Cboe Global Markets (CBOE) Q4 2025 earnings review
A Blowout Quarter: Volatility & Leverage Drive Massive Beat
Cboe delivered an exceptional end to fiscal 2025, accelerating significantly across every metric. Revenue growth surged to 28% YoY (up from 14% in Q3), crushing the single-digit pace seen a year ago. The story is pure operating leverage: while revenue jumped 28%, adjusted operating expenses grew only 8%, sending Adjusted EBITDA margins expanding by 600 basis points to 69.2%. While the core derivatives engine (Options +34%) is firing on all cylinders, management's initial FY26 guidance suggests a sharp normalization to 'mid-single digit' growth, setting a conservative bar against this quarter's explosive performance.
🐂 Bull Case
The core Options segment grew 34% YoY, driven by a 35% jump in Index options volume and a 20% rise in multi-listed options. The '0DTE' (zero days to expiration) phenomenon continues to drive structural volume growth beyond simple cyclical hedging.
Cboe demonstrated elite scalability in Q4. A 28% revenue surge converted into a 46% increase in Adjusted EPS. With fixed costs relatively stable, incremental volume is dropping almost entirely to the bottom line.
🐻 Bear Case
Management's FY26 guidance calls for 'mid-single digit' organic revenue growth. After a year of 17% growth and a Q4 of 28% growth, this implies a significant slowdown or 'normalization' of volatility that may disappoint investors expecting the current pace to continue.
Q4 results were fueled by 'strong company performance' bonuses and record volumes. If market volatility subsides (VIX drops), the comparative hurdles in FY26 will be incredibly difficult to overcome.
⚖️ Verdict: 🟢🟢
Strong Bullish. Cboe posted a flawless quarter with accelerating growth and expanding margins. While FY26 guidance is conservative (likely sandbagged), the underlying execution in the derivatives franchise and international expansion is undeniable.
Key Themes
Derivatives Engine Firing on All Cylinders
Accelerating. The Options segment remains the undisputed growth engine, generating $433.1M in revenue (+34% YoY). This was driven by a powerful combination of volume growth (Total ADV +24%) and pricing power (RPC +13%). Notably, Index options (proprietary products like SPX/VIX) grew volumes 35%, outpacing the broader market and driving a favorable mix shift that boosted revenue per contract.
Operating Leverage & Margin Expansion
Accelerating. The most impressive financial metric in the report is the Adjusted EBITDA margin, which leaped to 69.2% from 63.2% a year ago. By keeping Adjusted Operating Expense growth (8%) significantly below Revenue growth (28%), Cboe proved the scalability of its model. Even with higher performance-based bonus accruals, profitability metrics improved drastically.
International Momentum (Europe & APAC)
Accelerating. The Europe and APAC segment grew net revenue 24% YoY to $69.9M. This isn't just currency noise; on a constant currency basis, growth was still 17%. Key drivers include a 17% increase in European Equities ADNV and a 22% jump in clearing volumes at Cboe Clear Europe. This validates the strategy of diversifying geographically beyond US Options.
FY26 Guidance Reality Check
Decelerating. Against the backdrop of +17% full-year revenue growth in FY25, the FY26 guidance for 'mid-single digit' growth implies a massive braking effect. This likely factors in the divestitures (Australia/Canada) and a conservative view on volatility, but it signals that the current +28% growth rate is viewed internally as an anomaly rather than a new baseline.
Strategic Realignment & Divestitures
Management is actively pruning the portfolio. FY26 guidance explicitly includes impacts from discontinuing U.S. and European Corporate Listings and the planned divestitures of Cboe Canada and Cboe Australia (announced Oct 2025). While this creates near-term revenue headwinds (reflected in guidance), it focuses capital on the high-margin Derivatives and Data Vantage segments.
North American Equities Market Share Erosion
Stable/Negative. While N.A. Equities revenue grew 17% due to higher capture/fees, market share continues to struggle. U.S. Equities on-exchange market share fell to 9.4% from 10.8% a year ago, and Canadian Equities share dropped to 12.7% from 14.3%. The segment is growing revenue solely through industry volume tides and pricing, not competitive wins.
Other KPIs
Accelerating. Revenue up 22% YoY, driven by a 17% increase in ADNV to $53.3 billion and an 8% improvement in net capture rate ($2.95 per million). This segment has consistently outperformed, hitting record highs.
Stable. Up 9% YoY. While solid, this segment is growing slower than the transactional businesses (Options/FX), slightly diluting the overall growth rate. FY26 guidance expects this to persist at 'mid to high single-digits'.
Strong. Cash and equivalents surged to $2.2B from $920M a year ago. The company paid $75.8M in dividends but did zero share repurchases in Q4, likely preserving capital for the strategic realignment or simply due to the high valuation/stock price.
Guidance
Decelerating significantly vs FY25 (+17%) and Q4 (+28%). This reflects the divestiture of Canada/Australia and a cautious outlook on volatility repeating record levels.
Stable. Consistent with FY25 performance (+10%). Suggests the recurring revenue base remains healthy but isn't accelerating.
Accelerating. Implies growth of roughly 3-5% vs FY25 actuals ($836.5M), despite the divestitures. Management notes this includes planned cost reductions, suggesting underlying core inflation or investment spend remains high.
Key Questions
Conservatism in FY26 Guidance
Given the exit velocity of 28% growth in Q4 and continued secular tailwinds in 0DTE options, does the 'mid-single digit' revenue guidance assume a specific decline in VIX/Volatility, or is it purely a reset of expectations?
Use of Cash Pile
Cash balance has ballooned to $2.2B with zero buybacks in Q4. With the stock at highs, is the plan to stockpile for M&A, or will we see a special dividend/aggressive buyback once the divestitures close?
Options Pricing Power
Revenue Per Contract (RPC) in Options jumped 13% due to mix shift. How sustainable is this index-heavy mix in a lower volatility environment?