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    CME
    Earnings call· Mar 2025(Q1 FY25)

    CME GROUP Q1 FY25 earnings call CME

    Apr 23, 2025 Source

    Executive summary

    CME Group Q1 FY25 — Record Performance Across All Metrics

    CME Group delivered a record-breaking Q1 FY25, driven by strong demand for risk management products amidst high market volatility and geopolitical uncertainty. The company achieved its highest-ever revenue, operating income, and EPS, with broad-based volume growth across all asset classes and international regions. Management emphasized the resilience of its systems and proactive risk management, while also highlighting new product offerings and strategic partnerships to fuel continued growth.

    Highlights

    5

    • Record quarterly revenue of over $1.6 billion, up 10% YoY.

    • Highest quarterly ADV of 29.8 million contracts, up 13% YoY, with growth across all 6 asset classes.

    • Record adjusted net income of $1 billion and adjusted diluted EPS of $2.80, both up 12% YoY.

    • International business ADV up 19% YoY to 8.8 million contracts, with record volumes in EMEA and APAC.

    • Adjusted operating margin expanded to 71.1% from 68.9% in the prior year.

    Concerns

    3

    • Increased margin requirements across various products due to heightened volatility, with $7 billion in increased collateral requirements on April 9.

    • Uncertainty around geopolitical events (Russia-Ukraine, Middle East) and tariff policies creating a challenging market environment.

    • US national debt of $38 trillion contributing to market uncertainty and risk.

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    International
    Driven by growth across all asset classes, with record volumes in both EMEA and APAC. Strong contribution from commercial participants and buy-side community in EMEA and APAC.
    Average Daily Volume: 8.8 million contractsEMEA volume: record quarterlyAPAC volume: record quarterlyNon-U.S. options growth: 20% YoYNon-U.S. options ADV: 1.5 million contractsCommercial participants growth: almost 30%
    		—19%——
    Equities (International)
    Outsized volume growth driven by buy side in EMEA, APAC, props, retail business, and LatAm on the sell side and buy side.
    		—33%——

    Operational metrics

    49
    Revenue
    $1.6Bup 10% YoY
    Q1 FY25

    Highest quarterly revenue in company history.

    Average Daily Volume (ADV)
    29.8 million contractsup 13% YoY
    Q1 FY25

    Highest quarterly ADV in company history, with broad-based growth across all 6 asset classes.

    Adjusted Net Income
    $1Bup 12% YoY
    Q1 FY25

    Highest quarterly adjusted net income in company history.

    Adjusted Diluted EPS
    $2.80up 12% YoY
    Q1 FY25

    Highest quarterly adjusted diluted EPS in company history.

    Adjusted Operating Income
    $1.2Bup 14% YoY
    Q1 FY25

    Record adjusted operating income.

    Adjusted Operating Margin
    71.1%up from 68.9% YoY
    Q1 FY25
    Adjusted Effective Tax Rate
    23.1%
    Q1 FY25
    Adjusted Net Income Margin
    over 62%
    Q1 FY25
    Capital Expenditures
    $12M
    Q1 FY25
    Cash Balance
    $1.6B
    Q1 FY25

    End of quarter.

    Dividends Paid
    $2.6B
    Q1 FY25
    Dividends Paid (LTM)
    $3.8B
    LTM Q1 FY25
    Year-to-date Volumes
    up 20%vs 2024
    YTD Q2 FY25

    Strong start continuing into Q2.

    Average Rate Per Contract (RPC)
    $0.686down 1% YoY
    Q1 FY25
    Clearing and Transaction Fees
    $1.3Bup 11% YoY
    Q1 FY25

    Highest quarterly in history.

    Adjusted Expenses
    $475M
    Q1 FY25
    Adjusted Expenses (ex-license fees)
    $378M
    Q1 FY25
    Open Interest
    up 7%vs same point last year
    current

    Strong growth in interest rates, energy, and agricultural complexes.

    Mark-to-market cash collected/paid
    $32Bexceeded previous record of $22B
    April 9

    New single day record for moving cash associated with mark-to-market.

    Increased collateral requirements (margin increases)
    $7B
    April 9
    Order Entry Volumes (Globex)
    exceeding 13 billion messages
    week of April 7

    Record volumes during a period of extreme volatility.

    Ags Revenue
    just under $600M
    FY24

    Record year for ags business.

    Open Interest (options, ags)
    5.1 millionrecord
    April 21

    Set a new record in options open interest.

    Energy Revenue
    in excess of $800M
    FY24

    Record year for energy business.

    Energy Volume Growth
    39%
    April
    Commodities Complex Portfolio Revenue
    almost $1.7Ball-time record
    FY24
    Collateral Spread (cash)
    35 bpssimilar to Q4
    Q1 FY25
    Collateral Spread (noncash)
    10 bps
    Q1 FY25
    Average Cash Balances
    $79B
    Q1 FY25
    Average Noncash Collateral
    $173B
    Q1 FY25
    Average Cash Balances
    $131B
    month-to-date April
    Fee Eligible Noncash Collateral
    $140B
    month-to-date April
    Retail Segment Revenue Growth
    10%
    Q1 FY25
    New Client Acquisition (Retail)
    83,000up 44%
    Q1 FY25

    Fourth consecutive quarter of double-digit NCA growth.

    Total Participation (Retail)
    350,000up 17%
    Q1 FY25

    Globally, across all three regions.

    Micro Volumes ADV
    3.8 millionup 13%
    Q1 FY25

    Robust demand in micro equities, metals, and cryptocurrencies.

    Market Data Revenue
    $195Mup 11%
    Q1 FY25

    Record level.

    Market Data Pricing Increase
    3.5%
    January

    Went into effect January 1.

    Market Data Non-recurring Revenue (Audit)
    $3.5Muptick over Q1 2024 and Q4
    Q1 FY25

    From audit and other true-ups.

    Google Cloud Spend
    just under $20M
    Q1 FY25
    WTI Share (vs ICE)
    about 73%static YoY
    Q1 FY25
    Henry Hub Futures Share (vs ICE)
    77-78%about the same
    Q1 FY25
    WTI Options Share (vs ICE)
    91%up
    Q1 FY25
    Henry Hub Options Share (vs ICE)
    71%up from 66%
    Q1 FY25
    Cross-margin Savings
    $60B
    current

    Total offsets on margin efficiencies across all asset classes.

    Cross-margin Savings (Rates)
    $20B+
    current
    Cross-margin Participants (FICC)
    15
    current

    Number of house accounts onboarded.

    Gold Price Range
    $2,000 to $3,500
    recent

    Gold price increase attracting participation.

    Gold Price
    $3,500vs $1,000/ounce
    current

    Higher price makes contracts more expensive.

    Product announcements

    4
    ProductTypeDetails
    BrokerTec Chicagolaunch
    FX Spot+launch
    Cross-margin program with FICCexpansion
    Micro Agslaunch

    Deals & partnerships

    1
    S&P GlobalSale of 50% stake in OSTTRA joint venture.$3.1B (total sale price), CME to receive half

    The joint venture was formed with IHS Markit (later acquired by S&P). Management views it as a smart business decision to monetize gains without putting CME at a disadvantage, as services can still be used.

    Risks & headwinds

    4
    Heightened market volatilityQ1 FY25 and continuing into April

    Record order entry volumes exceeding 13 billion messages (week of April 7); $32 billion collected/paid in mark-to-market cash on April 9; $7 billion in increased collateral requirements on April 9.

    Mitigation: Proactive increases in margin requirements; resilient systems (Globex); real-time risk management; SPAN 2 technology.

    Geopolitical dynamics and tariff policiesOngoing

    Uncertainty in markets, driving need for risk management products.

    Mitigation: CME products provide critical tools for hedging exposures; deep liquidity in times of market stress.

    US National DebtOngoing

    $38 trillion of debt on the book of the United States of America.

    Mitigation: Contributes to market uncertainty, making CME's risk management products critically important as participants cannot afford to deleverage.

    Ukraine-Russia conflict resolution implicationsUncertain

    Uncertain impact on energy markets; potential for Russian market to take time to re-enter global market.

    Mitigation: Customers have redeployed supply chains; U.S. is now largest exporter of energy products, positioning WTI and Henry Hub as global benchmarks; CME provides tools for customers to manage risk in this uncertain environment.

    What to watch in Q2 FY25

    5

    Collateral mix shift (cash vs. noncash)

    Next few months (Q2 FY25)
    CurrentQ1 average cash $79B, noncash $173B. April MTD cash $131B, fee-eligible noncash $140B.
    TargetContinued shift towards cash, stabilization of mix.

    Why it matters

    Indicates client adaptation to new soft minimums for cash collateral and potential impact on CME's fee revenue from collateral balances.

    So this is an item that we do report on, on a monthly basis in our volume tracker. So I would keep an eye on that as we're putting out that data over the next few months because we need to see when people are more used to the cash minimum.

    Q&A highlights

    6

    Why isn't broad deleveraging occurring despite high volatility and margin increases, and what explains specific OI declines in ags futures?

    Management stated that open interest is up 7% overall, and participants cannot afford to deleverage due to unprecedented global uncertainty (tariffs, $38T US debt). In ags, while some futures OI declined, it was more than offset by record options OI, indicating a 'risk-on' environment and product shift rather than deleveraging.

    “You don't have that luxury today because of the fundamentals that are not only here in the United States, but globally. So I think that's a big part of why we're not seeing the deleveraging.”

    asked by Kyle Voigt · answered by Terrence Duffy

    2 min read6 chapters

    Detailed Narrative

    01

    Record-Breaking Q1 Performance

    CME Group reported its highest-ever quarterly revenue exceeding $1.6 billion, a 10% increase from Q1 2024. This was accompanied by record average daily volume (ADV) of 29.8 million contracts, up 13% year-over-year, with all six asset classes contributing to growth. Adjusted net income reached $1 billion, and adjusted diluted EPS hit $2.80, both up 12% from the prior year.

    02

    International Expansion and Retail Engagement

    The international business achieved a record 8.8 million contracts per day, growing 19% year-over-year, with strong performance in EMEA and APAC. Retail segment revenue increased by 10%, with new client acquisition surging 44% to over 83,000 new traders and total participation reaching over 350,000 globally. Micro products, including micro equities, metals, and cryptocurrencies, saw 13% ADV growth to 3.8 million.

    03

    Market Data Growth and Pricing

    Market Data revenue reached a record $195 million, up 11% year-over-year, driven by a 3.5% pricing increase effective January 1 and strong subscriber growth, particularly from professional and non-professional (retail) users. Non-recurring📎 audit-related revenue contributed approximately $3.5 million, though these are difficult to predict📌.

    04

    Risk Management and System Resiliency

    Amidst heightened volatility, CME Group proactively increased margin requirements, collecting a record $32 billion in mark-to-market cash on April 9, far exceeding the previous record of $22 billion. The systems demonstrated resilience, handling record order entry volumes exceeding 13 billion messages during the week of April 7 without disruption.

    05

    Commodities Strength and Global Benchmarks

    The commodities complex (ags, energy, metals) delivered a record first-quarter revenue, following a record year in 2024 with nearly $1.7 billion in revenue. Energy volumes grew 20% in Q1, with April seeing 39% growth, driven by global adoption of WTI and Henry Hub as benchmarks due to the U.S.'s role as a major exporter. Ags business also saw record ADV and open interest, with options open interest reaching 5.1 million contracts.

    06

    Capital Allocation and OSTTRA Divestiture

    CME Group announced the sale of its 50% stake in the OSTTRA joint venture with S&P Global for $3.1 billion. The company expects to receive half of the proceeds, with the transaction anticipated to close in approximately six months, pending regulatory review. OSTTRA contributed $89 million in earnings to CME in 2024.

    AI-generated summary of the company’s earnings call. Not investment advice.