Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CME Group Inc (CME, Financial) reported record quarterly revenue of over $1.6 billion, marking the highest volume revenue, operating income, and diluted earnings per share in the company's history.
- The first quarter saw a 13% increase in average daily volume (ADV) to 29.8 million contracts, with growth across all six asset classes, including record volumes in interest rates, equities, agricultural commodities, and foreign exchange.
- International business achieved a record average of 8.8 million contracts per day, up 19% from the previous year, with strong growth in EMEA and APAC regions.
- CME Group Inc (CME) continues to innovate with new product offerings, such as BrokerTec Chicago and FX Spot Plus, enhancing links between cash and futures markets.
- The company maintained strong cost discipline, resulting in an adjusted operating margin of 71.1%, up from 68.9% in the same period last year.
Negative Points
- Despite the strong performance, the average rate per contract decreased by 1% from the prior year, indicating potential pricing pressure.
- There are concerns about potential deleveraging in certain pockets, such as agricultural futures, despite overall open interest growth.
- The company faces challenges in maintaining momentum in the face of geopolitical uncertainties and market volatility.
- CME Group Inc (CME) is cautious about the regulatory approval timeline for the sale of its OSTTRA joint venture, which could impact capital allocation plans.
- The company anticipates increased expenses related to technology and professional fees as it continues to invest in cloud migration and other projects.
Q & A Highlights
Q: Can you discuss why there hasn't been significant deleveraging despite increased margin requirements and volatility?
A: Terrence Duffy, Executive Chairman and CEO, explained that the current market environment is unprecedented with geopolitical tensions and high debt levels, making it difficult for participants to reduce risk. He noted that the need to manage risk in uncertain times is driving continued engagement with CME's products, preventing broad-based deleveraging.
Q: What are the historical impacts of raising margin requirements on trading volumes?
A: Terrence Duffy stated that each situation is unique, and while margin increases can sometimes lead to reduced trading, the current geopolitical and economic conditions are different from past crises. Suzanne Sprague, Senior Managing Director, added that the current environment shows appreciation for the safety provided by CME's collateralization and clearing services.
Q: What are CME Group's plans for the proceeds from the sale of the OSTTRA joint venture?
A: Lynne Fitzpatrick, CFO, mentioned that the sale is expected to close in about six months, pending regulatory approval. The company has not yet decided on the use of proceeds but will update stakeholders as the closing date approaches.
Q: Can you elaborate on the growth of CME's international business and its drivers?
A: Julie Winkler, Chief Commercial Officer, highlighted that international average daily volume reached a record 8.8 million contracts, with strong growth across all asset classes. The growth was driven by increased participation from commercial participants and the buy-side community, particularly in energy, agricultural, and foreign exchange products.
Q: How is CME Group's retail segment performing, and what role do partnerships like Robinhood play?
A: Julie Winkler noted that the retail segment saw record growth, with new client acquisition up 44% and total participation increasing by 17%. Partnerships with platforms like Robinhood are crucial for reaching new customers and expanding product offerings, contributing to the growth in micro equity index and micro FX volumes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
