MIAMI INTERNATIONAL HOLDINGS, INC. Q3 FY2026 earnings call

• Strong Financial Performance: Net revenue grew 20% YoY. Adjusted EBITDA reached $71 million with a margin of 54%, an improvement of over 1,000 basis points YoY. Adjusted earnings were $50 million (up 25% YoY).
• Options Business Strategy: Focus remains on optimizing revenue mix and driving share growth. The company hit milestones on the Sapphire trading floor, capturing over 12% of total industry multi-listed trading floor volume. New market makers joined during the quarter.
• Futures Business Progress: NinjaTrader became the first retail broker distributing Bloomberg Financial Futures products. Retail distribution for Bloomberg Keeney B500 and B100 equity index futures is underway. Four new physically settled fertilizer contracts were launched on MyExFutures.
• Technology Moat: The unified technology foundation provides low latency (36 microseconds at 99.9th percentile), high throughput, determinism, and reliability. This allows market makers to be more aggressive during periods of volatility or market stress.
• Strategic Expansion: The company holds a 10-year exclusive license with Bloomberg for index futures and options in North and South America. Plans include filing with the SEC for cash-settled binary index options and binary KPI options.
• Capital Allocation: Ended the quarter with $699 million in cash and less than $2 million in debt. The company remains disciplined in capital deployment while investing in new products and infrastructure.

• Options Segment: Net revenue was $131 million, up 20% year-over-year. Market share increased to 17.4%. Revenue growth was driven by higher industry average daily volume (ADV), market share gains, and a 38% increase in non-transaction fees (member connections, fee increases, data sales). RPC declined to 9.8 cents from 11 cents in Q1 due to pricing changes, ORF model shifts, and mixed factors.
• Auction Segment: Net revenue was $113 million, up 19% year-over-year. ADV grew 15% to 11.1 million contracts. Growth was fueled by net transaction fees and non-transaction fees.
• Equity Segment: Net revenue was $7 million, up from $4 million in the prior year period, primarily due to higher net transaction fees.
• Futures Segment: Net revenue was $5 million, up 4% year-over-year. Bloomberg Financial Futures products launched in May did not contribute materially to overall Q3 results. Four new physically settled agricultural futures contracts were launched on MyExFutures.
• International Segment: Net revenue was $6 million, up 11% year-over-year.

• Full-Year 2026 Adjusted Operating Expenses: Lowered to $254 million–$257 million (previously $260 million–$270 million), reflecting careful expense management.
• Share-Based Compensation Expense: Expected between $30 million and $32 million (narrowed from $29 million–$32 million).
• Capital Expenditures: Expected between $43 million and $46 million (previously $40 million–$45 million), partly due to pulling forward planned 2027 CapEx to mitigate expected cost increases.
• Depreciation and Amortization: Expected between $36 million and $38 million (narrowed from $35 million–$39 million).
• Effective Tax Rate: Expected to be in the 26%–28% range (previously 27%–29%).
• Q4 Outlook: Marketing costs are expected to increase in Q4 due to Bloomberg Futures quoting incentives and customer events.

• Regulatory Uncertainty: The regulatory environment continues to evolve, though regulators are currently embracing speed and innovation.
• Product Launch Risks: New product rollouts (e.g., Bloomberg Futures, binary options) involve significant investment and early-stage adoption risks; success depends on expanding distribution, growing volumes, and improving capture rates over time.
• Competitive Dynamics: While new exchange entrants exist, MIAC views them as having limited impact due to superior technology and functionality. However, competition remains a factor in market share and pricing strategies.
• Operational Volatility: Revenue per contract (RPC) and capture rates can fluctuate based on volatility, member tier changes, and mix of trading mechanisms.
• Cost Inflation: Pressure on technology costs, including software/hardware maintenance and data center costs, requires proactive mitigation strategies.

Q: Analyst asked for a breakdown of the three factors driving the decline in Options RPC from Q1 ($0.11) to Q3 ($0.098), specifically regarding the impact of July fee changes vs. ORF adjustments, and whether Q3 represents a clean baseline for future pricing.

A: CFO Lance Emmons explained that the ORF model change accounted for about six-tenths of a penny of the decline, while fee changes (including partial reversals) accounted for eight to nine-tenths of a penny, with mixed factors adding three-tenths. He noted no planned fee changes for October/November and suggested the $0.10 mark could be a reset point, though volatility and member mix will continue to influence results.

Q: Analyst questioned the sustainability of operating expense cuts and what levers remain for 2027, given two consecutive downward revisions to full-year OpEx guidance.

A: Emmons clarified that sequential OpEx decreases were driven by timing of marketing spend around the Bloomberg launch and modest headcount additions. For 2027, he indicated that marketing, headcount, and some CapEx would likely increase to support new product roadmaps. The company mitigated tech cost pressures by ordering hardware early and pulling forward 2027 CapEx to lock in prices before expected inflation.

Q: Analyst asked about the relationship between pricing contraction and market share gains, noting that MIAC seemed to give up more pricing than expected without commensurate share growth.

A: Shelly Brown (CEO) stated that while share and pricing are generally negatively correlated, short-term variations occur due to market conditions and volume mix. She expressed no concern over lower capture rates, attributing them to temporary factors like fee structures and customer volume composition. Emmons added that cutting fees isn't the sole driver of share gains; functional improvements like the trading floor and complex order capabilities also drive share at higher capture rates.

Q: Analyst inquired about the potential entry into perpetual futures (PERPs), asking if this represented a deviation from MIAC's core focus and how the company would evaluate such opportunities.

A: Chairman Tom Gallagher emphasized that MIAC only pursues new products if there is clear customer demand, a defined regulatory pathway, and justified economics. He noted that PERPs are seen as an opportunity to bring offshore volume to US-regulated markets, not a replacement for existing products. CIO Doug Schafer added that their unified technology stack allows for evolutionary migration into new asset classes without massive re-architecting, allowing the company to move decisively when conditions align.