Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto, included in Item 1 in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and as contained in that report, the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This discussion contains forward-looking information. Please see “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

Cboe Global Markets, Inc. (“Cboe” or “the Company”), a leading provider of market infrastructure and tradable products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The Company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives and FX, across North America, Europe, and Asia Pacific.

Cboe’s subsidiaries include the largest options exchange and the third largest stock exchange operator in the U.S. In addition, the Company operates one of the largest stock exchanges by value traded in Europe, and owns EuroCCP, a leading pan-European equities and derivatives clearinghouse, BIDS Trading, a leading block-trading ATS by volume in the U.S., MATCHNow, a leading equities ATS in Canada, Cboe Australia, an operator of trading venues in Australia, and Cboe Japan, an operator of trading venues in Japan. Cboe also is a leading market globally for exchange-traded products (“ETPs”) listings and trading.

The Company is headquartered in Chicago with offices in Amsterdam, Belfast, Calgary, Hong Kong, Kansas City, London, Manila, New York, San Francisco, Sarasota Springs, Singapore, Sydney, Tokyo and Toronto.

Recent Developments

Planned acquisition of ErisX

On October 20, 2021, the Company announced it entered into a definitive agreement to acquire ErisX. ErisX operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of ErisX presents a unique opportunity for the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions.

Planned acquisition of NEO

On November 15, 2021, the Company announced it entered into a definitive agreement to acquire Aequitas Innovations, Inc. (“NEO”). NEO is a fintech organization that is comprised of a fully registered Tier-1 Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equity trading. Ownership of NEO will help allow the Company to provide a more fulsome Canadian equities offering, operating the NEO Exchange, a national securities exchange with trading, listings, and other services, in addition to MATCHNow, the ATS acquired by the Company in 2020. The transaction is expected to close in the second or third quarter of 2022, subject to regulatory review and other customary closing conditions.

Business Segments

The Company reports five business segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX. Segment performance is primarily based on operating income (loss). The Company has aggregated all of its corporate costs and eliminations, as well as other business ventures, within Corporate Items and Eliminations; however, operating expenses that relate to activities of a specific segment have been allocated to that segment. Our management allocates resources, assesses performance and manages our business according to these segments:

Options. The Options segment includes options on market indices (“index options”), as well as on the stocks of individual corporations (“equity options”), and options on ETPs, such as exchange-traded funds (“ETFs”) and exchange-traded notes (“ETNs”), which are “multi-listed” options and listed on a non-exclusive basis. These options are eligible to trade on Cboe Options, C2, BZX, EDGX, and other U.S. national security exchanges. Cboe Options is the Company’s

primary options market and offers trading in listed options through a single system that integrates electronic trading and traditional open outcry trading on the Cboe Options trading floor in Chicago. C2 Options, BZX Options, and EDGX Options are all-electronic options exchanges, and typically operate with different market models and fee structures than Cboe Options. The Options segment also includes applicable market data fees generated from the consolidated tape plans, the licensing of proprietary options market data, index licensing, and access and capacity services.

North American Equities. The North American Equities segment includes listed U.S. equities and ETP transaction services that occur on fully electronic exchanges owned and operated by BZX, BYX, EDGX, and EDGA, equities transactions that occur on the BIDS Trading platform, and Canadian equities and other transaction services that occur on or through the MATCHNow ATS. The North American Equities segment also includes ETP listings on BZX, the Cboe Global Markets, Inc. common stock listing, applicable market data fees generated from the consolidated tape plans, the licensing of proprietary equities market data, routing services, and access and capacity services.

Europe and Asia Pacific. The Europe and Asia Pacific segment includes the pan-European listed equities and derivatives transaction services, ETPs, exchange-traded commodities, and international depository receipts that are hosted on MTFs operated by Cboe Europe Equities (Cboe Europe and Cboe NL equities exchanges) and Cboe Europe Derivatives (“CEDX”). It also includes the ETP listings business on RMs and clearing activities of EuroCCP, as well as the equities transaction services of Cboe Australia and Cboe Japan, each operators of trading venues in Australia and Japan. This segment was previously referred to as the European Equities segment but was updated to the Europe segment in the first quarter of 2021 as a result of the launch of Cboe Europe Derivatives, a pan-European derivatives platform in September 2021. The segment was subsequently updated to Europe and Asia Pacific to reflect the acquisition of Cboe Asia Pacific in July 2021. Cboe Europe operates lit and dark books, a periodic auctions book, and Cboe BIDS Europe, a Large-in-Scale (“LIS”) trading negotiation facility for UK symbols. Cboe NL, launched in October 2019 and based in Amsterdam, operates similar business functionality to that offered by Cboe Europe, and provides for trading only in European Economic Area (“EEA”) symbols. The new Cboe Europe Derivatives venue offers futures and options based on Cboe Europe equity indices. This segment also includes Cboe Europe, Cboe NL, CEDX, Cboe Australia, and Cboe Japan revenue generated from the licensing of proprietary market data and from access and capacity services.

Futures. The Futures segment includes transaction services provided by the Company’s fully electronic futures exchange, CFE, which includes offerings for trading of VIX futures and other futures products, the licensing of proprietary market data, as well as access and capacity services.

Global FX. The Global FX segment includes institutional FX trading services that occur on the Cboe FX fully electronic trading platform, non-deliverable forward FX transactions (“NDFs”) offered for execution on Cboe SEF and Cboe Swiss, as well as revenue generated from the licensing of proprietary market data and from access and capacity services.

General Factors Affecting Results of Operations

In broad terms, our business performance is impacted by a number of drivers, including macroeconomic events affecting the risk and return of financial assets, investor sentiment, the regulatory environment for capital markets, geopolitical events, tax policies, central bank policies and changing technology, particularly in the financial services industry. We believe our future revenues and net income will continue to be influenced by a number of domestic and international economic trends, including:

	●	trading volumes on our proprietary products such as VIX options and futures and SPX options;

	●	trading volumes in listed equity securities, options, futures, and ETPs in North America, Europe, and Asia Pacific, clearing volumes in listed equity securities and ETPs in Europe, volumes in listed equity options, and volumes in institutional FX trading;

	●	the demand for and pricing structure of the U.S. tape plan market data distributed by the Securities Information Processors (“SIPs”), which determines the pool size of the industry market data fees we receive based on our market share;

	●	consolidation and expansion of our customers and competitors in the industry;

	●	the demand for information about, or access to, our markets and products, which is dependent on the products we trade, our importance as a liquidity center, quality and integrity of our proprietary indices, and the quality and pricing of our data and access and capacity services;

	●	continuing pressure in transaction fee pricing due to intense competition in the North American, European, and Asia Pacific markets;

	●	significant fluctuations in foreign currency translation rates or weakened value of currencies; and

	●	regulatory changes and obligations relating to market structure and increased capital requirements, and those which affect certain types of instruments, transactions, products, pricing structures, capital market participants or reporting or compliance requirements.

A number of significant structural, political and monetary issues, global conflicts and the COVID-19 pandemic continue to confront the global economy, and instability could continue, resulting in an increased or subdued level of inflation, market volatility, supply chain constraints, changes in trading volumes and greater uncertainty, inflationary increases in our expenses, such as compensation inflation, may have an adverse effect on our financial results.

We continue to closely monitor developments around COVID-19 and follow guidance provided by governmental and public health agencies. In response to COVID-19, we have provided frequent communications to employees, customers, regulators, critical vendors, technology equipment suppliers, data and disaster recovery centers, and other service providers and instructed non-essential employees to work from home on a temporary basis, implemented travel restrictions, and temporarily suspended open outcry trading between March 13, 2020 and June 14, 2020, without any known significant disruptions to our business or control processes. We expect to continue to take further actions as necessary in response to addressing COVID-19. Our business and operations could be materially and adversely affected by the effects of COVID-19, however, the extent to which our results could be affected by COVID-19 largely depends on future developments which cannot be accurately predicted and are uncertain. Further, changes in trading behavior, additional suspensions of open outcry trading, market disruptions and other future developments caused by the effects of COVID-19 could impact trading volumes and the demand for our products, market data, and services, which could have a material adverse effect on our business, financial condition, operating results and cash flows for fiscal year 2022 and could be material during any future period impacted either directly or indirectly by this pandemic.

Components of Revenues

Cash and Spot Markets

Revenue aggregated into cash and spot markets includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from the Company’s North American Equities, Europe and Asia Pacific, and Global FX segments.

Data and Access Solutions

Revenue aggregated into data and access solutions includes access and capacity fees, proprietary market data fees, and associated other revenue across the Company’s five segments.

Derivatives Markets

Includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other fees from the Company’s Options, Futures, and Europe and Asia Pacific segments.

Components of Cost of Revenues

Liquidity Payments

Liquidity payments are directly correlated to the volume of securities traded on our markets. As stated above, we record the liquidity rebates paid to market participants providing liquidity, in the case of C2, BZX, EDGX, and Cboe Europe Equities and Derivatives, as cost of revenue. BYX and EDGA offer a pricing model where we rebate liquidity takers for executing against an order resting on our book, which is also recorded as a cost of revenues.

Routing and Clearing

Various rules require that U.S. options and equities trade executions occur at the NBBO displayed by any exchange. Linkage order routing consists of the cost incurred to provide a service whereby Cboe equities and options exchanges deliver orders to other execution venues when there is a potential for obtaining a better execution price or when instructed to directly route an order to another venue by the order provider. The service affords exchange order flow providers an opportunity to obtain the best available execution price and may also result in cost benefits to those clients. Such an

offering improves our competitive position and provides an opportunity to attract orders which would otherwise bypass our exchanges. We utilize third-party brokers or our broker-dealer, Cboe Trading, to facilitate such delivery. Also included within routing and clearing are the Order Management System and Execution Management System (“OMS” and “EMS”, respectively) fees incurred for U.S. Equities Off-Exchange order execution, as well as settlement costs incurred for the settlement process executed by EuroCCP.

Section 31 Fees

Exchanges under the authority of the SEC (Cboe Options, C2, BZX, BYX, EDGX, and EDGA) are assessed fees pursuant to the Exchange Act designed to recover the costs to the U.S. government of supervision and regulation of securities markets and securities professionals. We treat these fees as a pass-through charge to customers executing eligible listed equities and listed equity options trades. Accordingly, we recognize the amount that we are charged under Section 31 as a cost of revenues and the corresponding amount that we charge our customers as regulatory transaction fees revenue. Since the regulatory transaction fees recorded in revenues are equal to the Section 31 fees recorded in cost of revenues, there is no impact on our operating income. CFE, Cboe Trading, Cboe Europe, Cboe NL, BIDS, MATCHNow, Cboe FX, Cboe Australia and Cboe Japan are not U.S. national securities exchanges, and accordingly are not charged Section 31 fees.

Royalty Fees and Other Cost of Revenues

Royalty fees primarily consist of license fees paid by us for the use of underlying indices in our proprietary products usually based on contracts traded. The Company has licenses with the owners of the S&P 500 Index, S&P 100 Index and certain other S&P indices, FTSE Russell indices, the DJIA, MSCI, and certain other index products. This category also includes fees related to the dissemination of market data related to S&P indices and other products through Cboe Streaming Market Indices (“CSMI”).

Other cost of revenues primarily consists of interest expense from clearing operations, electronic access permit fees and other miscellaneous costs associated with other revenue.

Components of Operating Expenses

Compensation and Benefits

Compensation and benefits represent our largest expense category and tend to be driven by our staffing requirements, financial performance, and the general dynamics of the employment market. Stock-based compensation is a non-cash expense related to equity awards. Stock-based compensation can vary depending on the quantity and fair value of the award on the date of grant and the related service period.

Depreciation and Amortization

Depreciation and amortization expense results from the depreciation of long-lived assets purchased, the amortization of purchased and internally developed software, and the amortization of intangible assets.

Technology Support Services

Technology support services consists primarily of costs related to the maintenance of computer equipment supporting our system architecture, circuits supporting our wide area network, support for production software, operating system license and support fees, fees paid to information vendors for displaying data and off-site system hosting fees.

Professional Fees and Outside Services

Professional fees and outside services consist primarily of consulting services, which include supplemental staff activities primarily related to systems development and maintenance, legal, regulatory and audit, and tax advisory services.

Travel and Promotional Expenses

Travel and promotional expenses primarily consist of advertising, costs for special events, sponsorship of industry conferences, options education seminars and travel-related expenses.

Facilities Costs

Facilities costs primarily consist of expenses related to owned and leased properties including rent, maintenance, utilities, real estate taxes and telecommunications costs.

Acquisition-Related Costs

Acquisition-related costs relate to acquisitions and other strategic opportunities, including the Merger. The acquisition-related costs include fees for investment banking advisors, lawyers, accountants, tax advisors, public relations firms, severance and retention costs, impairment of goodwill, capitalized software and facilities, and other external costs directly related to the mergers and acquisitions.

Other Expenses

Other expenses represent costs necessary to support our operations that are not already included in the above categories.

Non-Operating (Expenses) Income

Income and expenses incurred through activities outside of our core operations are considered non-operating and are classified as other (expense) income. These activities primarily include interest earned on the investing of excess cash, interest expense related to outstanding debt facilities, dividend income, income and unrealized gains and losses related to investments held in a trust for the Company’s non-qualified retirement and benefit plans, and equity earnings or losses from our investments in other business ventures.

Financial Summary

The following are summaries of changes in financial performance and include certain non-GAAP financial measures. Management uses these non-GAAP measures internally in conjunction with GAAP measures to help evaluate our performance and to help make financial and operational decisions. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision making by removing the impact of certain items management believes do not reflect our underlying operations.

We believe our presentation of these measures provides investors with greater transparency into financial measures used by management and is useful to investors for period-to-period comparisons of our ongoing operating performance.

These non-GAAP financial measures are not presented in accordance with, or as an alternative to, GAAP financial measures and may be calculated differently from non-GAAP measures used by other companies, which reduces their usefulness as comparative measures. We encourage analysts, investors and other interested parties to use these non-GAAP measures as supplemental information to the GAAP financial measures included herein, including our consolidated financial statements, to enhance their analysis and understanding of our performance and in making comparisons. Please see the footnotes below for definitions, additional information, and reconciliations from the closest GAAP measure.

The following summarizes changes in financial performance for the three months ended March 31, 2022, compared to the three months ended March 31, 2021:

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	(1)	These are Non-GAAP figures for which reconciliations are provided below.


	Three Months Ended March 31,						Increase/			Percent
	2022			2021			(Decrease)			Change

	(in millions, except percentages, earnings per share, and as noted below)
Total revenues	$	974.5		$	1,010.8		$	(36.3)		(4)	%
Total cost of revenues		556.4			645.3			(88.9)		(14)	%
Revenues less cost of revenues		418.1			365.5			52.6		14	%
Total operating expenses		178.4			160.9			17.5		11	%
Operating income		239.7			204.6			35.1		17	%
Income before income tax provision		224.9			192.9			32.0		17	%
Income tax provision		115.3			55.7			59.6		107	%
Net income	$	109.6		$	137.2		$	(27.6)		(20)	%
Basic earnings per share	$	1.02		$	1.27		$	(0.25)		(20)	%
Diluted earnings per share		1.02			1.27			(0.25)		(20)	%
Organic net revenue (1)		409.7			365.5			44.2		12	%
EBITDA (2)		276.2			246.8			29.4		12	%
EBITDA margin (3)		66.1	%		67.5	%		(1.4)	%		*
Adjusted EBITDA (2)	$	281.2		$	250.2		$	31.0		12	%
Adjusted EBITDA margin (4)		67.3	%		68.5	%		(1.2)	%		*
Adjusted earnings (5)	$	184.3		$	164.8		$	19.5		12	%
Adjusted earnings margin (5)		44.1	%		45.1	%		(1.0)	%		*
Diluted weighted average shares outstanding		106.8			107.4			(0.6)		(1)	%
Adjusted Diluted earnings per share (6)	$	1.73		$	1.53		$	0.20		13	%

*	Not meaningful

(1)

Organic net revenue is defined as revenues less cost of revenues excluding revenues less cost of revenues of any acquisition that has been owned for less than one year. Revenues from acquisitions that have been owned at least one year are considered organic and are no longer excluded from organic net revenue from either period for comparative purposes. Organic net revenue does not represent, and should not be considered as, an alternative to revenues less cost of revenues, or net revenue, as determined in accordance with GAAP. We have presented organic net revenue because we consider it an important supplemental measure of our performance and we use it as the basis for monitoring our operating financial performance before the effects of acquisitions. We also believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. We believe that investors may find this non-GAAP measure useful in evaluating our performance compared to that of peer companies in our industry. Other companies may calculate organic net revenue differently than we do. Organic net revenue has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.


	Three Months Ended
	March 31,
	2022		2021

	(in millions)
Revenues less cost of revenues	$	418.1	$	365.5
Recent acquisitions:
Acquisition revenues less cost of revenues	$	(8.4)	$	—
Organic net revenue	$	409.7	$	365.5

(2)

EBITDA is defined as income before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before acquisition-related costs and investment establishment costs. EBITDA and adjusted EBITDA do not represent, and should not be considered as, alternatives to net income as determined in accordance with GAAP. We have presented EBITDA and adjusted EBITDA because we consider them important supplemental measures of our performance and believe that they are frequently used by analysts, investors and other interested parties in the evaluation of companies. In addition, we use adjusted EBITDA as a measure of operating performance for preparation of our forecasts and evaluating our leverage ratio for the debt to earnings covenant included in our outstanding credit facility. Other companies may calculate EBITDA and adjusted EBITDA differently than we do. EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

(3)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

(4)	Adjusted EBITDA margin represents adjusted EBITDA divided by revenues less cost of revenues.

(5)

Adjusted earnings is defined as net income adjusted for amortization of purchased intangibles, acquisition-related costs, investment establishment costs, tax reserves, and net income allocated to participating securities, net of the income tax effects of these adjustments. Adjusted earnings does not represent, and should not be considered as, an alternative to net income, as determined in accordance with GAAP. We have presented adjusted earnings because we consider it an important supplemental measure of our performance and we use it as the basis for monitoring our own core operating financial performance relative to other operators of exchanges. We also believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. We believe that investors may find this non-GAAP measure useful in evaluating our performance compared to that of peer companies in our industry. Other companies may calculate adjusted earnings differently than we do. Adjusted earnings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

(6)	Adjusted diluted earnings per share represents adjusted earnings divided by diluted weighted average shares outstanding.

The following is a reconciliation of net income (loss) allocated to common stockholders to EBITDA and adjusted EBITDA (in millions):


	Three Months Ended March 31,
	2022
	Options		North American Equities		Europe and Asia Pacific		Futures		Global FX		Corporate		Total
Net income (loss) allocated to common stockholders	$	162.4	$	38.4	$	14.0	$	16.9	$	2.4	$	(124.9)	$	109.2
Interest expense, net		—		—		1.9		—		—		8.9		10.8
Income tax provision		—		—		4.8		—		—		110.5		115.3
Depreciation and amortization		6.7		18.1		9.6		0.7		5.8		—		40.9
EBITDA		169.1		56.5		30.3		17.6		8.2		(5.5)		276.2
Acquisition-related costs		—		0.4		0.8		—		—		0.8		2.0
Investment establishment costs		—		—		—		—		—		3.0		3.0
Adjusted EBITDA	$	169.1	$	56.9	$	31.1	$	17.6	$	8.2	$	(1.7)	$	281.2

	Three Months Ended March 31,
	2021
	Options		North American Equities		Europe and Asia Pacific		Futures		Global FX		Corporate		Total
Net income (loss) allocated to common stockholders	$	127.9	$	43.7	$	7.8	$	17.4	$	1.2	$	(61.2)	$	136.8
Interest expense, net		—		—		3.4		—		—		8.9		12.3
Income tax provision		—		1.2		3.5		—		—		51.0		55.7
Depreciation and amortization		7.4		19.6		7.9		0.7		6.4		—		42.0
EBITDA		135.3		64.5		22.6		18.1		7.6		(1.3)		246.8
Acquisition-related costs		0.3		—		—		—		—		3.1		3.4
Adjusted EBITDA	$	135.6	$	64.5	$	22.6	$	18.1	$	7.6	$	1.8	$	250.2

The following is a reconciliation of net income allocated to common stockholders to adjusted earnings (in millions):


	Three Months Ended
	March 31,
	2022		2021
Net income allocated to common stockholders	$	109.2	$	136.8
Amortization		30.6		32.9
Acquisition-related costs		2.0		3.4
Investment establishment costs		3.0		—
Tax reserves		48.5		—
Tax effect of adjustments		(8.7)		(8.2)
Net income allocated to participating securities		(0.3)		(0.1)
Adjusted earnings	$	184.3	$	164.8

The following summarizes changes in certain operational and financial metrics for the three months ended March 31, 2022, compared to the three months ended March 31, 2021:

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The following table includes operational and financial metrics for our Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX segments. The metrics listed for Australian Equities and Japanese Equities in the table below are newly added for the three months ended March 31, 2022 as a result of the acquisition completed during 2021. Therefore, the table does not include results from the periods preceding each acquisition for the applicable metrics. The following summarizes changes in certain operational and financial metrics for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:


	Three Months Ended March 31,						Increase/			Percent
	2022			2021			(Decrease)			Change

	(in millions, except percentages, trading days, and as noted below)
Options:
Average daily volume (ADV) (in millions of contracts):
Market ADV		42.5			42.0			0.5		1	%
Total touched contracts (1)		13.4			12.7			0.7		6	%
Multi-listed contract ADV		11.0			10.8			0.2		2	%
Index contract ADV		2.4			1.9			0.5		27	%
Number of trading days		62			61			1		2	%
Total Options revenue per contract (RPC) (2)	$	0.210		$	0.177		$	0.033		18	%
Multi-listed options RPC (2)		0.067			0.067			—		—	%
Index options RPC (2)		0.857			0.803			0.054		7	%
Total Options market share		31.5	%		30.2	%		1.3	%		*
Multi-listed options market share		27.4	%		26.9	%		0.5	%		*
Index options market share		99.1	%		99.0	%		0.1	%		*
North American Equities:
U.S. Equities:
U.S. Equities - Exchange:
ADV:
Total touched shares (in billions) (1)		1.9			2.3			(0.4)		(17)	%
Market ADV (in billions)		12.9			14.7			(1.8)		(12)	%
Market share		14.3	%		15.0	%		(0.7)	%		*
U.S. Equities - Exchange (net capture per one hundred touched shares) (3)	$	0.017		$	0.015		$	0.002		8	%
U.S. ETPs: launches (number of launches)		32			35			(3)		(9)	%
U.S. ETPs: listings (number of listings)		566			471			95		20	%
U.S. Equities - Off-Exchange:
ADV:
Total touched shares (in millions) (1)		108.5			99.5			9.0		9	%
U.S. Equities - Off-Exchange (net capture per one hundred touched shares) (4)	$	0.117		$	0.121		$	(0.004)		(4)	%
Trading days		62			61			1		2	%
Canadian Equities:
ADV (matched shares, in millions) (5)		41.1			71.4			(30.3)		(42)	%
Trading days		62			62			—		—	%
Net capture (per 10,000 touched shares, in Canadian dollars) (6)		9.131			7.184			1.947		27	%
Europe and Asia Pacific:
European Equities:
ADNV:
Matched ADNV (in billions) (7)	€	12.8		€	7.5		€	5.3		71	%
Market ADNV (in billions)		58.7			44.8			13.9		31	%
Trading days		64			63			1		2	%
Market share		21.8	%		16.8	%		5.0	%		*
Net capture (per matched notional value in basis points) (8)		0.233			0.284			(0.051)		(18)	%
EuroCCP:
Trades cleared (9)		454.4			298.2			156.2		52	%
Fee per trade cleared (10)	€	0.009		€	0.011		€	(0.002)		(14)	%
Net settlement volume (11)		2.8			2.4			0.4		16	%
Net fee per settlement (12)	€	0.924		€	0.865		€	0.059		7	%
Australian Equities:
ADNV (AUD billions)	$	0.9		$	—		$	0.9		—	%
Trading days		63			—			63		—	%
Market share - Continuous		15.8	%		—	%		15.8			*
Net capture (per matched notional value in basis points) (13)		0.173			—			0.173		—	%
Japanese Equities:
ADNV (JPY billions)	¥	164.6		¥	—		¥	164.6		—	%
Trading days		58			—			58		—	%
Market share - Lit Continuous		3.8	%		—	%		3.8	%		*
Net capture (per matched notional value in basis points) (14)		0.228			—			0.228		—	%
Futures:
ADV (in thousands)		253.7			255.9			(2.2)		(1)	%
Trading days		62			61			1		2	%
Revenue per contract	$	1.637		$	1.639		$	(0.002)		—	%
Global FX:
ADNV (in billions)	$	42.0		$	37.1		$	4.9		13	%
Trading days		64			63			1		2	%
Global FX (net capture per one million dollars traded) (15)		2.67			2.65			0.02		1	%

Average British pound/U.S. dollar exchange rate	$	1.342		$	1.379		$	(0.037)		(3)	%
Average Canadian dollar/U.S. dollar exchange rate	$	0.789		$	0.790		$	(0.001)		—	%
Average Euro/U.S. dollar exchange rate	$	1.122		$	1.205		$	(0.083)		(7)	%
Average Euro/British pound exchange rate	£	0.836		£	0.874		£	(0.038)		(4)	%
Average Australian dollar/U.S. dollar exchange rate	$	0.721		$	—		$	0.721		—	%
Average Japanese Yen/U.S. dollar exchange rate	$	0.009		$	—		$	0.009		—	%

*	Not meaningful

Note, the percent change listed represents the change in the unrounded metrics figures.

(1)	Touched volume represents the total number of shares of equity securities and ETFs internally matched on our exchanges or routed to and executed on an external market center.

(2)	Average revenue per contract, for options and futures represents total net transaction fees recognized for the period divided by total contracts traded during the period.

(3)	Net capture per one hundred touched shares refers to transaction fees less liquidity payments and routing and clearing costs divided by the product of one-hundredth ADV of touched shares on BZX, BYX, EDGX, and EDGA and the number of trading days.

(4)	Net capture per 100 touched shares refers to transaction fees less order and execution management system (OMS/EMS) fees and clearing costs divided by the product of one-hundredth ADV of touched shares on BIDS Trading and the number of trading days for the period.

(5)	Matched volume represents the total number of shares of equity securities and ETFs activity executed on our exchanges.

(6)	Net capture per 10,000 touched shares refers to transaction fees divided by the product of one-ten thousandth ADV of shares for MATCHNow and the number of trading days.

(7)	Matched ADNV represents the average daily notional value of shares or contracts executed on our exchanges.

(8)	Net capture per matched notional value refers to transaction fees less liquidity payments in British pounds divided by the product of ADNV in British pounds of shares matched on Cboe Europe Equities and the number of trading days.

(9)	Trades cleared refers to the total number of non-interoperable trades cleared.

(10)	Fee per trade cleared refers to clearing fees divided by number of non-interoperable trades cleared.

(11)	Net settlement volume refers to the total number of settlements executed after netting.

(12)	Net fee per settlement refers to settlement fees less direct costs incurred to settle divided by the number of settlements executed after netting.

(13)	Net capture per matched notional value refers to transaction fees less liquidity payments in Australian dollars divided by the product of ADNV in Australian dollars of shares matched on Cboe Australia and the number of Australian Equities trading days.

(14)	Net capture per matched notional value refers to transaction fees less liquidity payments in Japanese Yen divided by the product of ADNV in Japanese Yen of shares matched on Cboe Japan and the number of Japanese Equities trading days.

(15)	Net capture per one million dollars traded refers to net transaction fees less liquidity payments, if any, divided by the Spot and SEF products of one-thousandth of ADNV traded on the Cboe FX Markets and the number of trading days, divided by two, which represents the buyer and seller that are both charged on the transaction.

Revenues

Total revenues for the three months ended March 31, 2022 decreased $36.3 million, or 4%, compared to the prior period primarily due to decreased cash and spot markets revenue as a result of a decline in the Section 31 fee rate and a decline in volumes traded on the U.S. Equities exchanges, partially offset by increased derivatives markets revenue attributable to increased volumes traded on the Options exchanges, coupled with increased data and access solutions revenue primarily related to increased access and capacity fees in the Options and North American Equities segments. The following summarizes changes in revenues for the three months ended March 31, 2022, compared to the three months ended March 31, 2021 (in millions, except percentages):


	Three Months Ended
	March 31,				Increase/		Percent
	2022		2021		(Decrease)		Change
Cash and spot markets	$	461.9	$	548.9	$	(87.0)	(16)	%
Data and access solutions		118.9		100.6		18.3	18	%
Derivatives markets		393.7		361.3		32.4	9	%
Total revenues	$	974.5	$	1,010.8	$	(36.3)	(4)	%

Cash and Spot Markets

Cash and spot markets revenue decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to decreases in regulatory fees and transaction and clearing fees. Regulatory fees decreased primarily due to a 68% decline in the Section 31 fee rate, from an average rate of $15.80 per million dollars of covered sales for the three months ended March 31, 2021 to an average rate of $5.10 per million dollars of covered sales during the three months ended March 31, 2022. Transaction and clearing fees decreased primarily due to a 17% decrease in total touched shares on U.S. Equities exchanges, partially offset by a 71% increase in European Equities matched ADNV.

Data and Access Solutions

Data and access solutions revenue increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in access and capacity fees and proprietary market data fees. Access and capacity fees increased primarily due to increases in logical port revenue in the Options and North American Equities segments, increases in physical port revenue in the North American Equities and Options segments, and increased access fees in the Europe and Asia Pacific segment. Proprietary market data fees increased primarily due to proprietary market data attributable to Cboe Asia Pacific, which was acquired in the third quarter of 2021, coupled with an increase in financial risk analytics market data in the Options segment, partially offset by a decrease in licensing fees.

Derivatives Markets

Derivatives markets revenue increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to an increase in transaction and clearing fees, partially offset by a decrease in regulatory fees. Transaction and clearing fees increased primarily due to a 27% increase in index options ADV. Regulatory fees decreased primarily due to a 68% decline in the Section 31 fee rate, from an average rate of $15.80 per million dollars of covered sales for the three months ended March 31, 2021 to an average rate of $5.10 per million dollars of covered sales during the three months ended March 31, 2022.

Cost of Revenues

The following tables reconcile the cost of revenues captions presented on the condensed consolidated statements of income to the updated net revenue captions discussed in Note 1 (“Organization and Basis of Presentation”) for the three months ended March 31, 2022 and 2021, respectively (in millions):


		Three Months Ended March 31,
		2022
	Cash andSpot Markets		Data andAccess Solutions		DerivativesMarkets		Total
Liquidity payments	$	299.6	$	—	$	167.9	$	467.5
Routing and clearing fees		15.6		—		6.7		22.3
Section 31 fees		31.8		—		3.9		35.7
Royalty fees and other cost of revenues		4.6		2.4		23.9		30.9
Total cost of revenues	$	351.6	$	2.4	$	202.4	$	556.4

		Three Months Ended March 31,
		2021
	Cash andSpot Markets		Data andAccess Solutions		DerivativesMarkets		Total
Liquidity payments	$	335.8	$	—	$	166.0	$	501.8
Routing and clearing fees		21.6		—		5.5		27.1
Section 31 fees		82.0		—		9.9		91.9
Royalty fees and other cost of revenues		4.2		2.0		18.3		24.5
Total cost of revenues	$	443.6	$	2.0	$	199.7	$	645.3

Cost of revenues decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to decreased cash and spot markets cost of revenues related to lower Section 31 fees, coupled with a decline in liquidity payments.

The following summarizes changes in the disaggregated cost of revenues for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 (in millions, except percentages):


	Three Months Ended
	March 31,				Increase/		Percent
	2022		2021		(Decrease)		Change
Liquidity payments	$	467.5	$	501.8	$	(34.3)	(7)	%
Routing and clearing		22.3		27.1		(4.8)	(18)	%
Section 31 fees		35.7		91.9		(56.2)	(61)	%
Royalty fees and other cost of revenues		30.9		24.5		6.4	26	%
Total cost of revenues	$	556.4	$	645.3	$	(88.9)	(14)	%

Liquidity Payments

Liquidity payments decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a decrease in volumes traded on the U.S. Equities exchanges, partially offset by increased volumes traded on the European Equities exchanges.

Routing and Clearing

Routing and clearing fees decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a decline in routed trades in the North American Equities segment, partially offset by an increase in routed shares on the Options exchanges.

Section 31 Fees

Section 31 fees decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a 68% decline in the Section 31 fee rate, from an average rate of $15.80 per million dollars of covered

sales for the three months ended March 31, 2021 to an average rate of $5.10 per million dollars of covered sales during the three months ended March 31, 2022.

Royalty Fees and Other Cost of Revenues

Royalty fees and other cost of revenues increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to an increase in trading volume in licensed products.

Revenues Less Cost of Revenues

Revenues less cost of revenues increased $52.6 million, or 14%, for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increased derivatives markets revenue attributable to increased volumes traded on the Options exchanges, as well as increased access and capacity fees in the Options and North American Equities segments.

The following summarizes the components of revenues less cost of revenues for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 (in millions, except percentages):


	Three Months Ended
	March 31,						Percent
	2022		2021		Increase		Change
Cash and spot markets	$	110.3	$	105.3	$	5.0	5	%
Data and access solutions		116.5		98.6		17.9	18	%
Derivatives markets		191.3		161.6		29.7	18	%
Total revenues less cost of revenues	$	418.1	$	365.5	$	52.6	14	%

Cash and Spot Markets

Cash and spot markets revenues less cost of revenues increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increased transaction and clearing fees in the European Equities segment. Transaction and clearing fees increased primarily due to a 71% increase in European Equities matched ADNV, partially offset by a 17% decline in total touched shares on U.S. Equities exchanges. Routing and clearing fees decreased primarily due to a 36% decline in routed shares on U.S. Equities exchanges.

Data and Access Solutions

Data and access solutions revenues less cost of revenues increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in access and capacity fees and proprietary market data fees. Access and capacity fees increased due to increases in logical port revenue in the Options and North American Equities segments, increases in physical port revenue in the North American Equities and Options segments, and increased access fees in the Europe and Asia Pacific segment. Proprietary market data fees increased due to proprietary market data attributable to Cboe Asia Pacific, coupled with an increase in financial risk analytics market data in the Options segment.

Derivatives Markets

Derivatives markets revenues less cost of revenues increased for the three months ended March 31, 2022 compared to the same period in 2021 due to increased transaction and clearing fees, partially offset by increased royalty fees in the Options segment. Transaction and clearing fees increased primarily due to a 27% increase in index options ADV.

Operating Expenses

Total operating expenses for the three months ended March 31, 2022 compared to the same period in 2021 increased $17.5 million, or 11%, primarily due to increases in compensation and benefits, professional fees and outside services, and other expenses, partially offset by a decrease in acquisition-related costs.

The following summarizes changes in operating expenses for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 (in millions, except percentages):


	Three Months Ended
	March 31,				Increase/		Percent
	2022		2021		(Decrease)		Change
Compensation and benefits	$	81.2	$	72.3	$	8.9	12	%
Depreciation and amortization		40.9		42.0		(1.1)	(3)	%
Technology support services		19.2		17.2		2.0	12	%
Professional fees and outside services		19.7		15.6		4.1	26	%
Travel and promotional expenses		2.9		1.6		1.3	81	%
Facilities costs		6.5		5.3		1.2	23	%
Acquisition-related costs		2.0		3.4		(1.4)	(41)	%
Other expenses		6.0		3.5		2.5	71	%
Total operating expenses	$	178.4	$	160.9	$	17.5	11	%

Compensation and Benefits

Compensation and benefits increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a $9.8 million increase in salaries, wages, and bonuses, driven by a $3.5 million increase in compensation and benefits expense related to Cboe Asia Pacific, a $4.6 million increase in salaries, wages, and bonuses driven by strong Company performance year to date, merit increases, and increased headcount excluding acquisitions, and a $1.0 million increase in benefits driven by increases in payroll taxes and benefit plan contributions, partially offset by a $2.7 million decrease in equity compensation related to the reversal of 2019 PSUs which did not meet performance conditions required for vesting and forfeited awards during the three months ended March 31, 2022.

Depreciation and Amortization

Depreciation and amortization decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a decrease in amortization under the discounted cash flow method for the intangibles acquired in the Bats acquisition, partially offset by an increase in depreciation expense related to Cboe Asia Pacific, as well as an increase in depreciation expense related to the former headquarters location, which was not subject to depreciation during the three months ended March 31, 2021 as it was classified as held for sale from May 1, 2019 until May 1, 2021.

Technology Support Services

Technology support services increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in software maintenance support service fees and market data support service fees, partially offset by a decrease in purchased hardware and equipment.

Professional Fees and Outside Services

Professional fees and outside services increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in legal fees, contract services, and recruiting fees.

Travel and Promotional Expenses

Travel and promotional expenses increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in marketing expenses and travel expenses.

Facilities Costs

Facilities costs increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to an increase in rent expense related to additional office locations following the acquisition of Cboe Asia Pacific, along with the new trading floor in Chicago.

Acquisition-Related Costs

Acquisition-related costs decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a decline in professional fees, partially offset by an impairment charge related to the Company’s investment in Signal Trading Systems, LLC that occurred in the first quarter of 2021 and did not recur in 2022.

Other Expenses

Other expenses increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to increases in taxes, licenses, and permits, as well as record storage costs and additional one-time charitable contributions made related to Ukraine relief efforts during the three months ended March 31, 2022.

Operating Income

As a result of the items above, operating income for the three months ended March 31, 2022 was $239.7 million, compared to $204.6 million for the same period in 2021, an increase of $35.1 million.

Interest Expense, Net

Net interest expense decreased for the three months ended March 31, 2022 compared to the same period in 2021. The decrease for the three months ended March 31, 2022 was primarily due to a decrease in interest expense related to the EuroCCP Credit Facility, which was amended and restated in July 2021, partially offset by interest income related to Cboe Asia Pacific.

Other (Expense) Income, Net

Net other income decreased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to a $3.1 million loss, related to the Company’s share of the 7Ridge Fund’s loss accounted for under the equity method of accounting, of which $3.0 million was related to investment establishment costs, which are not expected to recur.

Income Before Income Tax Provision

As a result of the above, income before income tax provision for the three months ended March 31, 2022 was $224.9 million, compared to $192.9 million for the same period in 2021, an increase of $32.0 million.

Income Tax Provision

The effective tax rate from continuing operations was 51.3% and 28.9% for the three months ended March 31, 2022 and 2021, respectively. The higher effective tax rate for the three months ended March 31, 2022 is primarily due to additional tax reserves of $48.5 million related to the Section 199 litigation.

Net Income

As a result of the items above, net income for the three months ended March 31, 2022 was $109.6 million, compared to $137.2 million for the three months ended March 31, 2021, a decrease of $27.6 million.

Segment Operating Results

We report results from our five segments: Options, North American Equities, Europe and Asia Pacific, Futures, and Global FX. Segment performance is primarily based on operating income (loss). We have aggregated all corporate costs, as well as other business ventures, within Corporate Items and Eliminations as those activities should not be used to evaluate a segment’s operating performance. All operating expenses that relate to activities of a specific segment have been allocated to that segment.

The following summarizes our total revenues by segment (in millions, except percentages):

Note, the chart excludes Corporate revenues less cost of revenues of $0.3 million for the quarter ended March 31, 2021.


							Percentage
							of Total
							Revenues
	Three Months Ended						Three Months Ended
	March 31,				Percent		March 31,
	2022		2021		Change		2022		2021
Options	$	422.6	$	382.4	11	%	43	%	38	%
North American Equities		423.7		526.0	(19)	%	44	%	52	%
Europe and Asia Pacific		78.6		55.8	41	%	8	%	6	%
Futures		32.3		31.6	2	%	3	%	3	%
Global FX		17.3		14.7	18	%	2	%	1	%
Corporate		—		0.3	—	%	—	%	—	%
Total revenues	$	974.5	$	1,010.8	(4)	%	100	%	100	%

The following summarizes our revenues less cost of revenues by segment (in millions, except percentages):

Note, the chart excludes Corporate revenues less cost of revenues of $0.3 million for the quarter ended March 31, 2021.


							Percentage of
							Total Revenues
							Less Cost of Revenues
	Three Months Ended						Three Months Ended
	March 31,				Percent		March 31,
	2022		2021		Change		2022		2021
Options	$	219.2	$	181.7	21	%	52	%	50	%
North American Equities		93.1		96.1	(3)	%	22	%	26	%
Europe and Asia Pacific		57.5		42.1	37	%	14	%	12	%
Futures		31.2		30.6	2	%	8	%	8	%
Global FX		17.1		14.7	16	%	4	%	4	%
Corporate		—		0.3	—	%	—	%	—	%
Total revenues less cost of revenues	$	418.1	$	365.5	14	%	100	%	100	%

Options

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our Options segment (in millions, except percentages):


									Percentage
									of Total
									Revenues
	Three Months Ended								Three Months Ended
	March 31,						Percent		March 31,
	2022			2021			Change		2022		2021
Revenues less cost of revenues	$	219.2		$	181.7		21	%	52	%	48	%
Operating expenses		56.5			53.0		7	%	13	%	14	%
Operating income	$	162.7		$	128.7		26	%	38	%	34	%
EBITDA (1)	$	169.1		$	135.3		25	%	40	%	35	%
EBITDA margin (2)		77.1	%		74.5	%	*		*		*

*	Not meaningful

(1)	See footnote (2) to the table under “Financial Summary” above for a reconciliation of net income to EBITDA, and management’s reasons for using such non-GAAP measures.

(2)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $37.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to a 27% increase in index options ADV and a 7% increase in index options net capture. For the three months ended March 31, 2022, operating income for the Options segment increased $34.0 million compared to the three months ended March 31, 2021 primarily due to an increase in revenues less cost of revenues. Operating expenses increased $3.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to increases in professional fees and outside services, other expenses, and technology support services.

North American Equities

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our North American Equities segment (in millions, except percentages):


									Percentage
									of Total
									Revenues
	Three Months Ended								Three Months Ended
	March 31,						Percent		March 31,
	2022			2021			Change		2022		2021
Revenues less cost of revenues	$	93.1		$	96.1		(3)	%	22	%	18	%
Operating expenses		54.5			51.0		7	%	13	%	10	%
Operating income	$	38.6		$	45.1		(14)	%	9	%	9	%
EBITDA (1)	$	56.5		$	64.5		(12)	%	13	%	12	%
EBITDA margin (2)		60.7	%		67.1	%	*		*		*

*	Not meaningful

(1)	See footnote (2) to the table under “Financial Summary” above for a reconciliation of net income to EBITDA, and management’s reasons for using such non-GAAP measures.

(2)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues decreased $3.0 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to a decline in transaction and clearing fees as a result of a 17% decrease in total touched shares on U.S. Equities exchanges. For the three months ended March 31, 2022, operating income for the North American Equities segment decreased $6.5 million compared to the three months ended March 31, 2021 primarily due to an increase in operating expenses, coupled with a decrease in revenues less cost of revenues. Operating expenses increased $3.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to increases in professional fees and outside services and compensation and benefits, partially offset by a decrease in depreciation and amortization.

Europe and Asia Pacific

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our Europe and Asia Pacific segment (in millions, except percentages):


									Percentage
									of Total
									Revenues
	Three Months Ended								Three Months Ended
	March 31,						Percent		March 31,
	2022			2021			Change		2022		2021
Revenues less cost of revenues	$	57.5		$	42.1		37	%	73	%	75	%
Operating expenses		36.6			27.6		33	%	47	%	50	%
Operating income	$	20.9		$	14.5		44	%	27	%	26	%
EBITDA (1)	$	30.3		$	22.6		34	%	39	%	41	%
EBITDA margin (2)		52.7	%		53.7	%	*		*		*

*Not meaningful

(1)	See footnote (2) to the table under “Financial Summary” above for a reconciliation of net income to EBITDA, and management’s reasons for using such non-GAAP measures.

(2)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $15.4 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to a 71% increase in European Equities matched ADNV, driven by a 31% increase in European Equities market ADNV, and additional revenue attributable to Cboe Asia Pacific. For the three months ended March 31, 2022, operating income for the Europe and Asia Pacific segment increased $6.4 million compared to the three months ended March 31, 2021, due to higher revenues less cost of revenues. Operating expenses increased $9.0 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to increases in compensation and benefits and depreciation and amortization attributable to Cboe Asia Pacific.

Futures

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our Futures segment (in millions, except percentages):


									Percentage
									of Total
									Revenues
	Three Months Ended								Three Months Ended
	March 31,						Percent		March 31,
	2022			2021			Change		2022		2021
Revenues less cost of revenues	$	31.2		$	30.6		2	%	97	%	97	%
Operating expenses		14.2			13.1		8	%	44	%	42	%
Operating income	$	17.0		$	17.5		(3)	%	53	%	55	%
EBITDA (1)	$	17.6		$	18.1		(3)	%	54	%	57	%
EBITDA margin (2)		56.4	%		59.2	%	*		*		*

*	Not meaningful

(1)	See footnote (2) to the table under “Financial Summary” above for a reconciliation of net income to EBITDA, and management’s reasons for using such non-GAAP measures.

(2)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $0.6 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase in proprietary market data and logical port fees. For the three months ended March 31, 2022, operating income for the Futures segment decreased $0.5 million compared to the three months ended March 31, 2021 primarily due to higher operating expenses. Operating expenses increased $1.1 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase in professional fees and outside services.

Global FX

The following summarizes revenues less cost of revenues, operating expenses, operating income, EBITDA, and EBITDA margin for our Global FX segment (in millions, except percentages):


									Percentage
									of Total
									Revenues
	Three Months Ended								Three Months Ended
	March 31,						Percent		March 31,
	2022			2021			Change		2022		2021
Revenues less cost of revenues	$	17.1		$	14.7		16	%	99	%	100	%
Operating expenses		14.7			13.5		9	%	85	%	92	%
Operating income	$	2.4		$	1.2		100	%	14	%	8	%
EBITDA (1)	$	8.2		$	7.6		8	%	47	%	52	%
EBITDA margin (2)		48.0	%		51.7	%	*		*		*

*	Not meaningful

(1)	See footnote (2) to the table under “Financial Summary” above for a reconciliation of net income to EBITDA, and management’s reasons for using such non-GAAP measures.

(2)	EBITDA margin represents EBITDA divided by revenues less cost of revenues.

Revenues less cost of revenues increased $2.4 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to a 13% increase in Global FX ADNV. For the three months ended March 31, 2022, operating income for the Global FX segment increased $1.2 million compared to the three months ended March 31, 2021 primarily due to an increase in revenues less cost of revenues. Operating expenses increased $1.2 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase in compensation and benefits, partially offset by a decrease in depreciation and amortization.

Liquidity and Capital Resources

Below are charts that reflect elements of our capital allocation:

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We expect our cash on hand at March 31, 2022 and other available resources, including cash generated from operations, to be sufficient to continue to meet our cash requirements for the foreseeable future. In the near term, we expect that our cash from operations and availability under the Revolving Credit Facility and Term Loan Agreement will

meet our cash needs to fund our operations, capital expenditures, interest payments on debt, any dividends, potential strategic acquisitions, opportunities for common stock repurchases under the previously announced program, and payouts related to the unfavorable decision in the Section 199 litigation. We may also utilize excess cash on hand to pay down amounts outstanding under the Term Loan Agreement. See Note 10 (“Debt”) of the condensed consolidated financial statements for further information.

EuroCCP also has a €1.5 billion committed syndicated multicurrency revolving and swingline credit facility agreement with EuroCCP as borrower and the Company as guarantor of scheduled interest and fees on borrowings (but not the principal amount of any borrowings) (the “Facility”). The Facility is available to be drawn by EuroCCP towards (a) financing unsettled amounts in connection with the settlement of transactions in securities and other items processed through EuroCCP’s clearing system and (b) financing any other liability or liquidity requirement of EuroCCP incurred in the operation of its clearing system. Borrowings under the Facility are secured by cash, eligible bonds and eligible equity assets deposited by EuroCCP into secured accounts. As a result, should the Facility be drawn by EuroCCP it could potentially impact EuroCCP’s liquidity, and we can give no assurance that this Facility will be sufficient to meet all of such obligations or sufficiently mitigate EuroCCP’s liquidity risk to meet its payment obligations when due. Additionally, a default of the Facility may allow lenders, under certain circumstances, to accelerate any related drawn amounts and may result in the acceleration of the Company’s other outstanding debt to which a cross-acceleration or cross-default provision applies, which may limit the Company’s liquidity, business and financing activities. The Facility is expected to terminate on June 30, 2022 and we may not be able to enter into a replacement facility on commercially reasonable terms, or at all.

Our long-term cash needs will depend on many factors, including an introduction of new products, enhancements of current products, the geographic mix of our business and any potential acquisitions. We believe our cash from operations and the availability under our Revolving Credit Facility will meet any long-term needs unless a significant acquisition or acquisitions are identified, in which case we expect that we would be able to borrow the necessary funds and/or issue additional shares of our common stock to complete such acquisition(s). In addition, we do not expect COVID-19 to have a material impact on our liquidity or capital resources, including cash from operations or uses of cash, or change our ability to access capital markets in the near term or the foreseeable future.

Cash and cash equivalents include cash in banks and all non-restricted, highly liquid investments with original maturities of three months or less at the time of purchase. Cash and cash equivalents as of March 31, 2022 increased $317.5 million from December 31, 2021 primarily due to the issuance of the 3.000% Senior Notes, results of operations, and adjustment for depreciation expense. See “Cash Flow” below for further discussion.

Our cash and cash equivalents held outside of the United States in various foreign subsidiaries totaled $173.1 million as of March 31, 2022. The remaining balance was held in the United States and totaled $486.3 million as of March 31, 2022. The majority of cash held outside the United States is available for repatriation, but under current law, could subject us to additional United States income taxes, less applicable foreign tax credits.

Our financial investments include deferred compensation plan assets, as well as investments with original or acquired maturities longer than three months, but that mature in less than one year from the balance sheet date and are recorded at fair value. As of March 31, 2022 and December 31, 2021, financial investments consisted of U.S. Treasury securities and deferred compensation plan assets.

Cash Flow

The following table summarizes our cash flow data for the three months ended March 31, 2022 and 2021, respectively (in millions):


	Three Months Ended
	March 31,
	2022		2021
Net cash provided by operating activities	$	1,259.8	$	599.1
Net cash used in investing activities		(24.9)		(13.3)
Net cash provided by (used in) financing activities		146.5		(119.5)
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents		0.7		(0.5)
Increase in cash, cash equivalents, and restricted cash and cash equivalents	$	1,382.1	$	465.8


	As of March 31,
	2022		2021
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents:
Cash and cash equivalents	$	659.4	$	263.3
Restricted cash and cash equivalents (margin deposits and clearing funds)		1,810.3		1,260.0
Restricted cash and cash equivalents (included in other current assets)		4.6		—
Total	$	2,474.3	$	1,523.3

Net Cash Flows Provided by Operating Activities

During the three months ended March 31, 2022, net cash provided by operating activities was $1,150.2 million higher than net income. The variance is primarily attributable to the change of $1,064.4 million of restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP, the change in accounts payable and accrued liabilities of $93.7 million, the change in income taxes receivable of $42.7 million, the adjustment for depreciation of $40.9 million, and the change in income taxes payable of $24.5 million, partially offset by the change in accounts receivable of $56.2 million and the adjustment for the provision for deferred income taxes of $17.8 million for the three months ended March 31, 2022.

Net cash flows provided by operating activities were $1,259.8 million and $599.1 million for the three months ended March 31, 2022 and 2021, respectively. The change in net cash flows provided by operating activities was primarily due to the change in restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP, the change in Section 31 fees payable, and the change in unrecognized tax benefits, partially offset by the change in accounts receivable and the change in other liabilities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Net Cash Flows Used in Investing Activities

Net cash flows used in investing activities were $24.9 million and $13.3 million for the three months March 31, 2022 and 2021, respectively. The variance is primarily due to the change in the proceeds from available-for-sale financial investments, partially offset by the change in purchases of available-for-sale financial investments for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Net Cash Flows Provided by (Used in) Financing Activities

Net cash flows provided by (used in) financing activities were $146.5 and ($119.5) million for the three months ended March 31, 2022 and 2021, respectively. The variance is primarily attributable to proceeds from the long-term debt issuance of $298.6 million, partially offset by the change in share repurchases, as well as the change in payment of contingent consideration from acquisition for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Financial Assets

The following summarizes our financial assets, excluding margin deposits and clearing funds, as of March 31, 2022 and December 31, 2021 (in millions):


	March 31,		December 31,
	2022		2021
Cash and cash equivalents	$	659.4	$	341.9
Financial investments		48.7		37.1
Less deferred compensation plan assets		(27.4)		(28.0)
Less cash collected for Section 31 fees		(20.7)		(25.9)
Adjusted cash (1)	$	660.0	$	325.1

(1)

Adjusted cash is a non-GAAP measure and represents cash and cash equivalents plus financial investments, minus deferred compensation plan assets and cash collected for Section 31 fees. We have presented adjusted cash because we consider it an important supplemental measure of our liquidity and believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies.

Debt

The following summarizes our debt obligations as of March 31, 2022 and December 31, 2021 (in millions):


	March 31,		December 31,
	2022		2021
Term Loan Agreement	$	160.0	$	160.0
3.650% Senior Notes		650.0		650.0
1.625% Senior Notes		500.0		500.0
3.000% Senior Notes		300.0		—
Revolving Credit Agreement		—		—
EuroCCP Credit Facility		—		—
Less unamortized discount and debt issuance costs		(16.4)		(10.7)
Total debt	$	1,593.6	$	1,299.3

As of March 31, 2022 and December 31, 2021, we were in compliance with the covenants of our debt agreements.

In addition to the debt outstanding, as of March 31, 2022, we had an additional $400.0 million available through our revolving credit facility, with the ability to borrow another $200.0 million by increasing the commitments under the facility, and, as of March 31, 2022, through September 30, 2022 we have an additional $400.0 million available through our term loan agreement. Together with adjusted cash, we had $1.7 billion available to fund our operations, capital expenditures, potential acquisitions, debt repayments and any dividends as of March 31, 2022.

Dividends

The Company’s expectation is to continue to pay dividends. The decision to pay a dividend, however, remains within the discretion of the Company's Board of Directors and may be affected by various factors, including our earnings, financial condition, capital requirements, level of indebtedness and other considerations our Board of Directors deems relevant. Future debt obligations and statutory provisions, among other things, may limit, or in some cases prohibit, our ability to pay dividends.

Share Repurchase Program

In 2011, the Board of Directors approved an initial authorization for the Company to repurchase shares of its outstanding common stock of $100 million and subsequently approved additional authorizations for a total authorization of $1.6 billion. The program permits the Company to purchase shares through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation.

Under the program, for the three months ended March 31, 2022, the Company repurchased 596,988 shares of common stock at an average cost per share of $117.25, totaling $70.0 million. Since inception of the program through March 31, 2022, the Company has repurchased 18,669,117 shares of common stock at an average cost per share of $69.69, totaling $1.3 billion.

As of March 31, 2022, the Company had $248.9 million of availability remaining under its existing share repurchase authorizations.

Commercial Commitments and Contractual Obligations

As of March 31, 2022, our commercial commitments and contractual obligations included operating leases, data and telecommunications agreements, equipment leases, our long-term debt outstanding, contingent considerations and other obligations. See Note 21 (“Commitments, Contingencies, and Guarantees”) to the condensed consolidated financial statements for a discussion of commitments and contingencies, Note 10 (“Debt”) for a discussion of the outstanding debt, Note 12 (“Clearing Operations”) for information on EuroCCP’s clearinghouse exposure guarantee, and Note 22 (“Leases”) for discussion on operating leases and equipment leases.

Guarantees

We use Wedbush and Morgan Stanley to clear our routed equities transactions for our U.S. Equities exchanges. Wedbush and Morgan Stanley guarantee the trade until one day after the trade date, after which time the National Securities Clearing Corporation (“NSCC”) provides a guarantee. The BIDS Trading ATS platform delivers matched trades to BofA Securities, Inc. (“BOA”), which delivers the matched trades to the NSCC. BOA guarantees the trade until one day after the trade date, after which time the NSCC provides a guarantee. In the case of failure to perform on the part of Wedbush or Morgan Stanley on routed transactions for our U.S. Equities exchanges, we provide the guarantee to the counterparty to the trader. In the case of failure to perform on the part of BOA on transactions for the BIDS Trading ATS platform, BIDS has obligations to the counterparties to satisfy the trades. OCC acts as a central counterparty on all transactions in listed equity options in our Options segment, and as such, guarantees clearance and settlement of all of our options transactions. We believe that any potential requirement for us to make payments under these guarantees is remote and accordingly, have not recorded any liability in the consolidated financial statements for these guarantees. Similarly, with respect to U.S. listed equity options and futures, we deliver matched trades of our customers to the OCC, which acts as a central counterparty on all transactions occurring on Cboe Options, C2, BZX, EDGX, and CFE and, as such, guarantees clearance and settlement of all of our matched options and futures trades. With respect to Canadian equities, we deliver matched trades of our customers to The Canadian Depository for Securities, which acts as a central counterparty on all transactions occurring on MATCHNow and, as such, guarantees clearance and settlement of all of our matched Canadian equities trades. With respect to Australian equities and derivatives, we deliver matched trades of our customers to ASX Clear Pty Ltd and ASX Settlement Pty Ltd. ASX Clear Pty Ltd acts as a central counterparty on all transactions occurring on Cboe Australia and, as such, guarantees clearance and settlement on all of our matched trades in Australia. With respect to Japanese equities, we deliver matched trades of our customers to the Japanese Securities Clearing Corporation, which acts as a central counterparty on all transactions occurring on Cboe Japan and, as such, guarantees clearance and settlement on all of our matched trades in Japan.

Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of the amounts of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. The Company bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources.

In the three months ended March 31, 2022, there were no significant changes to our critical accounting estimates from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K.

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