Skip to content
    CME
    Earnings call· Dec 2024(Q4 FY24)

    CME GROUP INC. CME

    Feb 12, 2025 Source

    Executive summary

    CME Group Q4 FY24 — Record Year Driven by Volume Growth and Strategic Investments

    CME Group concluded a record-breaking 2024, achieving its third consecutive year of double-digit earnings growth, fueled by broad-based volume increases across all asset classes and strategic investments in client acquisition and technology. The company is navigating a complex macro environment with geopolitical tensions and economic uncertainties, which management believes will continue to drive demand for risk management solutions. Looking ahead, CME is focused on expanding its retail client base, leveraging its diverse product suite, and pursuing capital efficiencies for clients, while also addressing regulatory considerations for new product development and M&A.

    Highlights

    5

    • Record volume in 2024, with average daily volume increasing 9% to 26.5 million contracts.

    • Record revenue of $6.1 billion in 2024, up 10% compared to 2023.

    • Adjusted operating margin expanded to 68.3% in 2024, up over 140 basis points from 2023.

    • Adjusted net income of $3.7 billion in 2024, resulting in 10% EPS growth.

    • New clients added in the last 5 years generated approximately $1 billion of revenue, including 5% of transaction and clearing revenue in 2024.

    Concerns

    3

    • The collateral surcharge for non-cash collateral, effective April, introduces uncertainty as its financial impact depends on customer decisions, potentially shifting revenue from fees to non-operating income.

    • Regulatory clarity for launching new crypto derivative products beyond Bitcoin and Ether is still pending, limiting immediate expansion in this high-growth area.

    • The potential for delayed approval of the securities clearinghouse application by the SEC, as noted by management, could defer the realization of capital efficiency benefits for clients.

    Guidance & targets

    7
    CategoryTargetConfidence
    Total adjusted operating expenses (excluding license fees but including cloud migration expenses)
    approximately $1.65 billion
    high materiality
    High
    Total capital expenditures
    approximately $90 million
    medium materiality
    High
    Adjusted effective tax rate
    between 22.5% and 23.5%
    medium materiality
    High
    Futures and options transaction revenue increase (from fee adjustments)
    approximately 1% to 1.5%
    medium materiality
    High
    Market data fees increase
    3.5%
    medium materiality
    High
    Total pretax income impact (from fee changes and cash minimum)
    2% to 2.5%
    high materiality
    High
    Cloud migration expenses
    $115 million
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Company-wide
    Our revenue of $6.1 billion grew 10% compared to 2023 and included all-time revenue records in all six of our asset classes.
    		$6.1 billion10%——
    International business
    It was also a record year for our International business, which averaged 7.8 million contracts per day, up 14% from the previous record set in 2023.
    Average daily volume: 7.8 million contractsVolume growth YoY: 14%
    		————
    Commodities
    Commodities were the third fastest-growing asset class in 2024... These businesses combined to generate a record $1.7 billion in revenue in 2024, up 16% versus 2023.
    		$1.7 billion16%——
    Metals
    metals volume up 23%
    		—23%——
    Energy
    energy up 17%
    		—17%——
    Ags
    ags up 13%
    		—13%——
    EMEA (within Commodities)
    Geographically, the fastest growth came from EMEA, where our year-over-year volume was up 34% across the commodities business.
    		—34%——

    Operational metrics

    41
    Average daily volume (ADV)
    26.5 millionup 9%
    FY24

    2024 was the best year in CME Group's history, and our fourth consecutive year of record volume, with average daily volume increasing 9% to 26.9 million (sic) [26.5 million] contracts.

    Margin savings for clients (interest rates)
    $20 billion
    per day

    within our interest rates alone, the breadth of our offering results in margin savings in excess of $20 billion per day for our clients.

    Margin savings for clients (all asset classes)
    $60 billion
    per day

    our customers are now saving approximately $60 billion per day across all six asset classes.

    New client revenue contribution
    $1 billion
    last 5 years

    In total, new clients added in the last 5 years have generated approximately $1 billion of revenue

    New client revenue contribution (transaction and clearing)
    5%
    FY24

    including approximately 5% of transaction and clearing revenue in 2024.

    Adjusted operating margin
    68.3%up over 140 basis points from 2023
    FY24

    Our adjusted operating margin for the year expanded to 68.3%, up over 140 basis points from 2023.

    Adjusted net income
    $3.7 billion
    FY24

    We delivered $3.7 billion in adjusted net income

    Adjusted EPS growth
    10%
    FY24

    resulting in 10% earnings per share growth for the year.

    Adjusted operating expenses (excluding license fees)
    $1.59 billion
    FY24

    Our annual adjusted expenses, excluding license fees were approximately $1.59 billion

    Cloud migration expenses
    $85 million
    FY24

    including $85 million related to our cloud migration.

    Revenue
    $1.5 billion6% increase from Q4 2023
    Q4 FY24

    During the fourth quarter, CME Group generated more than $1.5 billion in revenue, a 6% increase from Q4 2023

    Market data revenue
    $182 milliongrew 9% from last year
    Q4 FY24

    Market data revenue grew 9% from last year to $182 million.

    Adjusted operating expenses (excluding license fees)
    $436 million
    Q4 FY24

    adjusted basis were $520 million for the quarter and $436 million, excluding license fees

    Adjusted effective tax rate
    21.8%
    Q4 FY24

    CME Group had an adjusted effective tax rate of 21.8%

    Adjusted net income
    $919 million
    Q4 FY24

    resulted in adjusted net income of $919 million.

    Adjusted EPS
    $2.52up 6% from the fourth quarter last year
    Q4 FY24

    Our adjusted earnings per share were $2.52, up 6% from the fourth quarter last year.

    Capital expenditures
    $28 million
    Q4 FY24

    Capital expenditures for the fourth quarter were approximately $28 million

    Cash balance
    $3.1 billion
    end of FY24

    cash at the end of the year was $3.1 billion.

    Dividends declared
    $3.8 billion
    FY24

    CME Group declared dividends during 2024 approximately $3.8 billion

    Annual variable dividend
    $2.1 billion
    FY24

    including the annual variable dividend of $2.1 billion which was paid in January.

    Dividend per share
    $1.25from $1.15
    per share

    we raised that from $1.15 to $1.25.

    Non-cash collateral surcharge
    10 basis points
    effective April

    Additionally, we announced a 10-basis-point non-cash collateral surcharge effective in April for participants that do not post at least 30% of their margin requirement in cash.

    Cloud migration expenses
    $22 million
    Q4 FY24

    So in the fourth quarter, Simon, the total spend was about $22 million on the migration. That was about $18 million within technology and about $4 million within professional services

    Retail participation
    6%up
    Q4 FY24

    Q4 was another really strong quarter for us in terms of total participation being up, the number of traders being up 6%

    New Client Acquisition (NCA) growth
    23%up
    Q4 FY24 YoY

    and that NCA number was up another 23% year-on-year.

    Micro volume ADV
    2.8 millionup 11%
    Q4 FY24

    The micro volume is in product, I think, has continued to be a sweet spot for us in our retail business. So that volume was up 2.8 million contracts and ADV in Q4, so that was up 11%.

    Ags volume growth
    33%up
    YTD 2025

    our ag business is up 33% year-to-date

    Nat gas options growth
    61%up
    last year

    our options is up 61% last year.

    Weather derivatives open interest
    90,000
    end of year

    We finished the year at about 90,000 contracts open interest. 70% of that is in the form of options.

    Ags volume growth
    32%up
    YTD 2025

    our overall business up in ags up 32%

    Energy volume growth
    25%up
    YTD 2025

    energy 25%

    Metals volume growth
    14%up
    YTD 2025

    and metals up 14%.

    U.S. cash balances
    $75 billion
    Q4 FY24 average

    we had $75 billion on average in cash in Q4

    U.S. cash balances
    $77 billion
    Q1 FY25 quarter-to-date

    quarter-to-date, we're running at $77 billion.

    Non-cash collateral
    $178 billion
    Q4 FY24

    On the noncash collateral, we were at $178 billion in the quarter

    Non-cash collateral
    $175 billion
    Q1 FY25 quarter-to-date

    quarter-to-date, Q1 is $175 billion.

    BrokerTec revenue growth
    7%up
    Q4 FY24

    Overall revenues for BrokerTec were up 7% in Q4.

    BrokerTec ADV
    29%month-over-month
    January

    January is much better with ADV up 29% month-over-month.

    BrokerTec market share
    0.5%ticking up about 0.5% versus December
    January

    market share ticking up about 0.5% versus December

    Non-professional device usage
    40%increase
    Q3 to Q4

    we saw an increase just even from Q3 to Q4 of almost 40% from our vendors and our brokers in terms of increased units that they were reporting to us on a nonprofessional or retail basis.

    Largest crypto trading date
    700,000
    February 3

    we had our largest trading date in cryptocurrency, with almost 700,000 contracts trading on February 3

    Product announcements

    4
    ProductTypeDetails
    Micro Ag Contractslaunch
    Physical Ethanol Contractlaunch
    Bitcoin Friday Futureslaunch
    Financially Cash-Settled Bitcoin Friday Futures Optionslaunch

    Deals & partnerships

    2
    RobinhoodPhased rollout of futures trading capabilities to Robinhood's 24 million customers.

    CME Group is partnering with Robinhood for a phased rollout of futures to their customer base, aiming to expand retail participation in CME markets.

    Fixed Income Clearing Corporation (FICC)Expanding cross-margining program for existing house accounts and to include client accounts.

    CME Group is closely partnering with FICC to expand their cross-margining program, enhancing capital efficiencies for both house and client accounts.

    Risks & headwinds

    4
    Geopolitical tensions and global economic uncertaintyongoing

    Shipping views around the global economy, persistent inflation, potential for changes in tariffs, and ongoing geopolitical tensions.

    Mitigation: CME provides effective risk management solutions to clients navigating these market movements.

    Regulatory uncertainty for new crypto productsongoing

    Lack of clarity from the SEC regarding what is deemed a security for new crypto tokens.

    Mitigation: CME will consult and work with the SEC and will not 'front-run' regulators, waiting for clarity before introducing additional products beyond Bitcoin and Ether.

    Impact of non-cash collateral surcharge on customer behavioreffective April

    A 10-basis-point non-cash collateral surcharge effective in April for participants not posting at least 30% cash margin.

    Mitigation: The goal is to ensure a minimum level of cash for risk management; financial impact depends on customer decisions to either pay the surcharge or increase cash posted.

    Default and resolution authority for U.S. sovereign debt cleared abroadlong-term structural risk

    A market as big as $28 trillion, if someone gets sick, we all get cancer.

    Mitigation: Management advocates for U.S. resolution authority embedded in the U.S. for sovereign debt, arguing it is detrimental for the U.S. not to have authority over its sovereign debt clearing.

    What to watch in Q1 FY25

    5

    Cloud migration expenses

    Q1 FY25 / FY25
    Current$22 million (Q4 FY24)
    TargetProgress towards $115 million (FY25 target)

    Why it matters

    This investment is key to enhancing technology, data capabilities, and overall operational efficiency, impacting future cost structure and service offerings.

    So in the fourth quarter, Simon, the total spend was about $22 million on the migration. That was about $18 million within technology and about $4 million within professional services, bringing the total for the year to about $85 million. Within our guidance for 2025, it's including $115 million related to the migration.

    Q&A highlights

    6

    How additive will the Robinhood rollout be to volumes, and what is the broader retail strategy?

    Julie Winkler stated that 2/3 of the $1 billion new client acquisition revenue over 5 years came from retail, with Q4 participation up 6% and NCA up 23% YoY. Micro volume was up 11%. Robinhood is in a phased rollout. Terry Duffy added that the definition of retail is evolving, blurring lines with institutional traders due to technology, and new risk management tools will expand this segment.

    “I think the definition of that retail participant is going to continue to evolve over the next several years, and we might be saying something a lot different about what a retail participant looks like.”

    asked by Patrick Moley · answered by Terrence Duffy

    2 min read6 chapters

    Detailed Narrative

    01

    Record Performance in 2024

    CME Group achieved its best year in history in 2024, marking the fourth consecutive year of record volume, with average daily volume (ADV) increasing 9% to 26.5 million contracts. This growth was broad-based, with all six asset classes seeing increased volume, and record revenue of $6.1 billion, up 10% from 2023. The company also reported a record adjusted operating margin of 68.3% and 10% adjusted EPS growth.

    02

    Strategic Retail Expansion

    The company is actively expanding its retail client base, with new clients contributing approximately $1 billion in revenue over the last five years, including 5% of 2024 transaction and clearing revenue. The phased rollout of futures to Robinhood's 24 million customers is a key initiative, and management notes a blurring of lines between institutional and retail trading behaviors due to technology and improved data access. Micro products, crypto, and commodities are attracting new retail participants, with non-professional device usage up almost 40% from Q3 to Q4.

    03

    Commodities Growth and Climate Risk Management

    Commodities were the third fastest-growing asset class in 2024, with metals volume up 23%, energy up 17%, and ags up 13%, generating a record $1.7 billion in revenue. This growth was significantly driven by the buy side, particularly multi-strategy hedge funds expanding into commodity-focused strategies. Management highlighted the increasing use of CME products, including weather derivatives and energy contracts, to manage risks related to climate events and their impact on real economies, such as the copper and battery metals markets.

    04

    Capital Allocation and Shareholder Returns

    CME Group views its dividend as a key use of capital, having recently raised it from $1.15 to $1.25 per share. The company also has a $3 billion share repurchase program, which it intends to use opportunistically as a third lever for returning capital to shareholders, alongside regular and variable dividends. Management emphasized a conservative balance sheet approach to maintain flexibility for strategic M&A opportunities that align with core competencies.

    05

    Regulatory Landscape and Securities Clearing

    The company's application for a securities clearinghouse has been published in the Federal Register, with ongoing engagement with the SEC for approval. This initiative, along with expanding cross-margining with FICC, aims to provide significant capital efficiencies for clients. Management also addressed the competitive landscape for U.S. Treasury contracts, emphasizing the importance of U.S. resolution authority for sovereign debt cleared in the U.S. to prevent systemic risk.

    06

    Cloud Migration and Technology Investment

    CME Group's cloud migration strategy continues, with $22 million spent in Q4 2024 and an expected $115 million allocated for 2025. This investment focuses on migrating non-latency-sensitive applications and building additional capabilities for clients to use data more effectively. The cloud migration is part of a broader effort to enhance technology and risk management tools, which management believes will broaden the scope of what is defined as retail trading.

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