Cboe Global Markets (BATS:CBOE) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Cboe Global Markets reported strong Q3 results with net revenue up 18% year-over-year to $712 million and adjusted diluted EPS up 36% to $3.63.
The company signed a 25-year extension of its exclusive licensing agreement with S&P Dow Jones Indices and received approvals for new securities-based KPI contracts.
Derivatives net revenue grew 22% year-over-year, driven by strong performance in index options with average daily volume up 24%.
Cboe’s DataVantage saw a 13% increase in net revenue, driven by new subscriptions and strong international demand.
The company plans to continue investing in organic growth opportunities and has increased its share repurchase authorization by $550 million.
Cboe’s guidance for 2026 includes high-teens organic net revenue growth and adjusted operating expenses of $830 million to $845 million.
Cboe is expanding its clearing capabilities with CCUS to support new products and asset classes, and continues to focus on options growth and international expansion.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to Cboe Global Markets third quarter earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Ken Hill, Head of Investor Relations. Ken, please go ahead.
Ken Hill (Head of Investor Relations)
Good morning and thank you for joining us for our third quarter earnings conference call. On the call today, Craig Donahue, our CEO, will discuss our performance for the quarter and provide an update to our strategic outlook. Jill Griebeno, our Chief Financial Officer, will provide an overview of our financial results for the quarter as well as discuss updates to our 2026 financial guidance. Following their comments, we’ll open the call to Q&A. Also joining us for Q&A will be Prashant Bhatia, our Head of Enterprise Strategy and Corporate development, Heidi Fisher, our Global Head of Cash and Spot markets, Rob Hawking, our Global Head of Derivatives, and Scott Johnston, our Chief Operating Officer.
I would like to point out that this presentation will include the use of slides. We’ll 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 certain forward-looking statements which represent our current judgment on what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements.
We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. During the call this morning, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. Now I’d like to turn the call over to Craig.
Craig Donahue (Chief Executive Officer)
Good morning and thank you for joining us to review our third quarter results. Building on our year-to-date momentum, Cboe delivered another quarter of strong net revenue and adjusted earnings growth. We also took two significant steps to strengthen the foundation of our company. At the end of September we signed a 25-year extension of our exclusive licensing agreement with S&P Dow Jones Indices. It is our longest agreement with S&P to date and extends our collaboration through 2051.
Then in October we received approvals to offer securities-based KPI contracts on 23 companies, creating a new avenue for innovation in financial markets. Together, these milestones provide a long runway to drive growth for years to come. I’ll share some high level comments before handing the call over to Jill for a financial update. During the third quarter, Cboe grew net revenue 18% year-over-year to 712 million and adjusted diluted EPS increased a robust 36% to $3.63. The strong results continued to be broad-based, driven by double digit net Revenue growth in every major category and year-over-year net revenue growth in four of our five company segments. Beginning with our derivatives business, we delivered another very strong quarter with net revenue up 22% year over year to 402 million. Index options led the way with third-quarter average daily volume rising 24% year over year to 6.1 million contracts. Multi-list activity was also solid, with volumes growing 10% year over year in the third quarter.
Within the index complex, we saw ADV records across several products and services, including 0DTE SPX options, where 0DTE activity made up a record 65% of overall SPX activity. Mini-SPX options averaged 251,000 contracts per day, and Global Trading Hours were nearly 250,000 contracts traded per day in the third quarter. Within options, stronger retail engagement was a consistent theme across our products last quarter. In SPX, 0DTE retail volume jumped 46% year over year, outpacing institutional growth of 20%. Retail made up an estimated 58% of record SPX 0DTE volume, up from 53% a year ago. In XSP, total volume more than doubled as compared to the third quarter of 2025, driven largely by retail following the June repeal of the Pattern Day Trader rule. And it’s not just U.S. retail; GTH volume jumped over 130%, led by the Asian trading session, which now makes up over 30% of GTH volume, up from less than 20% a year ago. That success is a culmination of a long process of onboarding local brokers in the APAC region and extensive education and marketing efforts. We’re excited to build on that momentum with our recent launch of extended early trading hours for single-stock options announced earlier this month, which will enable more international customers to trade U.S. options in their local hours.
While SPX growth was very strong last quarter, VIX options volume was more muted, with ADV up just 3% year over year. That’s a result of a very stable volatility environment, with the VIX staying in a tight 14 to 20 range and giving investors few opportunities to monetize their views. Through the early part of the fourth quarter, though, we’ve seen the environment change markedly. Volatility has picked up heading into year end amid rising bond yields and growing geopolitical uncertainty, leading to more investors turning to VIX options to hedge.
VIX call volume hit its highest daily level in over two years earlier in October, surpassing any day during last year’s Labor Day sell-off when the VIX hit a high of over 50. The rapidly changing market backdrop is a good reminder of why options remain the tool of choice for most investors. Linear products like single-stock futures or perpetual futures may provide leverage and directional exposure, but losses are unbounded and positions may get liquidated quickly if market conditions turn. Options work differently. Investors are able to define their max loss up front while keeping full exposure to the upside. When volatility rises and gap risk increases, that defined risk matters most.
It’s why the vast majority of zero DTE trading happens in capped-risk structures. Options are also more than a directional bet. Investors use them for income, hedging, and volatility management, making them among the most versatile instruments available. We see them as a different type of product from linear derivatives, not a substitute, and it’s a big reason SPX options volume has kept growing across market cycles and volatility regimes. A landmark achievement during the quarter was the signing of a 25-year extension of our exclusive licensing agreement with S&P Dow Jones Indices, which continues our collaboration through 2051. Cementing this relationship was the longest agreement we have had in our over four-decade history with S&P. It gives customers and shareholders the certainty and continuity they expect and a long runway to invest in the franchise. Few relationships are as woven into Cboe Global Markets’ foundation as this one.
It began in 1983 with the launch of SPX options, an innovation that has become the global standard for how investors gain and manage equity market exposure. Under the extended agreement, we will continue to have the exclusive rights to offer trading in SPX options, and our exclusivity continues across the S&P options products we offer today, including Mini-SPX, VIX, and S&P binary options. We anticipate collaborating with S&P Dow Jones to pursue innovation beyond traditional index derivatives, including new products like exchange-traded, centrally cleared, tokenized options contracts, where our exclusivity carries over.
As Jill will cover, from a financial perspective, there is no change to the 2026 royalty fee terms, and we anticipate the updated terms will have a de minimis impact on 2027 net revenue growth. As we evolve and expand our derivatives business, we’re excited to bring new products to market in the prediction market space. In June, we launched our first Cboe Predicts product: binary options on the Mini S&P 500 Index. We have seen some initial interest, and we anticipate adoption of this product and future products to accelerate as our broker-dealer partners roll out dedicated user interfaces over the coming months. We expect these interfaces to offer simple, illustrative graphics and point-and-click trading, making it even easier for new derivatives customers to express their views on market outcomes.
Beyond binaries, we have received SEC approval to expand Cboe Predicts with our offering of company KPI event contracts. Additionally, the SEC has approved our filing to temporarily clear these innovative contracts through Cboe Clear U.S. Both applications were filed in late June, and we anticipate a November product launch. That timeline reflects significant progress across concept, regulation, clearing, and distribution. This work is a direct result of investing in the right talent and capabilities to deliver solutions for investors. What stands out is how quickly we moved while staying true to our principles on market integrity. We built these products as securities, which provide retail and institutional investors with the transparency and investor protections they have come to expect from Cboe Global Markets.
Just as important as how the contracts trade is how we bring them to market. In September, we announced Robinhood as our launch partner and have seen strong interest and support from Interactive Brokers and Schwab. By working across our distribution partners and our intermediated network, we reach investors where they trade with the protections they know. Distribution breadth is an advantage that a closed, vertically integrated system cannot match, and we believe it is why our KPI contracts are well positioned to scale.
This is the first step in our broader event contract strategy. As we look to build on this foundation, we will analyze how KPI contracts scale alongside traditional equity options and futures products and collaborate with market participants to develop new offerings. Over time, and supported by our enhanced clearing capabilities, we see an opportunity to expand into other asset classes, bundling new products with existing products and capabilities across trading and data, resulting in an ecosystem that deepens with each addition.
In order for Cboe Global Markets’ event contracts to scale, and for prediction markets to thrive over the long term, they need to rest on the sound legal framework Congress has already established—one that is built on clarity, not compromise. Event contracts based on securities indices or on corporate performance metrics that issuers disclose as material to their actual reported financial or operating performance, such as earnings and revenue, meet the definition of a security and squarely fall within SEC jurisdiction.
What a platform chooses to call a product does not change that. Allowing these products to trade outside the securities laws risks creating a shadow securities market—one where investors take on securities risk without the registration, disclosure, and market integrity protections the law requires. We built our products as securities so investors can benefit from the safeguards against manipulation and insider trading that no alternative framework can replicate.
We also believe that the filings and self-certifications behind event contracts should be public, without large portions that are unavailable for public review, so that market participants can assess the risk. The success of prediction markets will depend on both innovation and investor confidence. Clear rules, consistent oversight, and strong market protections have helped make U.S. capital markets the envy of the world. Applying those same principles to prediction markets will strengthen competition, foster responsible innovation, and build lasting trust.
Moving to Cash and Spot markets, net revenue grew 12% year over year to 131 million, with growth across our three segments. Global FX delivered another very strong quarter with net revenue up 23% to 28 million, as average daily notional value increased 22%. North American equities net revenue increased 10% to 114 million, with net transaction and clearing fees up 16% on improved net capture rates for our U.S. on-exchange activity. In Europe and Asia Pacific, net revenue increased 6% to 73 million, driven by growth in net transaction and clearing fees and partially offset by softer market data and access fees.
The segment includes Cboe Australia through the closing of a sale on July 31st. As we noted last quarter, cash equities remain one of the most dynamic asset classes in the world today. We remain ready to extend cash equities trading to 23×5 this December, pending industry readiness, and looking further out, we continue to explore tokenized solutions on the path to 24/7. Turning now to DataVantage, net revenue increased 13% year over year. New subscription and unit sales continued to grow, driven by higher market volumes and strong international demand. We continue to pursue expansion of new data sets, analytics, and index products within our DataVantage portfolio.
Before I turn the call over to Jill, I’d like to welcome Kathryn Grover, who will join Cboe Global Markets as Executive Vice President and Chief Human Resources Officer on November 16th. Kathy joins us from BMC, where she spent more than 29 years in HR, leadership, and business roles, most recently as Executive Vice President, Human Resources. Kathy’s experience will help us attract, develop, and retain the exceptional talent our ambitions require.
I would also like to thank Jill for her leadership as Interim Chief Human Resources Officer throughout this search.
Jill Griebenow (Chief Financial Officer)
Thanks, Craig. Cboe Global Markets posted another quarter of strong results, reflecting positive execution across our core businesses. Diluted EPS reached a record $4.08, helped by a gain from the sale of our Cboe Australia business, and on an adjusted basis, diluted EPS rose 36% year over year to $3.63. Before turning to the segment results, I’ll walk through a few high-level takeaways from the quarter. Net revenue increased 18% versus the third quarter of 2025, finishing at $712 million. Double-digit growth continued across all categories, led by our derivatives business. Specifically, derivatives net revenue increased 22% as volume growth across our proprietary index options and multi-listed products drove the category’s performance. Data Vantage net revenue was up 13% on a year-over-year basis, driven by continued growth in new unit sales, and cash and spot markets net revenue rose 12%.
Adjusted operating expenses came in at $204 million, down 3% year over year, while adjusted operating EBITDA grew 28% to $522 million. Adjusted operating EBITDA margin expanded 5.8 percentage points to 73.3% in the third quarter, reflecting strong revenue performance and expense discipline. 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. Options growth remained robust, with net revenue up 23% year over year, driven by a 24% increase in net transaction and clearing fees. Total options ADV climbed 14%, including a 24% increase in index options volume and a 10% increase in multi-listed options volume.
The revenue per contract for our options business rose 9% year over year, a result of continued mix shift towards index options coupled with a 3% increase in the index options rate per contract. North American equities net revenue increased 10% versus the third quarter of 2025, led by a 16% increase in net transaction and clearing fees from higher on-exchange net capture. Europe and APAC net revenue improved 6% year over year, or 7% on a constant-currency basis, with net clearing fees up 31% as investments in Cboe Clear Europe continued to gain traction. Futures net revenue was down 5% from the third quarter of 2025 due to lower net transaction and clearing fees given lower VIX futures activity.
Lastly, turning to global FX, net revenue rose 23% year over year, driven by a 22% increase in average daily notional value. Moving to our Cboe Data Vantage business, net revenues increased by 13% compared to the third quarter of 2025. Access and capacity fees were up 16%, accounting for approximately 82% of the year-over-year growth, with the remainder coming from proprietary market data. New subscription and unit sales continued to drive growth on the back of healthy market activity and strong international demand.
On the expense side, total adjusted operating expenses came in at $204 million, down 3% year over year. The decline was driven by lower compensation and benefits, reflecting reduced salaries and wages following our strategic realignment, along with lower travel and promotional spend. Before discussing forward guidance, I’d like to briefly cover two notable items which impacted the quarter’s GAAP financials, both of which are excluded from our adjusted results. In September, we recorded a $14 million incremental reserve on our notes receivable from CAT LLC, the operator of the Consolidated Audit Trail, reflecting a change in our assessment of the probability that CAT LLC will recover certain historical costs separately. The sale of Cboe Australia to TMX Group closed on July 31, resulting in a net gain of $71.5 million in the third quarter.
The Cboe Australia gain is non-taxable, which lowered our GAAP effective tax rate to 22.8%, down 5.8 percentage points from 28.6% in the second quarter. On an adjusted basis, the effective tax rate was 27.6%, down 0.9 points sequentially and within our full year guidance range of 27.5% to 29.5%. Turning now to our 2026 guidance, like last quarter, we will continue to provide organic net revenue growth metrics that exclude the impact of the Cboe Australia sale, and we’ll also break out the absolute dollar impact for modeling purposes. Cboe Canada will remain part of our ongoing 2026 guidance until we have more clarity as to the exact timeline for closing. We now expect Cboe Global Markets total organic net revenue growth in 2026 to be in the high-teens, compared with last quarter’s mid- to high-teens guidance.
We estimate Cboe Australia contributed approximately $20 million in net revenue through July 31st of 2026. Factoring in the loss of future revenue, we still expect total net revenue growth to finish in the high-teens range for 2026. For Data Vantage, we now expect 2026 organic net revenue growth in the mid-teens range, up from last quarter’s low-teens guidance. We estimate Cboe Australia contributed approximately $17 million in 2026 net revenue. Factoring in the loss of future revenue from the sale, we expect total Data Vantage net revenue growth to be in the low- to mid-teens in 2026. As Craig mentioned in his remarks, the impact of the extension of the exclusive licensing agreement with S&P Dow Jones Indices will have no impact on 2026 net revenues, as the updated royalty terms will begin in 2027.
We anticipate that the increase in 2027 royalty fee terms will have a de minimis impact on 2027 net revenues when considered against expected organic and ecosystem-driven volume growth, pricing optimization opportunities, and continued business execution. I would note that the extended contract, as structured, positions Cboe Global Markets for long-term growth with future royalty fee adjustments smaller than the 2027 reset. Turning to expenses, we have revised our adjusted operating expense guidance to $830 million to $845 million, primarily reflecting lower compensation and benefits expenses. As mentioned last quarter, our expense guidance reflects expected savings from the completed Cboe Australia sale. While most Cboe Australia expenses have ceased, we expect to continue to provide transition support and incur some related expense for up to 12 months after closing, some subject to operational readiness.
While the remaining transition costs are included in our guidance, a majority of the expense will be offset in non-operating income, making the impact to overall net income immaterial. Also consistent with last quarter, our guidance includes $20 million to $25 million of 2026 savings from our strategic realignment, and we remain on track to hit our annualized run rate of $40 million to $50 million. Rounding out 2026 guidance, CAPEX is unchanged from prior quarter guidance at $98 million to $108 million. This reflects continued investment across our business along with inflationary pressure on technology-related costs, two drivers that we anticipate will persist going forward. On investment, we will be deliberate in deploying capital behind opportunities we believe will drive long-term profitable growth, including clearing and extended market hours.
Regarding inflationary pressure, we are seeing AI-driven demand raising hardware and software prices across both our CAPEX and OPEX, and we do not expect that to abate in the near future. We will continue to proactively manage both areas with the same rigor we have demonstrated to deliver attractive returns to shareholders. We continue to expect depreciation and amortization in the range of $54 million to $58 million, and our outlook for the full-year effective tax rate on adjusted earnings remains in the range of 27.5% to 29.5% under current tax laws. Finally, while we don’t formally guide interest income or expense, we expect net interest income, net of expenses, to contribute $12 million to $13 million positively in the fourth quarter given higher cash balances and higher market interest rates.
In addition, we anticipate a $2 million positive quarterly impact to non-operating income from the transition services agreement with TMX. This has an immaterial impact on overall net income as it recoups expenses included within our expense guidance for providing transition support related to Cboe Australia. Concluding with capital allocation, our strong capital and cash position provide us with the ability to invest in organic or inorganic growth, prudently manage our debt, and return capital to shareholders. We maintain significant balance sheet flexibility with adjusted cash of $2.7 billion and a leverage ratio of 0.7 times. As we highlighted last quarter, we continue to anticipate repaying $650 million of senior notes maturing in the first quarter of 2027 with cash on hand.
In the third quarter, we returned $146 million to shareholders, up 35% as compared to the second quarter. This included $56 million of share repurchases and a $90 million dividend payment of $0.86 per share. In addition, last week we announced a $550 million increase to our share repurchase authorization, bringing total capacity to approximately $1 billion when added to our outstanding authorization as of October 28th. With this added flexibility, we will continue to evaluate repurchases based on our share price, trading window, and other capital deployment priorities.
With that, I’d like to hand it back to Craig for closing comments.
Craig Donahue (Chief Executive Officer)
Thank you, Jill. The strong third quarter results reflect Cboe’s continued momentum and build upon the secular trends that underpin our business. The U.S. equity market remains the bedrock of global capital, with the S&P 500 Index at the heart of it. U.S. households continue to grow financial assets, and retail investors are playing a bigger role in markets than ever before. Options live where these trends converge and remain among the fastest-growing asset classes, with the market expanding and demand building every year.
With our exclusive S&P license now secured, we are well positioned at the center of all three trends for decades to come. As we build on the foundation of options growth, Cboe Clear US is creating an innovation lane for Cboe and other market participants, with clearing playing a critical role in unlocking opportunity as markets and regulation evolve. CCUS recently received temporary SEC registration to clear securities. This expands its authority beyond futures and swaps, which it clears as a CFTC-registered derivatives clearing organization, to include securities products.
CCUS will initially use its SEC registration to clear Cboe’s company KPI contracts. It also recently received CFTC approval to clear a broad range of margin futures products, and it continues to clear digital asset derivatives under its DCO registration. Over the past year, we have strengthened CCUS risk management and resilience, including electing to become a subpart C DCO, which applies the CFTC’s enhanced standards for financial resources, risk management, and operational resilience.
Over time we see CCUS complementing the U.S. clearing ecosystem and supporting new products and emerging asset classes across the industry. While our long-standing relationship in traditional equity options continues in Europe, our clearing strategy is well underway. Cboe Clear Europe is a leading pan-European equities clearinghouse and has expanded into adjacent markets such as securities financing transactions, with momentum building as we broaden the offering. While expanding our clearing capabilities, we are extending when and where customers can trade.
This month, with the help of our partners at the OCC, we launched extended trading hours for options on 24 single stocks and 5 ETFs, with pre-market trading starting at 7:30 a.m. Eastern Time and a post-market session after the close. The new sessions launched smoothly on October 19, with Cboe capturing 63% of morning and 91% of curb volume during the first week. In cash equities, we are moving towards 23.5 trading in December pending industry readiness and planning for 24/7 over time.
Advancing these priorities in parallel is a significant undertaking, but we have the team and the capabilities to deliver. We are investing today to drive long-term growth and create value for our shareholders. I am excited about Cboe’s direction and I look forward to updating you on progress in the quarters
OPERATOR
Ahead. At this point we’ll open the line for questions. To allow time for everyone, please limit yourself to one question per person. Feel free to re-enter the queue and, if time permits, we’ll take a second question. Thank you so much. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you’re muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley with Piper Sandler. Your line is open.
Please go ahead.
Patrick Moley (Analyst)
Good morning, and congratulations on getting the S&P contract renewed. Just want to start there. So you’ve talked about the 2027 royalty reset as being de minimis to revenue growth. Could you just maybe walk us through the pricing levers that you’re planning to use to offset the step-up? And then have you communicated any of these pricing changes to your customers? And I guess what gives you the confidence that the pricing changes are not going to impact, or not have a negative impact on, volumes?
Craig Donahue (Chief Executive Officer)
Yeah, thanks, Patrick. I can take that, and hopefully Jill can jump in. I think, you know, obviously, Cboe’s delivered some of the strongest, really most consistent growth in the exchange space over the last several years, and we’re committed to keep that going. We’re excited about the 25-year extension. Like we talked about on the future impact, really we expect, as we’ve mentioned, the impact on 2027 net revenue growth to be de minimis. And the reason really is, as you mentioned, several levers to manage it.
The first one’s really organic volume growth across the ecosystem. Just this past quarter, Q3, index option volumes were up 24%. We had a bunch of product-specific records, including zero DTE, which we mentioned hit 65% of SPX activity. And we plan to build on that. We’re investing to drive more retail participation and adding new ways to extend hours. As we’ve talked about, we think the launch on extending GTH in single names was a big benefit to the overall portfolio.
I would say second, probably the most direct from a pricing perspective, the SPX complex hasn’t really been adjusted in a number of years, and we’ve got an opportunity to optimize our fees for today’s environment. That gives us a lot of flexibility to strike the balance with our customers. And then really third is execution. We’re executing well on our priorities and our growth strategy. We feel really good about the platform we’ve built to do that. Looking forward, that’s really where our focus will be. As with everything, pricing goes up over time. We’ve been communicating that with our trading participants, our members, but we think given how strong the environment is that we have a lot to work with when it comes to pricing going forward.
Patrick Moley (Analyst)
All right, thanks for the color.
OPERATOR
Your next question comes from the line of Dan Fannin with Jefferies. Your line is open. Please go ahead.
Dan Fannin (Analyst)
Great, thanks. So DataVantage continues to come in higher than expected. You guys have raised guidance, I think, each quarter this year. Can you talk about the biggest delta in terms of your original expectations and what’s come through, and as you think about the building blocks for next year, how we should think about growth and the sustainability of the activity or demand that you’ve seen thus far?
Craig Donahue (Chief Executive Officer)
Thanks, Dan. In terms of DataVantage, we had record revenues in 3Q; we were up 13%. As Jill noted, if you actually exclude Australia, which was in for one quarter this month versus three last year, we were up about 16%. So we’re seeing strong growth. If you look at it on a year-over-year basis, we grew by $20 million. All four of the functions in DataVantage grew; in rank order, our growth was driven by access and market data, followed by analytics and indices.
In terms of the access growth, that was primarily driven by connectivity to our options exchanges. We saw double-digit ADV growth year over year in both our index and multi-list volume, so that drove some of the growth. We also had good momentum on the equity side as clients continued to widen out and use our dedicated cores offering, so that also drove part of the growth there. In terms of market data, we continue to see strong growth. Again, 80% plus of our growth is coming from new subscriptions or new license sales, so that’s driving good growth. And year to date the majority of our sales are coming from outside the U.S., and even when we look forward and we look at our sales pipeline, we anticipate we’ll continue to see strong growth from outside of the U.S., and that’s really driven by the secular trend of overseas investors wanting access to the U.S. marketplace.
The areas that we see a lot of growth from outside the U.S. include Japan, South Korea, and Hong Kong. Those are some of the markets that are driving the growth across our markets. We’ll continue to see, from our perspective, strong growth going forward as well. Again, this is underpinned by the core secular trends we’re seeing in our business. You see that in volumes across our options platforms and more connectivity across the board. So we’ll give you guidance next quarter, but we anticipate continuing the strong growth in DataVantage. Thank you.
OPERATOR
Your next question comes from the line of Alex Cram with UBS. Your line is open. Please go ahead.
Alex Cram (Analyst)
Yeah, hey, good morning. Just a super quick follow-up to Patrick’s question on the SPX. It sounds like, and I think you confirmed, that there will be continued increases to the royalty fees in the years following. I think it may actually be an annual thing; I think S&P said that—maybe you can confirm that—but do you think that you will continue to be able to pass those through? So we should expect muted impact or negative impacts even for the next decade or even the whole life of the contract.
How do you think about long term, is really the question. Thank you.
Jill Griebenow (Chief Financial Officer)
Thanks, Alex, for the question. I can take this one. So, as we’ve alluded to, 2027 is the first step-up. We haven’t gone into details as to the increments after that, but 2027 is the largest step-up, with it moderating a bit starting in 2028. What I’ll just say is we’re committed to continuously driving long-term net revenue growth. We have a really good track record of doing so. Now that we have this, let’s call it, extension in hand, we’re planning accordingly, making investments in the business to drive the outer-year growth.
Craig Donahue (Chief Executive Officer)
Alex, it’s Craig. Maybe just one addition to that. In working through the long-term extension with S&P, we absolutely believe that, just looking over the long course of history with our 43 years of experience with S&P, we’ve always had RPC growth exceed what we are expecting in terms of the future royalty payments. So we’re very comfortable with the structure that we’ve agreed to with S&P.
Alex Cram (Analyst)
Makes sense. Very good. Thank you, guys.
OPERATOR
Your next question comes from the line of Ben Butish with Barclays. Your line is open. Please go ahead.
Ben Butish (Analyst)
Hi, good morning, and thanks for taking the question. Wondering if you could talk a little bit more about the rollout plans for the single-stock KPIs. I’m curious in particular about market maker readiness. How are they thinking about being able to effectively hedge risk, and what are maybe the implications for longer-term institutional adoption? I recall over the last several years you guys would talk a lot about growth in the long-term data sets for zero DTEs, which kind of encouraged institutions to continue to participate. So curious how market makers are thinking about this product and what that may mean for the longer tail of institutional opportunity there. Thank you.
Rob
Yeah, thanks for the question. Ben, this is Rob. So as we mentioned on the call, we’re targeting sometime in November pending really clearing member broker and market maker readiness. I just want to remind everyone, you know, we’re introducing a second securities clearinghouse for the first time in over 53 years. And so that’s just taking some time to make sure everyone’s connected and ready to trade on the market maker readiness. We’ve got a number of market makers at different stages, but we’re confident that the screens will be lit on day one.
And like any launch, I’m sure the market makers will start, you know, a bit slow and then tighten spreads as, as liquidity builds. And so we’re confident in that in that front on the broker side, you know, Robinhood and Interactive Brokers will be there to support client access on day one. And we’ve got an additional pipeline of brokers working through their onboarding processes. And it’s a great thing about our intermediated model. I would add that every broker that connects, they just keep adding to the same pool of liquidity which we think will be a big benefit for the, for the users of these products.
On the volume, as far as early volume projections, honestly that’s not really where our focus is. This is about really building the right foundation with the right investor protections that we can grow steadily over time. So on a trading mix to start, we expect this, and I know I’ve said this in the past, we expect it to look a lot like 0DTE did retail led early on and then institutions follow as those historical data sets become available and as they can model how these metrics relate to the various, various stock prices.
From our early conversations, we think institutional demand will come from places like hedge funds, you know, call it single stock, portfolio managers who want to hedge or take a view on that specific driver of the stock. So think, you know, data revenue in particular without really taking on the whole earnings event, you know, as a whole. When it comes to how that evolves, kind of the back end of your question, I do think this will build data sets just like we’ve seen the multi-list market evolve over time into the index market. I think that data will be incredibly valuable. When I think of things like even consensus on a stock right now, consensus is usually driven by opinion analysts coming out, saying what they think, looking at different elements to that company. I think where this market can develop and where these data sets can develop is where you start to create indices on consensus, where people are actually trading what the consensus will be on a particular name.
And as that evolves, I think the market will, will evolve to, to match that demand. And I think it’s just going to become a very interesting space over time. But so far we feel, you know, very prepared, I would say, for the launch here in November.
Ben Butish (Analyst)
All right, great, thank you.
OPERATOR
Your next question comes from the line of Eli Abood with Bank of America. Your line is open. Please go ahead.
Eli Abood (Analyst)
Good morning. Thank you for taking the question. How quickly do you expect to exhaust the $1 billion repurchase authorization? And then once that authorization is exhausted, it looks like there will still be another couple billion dollars on the balance sheet. So my question is, how much cash do you need to run this business? What’s the plan for the rest? And has your calculus on capital allocation changed following the SPX renewal?
Jill Griebenow (Chief Financial Officer)
Thanks for the question, Eli. So what I will just say is that I won’t, you know, I can’t go into specifics as to your detailed questions there, but really what it comes down to is our capital allocation priorities really have not changed. I say both first and foremost, we’re really, you know, focused on continued investment in the business. We’ve had, you know, wonderful track record with our organic growth. We see some good opportunities there. We continue to pay a quarterly dividend, so we typically review that in the third quarter.
Now, if you look back to August, we did increase that dividend rate about 19%. We’ll continue to be opportunistic as it relates to share repurchases. We came out last week, obviously, with that increase to the share repurchase authorization. Given the healthy balance sheet, the cash on hand, we’ll go after that where and when it makes sense. And then finally, as it relates to M and A, you know, we look at that, but only where it makes strategic and financial sense.
So really what it comes down to is we like the flexibility of our strong balance sheet. We’ll continue to, you know, allocate the capital accordingly.
Eli Abood (Analyst)
Thank you.
OPERATOR
Your next question comes from the line of Bill Katz with TD Cowen. Your line is open. Please go ahead.
Bill Katz (Analyst)
Great. Thank you very much. Taking the question, I was wondering if you could expand a little bit more on the incremental opportunity for the KPIs. I heard just sort of finish off the last question on just sort of the indices. Can you talk about how quickly this might be able to ramp beyond the initial 23 stocks and 100 KPIs? I’d be curious how you think about that on a global opportunity. And then what are you hearing from the distributors you have linked up with?
I think it’s like 75 incremental brokerage accounts that have been announced so far. And what other pipelines behind that do you think might look to add the KPIs? Thank you.
Rob
Yeah, thanks, Bill. This is Rob. Maybe I’ll start with, you know, we’re building this market slowly, I would say, you know, even on pricing, you know, fees will be waived through the end of 26. You know, right now the priority is adoption, not really revenue. So when we do bring in fees, you should expect, you know, kind of a per contract model, notionally consistent with how the pricing is on our other options. So it’s competitive for both brokers and liquidity providers.
But on structure, you know, we started with binaries for a reason and kind of this yes/no on a reported number is just the simplest way to introduce a new kind of exposure, you know, and get the customers squared away right away. Like this is a new exposure, a new way to get new investors into the market. Over time though, we see, you know, room to extend the category. Think more companies, more metrics, more strikes, you know, ranges around each metric, even potentially option-style payouts as institutions get more involved and we want more, you know, precise exposure.
That’s really the path multilist and SPX followed. You start simple, let customers tell you what they want and then build out the product set. So we’ll let demand drive the sequencing. I would say it’s really hard to say where this market turns into. I’ve been very kind of public in meetings saying the thesis of this is really being built on the back end of sports. Right now sports are the majority of the prediction markets that are trading, I think.
And I can see where the, where the valuation component and these metrics and the ability to trade. The ability to trade a backward-looking metric, not a forward prediction metric, I think has real value in the market. But unfortunately, you know, I’m sure I would be wrong if I tried to predict how fast and how it would grow.
OPERATOR
Thank you. Your next question comes from the line of Brian Bedell with Deutsche Bank. Your line is open. Please go ahead.
Brian Bedell (Analyst)
Great, thanks very much. Maybe just continuing along the company KPIs and the institutional part of that. So how are you thinking about the plan to market this to institutions? Obviously building liquidity is going to be an essential part of that. But are you initially working with institutional users to gauge which types of companies and KPIs you can launch to appease that market? And would the institutions be able to connect directly to Cboe or they have to go through an FCM?
And then if you could just elaborate a little bit more on that pricing. I think you said similar to options, but maybe which kind of options or maybe said differently. Would you expect these event contracts to sort of be in line with the current event contract pricing in the industry?
Rob
Sure. Let me see if I can’t unpack that a bit. And maybe it’ll be good to just give kind of an overall view of how we’re looking at the KPI market. You know, first, you know, I’ll attack the competition side. So, you know, we welcome competition. We just want to make sure. We’ve been public saying we just want to make sure everybody’s playing by the same rules. But we expect kind of this KPI binary market to develop to be a multi listed market over time.
Frankly we think that’s a good thing for the market and I think that plays into both retailers and institutional adoption. That’s really how the listed options market became called a multi trillion dollar market. You standardize the contracts, you provide central clearing, lots of brokers, venues, all kind of helping the whole category grow. So it’s a complicated landscape right now. I’ll even address from the SEC side you had MEMX submit a filing, you’ve had NYSE submit a filing, you’ve had NASDAQ submit a filing, all looking very similar. On that side we think we have a big advantage being a first mover. Obviously we’ve built a clearing solution to support the launch. We really believe in this intermediated model and quite frankly would be open to providing, call it post trade clearing services where we can benefit the larger market.
Now on the CFTC side you have competitors like Kalshi, Polymarket, Rothera. One thing I’d say with all of this is it tells you that the category is real, the products are real, we think the opportunity is real. But I will tell you like one, the products aren’t the same on, you know, our SEC regulated products traded on a registered exchange. They come with securities law, insider trading protections, all things we’ve gone through. But that’s going to be very important for brokers and institutions to adopt something like that.
So I want to highlight that because I think that’s a critical piece where this goes. Yes, we’re talking with all of the institutional players once again like 0DTE. We anticipate they will be slower to adopt something like this. But there’s interest because when you think about how you decompose a stock’s valuation, these components all feed that right now the only way to trade those components to hedge those components, whether you’re talking about, you know, chip sales, car manufacturing, the only way to trade those is through the stocks themselves.
We’re going to offer a way to effectively get more granular in that risk and offset that risk in ways that just aren’t available. And so institutions are very interested in this. They have massive stock portfolios, they have massive exposure. It’s why multilist options continue to grow. It’s why the options industry is trading 70 million contracts ADV right now. So we see that growing in that way, the institutions see it. I think everyone’s aligned more than anything.
It’s how do you build the foundation in a way that supports that long term growth. And that’s why, you know, I kind of went through the landscape. That’s why we’re doing it on the SEC side. And in a matter that we think in the intermediated model that can scale to support all of the different players.
Brian Bedell (Analyst)
And just to be clear, these couldn’t be multi listed, I don’t think. Right. In other words, if you list a contract, it’s got to clear through CCUS. Yes, NASDAQ could come up with the same type of contract, but they would be clearing it through their internal agency rather than a multi list horizontal OCC clearing arrangement.
Craig Donahue (Chief Executive Officer)
You know, it’s Craig. I would expect that, as these markets develop, as we get traction, others will list these types of products. In many cases they certainly are amenable to being multi-listed and standardized. Our view and what we’re thinking about is, first of all, we think that for these kinds of things like KPI, that’s a superior kind of market structure. Those markets have the potential to scale, to be akin to what we see in options and in equities.
So first of all, we think we have an ecosystem advantage versus the event and prediction markets. Part of the strategy that we have with CCUS is not only to build that out in support of our own innovations in these new areas, but also to work with other market participants as an open facility so that they have a clearing solution if they need it. So I can’t speak for other exchanges and platforms, but we certainly envision expanding and opening CCUS to be able to help facilitate transactions for them as well.
OPERATOR
Your next question comes from the line of Jeff Schmidt with William Blair. Your line is open. Please go ahead.
Jeff Schmidt (Analyst)
Hi, thank you. Could your expanded U.S. clearing capabilities eventually support products like perpetual futures? And if you enter that market, could cross margining against existing Cboe products provide a competitive advantage?
Craig Donahue (Chief Executive Officer)
Yeah, great question. Happy to take that on too. Maybe just to start with, we have a very longstanding, very successful partnership with OCC. We’re super committed to the existing market structure for the listed options market, and we envision continuing to work with them very, very closely. At the same time, CCUS is really designed like a blank canvas in a way that we can start to develop operational, technical, and risk engine, risk model type capabilities that are really designed to address the kind of nascent, evolving market. There’s a lot of innovation that’s happening across the marketplace—things like tokenization, things like perpetuals, things like financial and economic-based event and prediction markets. And so that’s really the idea behind CCUS: to develop something that allows us to be innovative, come to market, support other organizations who are trying to do the same thing.
And wherever we can, we’re a customer-focused organization, so wherever we can maximize capital, margin, cross-margin efficiencies, payment efficiencies for market participants, we’re going to try to work with our partners to accomplish that. We need these markets to develop a little bit before we can do that, but that would certainly be within our contemplation. And wherever we can find ways to work with OCC in a preferential way, we will always do that. It just makes sense; they have scope, they have scale, we have a great working relationship and history with them. So they will always be our preferred partner wherever possible.
Jeff Schmidt (Analyst)
Great, thank you.
OPERATOR
Your next question comes from the line of Alex Blustein, with Goldman Sachs. Your line is open. Please go ahead.
Alex Blustein (Analyst at Goldman Sachs)
Hey, good morning. Long week. Happy Friday. I wanted to ask you a question around the pace of investing versus spending as you think about the next leg of growth for the company. You’ve made a number of steps; you’ve rationalized both the businesses and the expense base. But on a go-forward basis, beyond this year, more on a multiyear basis, how should we think about the expense trajectory? And more importantly, the operating margins are now running in the low 70s, which is, I think, the highest it’s ever been.
What is the steady state for margins in this business over time as you see it unfold over the next few years? Thanks.
Jill Griebenow (Chief Financial Officer)
Alex, I can start with the back part of your question. What I’ll say is we don’t guide to any specific margin. What you really see is it’s an output of our growing revenues and a function of managing the expenses. It will likely fluctuate over time though, just depending upon the investment cycle. To the earlier part of your question, we did take actions earlier this year—our strategic realignment—that did result in a number of cost savings throughout 2026. Really what we’re looking to do is determine where to best invest our people, our resources, and center that around the areas for growth. But we’re still going to do it in what I’ll call a balanced or moderated approach from an expense management perspective. So not to go into details on 2027 just yet—we’ll share that guidance in early February—but just know it will be measured.
As we alluded to earlier, we do a lot of organic investments. We have a lot of opportunities there. We have a good track record on the investments we’ve made organically over the years and the returns that they’ve produced. So we’re honing in on the capital needs, whether it be opex, capex. I alluded to in my prepared remarks some of the price escalations we’re seeing from a technology perspective. But we are being very, very thoughtful as to how we balance this holistically.
So more details will be shared in early February. But again, really like the margin, but we don’t guide to a specific margin. Just want to be thoughtful to continue to invest for that future net revenue growth while again moderating the expenses.
OPERATOR
Your next question comes from the line of Michael Cyprys with Morgan Stanley. Your line is open. Please go ahead.
Michael Cyprys (Analyst)
Hey, good morning. Thanks for taking the question. I wanted to ask about SPX. Starting with the mini SPX, really impressive growth, up over 100% in the quarter. Can you talk about what you see driving that strength? How much of that is coming from the pattern day trader rule repeal? How big of an opportunity could this be for the Mini over time? And then more broadly on the regular size SPX contract, growth continues to be impressive there. As you look out from here, what do you see as key drivers of growth as we move forward into the next couple of years?
Thank you.
Rob
Yeah, thanks, Michael. This is Rob. It’s been a real strong run, I agree. Zero DTE has averaged almost 3.2 million contracts in the third quarter, and I would say October’s tracking, call it, about 12% higher. Really on the retail platforms, I’d say three things are driving the volume not only in XSP, but just kind of more broadly. As you mentioned, the pattern day trader repeal removed a real barrier. We’re seeing it in order counts, not just volume.
So more customers are placing more smaller orders, which is great to see. That was the intent of repealing that rule. Really, better tools and education—brokers are making it easier to trade spreads and defined risk strategies. As we’ve said, zero DTE has been tracking around 95% defined risk strategies kind of since inception. That stayed very consistent and that percentage holds as the market continues to grow, and brokers are just making it easier to trade strategies like that. And then, as you highlighted with XSP, it’s really the right-size products. XSP gives smaller accounts access to that same exposure.
And XSP volumes grew almost 30% quarter over quarter, and they’re trending up, call it, another 16% in Q4. So as I look to ’27, we really see the next leg of growth coming from a few places. One, more international demand. We keep onboarding brokers in APAC and Europe, and a lot of the ones already onboarded, I would say, are still in early days of offering our products. Second, you heard us focus on, in Craig’s prepared remarks, more trading in GTH. The overnight session volume in SPX grew 117% year over year in the third quarter, and the GTH and curb sessions overall have set quarterly records.
So you’re just seeing people want to get in the store more frequently at longer hours, and we’re opening up that access. And then last, institutions are a big one. They keep using and asking for more short-dated options to hedge and really fine-tune exposures around different events. And I’ll add, that’s not just an index trend. We’re seeing that in zero DTE growth in the single names too. As a reminder, earlier in the year we launched Monday and Wednesday terms in a select number of single-name options, and in two of the more popular names, Nvidia and Tesla, zero DTE trading went from around 30% to 36% and from 40% to 46% in those two names in the third quarter. So demand just keeps really growing. We’re really excited about it. And really, you highlighted XSP, but it really comes back to—and we’ve said this before—it’s kind of a toolkit.
Make sure you have every notional size, make sure you have every different risk exposure. We’re just trying to collectively put that all into the portfolio, and thus far it’s working and the portfolio continues to grow.
Michael Cyprys (Analyst)
Great, thank you.
OPERATOR
Your next question comes from the line of Dan Weldon with Wells Fargo. Your line is open. Please go ahead.
Dan Weldon (Analyst at Wells Fargo)
Good morning. I’ve got a broader one on retail engagement. It jumped out to me in the slide deck that the Options Institute registrations are up so much quarter over quarter. So I guess how are you thinking about that, and then broadly, how are you measuring whether AI tools, agentic products, are driving more retail investors to engage with options? Thanks.
Rob
Yeah, we’ve been excited about the expansion of a lot of the OI initiatives. We’ve been heavily focused, I would say, on the international front, introducing new curriculums in locally sourced languages. I think all that’s helping. You’ve seen the international demand that I’ve already talked about and how that’s growing with more brokers wanting to be connected and to expand in those markets. We’ve seen tremendous growth just in our new education portal, which is the direct portal where investors can log in and take classes. That’s had a great turnout. We’ve seen very steady growth. I don’t remember the number off the top of my head, but the rate at which the growth has been happening, we’ve been very, very pleased with.
We’ve been doing a lot more, I would say, Options Institute outreach. For example, I got to go to the Robinhood Summit this year and we had the Options Institute’s Stacy Gilbert on stage with Henry Schwartz talking through all of the benefits that options can provide, and we had great feedback from that event from the retail community. So we just continue to look for ways to expand, look for ways to continue to introduce more and more education because we think that’s really the foundation for the long-term growth of where we want to go to.
And apologies, did I miss the second part of your question, or was that…
Dan Weldon (Analyst at Wells Fargo)
It was sort of related to whether AI tools are making options more accessible—it’s a hard thing to measure, but…
Craig Donahue (Chief Executive Officer)
It is, I would say we don’t have good measurement as of yet. I think we’re learning how people are using AI to really trade. I would say, and this is just me talking, I anticipate it speeding up trading. What you need for agentic trading are good data sources. You need, you know, defined risk, short-dated, you know, all of those different things to build AI strategies around. And we think that our portfolio really suits that quite well. So I envision, as investors get more and more comfortable using AI to build strategies, build bots that can help them analyze different market trends, that you’ll start to see that actually pick up and drive faster trading.
You know, one thing I’ve always said that when I ran a trading book was one of the things to be a good trader is you have to remove all emotion from your trading. People tend to hold their losers longer; they tend to get rid of their winners faster. When you introduce things like AI, it helps an investor do that because it becomes very systematic in nature. It’s why you’ve seen the algorithmic growth in our products, I think, so much. And so I think AI is lots of opportunity and can offer a lot of benefit to investors moving forward.
And we’ll continue to track it the best we can and figure out how to integrate it where it makes sense. Thank you.
OPERATOR
Your last question comes from the line of Simon Clinch with Rothschild and Co Redburn. Your line is open. Please go ahead.
Simon Clinch (Analyst)
Thanks for taking my question, and apologies if this has already been asked if I kept getting some drop-offs on the call, unfortunately. Craig, I was wanting to jump back to the KPI contracts and some of the things you were talking about in terms of the competitive environment and your relationships with partners. And I’m just curious, as you know, certain of your many distribution partners in the space seem interested in actually launching their own products within this kind of arena.
And I was wondering how you think about that kind of long-term competitive friction between steering volume towards products where they capture more of the economics versus, I guess, the large liquidity-based products that Cboe Global Markets might be able to offer them. Thanks.
Craig Donahue (Chief Executive Officer)
Yeah, thank you. Good question and happy to address that. I think there’s maybe two different elements to responding to that. One is that, you know, we’re currently operating in an environment where there’s a high degree of flexibility with respect to how you can offer these kind of products. As you well know, you know, we have an unusual situation where these products can be both offered on securities exchanges and cleared through registered securities clearinghouses.
And at least for the moment, they appear to also be able to be offered on a designated contract market and cleared through a DCO. And I think what you see is people sort of exploring the contours of that and maybe even exploiting some of the differences that exist in terms of the regulatory framework, the ability to bring products to market very quickly, etc. So I think it’s not that surprising. But I think there’s two things that we’re very focused on.
One is that in these products we believe they are clearly securities. Our reputation and history and brand is based on making the right long-term choice for investors. And we believe that there are substantial differences between the securities regime and the futures regime in terms of, you know, the whole, you know, aspect of, you know, securities markets. And again, we believe these are securities and we believe that we have a so-called better mousetrap in terms of, you know, surveillance, market integrity, bringing products to market that offer securities customers customer protections that are very important to them and I think have been the foundation for the growth that we have in both equity markets and equity options markets. So while we could do those things, we don’t think that’s the right way to approach this market.
So that’s sort of one element of it. And I think over time, while that may be the current condition, you know, it’s very clear to us that, you know, it’s clear what a definition of a security is — that’s, you know, statutory. It was determined by Congress. There’s been nine decades of not only, you know, lawmaking by Congress, but also case law. And we’ve made these points in public forums. So despite what the current regulatory environment is sort of affording people, we’re going to do this the right way.
We think doing it the right way is far more sustainable. The second thing that I would say is, you know, I’m just not — in these kinds of markets, you know, if KPIs, for example, would scale similarly to options markets or securities markets, that won’t work very well in a closed market system. One of the reasons why our markets work so well and why we’ve had extraordinary growth over many, many, many decades is they’re all-to-all markets and they’re non-discriminatory, open-access markets. So all market makers and liquidity providers compete on a level playing field — they’re all welcome.
All broker-dealer FCMs compete on a level playing field — they’re all welcome. That builds a highly scalable financial market structure and an ecosystem that everybody can participate in. So while our hat is off and we recognize, you know, what, you know, people are trying to do in other ways, our North Star is what I described.
Simon Clinch (Analyst)
That’s really useful. Thank you for
OPERATOR
We have reached the end of the Q and A session. I will now turn the call back over to the management team for closing remarks.
Craig Donahue (Chief Executive Officer)
Well, thank you everyone for joining us again. You know, just to reiterate, I mean, we’re super pleased to have completed our long-term extension with S&P. We do think it’s foundational to everything that we’re trying to do. We’re at a really interesting and exciting time, pivoting toward new growth opportunities, building new capabilities. So lots more to come and excited to talk to you next quarter. Thank you.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
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