Cboe Global Markets, Inc. (ETF:CBOE) Q3 2023 Earnings Call Transcript

Cboe Global Markets, Inc. (ETF:CBOE) Q3 2023 Earnings Call Transcript November 3, 2023

Cboe Global Markets, Inc. beats earnings expectations. Reported EPS is $2.06, expectations were $1.86.

Operator: Good morning, and welcome to the Cboe Global Markets Third Quarter 2023 Earnings Call. Please note that this call is being recorded. All participants are in listen-only mode at this time. After the speakers’ remarks, there will be a question and answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Ken Hill, Vice President of Investor Relations. Please go ahead, sir.

Kenneth Hill: Good morning. Thank you for joining us for our third quarter earnings conference call. On the call today, Fred Tomczyk, our Chairman and CEO, and David Howson, our Global President will discuss our performance for the quarter and provide an update on our strategic initiatives. Then Jill Griebenow, our Executive Vice President, Chief Financial Officer, and Chief Accounting Officer, will provide an overview of our financial results for the quarter, as well as discuss our 2023 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer; and our Chief Strategy Officer, John Deters. I would like to point out that this presentation will include the use of slides.

We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we’ll make some forward-looking statements, which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise after this conference call.

During the call this morning, we’ll be referring to non-GAAP measures as defined and reconciled in our earnings materials. Now, I’d like to turn the call over to Fred.

Fred Tomczyk: Thank, Ken, and thanks everyone for joining the call this morning. Having CBo’es results I am Cboe team and our focus on our clients which has resulted in another strong quarter for the company. For today’s call, I will highlight our overall results and share my priorities as Cboe’s new CEO. I will then hand it over to our Global President David Howson to walk through the progress we made against our strategic priorities. I am pleased to report record third quarter adjusted earnings for Cboe. During the quarter, we grew net revenue by 9% year-over-year to $481 million and adjusted earnings per share by 18% to $2.06. These results were driven by record activity across our derivatives business and continued growth of our Data and Access Solutions business, lower third quarter operating expenses and a lowering corporate tax rate.

Our derivatives franchise delivered another record quarter as total organic net revenue increase 15%. As the uncertain macro geopolitical environment impacted markets globally, investors and traders relied on our suite of index options, and volatility products that help manage risk and generate income in an uncertain environment. We believe our derivatives business remains incredibly resilient, supported by a growing customer base and our options product that is becoming increasingly recurring in nature as the management shift to shorter duration explorations and more frequently positioned around changing market environments. During the quarter, organic net revenue in our Data and Access Solutions business increased 9%. Net revenue in our cash and spot markets business decreased by 6% during the quarter reflecting the muted volumes we saw across all global equity markets.

These solid results were made possible by the continuing execution of our strategy to build the world’s largest derivatives and securities network and positioned Cboe for a strong finish to the year. Now as a Cboe Board member for the last four years, I’ve been very close to the business and supported the team as Cboe expanded and evolved into the leading global derivatives and securities network that it is today. The company has a solid foundation, a global recognition and a strong management team that I’m honored to lead. In my new role I am primarily focused on three key priorities that I believe will further strengthen Cboe and enhance shareholder value. First, sharpening our strategic focus; second effective allocation of our capital and training developing talent management succession.

While I wholeheartedly support Cboe’s strategic direction, I see opportunity to refine this strategy to provide a clear focus on the core elements of our business that drive revenue and earnings growth/ I believe our sharpened strategy will help the margin profile of our business and increase shareholder value over the longer term. I will also focus on ensuring our capital allocation plan is delivering the kind of returns our shareholders expect from Cboe. I’m intent on increasing the efficiency of our investments that we make across the business to generate durable revenue growth. Finally, talent development and succession planning, which is always an important component of any CEOs duties and responsibilities will be a priority for me. I’ll now turn the call over to Dave Howson to talk through how we are driving results within our strategy.

David Howson: Thanks, Fred. As Fred noted, our strategy yielded solid results during the third quarter as we continued to advance our top strategic growth priorities, Derivatives, Data and Access Solutions, and Digital. Before moving to the record results for our Derivatives and D&A businesses, let me provide an update on our Digital segment. We are working with our customers and the CSEC on final preparation for the planned launch of Margin Futures in the first quarter of 2024 subject regulatory approvals. Within large Cboe Digital will be the first US regulated crypto native exchange and trading house to offer spot and leverage derivatives on a single platform. We look forward to bringing this unique product to market. Turning to Derivatives and Data and Access Solutions.

Last month we made important leadership changes to further support our global growth strategy. Cathy Clay, who previously led our Data and Access Solutions business was appointed the Global Head of Derivatives. A new role for the organization as we reorganize the team for the next chapter of global growth. Furthermore, we tapped our strong range of talent to promote Adam Inzirillo to Global Head of Data and Access Solutions. By aligning our organizational structure to the global nature of the business we anticipate harnessing the full strength of Cboe increasing efficiency and collaboration across business lines and regions, while enabling our competitive and our world-class products and services in a globally consistent manner to our clients.

Turning to Derivatives on Slide 8. It was another record of quarter for the business as traders and investors turned to our flagship S&P 500 and fixed index products while navigating the uncertain macro environment. SPX volumes surged 21% to a record ADV of 2.9 million contracts in the third quarter. While our mini SPX contract SXP jumped 82% year-over-year. Within SPX, the fastest growing segment continued to be the zero data expiry options gaining 33% year-over-year. Investors use these for hedging, income generation, expressing views on market direction and more. The diversity of using is what we expect to continue to see strong and sustainable use is zero DT options regardless of what the market is doing or where the fix is trading. These options opened up a whole new risk premium for investors to capture namely intraday risk.

And it’s uncertain to increase is regarding the longer term macro picture, interest in capturing shorter term trends and dislocations have led to a higher share going to zero DT options, now, comprising around 48% of all SPX volumes in the third quarter. However, it’s important to note that while the zero DT options are making up a bigger part of the pie, the pie itself is growing, as well. Other expiries are also seeing high volume including our standard monthly SPX options contracts that expires in the third Friday of every month. We believe that bonus are being used less as we diversify our equity risk and investors are increasingly turning to options to help hedge their portfolios. That hedging demand helps explain why VIX option volumes are been so strong with ADVs surging 60% year-over-year even as a world VIX levels are staying.

Investors use VIX options primarily to protect against potential black swan events, which typically happen when volatility levels are known or in the work when least expected. We believe the appeal of buying VIX call options is to potentially capture that context move and the VIX triples or quadruples something that is harder to do when the VIX index was in the mid-20s last year versus the mid-teens of this year. The macro and geopolitical risks rising across the world, we’re seeing strong global demand for our products. With SPX and VIX options ADV during global trading hours increasing 95% and 10% respectively year-over-year. As markets change our derivatives products remains well positioned for customers in any market environment. Our VIX plan-based products anchor a remarkable toolkit that allows customers to choose the right products, size and expiry to meet their needs, be it risk management or income generation.

Documenting the burgeoning activity posted by our derivatives business, Cboe is continuously working to expand its suite of data products to enhance the overall trading ecosystem. In collaboration with S&P Dow Jones indices, Cboe’s products innovation Cboe Labs recently launched several new benchmark indices for market participants. We were incredibly excited to bring to market Cboe S&P 500 dispersion index known by Ticker DSPX as well as our four new credit volatility, indices. Early market reception has been extremely favorable and B2B’s indices are designed to provide investors with key information to help them better manage their strategies and portfolios potentially fueling further growth in our tradable products. On the innovation front in Europe, we are excited about the upcoming launch of single stock options on the Cboe European Derivative Exchange beginning next week.

The commitment secured from leading market participants ahead of the launch highlight the opportunity to materially advance the European options market for clients. As we plan to introduce the liquidity provider and market maker programs in the first quarter of next year subject to regulatory approval, we anticipate volumes on the platform to grow. We see the largest single stock options as a key milestone for our European derivative initiatives and our broad ambition of creating the leading market growth, the management around the globe. Moving to Slide 10 our Data and Access Solutions business posted record results during the third quarter, with net revenue increasing 8.7% on an organic basis. The durable year-over-year growth was fueled by an expanding global customer base and an evolving portfolio of market data solutions.

Through our data offerings and cloud strategy, we can package high quality data from across markets and deliveries to customers globally in a consistent, and cost-effective manner extending the addressable markets for this business. We continue to see solid customer adoption of Cboe global cloud, a real-time data streaming service that provides simple, effective access to Cboe’s robust suite of market data. Nearly 80% of customers utilize this service are located outside of the Americas reflecting our expanding global footprint. Additionally, through our cross-region sales efforts many customers are subscribing to multiple data products offered by Cboe global cloud in the simple, efficient, access to high quality data service. As we look across our global network on slide11, we continue to build on a solid foundation of our global cash equity business while we have a strong presence in seven of the top 10 global equity markets, serving a diverse customer base.

While overall performance in our cash and spot market reflected the muted volumes we saw across global equity markets during the quarter, we are on upbeat about the long-term potential. With 80% of Cboe’s market share grew 17.9% in the third quarter, up from 16.7% in the previous year as momentum continued to build post our technology migration. Later this month, we expect to complete the technology migration of Cboe Japan from a world-class technology stack and launch Cboe with Japan subject to regulatory approvals further expanding our unique block trading network to this important market. We are grateful to our customers for that partnership and look forward to providing them with the best-in-class trading experience that our global customers have come to rely on at Cboe.

In Europe, the Cboe Europe equities business reported market share of 23.2%, while Cboe BIDS Europe experienced another strong quarter a remains the largest block trading venue in Europe. Cboe Clear Europe’s market share grew to 33.8% in the first quarter, up from 33.6% in the prior year quarter. In North America, Canadian1equities market share rose to 15.2%, up from 12.2% in the third quarter of 2022, while US equities market share fell to 12.7% compared to13.3% in the prior year period, Cboe’s addressable market share which excludes both the auctions and the foreign exchange volumes remained stable. Lastly, our global FX business had another record quarter. Net revenues were up 6% year-over-year in the third quarter as the business expanded spot market share to a record 20.2%, up from 17.8% a year ago.

Our NDF offering which trades on Cboe SEF our Swap Execution Facility continued to see strong results with the volumes increasing 19% year-over-year with ADV of $1.1 billion. These record results were driven by new prime growth and increasing utilization of our platforms by existing clients. In summary, Cboe delivered another outstanding quarter and we see strong momentum as we head into the final months of the year and into 2024. With our strong foundation of derivatives, cash and spot markets, coupled with our Data and Access Solutions, we will continue to harness the power of our markets to deliver innovative products and services to our customers. As we show up our strategy and focus we see even more opportunity for Cboe to maximize its global potential and drive further value for our shareholders.

With that, I will turn the call over to Jill.

Jill Griebenow: Thanks, Dave. As Fred and Dave highlighted, Cboe posted a record third quarter with adjusted diluted earnings per share of 18% on a year-over-year basis to $2.06. I want to provide some high level takeaways from the record quarter before delving into an assessment of the segment results. Our third quarter net revenue increased 9% to finish at $481 million. The growth was again driven by the strength in our Derivatives Markets categories and the solid results from our Data and Access Solutions business. Specifically, Derivatives Markets produced 15% year-over-year organic net revenue growth in the third quarter as traders and investors saw increasing utility in our toolkit of proprietary products. Data and Access Solutions net revenues increased 9% on an organic basis during the quarter.

We are pleased with the revenue growth acceleration we have seen through 2023 and remain excited by the continued momentum into year end. Cash and Spot Markets net revenues decreased 6% during the quarter on an organic basis, as the trading environment remained muted across the globe. Adjusted operating expenses increased to a modest 4% to $180 million with a year-over-year growth tempered by a $10 million benefit from changes made during the quarter. And adjusted EBITDA of $321 million grew a solid 12% versus third quarter of 2022. Turning to the key drivers by segment, our press release and the appendix of our slide deck includes information detailing the key metrics for each of our business segments. So I’ll provide some highlights for each.

The Options segment again provided the highest growth of any segments for the quarter. Net revenue grew a robust 14% led by strong contribution from our Index business and favorable revenue per contract trends given the mix shift in VIX options. Total options ADV was at 8% as our higher priced Options ADV increased 28% over third quarter of 2022 levels. Revenue per contract moved 12% higher, given a continued positive contribution of higher captured investment products. In market data and asset capacity these were up 19% and 5% respectively as compared to third quarter of 2022. North American equities net revenue was 2% percent on a year-over-year basis in the third quarter, while access to capacity fees increased 6% and proprietary market data was at 4%.

US industry volumes remains a headwind for the segment. Net transaction fees were down 11% given softer industry volumes and market share on our US business segments. And while our US on-exchange market share have trended lower on an absolute basis, our share remains stable and adjusting for the increased on-exchange market volume and Option activity during the third quarter. The Europe and APAC segment reported a 2% year-over-year increase in net revenue, as stronger non-transaction revenues and favorable foreign exchange trends were tempered by volume headwinds. Market Data, access to capacity and others, which includes the positive impact of interest income during the quarter were up a combined 18% on a year-over-year basis. This outperformance was tempered by softer industry volumes in Europe, down 13% versus the third quarter of ’22.

In the Futures segment, third quarter net revenue was up 14% as net transaction fees, access to capacity fees and market data revenue each produced double-digit year-over-year revenue for the quarter. Activity in the complex accelerated as volumes increased 12% on a year-over-year basis. Our non-transaction volume, access to capacity fees continued to perform well, up 14% versus the third quarter of last year and Market Data revenues increased by 16%. And finally, net revenue in the FX segment notched another quarterly gain, growing by 6% making it the tenth consecutive quarter of year-over-year net revenue gains for the segment. Net transaction fees revenue was at 5% as average daily notional volume increased by 8% and market share had another record at 20.2% for the quarter.

Turning now to Cboe’s Data and Access Solutions business, net revenues were up a strong 8.7% on an organic basis. Net revenue growth continued to be driven by additional subscriptions and units accounting for two-thirds of the organic market data growth and just over half of the organic access and capacity fee growth in the third quarter. The uptick in pricing for Access and Capacity fees was driven by the first pricing increase we have passed through at over five years for physical connectivity to our multi-exchange network. Last quarter, we spoke to selectively increasing pricing to support innovation and keep pace with the utility we provide to the market. We intend to continue to lead with new user and unit growth as we provide exceptional value to our customers.

But we’ll remain mindful of competitor pricing and our need to support continued innovation for our products. We are pleased with the overall acceleration and organic net revenue trends for the segment and believe the momentum positions us well in our full year and medium term guidance range of 7% to 10%. More specifically, we expect to see continued strengths from proprietary data sales benefiting from the sustained growth across our Derivative complex. In Australia, we continue to see a solid uptick in data sales in access and the migration. We expect that momentum to continue. And finally, we anticipate a continued focus on our sales efforts to distribute our content globally adding to the enhanced position capability that Cboe Global – that.

Turning to expenses, total adjusted, operating expenses were approximately 180 million for the quarter, up 4% compared to last year. The modest increase was the product of higher technology support services and professional and outside services fees to support some of our key growth initiatives and an increased travel and promotional spend given higher ongoing corporate marketing expenses. The entire year-over-year changes were partially offset by a 6% year-over-year decline in compensational benefits T given a $10 million benefit for executive changes. As we have historically guided, we did not adjust for the impact of executive departures, and we would not expect the impact to be a recurring element in the Cboe expense page. Moving to our expense guidance, we are lowering our full year 2023 expense guidance range by $12 million to $754 million to $762 million, from $766 million to $774 million.

The three basic components of the full year expense notes are outlined on slide 18 of our earnings presentation; expenses from 2022 acquisitions, core expense growth and growth investments. Looking at the details of our three expense categories. The incremental 2023 expenses from our 2022 acquisition, remains at $30 million to $31 million, following a reduction in expenses growing our newness. The market change in our overall expense forecast comes to support that category now calling for growth of $51 million to $55 million versus our prior expectation of $59 million to $54 million. The reduction is a product of the strong expense management trends we have seen this year as highlighted in our third quarter results and modest growth expectations moving forward.

In addition, we have recalibrated our capitalized cost given our updated expectations. Overall, we expect core expenses to grow by 8% in 2023. Moving on to growth generating investments, we anticipate that the investments we are making as a business to help drive incremental revenue to our bottom-line, will be in the range of $21 million to $24 million. Our new range of roughly $3 million to $4 million lower than our prior range. But we remain committed to investing in high return areas, by D&A expansion, a more addressable marketing campaigns and targeted product and services across our ecosystem. Looking at our full year guidance more broadly on the next slide, we are making some positive refinements to our forward outlook across our businesses.

At a high level, we are reaffirming our organic total net revenue growth range of 7% to 9% for 2023, we expect to finish at the high end of the range for the year. As a reminder, this remains above our medium term guidance of 5% to 7% introduced at our Investor Day nearly three years ago, a function of the durable innovation we have seen across the entire ecosystem at Cboe. As mentioned earlier, we are reaffirming our D&A organic net revenue growth rate of 7% to 10% for 2023, in line with our medium term expectations. Given the company’s positive marks on its investment in the 7Ridge Fund, which owns Trading Technologies, we are again increasing our expected benefit from the other income line. Our new guidance range of $38 million to $44 million, is $4 million above our prior range of $34 million to $40 million.

Our full year guidance on depreciation and amortization remains at $40 million to $44 million, and we expect the effective tax rate on adjusted earnings under the current tax laws to come in at 27.5% to 29.5% down from our prior guidance of $28.5% and $30.5% in 2023. Outside of our annual guidance, net interest expense for the third quarter of 2023 was $12 million. For fourth quarter, we expect net interest expense to be in the range of $11 million to $12 million. On the capital front, our focus remains maximizing long-term shareholder value through effective capital management. In the third quarter, we returned a total of $58.5 million to shareholders in the form of a $0.55 per share quarterly dividend. In addition, last week we announced to increase our share repurchase authorization at an $250 million to preserve total capacity to $390 million available for share repurchases.

We remain well positioned to invest in our business, support our dividends and opportunistically repurchase shares given our continued strong free cash flow generation. Turning to our balance sheet, we paid down $99 on our term loan facility that matures in December of this year during the quarter. Our third quarter leverage ratio declined slightly to 1.3x from 1.4x in the prior quarter, as a result of the debt paydowns. Since the end of the third quarter, we have paid down the remaining $75 million on our term loan facility. Overall, we remain comfortable with our debt profile having locked in low medium longer term fixed rates averaging to low 20% on our option in debt. Moving forward, we will continue to put capital to work in value-enhancing ways across our ecosystem while looking to strike the right values between investing in future growth and driving margin efficiencies.

Before I turn the call over to Fred for some closing remarks, I want to congratulate Ken Hill, who was recently promoted to Treasurer and Vice President, Investor Relations. Since joining Cboe in 2021, Ken has made an incredible impact with our Investor Relations programs and I am delighted with him to expand his leadership with the Treasurer role. Now, I’d like to turn it back over to Fred for some closing comments before we open it up for Q&A.

Fred Tomczyk: Thanks, Jill. In summary, I want to thank the entire Cboe team for the warm welcome, and the incredible achievements over the last quarter. Cboe’s success this year and over the last 50 years is a testament to the enduring strengths and resiliency of the team who continue to rise to any occasion and deliver results. I’m very excited about the future of Cboe Global Markets. At this point, we’d be happy to take questions. We ask that you please limit your questions to one per person to allow time to get to everyone. Feel free to get back into queue, and if time permits, we’ll take the second question.

Operator: [Operator Instructions] Our first question comes from Patrick Moley with Piper Sandler. Your line is open.

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Q&A Session

Patrick Moley: Yes. Good morning. Thanks for taking my question. Fred, I just wanted to dig into the three key priorities you laid out in your prepared remarks. I was hoping you can maybe elaborate on the comments you made about refining the strategic vision. What areas are you focused on? Where you see the most opportunity for improving efficiencies? And what impact would you expect this to have on your overall expense growth going forward? Thanks.

Fred Tomczyk: Thanks Patrick. So, obviously I have been following the strategies from a Board level and I’m providing my input comments to the management team through the process. I generally agree with the direction as – clearly as a board member I have my input to that. However, I have been clear that I consider that the current strategy is to brought – let me just say new asset classes, new geographies. So I use to say that my predecessor anything fits in there. And so, I think it a good strategy provides greater direction and focus to an organization. So that’s the first point Second, all good strategies starts with a good organic strategy. So we’re definitely going to focus on that to make sure we have a good solid organic strategy.

And then the inorganic parts of that strategy will complement that organic strategy, but not be the main game source to be. I also believe that any good strategy has to be built by the management team with everybody providing their input along the way and it has to be reviewed and approved by the Board. To me, what’s important as the first step is to have a common frame of reference. And what I mean by that is, we all agree on what the trends are in the business, where the world’s going to between what I call secular and cyclical trends and you always line up your strategies to go with the secular trends and you adjust over the short term for cyclical trends. Also, they’re good competitive analysis and then a good SWOT analysis of what Cboe is really good at and what it can bring to different parts of the world.

From that we’ll follow your key strategic things. Why they’re important? And then your various actions will follow off over the next two to three years, but between organic and organic. And when I talk about efficiencies, obviously, I clearly recognize that even op margins of the following last three or four years that – I’m okay with even our margins falling slightly as long as it’s for a good reason. But I think we want to sort of stabilize that trend and start to turn it into the future looking forward. Does that answer your question?

Patrick Moley: Yes, it does. I’ll hop back in the queue. Thanks.

Operator: Our next question comes from Dan Fannon with Jefferies. Your line is open.

Dan Fannon: Thanks. Good morning. Wanted to follow up on that and maybe if you could talk about capital allocation going forward, the authorization last week and then the message we heard this morning sounds similar in terms of how you guys have allocated capital previously, but should given the organic and sharpening focus of the business should we think about buybacks and as more of a focus here in the near term.

Fred Tomczyk: I would lay it out this way. I would say, we’ll have discipline, number one. The first and foremost, we think the best use of our capital is to invest in organic initiatives. We’ve seen some good returns from some of those initiatives and so that will continue to be a focus. Secondly, obviously we have the dividend. We consider that as something, we just have to do almost like an interest payment to return capital to our shareholders through a form of a regular dividend. Third, I think right now, as you can see us from Jill’s comments, we’ve been paying down our floating rate debt, given the rise of interest rates and we’re happy that we’ve got that back down to essentially zero. And that we will look at share repurchases on an opportunistic basis from this point forward.

And then lastly, M&A, I think you should expect, you’ll see less M&A going and a more focused M&A strategy. I’m a much bigger fan of what I call deliberate M&A transactions. But right now, we’re going to focus on making sure our strategy is tight. We are all on the same page and making sure organic growth strategy is what we wanted to be.

Dan Fannon: Thank you.

Operator: Our next question comes from Chris Allen with Citi. Your line is open.

Chris Allen: Yeah, morning, everyone. I wanted to follow up on basically the last two questions. Just in terms of stabilizing EBITDA margins and potential room for improvement there. Any colors in terms of specific opportunities that you see and any color on a timeframe to expect some room for improvement there?

Fred Tomczyk: Well, I’m six weeks in. So I think you can ask me that question maybe next quarter, but I’ve suffice it to say that’s certainly an area of focus for me to try to stabilize those margins. And find ways to improve them going forward, which I think the management team will do where we get good operating leverage in the business. But at this point, six weeks in, I don’t have anything specific.

Operator: Our next question comes from Ben Budish with Barclays. Your line is open.

Ben Budish: Hi. Good morning and thanks for taking the question. To be original I’m going to continue to follow up on those first three questions. Maybe you talked about narrowing the strategic focus going forward. To what extent that that perhaps refer to divestitures as well? It sounds like maybe there was a little bit of disagreement with your predecessor about the breadth of the M&A strategy. So are you talking about, being more focused going forward or revisiting the existing portfolio? Are you thinking about balancing those two things? Thank you.

Fred Tomczyk: I wouldn’t say it was much of a disagreement between Ed and I, as much as I didn’t think there’s a strategy provided enough focus to the organization and focusing where we allocate our capital in terms of M&A. So that, but I don’t think there was a difference of opinion on strategies, so to speak. It’s much more about narrowing it. So, that’s – I don’t know what I’ll say there. Anybody else?

David Howson : In terms of the product lines that we’re in, we’ve got some exciting new events coming up with the launches and in our Digital business and margin Futures in the New Year with new product launches coming back. And we’ve got the Asia Pacific Re-platforming that’s going to happen later this year together onto a common technology platform. And what we saw with the Australian migration was that increasing Data and Access and capacity. That, so as we get these new acquisitions onto that common world-class technology platform, there’s some great opportunity to see that longer term growth come from some of those the more recent acquisitions.

John Deters : This is John. I think really integrations and focused today the press point for past acquisitions. And we do see as a consequence of the way, we approach integration deep integration that our return on invested capital for the tranches of deals that we pursue improves over time to be managed that those returns for three to five year outcomes. And so we’re still in process there.