Conference Transcript - MIAX 2026-06-04

Operator

Next up, it is my pleasure to introduce the executive team here from Miami International Holdings, ticker MIAX. We're joined by Chairman and CEO Thomas Gallagher, as well as Chief Strategy Officer and CEO of MyAX Futures, Shelley Brown. MyAX is an exchange company. They run a portfolio of global exchange businesses. They're probably best known for their U.S. options exchange franchise. guys. In under 14 years, MyEx has gone from launching its first market to capturing nearly 20% of the entire U.S. options industry. One of the great success stories, in my opinion, of the modern exchange era. The company went public last August. Stock has more than doubled since. Market cap sits at around $4 billion. So, Thomas and Shelley, thank you so much for joining us. Thank you, Patrick. Thank you. So, like I said, you've quietly become one of the more ambitious companies in the exchange space. You have four U.S. options exchanges, equities, index futures, a robust international footprint. How is the business performing today, nine months into life as a public company? And how do you frame my ex's identity who are maybe

Thomas P. Gallagher, CEO

still getting familiar with the story? Well, great, Patrick. Thank you very much for having me here today. And I'm joined with Shelly. I brought the heat from Chicago with me because I think there'll be a few questions on a few topics, but I'm really grateful to be here. And I'm really glad that the bankers at Sandler decided to start our roadshow last June 2025 to go public than this week, given everything that's been going around. But I feel really good about the state of the union of our company. We went public last August, and we've had three very solid quarters. And coming out of the block, I think that's really important. just the last quarter that we've just completed, whether you look at net revenues, whether you look at adjusted EBITDA growth, or you look at margins growth, we're looking at double-digit increases in these three metrics. I'll start with revenues. We had a 40% increase in net revenues, Q1.26 over Q1.25. Adjusted EBITDA up 66% over last year with about $66 million in EBITDA. And then thirdly, I'm really excited about the fact that our overall margins hit 51% in the overall business, not just the mature options business. That's an 800 basis point growth since last quarter of 2025. And then when it comes to average daily volume growth, we were 60% higher ADV than the industry this year at a 27% increase over last year's ADV. and the industry this year grew by about 17%. So we feel very good about it. I'm not saying any of this to boast, but when you take the time to make the investments we've made, it's great to see the reaction now three quarters into being a public company.

Operator

And then, you know, just looking at the options market in general, you mentioned the double-digit growth. We had an option panel yesterday. You know, sentiment was the same. People are pretty optimistic that we can continue to see double-digit growth in options. Earlier this week, you gave a presentation. I think you said you thought that all these big IPOs coming up this year could drive significant growth on top of what we already saw last year. Could you maybe just touch on that quickly and how you're feeling about overall ADV trends here, how sustainable this is, and some of the factors that I mentioned?

Thomas P. Gallagher, CEO

Sure. I think there's been some great secular tailwinds propelling our industry in the last 24 to 36 months. My belief is not only are these tailwinds intact, they're expanding and starting with, we're about to see three historic IPOs, starting with SpaceX, then followed by Anthropic and then OpenAI, depending on how SpaceX goes. I think when you look at some of the symbols in our industry, NVIDIA, Tesla, Shelley's my expert there. Shelley, what's that market share in those two symbols? At any given day, 5% to 6% of the market in each of those symbols. And when then you think about a SpaceX, an Anthropic, and OpenAI, we both think that the market share in each of those symbols could be that amount or even higher, and then you couple them both together. I think it's a great tailwind for additional volumes taking us from that 65 to

Operator

67, Patrick, even higher. Sure. All right. So switching gears, I want to talk about Bloomberg index futures. It's been a very strategic milestone, important strategic milestone for MyX. You launched Bloomberg equity index options or futures on Onyx May 17th, started with the Bloomberg 100. Walk us through the strategic rationale behind these index products and why you chose to launch for the 100 rather than the 500 and then anything you have on kind of the rollout sequencing up here and what investors should expect would be appreciated as well.

Thomas P. Gallagher, CEO

Yeah, I'll start and I'd like to turn it over to you, Shelly. But the Bloomberg relationship took about three or four years to develop. And having a worldwide name like Bloomberg and having someone like Bloomberg that's really interested in growing their 4,000 to 5,000 index business, you couldn't pick a better partner. So we signed that agreement. It's in place. And And we're very happy about how it's gone the last two weeks. But, Shelly, maybe the game plan, why we started with B100 and how we're going to be a disruptor.

Shelly Brown, CEO

So, yeah, similar to how we did in options and disruptor, both in terms of technology and fees and functionality, we believe we can do the same thing in the future space. So beginning with our Onyx technology, our members tell us, the members who are in the wheat product and were there when it was on Globex and continue with us on the new Onyx platform, tell us our system's five to six times faster than the incumbent system. We also believe we can be a disruptor in the overall space by bringing different fee structures to the marketplace. If you look at the options market from 2020 to 2026, volume is up 3x. And most of that has been driven by retail, who have flocked to the markets because of zero execution costs. When the retail firms drop costs to zero for executing equities and options, we saw significant retail growth. Our position with the Bloomberg indexes, and we've come to this in partnership with Bloomberg, is to start with retail trades free. It's a very different market model than what the incumbent does. We believe that we can grow the industry together with Bloomberg, bringing new participants in the marketplace, expanding the retail role in futures, and bringing better products to market. The Bloomberg indices are constructed different than the incumbent indices. Bloomberg is 100% algorithmic, 100% objective. New IPOs will be added at a much faster pace. There's no profit look back as it is in some of the current indices. There's no committee making decisions. There's no subjectivity at all. We believe that we will grow the overall index pie. I think there may be an interesting arbitrage setting up with these new IPOs as they become in the Bloomberg indices and not in the incumbents. You can actually get long the IPOs, being long Bloomberg and short S&P. Those opportunities exist. And then, again, bring in the additional technology. I've been very happy with the launch so far. The 100 launched three weeks ago. Our markets are tighter than the existing product, the MNQ. We just launched the 500 this week. Same thing, very tight markets.

Thomas P. Gallagher, CEO

And when you launch something new, whether it's a new restaurant or it's a new exchange or a new suite of products, you don't bring your best menu to the table on day one. You want to do a little bit of getting the kinks out. And so we got the markets now lit up with great market makers. It's going to take a couple of months to get the retail engagement. But we're really, really pleased, exceptionally pleased over the first three weeks.

Operator

And one of the differentiators about these products is that they clear at the OCC. So there's cross-margin benefits for members who are already active in equity options. How important is that capital efficiency story to the go-to-market, and how does it differentiate you against SPX and VIX futures, which are approximately 95% of the index market today?

Thomas P. Gallagher, CEO

Yeah, yeah. I'll say it was really important. I learned a lot of lessons. We did the Spikes futures, which was on the vol of the SPY ETF. and there were some headwinds getting people to clear on our MyX Futures Exchange in Minneapolis. Check the box. We've cleared that hurdle. In early May, we got OCC membership for MyX Futures, and we're going to give that margin efficiency to the folks that want to trade the product. Shelly, 30-second comment on that?

Shelly Brown, CEO

Yeah, it's a huge tailwind as opposed to a headwind. The fact that people can cross margin, It gives market makers the ability to hold bigger positions, tying up less capital. It's a big advantage over the S&P complex. VIX is similar because VIX does clear at OCC, and we took that model, and that's why we applied it to our financial futures.

Operator

All right, so I do want to ask about perpetual futures. It's been something that has been a hot topic this week. You are both derivatives experts. You've spent a career in derivatives. You've seen some of the other options exchanges get hit pretty hard on this as well. What do you think about perpetual futures as an asset class? Is it something that makes sense that you could potentially launch a Bloomberg equity perp if that becomes legal in the U.S.? How do you think about that as an opportunity or as a threat?

Thomas P. Gallagher, CEO

Well, first of all, if you look at what the CFTC said last week, it was limited to perpetuals on Bitcoin. and then we're going to take a case-by-case basis. When I look at the role of an options exchange CEO, we're regulators. And I want to protect our industry with the same level of fiduciary obligation that I have to my shareholders. The options industry has grown tremendously over the last 20 years because we do things that look out not only for the institutional firm, but for the retail firm. So from my position, we're just getting into the futures world. We have a product that's been out for 144 years, an agricultural future. And a perpetual futures contract, in my opinion, should not have any relevance whatsoever. And in fact, it is really not legally permitted under the guidelines. When you think about things that have a physical delivery element and an expiration and are truly designed for people, like in our case, in the grain community, to hedge the risks associated with either climate issues, so real legitimate issues. And at some point, that product expires. It's consumed. It's put in your gas tank. It heats your home. So Perpetual, I think, was created to deal with some of the settlement issues by crypto traders. Shelley, I mean, what do you think?

Shelly Brown, CEO

Yeah, I think there's a lot of misconceptions about this product. I think it's very much overblown. One of the things they brag about is they've traded hundreds of billions of dollars of notional in these perpetuals in crypto. Big deal. We trade hundreds of billions of dollars notional in our equity markets every day. Same thing with our option markets every day. Trillions. It's billions, but trillions. Excuse me. Anyways, you made me lose my train of thought. No, your point is that they talk about this big notional. It's not that big a deal. We measure things in contracts. They measure notional because it makes it sound like it's a bigger market than it really is. But the reality is some people are trying to compare this to it's going to take volume away from zero-day expiration options. I look around this room. I don't think many people in this room were around in 87. I was in the S&P pit in 87. The market opened down 20% that morning. How are you going to unwind somebody's position? How are you going to protect them by getting them out instantaneously if the market's moving? Are you going to unwind them against the existing people on the other side, taking that profitability away from the other side? It's just not going to work. In options, you buy an option, all you are risking is what you paid for that option. I don't care what happens in the marketplace. If you're in a perpetual future and the market gaps, if you're in a single stock, a stock could open at zero, could double or triple in a given day. Where are you going to get out? Who's going to be the buyer of last resort? And if you can offset it against existing opposite side positions, what's the advantage of being in that market? You don't get any leverage of the market moving. It's completely misunderstood. I don't see how this impacts our markets at all.

Operator

OK, so let's just play devil's advocate for a second or maybe not even devil's advocate. But let's say that perps, the CFTC does do it on a case by case basis. And for whatever reason, index futures, equity index futures, perps are allowed in the US. What does that look like? Was that something that you would take the Bloomberg index and you'd say, we're going to watch a Bloomberg index perp? And, you know, you don't have to answer that specifically, but maybe just talk about what would the infrastructure overhaul look like? Do you have the capabilities to roll out perps? How quickly could that happen? What goes into that?

Thomas P. Gallagher, CEO

I mean, look, first and foremost, we are an exchange operator. We operate futures exchanges. We operate equities and options exchanges. If someone comes to me with a use case, one of my reputable customers and member firms, and they come to me with a use case for a perpetual on a certain type of product, I'm going to listen. That's how we got to be number 14 in the world. most of the opportunities come to us from some of our member firms that want to try new and different things. So if that event happens and someone comes to us, we're known for having the best technology in the United States in terms of options technology. We can handle the technical aspects of it. I'm going to stay within the lines. That's what's got us here. I'm going to stay within the lines on the regulatory side. I'm going to let these battles be fought before I dive in because I also have tremendous opportunities in our core business. I don't need to take the regulatory risks or other risks and reputational risks of diving in. But Shelly, in your view?

Shelly Brown, CEO

Yeah, I don't see where the liquidity is going to come from. As an ex-market maker in the indices, market makers provide liquidity because they know they can hedge it. So if a market maker is long an index future, they're short an ETF, they're short the basket of stocks, they're short something against it. If you do that and you know there's going to be convergence in price at expiration, at settlement, you're going to get the cash value of the index at settlement. If you have a perp and there's an automatic liquidation and you end up unhedged and you keep your other side, what do you do with that position? You're at unlimited risk. You can't create massive liquidity without knowing that you're hedged. So there's fundamental flaws in this product that I think is being overlooked that's going to limit the liquidity. I still don't view them in any way as a threat to the existing markets.

Operator

Sure. All right. So let's go back to the core business. Options is the engine. You put up 17.3% market share in the first quarter. That was up from 16% a year ago. You've said that you manage for the right mix of volume and economics rather than chasing a headline share number. How do you make that tradeoff in practice? And as we look ahead 12 to 18 months, where do you see the marginal share gains coming from?

Thomas P. Gallagher, CEO

Yeah. So I'm very bullish on our ability to continue to grow our options business. Why do I say that? We just launched the second trading floor in the history of our country down in Miami. We've got about half a point of market share. I have two or three levers that I'm going to pull to continue to grow that share. Plus, that share is capture rich. Oftentimes, it's double the capture rate of a multi-listed option. How are we going to do that? Number one, we want to roll out new functionality. No matter how many times I ask the brokers and the participants what functionality they want, you have to be in the place for three days and they say they forgot this or that. The number of functionality areas, offerings, they'll all be completed by the end of this year. Number two, we're going to use pricing incentives. If someone comes to me and says, listen, we want to put up two or three hundred thousand contracts a day, your fee schedule looks high for someone like me. we're going to work on a case-by-case basis. So we're going to create some incentive fees to bring those larger firms to trade on our floor. And the last thing is, whether it's on the trading floor or on our electronics, we're going to continue to diversify our complex offerings, which have a very capture-rich transaction fee. We're now number two in the country in terms of complex order functionality, those enjoy really good capture rates for us. So it's a combination

Operator

of more complex and more floor volume. Sure. So some of the things that we've talked about earlier, you know, you have these big IPOs coming up. We've had Monday, Wednesday expiry in a number of single name stocks. We have the pattern day trading rule going away today, which I think could create more options volume. With all these kind of tailwinds in the options business and the drivers of that, do you feel like you have an outsized opportunity for share gains from these things particularly, whether it's like more retail or some of these hot IPOs?

Thomas P. Gallagher, CEO

I do, I do. And I think what's going to happen with a SpaceX, an open AI, an Anthropic, with a guy like Elon Musk at the top of that capsule at SpaceX, there's going to be a lot of volatility, there's going to be a lot of retail engagement. That plays to our strong suit. We spent 16 years investing in our technology, our speed, throughput, and determinism. And if a major market maker wants to support some retail shop, he's going to look to us or she to put up those trades because they know they can get out of the market in under 18 millionths of a second when you know what is hitting the fan. But not only is it 18 million, it's predictably that 99.99 percentile that day when it's crazy, our volatility, our latency may only go from 17 or 18 to 40, whereas our competition could go to 400. So the infrastructure that we built, when these IPOs start coming out and that volatility hits, we're the perfect partner to allow those market participants to provide that liquidity to those firms in the retail space that are looking at those market makers for best X. So that's a huge tailwind that we talked about earlier. Each of those things could be bigger than a NVIDIA, for example. So we feel really good about that in terms of giving us continued growth in the U.S. options space. It's that infrastructure and it's that ability to work with the people that are going out there and getting that flow.

Operator

Sure. I want to touch on Rothera. I know you're not an active participant there, but you sold 90% of the MyXDX and its portfolio of licenses to Rothera for a 10% ownership stake. That's the prediction market JV between Robinhood and Susquehanna. Robinhood is kind of the retail distribution and engine there. Susquehanna is the institutional liquidity provider. Can you walk us through the strategic rationale on that JV and, you know, how you're thinking about it in the grand scheme of the of the business overall, how investors should kind of treat it when they think about modeling the company and sure opportunities?

Thomas P. Gallagher, CEO

Sure. Well, number one, we have 450 employees. And I went to the street with our IPO and say, this is the core business areas that we're going to focus on in 26 and 27. One of them was morphing our company from a single asset class in multi-listed options to being a multifaceted global exchange operator that also is now getting into futures. There's no way I could access that incredibly growing market of events and predictions by doing the other things on my plate. We got about a dozen firms came to see us about possibly partnering. So we were approached by Robinhood and approached by Susquehanna. And when I looked around at the retail distribution that that firm has, it made sense to create a JV, us to keep a stake. And now I have accelerated access literally in Q2, 2026 to this event space, well, I can still focus on my core business. So A, I'm a passive participant in it, 100%. I'm a cheerleader, 100%. And I think we made a right choice in terms of giving us more diversified revenue potential without impacting our core business. And we still have our futures exchange, my ex-futures. So if someone comes to me in this room or outside this room and says, we have a great idea for an events-based product suite. We can put that up on MyXFutures in Minneapolis. And that license also has marketing capabilities. So it was a strategic decision to focus on the core, get access to the events-based business, and keep a stake and really think about other ways to continue to diversify our business.

Operator

So that's the long and the short of it. Great. I want to talk about capital allocation. Balance sheet is in a strong place. Cash flow profiles improving meaningfully. You've seen margin expansion as well. How are you thinking about capital allocation today between continued investment in Bloomberg, international, M&A potentially? How are you

Thomas P. Gallagher, CEO

thinking about overall capital allocation? I'm thinking about it carefully. I didn't get the job when there was $600 million in the checkbook in the top right drawer. It took a hell of a long time to get to the position we're at today where we have this fortress balance sheet and I'm going to be really darn careful of how I allocate it. Number one, the businesses that we already own are really good and thriving businesses. I want to feed and nurture those, particularly futures. As we now walk in with this B100, B500 complex, we really want to be part of the marketing. We the street about this competitive, disruptive suite of products. So we're going to spend money there. We're going to invest in technology. The reason we got here is that I like to say it maybe too much. We built the church for Easter Sunday. Easter Sunday came on March 16th, 2020, when President Trump talked about the pandemic. From that day to today, people compared us to the incumbents. And they were shocked, shocked at the experience on a MyEx exchange where they could refresh their prices quicker, had more throughput and more deterministic systems. So I'm going to continue to invest. I got a lot of the employees to come to us from other exchanges because they said, well, we went to the boss to see if we could process four million messages a second. They said, why the hell four? We only doing a million. Get the hell out of here. We don't want want to invest. I've never had a fistfight with my head of technology, not once, because we've invested for the long term, and I'm going to keep doing that. Now, having said that, if one of my members comes to me with a great opportunity to do an acquisition, maybe it's another exchange, another exchange decided they're not going to be in that market, we're going to look at it. Because anytime a member that's a shareholder and a participant comes to me with an idea, I'm going to really look at it hard. But we're going to be discerning. Now that we're in a spot where we're close to, you know, the 129 million in revenue in the quarter, we have to look at the right things to move the needle. We absolutely are going to be strategic, but given how hard it was to get this money, I'm going to be damn careful how I spend it. I'm not going to go out for uncorrelated revenues in data just to grow revenues. I'm going to look for strategic opportunities.

Operator

All right. Time's almost up here, so I want to ask a longer-term question. Three to five years from now, when investors think about MIACs, What's the one storyline that you want them to be tracking and what are some of the milestones that people can keep an eye on to make sure you're on track?

Thomas P. Gallagher, CEO

Three to five years from now, I want people to look at us and say they invested in a company that brought disruption to markets that have been for decades dominated by one player or two players. I want people to say we invested in a company, MYAX, that brought disruptive competition in an area that we haven't seen, and people will get great prices, great customer service, and you'll never be worried about the ability to have liquidity and get in and out of the markets because of a lack of technology capabilities. When we unleash our electronic options technology in our future suite in 2027, I think you'll really be pleased at what you see. So I want to be that disruptor that takes competition into an area that's dominated by one or two people. And I'd feel really good about that. All right.

Operator

Well, Thomas and Shelly, thanks for joining us. I know it's been a long time coming. We haven't been able to do this in a couple of years because of the IPO process. So I'm glad.

Thomas P. Gallagher, CEO

I've been a spectator in your events for about 15 years. It's nice to make the big boy and the big girl podium here. So thank you very much, everybody.

Operator

Definitely a big time player.

Thomas P. Gallagher, CEO

Thanks a lot.