CBOE

Cboe Global Markets, Inc. (CBOE) - Q2 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. Cboe Global Markets operates five reportable segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX. The company is a leading global markets operator providing trading, clearing, and investment solutions. During the period, the company executed a strategic realignment, including the definitive agreement to sell Cboe Australia and Cboe Canada to TMX Group for approximately $300 million and the wind-down of the CEDX exchange service.

Key Financial Metrics

Note: Debt consists of $650M Senior Notes (2027), $500M Senior Notes (2030), and $300M Senior Notes (2032). No borrowings were outstanding under the Revolving Credit Agreement or Cboe Clear Europe Credit Facility as of June 30, 2026.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 23% in Q2 and 15% YTD compared to 2025. Growth was driven by higher transaction and clearing fees in Derivatives and Cash/Spot markets due to increased trading volumes (e.g., 32% increase in index options ADV) and a Section 31 fee rate increase effective April 2026.
• Profitability: Operating income rose 40% in Q2 and 42% YTD. This was aided by a 25% increase in "Revenues less cost of revenues" and a significant reduction in impairment charges compared to Q2 2025 (which included a $17.1M impairment related to Cboe Japan).
• Cost Structure: Operating expenses increased slightly (3% Q2, 4% YTD) primarily due to higher compensation and benefits (including severance from strategic realignment) and travel expenses, partially offset by lower professional fees and the absence of prior-year asset impairments.
• Strategic Realignment: The company recorded $23.7M in strategic realignment costs in Q2 2026, primarily for severance and professional fees related to the wind-down of Cboe Digital, Cboe Japan, and CEDX, and resource optimization.

Guidance, Outlook, and Risks

• Outlook: Management expects the sale of Cboe Australia to close in Q3 2026. The strategic realignment is expected to be substantially completed by the end of 2026. The company launched "Cboe Predicts," a new prediction markets suite, in June 2026.
• Capital Allocation: The company continues to return capital to shareholders, paying $0.72 per share in dividends for Q2 2026 and repurchasing $32.6M of stock in the quarter. Approximately $536.8M remains available under the share repurchase authorization.
• Risks & Contingencies:
  • CAT Funding: Ongoing litigation regarding the Consolidated Audit Trail (CAT) funding model creates uncertainty regarding the ability to collect fees to recover historical costs, potentially impacting future expenses.
  • Regulatory: The company faces routine reviews by the SEC, CFTC, FCA, and other global regulators. Changes in market structure or fee caps could impact revenue.
  • Debt Maturity: $650M of Senior Notes mature in January 2027; refinancing on commercially reasonable terms is not guaranteed.

Key Facts for Investor Verification

• Sale of Assets: Verify the closing timeline and final consideration for the sale of Cboe Australia and Cboe Canada to TMX Group (agreed at ~$300M).
• Section 31 Fees: Monitor the impact of the Section 31 fee rate changes (increased in April 2026) on net revenue, as these fees are pass-through items but affect gross revenue and cost of revenue.
• CAT Litigation: Track the status of the 11th Circuit appeal regarding the Revised CAT Funding Model, as a negative outcome could result in significant unfunded costs.
• Debt Refinancing: Assess the company's ability to refinance the $650M Senior Notes maturing in January 2027 given current interest rate environments.
• Strategic Realignment Costs: Confirm that the estimated remaining costs of $13.0M for compensation and benefits are accurate and that no further material impairments are expected from the wind-down of CEDX and Cboe Japan.