CME Group Inc. Q2 FY2025 earnings call

• Record-breaking second quarter volume: Average daily volume exceeded 30 million contracts for the first time, with growth in all 6 asset classes. Open interest was up 7% from the end of Q2 2024 and 10% from year-end 2024.
• International business growth: Highest-ever quarterly volume from international business, with EMEA and APAC seeing record volumes.
• Retail trader growth: Over 90,000 new retail traders in Q2, contributing to Micro's ADV record.
• NASDAQ license extension: 10-year extension of exclusive license to offer futures and options on NASDAQ indexes through 2039.
• Strong financial results: Record revenue, operating income, and diluted earnings per share for the second consecutive quarter.

CME Group's second quarter 2025 showed strong financial performance. Second quarter average daily volume was 30.2 million contracts, an increase of 16% compared to the same period last year. Financial products volume grew by 17%, and commodity sector volume grew by 15%. International business averaged 9.2 million contracts per day, up 18% from the prior year, with EMEA at 6.7 million (up 15%) and APAC at 2.2 million (up 30%). Over 90,000 new retail traders participated in the markets in the second quarter, a 56% increase versus the same period last year. Micro's ADV reached a record 4.1 million contracts in Q2, with the Micro E-mini NASDAQ 100 futures contributing 1.7 million of those. Year-to-date, NASDAQ 100 futures and options trading volume at CME Group has climbed to more than 2.5 million contracts per day, up 22% versus last year. Revenue for the second quarter was $1.7 billion, up 10% from the second quarter in 2024. Adjusted operating income was a record $1.2 billion, up 14% year-over-year. Adjusted net income was $1.1 billion, and adjusted diluted earnings per share was $2.96 per share, both up 16% from the second quarter last year.

• Now expects total adjusted operating expenses for the year, excluding license fees, to be approximately $1.635 billion, which is $15 million below prior guidance and represents 3% growth from last year's adjusted expense levels. - All other guidance remains unchanged.

• Pending litigation: Related to former floor traders' claims, but no specific details on potential outcomes provided.
• Market uncertainties: Including geopolitical tensions and macroeconomic uncertainties that could impact volume and performance.

Q: Talk about the macro backdrop for the second half and key drivers sustaining strong hedging activities.

A: Terry Duffy said it's hard to predict volumes, but there are factors like high debt levels globally, unrest between Russia and Ukraine, and between Israel and Palestine that may drive risk management needs, though it's unclear how it translates to volume.

Q: Talk about recent take-up of retail emergence and crypto ecosystem.

A: Terry Duffy said 90,000 new users is unprecedented growth, and they participate in multiple asset classes. On crypto, CME is a fast follower, will continue to participate, and regulations on perpetuals need to shake out. Julie Winkler added details on retail growth stats and strategic partnerships, and Tim McCourt commented on crypto momentum in July.

Q: How thinking about capital deployment and inorganic growth opportunities.

A: Lynne Fitzpatrick said capital deployment is opportunistic with variable dividend and share repurchase, and inorganic growth is considered but choosy, looking at various structures like joint ventures and commercial agreements.

Q: Impact of tariffs on physical commodities business.

A: Derek Sammann said tariffs create supply chain realignments, leading to increased volume and activity across client segments, with basis differentials leading to increased EFP activity and options volume.