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CME GROUP INC. (CME)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid growth: revenue $1.53B (+6% YoY), GAAP diluted EPS $2.40 and adjusted diluted EPS $2.52; clearing & transaction fees were $1.23B, with average rate per contract (RPC) up to $0.701 from $0.666 in Q3 .
  • Strong mix: Market Data revenue rose to $182M (+9% YoY), non‑U.S. ADV 7.6M (+5% YoY); commodities remained a growth engine and buy‑side participation increased, with management highlighting ~$60B/day in margin savings across asset classes .
  • 2025 outlook: adjusted operating expenses (ex‑license fees) ~$1.65B, capex ~$90M, tax rate 22.5–23.5%, pricing actions expected to add ~2–2.5% to pretax income; plus a 9% dividend increase to $1.25/share .
  • Potential catalysts: securities clearing application advancing; retail distribution ramp (e.g., Robinhood); fee changes (transaction, data, collateral surcharge) and Google Cloud migration supporting product and data innovation .

What Went Well and What Went Wrong

What Went Well

  • Broad-based performance with Q4 revenue $1.53B, operating income $947M, adjusted EPS $2.52; Market Data revenue $182M (+9% YoY) and RPC rose to $0.701 on mix shift to higher-priced commodities and less volume tiering .
  • Retail and buy-side momentum: new client acquisition drove meaningful volume and revenue; management cited ~2/3 of $1B NCA revenue over five years coming from retail and buy-side commodity options strength (options volumes up 29% YoY in 2024) .
  • Capital efficiencies: management reiterated unmatched margin savings — ~$20B/day in interest rates and ~$60B/day across all six asset classes — supporting client stickiness and competitiveness .

What Went Wrong

  • Non-operating items remained a headwind: “Other non-operating income (expense)” was -$837.5M in Q4 (vs -$961.2M Q4’23), tempering net operating strength .
  • Adjusted expense pressure from cloud migration: Q4 adjusted expenses were $520M (incl. ~$22M Q4 cloud spend), with 2025 guidance including ~$115M migration costs; margin impact must be monitored .
  • Securities clearing timeline uncertainty: while the application is progressing, management acknowledged potential delays in broader clearing mandates and regulatory processes, reducing near-term visibility .

Financial Results

Revenue, EPS, Operating Income (GAAP vs Adjusted)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($MM)$1,532.5 $1,584.4 $1,525.3
Operating Income ($MM)$1,000.6 $1,024.2 $947.1
Net Income ($MM)$883.2 $912.8 $874.6
Diluted EPS ($)$2.42 $2.50 $2.40
Adjusted Net Income ($MM)$932.2 $977.0 $918.9
Adjusted Diluted EPS ($)$2.56 $2.68 $2.52

Revenue Breakdown

Revenue Component ($MM)Q2 2024Q3 2024Q4 2024
Clearing & Transaction Fees$1,249.9 $1,297.1 $1,232.3
Market Data & Information Services$175.0 $178.2 $181.6
Other$107.6 $109.1 $111.4
Total$1,532.5 $1,584.4 $1,525.3

KPIs: ADV by Product Line (Futures & Options), Non-U.S. ADV, RPC

KPIQ2 2024Q3 2024Q4 2024
Total ADV (000s contracts)25,941 28,289 25,503
Non-U.S. ADV (000s contracts)7,800 8,400 7,600
Interest Rates ADV (000s)12,894 14,881 13,244
Equity Indexes ADV (000s)6,779 7,407 6,343
FX ADV (000s)1,075 1,089 969
Energy ADV (000s)2,447 2,571 2,519
Ag Commodities ADV (000s)1,877 1,614 1,755
Metals ADV (000s)868 728 673
Average RPC ($)$0.708 $0.666 $0.701

Non-GAAP Adjustments (Q4 2024)

Item ($MM)Q4 2024
Amortization of purchased intangibles$69.0
Restructuring & severance$1.0
FX transaction (gains)/losses$0.7
Unrealized/realized (gains)/losses on investments$8.1
Income tax effect on above$(15.9)
Other income tax items$(18.7)
Adjusted Net Income$918.9
Adjusted Diluted EPS ($)$2.52

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted OpEx (ex‑license fees)FY 2025~$1.59B FY 2024 actual (adjusted, ex‑license fees) ~$1.65B Raised
Capital ExpendituresFY 2025N/A~$90M New
Adjusted Effective Tax RateFY 202522.5%–23% (FY 2024 guidance) 22.5%–23.5% Slightly raised upper bound
Transaction Fee AdjustmentsEffective Feb 1, 20251.5%–2.0% (2024 frame) ~1%–1.5% uplift to futures & options transaction revenue Lower than prior year
Market Data FeesEffective Jan 1, 20253%–5% (2024 impact range) +3.5% increase Set at 3.5%
Noncash Collateral SurchargeEffective Apr 2025N/A+10bps for participants posting <30% cash; potential 2%–2.5% pretax uplift in aggregate (incl. pricing) New
Dividend1Q 2025$1.15/share prior $1.25/share (+9%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Google Cloud migrationAnnounced private Google Cloud region in Aurora; DR in Dallas; ~2/3 migration progress; cloud spend $85M FY’24 Q4 migration spend ~$22M; 2025 migration spend ~$115M; focus on non‑latency apps and data services Execution progressing; spend up in 2025
Retail distributionQ2/Q3: Strong retail NCA; new brokers; micro metals/equities growth Robinhood phased rollout; retail NCA up 23% YoY; traders +6%; global broker partners ~100 Scaling across channels
Commodities & buy‑sideQ2/Q3: Energy/nat gas options growth; EMEA participation up; WTI share gains 2024 commodities revenue $1.7B (+16%); buy‑side multi‑strategy funds driving activity; 2025 strong start (ags +32%, energy +25%, metals +14%) Secular buy‑side engagement rising
Pricing & RPCQ2: 2024 pricing adds 2.5–3% total revenue; mix & tiering impact RPC 2025: transaction +1%–1.5%; data +3.5%; collateral 10bps; Q4 RPC rose to $0.701; CFO clarifies incentives included Moderate pricing lever; mix supports RPC
Securities clearing/regulatoryQ2/Q3: Application and benefits; FICC cross‑margin ~$1B/day; portfolio margin ~$20B/day Application published; engaging SEC; emphasizes U.S. resolution authority and capital efficiencies Regulatory path advancing
Crypto expansionQ2/Q3: Ecosystem growth post ETFs; records in BTC/ETH; cautious on new tokens Largest crypto trading day Feb 3; focus on Bitcoin/Ether lanes; introduce new futures/options, await regulatory clarity for other tokens Depth in core crypto; prudent on tokens
Market DataQ2/Q3: +3–5% pricing; institutional use for indices/benchmarks Q4: $182M (+9% YoY); non‑professional device units +~40% vs Q3; +3.5% price effective Jan 1 Healthy growth; retail analytics usage rising
BrokerTec UST & RepoQ3: TRACE share headwinds then improved; repo record ADV Jan ADV +29% MoM; share +0.5ppt vs Dec; overall Q4 revenue +7% Stabilizing; modal expansion

Management Commentary

  • “In 2024, CME Group had its best year ever… Our Q4 performance also was very strong, delivering a 6% increase in revenue, adjusted net income and adjusted earnings per share.” — Terry Duffy, Chairman & CEO .
  • “Our customers are now saving approximately $60 billion per day across all six asset classes.” — Terry Duffy .
  • “We expect total adjusted operating expenses… to be approximately $1.65 billion. Total capital expenditures are expected to be approximately $90 million, and the adjusted effective tax rate… 22.5%–23.5%.” — Lynne Fitzpatrick, CFO .
  • “In aggregate, the fee changes and cash minimum could add 2% to 2.5% to pretax income, assuming similar volume and collateral levels.” — Lynne Fitzpatrick .

Q&A Highlights

  • Retail rollout and strategy: Robinhood futures in phased rollout; broad retail partner base (~100 globally); retail NCA +23% YoY; management expects continued blurring of institutional vs retail profiles with tech/AI tools .
  • Capital allocation: Dividend raised to $1.25; buyback program described as opportunistic alongside regular and variable dividends .
  • Pricing mechanics: 1%–1.5% transaction fee uplift includes incentives; collateral surcharge impact depends on customer choices (other revenue vs non‑op income) .
  • Securities clearing and cross‑margin: Application with SEC published; benefits to capital efficiency noted; partnership with FICC expanding; acknowledges potential timeline delays .
  • Cloud migration spend: Q4 migration ~$22M; FY’24 ~$85M; FY’25 ~$115M; focus on non‑latency apps and building additional client data capabilities .
  • BrokerTec trends: January ADV up 29% MoM; market share improved; repo complex record ADV and new modalities (curve spreads, butterflies) gaining traction .

Estimates Context

  • Wall Street consensus via S&P Global (Capital IQ) was unavailable at the time of this report due to data request limits; we were unable to present Q4 comparisons vs consensus for EPS, revenue, or EBITDA. Values normally retrieved from S&P Global will be added upon access restoration.

Key Takeaways for Investors

  • Q4 print was resilient with solid YoY growth and improved RPC; adjusted EPS of $2.52 underscores earnings quality despite non‑op headwinds .
  • 2025 pricing actions and collateral policies are measurable earnings levers (~2–2.5% pretax uplift), offering visibility independent of market volatility .
  • Retail and buy-side secular engagement (commodities and options) supports mix and RPC; watch for incremental distribution milestones (e.g., Robinhood ramp) .
  • Regulatory developments (securities clearing) and expanding cross‑margining with FICC are strategic catalysts that can deepen client stickiness and capital efficiencies .
  • Dividend increase (+9%) plus potential opportunistic buybacks reinforce capital return; monitor non‑op items and cloud migration spend trajectory for margin implications .
  • Cloud/AI partnership with Google should enable product/data innovation and client analytics over time; near‑term spend steps up in 2025 but long‑term ROI can be attractive .
  • Near-term trading: pricing tailwinds, commodity/options strength, and macro/geopolitical uncertainty favor elevated activity across complexes; focus on rate, commodity, and crypto contracts as tactical vehicles .
Sources: SEC 8-K (Item 2.02) and Exhibit 99.1 release for Q4 2024 **[1156375_0001156375-25-000007_cme-20250212.htm:0]** **[1156375_0001156375-25-000007_cme-20250212.htm:1]** **[1156375_0001156375-25-000007_exhibit991123124.htm:0]** **[1156375_0001156375-25-000007_exhibit991123124.htm:7]** **[1156375_0001156375-25-000007_exhibit991123124.htm:8]** **[1156375_0001156375-25-000007_exhibit991123124.htm:9]**; CME press release Q4 2024 **[1156375_20250212AQ17346:0]**-**[1156375_20250212AQ17346:4]**; Q4 earnings call transcripts **[1156375_CME_3415528_0]**-**[1156375_CME_3415528_24]** **[1156375_1973106_0]**-**[1156375_1973106_17]**; Prior quarters Q3 press release/transcript **[1156375_20241023AQ37794:0]**-**[1156375_20241023AQ37794:4]** **[1156375_CME_3403367_0]**-**[1156375_CME_3403367_26]**; Q2 press release/transcript **[1156375_20240724AQ68226:0]**-**[1156375_20240724AQ68226:5]** **[1156375_CME_3394105_0]**-**[1156375_CME_3394105_31]**; Dividend press release **[1156375_20250206CG13127:0]**.