Cboe Global Markets, Inc.

Operator Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets 1st quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Ken Hill, Head of Investor Relations. Please go ahead. Ken Hill Good morning and thank you for joining us for our first quarter earnings conference call. On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Scott Johnston, our Chief Operating Officer, will provide an update on the additional strategic realignment actions announced today. Jill Griebenow, our Chief Financial Officer, will provide an overview of our financial results for the quarter, as well as discuss our 2026 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Prashant Bhatia, our Head of Enterprise Strategy and Corporate Development, and Rob Hocking, our Global Head of Derivatives. I would like to point out that this presentation will include the use of slides. We will 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 some forward-looking statements which represent 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 after this conference call. During the call this morning, we'll be referring to non-GAAP measures as identified and reconciled in our earnings materials. Now, I'd like to turn the call over to Craig. Craig Donohue Good morning. Thank you for joining us to review our first quarter results. Cboe delivered another quarter of record net revenue and adjusted earnings powered by continued strength across all of our core businesses. The results underscore the strong foundation we have in place as we take the next steps in advancing our strategy. I will provide some high-level comments before turning the call over to Scott Johnston to talk through the additional strategic realignment changes announced this morning, and then to Jill for a financial update. During the first quarter, Cboe grew net revenue 29% year-over-year to a record $729 million, and adjusted diluted EPS increased an exceptional 48% to a record $3.70. The robust results in the first quarter were again broad-based, driven by record net revenue in every major category at Cboe and double-digit net revenue growth in four of our five company segments. Taking a closer look at the first quarter trends in our derivatives business, we delivered another record quarter with net revenue increasing 32% year-over-year. Index options net transaction and clearing fees revenue drove the upside, increasing a robust 35% as our proprietary SPX options set another quarterly record with average daily volume increasing 34% year-over-year to 4.9 million contracts. Interestingly, the drivers of that growth evolved as market conditions changed throughout the quarter. When things were steady, as they were in January and February, the 0DTE options continued to power the growth of the overall SPX franchise on the back of deeper retail and institutional engagement. In March, as the macro-outlook shifted abruptly with the Iran war, investors turned to non-0DTE options to help manage their portfolios as longer-term risks over inflation and growth increased. Zero DTE options still grew, but at a more steady 6% rate month-over-month in March, while non-0DTE options jumped over 26%, helping to drive a new monthly ADV record of 5.4 million SPX options contracts. Outside of SPX, we saw multiple quarterly ADV records across our Mini-SPX options, Russell 2000 index options, as well as our VIX options complex, speaking to the utility of Cboe's volatility toolkit across market environments. Overall, we see a supportive macro environment for our derivatives business while we continue to expand global access and retail engagement. Last quarter, global trading hours volumes rose more than 32% to a record high, driven by strong growth during Asian hours as we continue onboarding local brokers. We are also investing at home. Our trading floor helps traders to efficiently manage complex multi-leg risk capabilities that can't be replicated electronically and supports broader market liquidity through both direct execution and related hedging activity. On April 6, we were pleased to be joined by our long-term partner, S&P Dow Jones Indices, for the inaugural televised bell ringing on the Cboe floor as part of our new multi-year collaboration with CNBC. Through our new partnership with CNBC, we are bringing the power and expertise of Cboe's iconic trading floor to a global audience, leveraging a differentiated asset within our market ecosystem to deliver live market insight and investor education, elevate the Cboe brand, and reinforce our leadership in global markets. Turning to event contracts, subject to regulatory approval, we plan to bring our securities-based event contracts to market. Based on our Mini-SPX contract and leveraging our existing options infrastructure, the product is designed to mirror the risk-reward profile of a widely used options strategy, the vertical call spread, allowing investors to take a simple yes or no view on an outcome with defined downside risk and a capped payout range. By incorporating a broader payout zone, the structure enables customers to benefit from being directionally right without requiring a binary all or nothing result. This unique spread element is also being well received by the retail brokerage community as we educate in an easy-to-understand way one of the primary risks defined strategies in options trading. This launch is just the first step in our broader event contract strategy. We see significant growth ahead as these products become increasingly integrated into the financial markets, and we intend to expand beyond index-based outcomes by leveraging our capabilities across both securities and futures. Longer term, we see a compelling opportunity to introduce additional contracts around economic and financial indicators. This is a rapidly growing and compelling area of the market, and we believe Cboe is uniquely positioned to succeed as a trusted partner to customers and regulators with deep experience that spans securities, futures and clearing. We have consistently designed products that meet the needs of both institutional and retail participants while creating thoughtful education on ramps that support broader adoption. Leveraging our market infrastructure expertise, our product design capabilities and regulatory integrity, we believe Cboe is best positioned to bring differentiated event contract solutions to market across both securities and futures. Our move into event and prediction markets will bring capabilities and enhancements designed to address many of the weaknesses we see in the current event and prediction market space. Moving to cash and spot markets, net revenue was up a strong 34% as we saw record results in each of our respective segments across the category, Europe and Asia Pacific, North American Equities and Global FX. Led by another quarter of strength in our European transaction business, the Europe and Asia Pacific segment delivered a 32% year-over-year increase in net revenue. This was driven by 43% year-over-year growth in net transaction and clearing fees given stronger industry volumes, market share and net capture dynamics as we saw the quarter and month of March set new records for average daily value traded. In fact, five of the 10 highest trading days in Cboe Europe's history occurred during the quarter with records across key services such as Periodic Auctions, Cboe Closing Cross and Cboe BIDS VWAP-X. Higher non-transaction revenues in the segment also contributed to the growth with revenue up 21% year-over-year. North American Equities made a solid contribution with net transaction and clearing fees revenues up 40% given strong industry equity volumes in each of our markets. Rounding out cash and spot markets businesses, Global FX made another record contribution, increasing net revenue 38% year-over-year in Q1. The year-over-year growth displayed by the FX business was the strongest of any of our segments in the first quarter. Turning now to Cboe DataVantage, net revenue increased by 19% on a year-over-year basis, reflecting continued momentum across the platform in the first quarter. Roughly 85% of the growth across our market data and access businesses was driven by new units and new sales as opposed to pricing. The first quarter saw a strong contribution from new product sales, complementing continued demand for access to our markets and a durable and growing international contribution. I'd like to introduce our COO, Scott Johnston. Scott joined us in February, and while this is his first earnings call at Cboe, he has quickly taken on a very active role in shaping our strategic framework and strengthening discipline, efficiency and accountability as we position the company for future success. Scott brings an extensive track record in leadership roles at several key buy side firms, and I have personally had the opportunity to work closely with Scott during our time together at CME. Scott will now cover additional strategic realignment changes announced today. Scott Johnston Thank you, Craig. Our core business delivered exceptional result, and our leadership team is stronger than ever. This next evolution in our corporate strategy is designed to ensure we are not only optimizing the business we have today, but also building the capabilities and operating discipline required to capture tomorrow's opportunities. Since beginning our strategic realignment in the second half of 2025, we have taken decisive actions across the firm. These include announcing the sale of our Cboe Canada and Cboe Australia businesses, exiting or winding down our corporate listings, European derivatives, FX, and Japanese equities businesses, and reducing costs in our U.S. and European ETP listings businesses, as well as several of our smaller risk and market analytics businesses. In parallel, we have significantly strengthened our leadership team, adding experienced, proven talent in key roles. By eliminating some low-return work and complexity, we can invest more deliberately to support our long-term strategy. This includes strengthening our core derivatives and index businesses, exploring opportunities across our spot and off-exchange businesses, enhancing our clearing capabilities, broadening global access to our products, and positioning Cboe to succeed in new areas, such as prediction markets and tokenization. To support those long-term ambitions, we are realigning our organization from the ground up. Cboe's workforce has doubled in size since the beginning of 2020 as we integrated acquisitions and bolstered our support functions. While our growth brought with it enhanced opportunities, relationships, and capabilities, it also created mismatches as our strategy has shifted and the opportunity set has evolved. After a thorough review, today we announced our decision to realign our organization to build more agile teams, placing the clear ownership of outcomes with those best positioned to operate a fast, changing environment. Our earlier actions to sell, wind down, and optimize certain businesses, combined with today's additional strategic realignment changes, are expected to reduce our workforce by approximately 20%. In addition, we will also be transitioning back to in-person work to support faster decision-making, stronger collaboration, and better integration across teams as we execute the next phase of our growth strategy. Today's announcement represents a critical next step in our realignment, directing resources to the work that will drive our future success. When joining Cboe, an important consideration for me was the ability to effectuate change and drive greater levels of efficiency throughout the organization. As a management team, we have made great strides. Jill has been a key partner in instilling discipline throughout the company. I look forward to building on the steps we have taken as a firm. Now I'd like to turn the call over to Jill to walk through the financial highlights from the first quarter and our 2026 guidance. Jill Griebenow Thanks, Scott. Cboe posted its fourth record quarter in the last five quarters, with adjusted diluted earnings per share up 48% on a year-over-year basis to a record $3.70. I will provide some high-level takeaways from this quarter's operating results before going through the segment results. Net revenue increased 29% versus the first quarter of 2025 to finish at a record $729 million. We saw strong double-digit growth in all categories, with the strongest growth coming from our cash and spot markets business. Specifically, cash and spot markets grew net revenue 34% as industry volumes fueled revenue generation. In our derivatives category, net revenue grew 32% as strength in our proprietary index options and multi-list products drove robust results for the category. In Cboe DataVantage, new sales growth drove a 19% year-over-year increase in net revenue. Adjusted operating expenses of $201 million were up 4% on a year-over-year basis. Adjusted operating EBITDA of $541 million grew 41% and adjusted operating EBITDA margin expanded by 6.1 percentage points to 74.2%, a result of both our exceptional revenue results and disciplined expense management. 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. The Options segment delivered another quarter of record net revenue, increasing 33% year-over-year. The growth was driven by a 34% increase in net transaction and clearing fees in the first quarter. Total options ADV was up 10%, with a 29% increase in index options volume and a 4% increase in multi-listed options volume. The rate per contract for our options business also increased 19% on a year-over-year basis, given positive contributions from our multi-list products and index complex. North American Equities net revenue rose 18% versus the first quarter of 2025, with strong industry volumes driving a 40% increase in net transaction and clearing fees. On the non-transaction side, market data fees grew 5% and access and capacity fees increased 12%. Europe and APAC produced 32% year-over-year net revenue growth. Net transaction and clearing fees were up 43%, while non-transaction revenues were up a combined 21%. Futures net revenue increased 9% from the first quarter of 2025. The increase was primarily due to a 14% uptick in total ADV, given stronger VIX activity during the quarter. Finally, global FX produced the strongest net revenue growth of our segments, up 38% on a year-over-year basis, driven by a 36% increase in average daily notional value and a 4% increase in net capture. Looking at our Cboe DataVantage business, net revenues increased by 19% compared to the first quarter of 2025. Revenue growth was again underpinned by healthy new subscription and unit sales, representing approximately 85% of this quarter's growth, with the remainder coming from pricing changes. Exploring the growth drivers further, we saw increases in each major area of DataVantage, with market data and access services, Cboe Global Indices, and risk and market analytics all up double digits on a year-over-year basis. The most pronounced growth occurred as a result of one-time data sales associated with some of our newly launched products. Turning to expenses, total adjusted operating expenses were $201 million for the quarter, up 4% on a year-over-year basis. This increase is largely driven by higher compensation and benefits expense given the strong first quarter revenue trends, which resulted in an increase to our short-term incentive compensation. Before outlining updates to our 2026 guidance, I'd like to walk through how the planned sales of our Cboe Canada and Cboe Australia businesses, as well as the additional actions related to our strategic realignment announced today, are impacting our 2026 outlook. As you will recall, during the second half of 2025, we began to explore the potential sale of our Cboe Australia and Cboe Canada businesses, announced the wind down of certain businesses, and committed to reducing costs in specific listings and analytics businesses. Once complete, we continue to anticipate that these actions will lead to an approximate 3% annualized reduction in net revenue compared to 2025, primarily driven by our strategic decision to exit or scale back non-core and lower return businesses. On the expense side, we previously indicated that the strategic realignment was expected to yield an estimated 8%-10% annualized reduction in adjusted operating expenses versus 2025. In light of the incremental strategic realignment changes announced today, we now expect our strategic realignment to deliver an even greater reduction, approximately 12%-14% on an annualized basis compared to 2025, translating to savings in the range of $100 million-$120 million. The incremental strategic realignment actions are expected to contribute $40 million-$50 million in annualized expense savings. As it relates to our 2026 guidance, we anticipate realizing $20 million-$25 million of the additional strategic realignment savings in 2026. Before touching on the remainder of the 2026 guidance changes, I want to make clear that although we have an agreed-upon sale in place for Cboe Canada and Cboe Australia, we continue to operate the businesses until the transactions close, with each entity being subject to separate closing and regulatory approval processes. Until the sales are complete, the revenue and expense contribution of each will remain part of our 2026 guidance. On an annualized basis, we estimate the 2026 total net revenue contribution from Cboe Canada and Cboe Australia will be in the $60 million-$70 million range, and we estimate adjusted operating expenses that would no longer remain in Cboe's cost base following a sale to be in the $40 million-$50 million range. We will update our guidance as regulatory approvals progress and transaction timing becomes more certain. Looking at our overall 2026 guidance, we are providing the following updates. On a full year basis, we anticipate our Cboe DataVantage organic net revenue growth to be in the low double-digit range. We expect our total organic net revenue growth to be in the low double-digit to mid-teens range. We are lowering our 2026 adjusted operating expense guidance range from $864 million-$879 million to $838 million-$853 million. Compared to 2025, this represents no increase at the low end and a 2% increase at the high end. Our full year guidance range for CapEx remains $73 million-$83 million, and depreciation and amortization remains in the $56 million-$60 million range. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 27.5%-29.5% for the full year. While we don't provide formal guidance on interest income or interest expense, we expect that interest income net of interest expense will be a three and a half million dollars to a four and a half million dollars positive contributor for the second quarter of 2026. On the capital front, following our fourth quarter earnings call on February 6, we resumed opportunistic share repurchases, buying back a total of $45 million in Cboe shares through the first quarter. Last quarter, we also returned $76 million to shareholders in the form of a $0.72 per share dividend, putting total capital return to shareholders in the first quarter at $121 million. We retain a great deal of balance sheet flexibility, as evidenced by our adjusted cash position of $2.1 billion and a leverage ratio of 0.8 times, positioning us well to invest in organic or inorganic opportunities as well as redeploy capital to shareholders in the form of dividends or opportunistic share repurchases. Now, I'd like to turn it back over to Craig for some closing comments. Craig Donohue Thank you, Jill. The first quarter results were truly exceptional, but the market continues to evolve at an unprecedented pace. To continue to lead, we must move faster, sharpen our focus, and deploy our resources with even greater discipline. As I reflect on my first 12 months here at Cboe, it is clear that the decisive steps we have taken are moving the company closer to realizing its full potential. In October, following a thorough strategic review and adopting a more rigorous financial and strategic framework, we announced a strategic realignment designed to increase focus and investment in our core businesses that drive our earnings. Index options, multi-list options, futures, U.S. equities, European equities, and FX. We took quick and decisive action to reorient the business, including winding down Japanese equities, exiting corporate listings, winding down our European derivatives business, optimizing our resource allocation and our risk and market analytics businesses, and initiating the sale of our Canadian and Australian businesses. Last week, we achieved a significant milestone by reaching a definitive agreement to sell Cboe Canada and Cboe Australia. These actions have not only improved performance in our core businesses, they have allowed us to focus on new areas of growth amid a rapidly transforming industry. Going forward, we are positioned to allocate resources more effectively, including adding talent in emerging areas as we make greater investments in financial and economic event markets, tokenizing products, and further expanding our clearing services in Europe and the U.S. As a result, we will strengthen our regional sales, marketing, and investor education to bring our most in-demand products, emerging innovations, and deep market expertise closer to our customers, all driving long-term value for shareholders. I've been in this industry for many years, and I have never been as excited about the road ahead as I am now. We have everything to play for, but it's going require us to work smarter and be incredibly focused with our decision-making and use of capital. I will now turn the call back to antic for questions and answers. Ken Hill At this point, we'd be happy to take questions. We ask that you please limit your questions to one per person to allow time to get to everyone. Feel free to get back in the queue, and if time permits, we'll take a second question. Operator Ladies and gentlemen, we will now begin the question and answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment please for your first question. Your first question comes from the line of Patrick Moley of Piper Sandler. Please go ahead. Patrick Moley Yes, good morning. Thanks for taking the question. I had one on DataVantage revenues. Very strong growth this quarter of 19%. You mentioned the 85% coming from new unit sales. It's obviously, I think, been elevated for the last couple of quarters. How much of it's coming from new unit sales? I just wanted to get an update on how sustainable; you know, you think the growth here is, especially, you know, given some of your comments on reinvesting in the sales force. As we look forward, given the guidance update and increase this quarter for the full year, should investors look at, you know, low single or low double digits as kind of the new baseline in terms of growth in DataVantage? Thanks. Craig Donohue Hi, Patrick. In terms of Cboe DataVantage, you're right. We had a very strong quarter here, and the growth was pretty broad-based across all of our businesses. About half of the growth year-over-year was driven by higher access-related revenue, and the driver of that was really client demand for increased connectivity to our options exchanges. You saw our options volumes grew double digits, and our index options volumes grew about 30%. That was a pretty strong backdrop there. About 40% of the growth came from increased market data sales, and we continue to see very robust demand for both our European and U.S. prop data, and we also continue to see strong demand from local brokers in Asia. Again, those brokers want the data to provide U.S. access to their clients. We're seeing some pretty strong sales there. As we've said in the past, some of these sales can be unevenly spread throughout the year. We launched two new products related to options datasets this quarter. While we started off strong on subscription sales, those two new launches also triggered quite a bit of one-time revenue related to historic datasets to combine with those new products. That's where you see some of the relative outperformance in that 19% year-over-year growth rate. The rest of the growth was driven by both our index business and some of our risk and market analytics businesses. As you heard Jill say, we are taking our guidance up this quarter to low double digits for the year. I wouldn't say that's a new baseline, but we continue to see some pretty strong growth. We'll continue to update as the quarters go on. Operator Your next question comes from the line of Brian Bedell, Deutsche Bank. Please go ahead. Brian Bedell Great, thanks. Thanks. Good morning, folks. Thanks for taking my question. Maybe just as zone in on the prediction markets. Craig, I think you talked about that earlier in terms of the strategy there. What is the? It's clear what you're launching in the near term here on the on the vertical binary options. How do you envision this industry playing out over the long term and how Cboe would participate in that? What I'd particularly like to focus on is, you know, the potential to launch company-specific financial KPI contracts, realizing they most likely have to be regulated by the SEC. You know, what is your view on the potential demand for those types of contracts? Would those need to be done in an option structure? Is, you know, could you create a different platform, you know, say like how Kalshi runs their platform now in terms of that type of market structure to do those, or maybe both? Anyway, that's a long-winded question, but if you could comment on that. Craig Donohue Yeah. Thank you, Brian. I'm happy to do that, and I'm sure Rob's gonna wanna get into that as well. I mean, I view this as like a really significant new market segment that is likely to continue to develop. I think that despite the explosive growth that we've seen in event and prediction markets, this is still extremely early stages. What we've said is we're focused on, you know, taking advantage of that opportunity and what we view as the long-term growth potential in the market, but with a focus on, you know, contracts that are well-designed, that are really oriented toward, you know, financial instruments, and economic, you know, indicators and things like that. You know, you mentioned, you know, company-specific things. That's one of the things that makes us so well-positioned to take advantage of the long-term growth trend in event and prediction markets. We've said before that in many respects, you know, having really led the market in terms of developing the 0DTE ecosystem, you know, we've got effectively event contracts that are happening, you know, many millions of contracts being traded each day. Being in both the securities and the future space but being particularly strong in the equity and equity derivative space. We're super keen on, you know, coming to market with company-specific contracts. We see lots of opportunities for doing that. Rob and his team and JJ Kinahan are working really closely with all of our partners, our liquidity providers, our market makers, our retail brokers, to try to kind of, you know, move us to that next phase of growth. You know, long term, certainly see the opportunity also to expand into, you know, CFTC-regulated futures or swaps that are also event contracts. I see it as a really large market opportunity, one that's gonna continue to develop over the next decade. There's lots of opportunity for us specifically given, you know, we've got a really strong reputation, for, you know, market integrity, market supervision and oversight, contract design, distribution, and a proven ability to marry retail and institutional together. Let me turn it to Rob 'cause Rob is really leading this. Rob Hocking Yeah. Thanks, Craig. I agree, it's a great opportunity. I think, you know, starting with securities isn't philosophical, it's a practical reason. You know, it's where our customers are, it's where the infrastructure exists, it's where investor protections are the strongest. You know, retail broker platforms are already built for OCC-cleared index-based products. That means when we lead with our XSP Binary Options, you know, we have the potential for broader day-one distribution with stronger customer protections and really more of a reputational alignment with Cboe's brand. It avoids forcing securities-like risks into futures wrappers that customers don't naturally use today. So, you know, phase one, as we've talked about, we lead with the binary options, defined spreads in XSP. We want to expand that to other core proprietary products. As I mentioned, this approach aligns well with existing workflows for our clients. As you asked, you know, really fast second phase, exploring what KPI-based contracts would look like, I would argue in securities and futures, 'cause some will, I would say, fall into more of a futures category, but really leading more on the securities side as we feel a lot of these outcome-based contracts tied to things like earnings and corporate KPIs are directly tied to the financial performance of the individual company, and therefore land in that securities bucket. By moving forward and developing these, we're really focused on, you know, designing these products with. And I think this is super important for the integrity, is with clear resolution, kind of disclosure-based settlement that people can count on, that they understand exactly what that settlement number is, and there's very low likelihood of revisions and restatements. Obviously within the securities framework, taking advantage of decades of surveillance controls that will just add, you know, call it extra certainty and extra trust into the system for these users as more and more people look to get involved. Brian Bedell Great. Great color. Thank you. Operator Your next question comes from the line of Eli Abboud of Bank of America. Please go ahead. Eli Abboud Grad morning. Thanks for taking the question. Given the discussion lately about other exchanges looking to compete for the SPX contract in 2032, can you talk about what capabilities Cboe brings to the SPX complex that you feel other options exchanges cannot replicate? In particular, can you share any data points to help us better appreciate the depth of the network you've built out in SPX? How many introducing brokers offer SPX today? Does the vast majority of volume come from just a few brokers or is participation broad-based? Rob Hocking Yeah. Yeah. Happy to go through all of that. Why don't I just outline kind of the breadth of what makes up the proprietary product ecosystem, and hopefully that might give you an idea of why we feel it's so powerful and call it hard to replicate. First, you know, it starts with foundational product in the SPX, and then yet in a generational relationship with a great partner in S&P. That allows us to be able to deliver, call it, all of this record growth quarter after quarter after quarter. The SPX averaged just under 5 million contracts per day for the first quarter, and then almost 5.4 million contracts per day for March. Both were all-time record highs. What I like to point out is this is more than a, you know, 300% increase in the past five years for a product that is approaching its 43rd anniversary. You think of the established base, and yet these returns and how we're growing the product is phenomenal. Volume in the first quarter was made up of, call it, about 84% electronic, 16% open outcry. What's important to note on this is that 58% of the notional value traded in SPX options is trading on the floor. Really only 40% or call it 42% is being traded electronically. That just goes to show that while the number of contracts traded on the floor is a smaller absolute number, it still represents the majority of notional dollars at risk, which is just important to understand. On the trading floor, we have, call it, roughly 11 different floor broker groups, with the largest representing only around 23% of the volume. Not to mention the 20 market making groups servicing the flow of those 11 floor broker groups that they bring to the platform. On the electronic side, we have 34 different retail broker platforms connected in trading, with the largest representing only about 30% of the volume. You can see that volume is spread across many of those platforms. Of that volume, 50% is complex or multi-leg spreads, and 50% is simple or single option trades. As we've talked about, roughly 60% of the volume is showing up in 0DTE. If I break down how that flow is showing up each week and kind of looking at how it hits the contracts, Fridays tend to be the biggest volume day at around 28%, with the other days of the week averaging between 14%-23%. Overall, this trading is very balanced each day. Why do I go into that part? Really, what I think these numbers show is an entire ecosystem with balanced flow, balanced risk, balanced participation on the broker side, the market maker side, and the customer side. Now, I want to point out that this was intentional. This is what we set out to build when we went to build the ecosystem and the product toolkits and how they're all intertwined. I think given our success, we really see, you know, little reason to upset it. Eli Abboud Great. Thank you. Operator Your next question comes from the line of Dan Fannon with Jefferies. Please go ahead. Dan Fannon Thanks. Good morning. Jill, just wanted to follow up on all the guidance you gave. Appreciate the additional details, but just a few clarifications. The $100 million-$120 million is the total expense saves, I guess, across everything that you've announced, including today. Just wanna confirm what's in the guidance for this year, and then what's remaining to still kind of be in guidance and/or be realized as we think about 2026, I'm sorry, into next year. Just wanna clarify a few of the timing and also what's in guidance and what's not. Jill Griebenow You bet. Happy to walk through that. As mentioned, once all of the strategic realignment actions are fully implemented and realized, we expect the aggregate annualized benefit from an expense perspective to be in that $100 million-$120 million range. As you rightly alluded to, there is going to be a timing component to this. The way I would break it down is, you know, taking some of the midpoints of the figures that we shared today. We did share that we expect to save approximately $40 million-$50 million in expenses once both the Cboe Canada and Cboe Australia transactions are fully complete and transitioned. You know, taking that on an annualized basis, I would say given that those haven't occurred and in my remarks earlier, none of that has been baked into our 2026 guidance, savings has been built into the 2026 guidance. All of that expense remains to be realized at a later date. If you take a look at the, you know, additional actions related to the strategic realignment that we did later on today, that piece is also expected to be $40 million-$50 million in annualized savings once everything is fully recognized. We do expect the majority of that to hit in 2026, but there will be a component that does extend into 2027. As shared earlier, we expect the 2026 savings from the additional three strategic realignment efforts to be in that $20 million-$25 million range. Backing out, you know, the other, I would say we do have about $20 million then of the previously actioned strategic realignment pieces that have already been reflected in our 2026 guidance. You're seeing that, you know, that fully encompassed package reflected in the numbers then that we came out with today at our revisions. Dan Fannon Thank you. Operator Your next question comes from the line of Benjamin Budish of Barclays. Please go ahead. Benjamin Budish Hi. Good morning, and thanks for taking the question. Maybe one for Jill, just on capital priorities. It looks like you should have some proceeds coming in from the Australian and Canadian properties. You know, your net debt position is quite strong. I think your cash levels are maybe up double year-over-year. There seems to be no, you know, limits to your ability to invest, I would think, at least organically in the business. How should we think about, you know, use of cash, you know, OpEx versus M&A versus CapEx? Just any color there, as you're thinking through, you know, the impacts coming out of this realignment and anything else would be helpful. Thank you. Jill Griebenow You bet. Again, you know, we do generate a lot of free cash flow, especially given the record results that we continue to put up quarter after quarter. Balance sheet is in a phenomenal position. What I will say is, you know, we continue to be focused on organic investments. We've obviously, you know, taken quite a few actions and, you know, even announced more today on the strategic realignment front. Really what that's doing is better positioning us for, you know, future focus areas. I'll just, you know, hit on a couple of those that Craig mentioned earlier that we're really looking to lean into, whether they be, you know, financial and economic event markets, tokenizing products, further extending our clearing services in Europe and the U.S. You know, those are potential uses of the, you know, the nice capital that we have available to us. You know, we're taking a look at, you know, everything opportunistically. You can expect share repurchases, again, opportunistically, as I've hit on the quarterly dividend. We do have a history of increasing that during the third quarter. We'll take another look at that. Effectively, you know, really feel we're well-positioned right now to be able to lean into some of these areas as the opportunities are emerging. Benjamin Budish Okay, great. Thank you, Jill. Operator Your next question comes from the line of Ashish Sabadra of RBC Capital Markets. Please go ahead. Ashish Sabadra Oh, thanks for taking my question. I just wanted to follow up on Brian's question. The prediction markets have also launched these binary options on S&P 500. How does that change the competitive dynamic, particularly given you have the exclusivity for the SPX option? How are you thinking about pricing those event contracts going forward? Thanks. Craig Donohue Thanks. Thank you very much. You know, I'll just comment briefly and then let Rob Hocking answer your question on pricing. You know, we're certainly cognizant of some of the products that are being traded, and, you know, that a topic that we are always in active discussions with our regulators on. It is clear that binary options that are based on a broad-based stock index are a securities-based product. That's an ongoing conversation that we're having, and I think we're very hopeful and optimistic that regulatory clarity ultimately will result in no impact to our licensed products. Rob Hocking Yeah. On the pricing front, I think we're working very closely with the various retail broker platforms. We obviously have to look at what the clearing fee will be, the exchange fee. There's things like ORF regulatory fees that fall under security options today that we'll have to take into account. I think we're working through those now. The good news is we have a fair amount of flexibility in being competitive with pricing to various, I would say, event contracts that are out there today on other platforms. Even as I mentioned, ORF, I know it's a fun topic for the industry, even as we now look to, you know, potential ORF reforms coming in in the summer, it now gives us the flexibility to, I would say, by exchange, be very targeted in how we charge some of these fees and how we try to deliver as much end value as we can to the customers. We haven't finalized the fee structure yet. We obviously will be very public with that when we do. The fees on the existing contract, so XSP, those will be very much in line with the way fees are charged today. We don't see a big change. We just see launching the binary vehicle as just an add-on to the existing XSP, Mini-SPX franchise. When I'm more referring to the KPI style event contracts, you know, those will be very new, how the risk transfer happens and how the pricing works on that. We'll be back with more details, but are working very close with all the industry participants to ensure, you know, the best chance and the best value add for the end user. Ashish Sabadra That's very helpful, color, and congrats on such a strong result. Thank you. Craig Donohue Thank you. Operator Your next question comes from the line of Michael Cyprys of Morgan Stanley. Please go ahead. Michael Cyprys Hey, good morning. Thanks so much for taking the question. One of the areas of focus you mentioned is enhancing clearing capabilities. I was hoping you could elaborate on how you might go about that and the opportunity set that you see there with clearing. More broadly, as the industry may shift over time toward more tokenized rail. Just curious how you see the economics evolving for clearing, but also settlement and execution in the tokenized world. Where is there scope for compression versus opportunities for new revenue pools and adjacencies? Craig Donohue Yeah, I'll take that. You know, we see tremendous benefits in expanding our clearing capabilities. We've got a very strong position with our European clearing house. We're expanding that to include securities finance transactions. That's been emerging growth for us that we're really excited about. I think your question really touches on the heart of what I think is very interesting for us, which is that, at least in the U.S., we're still a very nascent and small scale player in clearing and settlement. I think as we look at, you know, tokenization and blockchain applications and, you know, atomic settlement, we view that as kind of where we're going in terms of opportunities for us to deploy those kinds of capabilities, especially in, you know, areas of emerging, you know, markets like cryptocurrency and other things. That is sort of the thrust of what we're focused on in terms of growth from here, and taking advantage of what we think is this, you know, melding that is going to keep happening between the traditional market infrastructure part of the markets and the DeFi sort of emerging area. Michael Cyprys Just to that point around economics evolving, just any views on how you see economics evolving for clearing settlement execution in tokenized landscape? Craig Donohue You know, I think that's something that has to wait until we get closer to, you know, developing those capabilities. I think that it's clear that there is demand for that. We clearly see people, you know, using, you know, on-chain tokenization as a way to overcome the inherent limitations of traditional market infrastructure, particularly in the post-trade area. There's value there to be created. I can't comment on pricing and economics at the moment. Michael Cyprys Okay. Thank you. Operator Your next question comes from the line of Simon Clinch of Rothschild & Co Redburn. Please go ahead. Simon Clinch Hi. Thanks for taking my question. I was wondering if we jump back to the event contract strategy you have. Terry, I was wondering if you could talk to us about how you see the size of the relative opportunities for just the prediction market opportunity on its own at Cboe, then sizing that against the opportunity of it treating it as a funnel to fuel activity and growth within your traditional futures and options franchise. Thanks. Craig Donohue Yeah. Thank you very much. I really appreciate that question. I think that you're right to think of that as a dual function of future growth for Cboe. We've said that all along, which is that, as we've been moving from, you know, quarterly contracts and monthly contracts and weekly contracts and bi-weekly contracts to zero, you know, zero DTE contracts, we see event contracts at this point as actually really a stepping stone to basic options trading strategies. Rob's talked about that. Rob and JJ, I think, have been super innovative in developing the sort of payout zone concept or the vertical spread concept. I think it's really difficult to answer your question at this juncture, you know, it's really clear that there's a lot of emerging interest in decomposing equity securities and looking at different ways to offer investment ideas to people. When you start to think about contracts that would, you know, effectively allow people to express an opinion about what, you know, the delta might be between actual earnings and expected earnings or, you know, people who are focused on how different sort of KPIs might drive earnings outcomes for companies, whether that's, you know, looking at Netflix subscriptions or Tesla car production or Meta ad revenues, I think these markets can be huge. I think, you know, it's hard to give you sort of an aggregate sort of exactly how we're sizing the market right now. If you just look at the size of the equity market, and then you start to contemplate breaking down more granularly, as I said, decomposing equity securities into all these different kind of event contracts, you can see that there can be an enormous multiplier effect well beyond what the equity market today would be. That's more conceptual than it is like an actual market sizing. That goes back to my earlier comments on the call, which is I think this is a huge new market segment I think is going to develop over the next decade. There's tremendous opportunity there. We're super excited about it. I think we're probably best positioned to actually be the leader in those markets. Simon Clinch Great. Thanks a lot. Thank you. Operator There are no further questions at this time. With that, I will now turn the call over to the management team for closing remarks. Please go ahead. Craig Donohue I just wanna say thank you for joining us. We are very excited here. This has been a tremendous amount of work to do over the course of the last year. Some of the things that we've had to do, of course, are quite difficult decisions to implement, but we are very focused on making Cboe incredibly strong and positioning us to take advantage of all these growth opportunities in the market, making today's changes that we've announced really further us in that regard. Thank you very much. We look forward to being with you next quarter. Operator Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.