Beta Finch - CME Group - CME - EN

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown! I'm Alex.

**JORDAN:** And I'm Jordan. Alex, today we're digging into CME Group — ticker CME — Q3 2026 earnings. And spoiler alert: this one's a record-setter across the board.

**ALEX:** It really is. But before we jump in, our standard reminder: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Appreciate you saying that, Alex. Okay, let's get into the numbers because they're genuinely impressive.

**ALEX:** So CME posted $1.7 billion in revenue, up 13% year-over-year — that's a record for a third quarter. Average daily volume hit 29.4 million contracts, up 16%, also a Q3 record. And here's the kicker: double-digit volume growth across all six asset classes. That's not one or two hot products carrying the quarter — that's genuinely broad-based strength.

**JORDAN:** Yeah, and when I see "broad-based," my analyst brain gets excited because it means the growth isn't fragile. Financial products up 16%, commodities up 16%, equities up 23% — equities actually led the pack. Adjusted operating income came in at $1.2 billion, up 15%, with a 69.4% operating margin. That's an incredibly efficient business model.

**ALEX:** And EPS — adjusted diluted earnings per share — was $3.02, up 13% from last year. Net income margin over 62%. For a company this size, those are eye-popping numbers.

**JORDAN:** One more highlight before we move on: market data revenue hit an all-time record at $243 million, up 20%. That's the 34th — count it, 34th — consecutive quarter of year-over-year growth in that segment. CME's data business just keeps compounding quietly in the background.

**ALEX:** It's almost become the unsung hero of this business. Okay, let's talk shareholder returns, because CME didn't just grow — they paid up. Nearly $1 billion returned to shareholders this quarter: $465 million in dividends, $524 million in buybacks.

**JORDAN:** And CEO Terry Duffy made a point of saying they've got one of the lowest debt loads in the sector, which gives them real flexibility — whether that's more buybacks, special dividends, or opportunistic M&A down the road.

**ALEX:** Speaking of flexibility, let's pivot to strategy, because there's a lot happening here. First up: the cloud migration with Google Cloud. They opened a Dallas disaster recovery facility, testing has gone well — latency's on par with their on-prem systems — and they're targeting late 2027 to start migrating markets to the cloud.

**JORDAN:** Interesting side note there — because the Dallas testing went so well, they decided they no longer need to physically relocate the livestock markets there. Small detail, but it shows the cloud infrastructure is doing exactly what they hoped.

**ALEX:** Then there's the new product pipeline. Single Stock futures launched and are off to a strong start — over 350,000 contracts traded, $3.5 billion in notional value since launch. They're getting traction both institutionally and on the retail side, working with over 130 retail firms.

**JORDAN:** What stood out to me in the Q&A was management's discipline around *not* rushing prediction markets onto everything. Terry Duffy was pretty blunt — he said just because there's a narrative that "every market needs a prediction market" doesn't make it true. They want Single Stock futures to establish themselves first before layering on anything else.

**ALEX:** That discipline theme came up again with the CFTC's Compute Futures review — that's the new contract tied to AI infrastructure and data center risk. Management's very bullish on client demand there, but it's sitting with regulators, comment period extended to November 9th. They're playing what Duffy called "the lon

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**BETA FINCH — CME GROUP Q2 2026 EARNINGS BREAKDOWN**

ALEX: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex, joined as always by Jordan, and today we're digging into CME Group's second quarter 2026 results — and trust me, there is a LOT to unpack here beyond just the numbers.

JORDAN: Yeah, this one's spicy. We've got record revenue, but the real story is CME going toe-to-toe with the entire perpetual futures narrative that's been dominating headlines.

ALEX: Before we get into it — quick disclaimer. This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

JORDAN: Solid. Okay, let's start with the numbers, because they're genuinely strong.

ALEX: Right. Revenue came in at just over $1.7 billion, up 1% year-over-year — that's a record for a second quarter and the second-highest quarterly revenue in company history, only behind Q1 of this year. Average daily volume was 29.8 million contracts, the second-best Q2 ever, within 1% of last year's record.

JORDAN: And the real headline for me is market data — $238 million in revenue, up 20% year-over-year. That's 33 consecutive quarters of year-over-year growth. Thirty-three! That's not a hot streak, that's a business model.

ALEX: It's wild. And adjusted EPS came in at $2.99, up 1% from last year, with a 69.5% adjusted operating margin. For a company this size, that margin is just remarkable.

JORDAN: They also returned $1.2 billion to shareholders in the quarter — $468 million in dividends, $695 million in buybacks. And CFO Lynne McGregor, who's stepping into a bigger strategic role, noted July is already tracking 18% ahead of last year. So momentum's not slowing down.

ALEX: Okay, now let's get into the thing everyone on the call wanted to talk about — perpetual futures. Multiple analysts pressed CEO Terry Duffy on this, and he came out swinging.

JORDAN: He really did. His argument, basically boiled down: perpetuals are functionally leveraged spot products dressed up as futures. No expiration date, funding rate resets, auto-liquidation mechanics — and he says none of that works for the institutional risk managers who make up 94% of CME's volume.

ALEX: He had this great anecdote about calling the CEO of a major energy trading firm and asking — I think he said nineteen times — whether they wanted CME to list a perpetual oil contract. Answer: no, every time. They said they couldn't risk-manage their book with something that just tracks leveraged spot price.

JORDAN: And on the crypto comparison — which is really the only apples-to-apples perpetuals data point that exists right now — CME's Tim McCourt laid out some pretty stark numbers. CME's doing $4.5 to $6.5 billion a day in crypto derivatives volume, versus about $270 million a day for a Bitcoin perpetual that a competitor, Kalshi, launched in July. Open interest gap was even bigger — $9-10 billion at CME versus $10 million for that perpetual product.

ALEX: So the message is basically: "We could launch these tomorrow if there were real demand, but the demand just isn't showing up where it matters."

JORDAN: Right, and Duffy was pretty direct that this isn't a defensive posture — CME says it has contract specs ready to go. It's a "we'll do it when it makes sense" stance, not a "we can't compete" stance.

ALEX: Let's talk product pipeline, because there's a lot coming. Twenty-four-seven crypto futures trading launched this quarter. This weekend, round-the-clock gold trading goes live. Next week, Single Stock futures relaunch — this is CME's second attempt at that product after a failed joint venture back in 2000.

JORDAN: Duffy's reasoning on timing there was interesting — he basically said the market has evolved, equity valuations are much higher now, and in

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**BETA FINCH PODCAST SCRIPT**

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**ALEX:** Welcome to Beta Finch, your AI-powered earnings breakdown where we cut through the noise to bring you what really matters from the latest corporate earnings calls. I'm Alex, and I'm here with my co-host Jordan to dive into CME Group's Q4 2024 earnings.

Before we jump in, I need to share an important disclaimer: This podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

**JORDAN:** Thanks Alex. And wow, what a quarter for CME Group! This is a company that just keeps hitting records. We're talking about their fourth consecutive year of record volume with average daily volume up 9% to nearly 27 million contracts. Revenue hit $6.1 billion for the year - that's 10% growth - and they delivered their third straight year of record revenues and earnings.

**ALEX:** It really is impressive. But what caught my attention was CEO Terry Duffy's comment about the blurring lines between retail and institutional trading. He said technology is equalizing access to data and improving information flow, bringing new types of traders into their markets. Jordan, what do you make of this trend?

**JORDAN:** It's fascinating, Alex. They're seeing massive growth in their retail business - Julie Winkler mentioned that two-thirds of the $1 billion in revenue from new clients over the last five years came from retail. And get this - new client acquisition was up 23% year-over-year. They're even rolling out futures to Robinhood's 24 million customers, which could be a game-changer.

**ALEX:** Speaking of game-changers, let's talk about their pricing power. CFO Lynne Fitzpatrick announced some interesting fee adjustments. Can you break that down?

**JORDAN:** Sure thing. They implemented transaction fee adjustments in February that should boost futures and options revenue by 1% to 1.5%. They also raised market data fees by 3.5% and - this is clever - they're adding a 10 basis point surcharge for participants who don't post at least 30% of their margin in cash. In aggregate, these changes could add 2% to 2.5% to pre-tax income.

**ALEX:** That cash requirement is smart risk management, especially given the current market environment. Terry Duffy was pretty candid about the economic headwinds ahead - $36 trillion in U.S. debt, geopolitical tensions, potential tariffs. He sees all of this driving demand for risk management tools.

**JORDAN:** Exactly, and it's showing up in their commodities business, which was their third fastest-growing asset class. Metals volume up 23%, energy up 17%, agriculture up 13%. Derek Sammann pointed out they're seeing significant increases from global multi-strategy hedge funds expanding into commodity-focused strategies. This isn't just cyclical - it looks secular.

**ALEX:** The international growth story is compelling too. Their EMEA commodities volume was up 34% year-over-year. But let's pivot to something that came up in the Q&A that I found intriguing - the regulatory environment under the new administration.

**JORDAN:** Terry Duffy was pretty fired up about this, particularly around Treasury futures clearing. He made a strong case that having U.S. sovereign debt cleared overseas - specifically at LCH in the UK - poses systemic risks because the Bank of England would have resolution authority over a market larger than some countries' entire economies.

**ALEX:** His quote was memorable: "If someone gets sick, we all get cancer" when talking about a $28 trillion market. Pretty stark warning. But shifting gears, what about their capital allocation strategy?

**JORDAN:** They've got a new $3 billion buyback authorization, though Lynne Fitzpatrick described their approach as "opportunistic." They're still prioritizing their dividend - raised it from $1.15 to $1.25 - and they just paid out

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**BETA FINCH PODCAST SCRIPT**

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**ALEX**: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex, and joining me as always is Jordan. Today we're diving into CME Group's Q4 2025 results – and wow, what a quarter to cap off what they're calling their most successful year ever.

Now, before we jump in, I need to mention that this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.

Jordan, CME just posted some pretty impressive numbers here. Walk us through the highlights.

**JORDAN**: Absolutely, Alex. This was a record-breaking quarter on multiple fronts. CME hit $1.65 billion in Q4 revenue, up 8% year-over-year, and for the full year they reached $6.5 billion – their fourth consecutive year of record revenues. But here's what really caught my eye: adjusted earnings per share grew 10% in the quarter to $2.77, and 9% for the full year.

**ALEX**: And those volume numbers were pretty staggering too, right?

**JORDAN**: Exactly. They averaged 28.1 million contracts daily for the year – up 6% and marking their fifth consecutive year of record volume. What's particularly interesting is this growth was broad-based across all their major asset classes. Interest rates, energy, metals, agricultural products, and crypto all hit all-time records.

**ALEX**: Speaking of crypto, that seems to be a major growth driver for them. What's happening there?

**JORDAN**: Crypto was absolutely on fire for CME. Q4 average daily volume hit 379,000 contracts – that's up 92% year-over-year, representing over $13 billion in notional value traded per day. And CEO Terry Duffy announced they're launching Cardano, Chainlink, and Stellar futures next week, plus they're rolling out 24/7 crypto trading next quarter.

**ALEX**: That's a big strategic shift. They're essentially saying crypto doesn't sleep, so neither should their platform.

**JORDAN**: Exactly, and Duffy made an interesting comment during the call about potentially expanding 24/7 trading to other asset classes if it makes sense. They're clearly being responsive to how markets are evolving, especially since the underlying crypto cash markets trade through weekends.

**ALEX**: Now, one area that's getting a lot of attention is their push into retail markets. They launched these "event contracts" – basically prediction markets. How's that going?

**JORDAN**: This is fascinating, Alex. They launched in December and have already seen over 68 million event contracts traded in just six weeks, including 7 million on market-related events. They're partnering with FanDuel for distribution, and their micro products – aimed at retail traders – were up 59% in Q4 to 4.4 million contracts daily.

**ALEX**: But there was some interesting commentary about the regulatory landscape here, wasn't there?

**JORDAN**: Yes, and Duffy was pretty direct about this during the Q&A. He emphasized that as long as the CFTC regulates these as swaps – which they currently do – CME will participate. But he was clear they don't want to get bogged down in legal battles with states over whether this constitutes gambling. His position is basically: "We follow federal regulation, and if states have issues, they should take it up with the federal government, not us."

**ALEX**: That's a pretty pragmatic stance. Now, looking at their financials, margins were strong again, right?

**JORDAN**: Very strong. Operating margin for the year was 69.4%, up 110 basis points from 2024. For Q4 specifically, they hit a 67% operating margin. They're also sitting on about $4.6 billion in cash, including $1.3 billion from their Austria sale proceeds, which the board has approved for share buybacks.

**ALEX**: And they're continuing to invest in growth initiatives. What's the 2026 guidance looking like?

**JORDAN**: They're guiding for about

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