Executive Summary / Key Takeaways

• Derivatives and Data Fuel Record Performance: Cboe Global Markets delivered record Q2 2025 net revenue of $587 million and adjusted diluted EPS of $2.46, driven by robust volumes across its derivatives franchise and strong growth in its Data Vantage business.
• Strategic Optimization and Global Expansion: Under new CEO Craig Donohue, Cboe is rigorously optimizing its business portfolio, exemplified by the strategic wind-down of its Japanese equities operations to reallocate resources to higher-return derivatives and data opportunities.
• Technological Moat Deepens: The Cboe Titanium platform underpins global operations, delivering enhanced efficiency and reliability, while investments in AI, cloud migration, and "Dedicated Cores" are set to drive future product innovation and revenue.
• Secular Tailwinds and Product Innovation: Growing retail participation, increasing international demand for U.S. market access, and the versatility of proprietary products like SPX and VIX options (including 0DTE) are strong secular tailwinds. Cboe continues to innovate with new offerings like Bitcoin index options and VIX Options on Futures.
• Disciplined Capital Allocation: With a strong balance sheet and a 1.0x leverage ratio, Cboe is committed to opportunistic share repurchases and increasing dividends, prioritizing shareholder returns and organic growth investments.

The Global Exchange Powerhouse: A Foundation for Growth

Cboe Global Markets, Inc., founded in 1973 as an options exchange, has evolved into a diversified global network for derivatives and securities trading. Its journey, marked by strategic acquisitions like Bats Global Markets in 2017 and BIDS Trading in 2020, has cemented its position across equities, derivatives, and FX markets. This expansion has cultivated a broad ecosystem, enabling Cboe to capitalize on dynamic market trends and reinforce its strategic focus on optimizing core businesses, expanding globally, and leveraging technological leadership.

The company's overarching strategy is deeply aligned with several powerful secular trends shaping global capital markets. The rising popularity and adoption of options trading, particularly for risk management in volatile environments, continues to drive demand. Concurrently, the increasing sophistication and participation of retail investors, coupled with the globalization of financial markets, present significant opportunities. Cboe is also at the forefront of harnessing rapidly evolving technologies, including artificial intelligence and advanced data management, to enhance its offerings and competitive edge.

Technological Bedrock: Cboe Titanium and Beyond

At the heart of Cboe's operational excellence and strategic growth lies its differentiated technology platform, Cboe Titanium. This unified, scalable global platform now powers all of Cboe's equities and derivatives markets across North America, the UK, Europe, Australia, and Japan. Its robust design was demonstrated in April 2025, when it seamlessly processed over 1 trillion orders, quotes, and market data events across 27 global markets, showcasing remarkable resiliency and reliability.

The tangible benefits of Cboe Titanium are evident in improved market share across newly migrated markets, enhancing efficiency and operational execution. Beyond its core trading infrastructure, Cboe is actively investing in advanced technologies. The company established an AI Center of Excellence in 2024 to drive internal productivity and explore new product development opportunities. Furthermore, Cboe is accelerating the migration of its Derivatives data to the cloud and expanding its "Dedicated Cores" offering, which provides superior performance and determinism for market participants. This strategic investment in technology not only strengthens Cboe's competitive moat by enabling faster innovation cycles and more efficient operations but also directly contributes to its financial performance through enhanced customer engagement and improved activity levels across its trading businesses.

Derivatives Dominance: Fueling Growth

Cboe's Derivatives segment continues to be a primary engine of growth, delivering a record quarter in Q2 2025 with organic net revenue increasing 17% year-over-year. This robust performance was underpinned by a 20% increase in total options average daily volume (ADV), including a 17% rise in index options volume and a 22% surge in multi-listed options volume. Notably, SPX options volumes jumped 21% year-over-year to a new record ADV of 3.7 million contracts, while Mini SPX options (XSP) ADV rose 50% to a record 108,000 contracts.

The utility of Cboe's S&P 500 volatility toolkit was on full display in Q2 2025, as heightened market volatility led investors to use options for dynamic risk management. SPX options set a single-day record of 6 million contracts on April 4, with institutional investors particularly gravitating towards longer-dated options for hedging. The resilience of 0DTE (zero days to expiration) options was also reaffirmed, with volumes rebounding to new highs in May and June, reaching a record monthly ADV of 2.2 million contracts and comprising a record 57% of overall SPX options volume in Q2 2025. Management remains confident in the sustainability of 0DTE volumes, citing expanding retail broker access and nascent demand from the Asia Pacific region.

Cboe continues to innovate within its proprietary product suite. This includes the successful launch of Bitcoin index options (CBTX and MBTX) in December 2024, which are already being utilized by 15 ETFs for options-based strategies. The company further expanded its crypto offerings with the introduction of Cboe FTSE Bitcoin index futures in April 2025. Additionally, Cboe S&P 500 variance futures launched in September 2024, and VIX Options on Futures in October 2024, broadening the volatility toolkit and providing access to a wider range of market participants.

Cash & Spot Markets: Broad-Based Strength

Cboe's Cash and Spot Markets segment also demonstrated strong performance, with its Europe and Asia Pacific segment delivering an impressive 30% year-over-year net revenue increase in Q2 2025. This growth was primarily driven by a 39% increase in net transaction and clearing fees, reflecting robust industry volumes and solid market share gains. Cboe maintained its position as the largest European stock exchange in Q4 2024, capturing 33% of continuous trading volume, with periodic auctions accounting for a significant 87% market share.

In North American Equities, net revenue remained relatively flat in Q2 2025, although access and capacity fees saw a healthy 16% increase. The U.S. on-exchange equities business improved its net capture by 42% in Q4 2024, reflecting Cboe's strategy to optimize revenues through a balanced approach to market share and capture. The Global FX segment achieved another quarter of record net revenue in Q2 2025, growing 19% year-over-year, propelled by a 17% increase in average daily notional value.

A significant strategic decision impacting the Europe and Asia Pacific segment was the announcement in July 2025 to wind down Cboe's Japanese equities business (Cboe Japan and Cboe BIDS Japan) by August 29, 2025. This move, which resulted in a $17.10 million impairment charge for intangible assets in Q2 2025, is part of Cboe's philosophy to reallocate resources to areas with the highest potential returns, such as derivatives and market data, where there is strong demand from Japanese market participants for international access. Cboe will maintain a sales and client engagement presence in Japan to support these efforts.

Data Vantage: The Recurring Revenue Engine

The Data Vantage business, formerly known as Data and Access Solutions, is a critical recurring revenue stream for Cboe, demonstrating an 11% year-over-year net revenue improvement in Q2 2025. New subscription and unit sales accounted for approximately three-quarters of this growth, highlighting the strong demand for Cboe's market information, analytics, and access solutions. International demand is a key driver, with roughly 45% of new data sales originating outside the U.S. in Q2 2025.

Management views the Data Vantage business as interconnected with its trading operations, noting that enhancements to market access and subscription-based data sales create an "ecosystem benefit" that drives better customer engagement and improved activity levels for trading. The company is actively expanding its global sales presence, particularly in the Asia Pacific region, and leveraging new distribution channels like Cboe Global Cloud to capitalize on the growing international appetite for U.S. and European market data.

Financial Health and Capital Allocation

Cboe's financial performance in Q2 2025 underscores its robust operational execution. The company reported record quarterly net revenue of $587 million, a 14% increase year-over-year, and adjusted diluted EPS of $2.46, also up 14%. Adjusted operating EBITDA grew 19% to $387 million, with the adjusted operating EBITDA margin expanding by 2.3 percentage points to 65.8%. For the trailing twelve months, Cboe boasts a gross profit margin of 55.51%, an operating profit margin of 29.04%, and a net profit margin of 19.82%, reflecting strong profitability.

The company maintains a strong financial position, with $1.2 billion of adjusted cash on its balance sheet and an attractive leverage ratio of 1.0x. Cboe is committed to a disciplined capital allocation strategy, prioritizing organic growth investments and shareholder returns. In Q2 2025, the company repurchased $35 million in shares, bringing year-to-date repurchases to $65 million, and returned $66 million to shareholders through a $0.63 dividend. As of June 30, 2025, Cboe had $614.5 million remaining under its share repurchase authorizations. Management explicitly favors share repurchases over further deleveraging, given its low fixed-rate debt profile. The anticipated exit from its investment in the 7Ridge Fund (which owns Trading Technologies) in Q4 2025 is expected to result in a gain, further bolstering its financial flexibility.

Competitive Positioning: A Differentiated Approach

Cboe operates in a highly competitive landscape, facing direct rivals such as Intercontinental Exchange , Nasdaq, Inc. , and CME Group Inc. , as well as indirect competitors like dark pools and OTC platforms. Cboe's competitive strategy is built on its leadership in options and derivatives, leveraging its proprietary technology, strong network effects, and regulatory licenses.

Compared to ICE , Cboe's specialized derivatives tools, such as its VIX and SPX options, offer a unique value proposition that caters to volatility-focused traders. Cboe's technology for options trading is designed for notably faster processing, potentially providing superior efficiency in certain derivatives execution environments. While ICE (ICE) benefits from a broader global footprint and a larger equities platform, Cboe's agility in niche derivatives markets allows it to lead in innovation speed, countering ICE's scale.

Against Nasdaq , Cboe's specialized derivatives expertise, particularly in products like VIX futures, differentiates its market positioning from Nasdaq's technology-driven equities and listings focus. Cboe's streamlined technology for derivatives execution can offer materially greater efficiency, potentially leading to faster innovation cycles in this specific domain. However, Nasdaq (NDAQ) holds a stronger position in equities listings and broader technology services.

In comparison to CME Group (CME), Cboe's strengths lie in its index options and global FX segments, offering a distinct value proposition from CME's dominance in commodity and interest rate futures. Cboe's technological focus on volatility products can deliver notably better performance in these areas. While CME's larger product suite may generate stronger overall cash flow, Cboe's innovation in equity derivatives provides a competitive edge.

Cboe's "Cboe Titanium" technology platform is a key competitive moat. Its ability to improve market share in every new market it enters post-migration highlights its effectiveness. This technological advantage, combined with Cboe's network effects that foster customer loyalty and its regulatory licenses enabling exclusive product offerings, creates significant barriers to entry for new players. While Cboe's smaller scale compared to some rivals could lead to lower margins in certain areas, its focused strategy and technological efficiency allow it to compete effectively and maintain strong profitability in its core segments.

Outlook and Strategic Imperatives

Cboe's outlook for 2025 reflects continued confidence in its strategic direction and market opportunities. The company has increased its full-year total organic net revenue growth guidance to high single digits, building on strong first-half results. The Data Vantage business's organic net revenue growth is reaffirmed at mid- to high single digits, driven by new sales and international demand.

Management's expense guidance has been refined, with full-year adjusted operating expenses now projected between $832 million and $847 million. This reduction accounts for year-to-date operating discipline and the strategic wind-down of the Japanese equities business, which is expected to yield $10 million to $12 million in normalized annual savings. This flexibility allows for continued investment in key growth areas, including incremental sales hires in the Asia Pacific region, the Securities Financing Transaction (SFT) offering in Europe, and marketing efforts to enhance investor education for index options. Capital expenditures are reaffirmed at $75 million to $85 million, reflecting ongoing investments in the business.

Under the leadership of new CEO Craig Donohue, Cboe is committed to a rigorous financial discipline in capital allocation, focusing on optimizing growth and profitability in its core businesses. The strategic decision to exit the Japanese equities business underscores this commitment to redeploying resources to areas with the highest potential returns.

Conclusion

Cboe Global Markets stands as a resilient and strategically focused exchange operator, poised for continued growth. Its core investment thesis is firmly rooted in its market leadership in derivatives, particularly its proprietary index options and volatility products, complemented by the expanding and recurring revenue streams from its Data Vantage business. The Cboe Titanium technology platform serves as a powerful competitive moat, enabling operational excellence, driving innovation, and facilitating global expansion.

While the company faces ongoing competitive pressures and regulatory challenges, its disciplined approach to capital allocation, coupled with a clear strategic framework aligned with secular market trends like increasing retail participation and globalization, positions it favorably. Cboe's ability to consistently innovate its product suite and leverage its technological advantages will be critical in sustaining its growth trajectory and enhancing shareholder value in the dynamic global financial markets.