CME

CME is a structurally advantaged exchange and clearing house, and the numbers show it: FY2025 revenue of $6.52B (+6.4% YoY) carries a 64.9% operating margin and a 62.5% net margin, with net income of $4.07B (+15.5%) and diluted EPS of $11.16 (+15.4%). The growth is steady rather than cyclical-looking — revenue has stepped up every year from $4.69B (FY2021) to $6.52B (FY2025) and net income from $2.64B to $4.07B over the same span. The MD&A confirms the engine: aggregate average daily volume rose 6% to 28,129K contracts with broad-based strength (interest rates +4%, equity indexes +8%, energy +8%, agricultural +8%, metals +34%), and average rate per contract held firm at $0.696 (+1%), so growth came from volume and product expansion rather than pricing erosion. Clearing and transaction fees (+6% to $5,281.1M) and market-data revenue (+13% to $803.1M) both grew. Cash generation is excellent — operating cash flow of $4.28B (+15.9%) against just $83.5M of capex — funding a $3.93B dividend (+9.7%).

The balance sheet looks alarming at first glance (liabilities/equity of 5.91x, total assets +44.4% to $198B), but this is the mechanical footprint of a clearing house: current assets ($165B) and current liabilities ($160B) are dominated by performance-bond and customer collateral balances that net out, not corporate borrowings. Tellingly, current portion of debt is $0 and cash rose 52.7% to $4.42B. ROE of 14.2% understates the economics because equity is inflated; the relevant signal is the 60%+ margins and high free cash conversion. A notable swing was non-operating income jumping 81% to $1,101M, which flattered the 15% net-income growth versus the 6% revenue line — investors should not extrapolate that full pace.