Cboe Global Markets Inc (CBOE) (Q2 2026) Earnings Call Highlights: Record Revenue and Strategic ...

This article first appeared on GuruFocus.

Release Date: July 31, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Record net revenue of $732 million, up 25% year-over-year, with adjusted EPS up 45% to $3.56. Broad-based growth across all segments, with derivatives net revenue up 30% and record index options volume. Strong retail engagement driven by the repeal of the pattern day trader rule, boosting SPX Zero DTE and mini SPX volumes. Successful launch of Cboe Predicts and filing for company KPI event contracts, expanding into new growth areas. Data Vantage net revenue up 15% with strong international demand and new subscription sales. Improved operating margin to 72.2% with disciplined expense management. Raised 2026 organic net revenue growth guidance to mid-to-high teens. Strong balance sheet with $2.3 billion cash and low leverage, supporting capital returns and investments.

Negative Points

Market share eased slightly in Europe and Asia Pacific despite strong revenue growth. Futures net revenue growth was modest at 2% year-over-year. Increased capital expenditures due to investments in clearing infrastructure and hardware purchases. Potential regulatory uncertainty for new products, including SEC approval for KPI contracts. Dependence on continued retail engagement and market volatility for sustained growth. Upcoming debt maturity of $650 million in Q1 2027, which may limit share repurchase flexibility. Expense guidance increased due to higher incentive compensation and return-to-office costs.

Q & A Highlights

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Q: How does Cboe view the competitive threat from perpetual futures, and what is the current retail mix in options trading? A: Rob Hawking, Global Head of Derivatives, explained that perpetual futures and SPX options serve fundamentally different investor needs. Perps offer linear exposure with no expiration and unbounded downside risk, while options provide defined risk and convexity. Over 95% of zero DTE trades are defined-risk strategies, with 50-55% being spreads. He noted that despite decades of access to S&P futures, SPX options demand continues to grow due to this different risk-return profile, making perps complementary rather than a substitute.

Q: What is the status of the company KPI event contracts filed with the SEC, and what is the expected demand and revenue impact? A: Rob Hawking stated that Cboe filed for company-specific KPI contracts covering 23 major US companies, targeting a late September/early October launch pending SEC approval. The products allow trading on granular metrics like NVIDIA's data center revenue or Microsoft's cloud revenue. He expects adoption to follow a similar path to Zero DTE, starting retail-heavy before institutions join as historical data accumulates. Jill Griebenow, CFO, confirmed that no revenue from these products is baked into 2026 guidance.

Story Continues

Q: What is Cboe's confidence in SEC approval for KPI contracts, and how will they be priced? A: Craig Donahue, CEO, noted the company has worked closely with SEC staff prior to filing and believes the process is going smoothly, though timing is outside their control. The comment period ends next Wednesday. Rob Hawking added that pricing will be competitive with existing event prediction contracts, noting the smaller notional value of these dollar-based yes/no contracts compared to SPX options, giving Cboe flexibility on pricing.

Q: How will Cboe drive adoption of company KPI contracts given the current dominance of sports contracts in prediction markets? A: Rob Hawking emphasized Cboe's intermediated model as a key advantage. Retail brokers like Robinhood, Schwab, and Webull are seeing strong inbound demand from customers and are actively seeking securities-based solutions. Unlike traditional product development where exchanges push products to platforms, this demand is pulling the product through distribution channels, with brokers requesting seamless integration into their existing interfaces.

Q: How would a potential shift to semi-annual corporate reporting affect options usage and retail engagement? A: Rob Hawking noted that options are used daily to trade around market movements, not just earnings events, so the impact may be limited. He highlighted that event and prediction contracts provide a hedge, as there are many other metrics and uncertainties to trade even if earnings frequency decreases. Jill Griebenow added that issuer sentiment suggests quarterly reporting is likely to continue, but Cboe is monitoring the situation closely.

Q: What products can Cboe innovate once it receives clearing capabilities, and are there inorganic investment opportunities? A: Craig Donahue explained that in Europe, Cboe is focused on clearing securities finance transactions, while in the US, clearing enables product innovation like KPI contracts and supports the move toward 23/5 and eventually 24/7 trading. He emphasized this complements rather than replaces the OCC partnership. Scott Johnston, COO, added that Cboe is exploring opportunities across tokenization, crypto rails infrastructure, and improving innovation speed at Cboe Clear US, though nothing specific can be discussed yet.

Q: How does Cboe view the competitive landscape with vertically integrated retail brokers offering their own contracts? A: Craig Donahue expressed strong belief in the value of open, all-to-all exchange and centrally cleared markets, arguing that closed silo systems lack interactive capability across the marketplace. Rob Hawking added that centralized clearing enables risk offsets and capital efficiency across the ecosystem, which is impossible in siloed structures. Prashant Bhadia noted the massive demand from over 50 million retail clients on partner platforms, supporting the intermediated model.

Q: Are event contracts and KPIs large standalone market opportunities or feeders into Cboe's core business? A: Rob Hawking described them as a combination of both, expanding Cboe's product toolkit. He illustrated the interconnected value chain from company KPIs to EPS to stock price to sector and index levels. This interconnectedness allows institutions to spread risk across portfolios while retail traders express views on individual components. He also mentioned potential expansion into economic indicators like CPI, which would further connect to market movements.

Q: What is the status of expanding the customer base for proprietary products like SPX and zero DTE, especially internationally? A: Rob Hawking reported strong international demand from APAC and EMEA regions, citing Korea as a success story where the vast majority of retail brokers are now online. He highlighted the impact of the pattern day trader rule repeal, noting that across top nine retail brokers, SPX ADV rose 3.5%, XSP ADV surged 36%, and multi-list options ADV increased 4% month-over-month. Simple order counts rose dramatically (SPX up 40%, XSP up 75%), indicating broader retail engagement with smaller order sizes.

Q: What are the key drivers of Data Vantage growth and its sustainability into 2027? A: Heidi Fisher, Global Head of Equities and Spot Markets, reported Data Vantage revenue of $178 million, up 15% year-over-year. Two-thirds of growth came from higher access-related revenue driven by increased connectivity demand to options exchanges, reflecting 24% growth in multi-list options and 40% growth in SPX options volume. The remaining third came from market data growth, with 50% of sales from international clients, particularly Asian investors seeking US market access. She deferred 2027 guidance to year-end.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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