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REVENUE RECOGNITION | 3 Months Ended
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Mar. 31, 2023
REVENUE RECOGNITION |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION Beginning in the first quarter of 2022, the Company updated the financial statement captions within its condensed consolidated statements of income to better reflect the Company’s diversified products, expansive geographical reach, and overall business strategy. Below is a summary of the changes to the financial statement captions. The changes do not have a financial impact on the Company’s reported revenue, revenues less cost of revenues, reported net income, or cash flows from operations. Revenues
| ● | Cash and spot markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s North American Equities, Europe and Asia Pacific, Global FX, and Digital segments.
| ● | Data and access solutions – includes access and capacity fees, proprietary market data fees, and associated other revenue across Cboe’s six segments.
| ● | Derivatives markets – includes associated transaction and clearing fees, the portion of market data fees relating to associated U.S. tape plan market data fees, associated regulatory fees, and associated other revenue from Cboe’s Options, Futures, Europe and Asia Pacific, and Digital segments.
Cost of Revenues
| ● | Royalty fees and other cost of revenues – includes royalty fees and other cost of revenues across the Company’s six segments. In prior periods, royalty fees and other cost of revenues were presented as distinct cost of revenues categories.
The Company’s main types of revenue contracts consist of the following, which are disaggregated from the condensed consolidated statements of income.
| ● | Transaction and clearing fees - Transaction fees represent fees charged by the Company for meeting the point-in-time performance obligation of executing a trade on its markets. These fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Transaction fees are recognized across all segments. Clearing fees, which include settlement fees, represent fees charged by the Company for meeting the point-in-time performance obligation for transactions cleared and settled by Cboe Clear Europe and Cboe Clear Digital, the derivatives clearing organization for Cboe Digital. Clearing fees can be variable based on trade volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. Clearing fees are recognized in the Europe and Asia Pacific and Digital segments. Transaction and clearing fees, as well as any
|  | tiered volume discounts, are calculated and billed monthly in accordance with the Company’s published fee schedules.
| ● | Access and capacity fees - Access and capacity fees represent fees assessed for the opportunity to trade, including fees for trading-related functionality across all segments, terminal and other equipment rights, maintenance services, trading floor space and telecommunications services. Facilities, systems services and other fees are generally monthly fee-based. These fees are billed monthly in accordance with the Company’s published fee schedules and recognized on a monthly basis when the performance obligations are met. All access and capacity fees associated with the trading floor are recognized over time in the Options segment, as the performance obligations are met.
| ● | Market data fees - Market data fees represent the fees received by the Company from the U.S. tape plans and fees charged to customers for proprietary market data. Fees from the U.S. tape plans are collected monthly based on published fee schedules and distributed quarterly to the Exchanges based on a known formula. A contract for proprietary market data is entered into and charged on a monthly basis in accordance with the Company’s published fee schedules as the service is provided. Proprietary market data also includes revenue from various licensing agreements. Both types of market data are satisfied over time, and revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the data to meet its performance obligation. U.S. tape plan market data is recognized in the North American Equities and Options segments. Proprietary market data fees are recognized across all segments.
| ● | Regulatory fees - There are two types of regulatory fees that the Company recognizes. The first type represents fees collected by the Company to cover the Section 31 fees charged to the Exchanges by the SEC for meeting the point-in-time performance obligation of executing a trade on its markets. The fees charged to customers are based on the fee set by the SEC per notional value of U.S. Equities exchange transactions and per round turn of Options transactions executed on the Company’s U.S. securities markets. These fees are calculated and billed monthly and are recognized in the North American Equities and Options segments. As the Exchanges are responsible for the ultimate payment to the SEC, the Exchanges are considered the principal in these transactions. Regulatory fees also include the options regulatory fee (“ORF”) which supports the Company’s regulatory oversight function in the Options segment, along with other miscellaneous regulatory fees, and neither can be used for non-regulatory purposes. The ORF and miscellaneous fees are recognized when the performance obligation is fulfilled.
| ● | Other revenue - Other revenue primarily includes interest income from clearing operations, all fees related to the trade reporting facility operated in the Europe and Asia Pacific segment, listing fees, and revenue associated with advertisements through the Company’s websites.
​ All revenue recognized in the condensed consolidated statements of income is considered to be revenue from contracts with customers, with the exception of interest income from clearing operations. The following table depicts the disaggregated revenue contract types listed above within each respective financial statement caption in the condensed consolidated statements of income (in millions): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Cash | ​ | Data and | ​ | ​ | ​ | ​
​ | ​ | and Spot | ​ | Access | ​ | Derivatives | ​ | ​
​ |  | Markets |  | Solutions |  | Markets |  | Total
Three Months Ended March 31, 2023 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Transaction and clearing fees | ​ | $ | 311.9 | ​ | $ | — | ​ | $ | 420.6 | ​ | $ | 732.5
Access and capacity fees | ​ | ​ | — | ​ | ​ | 84.2 | ​ | ​ | — | ​ | ​ | 84.2
Market data fees | ​ | ​ | 17.9 | ​ | ​ | 44.5 | ​ | ​ | 8.5 | ​ | ​ | 70.9
Regulatory fees | ​ | ​ | 62.6 | ​ | ​ | — | ​ | ​ | 21.9 | ​ | ​ | 84.5
Other revenue | ​ | ​ | 14.6 | ​ | ​ | 0.7 | ​ | ​ | 0.8 | ​ | ​ | 16.1
​ | ​ | $ | 407.0 | ​ | $ | 129.4 | ​ | $ | 451.8 | ​ | $ | 988.2
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Cash | ​ | Data and | ​ | ​ | ​ | ​
​ | ​ | and Spot | ​ | Access | ​ | Derivatives | ​ | ​
​ | ​ | Markets |  | Solutions |  | Markets |  | Total
Three Months Ended March 31, 2022 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Transaction and clearing fees | ​ | $ | 395.5 | ​ | $ | — | ​ | $ | 374.1 | ​ | $ | 769.6
Access and capacity fees | ​ | ​ | — | ​ | ​ | 77.9 | ​ | ​ | — | ​ | ​ | 77.9
Market data fees | ​ | ​ | 22.9 | ​ | ​ | 39.6 | ​ | ​ | 8.2 | ​ | ​ | 70.7
Regulatory fees | ​ | ​ | 31.9 | ​ | ​ | — | ​ | ​ | 10.7 | ​ | ​ | 42.6
Other revenue | ​ | ​ | 11.6 | ​ | ​ | 1.4 | ​ | ​ | 0.7 | ​ | ​ | 13.7
​ | ​ | $ | 461.9 | ​ | $ | 118.9 | ​ | $ | 393.7 | ​ | $ | 974.5
​ The following table depicts the disaggregation of revenue according to segment (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | North | ​ | Europe | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Corporate | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | American | ​ | and Asia | ​ | ​ | ​ | ​ | Global | ​ | ​ | ​ | Items and | ​ | ​ | ​
​ |  | Options |  | Equities |  | Pacific |  | Futures |  | FX |  | Digital |  | Eliminations |  | Total
Three Months Ended March 31, 2023
Transaction and clearing fees | ​ | $ | 395.8 | ​ | $ | 255.0 | ​ | $ | 42.1 | ​ | $ | 24.8 | ​ | $ | 15.8 | ​ | $ | (1.0) | ​ | $ | — | ​ | $ | 732.5
Access and capacity fees | ​ | ​ | 38.9 | ​ | ​ | 28.4 | ​ | ​ | 8.9 | ​ | ​ | 5.3 | ​ | ​ | 2.6 | ​ | ​ | 0.1 | ​ | ​ | — | ​ | ​ | 84.2
Market data fees | ​ | ​ | 28.0 | ​ | ​ | 31.9 | ​ | ​ | 8.7 | ​ | ​ | 2.0 | ​ | ​ | 0.3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 70.9
Regulatory fees | ​ | ​ | 21.9 | ​ | ​ | 62.6 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 84.5
Other revenue | ​ | ​ | 1.5 | ​ | ​ | 1.9 | ​ | ​ | 12.6 | ​ | ​ | — | ​ | ​ | 0.1 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 16.1
​ | ​ | $ | 486.1 | ​ | $ | 379.8 | ​ | $ | 72.3 | ​ | $ | 32.1 | ​ | $ | 18.8 | ​ | $ | (0.9) | ​ | $ | — | ​ | $ | 988.2
Timing of revenue recognition | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Services transferred at a point in time | ​ | $ | 419.2 | ​ | $ | 319.5 | ​ | $ | 54.7 | ​ | $ | 24.8 | ​ | $ | 15.9 | ​ | $ | (1.0) | ​ | $ | — | ​ | $ | 833.1
Services transferred over time | ​ | ​ | 66.9 | ​ | ​ | 60.3 | ​ | ​ | 17.6 | ​ | ​ | 7.3 | ​ | ​ | 2.9 | ​ | ​ | 0.1 | ​ | ​ | — | ​ | ​ | 155.1
​ | ​ | $ | 486.1 | ​ | $ | 379.8 | ​ | $ | 72.3 | ​ | $ | 32.1 | ​ | $ | 18.8 | ​ | $ | (0.9) | ​ | $ | — | ​ | $ | 988.2
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Three Months Ended March 31, 2022
Transaction and clearing fees | ​ | $ | 348.3 | ​ | $ | 330.8 | ​ | $ | 50.1 | ​ | $ | 25.8 | ​ | $ | 14.6 | ​ | $ | — | ​ | $ | — | ​ | $ | 769.6
Access and capacity fees | ​ | ​ | 35.8 | ​ | ​ | 26.0 | ​ | ​ | 9.3 | ​ | ​ | 4.5 | ​ | ​ | 2.3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 77.9
Market data fees | ​ | ​ | 25.9 | ​ | ​ | 34.2 | ​ | ​ | 8.3 | ​ | ​ | 2.0 | ​ | ​ | 0.3 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 70.7
Regulatory fees | ​ | ​ | 10.7 | ​ | ​ | 31.9 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 42.6
Other revenue | ​ | ​ | 1.9 | ​ | ​ | 0.8 | ​ | ​ | 10.9 | ​ | ​ | — | ​ | ​ | 0.1 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 13.7
​ | ​ | $ | 422.6 | ​ | $ | 423.7 | ​ | $ | 78.6 | ​ | $ | 32.3 | ​ | $ | 17.3 | ​ | $ | — | ​ | $ | — | ​ | $ | 974.5
Timing of revenue recognition | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Services transferred at a point in time | ​ | $ | 360.9 | ​ | $ | 363.5 | ​ | $ | 61.0 | ​ | $ | 25.8 | ​ | $ | 14.7 | ​ | $ | — | ​ | $ | — | ​ | $ | 825.9
Services transferred over time | ​ | ​ | 61.7 | ​ | ​ | 60.2 | ​ | ​ | 17.6 | ​ | ​ | 6.5 | ​ | ​ | 2.6 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 148.6
​ | ​ | $ | 422.6 | ​ | $ | 423.7 | ​ | $ | 78.6 | ​ | $ | 32.3 | ​ | $ | 17.3 | ​ | $ | — | ​ | $ | — | ​ | $ | 974.5
​ ​ Contract liabilities as of March 31, 2023 primarily represent prepayments of transaction fees and certain access and capacity and market data fees to the Exchanges. The revenue recognized from contract liabilities and the remaining balance is shown below (in millions): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Balance at December 31, 2022 |  | Cash Additions |  | Revenue Recognized |  | Balance at March 31, 2023
Liquidity provider sliding scale (1) | ​ | $ | — | ​ | $ | 7.2 | ​ | $ | (1.8) | ​ | $ | 5.4
Other, net | ​ | ​ | 11.7 | ​ | ​ | 11.1 | ​ | ​ | (6.5) | ​ | ​ | 16.3
Total deferred revenue | ​ | $ | 11.7 | ​ | $ | 18.3 | ​ | $ | (8.3) | ​ | $ | 21.7
(1) | Liquidity providers are eligible to participate in the sliding scale program, which involves prepayment of transaction fees, and to receive reduced fees based on the achievement of certain volume thresholds within a calendar month. These transaction fees are amortized and recorded ratably as the transactions occur over the period.

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