Cboe Global Markets Earnings Call: Records and Refocus

Cboe Global Markets ((CBOE)) has held its Q4 earnings call. Read on for the main highlights of the call.

Cboe Global Markets Delivers Record Results While Tightening Strategic Focus

Cboe Global Markets’ latest earnings call struck a clearly upbeat tone, underscoring record revenue, earnings, and margins alongside broad-based strength across derivatives, cash and spot markets, and the DataVantage data business. Management highlighted a solid balance sheet and active capital returns to shareholders, while also acknowledging a few pressure points: the planned wind-down of its European derivatives platform, ongoing divestitures in Canada and Australia, and signs that revenue growth will moderate in 2026. Overall, leadership emphasized that operational outperformance and a sharper strategic focus more than offset the challenges.

Record Quarterly and Full-Year Financial Performance

Cboe reported its strongest financial results ever, with fourth-quarter net revenue reaching $671 million, up 28% year over year, and adjusted diluted EPS climbing 46% to $3.06—both quarterly records. For the full year, net revenue rose 17% to $2.4 billion, while adjusted diluted EPS increased 24% to $10.67. Management framed these results as evidence that Cboe’s diversified business model is working, with multiple segments contributing to growth rather than relying on a single product or market cycle.

Margin Expansion and Cost Discipline Support Profitability

Profitability improved sharply as Cboe leveraged higher volumes and maintained cost control. Adjusted operating EBITDA in the fourth quarter increased 40% year over year to $465 million, and the adjusted operating EBITDA margin expanded by 6.1 percentage points to an impressive 69.2%. Adjusted operating expenses rose just 8% to $221 million, indicating that revenue growth significantly outpaced cost growth. Management portrayed this as a sign that the company can invest in new initiatives while still protecting margins.

Derivatives Franchise Drives Outperformance

The derivatives segment remained the engine of Cboe’s growth, with derivatives net revenue up 38% year over year in the fourth quarter. Multi-list options net transaction and clearing fees surged 41%, while index options fees rose 40%. Cboe’s flagship SPX options continued to power results, with average daily volume up 39% to a record 4.3 million contracts. Zero-days-to-expiry (0DTE) SPX options were a standout, with average daily volume jumping 66% and now representing more than 61% of SPX trading, up from 51% a year earlier. Management highlighted this as a structural shift in how investors trade index volatility and short-term risk.

VIX and Small-Cap Trading Gain Momentum

Beyond SPX, Cboe saw renewed strength in volatility and small-cap products. VIX futures and options volume rose 15% in the quarter, with VIX options averaging a record 862,000 contracts per day in 2025, signaling heightened investor interest in volatility hedging and trading strategies. Russell 2000 index options volume climbed 20% in the fourth quarter to its highest level in nearly a decade, pointing to robust demand for small-cap exposure and risk management tools.

Broad-Based Growth in Cash, Spot, and FX Markets

Cboe’s cash and spot markets also delivered strong results, helping diversify away from derivatives cyclicality. Cash and spot net revenue rose 27% year over year in the fourth quarter. In the Europe & APAC segment, net revenue grew 24%, powered by a 33% increase in net transaction and clearing fees in Europe. North American equities net revenue increased 17%, with net and clearing fees up 18%. Global FX net revenue advanced 22% year over year, underscoring Cboe’s growing role in electronic foreign exchange trading and its success in capturing flow across geographies.

DataVantage Growth Underpinned by New Sales and Products

Cboe’s data business, branded as DataVantage, continued to grow at a steady pace, if slower than some trading segments. Fourth-quarter DataVantage net revenue increased 9% year over year, and full-year revenue grew 10%. Importantly, management noted that roughly 90% of the quarter’s growth came from new units and new sales rather than price increases, suggesting demand is being driven by new customers and use cases. The company rolled out new offerings, including dedicated cores, enhanced time stamping, one-minute open-close data, and an options-like dataset that is seeing particular interest in Asia-Pacific. While growth lags derivatives and cash/spot, leadership framed DataVantage as a durable, recurring revenue stream with room for further expansion.

Robust Capital Returns and a Strong Balance Sheet

Cboe underscored its shareholder-friendly capital allocation, supported by a solid balance sheet. In the fourth quarter, the company returned $76 million to investors via a $0.72 per share dividend. For 2025, total dividends reached $284 million, and combined dividends and share repurchases totaled $350 million. Cboe ended the period with an adjusted cash position of $2.2 billion and a modest leverage ratio of 0.9x, giving management ample flexibility to fund growth initiatives, pursue opportunistic buybacks, and maintain its dividend track record.

Strategic Refocus and Leadership Enhancements

Management described a deliberate repositioning toward core strengths and higher-return opportunities. Cboe is actively reallocating resources from non-core operations, has initiated sales processes for Cboe Australia and Cboe Canada, and has ceased certain lower-priority activities. To support this refocus, the company announced senior hires, including Heidi Fisher and Scott Johnston, to reinforce leadership in key areas. Executives framed these moves as part of a broader effort to streamline the portfolio, reduce complexity, and concentrate capital and management attention on the businesses with the greatest growth and profitability potential.

Product Innovation and Global Market Expansion

Innovation remains a central theme in Cboe’s strategy. The company plans to launch event and prediction market products, including binary-style securities-based contracts targeted for a second-quarter rollout, which could open new avenues for trading around key events. Extended global trading hours (GTH) continue to gain traction, with GTH volume up 34% year over year, supporting demand from international and around-the-clock traders. Cboe is also adding more brokers to its platforms, including Robinhood and several APAC brokers, which is helping drive increased international flow into its core derivatives complex.

FedEx Wind-Down Marks a Strategic Setback in Europe

Not all initiatives are moving forward. Cboe disclosed that it will wind down its Cboe Europe derivatives exchange (FedEx) in January 2026 after concluding that it was unlikely to achieve the company’s revenue and profitability targets in the region. Management characterized the closure as a disappointing outcome but emphasized that the financial impact is largely contained within 2026 and already reflected in guidance. The decision underscores Cboe’s willingness to exit underperforming ventures to redeploy resources toward more promising areas.

Divestitures Introduce Revenue Headwinds and Uncertainty

The planned divestitures of Cboe Canada and Cboe Australia remain in progress and add a degree of uncertainty around timing and eventual financial impact. Management has previously indicated that its strategic realignment—including these potential asset sales—could create roughly a 3% net revenue headwind, and some of those effects are still to be realized or clarified. While these markets are being deemphasized, the moves are positioned as part of a broader effort to streamline operations and focus on higher-margin, higher-growth segments.

Competitive and Structural Pressures in Multi-List Options

Despite strong recent performance, Cboe acknowledged mounting competitive and structural challenges in the multi-list options business. The market has become increasingly crowded, approaching around 20 exchanges, which intensifies competition for order flow. Industry discussions around changes to regulatory fees and fee alignment—such as ORF and other cost structures—could alter the economics of trading and potentially compress per-contract revenue capture. Management did not signal an immediate impact but recognized that the long-term landscape in multi-list options is evolving and may pressure economics over time.

DataVantage Growth Trailing High-Flying Trading Segments

While DataVantage is expanding, its 9% year-over-year growth in the fourth quarter trails the much faster growth seen in derivatives and cash/spot businesses. This raises investor questions about whether the data segment can accelerate meaningfully in the near term, despite a steady flow of new products and international demand. Management reiterated confidence that the business offers resilient, recurring revenue and highlighted its high-margin profile, but acknowledged that the current growth rate is more moderate than some of Cboe’s trading franchises.

Expense Growth and Transition-Related Headwinds

Cboe’s cost base is rising, though management portrays this as controlled and largely tied to success and investment. Adjusted operating expenses increased 8% year over year in the quarter, driven primarily by higher compensation related to incentive accruals. For 2026, the company is guiding to expense growth of 3.3%–5.1%, incorporating modest inflation, leadership transition costs, the financial impact of the FedEx wind-down, and spending on new initiatives such as prediction markets and continued product innovation. Investors will be watching closely to ensure these costs translate into sustainable revenue and profit growth.

Moderating 2026 Outlook and Strategic Realignment Effects

Cboe’s forward guidance points to a slower but still positive growth trajectory. For 2026, the company expects mid-single-digit total organic net revenue growth and mid- to high-single-digit DataVantage organic growth—noticeably lower than the 17% net revenue growth delivered in 2025. Adjusted operating expenses are forecast between $864 million and $879 million, implying 3.3%–5.1% growth, while capital expenditures are projected at $73 million–$83 million and depreciation and amortization at $56 million–$60 million. The adjusted effective tax rate is expected to range from 27.5% to 29.5%, with the midpoint roughly 80 basis points below 2025, and net interest income should contribute a modest $3 million–$4 million. Guidance also factors in roughly a 3% net revenue headwind from strategic realignment, including the expected impacts of the Canada and Australia businesses and the FedEx wind-down, though Canada and Australia remain in the current forecast. Cboe enters 2026 with $2.2 billion in adjusted cash and a 0.9x leverage ratio, giving it continued flexibility to fund new products, support its trading ecosystem, and maintain opportunistic share repurchases and dividends.

Cboe’s latest earnings call painted the picture of an exchange operator firing on multiple cylinders—delivering record results, expanding margins, and deepening its franchise in derivatives, equities, FX, and data. While the looming closure of FedEx, planned divestitures, and a deceleration in top-line growth temper the outlook, management’s emphasis on strategic focus, disciplined investment, and ongoing capital returns offers a reassuring narrative for shareholders. For investors tracking exchange stocks and market infrastructure plays, Cboe’s combination of strong current performance and a more streamlined, higher-quality portfolio will be central themes to watch in the year ahead.