Executive Summary / Key Takeaways

• Derivatives Leadership and Innovation: Cboe Global Markets is solidifying its position as a global derivatives leader, driven by record volumes in proprietary index options, particularly 0DTE products, and strategic innovation in new offerings like Bitcoin index options and the upcoming Magnificent 10 Index futures and options.
• Strategic Realignment for Focused Growth: A recent comprehensive review led to the divestiture of non-core assets, including the Japanese, Canadian, and Australian equities businesses, and a reduction in other smaller ventures. This realignment aims to reallocate capital and human resources to high-growth areas, enhancing overall profitability and strategic focus.
• Robust Financial Performance: Cboe delivered record Q3 2025 net revenue of $605.5 million, a 14% year-over-year increase, and record adjusted diluted EPS of $2.67, up 20%. This strong performance is supported by double-digit growth across all revenue categories and disciplined expense management.
• Technological Foundation and Global Reach: The Cboe Titanium platform provides a unified, scalable global technology infrastructure, enabling seamless operations across 27 markets and supporting product innovation and global data distribution, which is crucial for attracting international clients.
• Positive Outlook with Emerging Opportunities: The company projects continued strong organic net revenue growth for 2025, fueled by secular trends in options adoption, retail participation, and international demand. Cboe is actively pursuing emerging growth opportunities in prediction markets and regulated crypto derivatives, leveraging its core strengths.

Cboe's Enduring Foundation and Strategic Evolution

Cboe Global Markets, founded in 1973 as the world's first U.S. options exchange, has consistently shaped the financial landscape through innovation and strategic expansion. Its journey from a pioneering options venue to a diversified global exchange network underscores a foundational commitment to market evolution. Key acquisitions, such as Bats Global Markets in 2017 and BIDS Trading in 2020, significantly broadened Cboe's global footprint and asset class offerings. This historical trajectory provides the bedrock for Cboe's current strategy: optimizing growth in its core derivatives and data businesses while strategically pivoting towards emerging opportunities.

The company's overarching strategy is to leverage its established market leadership and technological prowess to capture secular growth trends in global financial markets. These trends include the increasing adoption of options trading, the rising influence of retail investors, and the globalization of capital flows. Cboe aims to deepen its engagement with these trends through continuous product innovation, expanded market access, and targeted educational initiatives.

Competitive Landscape and Market Positioning

Cboe operates within a highly competitive global exchange industry, facing direct competition from major players like Intercontinental Exchange (ICE), Nasdaq, Inc. (NDAQ), and CME Group Inc. (CME). Each competitor brings distinct strengths to the market. ICE, with its broad portfolio including the NYSE and extensive commodities trading, offers significant diversification and scale. NDAQ excels in equity listings and technology solutions, emphasizing fintech and data analytics. CME Group dominates the futures and commodities derivatives space, known for its robust risk management products.

Cboe's competitive positioning is qualitatively strong, particularly in options and derivatives, due to its specialized focus and international presence. While ICE and NDAQ may lead in overall diversification and broader revenue generation, Cboe's agility and innovation in derivatives provide a distinct edge. For instance, Cboe commands over 24% of the multi-list options market share and is the #1 overall industry market share leader with just under 31%. This leadership is supported by its established relationships with index providers like S&P Dow Jones and MSCI, enabling unique, tailored product listings.

In the multi-list options space, which is expected to see up to 20 exchanges by early 2026, Cboe actively pursues market structure and pricing improvements, including liquidity incentives and competitive rebate programs, to balance market share and revenue capture. Cboe's distinct advantages in product innovation, contract design, and market structure, particularly for its 0DTE options, differentiate it from competitors. The company's decades of experience and established community of market participants also provide a significant competitive moat in emerging areas like prediction markets, where the premium traded in similar products is currently less than $50 million year-to-date, compared to $18 billion daily in SPX options.

Cboe's globalization strategy focuses on importing flow from international markets into its U.S. and European platforms, often initiated by strong demand for its market data. This approach leverages its global network without requiring a local exchange presence in every region, a key differentiator from competitors that might pursue broader, more capital-intensive local market operations.

Technological Differentiation and Innovation: The Cboe Titanium Advantage

At the heart of Cboe's competitive strategy is its proprietary technology platform, Cboe Titanium. This platform, rebranded in 2024, is a unified and scalable global technology infrastructure that powers all of Cboe's equities, options, and futures markets across North America, Europe, and Asia Pacific. The completion of the final equities exchange migration to Cboe Titanium in Q1 2025 marked a significant operational milestone.

The tangible benefits of Cboe Titanium are evident in its performance and impact on market share. The platform seamlessly processed over a trillion orders, quotes, and market data events across Cboe's 27 global markets in April 2025, demonstrating remarkable resilience and reliability. Management has noted that market share has improved in every new market following migration to Cboe Titanium, indicating its superior performance and operational efficiency. This technological backbone provides a critical competitive moat, enabling faster order processing, enhanced market data access, and a smoother user experience in high-frequency trading environments.

Cboe's commitment to innovation extends to significant R&D initiatives and new technological developments:

• Artificial Intelligence (AI): Cboe has made substantial investments in AI, primarily as a productivity multiplier across all internal functions, including sales, legal, HR, finance, infrastructure, software engineering, security, and business intelligence. An AI center of excellence, established in mid-2024, involves 900 active associates working on AI initiatives. The company is now shifting its focus to commercializing products based on AI insights, leveraging its unique data sets from proprietary products.
• New Index Products: Cboe plans to launch futures and options on the new Cboe Magnificent 10 Index (MGTEN Index), pending regulatory approval. This index will track actively traded U.S.-listed tech and growth-oriented stocks, offering investors a simpler way to gain exposure to the AI and tech theme and a more precise way to manage risk using cash-settled European-style options. These products are planned to allow for nearly 24x5 and shorter-dated options trading.
• Global Derivatives Expansion: Cboe Europe Derivatives (CEDX) plans to introduce Flexible EXchange® options (FLEX options) in Europe in Q1 2026. This initiative addresses the rising global demand for defined-outcome ETFs and bespoke investment strategies, building on Cboe's experience as a pioneer of FLEX options in the U.S..
• Crypto Derivatives: Cboe is preparing to launch Bitcoin and Ether Continuous Futures on CFE, beginning November 10, 2025, pending regulatory review. These long-dated, cash-settled futures are designed to provide access to perpetual-style futures in a U.S.-regulated, intermediated environment, marking the next phase of Cboe's expanding product innovation roadmap in the rapidly growing crypto derivatives market.
• Expanded Trading Hours: In response to surging equity option volumes and the industry's push towards 24x5 trading, Cboe has filed with the SEC to add additional trading hours for U.S. equity options. This includes a morning session (7:30 to 9:25 Eastern Time) and a post-close session (4:00 to 4:15), initially for approximately 25 high market cap, liquid names. This move aims to acclimate investors to off-hours trading and is seen as a meaningful step towards 24x5 trading.

For investors, these technological advancements and product innovations are critical. Cboe Titanium enhances the company's operational efficiency and market share, directly contributing to financial performance. The strategic focus on AI, new index products, and crypto derivatives expands Cboe's addressable market and diversifies revenue streams, strengthening its competitive moat. The ability to quickly develop and deploy new products, coupled with expanded trading hours, reinforces Cboe's leadership in derivatives and its capacity to adapt to evolving investor demands and market structures.

Financial Performance and Operational Strength

Cboe Global Markets demonstrated robust financial performance in Q3 2025, underscoring the effectiveness of its strategic initiatives. The company reported record quarterly net revenue of $605.5 million, a significant 14% increase year-over-year. Adjusted diluted earnings per share (EPS) also reached a record $2.67, up 20% from the prior year. This strong growth was broad-based, with all three revenue categories—Derivatives Markets, Cash and Spot Markets, and Data Vantage—posting double-digit net revenue growth.

The Derivatives Markets segment was a primary driver, with net revenue increasing 15% year-over-year in Q3 2025. This was fueled by a 14% rise in multi-list options net transaction and clearing fees and a strong 19% increase in index options net transaction and clearing fees. Proprietary SPX options, in particular, set new records, with SPX 0DTE average daily volume (ADV) surging 62% year-over-year and overall SPX ADV increasing 26% to a record 3.9 million contracts. 0DTE options now constitute over 61% of SPX volumes, up from 48% a year ago, highlighting a significant shift in trading behavior.

The Cash and Spot Markets segment also contributed meaningfully, with net revenue up 14% in Q3 2025. This was largely due to the strong performance of the European cash equities business, where the Europe and Asia Pacific segment achieved an impressive 24% year-over-year net revenue growth, its fifth consecutive quarter as the strongest Cboe segment. Global FX demonstrated consistent durability, growing net revenue 13% year-over-year in Q3 2025 and maintaining a trend of quarterly year-over-year net revenue growth in 17 of the last 18 quarters.

Cboe's Data Vantage business continued its strong trajectory, with net revenue increasing 12% year-over-year in Q3 2025. Notably, nearly 90% of this growth was driven by new unit and new sales, rather than pricing adjustments, indicating robust demand for Cboe's data and access products, including newer offerings like Dedicated Cores and Timestamping services.

Expense management remained disciplined, with adjusted operating expenses increasing only 3% year-over-year in Q3 2025, primarily due to higher compensation and benefits from increased bonus accruals tied to strong revenue trends. This efficiency contributed to a 21% growth in adjusted operating EBITDA and a 3.8 percentage point expansion in adjusted operating EBITDA margin to 67.5%.

Liquidity and Capital Allocation

Cboe maintains a healthy financial position, with an adjusted cash position of $1.5 billion and a leverage ratio of 1.0x as of September 30, 2025. This strong balance sheet was recently recognized by Moody's, which upgraded Cboe's credit rating by one notch to A2. The company's liquidity is further bolstered by a $400 million Revolving Credit Facility (with a potential increase to $600 million) and a $1.20 billion Cboe Clear Europe Credit Facility (potentially increasing to $1.70 billion), neither of which had outstanding borrowings as of September 30, 2025.

Cboe is committed to returning capital to shareholders, as evidenced by the $76 million distributed in Q3 2025 through a $0.72 dividend per share, representing a 14% year-over-year increase. The company also had $614.5 million remaining under its share repurchase authorizations as of September 30, 2025. Management emphasizes optimizing capital deployment to balance margin efficiency with investments in emerging growth trends, ensuring a disciplined approach to maximizing shareholder returns.

Outlook and Guidance

Cboe's outlook for 2025 reflects confidence in its strategic direction and market opportunities. The company has increased its full-year 2025 total organic net revenue growth guidance to "low double digit to mid-teens" from "high single digit". Data Vantage organic net revenue growth guidance has also been raised to "high single digit to low double digit" from "mid to high single digit," driven by stronger-than-expected year-to-date performance.

Adjusted operating expense guidance for 2025 has been lowered to $827 million to $842 million, reflecting continued operating discipline and reduced depreciation and amortization, partially offset by higher incentive compensation. CapEx guidance was also lowered to $73 million to $83 million, and depreciation and amortization to $50 million to $54 million. The effective tax rate on adjusted earnings is expected to be between 28.5% and 30.5%.

A significant aspect of the forward-looking strategy is the recent strategic realignment. The decision to initiate a sales process for the Canadian and Australian equities businesses, wind down the Japanese equities business, and reduce other smaller ventures is expected to be accretive to earnings. Management anticipates an annualized run rate impact of roughly a 3% reduction in net revenue and an 8% to 10% reduction in adjusted operating expenses, using 2025 guided ranges as a baseline. This pivot aims to focus human and financial capital on core derivatives, U.S. and European equities, FX, and Data Vantage, as well as emerging growth areas like event and prediction markets, and digital and crypto products.

Risks and Challenges

Despite a strong outlook, Cboe faces several pertinent risks and challenges. The CAT Funding Model Order Litigation and related legal proceedings pose a risk of additional significant costs and uncertainty regarding the collection of promissory notes related to the Consolidated Audit Trail. The recent D.C. Circuit ruling upholding the Equity Access Fees Cap Challenge, which reduces the cap from $0.30 to $0.10 per 100 shares, is expected to reduce transaction fee revenue and limit Cboe's ability to incentivize liquidity and compete in U.S. equity exchanges.

Personnel risk is also a factor, with substantial changes in executive officers over the past year. The company acknowledges that failure to attract or retain skilled management and employees, particularly in technology, could harm its business and hinder strategic execution. Competition for talent remains substantial. Furthermore, Cboe's debt obligations and the potential for cross-acceleration or cross-default provisions within its credit facilities could limit liquidity and financing activities. The Cboe Clear Europe Credit Facility is set to terminate in June 2026, with no assurance of a replacement on commercially reasonable terms.

Conclusion

Cboe Global Markets stands at a pivotal juncture, leveraging its rich history as a derivatives pioneer and its robust technological foundation to drive future growth. The strategic realignment, marked by the divestiture of non-core assets and a sharpened focus on high-potential areas, positions the company to optimize its core businesses and aggressively pursue emerging opportunities in crypto and prediction markets. Record financial performance in Q3 2025, characterized by strong revenue growth and disciplined expense management, underscores the efficacy of this strategy.

With its Cboe Titanium platform providing a scalable and resilient technological backbone, and a clear roadmap for product innovation and global expansion, Cboe is well-equipped to capitalize on secular trends in options adoption, retail participation, and international demand. While regulatory challenges and competitive pressures persist, Cboe's commitment to innovation, strategic capital allocation, and a strengthened leadership team provides a compelling investment thesis for long-term value creation in the dynamic global financial markets.