Cboe Global Markets, Inc. (CBOE) Earnings Call Transcript & Summary

Great. Good morning, everyone. We're going to get started with our next session. I'd like to welcome Brian Schell, CFO and Treasurer of Cboe; and Cathy Clay, Cboe's Head of Data and Access Solutions. A few weeks ago, at its Investor Day, Cboe outlined a vision of becoming one of the largest global securities and derivatives trade-in networks, including expansion into new geographies and asset classes. In addition, the firm set an updated target to accelerate data and access fee growth to the range of 7% to 10% over the medium term as well. We look forward to digging into this and many of the other topics with Brian and Cathy. Thank you both for making the trip. First of all, it's great to see you both in person.

Great. Thank you for having us.

Thanks, Alex.

Perfect. So why don't we start with 2022 priorities? The one thing that stood out to me from the Investor Day is that there's quite a lot on your plate. You've done a number of deals over the last 12 to 18 months. Some of them are still in the process of being integrated. There's new products that you're sort of launching. So just to help us kind of level set and set the stage for the discussion, maybe how are you prioritizing integration of these transactions as well as extensions [indiscernible]?

I'll start with that first [ signing ] thing, highlighting our growth priorities, right? And we talked about it, wanting people to know that derivatives continues to be our big focus and where we think a lot of growth is coming from there. We highlighted the continued growth that we're going to continue to drive on the data and our access solutions. And then third, one of the acquisitions that you did talk about, we think that over the medium to long term that the crypto environment is going to continue to provide a nice driver of growth as well longer term. But as you think about how we've laid out the various priorities, I think fundamentally comes down to planning. I know that's kind of a -- it seems like a pretty simplified answer. But given the new geographies and the asset classes and the organic products that we have, that's essentially what we do. You know that we have -- over time, one of our core competencies is having an incredibly efficient technology footprint and leveraging our global network. So as we think to prioritize those items is we're going to continue to prioritize our organic initiatives. We've talked about those, and I know we may want to get into some of those later as far as how we're expanding access, whether it be trading hours, whether it be contract size, whether it be creating new markets, for example, in European derivatives, whether it be establishing new jurisdictions. But essentially, what we're doing within the integration themselves, there are KPIs that will generate as part of our planning process for all of those acquisitions whether it be from, I'll call it, the infrastructure part, the traditional technology and operations to the people side of things, to the overall financial metrics and what we expect to happen over time. And we'll establish track, monitor and then we will stage based on the resources that we have when things will occur. So for example, just a very simple one would be, we acquired BIDS and their block trading capability network and the scale and the technology and their overall, call it, distribution. But we've implemented that, for example, in Canada or we're planning to implement that early in the year. And we'll have plans to stage that, for example, Australia is next, and then we'll look at Japan. But in the interim, we've continued to see growth in Europe. So 3 out of the last 4 months, Europe -- and our Cboe Europe is the largest block trading venue in all of Europe. And so again, not a coincidence. So again, we look at what are those return profiles of those various initiatives that will create, call it, the largest earnings relative to the investment as far as the acquisitions go. Again, so we staged the technology integration. When do we convert the technology to a Cboe tech platform and how do we enhance that? How do we leverage our data center? So laying out those synergies, both the revenue as well as the expense all goes into that planning prioritization process. But again, that's all upon the -- continuing to drive our organic initiatives, particularly on the derivatives franchise and then the organic initiatives within those new asset classes with those local management teams.

Great. Well, that's perfect. We'll dig into all of these over the course of the next half hour or so. But first, I wanted to start with data. And Cathy, this one is probably for you. Just thinking about the target that you set, 7% to 10% growth over the near to medium term. At the earlier comments at the Investor Day, it sounded like pricing is not a huge part of the growth algorithm that you provided. So a lot of it is going to essentially be coming from cross-selling and expanding the customer network. With most of the data and access services today concentrated in U.S. equities and options, can you talk to us a little bit about how you frame who the incremental buyer of these services will be? It sounds like a lot of it is non-U.S., but I was hoping we could expand on the underlying customer base and what they would be using.

Yes. Thanks, Alex. So it is true that when you think about leveraging our current infrastructure from a data -- drive data and access solutions perspective, most of our clients are domestic. And so as we expand hand-in-hand with our global operations, we really have this opportunity to take our play but to new jurisdictions across the globe and to introduce new data sets. And so right now, we see our #1 opportunity heading into 2022 really cross-selling into the current client base we have. Because one of the things we've noticed is this phenomenon where we have many, many clients who consume one product from us, and we have this opportunity to really simplify their access. As Brian talked about access, it's really important to us to really reduce the friction points where our clients are trying to consume more of the offerings that we have. And so we've talked about things like the global cloud, where we anticipate delivering all of our equity data across the globe and derivatives data into the cloud followed by a road map of delivering our analytics suite into the cloud. And so we really look in 2022 as a cross-selling opportunity into our current client base, that opening of the customer wallet, expanding it with the various product portfolio that we have. And then we also know that as we expand globally, we will make our offerings available to new clients that we just haven't touched before. And so the global cloud is another example of where we actually can reach new clients, especially in the APAC region but even in Europe that we're just not touching today. And so we really look at the 7% to 10% growth in 2022 as a cross-selling opportunity for our current client base as well as reaching those new clients for the current product portfolio. Now remember, as we expand into Europe, and we've just launched European derivatives, that gives us another great opportunity to start ingesting that data, those products into our portfolio suite. So again, it's really going to be expanding the product portfolio that we have as we expand into these new jurisdictions. So when you think about Europe, you think about our Chi-X acquisition. And so now we're heading into Australia and into Japan and the ability for us to bring that incumbent data from our exchanges into our product portfolio and reach new clients who are interested in transacting in those markets where we just currently haven't had any penetration before. So that's really on our 2022 road map, aggressive expansion into Europe next year to really support our derivatives business but then also provide that data and analytics offering that our U.S. clients are really used to consuming here in the United States and adding the European market to those products.

I got you. So maybe as a quick follow-up for that as I was jotting down some notes here. So in a typical fashion, we see kind of the interplay between trading and data in a way where liquidity needs to build first. You kind of establish your critical mass and then data and some of the nontrading services kind of come behind that -- shortly behind that. Is that sort of the path you see for your footprint in some of the newer asset classes like crypto, and we'll obviously talk about that, but as well as non-U.S. markets where you've acquired [ UAN ] for some of them but you really need to build a larger liquidity pool and gain share in those markets before sort of data and access fees from those regions will become more material contributors?

So I'll separate the data and access in that question a little bit. And I'll say this is a bit of a chicken and an egg question, right? Because when you think about liquidity does beget more liquidity. But it's the same story with data. Data begets more data. And so if you ask, do you build liquidity and then the data becomes more relevant? Or do you really need to be out there with the data offering to actually facilitate the liquidity? I mean I really think that we do need to spend time thinking about how to give the data and the products and the analytics that people need to actually monitor risk and have a successful experience in the markets as well as in tandem building liquidity. So I don't know that you can separate and say, "Oh, we'll just wait for the liquidity to build before we can then build a nice data offering, an analytics offering around that liquidity. I think they really go hand-in-hand. And actually, I might argue if I had to choose that the data actually is needed before liquidity actually builds. So we're looking at it, and it's step by step here, yes.

Got it. Makes sense. We've talked about pricing in the beginning, a little bit the fact that it gets certainly not part of the growth algorithm. But down the road, do you see pricing become part of the lever that you could use to kind of even go beyond the 7% to 10%? Or it's kind of once you feel a little bit more penetrated in the addressable market, then pricing comes on top of that?

Always trying to get that guidance, aren't you, Alex, a little bit? Yes, let's go back to the access part of the prior question. So clearly, as we acquire new exchanges across the globe, we want people to access the exchanges and become participants. But it's a supply and demand sort of equation. The more people want access to our new exchanges, the more the access becomes really important and the more value the access provides. And so then you might be able to think about some pricing levers as the demand for engagement and access to those markets grow. But we want people to participate first. So we want them to come to the marketplace and start enjoying what we're offering them as a global operator across the globe. But you're right, Alex, we are not based in our 7% to 10% growth rate next year on major price increases. It's really not part of our growth strategy. Our growth strategy is to get our product portfolio to other parts of the world where it's currently not penetrated and to add clients to enjoy our products that currently don't work with us on those yet.

And that's, again, a part of our overall longer-term approach of how are you really trying to optimize your long-term revenue growth rate versus that shorter term. And with that potentially could some pricing changes that may make sense, it could be competitive reactions, could be what other markets are doing. But again, that minimization of frictional costs as we continue to build is very important to us.

Sure. Great. All right. Let's talk about trading for a little bit. So Cboe's 5% to 7% total organic revenue growth guide implies something in the mid-single digit, maybe 4% to 5%, 4% to 6% growth target on the trading side of the business. You went through a lot of detail at the Investor Day again on how Cboe plans to leverage its technology and product expertise to scale into new markets, particularly outside the U.S. I was hoping we could kind of zone in on some of the specifics and which regions and which product will be the most needle moving from a revenue growth perspective on the trading side of the business for the next few years because some of them are quite niche and some of them are little developed. So just trying to see which one we'll be able to actually put a kind of circle around.

Great point. So let's start with derivatives. And one that was just, call it, recently -- launch is probably too strong of a word, but we say increased access. So our 24/5 initiative. We talked earlier about how do we increase access, and I'll keep coming back to that point, continuing to increase access to our existing, I say, core capabilities, core products and what we do. So what we're seeing is we're seeing -- and again, I know it's been a very positive macro environment for the index products and where we are. But what we have seen is increased institutional engagement in our 24/5 initiative through that expanded trading hours, where we're seeing expanded retail, I'd say, professional retail as well as kind of institutional engagement during those hours. And so we're seeing incremental involvement -- engagement with those hours. And then what we're seeing is we're seeing not only new participants, then we're seeing incremental activity during our regular trading hours, right? Because we know that events happen outside of U.S. trading hours. It'd be really convenient if they only happen in U.S. trading hours. The world doesn't work that way. And so what we're seeing is the ability then for those markets to be open to be able to engage and make their -- any adjustments to the risk that they want to during those expanded hours. And then what we're seeing is increasing engagement then in our regular trading hours as well. So we're seeing kind of that synergistic impact kind of across the board. So that's number one that's going to continue to help drive right out of the gate. It's already happening even this year. I would say number two is the -- our Nanos product launch. We've talked about how increasing access for a broader investor base who want access to and the ability to use the tools of, say, an SPX contract that is just not practical for them given the relative size and, again, through our incremental increased education efforts, through increasing work through retail firms to continue to provide this product with a lower price point -- a lower contract size, I should say, to make it very digestible for those retail accounts. We want to make sure we're going to be able to provide that service. So we do see some natural growth coming of that -- of a product that we think is very scalable. And this way, it's almost going the opposite direction of, again, increasing the accessibility of, we think, is a tremendous product for a new set of investors who may not have been able to tap into that prior. So the Nanos launch, we're excited about. On the continued [indiscernible] is increasing jurisdictions. We've talked a little bit about, you've touched on it quite a bit on the international side. Even independent of some of the new geographies that we're increasing our presence in with respect to Canada, Australia, Japan is increasing jurisdictions across Europe for those, the SPX and [ VIX ] products. We're starting to see some, I'll call it, positive results from those. So continuing to get that footprint there has been -- like I said, we see some real growth. We think that can be further enhanced with the acquisitions that we've talked about, adding to that network as one of the synergies that Cathy talked about, again, not just the trading but also the nontransaction revenue side. European derivatives launch, recently launched this year enabled with the acquisition of EuroCCP. Again, we put out a number out there that we think can grow over the shorter term, but that is also another important element, again, driving that organic growth with European derivatives, again, to help support, call it, that mid-range that you talked about as far as continued trading environment. So that's a big part of, I'll call it, the derivatives element of it. Then you have the rest of the [Audio Gap] that we're talking about in the new markets that are more focused on the cash and spot side of things in the new geographies. We're very excited about the prospects that those new markets bring for us. We think there's a lot of nice regulatory tailwinds in the various markets. You're seeing [indiscernible] LIS and what we've been able to do in Europe as far as being able to leverage bids in that offering and, like I said, being the #1 block trading venue 3 of the last 4 months. We're launching that into Canada early next year. We have plans then to launch it into Australia and then Japan. So you're seeing a lot of these organic efforts that are basically -- that are coming to fruition from what may have been initially inorganic. Again, the buy versus build, we're seeing that build now once we bought and brought those capabilities in-house. So like I said, those are some of the real growth drivers we're seeing behind and letting that local management teams in those new jurisdictions really leverage what it means to be part of that Cboe global network.

Great. All right. We went through a lot there. So I'm definitely going to need to unpack a couple of these things. So first, starting with retail. Look, obviously, a huge theme in the marketplace. We've seen just explosive volumes for retail and really [ exhausted ] volumes that comes at the back of retail, whether it's the cash markets in the U.S. or multi-listed options markets. You mentioned a couple of initiatives in retail. But if you were to try to kind of summarize a couple of questions there, one is, what percentage of Cboe's revenue would you say collectively comes from retail today when you think about both trading and nontrading side of the business? I don't know if there's a clean way to dissect that but take your best stab at it. And then when you look forward in terms of some of these new initiatives, you mentioned Nanos. But what are some of the other bigger kind of needle-moving things you expect to do on the retail front, assuming that activity persists?

Yes. So I'll start a little bit on that, and then I'll have Cathy pick up on the DNA elements of it. So you're right. On the retail, we are leaning in and actively engaging. So I would say, obviously, Nanos, you've mentioned, we've mentioned a couple of times as a big effort to make sure that's available and make that work. Part and parcel of that is continuing to work with our traditionally very strong firms that we work with, the brokerage firms as far as making sure we're understanding what their customers are looking for, what are their clients looking for, whether it be a very sophisticated base of investors on their platform or a newer base platforms or the new retail -- we'll call it, newer retail brokerage platforms that are looking to continuously add a depth of product, such as, like I said, the Nanos product or multi-listed options and continue and facilitate that through education efforts, right? There's an obligation, obviously, for know your client, but being a premier options exchange, being able to provide the incremental education to the extent that we can to help supplement that education is very important. I think on the -- more of the cash spot side, what we've talked about also is some of the order types we put in place with retail priority. How do we continue to enhance that? How do we continue to drive more growth? And how do we basically make that easier and simpler and better for those firms to engage in areas that we can compete in? And so those are some of the efforts there. You look at the option side on the multi-list side and how do we make sure that we are, again, facilitating our customers and helping with that volume. I don't know if you want to mention a couple of items on the DNA side.

Yes, back to the -- I mean, the retail traders. So the retail broker dealers are very large clients of ours from the perspective that they consume analytics and information from us that they then feed and proliferate throughout their own platforms that ultimately reach the end retail trader. And as the business at these retail broker dealers has grown, so has the need and the demand for additional information and additional analytics that get that retail trader closer to an actionable step. And so we engage frequently with our clients on how to improve their offering that they ultimately distribute to their retail clients. But I would say that we've all noticed that the pandemic and the ongoing recovery has certainly changed investor behaviors and preferences. And one of the things that we've noticed in DNA recently is that there has been a whole new crop of educators that are building businesses around educating this new retail class. And so we do see this rise in sophistication of the retail trader and the demand for tools that then correspond to the levels that these retail traders are now trading at. And so we have a very good B2B model of delivering additional real-time trade alerts, what's happening in the market, so option activity that gives these educators some ability to go to their end clients and educate them on suggested plays in the marketplace. And so we see the trends in that area of our market, although not material from a revenue standpoint yet, but the trends are very strong as these independent educators build businesses around educating this new investor class. So we really do engage from the very high-end retail broker dealers all the way down to these small companies that are starting to educate these retail traders. So retail traders are very important in our business as well.

Great. Let's pivot a little bit and -- but sticking with some of the new initiatives. Let's talk about digital and crypto. Obviously, Cboe acquired ErisX not too long ago and really tried to make a push into the space maybe from a slightly different footing than you did originally. So maybe just to start off, talk to us a little bit about the competitive advantage in trading crypto when it comes to the institutional marketplace that you're hoping to achieve and sort of what sets you apart from competition and assuming there's going to be other folks that are trying to penetrate the space.

Yes. So I go back to one of also the key themes from our Investor Day that we hope investors are walking away with is innovate, integrate and grow. So the innovation element of that is, and you talked about the competitive advantages versus a matrix of we do this, they do that, is a focus and a belief of where -- and again, this is based on client feedback, who we're working with, where clients want to trade crypto based on that. The feedback we've received is people are looking for a more regulated environment and a trusted environment and what their exchanges have been able to bring. Again, we're not trying to make crypto in a traditional model but provide that regulated environment. So ErisX is a regulated exchange, CFTC approval, spot and derivatives. And so that's where we see the market moving towards, and we're seeing demand. And that's where we think -- not that everything else becomes obsolete or anything else and there's no business there, but this is where the market is moving. This is where we've been -- we're seeing the client demand. This is what we want. So we're moving towards that direction. ErisX brings, obviously, that -- the immediate already CFTC approval with the spot and derivatives, and we see really significant growth opportunities there. So you have CFTC approval already in a regulated market. You have a resilient and reliable existing native platform already in place. You have an effort and the ability to drive transparent price formation in this exchange. When we look at being able to offer that, you see the data offering, which we can spend a little bit more time talking about, and Cathy mentioned how that data is helping [ form the complete circle ] of the cash, the spot market with the data and also then kind of [ settlement ] and how that continuously works together. And you get that exact same cycle within the crypto market and what ErisX brings to the table. And then the [indiscernible] has been to drive the long-term growth and what they do and their engagement in the crypto space and what they bring as far as natural flow providers, market makers, infrastructure providers and their interest in seeing that perform their strategic relationship with it, not just a commercial but a strategic relationship and interest in seeing the market evolve in that trusted, more regulated environment. We're very, very excited about the growth opportunities there. Cathy, I don't know if you want to mention anything else on the...

I would just piggyback on the innovate, integrate and grow aspect when you talk about crypto data. I mean we have the opportunity with ErisX now to have a really consolidated data platform that mimics all of the exchange data that we source from all of our exchange operations. And so when you think about innovating and bringing in this new crypto data and accessing that through our entire product portfolio through the analytics that we'll build using this crypto data to the indices that we'll be able to build using the proprietary data that comes off of the ErisX in combination with other reference data. For example, Alex, I think you know we have exclusive rights to the CoinRoutes real price data right now that we're using in indices that really gets to basically what is the expected price per notional coin that you might want to execute in the marketplace. And so we're using reference data from different outsourced third parties in addition to this anticipated data that we'll extract from Cboe digital and then we'll be able to grow by having a new asset class, leveraging all of our infrastructure and technology. So there's not any new build. It's basically ingesting what we'll get from this new exchange and leveraging that throughout our product portfolio. So it really is a nice high-margin thought of bringing this new asset class into what we do well already. And then, by the way, when you think about the distribution that sits at the end of all of our analytics, data feeds and data products, it's just a really nice way to think about how to leverage that distribution channel with this new crypto data because everyone knows the crypto marketplace is quite fragmented right now. It's very difficult to consolidate data from all of the different exchanges that are out there, let alone no regulated exchange that's offering the trading, the derivatives and spot and clearing, custody, all in one single enterprise. So we see a lot of optimistic growth here.

Great. Makes sense. One more kind of new initiative I want to hit on is around just European derivatives market. Brian and Cathy, you both hit on that from the trading angle and the data angle. But maybe just to zone in for another second or so. You guys are targeting EUR 25 million in revenues here in 3 years. But at the same time, you're highlighting it's a massive opportunity, especially relative to the U.S. market. EUR 25 million doesn't seem to be that astronomical. So just thinking through the areas where you could surpass or exceed these figures, like maybe a little bit more in terms of the building blocks, what that comprises of kind of how you get into that EUR 25 million versus where the upside could be given just the size of the market could be much bigger.

So thanks for writing that report. That's great. That's exactly what we think. I would say that we are going to be conservative knowing that we're "trying to launch a new market, right?" We're replicating, again, based on client feedback, demand. We want to see a similar U.S. type of market, screen-based liquidity on European derivatives and trying to create that from scratch is going to take some time, right? So there obviously -- no real insight here as far as -- you need flow, you need the market makers, you need good products and the data and is it providing the products that people want to trade. And that takes some time to build, like liquidity begetting liquidity. It's going to continue to drive the data and the connection. So is -- again, we've been conservative in our projections that it's just going to take time. There is -- we have not had a product launch that didn't take some time to build. So that reflects the conservative nature of that is -- again, we're having a long-term perspective, but it doesn't change our optimism about the use of the product or what we think the revenue output can be.

Makes sense. Sorry. Let's shift gears and talk a little bit about some financial items. So starting first with M&A. Again, I'll continue to refer back to the Investor Day given it was only a couple of weeks ago. But you guys have laid out an ROIC framework for M&A to exceed 10% hurdle, again, not too dissimilar from your peers. It seems to be kind of an industry standard. You've been quite acquisitive, obviously, over the last couple of years but really focusing on smaller deals. So a 2-part question. First is, are there still product gaps or adjacencies that you feel like you could expand inorganically around what you already have? And part two, is there room to do something a bit more transformative, right? So Bats was a transformation deal for Cboe. So maybe not quite like that, but something closer to that than these smaller add-ons.

Yes. I would say that -- I'm not sure I would think about it as much as product gaps other than maybe our initial set of acquisitions that Cathy has been -- was actually part of, if you go back many years ago. And I think what our focus has been more around -- I mean, and EuroCCP, I guess, is -- if you think about a product gap -- if you think about clearing as a product per se, but that was enabling several growth initiatives for us more broadly. But I think about it as being more about an expansion of geographies and what's enabling. And again, so if you have a very broad definition of that product gap, that's been able to put us into geographies and markets that we think would have been prohibitive from an ROI standpoint to build as far as the tenure. And so the buy versus build, looking at the ROIC, looking at the incremental TAM, what does that look like, what are the growth prospects and is it an environment that where is -- makes sense for us to be part of and leveraging our core capabilities and -- with the right economic outcomes. So it's -- I wouldn't say that, "Oh, my gosh, we have this glaring gap." We saw opportunities, and we took them where it arose with this overall network of how do we continue to be -- to build in our global network based on our core capabilities with a great financial profile. So that's more of the framework versus, I'll call it, a product gap. Now there's always -- there's likely to be opportunities where something comes up that makes sense that we will continue to take a look at, evaluate buy versus build, again, that framework that we talked about as far as evaluating each of those opportunities as we deploy any type of capital similar to what we do every day with respect to a dividend or share buyback or debt or delevering. So all of those elements kind of go into that evaluation. The second part of your question is that is there opportunity for a large, large transaction? I mean, I would say from a -- obviously, we have a fiduciary duty to always evaluate if something like that is available or whatever. But that goes back to -- and that's no promise that's not here, we're not looking for that. We're looking to, again, create the longest-term -- the highest shareholder value we can create for our investors. But that's why I think it's important for us to maintain such a healthy balance sheet is that should a transformative acquisition, meaning large and it makes sense to take on some incremental debt or whatever, is that we have a clean balance sheet that I want to make sure that that balance sheet is not a hurdle to make that happen, to be able to get strong shareholder returns, again, that makes that potential combination or whatever that looks like available. So having that access to the debt capital markets is important. Especially in the rate environment that we're in, it just makes all the sense in the world.

Yes. Perfect. Makes sense. One last topic I want to touch on is around expenses. And look, we talked about numerous investments you guys are obviously making in the business to support growth. There's hopefully a return of T&E. Again, you guys are here, probably not the most expensive part of your 2022 budget. I hope not. But that's part of it.

He hasn't gotten my expense report yet.

But look, I mean, we're also continuing to see inflationary pressures across the industry, right? So how should we be thinking about the expense outlook for '22? And if you're not ready to give us that yet -- if you are, please you're welcome to do it. But if you're not, maybe talk about the operating leverage in the business that we should really be focused on because, at the end of the day, expenses could get dialed up and down. So operating leverage in the business off of '21 level, where does that go over the next years?

Got it. So I would say, because I know we're running out of time, is that explicit guidance -- specific guidance, we'll deliver in February once we have Board approval and the budgets and everything there is lined up. So -- but I would say the framework to think about this is adjusting for M&A run rate, right, where we didn't own something for a certain part of the year, when you normalize that and you look at the expense growth rate that we had in '21 and you think about that as a framework for incremental investment in our, I'll call it, the capital infrastructure of people, technology, general compensation. You're right, there's definitely some wage inflation for -- continuing to compete for high-quality talent, and I'm sure everybody is experiencing that. And so that incremental investment then to drive that top line growth is -- our #1 priority is driving that top line growth. So seeing a -- like we did in -- we're seeing in '21, some EBITDA margin pressure is something that we have not shied away from. We're going to willing to make that investment in the short term if we have a high conviction around the revenue growth opportunity that we think is there. So I would say that I wouldn't envision '22 being any different. And we have engaged in businesses that weren't at scale that's going to almost mathematically when you add them to the mix are going to be a lower -- potentially have an outcome of a lower EBITDA margin percentage. We don't run the business to have that EBITDA margins more. Again, it's where do we see that long-term revenue growth, again, which once you get to scale, you're going to see the natural margins rise, once we get to scale, once we -- seeing some of those initial investments starting to pay off with those revenue returns [indiscernible].

That makes sense. Well, I think we're out of time. So no time for questions from the group, but thank you both for making the trip. Again, really appreciate seeing you here. It was great for you to be here.

Thank you.

Thank you.