CME Group Inc. 2026 Q3 Earnings Call

Please go ahead. Good morning, and I hope you're all doing well today.

Earlier this morning, we released our earnings commentary, which provides extensive details on the third quarter 2026, which we will be discussing on this call. I'll start with the safe harbor language, and then I'll turn it over to Terry. Statements made on this call and in the other reference documents on our websites that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.

With that, I'll turn the call over to our Chairman and CEO, Terry Duffy.

Thanks, Adam, and thank you all for joining us this morning. I'll make a few comments about our exceptional third quarter performance before turning it over to Lynne to provide an overview of our financial results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks. Against a backdrop of shifting central bank policies, geopolitical uncertainty, and persistent market volatility, global participants continue to turn to CME Group in record numbers. The third quarter average daily volume of 29.4 million contracts was the highest third-quarter average daily volume in CME Group's history and increased 16% compared to the same period last year. This strong growth was broad-based as we achieved double-digit year-over-year volume growth in all six asset classes. Our financial and commodity products volume each grew by 16%.

Beyond the strong volume growth, the underlying health of the business is perhaps best reflected in the strength of our open interest and the significant capital efficiencies we provide to our customers. Quarter end open interest reached 128 million contracts, and today it is over 133, the highest open interest at the end of September in our history. As I said, this open interest continues to grow in October. We also set a record for a number of large open interest holders in both our interest rates and foreign exchange complexes in September. Additionally, we delivered record levels of capital efficiency in the third quarter, saving our customers an average of over $100 billion a day in margin savings.

This was a record third quarter for our international business as well, where average daily volume reached 9 million contracts, up 22% versus last year. This was led by 6.5 million average daily volume from EMEA, which was up 20%, and 2.1 million contracts per day from APAC, up 28%. The record international volume was driven by growth in energy products, up 40%, agricultural products were up 28%, and equity index products were up 24%. To support our customers, product innovation remains central to our strategy. During the quarter, we launched several new products, including Single Stock futures and E-nano Equity Index futures. We also expanded 24/7 trading to both our 1-Ounce Gold and 100-Ounce Silver contracts, building on the strong traction of our 24/7 cryptocurrency products launched earlier this year.

Looking ahead, we are on track for our December 7 launch of CME Securities Clearing in advance of the SEC's Treasury clearing mandate. Innovation will continue to be a key driver of our performance and our ability to serve our clients effectively. However, true innovations must always be anchored in market integrity, financial safeguards, and client protection. Innovation without real risk management is not progress. It has the potential to create systemic risk. CME Group remains committed to ensuring market integrity and will never sacrifice core protections in the name of innovation. Instead, we continue to launch innovative products while preserving the safety and soundness of our marketplace. Technology innovation must also be responsive to client needs. As part of our ongoing cloud migration with Google Cloud, we opened the Dallas disaster recovery facility for client testing in June.

The performance of that infrastructure has been positive, with latency and consistency as good or better than our on-premises offering. The primary Chicago region continues to progress to plan, and we expect to begin this cloud migration of our markets in late 2027. Given this timeline and the positive testing to date, we have determined that in the interim, relocation of our livestock markets to Dallas is no longer necessary. Next-generation market participants require premier technology optionality. CME Group is uniquely positioned as the only global exchange offering clients the dual advantage of Google Cloud managed services alongside ultra-low latency co-location. It is clear that market participants continue to turn to CME Group to navigate a complex and rapidly evolving global economy. I am incredibly proud of what we achieved this quarter, and I am highly confident in the opportunities ahead of us.

With that, I will hand the call over to Lynne to discuss our financial performance in more detail.

Thanks, Terry, and thank you all for joining us this morning. As Terry mentioned, CME Group generated impressive third quarter financial growth. Revenue of $1.7 billion was up 13% from the third quarter in 2025. This marks a record for third quarter revenue in aggregate and included a new all-time quarterly record for market data at $243 million. Market data revenues were up 20% and delivered the 34th consecutive quarter of year-over-year revenue growth. Adjusted expenses were $532 million for the quarter and $428 million excluding license fees. The strong growth in volume this quarter, led by our equity complex, up 23%, resulted in an increase in license fees, which are primarily related to equity activity. Our revenue growth and operating leverage resulted in an adjusted operating income of $1.2 billion, up 15% year-over-year, or 69.4% adjusted operating margin.

Adjusted net income was $1.1 billion, resulting in adjusted diluted earnings per share of $3.02, up 13% from Q3 2025. Our adjusted net income margin for the quarter was 62.4%. Reinforcing our commitment to disciplined capital returns, we returned nearly $1 billion to shareholders during the quarter, with $465 million in regular quarterly dividends and $524 million in share repurchases. The third quarter results underscore CME Group's position as the primary destination for global risk management, delivering double-digit volume growth across every single asset class through double-digit gains in both revenue and earnings, resulting in the second highest revenue, adjusted net income and earnings per share of any quarter in our history. Through the first three quarters this year, our revenues have grown by 9% and our adjusted earnings per share by 11%.

Our strong year-to-date momentum reflects robust client demand across our global benchmark products and continued innovation to best serve our clients. As we enter the fourth quarter, volume is surpassing last year's record fourth quarter by 17%, and we are tracking 12% ahead of last year's record volume year-to-date. As we remain firmly on track to deliver another record year, our focus remains on delivering deep liquid markets and maximizing capital efficiencies for our clients and strong earnings for our shareholders. We would now like to open up the call for your questions.