

Yeah. I mean, all these products are cleared through OCC. And so as a result, there's substantial capital and margin efficiencies because of the portfolio margining that's happening within OCC. So, you know, I think, again, that's kind of another sort of complementarity to the launch of these products, which is they're all held on the same pool.

And therefore, you know, they get the multilateral of centralized clearing. I think that's your question. But Rob, is there something you want to add to that?

And maybe to expand on that is just, you know, if you think events, think zero DTE, whether single name or index, think MAG 10. All of these, as Craig points out, are cleared at OCC. So all of them, we expand the product set, whether it's introducing new tenors existing products. So think, you know, Mag 10 is even introducing new products that are made up of top 10 names relative to the single names that already trade. All of those and that's kind of our strategy.

All of those are going into the same bucket of risk at the OCC for offset and risk offset capital efficiency. So as we expand the toolkit, that's the beauty of it, is these people's portfolios, as you add these names, you're not introducing a completely new asset class that you have to fund as a completely new vertical. You're introducing new, call it, risk characteristics, new access points all within the existing verticals they have is a much more efficient way to trade.

Thank you.

Your next question comes from the line of Michael Cyprys with Morgan Stanley. Please go ahead.

I was just hoping you could share your updated thoughts on plans around extending trading hours to twenty-four-seven. Across your markets, what that path and some of the hurdles look like. I know for multi-list, you've announced to have extended sessions, I think, for certain options contracts. Just curious how you think about overcoming any sort of hurdles around fragmenting liquidity and ensuring real price discovery, particularly in some of those overnight hours.

Thanks.

Yeah, Michael. I just want to remind you. So we already trade 23 or 23.5 by five. Futures index options and FX.

I have for many years. And as we've mentioned on this call already, through the prepared remarks and Q&A, GTH volume or global trading hours really grown tremendously. 34% year over year. So we're seeing great growth in those markets where we already trade. In US equities, we trade from 4 AM eastern to 8 PM eastern today.

Kind of the broadest hours of all the US markets. Coming in late November, assuming the market infrastructure, the consolidated tapes, and DTCC are ready, the industry, including our EDGX market, would be going to 23 by five in late November, but you'll see a room filing for that in the first half. And then to your specific question about 24 by seven, you know, we're already making plans. There's been a lot of talk here about the Fed prediction markets and some about crypto as well.

So we certainly have the capability to trade 23 by five. We're taking a look at what would it mean for us to extend our clearing abilities to 24 by seven as well as our trading abilities to do that. And just, I'd say, just watch the space for when we see the appropriate market demand. To justify those projects.

But those are definitely in the planning phase, and we look forward to bringing those to market when the customer demand is there to meet it.

And then, Michael, real quick, if you're asking specifically about multi-list, you know, we're working to launch, you know, extended hours trading or that extended GTH session for Q, we'll call it Q3, pending regulatory approval. And in our filing, we would add a morning session from 07:30 to 09:25 eastern time and then a post-close session from four to 04:15 to supplement the existing US equity options hours that Craig meant, sorry, that Chris from 09:30 to four. Our plan would be to start with 25 names only. That represent kind of the highest market cap, most liquid, names across options and underlying equities.

And as you highlighted, this is really in response to the surge we've seen in the equity option volumes and just the general industry push towards 24 by five. But those are kind of the specifics around how we're expanding that for multi-list.

So just on the multi-list, so that goes till four fifteen. Just curious why not extend a bit longer? How do you think about that? What are some of the hurdles? When do you think we can get to twenty-four five, twenty-four seven within multi-list?

No. I think it's a great question. Really, you know, trying to expand the functionality slowly and deliberately to make sure market participants are prepared and it's a smooth transition process. Right now, these windows where we're expanding account for where we see the majority of volume in our current GTH session.

With SPX. So we don't want to burden liquidity providers right out of the gate having to staff and provide liquidity all night over some of the lower, you know, traded hours or lower volume hours. So we feel like if we use SPX as an XSP kind of as a guide, this is where we're seeing the majority of the volumes. So let's expand 25 names there.

Let's see how that works. Let's not burden liquidity providers and then hopefully expand as it makes sense.

Great. Thanks so much.

That concludes our question and answer session. I will now turn the call back over to Cboe management for closing remarks.

Thank you very much. Thank you for joining us today. I just want to take a last opportunity to thank Christopher Isaacson for his ten years of experience in his last earnings call with us. But he'll be with us for a while as an adviser and Chris, we thank you, and thank you for joining us.

Thanks, Craig. Thank you all.

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