# Cboe Global Markets (CBOE) Financial Model Free Excel 3-statement financial model and company analysis for Cboe Global Markets. - Canonical: https://finamodel.com/companies/cboe-global-markets - Industry: Capital Markets - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/CBOE.xlsx ## Model Purpose This model provides a comprehensive equity valuation and earnings forecasting tool for Cboe Global Markets (CBOE), enabling an equity research analyst to project future earnings based on trading volume trends, capture rates, and recurring data revenue growth. ## Company Overview Cboe Global Markets is a leading provider of market infrastructure and tradable products, operating derivatives and securities exchange networks globally. The company offers trading across a diverse range of asset classes, including options, futures, equities, and foreign exchange, alongside a robust suite of market data and access solutions. Business segments based on 2025 net revenue contribution: * Options (approx. 64% of net revenue) * North American Equities (approx. 16% of net revenue) * Europe and Asia Pacific (APAC) (approx. 10% of net revenue) * Futures (approx. 5% of net revenue) * Global FX (approx. 4% of net revenue) Key geographies include the United States, Europe, Australia, and Japan. The business model is highly scalable and asset-light, generating revenue primarily through transaction fees (which scale with market volatility and volume) and recurring non-transaction fees (market data and access solutions). Cboe holds a dominant competitive position in proprietary index options (such as VIX and SPX options) and is a major player in multi-listed options and global equities. Recent major events include a strategic realignment in late 2025 to focus resources on core growth areas, driving record 2025 net revenues of $2.4 billion. ## Revenue Deep Dive Cboe reports "Net Revenue", which is total gross revenue minus cost of revenues (liquidity payments, routing and clearing, and Section 31 fees). ### Options * **Segment name:** Options * **Revenue driver formula:** (Average Daily Volume x Trading Days x Revenue Per Contract) + Access & Capacity Fees + Market Data Fees * **Historical growth rate:** 10-15% CAGR over the last 3 years, driven by a retail options boom and 0DTE (zero days to expiry) volume. * **Key growth levers and headwinds:** Volatility is the primary lever. Low volatility environments typically suppress hedging demand, though retail adoption has created a higher baseline. * **Pricing dynamics:** Proprietary index options command a significant pricing premium and higher Revenue Per Contract (RPC) compared to multi-listed options. * **Seasonality:** Q1 and Q4 are typically stronger due to higher market volatility and portfolio rebalancing. ### North American (N.A.) Equities * **Segment name:** North American (N.A.) Equities * **Revenue driver formula:** Matched Shares Volume x Net Capture Rate per 100 Shares + Non-Transaction Fees * **Historical growth rate:** Low single-digit growth, highly competitive. * **Key growth levers and headwinds:** Market share gains versus competitors like NYSE and Nasdaq; off-exchange trading (dark pools) acts as a headwind. * **Pricing dynamics:** Highly competitive maker-taker pricing models. ### Europe and Asia Pacific (APAC) * **Segment name:** Europe and Asia Pacific (APAC) * **Revenue driver formula:** Regional ADV x Net Capture Rate + Clearing Fees + Data Fees * **Historical growth rate:** High single-digit to low double-digit growth (boosted by recent APAC acquisitions). * **Key growth levers and headwinds:** Expansion of Cboe Clear Europe and market share gains in Australia and Japan. Currency fluctuations impact reported USD revenues. ### Futures * **Segment name:** Futures * **Revenue driver formula:** Futures ADV x Trading Days x RPC * **Historical growth rate:** Mid single-digit growth. * **Key growth levers and headwinds:** VIX futures volume is the primary driver, highly dependent on macroeconomic uncertainty. ### Global FX * **Segment name:** Global FX * **Revenue driver formula:** Average Daily Notional Value (ADNV) x Net Capture Rate per Million * **Historical growth rate:** Mid single-digit growth. * **Key growth levers and headwinds:** Currency volatility drives institutional hedging and trading. ## Cost Structure ### Variable Costs / COGS (Cost of Revenues) * **Line-by-line breakdown:** Liquidity payments (rebates paid to liquidity providers), routing and clearing fees, and Section 31 fees (regulatory fees passed through to the SEC). * **Gross margin range:** Cboe focuses on "Net Revenue" (Gross Revenue less Cost of Revenues). The cost of revenues is essentially a pass-through, so traditional gross margin is less relevant than the Net Revenue yield. * **How COGS scales:** Perfectly linear with trading volume. ### Operating Expenses * **Compensation and benefits:** The largest operating expense, largely headcount-driven but includes variable bonus pools tied to financial performance. * **Technology and support:** Costs for maintaining exchange infrastructure, data centres, and telecommunications. * **Depreciation & Amortisation:** Significant due to the amortisation of intangible assets from historical acquisitions (BATS, EuroCCP). * **Professional fees and outside services:** Legal, consulting, and regulatory compliance costs. * **Restructuring / one-time charges:** Occasional charges related to M&A integration or strategic realignments (e.g., late 2025 realignment). ### Margin Profile * **Adjusted Operating Margin:** Typically ranges from 60% to 65% of Net Revenue, showcasing massive operating leverage. * **Margin trend:** Stable to slightly expanding as high-margin proprietary products and recurring data revenues outpace fixed expense growth. ## Balance Sheet Structure * **Total assets:** Approximately $7.0 to $8.0 billion. * **Key asset categories:** Cash and cash equivalents ($2.2 billion at year-end 2025), goodwill, and intangible assets. * **Goodwill & intangibles:** Represents over 50% of total assets, stemming from major acquisitions like BATS Global Markets. * **Working capital profile:** * Dominated by Section 31 fees receivable (from clearing firms) and payable (to the SEC). * Net working capital is generally negative or neutral, as the business collects cash quickly and requires minimal inventory. * **PP&E:** Minimal. Primarily consists of data centre equipment and leasehold improvements. * **Right-of-use assets:** Operating leases for office space, material but not a dominant balance sheet item. ## Capital Expenditure & Investment * **Capex as % of net revenue:** Very low, typically 2% to 4%. * **Maintenance vs. growth:** The majority is capitalised software development for trading platforms and data infrastructure. * **M&A pattern:** Historically a transformational acquirer (BATS) but recently focused on bolt-on acquisitions (MATCHNow, Chi-X Asia Pacific, EuroCCP) to expand asset classes and geographies. ## Debt & Capital Structure * **Total debt:** $1.4 billion as of December 31, 2025. * **Net debt:** Negative (Net cash position of approximately $800 million, given $2.2 billion in cash). * **Debt/EBITDA ratio:** Consistently below 1.5x, indicating a very conservative balance sheet. * **Credit rating:** Investment grade. * **Key debt instruments:** Senior unsecured notes and a revolving credit facility. * **Share repurchase programme:** Highly active. The company had approximately $614.5 million remaining under its share repurchase authorisation at the end of 2025. * **Dividend policy:** Progressive dividend policy. Paid $0.72 per share in Q4 2025, representing a yield of approximately 1.2% to 1.5% depending on the share price. ## Cash Flow Characteristics * **Operating cash flow conversion:** Exceptionally strong, typically >100% of Net Income due to high non-cash D&A charges related to acquired intangibles. * **Free cash flow margin:** FCF / Net Revenue typically exceeds 40%, reflecting the asset-light exchange model. * **Major non-cash items:** Depreciation, amortisation of acquired intangible assets, and stock-based compensation. * **Working capital cash flow impact:** Fluctuations are mostly driven by the timing of regulatory fee payments (Section 31), which are pass-throughs and do not impact underlying cash generation. * **Cash tax rate:** Generally tracks closely to the effective tax rate (around 28% to 31%). ## Sheet Structure 1. **Assumptions:** Hardcoded inputs for macroeconomic drivers, ADV, RPC, capture rates, expense guidance, and capital allocation. 2. **Volume & Pricing Build:** Detailed schedules projecting ADV, trading days, and RPC/capture rates for all five segments (Options, N.A. Equities, Europe & APAC, Futures, Global FX). 3. **Revenue Build:** Calculation of Gross Revenue and Cost of Revenues (liquidity payments, routing, Section 31 fees) to arrive at Net Revenue by segment. 4. **Income Statement:** Consolidated P&L from Net Revenue down to Net Income and EPS. Includes adjustments for non-GAAP metrics (Adjusted Operating Income, Adjusted EPS). 5. **Operating Expenses:** Detailed build of compensation, technology, D&A, and professional fees. 6. **Balance Sheet:** Assets, liabilities, and equity. Must include specific lines for Section 31 receivables/payables. 7. **Cash Flow Statement:** Operating, investing, and financing cash flows, highlighting capitalised software and share repurchases. 8. **Debt Schedule:** Tranches of senior notes, interest expense calculations, and revolving credit facility balances. 9. **DCF Valuation:** Unlevered free cash flow build, WACC calculation, and terminal value. ## Key Financial Relationships 1. Options Net Transaction Fees = Options ADV x Trading Days x Options RPC 2. Futures Net Transaction Fees = Futures ADV x Trading Days x Futures RPC 3. N.A. Equities Net Transaction Fees = Equities Matched Volume x Net Capture Rate 4. Global FX Net Transaction Fees = FX ADNV x Trading Days x FX Net Capture Rate 5. Total Net Revenue = Sum of Segment Net Revenues (Transaction Fees + Access & Capacity Fees + Market Data Fees) 6. Adjusted Operating Expenses = Total Operating Expenses - Acquisition Related Costs - Amortisation of Acquired Intangibles 7. Adjusted Operating Margin = (Total Net Revenue - Adjusted Operating Expenses) / Total Net Revenue 8. Effective Tax Rate = Provision for Income Taxes / Income Before Income Taxes 9. Diluted Shares Outstanding = Base Shares - (Share Repurchases / Average Share Price) + Stock-Based Compensation Dilution 10. Free Cash Flow = Cash from Operations - Capital Expenditures (including capitalised software) ## Cross-Sheet Dependencies * The **Volume & Pricing Build** feeds directly into the **Revenue Build** to calculate segment-level Net Revenue. * The **Revenue Build** feeds the top line of the **Income Statement**. * The **Operating Expenses** sheet feeds the operating profit lines on the **Income Statement**. * Net Income from the **Income Statement** is the starting point for the **Cash Flow Statement**. * The **Cash Flow Statement** determines the ending cash balance, which feeds the **Balance Sheet** and dictates the capacity for share repurchases in the **Assumptions** sheet. * Share repurchases reduce the share count on the **Income Statement** (boosting EPS) and reduce cash/equity on the **Balance Sheet**. * *Circularity Risk:* Interest income depends on average cash balances, which depend on net income, which depends on interest income. A circuit breaker toggle must be included. ## Sign Convention * Revenues, volumes, and capture rates are entered and displayed as positive numbers. * Cost of revenues and operating expenses are entered as positive numbers in the assumptions but subtracted in the P&L formulas. * On the Cash Flow Statement, cash inflows are positive, and cash outflows (capex, dividends, share repurchases) are negative. * Contra-asset or contra-equity accounts (like Treasury Stock) should be clearly labelled and subtracted in totals. ## Things Most Likely to Go Wrong 1. **Gross vs. Net Revenue Confusion:** Cboe reports "Net Revenue" as its primary top-line metric. Modelling Gross Revenue without properly deducting liquidity payments and Section 31 fees will massively overstate the size of the business. 2. **Section 31 Fee Mismatch:** These regulatory fees are a pure pass-through. They must be equal in both Gross Revenue and Cost of Revenues. 3. **RPC vs. Capture Rate:** Options and Futures use Revenue Per Contract (RPC), while Equities and FX use a Net Capture Rate (per 100 shares or per million notional). Applying the wrong multiplier will break the revenue build. 4. **Trading Days Calculation:** ADV must be multiplied by the exact number of trading days in a quarter (typically 61-63), not calendar days. 5. **Amortisation of Intangibles:** Cboe has heavy non-cash amortisation from acquisitions. Failing to add this back will result in understating Adjusted EPS, which is the metric the street cares about. 6. **Constant Currency Adjustments:** Europe and APAC revenues are sensitive to FX swings. The model should flag if historical growth is being distorted by a strong/weak USD. 7. **Data Vantage Growth:** The company guides specifically to "Data Vantage organic net revenue growth". This must be modelled as a separate, recurring revenue stream distinct from volatile transaction fees. 8. **Share Count Drift:** Cboe aggressively buys back stock. Holding the share count flat will understate future EPS. ## Validation Checks 1. "Adjusted Operating Margin should be in the 60-65% range; flag if outside this band." 2. "Total Net Revenue must equal the sum of the five reported segments." 3. "Capex as a % of Net Revenue should not exceed 5%." 4. "Effective tax rate should be between 28.5% and 31.0% based on recent historicals." 5. "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." 6. "Debt/EBITDA should remain below 2.0x; flag if leverage spikes." 7. "Data Vantage revenue growth should align with management's 'mid to high single-digit' guidance." 8. "Dividend payout ratio should remain between 25% and 35% of Adjusted Net Income." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Total Net Revenue Growth (2026) | 5.0 | % | Management guidance of 'mid single-digit' organic growth. | | Data Vantage Revenue Growth | 7.5 | % | Management guidance of 'mid to high single-digit' growth. | | Adjusted Operating Expenses (2026) | 871.5 | $ Millions | Midpoint of management's 2026 guidance range ($864M to $879M). | | Effective Tax Rate | 29.5 | % | Aligns with recent adjusted effective tax rates. | | Options Segment % of Net Revenue | 64.5 | % | Based on Q4 2025 actuals ($433.1M / $671.1M). | | N.A. Equities % of Net Revenue | 16.5 | % | Based on Q4 2025 actuals ($110.7M / $671.1M). | | Europe & APAC % of Net Revenue | 10.4 | % | Based on Q4 2025 actuals ($69.9M / $671.1M). | | Futures Segment % of Net Revenue | 5.0 | % | Based on Q4 2025 actuals ($33.7M / $671.1M). | | Global FX Segment % of Net Revenue | 3.5 | % | Based on Q4 2025 actuals ($23.7M / $671.1M). | | Quarterly Dividend per Share | 0.72 | $ | Actual Q4 2025 dividend rate. | | Annual Share Repurchases | 300.0 | $ Millions | Estimated run-rate based on strong free cash flow and remaining authorisation. | | Capex as % of Net Revenue | 3.0 | % | Historical average for capitalised software and equipment. | | WACC | 8.5 | % | Standard cost of capital for a mature, low-beta financial exchange. | | Terminal Growth Rate | 2.5 | % | Long-term GDP growth proxy for mature market infrastructure. | ## Data Sources & Benchmarks * **SEC Filings:** Cboe Global Markets Investor Relations page (ir.cboe.com) for 10-K, 10-Q, and 8-K earnings releases. * **Key Peers for Benchmarking:** CME Group (CME), Intercontinental Exchange (ICE), Nasdaq (NDAQ), and Tradeweb Markets (TW). * **Industry Data Sources:** Options Clearing Corporation (OCC) for monthly industry options volume data; FIA for global futures volumes. * **Consensus Estimates:** FactSet or Bloomberg for street consensus on ADV, RPC, and EPS. * **Proprietary Data:** Cboe's own monthly volume reports (published early each month) are critical for tracking intra-quarter performance before earnings are released. ## Sources * Cboe Global Markets Q4 2025 Earnings Release and Financial Supplement (February 6, 2026). * Cboe Global Markets 2024 Annual Report (Form 10-K). * Cboe Investor Relations Website (ir.cboe.com). --- ## Frequently asked questions ### What does Cboe Global Markets do? Cboe Global Markets is a leading provider of market infrastructure and tradable products, operating derivatives and securities exchange networks globally. The company offers trading across a diverse range of asset classes, including options, futures, equities, and foreign exchange, alongside market data and access solutions. ### How does Cboe Global Markets generate revenue? Cboe Global Markets generates net revenue primarily through transaction fees, which scale with market volatility and volume, and recurring non-transaction fees from market data and access solutions. Its Options segment is the largest contributor, accounting for approximately 64% of net revenue. ### What are the key revenue growth and margin assumptions in the Cboe Global Markets financial model? The financial model for Cboe Global Markets assumes a revenue growth rate of approximately 10.88%. Key margin assumptions include COGS at about 56.16% of revenue and SGA at roughly 22.98% of revenue. ### What is Cboe Global Markets' capital expenditure profile? Cboe Global Markets has a very low capital expenditure profile, typically ranging from 2% to 4% of net revenue. The majority of this capital expenditure is allocated to capitalized software development for its trading platforms and data infrastructure. ### What are important balance sheet considerations for valuing Cboe Global Markets? Important balance sheet considerations for Cboe Global Markets include total assets of approximately $7.0 to $8.0 billion, with goodwill and intangible assets representing over 50% due to past acquisitions. The company also typically has a negative or neutral net working capital profile. ### Can I download an Excel financial model for Cboe Global Markets? Yes, an Excel financial model for Cboe Global Markets is available for download, covering a forecast horizon from FY2026 to FY2030. This model provides a comprehensive equity valuation and earnings forecasting tool for equity research analysts. [Interactive forecast calculator](https://finamodel.com/companies/cboe-global-markets/forecast)