Cboe Global Markets - Earnings Call - Q1 2025

Executive Summary

• Record quarter: net revenue $565.2M (+13% y/y), diluted EPS $2.37 (+21% y/y), adjusted diluted EPS $2.50 (+16% y/y). Management raised 2025 organic total net revenue growth to mid-to-high single digits and reaffirmed adjusted opex guidance ($837–$852M).
• Beat vs consensus: Q1’25 adjusted EPS $2.50 vs consensus $2.36 (+5.8%); net revenue $565.2M vs consensus $562.4M (+0.5%)*. Values retrieved from S&P Global.
• Broad-based strength: Options (+15% y/y), Europe/APAC (+18% y/y), Global FX (+16% y/y); Cash & Spot Markets (+10% y/y) despite U.S. on-exchange share headwinds.
• Tactical catalysts: robust April activity, zero-DTE engagement, Robinhood rollout of index options, and new cash-settled Cboe FTSE Bitcoin Index futures on CFE launched April 29.
• Leadership transition as Craig Donohue becomes CEO (effective May 7), reinforcing optionality for organic and selective inorganic growth.

What Went Well and What Went Wrong

• What Went Well

  • “Broad-based strength” delivered records in net revenue and adjusted EPS, with Derivatives +16%, Cash & Spot +10%, Data Vantage +8% y/y.
  • Options: record net revenue $352.4M (+15% y/y) on 23% total options ADV growth; SPX/XSP/VIX activity robust and overnight index options volume at records; April volumes remained elevated.
  • Data Vantage momentum: organic net revenue +8% y/y; new recurring ACV +47% y/y; 55% of new data sales outside U.S., supporting international expansion.
  • Technology resiliency: completed migration to Cboe Titanium; processed over 1 trillion orders/data events across 27 markets on April 7.

• What Went Wrong

  • U.S. Equities on-exchange market share fell to 10.5% from 12.8% y/y amid higher industry off-exchange share; net transaction & clearing fees down 9%.
  • Total options market share dipped to 31.1% (from 31.3%); total options RPC declined 4% on mix shift (index options lower share of total volume).
  • Section 31 fees surged to $153.1M (from $42.1M y/y), pressuring gross-to-net conversion within Cash & Spot and Derivatives revenues.
  • CFO flagged reacceleration of marketing spend and higher short-term incentives given strong April, tempering near-term opex tailwinds.

Transcript

Operator (participant)

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets' first quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's 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, press Star one again. Thank you. I would now like to turn the call over to Ken Hill, Treasurer and Head of Investor Relations. Please go ahead.

Kenneth Hill (Head of Investor Relations)

Good morning, and thank you for joining us for our first quarter earnings conference call. On the call today, Fred Tomczyk, our CEO, and Dave Howson, our Global President, will discuss our performance for the quarter and provide an update on our strategic initiatives. Jill Griebenow, our Chief Financial Officer, will provide an overview of our financial results for the quarter, as well as discuss our 2025 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer. I'd 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 will make some 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, after this conference call. During the call this morning, we will be referring to non-GAAP measures as defined and reconciled in our earnings material. Now, I'd like to turn the call over to Fred.

Fred J. Tomczyk (CEO)

Good morning, and thank you for joining us today. Before I dive into our results, I want to express my support for the announced appointment of Craig Donohue as Cboe's new CEO. Craig is a seasoned, visionary leader who brings a wealth of experience to the role and is deeply respected across the industry. The board believes he is the right leader to take Cboe into the future. I'll share more about the planned transition a little later in the call, but let me first recap our strong results. During the first quarter, Cboe grew net revenue 13% year over year to a record $565 million and adjusted diluted earnings per share by 16% to a record $2.50.

These results were driven by strong volumes across our derivatives franchise, both in multi-list and our proprietary index option products, strong performance in our cash and spot markets, continued global expansion of our Data Vantage business, and disciplined expense management. While the robust option volumes were especially notable for the quarter, the broad-based results across each category—derivative markets, cash and spot markets, and Data Vantage—were strong and contributed to the record quarterly growth. Our derivatives business delivered a record quarter with organic net revenue increasing 16% year over year as traders and investors utilized our flagship VIX and S&P 500 index option products across an ever-changing and marked environment, helping to respond to geopolitical events, market volatility, and the macroeconomic uncertainty around the globe.

We saw strong volumes across our suite of index option products, with first quarter ADV in the SPX contract increasing 13% year over year and ADV in the XSP contract increasing 61% year over year. We also saw solid performance in our volatility product suite during the first quarter, with VIX options ADV increasing 33% and VIX futures ADV increasing 13%. Volumes across our index and multi-list products remained elevated in April as the tariff announcements created significant volatility and uncertainty in global markets, fueling a robust start to the second quarter. Given the secular and cyclical tailwinds in place, we are well-positioned as investors continue to utilize options in their portfolio and trading strategies. Our Data Vantage business performed well during the quarter, with organic net revenue increasing 8% year over year.

We continue to see durability in this business as we leverage our global network and ecosystem of data and access solutions to drive growth. Our cash and spot markets also performed well during the quarter as organic net revenue increased 10%, driven by healthy trading volumes and growth across all of our regional equities markets. Overall, it was an excellent quarter for both transaction and non-transaction revenue growth to start the year. Looking forward, we remain laser-focused on executing our longer-term strategy, including investing in the continued growth of our core business, global derivatives, increasing recurring revenue opportunities through Data Vantage, harnessing the power of our global network and client base to expand product reach and access, capitalizing on the demand for access to the U.S.

Capital market, leveraging our superior technology to help drive innovation and product development, and disciplined allocation of resources and capital towards the long-term secular growth trends. As witnessed during the first quarter, our strategic focus is well-aligned to the secular trends we see in the capital markets and leverages our core strengths. We see significant opportunity in the Asia-Pacific region, where we see growing demand for our index option products, which serve as an efficient and accessible way to gain exposure to the U.S. market. We see a solid pipeline of clients in the region, and during the first quarter, we onboarded new clients in Korea and Taiwan to offer our proprietary products. We see this as a long-term secular growth trend, and we are excited about the early signs of growth and penetration in this market.

Turning to our Data Vantage business, our global footprint continued to help drive results during the quarter. Leveraging Cboe Data Vantage products will be key to helping our Asia-Pacific customers gain the access they need to U.S. markets, and we're working diligently to make that more seamless and accessible. More recently, we've also seen increased interest for European market data amongst our Asia-Pacific customers, reinforcing the power of our global network to provide our customer base with the data and access they need across global markets. Additionally, we remain focused on product innovation across our ecosystem and unlocking access to U.S. markets for international investors. Whether it be through increased accessibility, new products, or education, we'll continue to help people access the liquidity and efficiency of the U.S. markets while also providing trusted markets in local regions around the world.

To that end, in the first quarter, we completed our final equities exchange migration to Cboe Titanium, our best-in-class exchange technology platform. During the recent market turbulence, our exchanges have demonstrated remarkable resilience and reliability, which is critical to our customers. We will continue to invest in our exchange technology platform to help ensure we have durable technology powering our markets and driving innovation for our customers. I'll now turn the call over to Dave to talk in more detail about the business line results.

David Howson (President)

Thanks, Fred. Starting with our derivatives business, net revenues increased a robust 16% to a record $309 million in the first quarter. We saw activity accelerate throughout the period to produce record total options average daily volumes across our four options exchanges. Notably, we reached all-time quarterly, monthly, and single-day highs in SPX during the first quarter. XSP, our mini SPX product, reached a new quarterly record, and overall proprietary index options ADV achieved all-time quarterly and monthly highs. Looking a little deeper into the drivers of the record activity, option volumes surged on the back of heightened geopolitical volatility as investors turned to options to help navigate the increasingly uncertain macro outlook. SPX options volumes increased 13% year over year to a record ADV of 3.6 million contracts, while VIX option volumes jumped to almost 33% to an ADV of 948,000 contracts.

The growth in our SPX options franchise was led by a continued rise in zero-DTE options trading. This was on the back of two factors. First was the fast-moving nature of headlines coming from this administration as investors turned to zero-day options to help monetize the increase in intraday volatility. Second was expanded access, with Robinhood rolling out index options to all its customers in late January. Zero-DTE option volumes averaged almost 2 million contracts in Q1, up 29% year over year and making up a record 55% share of overall SPX volume. In this headline-driven market, the ability to trade in and out of risk at all hours of the day became ever more important, especially as we expand our customer base internationally. Index options volume in our global trading hours hit a record last quarter, up 36% year over year.

Over 253,000 SPX options traded during overnight hours on January the 27th when the D.C. headlines hit the market, more than during the November U.S. election. That record has since been broken multiple times in April as trade tensions escalated. Outside of our established SPX and VIX franchise, we're also seeing encouraging growth in several new products. Most notably, our new Bitcoin index options, tickers CBTX and MBTX, since their December launch. ETF issuers, in particular, have gravitated toward our products by introducing options-based strategies on Bitcoin. Already, 15 ETFs are using CBTX and MBTX options in their strategies, with more expected to come. MBTX options volumes hit a record high of over 27,000 contracts on March the 31st, equivalent to $527 million in notional. We're excited to expand on our Bitcoin offering with Cboe FTSE Bitcoin Index Futures, which launched on April the 28th.

Besides crypto, we also saw a healthy uptick in our corporate bond futures. Open interest in our high-yield futures recently hit a record high of $901 million in notional value, while open interest in our investment-grade futures jumped to $547 million. As credit market volatility picks up, we expect continued growth and adoption in these products. The breadth and strength of the Cboe toolkit was on full display to start the year, be it early in the quarter as investors made tactical shifts with the use of zero-DTE SPX options or navigated more outsized volatility events with Cboe's VIX options and futures. As we head into the second quarter, volatility has remained elevated with trade tensions, recession risk, and potential inflation shocks. The need for both retail and institutional investors to use options to dynamically manage positions, hedge exposures, and generate income only increases.

Already in the second quarter, we've seen SPX volumes hit an all-time high of 6 million contracts on April the 4th, with quarter-to-date proprietary product ADV running above previous quarterly and annual records. Moving to cash and spot markets, first quarter revenue was up 10% as each region contributed to the upside. With Cboe Canada successfully migrating to Cboe Titanium during the quarter, we now have all our equities and derivatives markets across North America, U.K., Europe, Australia, and Japan running on Cboe Titanium. The resiliency of the platform has been on full display in 2025 as we have seen record volumes and activity in many of our markets. For context, on April the 7th, we seamlessly processed over 1 trillion orders, quotes, and market data events across our 27 global markets.

In today's environment, having a globally consistent, locally optimized technology platform is a differentiated strength that will help Cboe to expand access to its markets, data, products, and services to customers around the world. In North American equities, net revenue was up 2% as increased non-transaction revenue was partially offset by lower net transaction and clearing fees versus the first quarter of 2024. In the U.S., industry activity levels have been healthy, but the benefit was muted by a smaller addressable market for Cboe, with total volume transacted off-exchange or during auctions hitting 56% for the first quarter, or 6 percentage points higher than Q1 2024 levels. On the non-transaction side, we've seen durable demand for our access services and data products.

Our Europe and Asia-Pacific segment delivered the strongest year-over-year % growth of any segment for the third quarter in a row, printing an impressive 18% increase, or 22% on a constant currency basis. The increase was driven by higher net transaction and clearing fees, up 30% in the first quarter behind strong industry volumes and solid market share trends. We remain excited about our prospects in these regions, both for the opportunity to grow share in local markets as well as the ability to import activity back to the U.S., given the continued demand by global participants. Turning to Data Vantage, net revenue grew over 8% in the first quarter, with solid increases in all three components of our Data Vantage business: real-time market data, analytics, and indices. Also of note in Q1, we saw new recurring annual contract values, ACV, increase 47% year-over-year, a strong leading indicator for our business.

As we redeploy a greater proportion of our technology resources to revenue-generating activities, we look forward to building on our positive 2025 sales trends. Taking a closer look at some of the first quarter dynamics, 55% of new data sales occurred outside the U.S., with efforts to improve access to the U.S. and European markets for global investors by increasing our APAC sales force, adding more brokers in the region, as well as rounding out our market intelligence group with local expertise, we are looking to lean into this secular trend. We believe getting our data in the hands of more customers around the globe is not only beneficial for our Data Vantage business but enhances our trading businesses as well.

Historically, we have seen customers increase data consumption ahead of implementing trading strategies in new markets, in this case, international investors analyzing and backtesting ahead of putting money to work in the U.S. or Europe. The first quarter showcased the breadth and durability of the Cboe model. We look forward to building on the strong Q1 results and robust start to the second quarter through continued enhancements to our education efforts, broadening access to our markets, and leveraging our differentiated set of products for investors around the world. With that, I will turn the call over to Jill.

Jill Griebenow (CFO)

Thanks, Dave. Cboe posted a record first quarter, with adjusted diluted earnings per share up 16% on a year-over-year basis to $2.50. First quarter results reflected strength across our ecosystem and in each of our business segments. I will provide some high-level takeaways from this quarter's operating results before going through segment results. Our first quarter net revenue increased 13% versus the first quarter of 2024 to finish at $565 million, with each of our categories producing healthy year-over-year growth. Specifically, derivatives markets' net revenues grew 16%, cash and spot markets' net revenues grew 10%, and Data Vantage net revenues grew over 8%. Adjusted operating expenses of $192 million were roughly flat on a year-over-year basis.

Driven by our strong business results and disciplined expense management, adjusted operating EBITDA of $385 million grew 20%, and adjusted operating EBITDA margin expanded by 4.3 percentage points to 68.1% versus the first quarter of 2024. Turning to the key drivers 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 with 15% year-over-year growth. Total options ADV was up 23%, with a 17% increase in index options volume and a 25% increase in multi-listed options volume. North American equities net revenue increased 2% on a year-over-year basis. Access and capacity fees increased 16% as compared to the first quarter of 2024, partially offset by a 9% decline in net transaction and clearing fees.

The Europe and APAC segment produced record net revenue with an 18% year-over-year increase resulting from strong growth across both transaction and non-transaction revenues. Net transaction and clearing fees were up 30%, while non-transaction revenues were up a combined 8%. Futures net revenue increased 8% from the first quarter of 2024, with higher net transaction and clearing fees reflecting a 13% increase in ADV. Finally, Global FX record net revenue increased 16%, driven by higher net transaction and clearing fees. Looking at Cboe's Data Vantage business, net revenues were up over 8% on an organic basis in the first quarter. The ability to match an expanding product set with an increasing global sales presence and cloud distribution capabilities is a compelling combination.

We saw this benefit play out more recently with our Dedicated Cores offering and timestamping services, and we believe the future remains bright as we plan to continue to redeploy technology resources to revenue-enhancing activities. Turning to expenses, total adjusted operating expenses were $192 million for the quarter and roughly flat on a year-over-year basis. Lower other expenses, as well as travel and promotional expenses, were partially offset by higher technology support services and depreciation and amortization expenses. Despite the first quarter favorability, we are leaving our full-year expense guidance range unchanged at $837-$852 million. Our full-year guidance takes into account the first quarter expense benefit from timing-related elements in our marketing spend. Moving forward, we would expect to see marketing-related costs re-accelerate. In addition, given the continued strong results in April, we're projecting an uptick in short-term incentives in our compensation and benefits line.

Finally, our guidance framework captures the expected expense impact of our CEO transition. Overall, we are pleased to be in the advantageous position to invest in our business, expanding areas like our global sales efforts and making further marketing campaign enhancements to advance investor education for our index options products globally, all while maintaining our strong operating efficiency to drive durable returns for shareholders. Looking at our 2025 guidance more broadly on slide 16, we are increasing our full-year total organic net revenue growth guidance range to mid to high single digits, from mid-single digits, given the robust start to the year and confidence we have in our markets and products to provide utility to customers moving forward. We are reaffirming our Data Vantage organic net revenue growth range of mid to high single digits on the back of solid first quarter results.

As mentioned, we are reaffirming our full-year adjusted expense guidance range of $837-$852 million. Rounding out the remaining pieces of our guidance, our full-year guidance range for CapEx remains at $75-$85 million, and depreciation and amortization is expected to be in the $55-$59 million range. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5%-30.5% for the full year. While we do not provide formal guidance on interest income or interest expense, we expect that interest expense, net of interest income, will be in the $2-$3 million range in the second quarter of 2025.

Turning to our balance sheet, we remain in a strong financial position with over $1 billion of adjusted cash on our balance sheet and attractive debt profile with medium-term fixed rates averaging 2.8% and a low leverage ratio of 1.0 times. We resumed open market share repurchases following our fourth quarter earnings call on February 7 and repurchased $30 million in shares during the remainder of the first quarter. We have continued our opportunistic repurchase activity to start the second quarter with an incremental $5 million in shares bought back in April. Complementing our share repurchase activity, we returned a total of $66 million to shareholders in the form of a $0.63 dividend during the first quarter. Moving forward, we remain focused on leveraging our flexible balance sheet and healthy free cash flow profile to produce durable returns for shareholders.

Now, I'd like to turn the call back over to Fred for some closing comments before we open it up to Q&A.

David Howson (President)

Thanks, Jill. The year is off to a strong start with excellent first quarter and robust beginning to the second quarter. While volumes may ease from the exceptional levels seen in recent months, we believe the market ecosystem remains healthy and supportive of volume growth moving forward. Cboe is well positioned for Craig Donohue to take the reins. Many of you know Craig from his days at CME, where his track record speaks for itself. Craig brings decades of experience in the global derivatives markets and a history of driving growth and innovation to Cboe. His visionary leadership, deep experience, industry relationships, and proven track record in global financial markets make him an excellent individual to take the helm as CEO of Cboe.

When I moved from the board to CEO 18 months ago, my priorities were to stabilize the organization, sharpen our strategic focus, bring a more disciplined approach to capital allocation, and leadership development and succession. Together with a strong management team, we have achieved these goals, and I'm proud of the results we have delivered. We are now executing on an orderly and well-planned CEO succession strategy. Craig will assume the CEO seat on May 7th, upon which point I will transition to an advisory role through to the end of June. I look forward to working closely with him on a seamless transition and returning to my role as a non-employee director of the board. I am pleased to leave things in Craig and the executive management team's very capable hands, having accomplished each of my goals as CEO.

It's been an honor to lead this great company over the past 18 months, and I am incredibly proud of our achievements and optimistic about the future of Cboe. I will now turn the call back over to Ken for Q&A.

Kenneth Hill (Head of Investor Relations)

At this point, we'd be happy to take questions. We ask that you please limit your question 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 (participant)

Your first question comes from the line of Patrick Moley with Piper Sandler. Your line is open.

Patrick Moley (Analyst)

Yes, good morning. How are you all doing?

David Howson (President)

Great. My question was on the appointment of Mr. Donohue as CEO. Fred, you touched on it a little bit. I was hoping you could just elaborate maybe on what the CEO search process looked like and the decision to ultimately choose Mr. Donohue. Specifically, outside of his experience leading a publicly traded U.S. exchange, what sort of skills or qualities did you and the board feel like he possessed that made him the right person for the job? Thanks.

Fred J. Tomczyk (CEO)

Okay. It is Donohue, Anyway, we'll stop there. I mean, the process has been going on for quite a while. I mean, at the board level, our board is very much focused on strategy, risk management, and also on leadership development and succession. That is a top priority. It has been discussed over my whole tenure at literally every meeting. The process was very thoughtful, very disciplined. It looked at both internal candidates, and the board also wanted to consider external candidates. Obviously, we had certain characteristics we were looking at, and Craig ticked all those boxes with a combination of his global derivatives experience, his previous CEO experience, his strong track record of success, and his reputation throughout the industry and with regulators and shareholders and things like that.

At the end of the day, the board, after considerable deliberation, thought that Craig was the right person for Cboe at this time.

Operator (participant)

Our next question comes from the line of Chris Allen with Citi. Your line is open.

Christopher Allen (Analyst)

Yeah, morning, everyone. Thanks for taking the question. I look forward to working with Craig again. As you pointed out in the release announcement, Craig handled $20 billion of deals for CME. I am wondering how you're framing the inorganic growth opportunities moving forward, whether anything's changed on that front, and how do you view the environment from that perspective?

Fred J. Tomczyk (CEO)

As I said, we've built up a strong balance sheet. We've taken a very disciplined approach to capital allocation. We've sharpened our organic strategy, and we're actually returning capital through dividends and opportunistic share repurchases. Obviously, we're sitting on a fair bit of cash, as everyone recognizes. I think the company's in a good position to consider all of its options. One of the things that interested Craig in this role is all of those things and Cboe's position in the market. As we look forward, he's very much focused on growing the company both organically and to a certain extent inorganically, but will be very much focused on doing things that make strategic and financial sense and move the needle and create value in the long term for our shareholders. That's really what his focus is coming in.

We just think he's the right person to take us forward at this time.

Operator (participant)

Our next question comes from the line of Ben Budish with Barclays. Your line is open.

Benjamin Budish (Analyst)

Hi, good morning, and thank you for taking the question. I thought maybe you could dig into retail a little bit more. I think on the last earnings call, you called out faster adoption of index options than expected at Robinhood. It looks like the SPX volumes were quite robust in the quarter. Curious if you could give us any updates. Curious on Robinhood in particular, but also retail broadly. How is retail sort of responding in April versus maybe institutional? What kind of behavior are you seeing there? Thank you.

David Howson (President)

Yeah, thanks, Ben, for the question. As you point out, great Q1, really good engagement. As we mentioned in February, Robinhood came on board quicker than we expected, and the ramp-up was greater than we'd expected. We saw good utilization across the toolkit there with a majority of the activity in SPX. I guess I'll take the opportunity to talk a little bit about the characteristics that we've seen from retail in Q1 and that has prevailed throughout Q2, just to give you a flavor and a setup for what we might expect going forward. First comment I would make is that retail behavior has been remarkably disciplined. Now, what do I mean by that? We're looking at the strategies they deploy when they're opening trades.

95% of those in SPX Zero-DTE are what we call capped risks, where the maximum loss is known at the point of entry. What we've seen throughout Q1 and indeed in the start of April, when we see these extreme volatility spikes, we see retail investors remain engaged but take a really disciplined approach around their approach to the market. That means they make up less of the volume increases around those volatility spikes. The key point here is that, as we've seen in points of history, we see retail come back after those extreme volatility spikes have abated, whether that be COVID-19, August of last year, or indeed the start of April.

What we've seen from an exchange perspective there actually really marries up with what we're hearing from our customers, and you're hearing from some of our customers on their earnings call, which is that retail remained engaged and remained really quite successful throughout the Q1 into Q2. When we look at the outlook and we look back at that disciplined approach that retail has taken, we really have a constructive view for the ongoing retail engagement in our volatility toolkit.

Operator (participant)

Your next question comes from the line of Dan Fannon with Jefferies. Your line is open.

Daniel Fannon (Analyst)

Thanks. Good morning. Asia has been a particular focus of growth. You highlighted a few regions where you're seeing some success. Can you talk about the level of investment that you're putting into that region, where you sit in terms of salespeople and platforms that you're either on or trying to basically contextualize what the opportunity is in terms of additional platforms for you to access?

David Howson (President)

Yeah, absolutely. We've seen really good traction coming into this year. That's evidenced by some of the key data points I'll give you here in that data consumption is often a lead indicator of the appetite for trading. We saw 55% of our data sales come internationally this year with particular strength in the Asia-Pacific region. Data consumption and demand and growth there really continuing. You look more broadly at ACV and Data Vantage, and that grew 47% in Q1. Really strong demand for data during these times, in particular from the Asia-Pacific region. When we look at the brokerage firms across the region, whether that be Korea, Taiwan, Thailand, Malaysia, we're seeing some really good onboarding through the direct channels with customers coming on board in Q1 from Korea, for example, with more to come in Q2 and Q3.

That demand remaining and that need to provide access to the U.S. pool of equity vol risk that we have here at Cboe really, really persisting. In terms of our investment there, obviously, that's all within the expense guides that we've given, but it's really around new salespeople. We've got boots on the ground, natural language speakers in a variety of countries now, Singapore, Hong Kong, Japan, who will also travel within the region. We've got marketing efforts, particular digital channel marketing that we're really focusing on, seeing some good returns there. It is about education and market intelligence. We've hired some really great people to work with Mandy Xu in New York out there in the region to really promote and really talk about the product sets and the utilization.

I guess the last thing I'll say, though, is that we see direct engagement, but also indirect engagement with local, for example, Korean customers launching buffer protect products in the market. Direct and indirect interest in our volatility toolkit really coming from the region. Remain optimistic for our outlook there.

Operator (participant)

Your next question comes from the line of Alex Kramm with UBS. Your line is open.

Kenneth Hill (Head of Investor Relations)

Yes, hey. Good morning, everyone. I guess I want to follow up on Ben's question from earlier, partially on the retail, but really an observation in the second quarter so far that your index volumes, while they're up a lot, quarter over quarter, year over year, they're lagging probably some other markets out there, equities, futures, etc. Just wondering, is that really a function of what you spoke about earlier, your retail exposure and maybe more discipline, or are there other drivers maybe on the institutional side that may have not favored index options much relative to other, I guess, ways to express risk management?

David Howson (President)

Yeah, hey, Alex. Certainly, what we liked April, it was our second highest SPX month, certainly after our first highest SPX month in March there. For us, what we see, as you mentioned there, that institutional engagement and on those extreme volatility days I mentioned before, that's when we see institutional also really step up on those days. They're adjusting and repositioning their portfolios for the longer term. We see really good market share when we look at SPX options versus the rest of the S&P complex, whether that be the e-mini options or the SPY options there. We still see good traction and good market share holding. No real concerns from kind of the engagement from institutionally in the overall platform. You just look at the macro setup for the rest of the year.

You look at uncertainty on the policy front, on the economy, the elevated fixed term structure. It's a necessity to manage your portfolio and hedge risk in the largest equity vol pool in the world, which is SPX options.

Operator (participant)

Your next question comes from the line of Kyle Voigt with KBW. Your line is open.

Fred J. Tomczyk (CEO)

Hi, good morning, everyone. We've been asked a question on capital return. The buyback activity was relatively light in the quarter. Just curious how much of that was related to wanting to or needing to wait until the CEO announcement was finalized. With leverage now at one times and I think cash on the balance sheet over $1 billion, just wanted to get your updated thoughts on whether you're open to kind of restarting a more normal cadence to buyback activity with free cash flow or whether you'd still like to deleverage further from here on a net basis.

David Howson (President)

Thanks for the question. Good morning, Kyle. I think a couple of factors at play that came into account with the first quarter repurchases. We've messaged that we'll be opportunistic. Just to remind you, we were actually locked out of the market until the February 7 earnings call, so could not actually be in there, let's call it, the first six months of 2025. Also, the stock's doing well. Also during 2025, we've hit a new all-time high share price. Really being opportunistic, taking a very long-term view as it relates to share repurchase activity. I think with the dry powder we do have, it's a great position to be in that, especially in these market conditions, if we do sense weakness in the share price, we can get in there behind it and buy quite a few shares back.

As to prioritizing capital towards deleveraging, I would say no. Would look at share repurchases prior to deleveraging. As you mentioned, leverage ratio 1.0 times. If you look at the stack of debt we have outstanding, it is three tranches of fixed-rate senior notes, average around 2.8%. In this environment, definitely would see a higher return on share repurchases as opposed to prioritizing deleveraging.

Operator (participant)

Your next question comes from the line of Ashish Sabadra with RBC, your line is open.

Jill Griebenow (CFO)

Thanks for taking my question. Zero-DTE obviously has ramped up significantly from low 20% back in January 2022 to now mid-50% in March of 2025. I was just wondering if you could share any perspective on how these trends might evolve, particularly in light of VIX starting to normalize, but also growing adoption of these strategies by both retail and institutional investors. Thanks.

David Howson (President)

Yeah, thanks for the question. You point out rightly there there's been some really good growth. It's nearly, in fact, it's three years since we launched the Tuesday and Thursday expirations for SPX. A couple of data points really for Q1 is that SPX Zero-DTE grew by 29% year over year. XSP Zero-DTE grew by 150%. And Russell Zero-DTE grew by 59%. We see continued engagement in there by end investors, by customers into the shorter end of the curve to manage risk and be more flexible and nimble around the evolving news headlines. This is very much the outlook. The secular trend is to the shorter end of the curve. The macro setup means you need to be nimble around events and manage that portfolio delta on a more precise basis. For us, we see the continued engagement there.

We do see variations depending on the day, as we just talked about before. Extreme vol spikes, people tend to then manage the longer-term portfolio positions and go further out in the curve, four weeks plus, and then come back again to that more consistent churn in Zero-DTE. One thing we've mentioned a few quarters ago now worth reminding is that liquidity providers find this deep, rich pool of liquidity a great place to hedge those positions that they've just got into from the initiating side of the trade. We see the ecosystem being really robust. We see it being really diverse with a range of customers really exercising different strategies there. A really healthy ecosystem and a really balanced ecosystem as well. That's a great thing we see. Buyers versus sales being really balanced, put-call ratios remaining to be around one there.

A healthy outlook for Zero-DTE as we look forward. We bring more users internationally and locally and more use cases to bear as customers begin to launch product on Zero and One-DTE. Again, good signs for a constructive outlook on further growth, further engagement in the platform in general, but specifically in Zero-DTE.

Operator (participant)

Your next question comes from the line of Ellie Abode with Bank of America. Your line is open.

Ellie Abode (Analyst)

Good morning. Thanks for taking the question. Can you talk about the status of your option on Trading Technologies? When does that option expire? Can you share any more details on the terms of that agreement? Is there any strategic value in having more screen real estate and a larger pre-trade footprint for Cboe?

David Howson (President)

Just as it relates to the option itself, can clarify that we have not exercised the option and also the option has not expired. Beyond that, do not have much to share on that. Obviously, we look at things that make strategic and financial sense. Again, the option has not expired and we have not exercised it.

Operator (participant)

Your next question comes from the line of Brian Bedell with Deutsche Bank. Your line is open.

Fred J. Tomczyk (CEO)

Great. Thanks. Good morning, folks. Thanks for taking my question. And congrats on getting Craig. That's fantastic. Looking forward to working with him as well. My question for Dave linking the Data Vantage with organic revenue growth. So good to see the non-U.S. portion of the sales increase. As you mentioned, it's a good leading indicator typically for setting up trading volume. Looking at the organic growth guide revised up to mid to high single digit, it looks like you're kind of run rating the first quarter on that. Just trying to get a sense of the conservatism in that considering the potential for organically growing your products. Obviously, if we get a dramatic pullback in volumes, that could pressure that. Just, I guess, your confidence around the organic growth given the leading indicators you're seeing on the data set.

David Howson (President)

Yes. Thanks very much for the question, Brian. Yes. Data Vantage, over 8% growth in the first quarter. Good results. Good ACV growth, 40%, 47% up there. And that's off the back of 18% in 2024. Predicting the future is tough, particularly in today's macro setup. We have taken a good view based on what we see for the rest of the year. That is something we will update each quarter as we go through. As with the other questions on the call, we see good setup for the secular trends coming together with that macro setup to give us plenty of avenues to explore for incremental organic growth internationally with retail, options, product innovation more generally. We have a constructive outlook, as I mentioned, for the rest of the year. Guides are exactly that. They are guides, and we will update them each quarter as we go.

Operator (participant)

Your next question comes from the line of Owen Lau with Oppenheimer. Your line is open.

Owen Lau (Analyst)

Hi, good morning. Thank you for taking my questions. For your expense guidance, I hear that your COM and marketing expense will increase in all quarters, but your COM ratio in the first quarter was, based on my math, was like 20.6%. I'm just wondering how we should think about the more normalized COM ratio excluding the strong April revenue performance and how much conservatism you have baked into your expense guidance. Thanks a lot.

David Howson (President)

I would say, as we alluded to, keeping the expense guidance as it stands. Part of that is due to, again, just timing that occurred with first quarter spend and planned timing that's coming for Q2, 3, and 4, very much in line with our initial year estimates there as to the amounts and the timing. The piece that I think is variable from an expense perspective is we did have a fantastic start to the year, a very strong first quarter coupled with an also very strong April. What that does is it's the short-term incentive accrual that I would expect to see an uplift in over the course of the year, particularly for April and into Q2. Again, that is well within the confines of the initial year expense guidance that we set.

We'll continue to monitor this, come back in early August with any updates there, but feel pretty confident with that expense guide range that we've set at the beginning of the year and it held for this quarter.

Christopher Allen (Analyst)

All right. Thanks.

Operator (participant)

Your next question comes from the line of Michael Cyprys with Morgan Stanley. Your line is open.

Fred J. Tomczyk (CEO)

Hey, good morning. Thanks for taking the question. Just wanted to ask about retail. Curious your thoughts around taking the Zero-DTE success and bringing that to intraday options. Just curious what's your appetite for that, what hurdles might need to be overcome, and your sort of thoughts on how you might approach that. Just more broadly on retail, as you look at the product toolkit that you have today, just curious where you're most excited about for what's next to come with retail, with the existing toolkit, what new innovations might you be able to bring to the marketplace, and curious your views on prediction markets and to what extent might Cboe have interest in capturing the retail interest from that, any particular categories that may be more interesting to you than others. Thank you.

David Howson (President)

Great. Thanks, Michael. You got a three for one in that question there. We'll go through them as they came. Intraday options is something obviously we talk about, as with many things that we talk about with customers in terms of incremental exposures. For us, at the moment, the runway for new users and use cases in the existing ecosystem volatility toolkit in particular is healthy. We've got a lot of wood to chop there. It's not something we're actively looking at at this point. In terms of most excited about for retail, I think it goes back to the earlier responses as well. It's the disciplined approach that we see coming through from retail, that really considered approach to high volatility environments and volatility spikes as we go through there.

It's been encouraging to see retail actually use the full breadth of the toolkit, not just SPX, where the majority of the flow goes, but also VIX options and also XSP, which was a record quarter in Q1 as well. When you think more broadly about retail and the entry point to option strategies, it's the usage and the growth of those derivative income funds and those defined outcome or buffer protect funds where you've got the ability to access an option strategy without deploying it and looking after it yourself. Thinking about our diversification into other asset classes and building ecosystems around those, there's obviously Bitcoin ETF listings. We've got our Bitcoin ETF index. We've got our options on that Bitcoin ETF index, which are trading nicely. We've got people, issuers launching products on those two index options products on MBTX and CBTX.

A really nice ecosystem around crypto there for customers to engage in. In order to provide incremental hedges there, we launched the Cboe FTSE Bitcoin Index Futures earlier this week, which has seen some early trades as customers engage in that ecosystem there. That crypto ecosystem is really coming together nicely. We are aiming to migrate our digital futures onto CFE later in this year itself. Finally, question number three was around prediction markets and the event space there. Clearly, we are led by our customers. We have deep conversations with our customers about the evolving trends more broadly in the marketplace. Here, there is a lot of discussion with regulators, which we will continue to be engaged in. We will talk to customers. It is a fairly nascent space at this point with most of the activity around sports coming through there.

Certainly an interesting area for the industry to discuss and work out how a trusted, robust, transparent ecosystem can really be brought to bear there.

Operator (participant)

Your next question comes from the line of Ken Hill with JP Morgan. Your line is open.

Madeline Daleiden (Analyst)

Hi, good morning. This is Madeline Daleiden in North America. Thanks for taking our question. We just had a question on open interest trends, particularly in your VIX franchise. Now a few weeks out from that early April volatility, are you noticing any change in behavior, whether institutional or retail, or perhaps even deleveraging at this time? Thank you.

David Howson (President)

Big soap and interest details I don't have at my fingertips at this point. What we have seen in the VIX options and futures complexes, particularly in the start of Q1, is strong engagement around VIX call and call spreads, which allowed customers to position themselves for tail risk. Later on, say in April, we saw monetization of those hedges and rolling of those hedges. It is really modulating depending on the environment as customers flex between the toolkit of whether it be VIX options and futures or the SPX product set. It moves in a very fluid manner throughout time, depending on the market environment and the outlook. We can get you the volume, the open interest numbers, but really it is about the toolkit and the moving between the products and the activity there. It is a key thing to focus on.

Operator (participant)

Your next question comes from the line of Anthony Corbin with Goldman Sachs. Your line is open.

Anthony Corbin (Analyst)

Hi, good morning, everyone. This is Anthony on for Alex. Maybe a follow-up to Michael's earlier question. How do you view the competitive landscape evolving in the index option suite from products like prediction markets and leverage ETFs? There were some recent headlines on Nasdaq launching single stock zero-day options. What gives Cboe the competitive advantage to maintain share in products with relatively similar use cases? Thanks.

David Howson (President)

Yeah. Thank you for the question there. Certainly, what our customers talk to us about and what we see in the data is just the depth and the richness of the liquidity that we've got across the volatility toolkit that we've been talking about, the complementary nature of VIX, of SPX, and the additive products that we've been launching in recent times, whether it be variance, futures, or VIX options on futures, giving you a great toolkit, some fantastic depth of liquidity there, institutional assets allocated and benchmarked to that S&P 500, which need to be managed over $15 trillion, I believe. Also, when you look at the ecosystem we've built up electronically and with the trading floor itself, where 20% of flow takes place, it's the diversity of use cases that we've got now within that ecosystem.

It takes years to build, and it has its own inertia and its own traction. It's very hard to crack that with a new lookalike product when you look at that diversity and the balance as well in the ecosystem. One thing I'd like you to take away is that the ecosystem we've built with this volatility toolkit is incredibly balanced. When a particular use type or use case steps back, another one steps forward. Couple that with a disciplined approach, which our customers take 95% cap risk into that liquid ecosystem and the level of activity across tenants. I would say the breadth, the depth of liquidity, diversity of use cases, and the decades of innovation that we've put into the platform really gives a very strong position to continue to innovate around.

Operator (participant)

Your next question comes from the line of Alex Kramm with UBS. Your line is open.

Fred J. Tomczyk (CEO)

Yeah. Hey, guys. Just a quick follow-up, and maybe this is a little bit too big picture for today, but over the last few quarters, you've talked a lot about, and it came up today again, exporting the U.S. markets globally. I think over the last couple of months, there's been a lot more of this theme of capital flow into other global regions, into Europe, Asia, etc., and away from the U.S. You mentioned the market data demand in Europe already, but I'm just wondering if this is a theme you feel like you're prepared for or you think you want to lean in more. You obviously have a lot of global assets, but just wondering if you think if that really plays out that you have everything in your toolkit for that. Thanks.

David Howson (President)

Yeah. Alex, we think the long-term secular trends that have really driven the results in the business today are more than likely to continue, and all the signs are certainly pointing that way. You mentioned it before. I pointed a few data points. The growth in data internationally, 55% there. The onboarding we see from customers continues. It continues in Korea, Thailand, Malaysia, Taiwan, throughout the Asia-Pacific region there. The need and the desire to have access to the U.S. markets exposure continues. Consider that there are global companies in the S&P 500 with 30% of revenue coming internationally. It is a global ecosystem with a deep liquidity pool. We see real investment coming through from our customers. Global trading hour support is not a small lift, and we see wholesalers building that out for later this year. Those long-run secular trends continue.

The data, the engagement from our customers continues. We see no real evidence for us to be concerned or to change tack from what we're already doing.

Fred J. Tomczyk (CEO)

In terms of.

Operator (participant)

I will turn the call over to management for closing remarks.

Kenneth Hill (Head of Investor Relations)

Okay. Thank you for everyone for joining us today. Based on the results that we've just walked through, we've had a strong start to the year, and our ecosystem continues to work well for us and for our customers. Having accomplished what I set out to do 18 months ago, now is the right time for me to return to the board. I'm optimistic about the future of Cboe. We have a strong management team, a clear strategic focus, a strong balance sheet and financial position, and we're now bringing in a strong and experienced successor in Craig Donohue. I wish everyone the best. Thank you.

Operator (participant)

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.