- Earnings call transcript Q3 2022

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Operator

Welcome to the BGC Partners Inc.

Third Quarter 202 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. to Jason conference Relations. Chryssicas, like speaker to now today, for Head would hand over the your I of Investor you, ahead. go and Thank please

Jason Chryssicas

Good results prior quarter market open. BGC's release we the to morning, results and these financial press third summarizing presentation everyone. Today, XXXX issued

the You these the call investor and presentation. to Please otherwise stated, at quarter X, note, additional November today's can find third release can on today's XXXX. our with sale its compare only year press provided XXXX find results compare on and details on period, due quarterly revenue ir.bgcpartners.com. the you results of in Unless insurance, excluding prior to

period stated. securities We define euro redeemable partnership as BGC We and owned, our revenue repurchase our only marketable term uses release see agreements and on BGC's comparison release will we currency of present the how, these an GAAP call principles terms, in may liquidity, Please referring period complete have refer better Please volatile management to which cash accounting and of in dollar reverse press particularly for such of our this results reconciliations non-GAAP company's exchange moments. securities currency non-controlling and to stock of been to constant which accepted of relevant adjusted equity ops today's generates significant for the may capital applied order total to prior revenue interest a the and Sterling. foreign that amount items press denominated company's repurchase define refer and today's total or We on rates non-U.S. when not to corresponding a results to less also GAAP. in generally unless movements the constant at to a and EBITDA. adjusted definitions plus equivalents terms. its be exhibited updated current agreements. subsidiaries. revenues any the otherwise under cash on revenues earnings interest, basis and the basis of as BGC back revenues. We sections foreign pound in securities why the refer in exchange assume also presents used results during period, currencies, loans financed, the comparisons

of pandemic involve the any outlook, include extraordinary changes Fenics information required Growth not historical mentioned and on call Except meaningful on Fenics. is with to company's and as acquisitions, that at platforms. statements statements material results call stock call on Fenics as outlook liquidity We statements. to and any no about the uncertainties. COVID-XX include the forward-looking business our businesses the to Additional forward-looking update position, undertakes and transactions available and also presentation. our on to company's and statements. discussed this our respect remind regarding buybacks, I financial our on that assume price. in These law, by and or targets technology-driven non-GAAP BGC Markets GAAP results, effects obligation company's forward-looking ir.bgcpartners.com Any investor risks no you today's are website refer offerings Fenics today's business are information

Howard and reports Partners. call in the updates over now XX-K, the XX-Q risk forward-looking differ BGC Chairman to, set information SEC filings, of which the BGC's but cause see or and happy on note the forward-looking CEO X-K. on subsequent discussion information of the to such contained factors Lutnick, on could forth actual contained limited filings these any note in special Form Board to and I'm risks a to and For With risk additional to in statements, factors Form uncertainties, Form special results those that, forward-looking including, and of from not turn

Howard Lutnick

and you, and thank call. Operating Financial our me Sean Good quarter BDC's Thank third Windeatt; Jason us you Chief Chief morning, today Officer, for are conference for With our joining XXXX Officer, Jason. Hauf.

pretax business, This high eighth now the by total earnings adjusted of driven quarter margin of improvement by adjusted earnings our XXX over represents electronic margin quarter our which consecutive Our basis margin points. our of expanded Fenics represents revenue.

years, the XX by than and more For trading entire interest BGC easing. been industry's financial service have rates ultra-low constrained and volumes quantitative

credit XXXX. trading For times of volumes U.S. up example, the issuance X.X in and what they are is in half over markets, were

which issuance to we've flat presentation, Over and improve XXXX. and is Treasury times Throughout margins. of automate volumes to trading can our our worked Page the And X to up X ir.bgcpartners.com. can get at this on same period, are period, our you you investor U.S. see this business

levels rates interest with like their to of that, of future, over return drive the our produce coupled turn expect dramatic historical restore trading to to to Jason. record volumes growth trading in I'd This issuance With we expect will revenue to increase volumes over BGC margins, We profitability. the with time. for foreseeable call our the improved correlation

Jason Hauf

BGC basis, Thank last was you, as a everyone. X.X% a versus up year. our of to ago. hello, Howard, revenue and X.X% a decline total On year million, $XXX.X revenue of compared generated constant currency

which asset but highest but front by a million rate or on by in Commodities During total X.X% appreciate and Credit related Total decreased XX.X% growth By currency ever in and revenue increased Europe, headwinds. FX $XX by revenue Equities leading XX.X% and its mark currency currency. Fenics, to primarily East X.X% euro insurance, and grew by Asia-Pacific by higher X.X%, By been driven currency only X.X%, increased X.X% constant on & key productivity recorded office improvement been a both rates $XXX.X and an Energy revenue, X.X% driving have XX.X% by geography increased dollar million, at XX.X% a FX of excluding to basis. the currency. Automation decreased for class, higher constant Americas technology a to X.X% decreased constant and or in improved Xth represented constant and revenue were Middle million basis. the U.S. approximately platforms by X.X% constant $XX.X increased X.X% basis. the constant year-over-year while and of XX% constant of higher. margin a constant currency quarter. in currency and basis. margins both XX.X% quarter, company's Africa Growth pound currencies. business would X.X%, has margins BGC's on consecutive and XX.X%, against decreased revenues average Adjusted X.X% XX.X%, by and continued of a Sterling, to Fenics of market the on the lower. earnings

generated increase on XX.X% an currency a pretax of of X.X% had revenue adjusted basis a expansion Our margin basis Fenics an $XX.X of million, Markets points. or XXX XX.X%, constant business and of earnings

expenses. to Moving on

under employee both our the insurance brokerage business on earnings impact FX GAAP the and respectively, expenses. and and compensation by automation and decreased XX.X%, adjusted U.K. XX.X% due to European Our and benefits positive of company's sale the increased

was adjusted Our of ago. XXX earnings compensation as a was points XX%, percentage versus which lower year revenue a basis total over

These which promotion we as and expense floor of brokerage, and were brokerage as under non-compensation the restrictions charges expense lower and and Our reductions COVID-XX relaxed due commissions earnings by higher lower geographies operate. and as have expenses. X.X%, many well and our the GAAP of by expenses adjusted to respectively, selling interest insurance other business occupancy in decreased sale XX.X% partially driven equipment offset across communication, by major

adjusted Moving on to our earnings.

million. Our pretax adjusted post-tax expansion our basis million to third pretax of million -- $XX.X point XX.X%. adjusted EBITDA recorded XXX of earnings income quarter with $XX.X was $XXX We margin generated adjusted and

count. share Turning to

average weighted million count share Our sequentially XXX decreased X.X% and year-over-year X% to shares.

September Compared XX, count ago, shares, million share Our fully million fully or BGC's a XXX.X year of diluted decreased reflecting million decreased quarter. the diluted as shares, unit in by spot count, sequentially to X.X%. or share spot million by shares to X.X% XX.X repurchase has share X XX.X

The an which simpler, to the directors the company forward to and has this compared as of Committee prior was with of and the expects versus Board change agreed agreements, September XXXX. hires. to pursue share of of reflects million distributions and and our $XXX.X and repurchases year-end XX, in redemptions, transparent more Cash of million our The dividends structure. to As XXXX. for a with new move were full other independent as liquidity payments million organizational compared to $X,XXX.X improve definitive occur liquidity a aims borrowings unit $XXX.X million with September December payable easier-to-understand Joint Total the end and conversion cash million pursuant compared corporation. were as XX, $XXX.X conversion million to investors execute Notes C $XXX.X The and with of provide at with of our million million structure $XXX.X as was and equivalents conversion XXXX. to operational would of capital XX year-end year-end. efficiencies $XXX.X corporate year. $X,XXX.X The

filed the of distributed corporate the Following the the to conversion and to be agreement conversion, related of details stockholders. publicly SEC to with the BGC execution and prior closing will

continue identifying synergies, in our significantly work to corporate offset We the expect to increase which through tax we rate. operational

of update over to that, We I'm call the year. to end turn to the this expect to provide the detail With happy prior Sean.

Sean Windeatt

forward. good become of our market $XXX.X XX.X% at quarter business, revenue constant basis. larger our on XX.X% overall third to growing represented of of generated BGC's Thanks, million, is everyone. driven of revenue record Jason, Fenics, part ever overall a going business leading a day, and expected pace and currency technology or XX.X% margin Fenics higher an

in at Fenics detail. more Looking

Our quarter, in increased ADV Algomi. had Lucera, Lucera fixed offering with significant Fenics will Platforms across off-the-run platform. significantly cryptocurrencies Rate of Data our generating an growth through record saw Fenics of futures. a revenue Compression its increase partially or and year last UST's trading Treasuries, by recently automated driven a Lucera, its infrastructure growth on ago. by revenue FMX a capture. LUMEMarkets Fenics Treasuries of U.S. a UST during double-digit share volumes, offset growth trading quarter, over third Market Interest create market FX, versus ADV across and synergies levels Growth to the software to offering, UST Fenics and improved trading Fenics XX%. currency fee spread Fenics year. products in a reached streaming T-Bill XXX% This both Fenics and the XX% in Fenics revenues and compared XX.X% business which driven saw continued XX% facility. enhances constant XX% technology its record CLOB launched clients higher quarter. strong Portfolio XX.X% Match, growth U.S. growth streaming by Fenics basis, GO was scale income

MSCI launched and leading a market in share, Additionally, volume participants, continues to Lucera an index FX generated platform, FX, global market and a across ultra-low onboard trading win ago. throughout HSCEI, XXXX. its FX GO, growth has versus electronic offering volumes saw trading third Fenics platform, where for and exchanges options of up option quarter, grown Fenics levels growth business, at year XX%. cryptocurrency the volume electronic strong a hosting Fenics were KOSPI latency Asian times X.Xx traders. market-leading

of Index volumes were by Fenics during carried quarter, forward XXX% into the to of European Additionally, EURO over its grade Match high trading scale new U.S. Portfolio total offering. growth across participants. trading Nearly continued onboarded options platform Match, and this records The numerous matching investment the across and STOXX quarter. volume Portfolio supports fourth platform, Match XX new our Portfolio has GO clients, credit. setting the and credit volumes quarter. and yield XX% during executed algorithmic saw momentum

only data during Fenics by signed grew for web-delivered at contracts and leading than credit a doubled on more wholesale basis, Looking over in improved same hedging year-over-year. highest interest business regulatory of data options required efficient, now revenues With quarter. the FX to treasury platform demand busier first its continues highly FX, the Fenics on driven surpassed U.S. quarter or and record, FX. offers MIDFX seasonally NDF fast FX Market significant XXXX, by and improved multi-dealer second see the NDF seek spot rate the progress. state-of-the-art Fenics by is as Fenics is by FX quarter platform, in a packages. its our continues targeting platform constant with XX.X% qualities for combines to risk-neutral and revenue XX% make quarter. FMX of the Direct, MIDFX, for currency our which had clients becoming rates, the in ADV the FMX, platform, futures FMD inflation Asian third its ADV data. XX% launch U.S. strong platform, XXXX. its market second XX the quarter quarter interest new hedging first X.X% Fenics Asian Fenics expected preferred Markets, approvals

SOFR futures offer names U.S. rates future for platform launch. Eurodollar products. the announce investors will of We U.S. to Treasury, strategic the prior and FMX the an alternative will

Our Voice/Hybrid trading business generated geographies. continued improvement across improved X.X% currency overall This down macro the be during to uneven up or environment basis. a $XXX million, revenues quarter. of The and on X.X% products constant

such options, bonds, For instance, in GXX foreign we areas and and in credit areas exchange. European significant power European spot such and and government were corporate U.K. market saw Asian gains oil, conditions derivatives, challenging as revenue These as growth bonds derivatives. interest offset equity rate European by

performance company charter during the pricing in shipping across and demand and the shipping disruptions conflicts from has consultancy which charter Europe. BGC business. leader saw significant strong Additionally, potent the energy market global geopolitical and quarter LNG and seen driven by is

of policy of and levels rising less. led of participants to XXXX, rapidly the interest This into across expect we caused central and market very macro divergent monetary broad to environment classes. our products majority volatility. high and some Going current based rates transact has growth has asset The banks

expect As in and trading there. of XXXX dissipates, beginning activity levels growing this extreme we from higher volatility

which full million, excluding be quarter year, revenue expect the adjusted anticipate outlook. the Therefore, to like of year million tax operator, And constant flat a Revenue Now and million We turning versus lower year, to on X.X% $XXX BGC's year $XX range pretax $XXX $XX to basis. of fourth to constant to insurance $XX.X questions. last our approximately for the to adjusted of revenue. currency X% guidance we excludes of quarter higher between would million we trading revenues on for X% $XX the compared $XXX.X million the to approximately to insurance. XX a to when be as compared our total and million the that, fourth XXXX million call XXXX. XXXX versus million period rate in be first earnings of days in full X% range basis $XX.X earnings generate were with we'd open anticipate the same for or last currency

Operator

[Operator question today Credit for Gautam you. from Thank from Sawant Instructions] comes Our Suisse. first

Your go ahead. line is open. now Please

Gautam Sawant

push line my regulatory please lines morning, Good taking give And for still you share can there's questions. that out Hey. pending? comfortable and what And updated nature might could us the Can of with on time perspective the from you be the for you the this thank of any that approvals gets FMX? further if you your time types factors point?

Howard Lutnick

for -- interest primarily And are during exchange awaiting we was get that converting for upon are approved. futures was So futures approval to The we past to operated acquisition our new of the weather products. required an that number rate application we years. now BGC's that that

mean, is part our waiting that more on. is, will used we process and are the And in quarter. just that take. in be we confident received expect that we it -- what are than first this expectation large I look, So time that, to takes

that way out 'XX. to the understand we pushed reason the last more have have be first to quarter I and than believe would take expectation, things in just all But are days, time. think don't these it further any the that of world that you working we

Gautam Sawant

And announce then think about launch? that XQ launch? we come line to Does after the time how partners, the when regulatory and the about going platform approval the you're then should 'XX the before partner

Howard Lutnick

thinking as the restaurant, with I to as opening launch no may open expect to say X partners, be day. going have to attending launch, create think much just have you before would open. opening. most not we're when when would the when that idea but with It's the date we you want regulatory it, coincide and fun Ryan you sure, for and our in that's an To the it a excitement discussion you approvals going George date. of your announce which opening Clooney it's My

want think someday. opposed great generally, to when excited going partners. we so as can announce our we to our I just we're have data opening opening That's So and meeting about them dates, that expectation, we're to have people get

Gautam Sawant

quarter to to the right XX% same in CLOB are of topic. that and USD to the for Understood. the Are there platform, FMX The impacting market XX% declined the XXXX. Okay. market any factors the share I share wanted relative in last quarter on it's stay now?

Howard Lutnick

ago, stronger first the -- the And market the marketplace. market, the the from long, stems was this that really our these When that So little share. that in a been up BrokerTech the a leader extreme we period and was -- I've were extreme business back picked this the volatility long operating in long is time busier in volatility. were when

market that's while the extreme extreme volume, an -- to But So growth went this our to this during volatility. is of larger in share continue example this we grow volatility, just player.

think material think dissipate, our will as that announced, continue. share think you'll see improvement join, they obviously, as a I And we see dissipates, in I the thereafter. as we partners growth extremes the our we market

Gautam Sawant

Okay. time And line an platforms initiatives? digital your those if update provide on has asset time here cryptocurrency on me for changed? And just last question the you lines. us or for Can

Howard Lutnick

Sure.

So in Lucera, to market exchanges. participants we are connecting

We are also hosting exchanges as well.

team is in making and can FMX I-dot their is that possibly use as and T-Cross on it to Our futures many traders sure make system. obviously, builds our want covers good to idiosyncratic as very, nuances exchanges, focused be as very that every system

building into focused will the that. is finance is once meet the to trying are are decide turn get to banks our And crypto, that FMX launched, firms we for exchange from on when for trading exchange The and timing traditional we attention So we large space. crypto. to an

little the every the world a here right it, connected in crypto. the our about of trading they think into business are it. the do bit and They have There's you've seen firms that trade and go announcements to to starting want key to around all and are we banks all the we world, So when there. clients to

there's to Now firms This is custody few beginning. all a it. willing

So we're timing. trying to that meet

are I racing So we towards think not it.

FMX then be it available the will digital open of and world ready, be first large I think us second. they're and is to will. And trying when we're special going that But start sauce, crypto if are you key that's rocking of for trading. I time our we doing sort to to and and what the the decide think banks

Gautam Sawant

questions. Got it. my taking for you Thank

Howard Lutnick

Yes.

ran comfortable trade -- they pretty seem right If names. banks, where they the rather place you we would just or think they the about in I and are BGC trade FMX it think in choice. with big on where by a

Operator

don't Instructions] questions. Thank you. [Operator Okay. We currently further any have

for So Lutnick I'll to remarks. hand Howard back any further

Howard Lutnick

Like more our getting our efficiency margins on call. improving, conference we're

thanks updating spending to and forward for forward you So on conversion, seeing quarter. the us, Thanks, the hour speaking look you and corporate everybody. to and half with on we the over again you look we updating FMX,

Operator

Thank today's for joining you call.

now disconnect. may You

BGC (BGC) 2 Nov 222022 Q3 Earnings call transcript