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, FX, and digital assets, 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. On May 2, 2022, the Company completed its acquisition of ErisX, an operator of a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. On June 1, 2022, the Company completed its acquisition of NEO, which is a fintech organization that is comprised of a fully registered Canadian securities exchange.

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

Recent Developments

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 allows 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 closed on May 2, 2022.

Acquisition of NEO

On November 15, 2021, the Company announced it entered into a definitive agreement to acquire NEO. NEO is a fintech organization that is comprised of a fully registered Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform. With ownership of NEO, the Company expects to further grow Canada as a hub for global equities trading. The transaction closed on June 1, 2022.

Business Segments

The Company previously operated as five reportable business segments as of March 31, 2022. As a result of the ErisX acquisition, as of June 30, 2022, the Company operates as six reportable segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital, which is reflective of how the Company's chief operating decision-maker reviews and operates the business, as discussed in Note 1 (“Organization and Basis of Presentation”). Segment performance is primarily evaluated based on operating income (loss). The Company’s chief operating decision-maker does not use segment-level assets or income and expenses below operating income (loss) as key performance metrics; therefore, such information is not presented below. The Company has aggregated all of its corporate costs, as well as other business ventures, within the Corporate Items and Eliminations totals based on the

decision that those activities should not be used to evaluate the operating performance of the segments; however, operating expenses that relate to activities of a specific segment have been allocated to that segment.

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 and NEO as of the June 1, 2022 acquisition. 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 Chi-X 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.

Digital. The Digital segment includes ErisX, an operator of a U.S. based digital asset spot market and a regulated futures exchange, and Eris Clearing, a regulated clearinghouse, 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, volumes in digital assets, 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, digital assets 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, Global FX, and Digital 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 six 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, Europe and Asia Pacific, and Digital 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, and Digital, 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 and Eris Clearing.

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, Cboe Japan, ErisX, and NEO 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 Global Indices Feed (“CGIF”).

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. 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.

Goodwill Impairment

Goodwill impairment consists of charges to impair goodwill of our reporting units if the carrying value exceeds the implied fair value.

Other Expenses

Other expenses represent costs necessary to support our operations that are not already included in the above categories, including, but not limited to the impairment of digital assets held presented in intangible assets, net as part of the ordinary operations of the Digital segment.

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, realized gains and losses related to the Company’s previously held minority investments, equity earnings or losses from our investments in other business ventures, impairment of the Company’s investments, investment establishment costs associated with new business ventures, and loan forgiveness provided under the SBA’s PPP. See Note 10 (“Debt”) for additional information regarding the PPP.

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 and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021. “YTD” represents the six-month periods ended June 30, 2022 and 2021, respectively:

Graphic

(1)These are Non-GAAP figures for which reconciliations are provided below.
​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended June 30,​Increase/​Percent​Six Months Ended June 30,​Increase/​Percent
​20222021(Decrease)Change20222021(Decrease)Change
​​(in millions, except percentages, earnings per share, and as noted below)​​(in millions, except percentages, earnings per share, and as noted below)​
Total revenues​$985.8​$800.8​$185.0​23%​$1,960.3​$1,811.6​$148.7​8%
Total cost of revenues​561.7​​450.2​111.525%​1,118.1​​1,095.5​22.62%
Revenues less cost of revenues​424.1​​350.6​73.521%​842.2​​716.1​126.118%
Total operating expenses​661.5​160.6​500.9312%​839.9​321.5​518.4161%
Operating (loss) income​(237.4)​190.0​(427.4)(225)%​2.3​394.6​(392.3)(99)%
(Loss) Income before income tax provision​(256.8)​179.2​(436.0)(243)%​(31.9)​372.1​(404.0)(109)%
Income tax (benefit) provision​(72.3)​73.7​(146.0)(198)%​43.0​129.4​(86.4)(67)%
Net (loss) income​$(184.5)​$105.5​$(290.0)(275)%​$(74.9)​$242.7​$(317.6)(131)%
Basic (loss) earnings per share​$(1.74)​$0.99​$(2.73)​(275)%​$(0.70)​$2.26​$(2.96)​(131)%
Diluted (loss) earnings per share​​(1.74)​​0.98​​(2.72)​(277)%​​(0.70)​​2.26​​(2.96)​(131)%
Organic net revenue (1)​​414.2​​350.6​​63.6​18%​​823.9​​716.1​​107.8​15%
EBITDA (2)​​(202.0)​​231.8​​(433.8)(187)%​​74.6​​478.6​​(404.0)(84)%
EBITDA margin (3)​(47.6)%66.1%(113.7)%*​8.9%66.8%(57.9)%*
Adjusted EBITDA (2)​$274.2​$233.6​$40.617%​$555.8​$483.8​$72.015%
Adjusted EBITDA margin (4)​64.7%66.6%(2.0)%*​66.0%67.6%(1.6)%*
Adjusted earnings (5)​$177.3​$147.4​$29.920%​$362.0​$312.2​$49.916%
Adjusted earnings margin (5)​41.8%42.0%(0.2)%*​43.0%43.6%(0.6)%*
Diluted weighted average shares outstanding​​106.3​​106.9​​(0.6)​(1)%​​106.5​​107.3​​(0.8)​(1)%
Adjusted Diluted earnings per share (6)​$1.67​$1.38​$0.2921%​$3.40​$2.91​$0.4917%

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*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 EndedSix Months Ended
​June 30,June 30,
​2022​2021​2022​2021
​(in millions)​(in millions)
Revenues less cost of revenues$424.1​$350.6​$842.2​$716.1
Recent acquisitions:​​​​​​​​​​​
Acquisition revenues less cost of revenues$(9.9)​$—​$(18.3)​$—
Organic net revenue$414.2​$350.6​$823.9​$716.1

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(2)EBITDA is defined as income before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before acquisition-related costs, impairment of investment, gain on investment, investment establishment costs, impairment of goodwill, and loan forgiveness. EBITDA and adjusted EBITDA do not represent, and should not be considered as, alternatives to net income or loss 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 or loss adjusted for amortization of purchased intangibles, acquisition-related costs, impairment of investment, gain on investment, investment establishment costs, impairment of goodwill, loan forgiveness, tax reserves, and net income or loss 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 or loss, 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.

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The following is a reconciliation of net income (loss) allocated to common stockholders to EBITDA and adjusted EBITDA (in millions) for the three months and six months ended June 30, 2022 and 2021, respectively:

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended June 30,
​​2022
​OptionsNorth American EquitiesEurope and Asia PacificFuturesGlobal FXDigitalCorporateTotal
Net income (loss) allocated to common stockholders​$178.3​$34.0​$7.1​$15.3​$2.7​$(356.1)​$(65.8)​$(184.5)
Interest expense, net​—​—​2.3​—​—​—​12.3​14.6
Income tax (benefit) provision​—​(1.5)​1.1​—​—​(116.2)​44.3​(72.3)
Depreciation and amortization​6.3​17.7​8.9​0.7​5.4​1.2​—​40.2
EBITDA​184.6​50.2​19.4​16.0​8.1​(471.1)​(9.2)​(202.0)
Acquisition-related costs​—​2.9​1.3​—​—​8.3​1.8​14.3
Gain on investment​—​—​—​—​—​—​(7.5)​(7.5)
Loan forgiveness​—​—​—​—​—​(1.3)​—​(1.3)
Impairment of investment​​—​—​—​—​—​—​10.6​10.6
Impairment of goodwill​​—​​—​​—​​—​​—​​460.1​​—​​460.1
Adjusted EBITDA​$184.6​$53.1​$20.7​$16.0​$8.1​$(4.0)​$(4.3)​$274.2
​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended June 30,
​​2021
​OptionsNorth American EquitiesEurope and Asia PacificFuturesGlobal FXDigitalCorporateTotal
Net income (loss) allocated to common stockholders​$124.7​$36.6​$7.3​$15.3​$0.3​$—​$(79.0)​$105.2
Interest expense, net​—​—​3.5​—​—​—​8.8​12.3
Income tax provision​—​0.7​3.1​—​—​—​69.9​73.7
Depreciation and amortization​7.4​18.6​8.0​0.7​5.9​—​—​40.6
EBITDA​132.1​55.9​21.9​16.0​6.2​—​(0.3)​231.8
Acquisition-related costs​—​0.6​—​—​—​—​1.2​1.8
Adjusted EBITDA​$132.1​$56.5​$21.9​$16.0​$6.2​$—​$0.9​$233.6

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​​​​​​​​​​​​​​​​​​​​​​​​​
​​Six Months Ended June 30,
​​2022
​OptionsNorth American EquitiesEurope and Asia PacificFuturesGlobal FXDigitalCorporateTotal
Net income (loss) allocated to common stockholders​$341.3​$72.5​$21.2​$32.3​$5.1​$(356.1)​$(191.2)​$(74.9)
Interest expense, net​—​—​4.2​—​—​—​21.2​25.4
Income tax (benefit) provision​—​(1.5)​5.9​—​—​(116.2)​154.8​43.0
Depreciation and amortization​13.0​35.8​18.5​1.4​11.2​1.2​—​81.1
EBITDA​354.3​106.8​49.8​33.7​16.3​(471.1)​(15.2)​74.6
Acquisition-related costs​—​3.3​2.1​—​—​8.3​2.6​16.3
Investment establishment costs​​—​—​—​—​—​—​3.0​3.0
Gain on investment​​—​—​—​—​—​—​​(7.5)​​(7.5)
Loan forgiveness​​—​—​—​—​—​(1.3)​​—​​(1.3)
Impairment of investment​​—​​—​​—​​—​​—​​—​​10.6​​10.6
Impairment of goodwill​​—​​—​​—​​—​​—​​460.1​​—​​460.1
Adjusted EBITDA​$354.3​$110.1​$51.9​$33.7​$16.3​$(4.0)​$(6.5)​$555.8
​​​​​​​​​​​​​​​​​​​​​​​​​
​​Six Months Ended June 30,
​​2021
​OptionsNorth American EquitiesEurope and Asia PacificFuturesGlobal FXDigitalCorporateTotal
Net income (loss) allocated to common stockholders​$252.6​$80.3​$15.1​$32.7​$1.5​$—​$(140.2)​$242.0
Interest expense, net​​—​​—​​6.9​​—​​—​​—​​17.7​​24.6
Income tax provision​—​1.9​6.6​—​—​—​120.9​129.4
Depreciation and amortization​14.8​38.2​15.9​1.4​12.3​—​—​82.6
EBITDA​267.4​120.4​44.5​34.1​13.8​—​(1.6)​478.6
Acquisition-related costs​​0.3​​0.6​​—​​—​​—​​—​​4.3​​5.2
Adjusted EBITDA​$267.7​$121.0​$44.5​$34.1​$13.8​$—​$2.7​$483.8

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​

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

​​​​​​​​​​​​​
​​Three Months Ended​Six Months Ended
​​June 30,​June 30,
​2022202120222021
Net (loss) income allocated to common stockholders​$(184.5)​$105.2​$(74.9)​$242.0
Amortization​30.1​30.5​60.7​63.4
Acquisition-related costs​14.3​1.8​16.3​5.2
Investment establishment costs​​—​​—​​3.0​​—
Gain on investment​​(7.5)​​—​​(7.5)​​—
Loan forgiveness​​(1.3)​​—​​(1.3)​​—
Impairment of investment​​10.6​​—​​10.6​​—
Impairment of goodwill​​460.1​​—​​460.1​​—
Tax reserves​​—​​—​​48.5​​—
Tax effect of adjustments​(143.2)​(7.7)​(151.9)​(15.9)
Deferred tax re-measurements​​—​​17.7​​—​​17.7
Net income allocated to participating securities​​(1.3)​​(0.1)​​(1.6)​​(0.2)
Adjusted earnings​$177.3​$147.4​$362.0​$312.2

​

​

The following summarizes changes in certain operational and financial metrics for the six months ended June 30, 2022, compared to the six months ended June 30, 2021:

Graphic

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 six months ended June 30, 2022 as a result of the acquisitions 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 and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021:

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended June 30,​Increase/​Percent​​Six Months Ended June 30,​Increase/​Percent​
​20222021(Decrease)Change​20222021(Decrease)Change​
​​(in millions, except percentages, trading days, and as noted below)​​(in millions, except percentages, trading days, and as noted below)​
Options:​​
Average daily volume (ADV) (in millions of contracts):​​​​​​​​
Market ADV​​39.4​​36.4​​3.08%​40.9​​39.2​​1.74%
Total touched contracts (1)​13.1​​11.1​​2.018%​13.2​​11.9​​1.311%
Multi-listed contract ADV​​10.4​​9.2​​1.2​12%​​10.7​​10.0​​0.7​7%
Index contract ADV​2.7​​1.9​​0.846%​2.5​​1.9​​0.636%
Number of trading days​​62​​63​​(1)(2)%​​124​​124​​——%
Total Options revenue per contract (RPC) (2)​$0.233​$0.192​$0.04121%​$0.221​$0.184​$0.03720%
Multi-listed options RPC (2)​​0.066​​0.067​​(0.001)(2)%​​0.067​​0.067​​——%
Index options RPC (2)​​0.883​​0.823​​0.0607%​​0.870​​0.813​​0.0577%
Total Options market share​​33.2%​30.4%​2.8%​*​​32.3%​30.3%​2.0%​*
Multi-listed options market share​​28.3%​26.8%​1.5%​*​​27.8%​26.8%​1.0%​*
North American Equities:​​​​​​​​​​​​
U.S. Equities:​​​​​​​​​​​​​​​​​​​​​​​​
U.S. Equities - Exchange:​​​​​​​​​​​​​​​​​​​​​​​​
ADV:​​​​​​​​​​​​
Total touched shares (in billions) (1)​1.8​1.6​0.213%​1.9​2.0​(0.1)(5)%
Market ADV (in billions)​12.6​10.5​2.120%​12.7​12.6​0.11%
Market share​​13.6%​14.3%​(0.7)%​*​​13.9%​14.7%​(0.8)%​*
U.S. Equities - Exchange (net capture per one hundred touched shares) (3)​$0.020​$0.020​$——%​$0.018​$0.017​$0.0017%
U.S. ETPs: launches (number of launches)​​10​28​​(18)(64)%​42​​63​(21)(33)%
U.S. ETPs: listings (number of listings)​​574​499​​7515%​574​​499​7515%
U.S. Equities - Off-Exchange:​​​​​​​​​​​​​​​​​​​​​​​​
ADV:​​​​​​​​​​​​
Total touched shares (in millions) (1)​92.7​75.8​16.922%​100.6​87.5​13.115%
U.S. Equities - Off-Exchange (net capture per one hundred touched shares) (4)​$0.108​$0.123​$(0.015)(12)%​$0.113​$0.122​$(0.009)(7)%
Trading days​​62​​63​​(1)​(2)%​​124​​124​​—​—%
Canadian Equities:​​​​​​​​​​​​​​​​​​​​​​​​
ADV (matched shares, in millions) (5)​​36.0​​47.4​​(11.4)​(24)%​​38.6​​59.3​​(20.7)​(35)%
Trading days​​63​​63​​—​—%​​125​​125​​—​—%
Net capture (per 10,000 touched shares, in Canadian dollars) (6)​​9.328​​7.782​​1.546​20%​​9.209​​7.425​​1.784​24%
Europe and Asia Pacific:​​​​​​​​​​​​
European Equities:​​​​​​​​​​​​​​​​​​​​​​​​
ADNV:​​​​​​​​​​​​​​
Matched ADNV (in billions) (7)​€10.9​€7.3​€3.6​49%​€11.9​€7.4​€4.5​60%
Market ADNV (in billions)​​46.9​​42.0​​4.9​12%​​52.8​​43.4​​9.4​22%
Trading days​63​63​—​—%​127​126​​1​1%
Market share​​23.2%​17.4%​5.8%​*​​22.4%​17.1%​5.3%​*
Net capture (per matched notional value in basis points) (8)​​0.238​​0.267​​(0.029)​(11)%​​0.235​​0.275​​(0.040)​(15)%
EuroCCP:​​​​​​​​​​​​​​​​​​​​​​​​
Trades cleared (9)​​356.4​​294.8​​61.6​21%​​810.8​​593.0​​217.8​37%
Fee per trade cleared (10)​€0.009​€0.011​€(0.002)​(14)%​€0.009​€0.011​€(0.002)​(14)%
Net settlement volume (11)​​2.5​​2.4​​0.1​6%​​5.3​​4.8​​0.5​11%
Net fee per settlement (12)​€0.808​€0.893​€(0.085)​(10)%​€0.869​€0.878​€(0.009)​(1)%
Australian Equities:​​​​​​​​​​​​​​​​​​​​​​​​
ADNV (AUD billions)​$0.8​$—​$0.8​—%​$0.9​$—​$0.9​—%
Trading days​​61​​—​​61​—%​​124​​—​​124​—%
Market share - Continuous​​17.0%​—%​17.0%​*​​16.4%​—%​16.4%​*
Net capture (per matched notional value in basis points) (13)​​0.171​​—​​0.171​—%​​0.172​​—​​0.172​—%
Japanese Equities:​​​​​​​​​​​​​​​​​​​​​​​​
ADNV (JPY billions)​¥136.0​¥—​¥136.0​—%​¥148.7​¥—​¥148.7​—%
Trading days​​61​​—​​61​—%​​120​​—​​120​—%
Market share - Lit Continuous​​3.5%​—%​3.5%​*​​3.6%​—%​3.6%​*
Net capture (per matched notional value in basis points) (14)​​0.258​​—​​0.258​—%​​0.243​​—​​0.243​—%
Futures:​​​​​​​​​​​​​​​​​​​​​​​​
ADV (in thousands)​​221.7​​214.4​​7.3​3%​​237.7​​234.8​​2.9​1%
Trading days​​62​​63​​(1)​(2)%​​124​​124​​—​—%
Revenue per contract​$1.677​$1.648​$0.029​2%​$1.656​$1.643​$0.013​1%
Global FX:​​​​​​​​​​​​​​
ADNV (in billions)​$39.6​$32.5​$7.1​22%​$40.8​$34.7​$6.1​17%
Trading days​65​65​—​—%​129​128​​1​1%
Global FX (net capture per one million dollars traded) (15)​​2.71​​2.71​​—​—%​​2.69​​2.68​​0.01​0%
​​​​​​​​​​​​​​​​​​​​​​​​​
Average British pound/U.S. dollar exchange rate​$1.257​$1.397​$(0.140)​(10)%​$1.299​$1.388​$(0.089)​(6)%
Average Canadian dollar/U.S. dollar exchange rate​$0.784​$0.814​$(0.030)​(4)%​$0.786​$0.802​$(0.016)​(2)%
Average Euro/U.S. dollar exchange rate​$1.065​$1.205​$(0.140)​(12)%​$1.094​$1.205​$(0.111)​(9)%
Average Euro/British pound exchange rate​£0.847​£0.862​£(0.015)​(2)%​£0.842​£0.868​£(0.026)​(3)%
Average Australian dollar/U.S. dollar exchange rate​$0.713​$—​$0.713​—%​$0.717​$—​$0.717​—%
Average Japanese Yen/U.S. dollar exchange rate​$0.008​$—​$0.008​—%​$0.008​$—​$0.008​—%
*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 (excluding NEO).
(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 (excluding NEO).
(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 June 30, 2022 increased $185.0 million, or 23%, compared to the same period in 2021 primarily due to higher revenue across all revenue captions as a result of increased volumes traded on the Options, U.S. Equities, and European Equities exchanges, an increase in the Section 31 fee rate following a rate increase that was effective on May 14, 2022, and an increase in data and access solutions revenue primarily related to an increase in access and capacity fees in the Options and North American Equities segments. Total revenues for the six months ended June 30, 2022 increased $148.7 million, or 8%, compared to the same period in 2021 primarily due to increased transaction and clearing fees as a result of increased volumes traded on the Options exchanges, coupled with increased data and access solutions revenue primarily related to an increase in access and capacity fees in the Options and North American Equities segments, partially offset by a decrease in volumes traded on U.S Equities exchanges.

The following summarizes changes in revenues for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021 (in millions, except percentages):

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended​​​​​​Six Months Ended​​​​​
​​June 30,​Increase/​Percent​June 30,​Increase/​Percent
​20222021(Decrease)Change20222021(Decrease)Change
Cash and spot markets​$458.5​$372.7​$85.8​23%​$920.4​$921.6​$(1.2)​(0)%
Data and access solutions​​123.9​​103.0​​20.9​20%​​242.8​​203.6​​39.2​19%
Derivatives markets​​403.4​​325.1​​78.3​24%​​797.1​​686.4​​110.7​16%
Total revenues​$985.8​$800.8​$185.0​23%​$1,960.3​$1,811.6​$148.7​8%

​

Cash and Spot Markets

Cash and spot markets revenue increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to increases in transaction and clearing fees and regulatory fees. Transaction and clearing fees increased primarily due to a 13% increase in total touched shares on U.S. Equities exchanges and a 49% increase in European Equities matched ADNV. Regulatory fees increased primarily due to a 177% increase in the Section 31 fee rate, from an average rate of $5.10 per million dollars of covered sales for the three months ended June 30, 2021 to an average rate of $14.10 per million dollars of covered sales for the three months ended June 30, 2022.

Cash and spot markets revenue declined slightly for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to decreases in market data fees and regulatory fees, partially offset by an increase in transaction and clearing fees. Industry market data fees decreased primarily due to a decrease in U.S. tape plan revenue due to a 1% decline in market share on the U.S. Equities exchanges. Regulatory fees decreased primarily due to an 8% decline in the Section 31 fee rate, from an average rate of $10.50 per million dollars of covered sales for the six months ended June 30, 2021 to an average rate of $9.60 per million dollars of covered sales for the six months ended June 30, 2022. Transaction and clearing fees increased primarily due to a 60% increase in European Equities matched ADNV, partially offset by a 5% decrease in total touched shares on U.S. Equities exchanges.

Data and Access Solutions

Data and access solutions revenue increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to increases in access and capacity fees and proprietary market data fees. Access and capacity fees increased primarily due to increased logical port revenue in the Options and North American Equities segments, increased physical port revenue in the North American Equities and Options segments, and increased access fees attributable to Cboe Asia Pacific, which was acquired in the third quarter of 2021. Proprietary market data fees increased primarily due to proprietary market data attributable to Cboe Asia Pacific.

Derivatives Markets

Derivatives markets revenue increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in transaction and clearing fees driven by a 46% and 36% increase in index options ADV, respectively.

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 and six months ended June 30, 2022 and 2021, respectively (in millions):

​​​​​​​​​​​​​
​​​Three Months Ended June 30,
​​​2022
​​Cash and****Spot Markets​Data and****Access Solutions​Derivatives****Markets​Total
Liquidity payments​$270.0​$—​$159.0​$429.0
Routing and clearing fees​​15.0​​—​​5.9​​20.9
Section 31 fees​​68.2​​—​​11.4​​79.6
Royalty fees and other cost of revenues​​4.1​​2.3​​25.8​​32.2
Total cost of revenues​$357.3​$2.3​$202.1​$561.7
​​​​​​​​​​​​​
​​​Three Months Ended June 30,
​​​2021
​​Cash and****Spot Markets​Data and****Access Solutions​Derivatives****Markets​Total
Liquidity payments​$233.8​$—​$144.1​$377.9
Routing and clearing fees​​14.9​​—​​5.0​​19.9
Section 31 fees​​25.9​​—​​2.9​​28.8
Royalty fees and other cost of revenues​​3.3​​2.0​​18.3​​23.6
Total cost of revenues​$277.9​$2.0​$170.3​$450.2
​​​​​​​​​​​​​
​​​Six Months Ended June 30,
​​​2022
​​Cash and****Spot Markets​Data and****Access Solutions​Derivatives****Markets​Total
Liquidity payments​$569.6​$—​$326.9​$896.5
Routing and clearing fees​​30.6​​—​​12.6​​43.2
Section 31 fees​​100.0​​—​​15.3​​115.3
Royalty fees and other cost of revenues​​8.7​​4.7​​49.7​​63.1
Total cost of revenues​$708.9​$4.7​$404.5​$1,118.1
​​​​​​​​​​​​​
​​​Six Months Ended June 30,
​​​2021
​​Cash and****Spot Markets​Data and****Access Solutions​Derivatives****Markets​Total
Liquidity payments​$569.6​$—​$310.1​$879.7
Routing and clearing fees​​36.5​​—​​10.5​​47.0
Section 31 fees​​107.9​​—​​12.8​​120.7
Royalty fees and other cost of revenues​​7.5​​4.0​​36.6​​48.1
Total cost of revenues​$721.5​$4.0​$370.0​$1,095.5
​​​​​​​​​​​​​

Cost of revenues increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to increased cash and spot markets and derivatives markets costs of revenues driven by volumes traded on U.S. Equities and Options exchanges, coupled with an increase in Section 31 fees. Cost of revenues increased for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to increased derivatives markets cost of revenues driven by increased volumes traded on the Options exchanges, partially offset by a decrease in cost of revenues within cash and spot markets driven by a decrease in volumes traded on U.S. Equities exchanges.

The following summarizes changes in the disaggregated cost of revenues for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 (in millions, except percentages):

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended​​​​​​Six Months Ended​​​​​
​​June 30,​Increase/​Percent​June 30,​Increase/​Percent
​20222021(Decrease)Change20222021(Decrease)Change
Liquidity payments​$429.0​$377.9​$51.1​14%​$896.5​$879.7​$16.8​2%
Routing and clearing​20.9​19.9​1.0​5%​43.2​47.0​(3.8)​(8)%
Section 31 fees​​79.6​​28.8​​50.8​176%​​115.3​​120.7​​(5.4)​(4)%
Royalty fees and other cost of revenues​​32.2​​23.6​​8.6​36%​​63.1​​48.1​​15.0​31%
Total cost of revenues​$561.7​$450.2​$111.5​25%​$1,118.1​$1,095.5​$22.6​2%

​

Liquidity Payments

Liquidity payments increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to an increase in volumes traded on the U.S. Equities and Options exchanges. Liquidity payments increased for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to an increase in volumes traded on the Options and European Equities exchanges, partially offset by a decrease in volumes traded on the U.S Equities exchanges.

Routing and Clearing

Routing and clearing fees increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to an increase in routed trades on the Options exchanges, partially offset by a decrease in routed trades in the Europe and Asia Pacific segment. Routing and clearing decreased for the six months ended June 30, 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 an increase in routed trades on the Options exchanges.

Section 31 Fees

Section 31 fees increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to a 177% increase in the Section 31 fee rate, from an average rate of $5.10 per million dollars of covered sales for the three months ended June 30, 2021 to an average rate of $14.10 per million dollars of covered sales for the three months ended June 30, 2022. Section 31 fees decreased for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to an 8% decline in the Section 31 fee rate, from an average rate of $10.50 per million dollars of covered sales for the six months ended June 30, 2021 to an average rate of $9.60 per million dollars of covered sales for the six months ended June 30, 2022.

Royalty Fees and Other Cost of Revenues

Royalty fees and other cost of revenues increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in trading volume in licensed products, coupled with an increase in operating interest expense attributable to EuroCCP, and other cost of revenue attributable to Cboe Asia Pacific.

Revenues Less Cost of Revenues

Revenues less cost of revenues increased $73.5 million, or 21%, and $126.1 million, or 18%, for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 primarily due to an increase in derivatives markets revenue attributable to an increase in volumes traded on the Options exchanges, as well as an increase in 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 and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 (in millions, except percentages):

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended​​​​​​​Six Months Ended​​​​​​
​​June 30,​Increase/​Percent​​June 30,​Increase/​Percent​
​20222021(Decrease)Change20222021(Decrease)Change
Cash and spot markets​$101.2​$94.8​$6.4​7%​$211.5​$200.1​$11.4​6%
Data and access solutions​121.6​101.0​​20.6​20%​238.1​199.6​​38.5​19%
Derivatives markets​201.3​154.8​​46.5​30%​392.6​316.4​​76.2​24%
Total revenues less cost of revenues​$424.1​$350.6​$73.5​21%​$842.2​$716.1​$126.1​18%

​

Cash and Spot Markets

Cash and spot markets revenues less cost of revenues increased for the three months ended June 30, 2022 compared to the same period in 2021 primarily due to an increase in transaction and clearing fees on European Equities exchanges, U.S. Equities exchanges, and within the Global FX segment, partially offset by a decrease in industry market data fees. Transaction and clearing fees increased primarily due to a 49% increase in European Equities matched ADNV, a 13% increase in total touched shares on U.S. Equities exchanges, and a 22% increase in Global FX ADNV. Industry market data fees decreased primarily due to a decrease in U.S. tape plan revenue driven by a 1% decline in market share on the U.S. Equities exchanges.

Cash and spot markets revenues less cost of revenues increased for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to an increase in transaction and clearing fees on European Equities exchanges and within the Global FX segment, partially offset by a decrease in industry market data fees. Transaction and clearing fees increased primarily due to a 60% increase in European Equities matched ADNV and an 17% increase in Global FX ADNV, partially offset by a 5% decline in total touched shares on U.S. Equities exchanges. Industry market data fees decreased primarily due to a decrease in U.S. tape plan revenue driven by a 1% decline in market share on the U.S. Equities exchanges.

Data and Access Solutions

Data and access solutions revenues less cost of revenues increased for the three and six months ended June 30, 2022 compared to the same periods 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 and capacity fees attributable to Cboe Asia Pacific. Proprietary market data fees increased primarily due to proprietary market data attributable to Cboe Asia Pacific.

Derivatives Markets

Derivatives markets revenues less cost of revenues increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 due to an increase in transaction and clearing fees primarily due to a 46% and 36% increase in index options ADV, respectively, partially offset by an increase in royalty fees in the Options segment.

Operating Expenses

Total operating expenses for the three and six months ended June 30, 2022 compared to the same periods in 2021 increased $500.9 million, or 312%, and $518.4 million, or 161%, respectively, primarily due to goodwill impairment recorded in 2022.

​

The following summarizes changes in operating expenses for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 (in millions, except percentages):

​​​​​​​​​​​​​​​​​​​​​​​​​
​​Three Months Ended​​​​​​Six Months Ended​​​​​
​​June 30,​Increase/​Percent​June 30,​Increase/​Percent
​20222021(Decrease)Change20222021(Decrease)Change
Compensation and benefits​$86.2​$67.7​$18.5​27%​$167.4​$140.0​$27.4​20%
Depreciation and amortization​40.2​40.6​(0.4)​(1)%​81.1​82.6​(1.5)​(2)%
Technology support services​18.1​16.2​1.9​12%​37.3​33.4​3.9​12%
Professional fees and outside services​24.1​22.4​1.7​8%​43.8​38.0​5.8​15%
Travel and promotional expenses​5.5​1.9​3.6​189%​8.4​3.5​4.9​140%
Facilities costs​6.6​5.4​1.2​22%​13.1​10.7​2.4​22%
Acquisition-related costs​14.3​1.8​12.5​694%​16.3​5.2​11.1​213%
Goodwill impairment​​460.1​​—​​460.1​*​​​460.1​​—​​460.1​*​
Other expenses​6.4​4.6​1.8​39%​12.4​8.1​4.3​53%
Total operating expenses​$661.5​$160.6​$500.9​312%​$839.9​$321.5​$518.4​161%

​

*Not meaningful

​

Compensation and Benefits

Compensation and benefits increased for the three and six months ended June 30, 2022 compared to the same period in 2021. For the three months ended June 30, 2022, the increase was primarily due to a $17.7 million increase in salaries, wages, and bonuses, driven by an $11.0 million increase from the combination of strong Company performance year to date, merit and cost-of-living increases, and increased headcount excluding acquisitions, coupled with a $6.7 million increase related to the acquisitions of Cboe Asia Pacific, ErisX, which was acquired in May 2022, and NEO, which was acquired in June 2022. For the six months ended June 30, 2022, the increase was primarily due to a $27.5 million increase in salaries, wages, and bonuses, driven by an $18.3 million increase from the combination of strong Company performance year to date, merit and cost-of-living increases, and increased headcount excluding acquisitions, coupled with a $9.2 million increase related to the acquisitions of Cboe Asia Pacific, ErisX, and NEO, partially offset by a $1.1 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 six months ended June 30, 2022.

Depreciation and Amortization

Depreciation and amortization decreased for the three and six months ended June 30, 2022 compared to the same periods 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, ErisX, and NEO, as well as an increase in depreciation expense related to the former headquarters location, which was not subject to depreciation during four of the six months ended June 30, 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 and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to increases in software maintenance support service fees, software licenses and subscriptions, and market data support service fees, partially offset by a decrease in purchased hardware and equipment and purchased software.

Professional Fees and Outside Services

Professional fees and outside services increased for the three and six months ended June 30, 2022 compared to the same periods in 2021. For the three months ended June 30, 2022, the increase was primarily due to increases in regulatory costs due to an increase in CAT expense, as well as increases in contract services, recruiting fees, tax services and audit fees, partially offset by a decrease in legal fees. For the six months ended June 30, 2022, the increase was primarily due to increases in contract services, recruiting fees, legal fees, and regulatory costs due to an increase in CAT expense.

Travel and Promotional Expenses

Travel and promotional expenses increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to increases in marketing and travel expenses.

Facilities Costs

Facilities costs increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in rent expense related to the Amsterdam lease that commenced in October 2021, along with additional office locations following acquisitions in 2021 and 2022.

Acquisition-Related Costs

Acquisition-related costs increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in general and administrative costs and professional fees associated with the acquisitions of ErisX and NEO.

Goodwill Impairment

Goodwill impairment increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 due to the impairment recognized for the Digital reporting unit.

Other Expenses

Other expenses increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to increased taxes, licenses, and permits, charitable contributions, record storage costs, and office expenses.

Operating (Loss) Income

As a result of the items above, operating loss for the three months ended June 30, 2022 was $237.4 million, compared to operating income of $190.0 million for the three months ended June 30, 2021, a decrease of $427.4 million.

As a result of the items above, operating income for the six months ended June 30, 2022 was $2.3 million, compared to $394.6 million for the six months ended June 30, 2021, a decrease of $392.3 million.

Interest Expense, Net

Net interest expense increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to additional interest expense incurred in connection with the 3.000% Senior Notes issued at the end of the first quarter of 2022, as well as additional interest expense incurred in connection with the additional borrowings on the Term Loan in the second quarter of 2022, partially offset by a decrease in interest expense related to the EuroCCP Credit Facility, which was amended and restated in July 2021, and interest income related to Cboe Asia Pacific.

Other (Loss) Income, Net

Net other income decreased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to a $10.6 million impairment of the Company’s investment in American Financial Exchange, LLC, partially offset by a $7.5 million gain on the Company’s previous minority ownership of ErisX, which increased in fair value as a result of the Company’s acquisition of ErisX, coupled with $1.3 million associated with the SBA’s PPP loan forgiveness, which was applied against the term loan held by ErisX. All transactions were recorded in the second quarter of 2022. See Note 10 (“Debt”) for additional information regarding the PPP loan forgiveness.

(Loss) Income Before Income Tax Provision

As a result of the above, loss before income tax provision for the three months ended June 30, 2022 was $256.8 million, compared to income before income tax provision of $179.2 million for the same period in 2021, a decrease of $436.0 million.

As a result of the above, loss before income tax provision for the six months ended June 30, 2022 was $31.9 million compared to income before income tax provision of $372.1 million for the same period in 2021, a decrease of $404.0 million.

Income Tax Provision

The effective tax rate from continuing operations was 28.2% and 41.1% for the three months ended June 30, 2022 and 2021, respectively, and (134.8)% and 34.8% for the six months ended June 30, 2022 and 2021, respectively. The lower effective tax rate for the three months ended June 30, 2022 compared to the same period in 2021 is primarily due to the remeasurement of UK deferred tax liabilities following the UK tax rate increase from 19% to 25% enacted during the second quarter of 2021 and effective April 1, 2023. The negative effective tax rate for the six months ended June 30, 2022 compared to the same period in 2021 is primarily due to the loss before income tax provision caused by the $460.1 million goodwill impairment recorded in the second quarter of 2022 and the additional tax reserves of $48.5 million related to Section 199 litigation recorded in the first quarter of 2022.

The following table summarizes the non-GAAP calculation of the effective tax rate for the three and six months ended June 30, 2022:

​

​​​​​​​
​​Three months ended,​​Six months ended,​
​​June 30, 2022​​June 30, 2022​
GAAP effective tax rate​28.2%​(134.8)%
Tax effect of goodwill impairment​1.8%​175.9%
Tax effect of Section 199 related matters​—%​(11.3)%
Effective tax rate excluding goodwill impairment and Section 199 matters​30.0%​29.8%

​

Net (Loss) Income

As a result of the items above, net loss for the three months ended June 30, 2022 was $184.5 million, compared to net income of $105.5 million for the three months ended June 30, 2021, a decrease of $290.0 million.

As a result of the items above, net loss for the six months ended June 30, 2022 was $74.9 million, compared to net income of $242.7 million for the six months ended June 30, 2021, a decrease of $317.6 million.

​

Segment Operating Results

We report results from our six segments: Options, North American Equities, Europe and Asia Pacific, Futures, Global FX, and Digital. 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):

Graphic

Note, the chart excludes Digital revenues of $0.1 million for the six months ended June 30, 2022 and Corporate revenues of $0.3 million for the six months ended June 30, 2021.

​​​​​​​​​​​​​​​​​​​​​​​​​​​
​​​​​​​​​​Percentage​​​​​​​​​Percentage of
​​​​​​​​​​of Total​​​​​​​​​Total
​​​​​​​​​​Revenues​​​​​​​​​Revenues
​​Three Months Ended​​​Three Months Ended​Six Months Ended​​​Six Months Ended
​​June 30,​Percent​June 30,​June 30,​Percent​June 30,
​20222021Change2022202120222021Change20222021
Options​$438.2​$350.0​25%44%44%​$860.8​$732.4​18%44%40%
North American Equities​432.8​353.5​22%44%44%​856.5​879.5​(3)%44%49%
Europe and Asia Pacific​67.4​55.1​22%7%7%​146.0​110.9​32%7%6%
Futures​30.5​28.3​8%3%3%​62.8​59.9​5%3%3%
Global FX​​16.8​​13.9​21%2%2%​​34.1​​28.6​19%2%2%
Digital​​0.1​​—​*​—%—%​​0.1​​—​*​—%—%
Corporate​​—​​—​—%—%—%​​—​​0.3​(100)%—%—%
Total revenues​$985.8​$800.8​23%100%100%​$1,960.3​$1,811.6​8%100%100%

​

*Not meaningful

​

​

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

Graphic

Note, the chart excludes Corporate revenues less cost of revenues of $0.3 million for the six months ended June 30, 2021.

​​​​​​​​​​​​​​​​​​​​​​​​​​​
​​​​​​​​​​Percentage of​​​​​​​​​Percentage of
​​​​​​​​​​Total Revenues​​​​​​​​​Total Revenues
​​​​​​​​​​Less Cost of Revenues​​​​​​​​​Less Cost of Revenues
​​Three Months Ended​​​Three Months Ended​Six Months Ended​​​Six Months Ended
​​June 30,​Percent​June 30,​June 30,​Percent​June 30,
​20222021Change2022202120222021Change20222021
Options​$235.3​$178.6​32%55%51%​$454.5​$360.3​26%54%50%
North American Equities​92.7​89.2​4%22%25%​185.8​185.3​0%22%26%
Europe and Asia Pacific​49.9​41.6​20%12%12%​107.4​83.7​28%13%12%
Futures​29.6​27.4​8%7%8%​60.8​58.0​5%7%8%
Global FX​​16.6​​13.8​20%4%4%​​33.7​​28.5​18%4%4%
Digital​​—​​—​*​—%—%​​—​​—​*​—%—%
Corporate​​—​​—​—%—%—%​​—​​0.3​(100)%—%—%
Total revenues less cost of revenues​$424.1​$350.6​21%100%100%​$842.2​$716.1​18%100%100%
*Not meaningful

​

​

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​​​​​​​​​​​​Percentage
​​​​​​​​​​​​​of Total​​​​​​​​​​​​of Total
​​​​​​​​​​​​​Revenues​​​​​​​​​​​​Revenues
​​Three Months Ended​​​​​Three Months Ended​Six Months Ended​​​​​Six Months Ended
​​June 30,​​Percent​​June 30,​June 30,​​Percent​​June 30,
​20222021Change2022202120222021Change20222021​
Revenues less cost of revenues​$235.3​​$178.6​32%​54%​51%​$454.5​​$360.3​26%​53%​49%
Operating expenses​57.2​​53.4​7%​13%​15%​113.7​​106.4​7%​13%​15%
Operating income​$178.1​​$125.2​42%​41%​36%​$340.8​​$253.9​34%​40%​35%
EBITDA (1)​$184.6​​$132.1​40%​42%​38%​$354.3​​$267.4​32%​41%​37%
EBITDA margin (2)​78.5%​74.0%​*​​*​​*​​78.0%​74.2%​*​​*​​*​
*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 $56.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to a 46% increase in index options ADV and a 7% increase in index options net capture. For the three months ended June 30, 2022, operating income for the Options segment increased $52.9 million compared to the three months ended June 30, 2021 primarily due to an increase in revenues less cost of revenues. Operating expenses increased $3.8 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to an increase in compensation and benefits.

Revenues less cost of revenues increased $94.2 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to a 36% increase in index options ADV and a 7% increase in index options net capture. For the six months ended June 30, 2022, operating income for the Options segment increased $86.9 million compared to the six months ended June 30, 2021 primarily due to an increase in revenue less cost of revenues. Operating expenses increased $7.3 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to increases in compensation and benefits, travel and promotional expenses, and professional fees and outside services, partially offset by a decrease in depreciation and amortization.

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​​​​​​​​​​​​Percentage
​​​​​​​​​​​​​of Total​​​​​​​​​​​​of Total
​​​​​​​​​​​​​Revenues​​​​​​​​​​​​Revenues
​​Three Months Ended​​​​​Three Months Ended​Six Months Ended​​​​​Six Months Ended
​​June 30,​​Percent​​June 30,​June 30,​​Percent​​June 30,
​20222021Change2022202120222021Change20222021
Revenues less cost of revenues​$92.7​​$89.2​4%​21%​25%​$185.8​​$185.3​0%​22%​21%
Operating expenses​60.1​​51.8​16%​14%​15%​114.6​​102.8​11%​13%​12%
Operating income​$32.6​​$37.4​(13)%​8%​11%​$71.2​​$82.5​(14)%​8%​9%
EBITDA (1)​$50.2​​$55.9​(10)%​12%​16%​$106.8​​$120.4​(11)%​12%​14%
EBITDA margin (2)​54.2%​62.7%​*​​*​​*​​57.5%​65.0%​*​​*​​*​
*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 $3.5 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to an increase in transaction and clearing fees as a result of a 13% increase in total touched shares on U.S. Equities exchanges and an increase in transaction and clearing fees attributable to NEO, coupled with an increase in access and capacity fees, partially offset by a decrease in market data fees as a result of a decrease in U.S tape plan revenue due to a 1% decline in market share on the U.S. Equities exchanges. For

the three months ended June 30, 2022, operating income for the North American Equities segment decreased $4.8 million compared to the three months ended June 30, 2021 primarily due to an increase in operating expenses. Operating expenses increased $8.3 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to increases in compensation and benefits, acquisition-related costs, and other expenses.

Revenues less cost of revenues increased $0.5 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an increase in access and capacity fees driven by an increase in subscribers, coupled with an increase in transaction and clearing fees attributable to NEO, partially offset by a decline in market data fees as a result of a decrease in U.S tape plan revenue due to a 5% decrease in matched ADV on U.S. Equities exchanges. For the six months ended June 30, 2022, operating income for the North American Equities segment decreased $11.3 million compared to the six months ended June 30, 2021 primarily due to an increase in operating expenses. Operating expenses increased $11.8 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to increases in compensation and benefits, professional fees and outside services, acquisition-related costs, and other expenses, 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​​​​​​​​​​​​Percentage
​​​​​​​​​​​​​of Total​​​​​​​​​​​​of Total
​​​​​​​​​​​​​Revenues​​​​​​​​​​​​Revenues
​​Three Months Ended​​​​​Three Months Ended​Six Months Ended​​​​​Six Months Ended
​​June 30,​​Percent​​June 30,​June 30,​​Percent​​June 30,
​20222021Change2022202120222021Change20222021
Revenues less cost of revenues​$49.9​​$41.6​20%​74%​75%​$107.4​​$83.7​28%​74%​75%
Operating expenses​39.2​​28.3​39%​58%​51%​75.8​​55.9​36%​52%​50%
Operating income​$10.7​​$13.3​(20)%​16%​24%​$31.6​​$27.8​14%​22%​25%
EBITDA (1)​$19.4​​$21.9​(11)%​29%​40%​$49.8​​$44.5​12%​34%​40%
EBITDA margin (2)​38.9%​52.6%​*​​*​​*​​46.4%​53.2%​*​​*​​*​

*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 $8.3 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to additional revenue attributable to Cboe Asia Pacific. For the three months ended June 30, 2022, operating income for the Europe and Asia Pacific segment decreased $2.6 million compared to the three months ended June 30, 2021 primarily due to an increase in operating expenses, partially offset by an increase in revenues less cost of revenues. Operating expenses increased $10.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to increases in compensation and benefits, acquisition-related costs, and facilities costs attributable to Cboe Asia Pacific. Operating income was also adversely impacted for the three months ended June 30, 2022 compared to the prior period by changes in foreign currency rates, most notably Euros and Australian Dollars.

Revenues less cost of revenues increased $23.7 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to additional revenue attributable to Cboe Asia Pacific, coupled with an increase in transaction and clearing fees as a result of a 60% increase in European Equities matched ADNV, driven by a 22% increase in European Equities market ADNV. For the six months ended June 30, 2022, operating income for the Europe and Asia Pacific segment increased $3.8 million compared to the six months ended June 30, 2021 primarily due to higher revenues less cost of revenues, partially offset by an increase in operating expenses. Operating expenses increased $19.9 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to increases in compensation and benefits, depreciation and amortization, acquisition-related costs, technology support services, and facilities costs 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​​​​​​​​​​​​Percentage
​​​​​​​​​​​​​of Total​​​​​​​​​​​​of Total
​​​​​​​​​​​​​Revenues​​​​​​​​​​​​Revenues
​​Three Months Ended​​​​​Three Months Ended​Six Months Ended​​​​​Six Months Ended
​​June 30,​​Percent​​June 30,​June 30,​​Percent​​June 30,
​20222021Change2022202120222021Change20222021​
Revenues less cost of revenues​$29.6​​$27.4​8%​97%​97%​$60.8​​$58.0​5%​97%​97%
Operating expenses​14.3​​12.1​18%​47%​43%​28.5​​25.2​13%​45%​42%
Operating income​$15.3​​$15.3​(0)%​50%​54%​$32.3​​$32.8​(2)%​51%​55%
EBITDA (1)​$16.0​​$16.0​—%​52%​57%​$33.7​​$34.1​(1)%​54%​57%
EBITDA margin (2)​54.1%​58.4%​*​​*​​*​​55.4%​58.8%​*​​*​​*​
*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 $2.2 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to an increase in physical port fees, coupled with an increase in transaction and clearing fees as a result of a 3% increase in ADV and a 2% increase in net capture. Operating income was flat for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. Operating expenses increased $2.2 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to increases in compensation and benefits and travel and promotional expenses.

Revenues less cost of revenues increased $2.8 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an increase in physical port fees, coupled with an increase in transaction and clearing fees as a result of a 1% increase in ADV and a 1% increase in net capture. For the six months ended June 30, 2022, operating income for the Futures segment decreased $0.5 million compared to the six months ended June 30, 2021 primarily due to higher operating expenses, partially offset by higher revenues less cost of revenues. Operating expenses increased $3.3 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to increases in compensation and benefits and travel and promotional expenses.

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​​​​​​​​​​​​Percentage
​​​​​​​​​​​​​of Total​​​​​​​​​​​​of Total
​​​​​​​​​​​​​Revenues​​​​​​​​​​​​Revenues
​​Three Months Ended​​​​​Three Months Ended​Six Months Ended​​​​​Six Months Ended
​​June 30,​​Percent​​June 30,​June 30,​​Percent​​June 30,
​20222021Change2022202120222021Change20222021
Revenues less cost of revenues​$16.6​​$13.8​20%​99%​99%​$33.7​​$28.5​18%​99%​100%
Operating expenses​13.9​​13.4​4%​83%​96%​28.6​​26.9​6%​84%​94%
Operating income​$2.7​​$0.4​575%​16%​3%​$5.1​​$1.6​219%​15%​6%
EBITDA (1)​$8.1​​$6.2​31%​48%​45%​$16.3​​$13.8​18%​48%​48%
EBITDA margin (2)​48.8%​44.9%​*​​*​​*​​48.4%​48.4%​*​​*​​*​
*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 $2.8 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to a 22% increase in ADNV. For the three months ended June 30, 2022, operating income for the Global FX segment increased $2.3 million compared to the three months ended June 30, 2021 primarily due to an increase in revenues less cost of revenues. Operating expenses increased $0.5 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to increases in

compensation and benefits and professional fees and outside services, partially offset by a decrease in depreciation and amortization.

Revenues less cost of revenues increased $5.2 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an 17% increase in ADNV. For the six months ended June 30, 2022, operating income for the Global FX segment increased $3.5 million compared to the six months ended June 30, 2021 primarily due to an increase in revenues less cost of revenues, partially offset by an increase in operating expenses. Operating expenses increased $1.7 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to increases in compensation and benefits and professional fees and outside services, partially offset by a decrease in depreciation and amortization.

Digital

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

​​​​​​​​​​​​​​​​
​​​​​​Percentage​​​​​​Percentage
​​​​​​of Total​​​​​​of Total
​​​​​​Revenues​​​​​​Revenues
​​Three Months Ended​​Three Months Ended​​Six Months Ended​​Six Months Ended
​​June 30,​​June 30,​​June 30,​​June 30,
​20222022​20222022
Revenues less cost of revenues​$—​​—%​​$—​​—%
Operating expenses​​473.6​​—%​​473.6​​—%
Operating loss​$(473.6)​​—%​​$(473.6)​​—%
EBITDA (1)​$(471.1)​​—%​​$(471.1)​​—%
EBITDA margin (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.

The three months ended June 30, 2022 marks the first quarter post-acquisition of ErisX and subsequent establishment of the Digital segment. For the three and six months ended June 30, 2022, the Digital segment had an operating loss of $471.1 million, due to operating expenses, which primarily consist of $460.1 million impairment of goodwill, exceeding revenues less costs of revenues.

Liquidity and Capital Resources

Below are charts that reflect elements of our capital allocation:

Graphic

We expect our cash on hand at June 30, 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 €1.25 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 was amended on June 30, 2022, which extended the term of the facility through June 29, 2023. Please refer to Footnote 10 (“Debt”) for further information on the amendment.

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 June 30, 2022 increased $31.4 million from December 31, 2021 primarily due to the additional borrowings on the Term Loan Agreement, issuance of the 3.000% Senior Notes, cash used for acquisitions, and results of operations. See “Cash Flow” below for further discussion.

Our cash and cash equivalents held outside of the United States in various foreign subsidiaries totaled $193.8 million as of June 30, 2022. The remaining balance was held in the United States and totaled $179.5 million as of June 30, 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 June 30, 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 June 30, 2022 and 2021, respectively (in millions):

​​​​​​​
​​Six Months Ended
​​June 30,
​20222021
Net cash provided by operating activities​$625.4​$721.8
Net cash used in investing activities​(772.9)​(45.8)
Net cash provided by (used in) financing activities​435.8​(94.1)
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash and cash equivalents​(15.8)​(0.3)
Increase in cash, cash equivalents, and restricted cash and cash equivalents​$272.5​$581.6
​​​
​​As of June 30,
​20222021
Reconciliation of cash, cash equivalents, and restricted cash and cash equivalents:​​​​​​
Cash and cash equivalents​$373.3​$450.9
Restricted cash and cash equivalents (included in margin deposits and clearing funds)​​963.5​​1,188.2
Restricted cash and cash equivalents (included in other current assets)​​4.2​​—
Customer bank deposits (included in margin deposits and clearing funds)​​23.7​​—
Total​$1,364.7​$1,639.1

​

Net Cash Flows Provided by Operating Activities

During the six months ended June 30, 2022, net cash provided by operating activities was $700.3 million higher than net loss. The variance is primarily attributable to the adjustment for goodwill impairment of $460.1 million, change in restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP of $217.6 million, the adjustment for depreciation of $81.1 million, change in Section 31 fees payable of $75.5 million, and change in unrecognized tax benefits of $66.5 million, partially offset by the change in the (benefit) provision for deferred income taxes of $142.3 million and the change in accounts receivable of $70.0 million for the six months ended June 30, 2022.

Net cash flows provided by operating activities were $625.4 million and $721.8 million for the six months ended June 30, 2022 and 2021, respectively. The change in net cash flows provided by operating activities was primarily due to the change in net loss, change in restricted cash and cash equivalents, driven by margin deposits and clearing funds related to EuroCCP, and the change in the provision for deferred income taxes, partially offset by the goodwill impairment and

change in Section 31 fees payable for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Net Cash Flows Used in Investing Activities

Net cash flows used in investing activities were $772.9 million and $45.8 million for the six months June 30, 2022 and 2021, respectively. The variance is primarily due to the change in acquisitions, net of cash acquired and proceeds from maturities available-for-sale financial investments, partially offset by the change in purchases of available-for-sale financial investments for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Net Cash Flows Provided by (Used in) Financing Activities

Net cash flows provided by (used in) financing activities were $435.8 million and ($94.1) million for the six months ended June 30, 2022 and 2021, respectively. The variance is primarily attributable to proceeds from the long-term debt issuance of $663.6 million, partially offset by the change in payments of contingent consideration related to acquisitions for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Financial Assets

The following summarizes our financial assets, excluding margin deposits and clearing funds, as of June 30, 2022 and December 31, 2021 (in millions):

​​​​​​​
​June 30,​December 31,
​​2022​2021
Cash and cash equivalents​$373.3​$341.9
Financial investments​68.5​37.1
Less deferred compensation plan assets​​(25.5)​​(28.0)
Less cash collected for Section 31 fees​​(67.2)​​(25.9)
Adjusted cash (1)​$349.1​$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 June 30, 2022 and December 31, 2021 (in millions):

​​​​​​​
​June 30,​December 31,
​​2022​2021
Term Loan Agreement​$525.0​$160.0
3.650% Senior Notes​650.0​650.0
1.625% Senior Notes​​500.0​​500.0
3.000% Senior Notes​​300.0​​—
Less unamortized discount and debt issuance costs​​(15.8)​​(10.7)
Total debt​$1,959.2​$1,299.3

​

As of June 30, 2022 and December 31, 2021, we were in compliance with the covenants of our debt agreements.

In addition to the debt outstanding, as of June 30, 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 June 30, 2022, through September 30, 2022 we have an additional $400.0 million available through our term loan agreement. Together with adjusted cash, we had $1.3 billion available to fund our operations, capital expenditures, potential acquisitions, debt repayments and any dividends as of June 30, 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 June 30, 2022, the Company repurchased 147,139 shares of common stock at an average cost per share of $106.12, totaling $15.6 million. Since inception of the program through June 30, 2022, the Company has repurchased 18,816,256 shares of common stock at an average cost per share of $69.98, totaling $1.3 billion.

As of June 30, 2022, the Company had $233.3 million of availability remaining under its existing share repurchase authorizations.

Commercial Commitments and Contractual Obligations

As of June 30, 2022, our commercial commitments and contractual obligations included operating leases, data and telecommunications agreements, equipment leases, our long-term debt outstanding, contingent considerations, software development activities 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 and ErisX’s clearinghouse exposure guarantees, 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 trades in U.S. listed equity options and futures occurring on Cboe Options, C2, BZX, EDGX, and CFE, we deliver matched trades of our customers to the OCC, which acts as a central counterparty on all transactions occurring on these exchanges and, as such, guarantees clearance and settlement of all of those 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 NEO 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 six months ended June 30, 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, with the exception of Goodwill and Other Intangible Assets, as described below.

Goodwill and Other Intangible Assets

Description

Our acquisitions of Bats, Silexx Financial Systems, LLC (“Silexx”), Livevol, Inc. (“LiveVol”), Hanweck, FT Options, Trade Alert, MATCHNow, BIDS Holdings, Chi-X, ErisX, and NEO resulted in the recording of goodwill and other intangible assets, while our acquisition of EuroCCP, resulted in a bargain purchase gain and other intangible assets. In accordance with ASC 350—Intangibles—Goodwill and Other, we test the carrying values of goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently when events or changes in circumstances signal indicators of impairment are present.

Judgments and Uncertainties

The estimated fair values of our reporting units are based on the market approach and the income approach (using discounted estimated future cash flows). The estimated fair values of indefinite-lived intangibles used the income approach. The estimated fair value of these intangibles are expected to be updated, with the exception of indefinite-lived intangibles recorded as a result of the ErisX and Cboe APAC acquisitions, which are valued using the cost approach, and indefinite-lived intangibles recorded as a result of the NEO acquisition which are valued using the benchmark approach. The discounted estimated future cash flow analysis requires judgments about the discount rate, forecasted revenue growth rate, and operating expenses, that are inherent in these fair value estimates over the estimated remaining operating period. Additionally, the analysis contains uncertainty surrounding future events. As such, actual results may differ from these estimates and lead to a revaluation of our goodwill and indefinite-lived intangible assets.

Effect if Actual Results Differ from Assumptions

If updated estimates indicate that the fair value of goodwill or any indefinite-lived intangibles is less than the carrying value of the asset, an impairment charge is expected to be recorded in the condensed consolidated statements of income in the period of the change in estimate, which could result in a material change to the condensed consolidated financial statements. However, due to the results of our impairment analyses in 2021, in which all reporting units estimated fair value exceeded their carrying value, we do not consider our goodwill and indefinite-lived intangibles to have a significant risk of impairment, except as noted below.

Following the acquisition of ErisX, which closed on May 2, 2022, negative events and trends in the broader digital asset environment emerged, such as deleveraging and bankruptcies, and certain negative trends in the broader digital asset environment which emerged in late 2021 intensified, such as the decline in digital asset prices, overall market activity, and market capitalization. Additionally, following the acquisition of ErisX, the efforts to syndicate minority ownership interests in Cboe Digital to potential investors became more challenging and the outlook for the Digital segment’s future market growth has been negatively impacted. However, ownership of ErisX allows 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 Company considered these developments, in particular the recent syndication efforts, to be potential indications of impairment and performed an interim impairment test for the goodwill recognized in the Digital reporting unit. The Company concluded that the carrying value of the reporting unit exceeded its estimated fair value, which considered both market and income approaches, and recorded a goodwill

impairment charge of $460.1 million in the condensed consolidated statements of income for the three and six months ended June 30, 2022, and also recognized a deferred tax asset of $116.2 million. This deferred tax asset, resulting from the excess of tax deductible goodwill over book goodwill, relates to future tax deductions the Company expects to realize to reduce potential tax payments on future income. As a result, the carrying value of ErisX decreased by $343.9 million, to $220.0 million as of June 30, 2022. The Company also performed testing over the intangible assets recognized as a result of the ErisX acquisition, and based on the results of the assessments, determined there was no impairment required as the fair value approximated the carrying value. No other long lived assets were recognized as a result of the acquisition and subject to further assessment.

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