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

So for important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Good morning, everyone. I'm Mike Cyprys, Morgan Stanley's equity analyst covering brokers, asset managers and exchanges, and welcome to our fireside chat with Cboe. And we're excited to have with us here today, Chris Isaacson, Chief Operating Officer; and Brian Schell, CFO and Treasurer. Cboe is a leading provider of market infrastructure and tradable products, delivering trading, clearing and investment solutions to market participants around the world. Brian, Chris, thank you so much for joining us this morning.

Thank you. Good morning.

Great. Well, why don't we start with the current backdrop? It's been a little bit volatile, bumpy past couple of months or past couple of days for that much. As one of the more transactional revenue exchanges, Cboe's business should benefit arguably in this sort of less certain macro environment. So maybe you could talk a little bit about how you're seeing clients manage risks, what tools are they using, and what are some of the activities at levels like across your platform?

Great. So I got a little note here because there's a lot of data that I just kind of want to share that we've been seeing. So I'll start with a little bit of your last question, again to set the context of kind of volumes that we're seeing across the platforms. And we're in 25 markets around the globe. And I know a lot of people focus more -- a little bit more around the derivatives side. But if you look at our overall broadly our asset classes or our segments and obviously, we've published our volumes around April and May. And if you look at those numbers, you've seen that broadly, you've seen those have been up double digit over the prior year with the exception of maybe 1 or 2 in any one month. We've seen a really strong growth, as you've indicated as far as incremental volumes, incremental volatility. And then if you look at June, in particular, you've seen a little bit of a decline in the multi-list but a large increase on the index option side and the future side as well. And you've seen the equities markets around flattish because you had a relatively strong June of last year as well. And one of the things that we're seeing really stand out, as I mentioned, was that proprietary index suite that we've seen. And that has really been the key tool that we've seen people using to manage risk. Chris and I were talking earlier in some of the research that's out there is that May was a record SPX month that we've never done more volume than we've done in SPX than May of this past year. Five of the 10 largest SPX contract volume days in SPX have happened in the last month. So we're seeing a lot of people focus on doing that. And again, that's part of the backdrop. There is a very strong macro environment that we're seeing people manage this risk as far as with the interest rate change, the regime change that we're seeing with respect to the geopolitical events that's continued to create some level of uncertainty. You've seen the lingering effects of pandemic and what that means in the economy. You even have upcoming elections that continue to weigh in here. And so as we think about the volatility environment as part of this macro environment, we've seen an elevated level of VIX for the last couple of years, and we're seeing people manage around that. And what we're seeing is a demand for shorter-term expiration of contracts. And we've seen that if we look at the expiration of contracts back to, say, 2017, 24% of contract volume was less than 5 days. In '21, it's 46%. We've seen it double, right? And that's only increasing. And it skews even larger for if you go out a little bit wider. So what we're seeing is a higher probability of big swings intraday in the market. So investor reaction is, we want more nimbleness to be able to interact. So they're looking for that shorter-dated ways to manage that risk, and we're seeing that really show up across the index of the use of the proprietary index suite.

So that's what's driving the reduction in the two shorter-duration contracts.

Correct. It's that we're seeing people want to have that more precise ability to hedge, right? So we're seeing that much shorter duration to be able to manage those risks and have that ability to see that because, again, that we're seeing more and more of those swings. And we're seeing, again, more of that increased volatility. I mean, again, that is showing up if you look at the VIX futures curve and you look at where their expectations are. It's certainly supporting that.

So clearly, macro environment is very supportive for your business here. But as we think about your proprietary suite of revenues, think of maybe about 30% roughly of revenues from your proprietary suite. How do you think about the structural drivers looking out beyond some of the near-term cyclical benefits, looking out more longer term?

Yes. So that's something that we actually start seeing that trend actually beginning in 2021, some of the stats I referenced. And so we try to think of ourselves as very much listening to clients. What do they need? How do we help them manage their risks and what we provide in that trusted exchange environment. And one of the things we worked on a while ago was basically a broader theme of increasing access. And the first start with that was opening up our markets for a longer time frame, right? So we opened up to more of a 24x5 trading time frame for our options contracts that didn't exist before. So it enables people to, I guess, manage that risk for a larger part of the day. And so that was the first one. We looked at -- do they need more expirations to their earlier theme of if we increase the access, we needed to add Tuesday and Thursday expirations. So we added Tuesday and Thursday expirations. We've over time also changed contract size to allow for participation either from a retail or sophisticated retail to participate also in index contracts given their tax advantages, given their cash settle nature. So we've changed the contract size to be able to enable that as well. So access was a huge theme to be able to accommodate that shift and their willingness to want to manage risk. The other things that we've been doing as far as structural is we've continued to enhance our sales and marketing teams so that they can cover more geographies. We're seeing increasing demand internationally. We're seeing more institution. We're seeing more retail as we mentioned earlier, both new accounts as well as increased use within those accounts. So we're seeing both. And then longer term, structurally, we're looking to enhance functionality within those contracts. As far as whether it be week 3 or week 4, whether we look at adjusting XSP elements. So again, continuing to focus on how do we enhance that access for our clients, again, not just today but also going forward.

And it seems one of those things you mentioned is retail. So why don't we dig in a little bit there? Over the last couple of years, we've seen really a surge in retail investors engaging in the markets some for the first time, some in a more sophisticated manner. So I guess what's the level of participation that you're seeing from retail investors in this environment because we haven't seen in some pockets where they have pulled back a bit. And how is the engagement that you're seeing from retail now compared to, say, last year and some of the peak levels that we had seen last year.

Yes. So I'll start off a little bit because Chris and I have talked a lot about this as a big part. So when we saw kind of at their peak and we really differentiate and I'm going to more focus on U.S. here is on equity side of it. We saw a peak back with the main stocks and a lot of that driving a lot of that really significant volumes was -- we think we saw that participation closer to that 15% to 20% level, whereas I think that's fallen back down to call it closer to that 10% level of where we've seen broadly speaking, in that retail activity.

That's cash equities.

That's cash equities. On the option side, that -- I would say that we would range bound that around 20%, 25%. And we've seen that been pretty sticky as far as that overall percentage of participation. And what we've seen though is a shift from where they're participating a little bit more in multi-list, where we've actually seen that shift to index options. And again, these are a little bit more of the sophisticated retail is what we're seeing as far as the use of options. So that's where we've seen that be much stickier, which again, which we think is -- it tells to the sophistication of the retail investor and given the importance of education and being able to -- they're finding great utilization in the use of those options.

So you haven't really seen any meaningful pullback on the derivative side from retail, still hanging in 20%, 25%.

We're actually seeing it grow.

Grow.

Just as Brian mentioned there, I think the key is that these retail investors that have been starting to learn how to trade options, started out trading single stock options. And now we're in a different environment, a paradigm shift as far as the market goes, and they're seeing the need in the value of trading index options, and their retail broker is allowing them to trade index options. We've said on a few earnings calls that the number of retail firms that allow for index options, trading is still growing, and that's allowing for that durable growth that Brian mentioned.

And one of the things on the index side that you guys are doing to help support that is the Nanos, right? So let's talk a little bit about that. Retail-focused S&P product there where you lower the notional size. So how do you think about penetrating the retail opportunity with those sort of newer products whether -- and also newer platforms as well.

Yes. I think as Brian mentioned, we want to be client-driven and what customers have wanted here. Retail customers wanted a smaller contract size, shorter duration, and Nanos is leaning right into that. And we have some early adoption. It's going to take a while to grow this product. It's a long-term play for us. So shorter duration, smaller size, that's bite size for them that fits better into their portfolio. If you think about the phenomenon that's happened in the last 2 or 3 years, you have partial share trading that happens in a lot of these retail firms. And this is just leaning right into that smaller contract size.

Do you worry that the retail engagement could pull back and kind of follow what we saw in the cash equity side, I guess. What gives you confidence that the option side derivatives can hold in?

What gives us confidence is the education and the engagement of those really advanced retail customers that now they've learned the power of options. Now they want to trade with index options to manage macro risk, and they see the payout structures that they can make more money or lose less through the use of these products. So education is the real catalyst here for the durable growth.

Great. Why don't we move on to another topic, and that is around the competitive landscape. We've seen a number of upstarts enter the market in recent years and some have gained some meaningful market share over the last couple of years in cash equities and options. I guess, how do you see the competitive landscape evolving?

Yes. I mean, as Brian mentioned, we have 25 markets around the world. So competition is different in each one of those markets. We welcome competition. Some upstarts have started. Brian and I came from Bats. We love competition, frankly. Some of that's happened in U.S. equities. Some of those competitors have grown up and now their market share is leveling off as they rationalize pricing. We've all along tried to optimize net revenue while growing and sustaining market share. That's been the case in U.S. equities. If you look over in Europe, we're at the 3- or 4-year highs on market share, the highest market share we've had in Europe since Q1 of 2019. And what's driving that? Well, that is, again, client-driven solutions, talking with our customers, going to them with data and saying, here's how you can get a better execution experience, and that's navigating through Brexit and MiFID II as well, which is now we're at multiyear highs and growing that in a very, very competitive European equities environment. Dave Howson and Natan have just done a great job of growing that business for us. So probably don't have time to go over every market that we're in and the competitive landscape, but those are just 2 and how we're effectively competing.

Great. Now just the other day, you guys announced the next-generation open outcry trading floor for you guys. This comes after we've experienced 2 years of hybrid and remote work and peers have gone the other path of closing down the pit. So I guess what's the rationale for Cboe and for your clients, right, of opening the pits here? And how do you see this sort of this trading dynamic evolving over time?

That's very interesting as a markets guy. I'm -- it's almost 50 years into Cboe here we are back to the future, opening a trading floor in the same place where Cboe really started. If you would have told Brian and I, even 2 or 3 years ago, that we'd be building a trading floor in opening, and we probably said you're crazy. But the fact of the matter is one of the big lessons we learned from COVID when we had to shut the trading floors is that thing has utility for our customers. And we're going to keep it open and invest in it as long as it provides utility for our customers. And where it provides tremendous utilities, especially for this complex large trades that need to get done, especially in our prop products, SPX and VIX. So we've actually grown the floor through COVID and now the floor is bigger as we opened the new one last week. It looks tremendous. And we did, I think, a little over 4 million contracts in the floor last week. It's thriving. And it's a big part of our hybrid trading that we need to provide a full ecosystem for our products and for multi-list. And so as I said, we'll continue to invest and use it as long as it provides value for customers.

Great. I look forward to visiting that at some point.

We look forward to having you. Open invitation. Yes.

Thank you. Let's talk a little bit about digital assets. Space has gotten a little bit more volatile in the past couple of days. You're entering the digital asset space with the acquisition of ErisX and the formation of Cboe Digital. So can you just give us a sense of the volume that's on the platform there today at ErisX, the market share that they have? And how do you think about the path to expanding their share and volume? How do you see that marketplace evolving?

Yes, I'll say, as we've said publicly that the volumes of the market share that ErisX has is very modest. This is still a very early stage company. But if you think about our flywheel, if I remind you, we have spot, data, derivatives and then clearing where we can get it. With this acquisition of ErisX, we got all 4 of those in the flywheel. It's very rare that you can get 3 much less 4. And so we got a clearing entity as well. And Certainly, this space, you've seen valuations and volume come down quite a bit since in the last 6 months, talk of crypto winter and whatnot. The way we view this is this is some painful pruning that's happening in an asset class that is still maturing. And oftentimes, you need to prune things in order for them to grow in a more healthy durable way. And that's the way we view this is our strategy is unchanged. We think that this market will go toward trusted transparent markets. That's what ErisX has built. That's our vision as well. We have trusted transparent markets that will continue to be -- while retail engagement in crypto may come and go, the institutional adoption of crypto will continue and is actually continuing through this cycle right now. So painful pruning, which will lead to longer-term growth.

So strategy unchanged. You guys are still optimistic on the digital.

It's a long-term growth.

But does the environment impact your resourcing and the pacing of how you sort of push to grow and...

Yes. I mean our investment here is I think it's really unchanged at this point. We haven't overinvested nor underinvested. So we feel good about our level of investment and time invested in this, amongst many other things, when we closed another transaction a month later. So it's not the only thing we're doing. It's just one of our legs of growth.

What would you say your vision is for Cboe Digital? Looking out 5 years, what do you sort of see this looking like and any sort of milepost, goalposts that you would be looking to as a measure of success?

A measure of success I would look at is if you have a thriving spot market -- if you look at our other asset classes where we have -- it's taken us many, many years to get there. But thriving spot markets, with producing good high-fidelity data that is valuable and then thriving derivatives markets that are based off of those spot markets with clearing in the middle, with good capital efficiency around that clearing. That whole ecosystem may take years to fully grow and build, but I'll use Europe as a great example of that. We started in cash equities, grew that to scale. Then we purchased EuroCCP to get clearing. We have data there also. And now we've launched European derivatives. So you see the entire flywheel. We have the foundation for that in digital assets. Now it will take time to grow.

What benefits are there of having spot, the cash trading along with the derivatives on the same platform? Is there a benefit? How do you see that? And how does that compare versus other asset class?

Yes, there is a benefit from a capital efficiency perspective. So if you're trading spot and within the same clearinghouse as your derivatives, you can have capital offsets and capital efficiency. Capital is really the fuel that drives trading. And so as firms, especially market makers have more capital to deploy, there'll be more trading. So that's a unique part of this asset is the clearing, the clearing organization that allows for those offsets. And we're working with CFTC to get margin approval for margin futures, which will allow for appropriate levels of margin on a futures product.

Okay. Speaking of derivatives, clearing, I have to ask about the FTX proposal that's out there with the direct-to-consumer clearing model. Just curious of your views on that. Is that something you would look to employ in your business?

Yes. So we've put out a comment letter on this. This is -- we believe that FCM's futures merchants have done a very good job of helping manage risk as part of the buffer in the ecosystem for decades. So any massive change like this needs to be appropriately looked after before any change like this would go forward. So we think probably appropriate full rule-making needs to be considered with comments. It's not that we're necessarily wholly against. It's just we see a lot of value being delivered by FCMs today from a risk management perspective, especially in other functionality that can't be discounted. And there are concerns about procyclicality and other things with the direct-to-retail clearing model that need to be dealt with in a measured way. And so you can see that in our comment letter. We commend the CFTC for taking a measured approach here.

Okay. Why don't we shift gears and talk about your tech stack and the cloud. We're seeing a number of different approaches firms are taking across the industry. Last quarter, you guys announced the formation of Cboe Global Cloud that enables cloud-based data delivery. So just how are you thinking about the opportunity set there in driving adoption with clients? And are there any other use cases would you say, for the cloud, maybe even of your markets themselves?

Yes. So we're quite excited about the different use cases for the cloud. Cboe Global Cloud is one of those. We think about that as Brian mentioned about access and distribution. The cloud is a great distribution channel for our data to users primarily that may not have a cross connect within one of our many data centers around the world. They can use that -- they can get that over the Internet now through AWS and we may add other clouds here in the future. And we're adding data sets to it. We'll be adding European data later this year, potentially APAC data, and that's real-time data. Other things we're using the cloud for are historical data. So we have our DataShop product, distribution of historical data sets that are more and more in high demand. With our ErisX acquisition and the clearing entity we have, well, that clearing platform runs completely in the cloud today. So things that are not super low latency, I think in the nanosecond or microsecond time scale, likely should be in the cloud in the long term. We have a service called Compression Service that allows people to have better use of capital, our market makers, but we use the cloud for a bit -- a key part of that service as well. So there are a myriad of uses of the cloud that make a lot of sense in capital markets and in our business. At the point of match, microsecond, nanosecond time scales, that is still a difficult use case for most, if not all, of the cloud providers to offer today. That doesn't mean that it will not happen in the near more medium term. We have good relationships with all of them. But we're a client-driven business, and we're meeting client demand with the use cases I've mentioned. Our customers aren't telling us move to the cloud for our matching. When that discussion occurs, they won't be surprised and it will make sense to all of them. I think it's worth noting that our customers have invested substantial capital for matching across our markets and other markets around the world in data centers. And so those investments will take time if those matching investments are going to go to a cloud. Not that it won't happen, but we're excited about the use cases I mentioned to start. And the matching may go there if our customers drive us there.

So no plans in the near term to bring one of your exchanges, the matching into the cloud, maybe over time.

Maybe over time as customers demand.

And do you see anything that needs to be addressed from a technology standpoint? I guess you mentioned the latency. But I guess how do you see that over -- being overcome over time to address the shortcomings there?

So one of the bellwethers, one of the most important things about the markets we operate is trust is fair, fair access, meaning everyone has fair access to that market. That's from down to the nanosecond or microsecond distance they have from the matching engine to wherever they might be in a data center. That's very hard to implement in a cloud today, not that it couldn't be, but it comes down to physics. It comes down to how long is the cable and how long does it take light to travel. And dedicated infrastructure, our dedicated space within a cloud provider. So there is material capital work -- capital infrastructure work to be done within a cloud provider to emulate that sort of experience that is a bellwether of what customers have come to expect, which is fair access.

Great. Maybe staying with data, just zooming out a little bit, you guys have raised your data and analytics revenue guide for the year, 8% to 11%, I believe, for this year. So I guess just what type of revenue growth do you see for that part of the business, I guess, looking out more longer term? And what are the products you think are going to be most interesting and more supportive to growth over time?

Yes. This is -- Chris led into one of the kind of the sources of some of that growth. And the way we -- and you'll see more and more as we think about that business. We've kind of divvy it up into 3 different, I'll call it, broader categories of kind of -- I'll call it, the real time and access. And there's a lot -- and that's the biggest part of the chunk of that business right now. And as far as you look at where do we see that growth rate where we've said that kind of the medium term of the 7% to 10%, we saw a slightly higher growth rate in '22 with the things we have in the works and the success that we've been able to build. But if you look at where are we seeing that growth and why do we think that growth continue in the future is, right now, we're seeing strong, strong international band for U.S. data on the market data side. We're continuing to see that and so we don't necessarily see that shifting. So that's number one. Number two, as Chris has mentioned a lot, is that use of cloud and the cloud delivery of not just U.S. data, then to more, I said clients, but also the expansion of data on it, whether it be the European data, data at APAC, Canada, that's increasing access. There's that word again, that we very much think is a big part of the growth story. The third thing is, which we haven't touched on yet is that, and we hinted at it as far as the global nature of Cboe and the global client base that we have, meaning there are needs that we're seeing and looking at bundling the global data, right? The combination of being able to have access, again, some of this is going to be a bit regulatory driven, but to be able to have incremental data from U.S. and Canada or bundling with APAC or bundling with -- with Europe, we're seeing increasing demand for that. So those new products and that bundling, we think, gives us a unique competitive advantage that we continue to see some expansion and growth there. And then finally, as we look at that you can also do that across asset classes as well, not just geographies. So those new products, we're very excited about over the medium to long term of being able to continue to drive that part of the business. The other 2 parts that I'll mention is the risk management and analytics and then the index. On the risk management and analytics, a big source of that is from the acquisitions that we did earlier in the year, but those quantitative risk management tools and bringing that into a common suite as we've really seen a strong uptake for that and enhancement to those tools for people as -- again, you're seeing that increasing focus and the ability to manage risk more and more real time as we continue to see the markets move. And then thirdly, on the index side, you're seeing increased, I'll call it, marketing, increased resources around our ability to then, I'll call it, license our data. And one of the terms that we like here as far as the index side is redistribution as a service, right? So you saw the Morningstar announcement, and that's basically how do we leverage Cboe's existing network. And we know that people have that data stream, whether they're a large data provider and they want to leverage our network or they're new data provider and whether that we blend that in. And so that ability to offer that redistribution as a service, we love that business, right? Because it's already leveraging scale, has a very high opportunity both for us as well as we partner with. And then the other part of that index business is continuing to look at us either calculating the index for others or leveraging our data and license it for other, say, other calculation methodologies. Again, that's using already using Cboe proprietary data. So those -- I kind of went through that quickly, but that's why we're excited about this business. There's a lot of initiatives, a lot of growth opportunity that we think we can leverage in the medium to long term.

I'd like to dig in just a little bit more on that because I think it's important. You've made a number of acquisitions over the past year, 2 years. Can you talk about how you're stitching together these different data offerings into a single product suite? Where is the integration progressing further along? Where is there still more work to be done?

Maybe I'll start with -- we have done a lot of acquisitions over the last 2.5 years. I think 8 in total, starting really when COVID started. And 3 of them had to do with data and access solutions, Hanweck, Trade Alert and FT Options. And as we've talked about our durable growth we see there is 7% to 10% in the long term for data and access solutions and 8% to 11% this year. Some of that is driven because of these acquisitions and stitching them together. So those acquisitions, the integrations are largely done. And we've used Hanweck to help drive market data across some of our other products such as Silexx and it's helping drive some of the data on the floor and other data and access solutions products. So those integrations are done. The other integrations I can speak of are -- we bought MATCHNow, dark pool in Canada, that platform migrated in February, so that integration is done. The Chi-X Asia acquisition, that was about a year ago. We're well into that integration, probably halfway done. We'll finish the platform migrations and the integrations next year. And then BIDS is largely done, just growing and expanding that access around the world. And EuroCCP is largely done as well, still some improvements to be made there as a clearing firm, but we were largely progressed on most of those. And the most recent with ErisX and NEO, those just getting started having just closed those transactions May 1 and June 1. So you're like that's -- you probably might be thinking, that's a lot of acquisitions. It is. We realize that. One of our top 5 priorities here over the next couple of years is M&A integration excellence. And we believe this is a muscle that we've built over time. And just as you do with your body, you need to keep working out to maintain fitness, grow fitness, we can always get better. And we want to be excellent at this. We're not running a portfolio company. We want to integrate these firms so we get the full benefit from the great teams and platforms that we get. So maybe, Brian, if you want to mention how we grade ourselves and how we think about doing this with excellence.

Yes. So this is a very important part of our, call it, financial discipline part of our capital allocation approach is as we focus on the capital allocation, high level of -- we love the organic initiatives. We try to be very transparent about our high conviction revenue opportunities and where we're investing for that growth. And then obviously, anything around the inorganic that we believe adds to an ROI positive that we're looking for a return greater than 10% as far as some of those -- that M&A activity that happens. But as we look at evaluating ourselves on a pretty regular basis, quarterly at a minimum with our Board and the governance process that we put in place, is we look at how are we meeting against the financial metrics around that model that we assumed. Here's where we're going to generate that ROI. We look at how are we doing on retention and engagement of that new group of associates who have joined Cboe as far as that cultural match. How are we engaging them and they're -- as part of the key members of success of growing that going forward. And then we look at the other, call it, nonfinancial metrics and helping them achieve some of the other strategic objectives around, for example, helping the launch. Chris mentioned the -- some of the early data acquisitions that we made that really helped form the foundation of our market risk and analytics group and the overall broader DNA group. So those items, we regularly evaluate over a time frame to say how are we doing and if there's a course correction we need to make, we readily address those. And we're alert is like, okay, let's make some course corrections and make sure you will get back on track.

Great. Why don't we see if there's any questions from the audience? Any questions? Over here, question in the front.

Good morning. I wanted to ask around your strategy with your expansion into Asia Pac and Australia. Given some of those markets have limited competition, what is your medium-term strategy? Is it just data bundling? Or can you do more than that?

Yes. So in Australia, we're quite excited. I mean, we've had -- actually, the market share has grown since we purchased those acquisitions. We're not done with the platform migration yet, which comes in February. But that team there, we found a great cultural fit, very disruptive team, and we love the competitive spirit, team competitive spirit we have there. I'll go back to our flywheel. They have a cash equities business as the second largest exchange in Australia and it's creating nice data. We can do data bundling there, both selling our existing data into Australia and then selling Australia data to the rest of the world. I also mentioned there's just a great opportunity with BIDS. So the BIDS network is not yet -- there's really no real block trading network to speak of in Australia yet, but there is palpable demand from customers in Australia to bring BIDS there. We plan to do that in February when we migrate the platform to Cboe technology. And I'll say there's also discussions about, is there an opportunity for us to also add derivatives and then potentially clearing in the longer term. No imminent plans to announce there. But I'd say the near-term thing is about platform migration, add BIDS, and continue to grow market share and the customer reception there has been fantastic.

And just to add to that briefly is we also see listings. Again, not a big part of the business, but Australia has done an amazing job with that franchise as far as listings. And we also -- that's also coming up within our -- the NEO and what they've been able to do so that a global listings franchise, particularly around ETPs, we think there's a lot of opportunity on a go-forward basis as well. Again, a little bit smaller and -- but we see a really nice franchise there as well.

Great. Just a few seconds left, just on M&A. Sounds like you -- with that muscle memory reference, you may continue to execute on M&A. I guess how do you see the transaction size? Is these mostly going to be smaller? Or what's the prospect for doing some larger or even transformative transactions?

I think we have not a need for further M&A, but we are open to discussions where we think the return profile could help us accelerate growth. I will mention, we have a lot of integration work to do. We talked about that. And that this year is a massive year of integration for us, and we want to do these integrations very well.

Great. I'll leave it there. Brian, Chris, thank you very much.

Thank you.