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CG

CME GROUP INC. (CME)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record revenue of $1.642B (+10% YoY), GAAP diluted EPS of $2.62, and adjusted EPS of $2.80, driven by record ADV of 29.8M contracts and record market data revenue ($195M) .
  • Versus S&P Global consensus, CME posted a slight miss: revenue $1.642B vs $1.662B estimate*, and diluted EPS $2.80 vs $2.809 estimate*; EBITDA was in line ($1.190B actual vs $1.191B estimate*) — modest negatives that could temper near-term stock reaction. Values retrieved from S&P Global.
  • Management emphasized robust demand across asset classes (commodities +19%, financials +12%) and record international ADV (8.8M, +19% YoY), sustaining high operating leverage (adjusted operating margin 71.1%) .
  • 2025 guidance (set in Q4) remains intact: adjusted OpEx ex-license ~$1.65B; capex ~$90M; adjusted tax rate 22.5%-23.5%; fee changes and new 30% soft minimum cash collateral could add ~2%-2.5% to pretax income .
  • Catalysts: sale of OSTTRA JV (~$3.1B total proceeds, CME’s 50% share; expected close ~6 months), BrokerTec Chicago launch (Q3 2025), and ongoing mix/pricing and collateral changes; these underpin earnings quality despite small consensus misses .

What Went Well and What Went Wrong

What Went Well

  • Record quarter across key P&L metrics: revenue ($1.642B), adjusted operating income ($1.2B), adjusted net income ($1.020B), adjusted EPS ($2.80) .
    Quote: “generated record revenue, adjusted operating income, adjusted net income and adjusted earnings per share for the quarter” — Terry Duffy .
  • Broad-based volume strength with all-time quarterly ADV records in interest rates, equities, ags, FX, and crypto; record international ADV (8.8M) with EMEA/APAC strength .
    Quote: “This strong growth was broad-based… quarterly volume records in interest rates, equities, agricultural commodities and foreign exchange” — Terry Duffy .
  • High operating leverage with discipline on costs: adjusted operating margin 71.1% (vs 68.9% last year), adjusted tax rate 23.1%; market data revenue reached a record $195M (+11% YoY) .

What Went Wrong

  • Slight consensus misses: revenue (-$19M vs estimate*), diluted EPS (-$0.009 vs estimate*) for Q1 2025; prior quarters mixed (Q3 revenue slight miss*, EPS beat; Q4 both beat*) — a modest near-term overhang. Values retrieved from S&P Global.
  • Average rate per contract (RPC) drifted lower YoY to $0.686 (from $0.695 in Q1 2024) as volume tiering engaged at high volumes; management noted RPC down ~1% YoY on +13% volume growth .
  • Cash fell to ~$1.6B from $3.1B at year-end due to dividend outflows ($2.6B paid in Q1), reducing balance sheet flexibility in the near term (though capital return is a core policy) .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,584.4 $1,525.3 $1,642.3
Diluted EPS ($USD)$2.50 $2.40 $2.62
Adjusted EPS ($USD)$2.68 $2.52 $2.80
Operating Income ($USD Millions)$1,024.2 $947.1 $1,108.0

Revenue Composition

Revenue Component ($USD Millions)Q3 2024Q4 2024Q1 2025
Clearing & Transaction Fees$1,297.1 $1,232.3 $1,337.3
Market Data & Information Services$178.2 $181.6 $194.5
Other$109.1 $111.4 $110.5
Total Revenue$1,584.4 $1,525.3 $1,642.3

Margins

Margin MetricQ3 2024Q4 2024Q1 2025
Adjusted Operating Margin %69.1% N/A71.1%

KPIs: ADV and RPC

KPIQ3 2024Q4 2024Q1 2025
Total ADV (000s of contracts)28,289 25,503 29,768
Average RPC ($USD)$0.666 $0.701 $0.686

ADV by Asset Class (000s)

Asset Class ADV (000s)Q3 2024Q4 2024Q1 2025
Interest Rates14,881 13,244 15,029
Equity Indexes7,407 6,343 7,997
FX1,089 969 1,149
Energy2,571 2,519 2,903
Agricultural1,614 1,755 1,958
Metals728 673 732

Balance Sheet Highlights

MetricQ3 2024Q4 2024Q1 2025
Cash and Cash Equivalents ($USD Millions)$2,322.1 ~$3,092.4 ~$1,405.3 (cash; $1.6B incl. $200M at FICC)
Total Debt ($USD Millions)$3,427.4 (LT + ST) $3,428.0 $3,419.4

Q1 2025 YoY/Sequential

ComparisonQ1 2025Reference
YoY Revenue change vs Q1 2024+10% ($1,642.3 vs $1,487.9)
YoY Diluted EPS$2.62 vs $2.35
Sequential Revenue change vs Q4 2024+$117.0M ($1,642.3 vs $1,525.3)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent UpdateChange
Adjusted Operating Expenses (ex-license fees)FY 2025~$1.65B No update in Q1 materialsMaintained
Capital ExpendituresFY 2025~$90M No update in Q1 materialsMaintained
Adjusted Effective Tax RateFY 202522.5%–23.5% Q1 actual 23.1% Maintained (Q1 in-range)
Clearing & Transaction Fee AdjustmentsEffective 2025+1%–1.5% revenue impact No update in Q1 materialsMaintained
Noncash Collateral Surcharge / Soft Minimum Cash (30%)Effective Apr 2025Adds to pretax income; shift mix to cash/noncash Early April mix: cash $131B, noncash $140B; majority meeting 30% soft minimum Implementing
Aggregate Pretax Impact (fees + collateral policy)FY 2025+2%–+2.5% No update in Q1 materialsMaintained
Dividend Policy2025Quarterly dividend raised to $1.25 (Feb 6) ; Variable dividend $2.1B (paid Jan 2025) ~$2.6B dividends paid in Q1 2025 Ongoing returns

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
International ADV growthRecord EMEA/APAC volumes; tax rate benefit Record international ADV 8.8M (+19% YoY); EMEA/APAC records Strengthening
Retail & MicrosRetail NCA up; micro equity suite pivotal; partners (Plus500, Robinhood) ramping Record retail; 83k new traders (+44%); micro volumes up; broader asset adoption Expanding
Energy & Nat GasRecord energy options, Henry Hub; global structural shift Henry Hub futures/options records; share gains in WTI/nat gas options Accelerating
Pricing & RPCTiering lowers RPC at high volumes; fee changes +1%–1.5% RPC $0.686 (down ~1% YoY); fee/tiering impact reiterated Normal at high volume
Collateral Mix & SurchargeAnnounced 10bp noncash surcharge; 30% cash soft minimum from April April early data: cash up; majority complying with 30% soft minimum Shifting toward cash
Cross-Margining (FICC)House program ~$1B/day savings; expanding to customers 15 house accounts; targeting customer availability by year-end (ops readiness) Building scale
Google Cloud Migration$85M 2024; guided $115M 2025; tech spend rising ~$19M Q1 tech; more apps moving; expect further tech line increases Ongoing migration
BrokerTec StrategyRepo strength; relative value modalities; regulatory clearing tailwinds BrokerTec Chicago co-location in Aurora; client testing late April; launch Q3 2025 Strategic expansion
OSTTRA JVContributes ~$20–22M quarterly earnings Sale for ~$3.1B total; CME to receive ~50%; expected close ~6 months Monetization

Management Commentary

  • “Our quarterly revenue crossed $1.6 billion for the first time, and we also exceeded $1 billion in adjusted net income… This quarter highlighted the strength of our product diversity and the ability [of] customers to manage risk in times of uncertainty.” — Terry Duffy .
  • “Adjusted operating margin… 71.1%… highest quarterly adjusted net income and adjusted diluted earnings per share in our history” — Lynne Fitzpatrick .
  • “Quarterly international ADV… record 8.8 million… broad, sustained client demand outside the U.S.” — Julie Winkler .
  • “Launch [of] BrokerTec Chicago… co-located next to our U.S. Treasury futures and options… scheduled for Q3 2025” — Michael Dennis .

Q&A Highlights

  • Deleveraging dynamics and open interest: Despite margin increases, OI up ~7% YoY; pockets of ag futures OI softness offset by record options OI — “risk‑on” environment in ags .
  • OSTTRA sale and capital allocation: CME to receive ~50% of ~$3.1B proceeds; close expected in ~6 months; use of proceeds TBD closer to closing .
  • Collateral mix after surcharge: Q1 averages $79B cash/$173B noncash; April month-to-date cash ~$131B, noncash ~$140B; majority meeting 30% soft minimum .
  • International growth drivers: Double-digit growth across asset classes, strong commercial participation (+~30%), record non-U.S. options; EMEA/APAC buy-side strength .
  • Energy complex momentum: Multi-year share leadership in WTI/Henry Hub; options outperformance; global benchmark adoption and record OI .
  • Expenses & cloud: Q1 Google spend just under $20M (tech ~$19M, prof svcs < $1M); expect ramp through year as apps migrate .

Estimates Context

MetricQ3 2024 Estimate*Q3 2024 ActualQ4 2024 Estimate*Q4 2024 ActualQ1 2025 Estimate*Q1 2025 Actual
Revenue ($USD Millions)1,594.4*1,584.4 1,507.1*1,525.3 1,661.9*1,642.3
Diluted EPS ($USD)2.654*2.50 2.445*2.40 2.809*2.62
Adjusted EPS ($USD)N/A2.68 N/A2.52 N/A2.80

Notes: Values retrieved from S&P Global.
Interpretation: Q4 2024 was a beat on both revenue and EPS; Q3 was a slight revenue miss but adjusted EPS beat; Q1 2025 was a modest miss on revenue and diluted EPS relative to consensus*.

Key Takeaways for Investors

  • Underlying demand remains robust across asset classes and geographies, with record ADV and pricing/fee levers sustaining high margins despite slight Q1 consensus misses .
  • Watch evolving collateral mix and the 30% soft minimum in cash; early April data suggests rising cash balances, which can boost non‑operating income or other revenue and modestly lift pretax earnings .
  • Energy and ag complexes are seeing secular adoption internationally (Henry Hub/WTI, grains), with options as a key growth vector — supportive of revenue quality and RPC mix over 2025 .
  • International growth supports tax-rate benefits and diversification; management is leaning into co‑located cash/futures infrastructure (BrokerTec Chicago) to deepen the rates moat .
  • The OSTTRA monetization and buyback authorization increase flexibility for capital returns or strategic investments; timing and use of proceeds are near‑term watch items .
  • Expect continued OpEx discipline with cloud migration investments; margin profile likely remains structurally high given operating leverage and fee/tiering strategies .
  • Near-term narrative: Slight miss vs consensus* but strong volume/mix, expanding international footprint, and operational resiliency (margin management, cross‑margining) should anchor the medium‑term thesis.