CME Group Inc. (CME) 4Q25 Earnings Review
Earnings Beat Consensus on Non-Operating Income; Begins to Utilize Repurchase Program; Event-Based Contracts / Prediction Markets Major Focus on Earnings Call Once Again
EPS Beats Street On Non-Operating Income
CME reported 4Q25 earnings prior to market open yesterday. Total net revenue came in at $1,649M, up 7% Q/Q and up 8% Y/Y. The sequential increase in revenue was driven by an increase in clearing and transaction fees, which rose 8% Q/Q and were up 8% Y/Y to $1,328M. Meanwhile, market data revenue increased by 3% Q/Q (+15% Y/Y) to $208M and other revenue increased 5% Q/Q (+1% Y/Y) to $113M. On the expense side, total adjusted operating expenses excluding licensing fees came in at $447M, which was up 10% sequentially (+2% Y/Y) while licensing fees were up 18% Q/Q (+15% Y/Y). Operating margins for the quarter came in at 67.0% (down 130bps Q/Q but up 110bps Y/Y. Non-operating income came in at $219M (+2% Q/Q, +28% Y/Y) and adjusted diluted EPS came in at $2.77, up 3% Q/Q (+10% Y/Y).
Relative to consensus estimates, revenue came in essentially inline with the consensus forecast of $1,644M. Meanwhile, operating expenses were inline with street forecasts of $541M and adjusted EPS came in 1% above the consensus expectation of $2.74.
In terms of key operating metrics, volume detail for the quarter was known coming into today’s print, however, to recap the quarter, total futures and options ADV was 27.4M for 4Q25 (+8% Q/Q, +7% Y/Y) while ADV for BrokerTec and EBS were mixed Y/Y. New revenue metrics from today’s print include RPC detail for the futures and options businesses and total revenue figures for BrokerTec and EBS. The blended futures and options RPC for the quarter came in at $0.707 (+1% Q/Q, +1% Y/Y). BrokerTec revenue came in at $39M (-2% Q/Q, +7% Y/Y) while EBS revenue came in at $29M (-5% Q/Q, -11% Y/Y).
CME Earnings Summary and Key Operating Metrics
Source: company data and Tikr.com
Highlights from CME Earnings Call, Presentation and Press Release
In terms of the outlook going forward, CME 0.00%↑ management touched on several details during the earnings call that are worth highlighting:
Guidance Items – Adjusted operating expense excluding licensing fees expected to be approximately $1.695B for 2026 which includes core expense growth as well as investment in new initiatives such as 24/7 crypto trading, securities clearing and continued even contract roll out. Full year capex expected to be $85M. Tax rate anticipated between 23.5% and 24.5%.
Pricing Changes & Revenue Impact – Earlier this week CME announced transaction fee pricing changes that will be implemented on April 1 and at the beginning of the year CME implemented market data pricing changes. According to mgmt., the combination of pricing actions should increase overall revenue by 1.0% to 1.5% in 2026 assuming all else equal (volume, product and client mix on the trading side). CME has adjusted its philosophy on pricing changes and will evaluate transaction fee pricing on a regular basis moving forward to make changes based on market conditions rather than strictly in December. According to mgmt., this will allow for more real time management of the business
OSTTRA Sale and Capital Return – CME had $4.6B in cash on hand as of quarter end which included $1.3B of proceeds from the OSTTRA sale. CME board has approved the funds from the OSTTRA sale to go towards share repurchases and CME repurchased $256M during 4Q25 and $276M thus far in 2026. CME plans to announce its annual variable dividend next week (to align with 1Q26 dividend payment date). Based on year end cash (less OSTTRA proceeds) CME’s annual variable dividend could be somewhere near last year’s levels when they announce next week ($5.80 / share)
Prediction Markets
Over 68M contracts have traded in the 6 weeks since CME launched its even contracts products, including over 7 million markets-related contracts
CME views this launch as the next step in its multi-year strategy to expand its customer base by providing greater access to markets for the next generation of traders
On top of retail interest in the product, CME has seen new to CME institutions and market makers reach out about trading the products
Regarding CME’s philosophy around sports related contracts, CME has no interest in getting bogged down in a bunch of legal battles over sports contracts
So long as sports contracts are called swaps markets and overseen by the CFTC, CME will continue to remain in the business of trading and listing these contracts
According to CME CEO, Terry Duffy, the new CFTC Chairman, Michael Selig, is committed to overseeing these products and believes they should be treated as legal swaps under the CFTC’s regulation
CME does find value in listing certain political contracts (major elections, who will win the house or senate, etc.) but CME will not list certain smaller political contracts, such as a small congressional race in a district or state race
Currently working with 120 to 130 retail distribution partners (in addition to current partnerships with FanDuel and DraftKings) to understand what it will take for them to be ready to offer contracts
Tokenization – have an initiative they are rolling out with Google this year on tokenized cash and working with a depository bank to facilitate those transactions. Would accept tokens from a large systemically important financial institution but likely not from a third or fourth-tier bank. Additionally looking at initiatives around CME’s own coin that they could put on a decentralized network for other industry participants to use
AI – CME’s data is proprietary that participants need for risk management protocols. CME is not in some of the ancillary data businesses that could potentially be disrupted by AI
Key Financial Highlights
CME showed solid revenue growth of 8% Y/Y, posting revenue of $1,649M. Meanwhile, operating expense growth remained slightly more subdued with total expenses growing 4% Y/Y in the quarter to $543M. This allowed operating margins to expand to 67.0% in the quarter, up 110bps Y/Y.
CME Revenue, Expenses and Margins
Source: company documents
CME ADV grew 7% Y/Y in 4Q with particular strength in the metals category (+114% Y/Y) and equities (+22% Y/Y). In terms of mix of products, interest rates made up 48% of the total mix, the lowest level since 4Q22, while metals contracts made up 5% of the mix, the highest level since 3Q20.
CME ADV Mix
Source: company documents
Given the above mix shifts towards higher priced commodities products, CME’s RPC increased in 4Q25 despite the volume increase both Q/Q and Y/Y.
CME Total ADV and Blended RPC
Source: company documents
Broad Thoughts / Outlook
I thought the quarter was solid for CME and clearly things are off to a strong start in 1Q26 (as you can read in my monthly exchange volume recap here). The prediction markets space remains a huge area of focus, not just for CME but also for the analysts asking management questions on the call. I’m interested to see where CME can take this opportunity and how it can further expand their user base into retail (assuming all of retail hasn’t been blown up over the past handful of trading days). Finally, I was pleasantly surprised to see some activity on the share repurchase front in the quarter given CME previously hadn’t been active on repurchases since its board approved the first buyback in December of 2024.