Earnings call transcript Q4 2022

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Operator

Welcome to BGC Partners Incorporated Fourth Quarter 2022 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 call is being recorded.

I would now like to turn the conference over to your speaker today, Chryssicas, Head of Investor Relations. you. Thank ahead. go Please

Jason Chryssicas

We results fourth presentation press morning market results everyone. year summarizing and XXXX this open. the to financial release prior issued morning, quarter BGC's full these Good and the

ir.bgcpartners.com. at our on today's it find in can Please you additional results investor can and release note, press details find presentation. You

the of X, revenues, any prior year the to-date Certain historical stated, today's excluding otherwise are the with due provided on provided November first call XXXX. first days and 'XX compare sale comparably revenue figures Unless XX results quarter the XXXX. in insurance to fourth on quarter for period, the trading

will basis, We call earnings unless this otherwise on stated. our referring be results adjusted only on an to

our equivalents, define cash non-controlling loaned We reverse less We subsidiaries. capital adjusted refer and marketable may plus repurchase and also owned, agreements. in to total stockholders' not which to agreements and as liquidity, been cash EBITDA. securities equity repurchase interest that refer as interest, securities have may securities financed, redeemable partnership total and we define We

to constant current to foreign under or in GAAP. basis Please significant movements. revenues. results sterling. during presents revenue used the prior Accounting volatile a of the Principles determine assume release, to period rates, BGC's comparisons its euro denominated press period, exchange a exchange company's the exhibited present BGC revenues no Accepted which constant currency see of foreign dollar comparison movements the BGC generated Generally company's on particularly the a period today's and currencies, order amount pound in better the non-US revenue in currency revenues applied

back complete these updated how and relevant any terms, terms. definitions and for press uses of when corresponding the release such today's see and of also reconciliations management results why and sections the of non-GAAP in to GAAP items the Please the

our investor and Fenics our technology-driven Fenics. our GAAP the to at presentation. results platforms. in company's respect and offerings growth available on We mentioned business with markets website include call ir.bgcpartners.com Fenics today's Additional is refer and non-GAAP information as to on Fenics

no the required also I historical remind as forward-looking risks and our uncertainties, are law, except outlook BGC targets Any the today's and regarding statements call to information are stock assume discussed obligation update by transactions statements. changes you any forward-looking meaningful undertakes involve price. business to no the not and forward-looking that call buybacks, acquisitions, Any that statements. on material or extraordinary on company's

BGC's cause uncertainties, the risks results For in a could risk to including, but factors which not to, limited of forward-looking statements, X-K. updates note Form discussion SEC in these such on additional see and actual contained and special any and filings, on Form from those differ forward-looking and and information XX-K, contained on set Form forth special XX-Q in factors the to filings the note reports subsequent information risk forward-looking

And the Lutnick, to Board over with the I'm that, now and Howard call of Chairman happy Partners. CEO to BGC turn of

Howard Lutnick

Officer, morning. quarter you, XXXX Sean our are BGC's Jason Hauf. Windeatt; joining year Thank you With for conference Operating me for our Good all Officer, Jason. and fourth Chief us Thank Financial and Chief call. today full

XX over over The global business. decade-long our interest I of remain volume, issuance, BGC been rates, to and since trading years last instead, volumes for rates XXXX, record have changed flat times have increase which Today, overshadowed credit by of an trading headwind business zero actually our rates created in produced This to a growth issuance. and despite caused over discussing manufactured has company. environment trading we've X interest the Historically, declined fundamentally starting XXXX. have in volumes an over became which pleasure how the seen zero would December near-zero past huge decade, the

catalyst and these issuance zero these transactions, of between to tools catalyst new eSpeed off of of broke down with BGC volume transactions Newmark, a to billion. trading and years XX last best headwinds. as XX to disappeared, the available electronification for impact rates, built relationship the the growth During leaving we we and our interest dampen market $X.X times sold shareholders which cap spun In billion. $X.X revenues We or the

sold sold GFI a producing its over results bought BGC went these times of brokerage catalyst their shortly all $XXX in X.X investment one $XXX We shareholders in total proceeds. was We earned public April The of BGC for technology transactions Trayport built that business, million XXXX. gross million have thereafter. since for return over and assets, of million $XXX insurance and an of

technology, last historical the differentiates our peers. than represent massive have a electronify Today, businesses to infrastructure made Fenics over building decade, more believe our worth BGC's Additionally, revenues. margin current quarter higher us of these Fenics We overall from Fenics we the This investment capitalization. alone BGC's in a is business. market

difficult trading environment. Since the company, our XXXX, Hybrid of our Voice a largest business, faced part

dozen to billion. in GFI more other XX XXXX, we the in have forma been that global given have billion than If their been businesses This period. during impossible, this have has BGC, acquisitions to or at tripled issuance close resulting $X.X should environment service these you $X.X look producing which macro year and more in would made, revenues were pro financial XXXX of revenue

and volumes of XXXX When have average issuance return With volumes drive would grow positive would will volumes XX%. the trading our is correlated we that higher. on this levels, directly rates interest strong meaningful issuance. multiples correlation believe trading double, issuance significantly been Historically, with trading above

It time mentioned. a of exceed only matter we I just believe before billion BGC will is the $X.X

company. We are now growth a

an remain company. will opportunistic We catalyst

but company drive electronification, our will across growth a businesses. now that remain fundamental environment high macro all margin have driving the of will we that We is

over I to Sean. the with call that, will And turn

Sean Windeatt

Howard, Thanks, day, and everyone. good

highlight the be on far As Howard almost the how order through of quarter of two is the business providing my our performing just mentioned, to today in focus will updates company, of first months XXXX. on growth so

currency the BGC's first quarter, on or of total trading basis. revenue a X% days up XX first the is For constant XX%

across constant X% increased our increased seeing constant or or classes. basis. all X% X% asset FX in a X% Credit growth X% X% currency. currency currency. constant Rates increased on We revenue are or in

days increased Additionally, constant energy driven our of first revenue strong and Fenics, quarter, with in foreign margin the currency. and XX% first trading strong the constant data. XX% business and or increased currently growth rates, market XX% equities higher momentum through currency, XX% a This been or XX up generated exchange constant in technology-driven credit, basis. currency or commodities on has XX% electronic by XX%

platforms, wholesale XX% our growth state-of-the-art the offering the Fenics revenue or pools technology. markets reflects on Fenics a of increased that liquidity our using currency Fenics strength comprehensive access This to deepest growth XX% basis. as increased constant revenue the provide GO has Fenics Fenics by days trading Treasuries, Portfolio Lucera, growth platforms of first US such been for led range XX% Match. XX This of broad and fully electronic our XXXX.

outlook of the described, to first provide With following the for I've quarter the pleased I'm XXXX. just details

full of million pre-corporate XXXX. expect we rate be $XXX $XXX.X guidance be We of anticipate to $XX the be revenue basis. tax million to higher $XXX.X on total for pre-tax X.X% approximately currency million generate million range XX.X% adjusted to in our last X.X% conversion of constant million, versus year. $XXX a year to $XXX versus the earnings and to Revenue earnings anticipate million. between in to And as would range $XXX million compared adjusted We

the over that, call like Jason. to to I'd turn with And

Jason Hauf

Thank hello, you, and Sean everyone.

also our press our financial XXXX, count, year investor this represents average fourth other full of brokerage weighted can the XXXX, available our count on or the quarter year-over-year respect decreased share million be and quarter insurance approximately XX shares. were a second XXXX morning million share share sequentially business. fourth XX% compared and and Relations website. the decrease quarter made Our X.X% results for fully of With release sale X.X% to to we and announced materials of found Investor This to after XXX.X diluted

December repurchases of fully shares our has to million sequentially second or spot we a diluted million X.X%. year. shares. year count the XXX.X fully of make by share the BGC's speaking, X.X the shares share share by diluted to X.X% Our spot expect or to of in decreased majority XX decreased X.X count half Generally Compared million ago, as

As the to slightly we we to our decline expect our invest for growth, business accelerate in year. share count

US FMX. our Turning electronic platform, to rates and treasury

rate brings partnership regulatory we FMX expect rate of and as investors, all of will for LCH, for industry-leading the futures markets. submissions it quarter. of completed technology FMX' track be futures Fenics' the valuable announce most world's collateral, remain enormous in our and end We by investors expect platform, interest and on representing together products largest launch. of value to the first prior The filings strategic a and the creating the the interest distribution We US BGC competes strategic largest soft users launch to holder

of to expect we the conversion, corporate S-X the Statement quarter a to in second Registration respect With file Form XXXX.

soon provide to practicable. our information additional expected respect forward tax We with rate as to as expect also going

back I'd remarks. like that, Howard closing With turn to for to

Howard Lutnick

Thank you, Jason.

We reemergence will or up beginning interest rates, technological a markets. correlation down, to with the volumes. that BGC's are meaningful of issuance don't the by they're benefit an We means, driven and at interest rates, just strong growth those capital trading and have positive return capabilities improving whether which the scale the strong across of worry volumes we and these believe trajectory, really meaningful about of increasing we trading

and our made which will the global importance with strong Fenics, deliver earnings Understanding of cash flow. we technology, the investment in growth, scale coupled

Given value offers attractive growth best and we trading our the our in BGC highly the multiple, valuable proposition outlook assets, highly our believe Fenics industry.

operator, we're With happy over for the call to turn questions. that,

Operator

proceed. is Instructions] Please [Operator first from Credit with you. question Our Gautam Thank Suisse. Sawant

Gautam Sawant

there Jason. of over questions. could you seeing the And in mix by within I being terms Voice production start that sizes Good Hybrid platform? you're the the traded? the Thank amongst asset positive classes and and better evolve is guess, driven morning, we being outlook, How for my activity with the broker business? traded Howard, And notional momentum larger a the please Sean is course of the XXXX? the taking Can across better shift,

Howard Lutnick

of seeing the feeling and start volume, we the trading beginning. it our and across are between return we'll at So business. correlation issuance positive The it

begun. has it just only Now

it near where for issuance volume the zero. that's relationship for the not in credit, of issuance and volumes of Imagine, clients credit times spread. just there XXXX. to trade. had what and XXXX, was decreased no X.X since credit -- X.X There's no no in rates was So simply about times example, There's was fun and up X.X actually interest reason are there's was because trade to having, when it's and just

That X.X relationship which XX%. volumes means, going are to grow to X.X, going from nothing, is

just are much come, arms, year clients see to see going and us. for trading these better so deliver our for for pent-up good have and you're banks numbers volume you're of to coming relentlessly course improve results, over dramatically because just that things you the going good So our the and to years improve

industry going So and platforms. is across the better, it going to the do you're to see

to going you volume? to Are going smaller see will. Are will. You larger it see volumes? in it You in you

fact, actions is in you're That zero. just to incredibly were that In broker rates it expectation interest driven governments easing going core broken, to aggressive has near zero volumes, that across by interest and own to driving their were for of big debt, and our relationships see my is small gone. fundamental the by quantitative balance platform. lifetime. My buying because gone rates zero or returns These to mathematical are productivity; across

take do They're hold, and interest will will think stay. the I going in So BGC are results And relentlessly relationships for to over opinion. I here. quarter quarter forward think our relentlessly as improve and so they here those rates

Gautam Sawant

just it. And platforms. Fenics to switching Got then growth gears

Given I'm million, Lucera's relative UST you the kind year-over-year of XX% like and sense a like mix? XX% of can give out growth. breaks how $XX to just platforms? to the other the revenue revenue I'm trying determine growth to looking maybe year-over-year at us that

Sean Windeatt

is your or that Yeah. did them, highlighted four think Look, five of I I we've I -- seen. what

of Remember, and across I You're those Portfolio because say up the GO it's seeing one say, But treasuries, growth in to you're is XX% the credit would single why days obviously, in around gave Fenics Lucera, correct levels every in which in US XX and them Lucera, board. that's growth I levels. double-digit related. in, Match,

our this Fenics point, of at areas say, platforms. strong So I'd double-digits the early in growth five main

Howard Lutnick

what do you that do X issuance any with, equal And nothing and times? zero, up how be what US if to had to our structural, go two much in you have anyone says, with and the times there it with And trade. say, any who you has it to trading basically were visit about was it's was imagine And wasn't just would zero see can position if historically think bank, It X visit Fenics past. notes you treasury Yeah. in can structure. at to volumes UST, it treasuries and firm, go issuance were year for bills

rates, those return. that be this volume platform treasury they'll all lower volume on across and With volumes they'll is X%, great higher, growth as be for maybe to relentlessly our expect X%, relationships you platforms and to grow these or US maybe grow should

back issuance highly volume which correlated. and is where always directly been, is, business to Our and should it are have

sense. And the for back those and then we been. XX debt This have all just we you numbers will where ago, years gigantic, about are were our not that me. will where and in is no always issuance going new volumes XX these business to are they if you, again, excited path own are volumes were and told a money, their very buy going, you are the should I we're And things going continuously they because their Made see shocking grow. cutting. to the would But printed with at It's off laugh years. just path governments grow,

Gautam Sawant

here last of and guess, think fourth in acquisition expand the And how me priorities. level guess, I decision-making the I question capital Thanks. XXXX? around repurchases should Can we on for Trident the XXXX? repurchases the half And you deployment in on of of the second about, quarter just

Howard Lutnick

half make we year, the but collect half in speaking, it the of in basically year. money second So we the first the more of

is aggressive shares the back in in as the speaking, collect flow better, because the of bigger the said, the buying more half second Jason year, second year. cash half we'll because be in just generally numbers we our So of

a bought going very brokerage Trident. just We business. very, view as growth continuously our we invest in And commodities we're called, now. correct. are Obviously, company attractive You path the to

buy that going we're are companies think to grow to we assets more buy other So quickly. and going

these However, stock more multiples very buy should is our we us at attractive did you feel that to say that, expect we and shares.

through because So in that, really do core forward I wasn't to a that's right? and we now going We build continuously the balance which think to didn't businesses, because just catalyst year, go we opportunity sell could just all have is great but growing. companies business the company, were we're we past, grow buy and as have our we

just invest exciting. our business our more is across the core Now board across our growing and opportunity to is business much

say, is we buying -- than huge you business, of we we different our the many are to aren't in have shareholders I -- in So And that. know That insurance sold back shares. back our amount past. balance bought saw when of why the a past shares? you when would when

company said, shares. shareholders, of this Jason ability business think our front is of is XX million is our for As The in grow us. great changed. our the and to But opportunity there returns get and growth I

in ago now what also our to And really now. from is very ago, also investing it lot balance choices. attractive. And we're it That different very find years five which which back, they're business, find our but really, going of which attractive, because be shares may to is a we it buying good but debate, seven great better, years both place a fun was is we and

Gautam Sawant

you Understood. much. very Thank

Operator

from [Operator Sandler. Instructions] with Our question Piper Rich Please proceed. is Repetto next

Rich Repetto

speak Good Good morning, you. to with Howard.

know FX. at XX%. in and look rate, 'XX. CME's they're nuanced actually helped -- understand, when XXXX question. as to But the that just revenue I a But it And and down is you versus be I just interest was brokerage the bit, trying well. rates of in could So the up looked at question first more believe revenue looked volume, a I rates credit, little I you

me, banks nuances better can the banks year So when about, in will CME rates. can platform? the of be year-to-date effect the -- and why, your your -- excuse year But I about more there'll guess, you in also with talk like the is so CME the why then this the with than last XX% rather talk volume up and customers coming activity you lag far

Sean Windeatt

Sean. start that, it's I'll Rich, Rich, Well, maybe

year, constant You're so last us up rates for say, right to in X.X%. currency, year was last

year, last a you're in get -- into in environment, the last said year, rate bit the terms of we of as you going lumpiness of choppiness As interest businesses. and rising some

QX You rates piece That would are can who remember, us actually we now. have would and pointed out and QX, 'XX thought behind and is lower in volumes time of inflation at that business a during -- have QX rising. be QX

the hence, talking are -- fact favorably increasing. XX% on continued Howard overall, takes in are the trading -- between Yes, that starting in it in And classes of why And but for into And X% constant start as increasing performing, all into of and trading that's continued actually happened I Feb. in now albeit rate it QX, my strongly Jan we that's -- its the prepared and before, And about and all rate that that's asset there. the the environment, up at rising QX. December spent And going are started noticed of I think interest where you December us, what's interest across board. the into lag currency, pointed volumes QX. are that remarks -- out

Howard Lutnick

had had and So in very the rates. saw long-term year, you growth rates. and pure and less short-term volume -- volume short-term CME they They is rates growth last had

curve, going watch across mix. go volume entire were products, the product to smoothly across just across the You out our

product think be smooth was be it to word. would the wrong to the right don't going -- is. It's it be relentless going which I word. matters So not It's

end. go volumes to long think, I will the

moving short the treasuries, the to up perception vast or the issuance the in coming be be market is, go will end, the But issuance the up again, of It not things, is it. through credit, of business issuance met vast go down. And traditional government velocity Fed vast will volumes happening. be where answer that going with where volumes met return the by is will the think will that's volume to change we I will trading volume. buying as the

we're by are growth I path this be illogically, will the up and the relationships I it you of our end and So relentlessly in going now middle the a some that see December. be businesses going we in to to these business It choppy. going would going the return. businesses, to will the or this told it answer feel down are beginning of to our think in to see said, of by others, be in -- year, right, you're year. many stronger be now. There quarter I way is, going across right, but that are big you But one forward positive are ended another. But you're move to than some as going

Rich Repetto

watch, to It's it. Howard. to fun going Got be

next you date quarter. question it talk -- on about release, soft the my on second about what Could track, talked earnings FMX? be you So in In launch didn't be follow-up or the date you that would mention reaffirmed the the launch being to means FMX. for the but contract

Howard Lutnick

nothing -- will will their approval. answers are -- we The That to are get that we has our we finished Yeah. this finish mean, means, perceptions questions, quarter. I sorry. changed, really we regulatory

and Soon announce launch after government we our begin. chooses approvals, we those give when date, the soft will us to will then

moving forward. We're it. are processes we're about just these excited So

Mercantile $XX is able firm is more excited than a Chicago futures can't these timing billion into greatest I this more reemergence platform It around decade. being volume with mean, Exchange want the in the is grow. for for exciting timing you of US a the be to so to to are -- are Imagine it. is They competing days. of And exciting. the rates open They be a here, going so by for This It it. this billion fine. little ready ready clients. $XX greatest are Volumes monopoly volumes is it. going competition. rates

Rich Repetto

Okay.

questions. no XQ last question gotten to couple you probably matter Anyway, what the of your corporate legal still say counsel wants how. a expecting conversion. So is I'm launch tell a to you, around soft I've

quantification benefits you review, what to rate issue of could just we And sort versus doing the And Howard, the the that? reasons of will see are the when the you? the then So of savings? for expect tax to

Howard Lutnick

Okay.

expected So as we mentioned, repeat before, said you what don't Jason? -- Jason why you

Jason Hauf

additional going rates information to We expect tax expected with practical. soon provide to forward respect our as as

Howard Lutnick

date what's it. But no. No, doing we're the

You said, do [Multiple we'll Speakers]

Jason Hauf

form second file S-X in the of to statement quarter expect We XXXX. registration

Howard Lutnick

I all That's want. Right.

So second When we'll in That put the legal they close. then SEC. the quarter, then it, approve documents S-X. our the we file to

pretty that's how works. There's much So nothing it in much between.

as thereafter. You as just soon close practical

in second quarter. where through and so, try We'll file tax we'll talk good the will everybody rates, And of and we'll come out we Then to it and to are. the have that's a details. we understanding go

over We they C buy stock. found time our who C-corp Simplicity, prefer have right? with in have met structure, structure and a to to the the many up would structure complex shareholders simple order

So couldn't put a that Timing be we will place. that simple in It in put place. We'll structure. be C-corp will better.

simpler structure. the have got and of a We you've coming the company rate hard growth

I think be that will helpful.

corporate be had We will will rate we higher, save know It much BGC. be broker structure. save -- a should to tax leakage. and will bought example, as money simpler had dealers. we partnership some broker our We but dealers. be to should We GFI. expense. We'd There able able an have be We add

now we're they all that doing to be of It do. can less be can capital just could more all work work simpler, together. be simplified, So merged this efficient,

mitigate won't tax will the some of And that so, we perfect. think be cost,

tax all our rate So we've said higher, and that will be along.

understand. We'll able shareholders the think be buy will able to However, will work. mitigate company. And And to transparent. make just to company simplicity the be to get I a we reasonable will be to better. It more It think be it easier I more it'll degree. should

Should be third. to the able close quarter, So second in file. we

Rich Repetto

That's Yeah. Thanks you. helpful. Howard. the review, Thank for

Operator

over question-and-answer our have end comments. of for the conference We I back reached turn to would Mr. closing session. the like to Lutnick

Howard Lutnick

all. thank Well, you

do makes in an trading volumes we're and excellent but technology, win, do are be volume incredibly extraordinary We valuation will We very well. the from feel feel bright. well. best our return clearly is global industry. Trading firms future a for very, the our our going that investors. is that we -- feel will positioned scale people marketplace where very, to Banks a the Our are lots that in to a position attractive BGC just BGC very for very, have of perspective going alternative to attractive comparative

We to to you look forward talking again.

reporting are call a volumes higher delighted to We forward, forward to look again, and going ourselves, we company with growth and interest rates.

So all. stick long Thank to with forward the quarter. next to us for future. again you, you speaking I look

Operator

Thank you. This conference. does conclude today's

lines your you disconnect time, may for this thank You and at your participation.

BGC (BGC) 27 Feb 232022 Q4 Earnings call transcript