BGC - Earnings call 1 2023

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Operator

Greetings, and welcome to the BGC Partners First Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jason Chryssicas, Head of Investor Relations for BGC Partners.

Jason Chryssicas

Good morning. We issued BGC's first quarter 2023 financial results press release and the presentation summarizing these results this morning prior to market open.

at me find can ir.bgcpartners.com. You can Please quarterly details our additional in that today's you results presentation. press on investor find release and otherwise of results only Unless year historical today's any compare call period. provided the with XXXX on quarter the prior first stated, figures period, indicated. Certain provided the for current revenue as

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

plus loan as dollar may BGC securities refer the agreements liquidity, and our the the not in interest, comparison movements. and equity BGC exhibited generated noncontrolling a company's financed, revenue that significant total marketable presents We agreements. order better total volatile during equivalents foreign been amount which constant we non-U.S. currencies, have and pound to partnership euro define denominated of currency interest sterling. of on revenues cash and cash in define as its securities and to reverse a comparisons subsidiaries. a We basis in reviewable stockholders' which present capital repurchase particularly owned, period, repurchase exchange securities revenues

BGC's constant to corresponding applied updated company's relevant uses section to of Please and and see of results any also definitions used for and terms. the exchange currency foreign terms, the revenues press non-GAAP of such complete under today's revenues. why release back items GAAP period see accounting assume of current how, the reconciliations period press these release management when for principles. Please rates to today's prior results terminate accepted movements generally the

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

regarding except outlook uncertainties, outlook. transactions as changes forward-looking financial These company's We stock required the COVID acquisitions, risks call on forward-looking undertake statements liquidity statements. to or information law. and the business targets I'd call Any no statements not on and are material by are Any include position, this the obligation of pandemic forward-looking extraordinary our to today's results, statements. historical no that and you about discussed that buybacks, also meaningful update remind any price. affection about assume

For note discussion risks could in including, XX-Q in of special cause see BGC's of results Lutnick, updates the Howard these risk subsequent which statements, BGC the note those additional any differ reports the and call on actual the contained on Partners. and contained Board now of Chairman information on set a information from but to Form uncertainties, and X-K. forward-looking forth the such and risk I to to filings limited forward-looking over factors have forward-looking special XX-K, filings, factors and SEC turn to, to CEO in and Form

Howard W. Lutnick

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

for expected, long-term BGC has growth As begun. we

quarter each lines. of saw our across The first business growth

currency constant in growth revenue in through second with XX X% or the with first quarter, X% over X% days. so by grew the revenue trading accelerating quarterly Our far up

with buy quarter. in Fenics in had relationship continue of constant representing or BGC's rates. volumes XX% record interest market-leading the over of following over total a the to first revenue XX% We growth X grow issuance of between increase enormous as revenue XX% end trading revenue our and expect the in a to quarter currency, returns

launch. With on partners continues respect we Exchange, approval the announce to and the call to our strategic over FMX, with complete June I'll corporate to Futures XX July. CFTC expect the new our under and We that, the conversion turn beginning of our on trade ticker of at intend progress final to BGC our the prior to Sean. With

Sean Windeatt

day, and Thanks, everyone. good

led trading by $XXX.X of ever to second in the Our revenue pandemic onset when our $XXX.X interest volumes grew quarterly XXXX as first up of the businesses only insurance, following first total quarter revenue. asset second interest of rates represents million representing Both the our meaningful volumes the conditions by with XX.X% asset in quarter first client quarter, shorter-dated growth revenue, strong by The classes. the interest of all of growth rate activity generating and record voice currency, the trading XX% credit, to hybrid increased rates. and excluding drove end volumes. volumes our highest course, record Fenics This This trading was and by solid X.X% or higher higher driven our XXXX grew all improving classes. COVID-XX across to saw credit across XX.X% combination trading of and products rates to million constant Fenics levels. of a across BGC's in revenue driven X

double-digit Data energy strong renewable driving Commodities revenues business our and Lucera. Data, driven growth, XX.X% and and Fenics saw chartering business by Energy ship Market and by higher. Additionally, post-trading software our improved

the to revenue the of growth outperform recurring expect industry. these We businesses continue to

and accelerated second quarter increased X.X% with year, trading record last front-office drove across our in the overall XX first has higher revenue of quarter. days through the the growth versus productivity, business. Higher up Our X% profitability revenue which

by XX% XX.X%. was portfolio platforms of UST's in Fenics Fenics currency driven by growth or improvement our GO. Fenics constant improved strong growth This was led growth match and Turning which Fenics industry-leading to platforms, in Fenics. by XX.X%

Fenics second conversion electronic following provide Our fixed Fenics quarter increased our products, income We higher-margin volumes Fenics saw With stronger X.X% to the technology-driven voice I'm our our across that, our credit. and outlook currency. XX.X% particularly volumes in hybrid markets businesses. of to This for the trading reflects or revenues of growth comprehensive of pleased constant strength XXXX. offerings the

to in to versus earnings range to million conversion million as to million pretax rate million in be the last range tax $XXX $XX call anticipate I'd turn to XXXX. the X% anticipate generate X.X% of we the to be Jason. compared million revenue for between to earnings We X% expect year We With And of $XX.X over like $XXX full total and to $XXX.X of year. adjusted versus our adjusted that, million. $XXX pre-corporate

Jason Hauf

by Thank an of currency. increased and revenue By -- and revenues by FX Pacific X% by up total a currency X.X% ago. everyone. X.X% Sean, On million, X.X% constant X.X%. compared class, year in and X% East X.X% constant constant currency in asset decreased hello, Africa and XX%, $XXX.X increase increased X.X% increased and and geography, in revenue and last increased X% currency. to constant year. increased Europe, by Asia revenues rates X.X% and as our Credit was X.X% by you, currency. constant of by generated X.X% X.X%, Americas while and revenue X.X% constant increased by in basis, a versus by commodities by and Energy currency. in increased Middle equities By

Moving expenses. on to

benefits compensation and both Our X.X%. and GAAP adjusted employee under earnings by increased

and Our by non-compensation expenses adjusted GAAP respectively. and earnings X.X%, increased X.X% under

on adjusted earnings. our to Moving

increase pretax year. $XXX.X was $XXX.X margin expansion a XX.X% improvement with XXX million of last EBITDA million, post-tax Our a million, We higher. was $XXX.X XX.X% of to recorded a income earnings XX.X%. X% from adjusted Adjusted basis point

count. Turning to share

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

as spot share March fully by count increased Our to sequentially X.X% XX XXX.X shares. of diluted million

XXXX, issuance to repurchased we greater share annual first April The bonuses. million In generally due broker shares. approximately X has quarter

repurchases of the our to half expect majority in place the of We take year. second share the

statement $XXX.X As Form conversion. filed corporate BGC connection was previously S-X Inc. million of of On with Group, $XXX.X its April announced on liquidity March XXXX, year-end registration a XX, our compared the million XXXX. in with SEC as X, with

Following close June effectively receipt approvals will and after of the subject The named to corporate closing conversion currently on will of expected immediately BGC shareholder its conditions, are of ticker, to to A Group other on BGC. including all customer trade which we our common expect approval, satisfied, under new be company regulatory of XX, and BGC's NASDAQ be quarter stock second shares Class Inc. closing XXXX.

information of to I'd soon practical going additional turn With like to for our forward corporate the with conversion. that, rate provide tax respect Howard remarks. will close to the expected as closing as following We

Howard W. Lutnick

Thank Jason. you,

to As you today's it be exciting of see from is time an part can BGC. results,

first growth in second the improve the quarter. our is trading continuing through business to days Our with accelerating XX

will the recent company conversion Full the for and S&P of XXX Recent XX% updates C-Corp dual included average saw this trading pass the year note alone, policies index million are like if of X A by from doubled class and XX of demand. into that eligible complete inclusion. corporate this examples now most quarter research end recent daily to estimated companies could increased following BGC's a Our the S&P's translate shares in to that us share bonds be Up-C at conversions ownership conversion. institutional an mean

happy operator, that, open questions. with So we'd call be the to for

Operator

Rich from Repetto the Instructions] Piper with question first Our of [Operator comes Sandler. line

Richard Repetto

at I how the the quarter. is is on down the first this second fixed quarter strongly robust guess congrats And -- out volumes -- year-over-year strong. income. call X% first date -- question still pretty numbers, have acknowledge the outlook Again, know is But slowed back? down look I you for put optimistic volumes momentary quarter. is first strong is pause a up the quarter, the the I -- very second we that up quarter. is But just to the I pull -- to guidance guidance do guess positive, it Is you what to CME to are compared you for you're the compared first, a -- when question volumes, that

Howard W. Lutnick

are head the between got consistency healing rates We've of and we've more around Well, seeing volume meaningful are towards to around starting volumes we world. and be meaning the that relationship expecting the been more process issuance. world, trading to the process, look, broadly healing issuance interest

So will quarter. we and this pace of April, with expectation were we that remain of for the our through is the month balance up X%

system pullback. that volumes volume. issuance very less So we're in issues in volumes, certainly are feeling pretty have growing, We that BGC, feel is a seeing we're There's banking certain But good more not confident at idiosyncratic the globally, areas big. things America. up know

probably the up and of, expect issuance my our that's big We rest be of expectation. to life, rest the for

Richard Repetto

And do BGCP, half that I delay half? back ceiling bit the term, And come a a guess, but little would debt guess? And -- due longer the bit least impact back expect I has all at will been the how is to the back little in issuance. issuance over up, think you that this of you that there don't

Howard W. Lutnick

do. I

the the I market to ceiling debt in of within issues in the other that will assume term. ceiling, impacting the particular respect don't constraints and end U.S.'s debt that has way treasury the the been be the movements relative with which idiosyncratically of of try treasury or downs think has see created one by we BGC. modified it's global it its it think in be short stay the mean, just near to to X% BGC near resolved around the volumes I are think resolves will going scale be I business, sorted if ordinarily, becomes even itself, issuance rates BGC. interest will not improve. deficit beneficial I the of beneficial is chaotic, then U.S. to were so to term. continue And at large it I if and If that just for to it of the issuance

was that that I they every we're And they many the we're heal, quarter I the they're for saw way. pretty better X.X%. heal X%. second slow, quarter whether much mean think you a or So up volumes fast heal good think started have as -- first day. been years just We in spot constrained I getting up either so they

going is expectation that keep and we'll Our good. pretty we feel pace

Richard Repetto

other, one guess Howard. I

clearer You what you come understand that's But be on tell talked or -- to what savings XX June rate cost XX. about us of of and completed where know then and I on going. talked Any the cost more type synergies? come corporate June conversion And about tax and will the this... just out about that I trying after you'll view

Howard W. Lutnick

a holistic we'd I rate both of think view will rather up. give our go tax

won't And entirely, mitigate that it somewhat. but it it mitigate somewhat. it will will savings we've as said, cost mitigate Our

will it and holding and a therefore, to So broader our institutional much hopefully shareholder base. simpler but company a attract a be stronger effective cost overall will have rise, able

is So expectation. our that

that get say. this will I we to -- the is taking hustling at we place the that that does the think we're quarter. constrain end of voting is process things the process in while done the And we are

a complete So our voting come we taking it expectation is while soon this as the process will complete, place. process with but is is are constrained as out is model, we

positive, to be we we've spoken to and who those the to that We carry are even are confident -- day. are confident planning maybe or is beyond the vote votes that achieved since will sufficient

you this, higher certainly Lots higher but So a as to mitigating, but this we with significant, cost, not is just model. things I overall robust come process as completely complete out costs mitigating said, work, will But rate but like higher. know, lower, now. not of therefore,

Richard Repetto

I submissions guess, I in you all it Howard, same players of incremental I investors for -- is that -- were the guess, and so since we you talks get to know incremental guess had and I last I the any on what the lined the same update regulatory gotten the got FMX, are customers talked, it's you approval that And -- launch. believe publicity. prior? guess, closer as update And Is you with, potential on the partners? up as it on, I plenty any forth

Howard W. Lutnick

Sure.

feel our is rising. -- I become get popularity So we I closer and closer, as

us I participate no, attended users in the rise. someone clients to always so I'm continues possibility. part to of in America. to I I think that meeting really interested far, that desire But haven't a yet not as competitor or yet. the the and yet. And be monopoly to have It's participating where FMX, meeting haven't said, to either as with had CME's the I've partners in

important backroom that is a America partners, So that conversations the an CME, my asking to and is slower. not sense My and with less. is will be go extraordinarily little there will have which maybe in enterprise CFTC powerful more sense

necessarily know things but a because might that's as a So to it, otherwise that's certainly don't I'm not I swiftly possibility. possibility. expecting go they

And so whenever its approval the runs course. await CFTC's process we that

our so expectation would follows. be And as

process We and why months. receive the no reason know that over approval will we receive CFTC coming -- we we won't work -- will through

will We approval. CFTC receive

then to approved, have available which once we will and We our will an we'll as what launch, business exchange. be a, ready means call do soft

try marketplaces to expect remember, approval. We and away opening, have of the have we a as we upon broad-based to world, And going then process, clients. begin in the the Do a will Is work? it onboarding as to That launch. will onboarded long line trying have sufficient We'll have But soft of do. one this clients onboarding are are Yes. we Is many to And of straight work? process? one clients launch a are of we the having our successful possibly is official then of them? it start broad We rate our just of base we will We we call we great do. than which onboarding Do just that U.S. be we clients. beginning when launch more soft say just we not. can. to futures, CFTC It is launch. the is

think [indiscernible] to it, so and not has anyone extraordinary to quite And hard like do going seen we at this. going an are are to ever we stand competitor the work and up anything we Exchange,

Richard Repetto

the that would or strategic partners And not the soft investors occur of the launch? announcement prior to

Howard W. Lutnick

full or after maybe I them, soft before launch, a somewhere be soft the with before it may launch. whether well the discussion the launch but before launch that's certainly it's think full the

a So discussion that's future. just of

Operator

Instructions] [Operator

Howard W. Lutnick

there Is any more I'll right? up. wrap Are that Or just questions?

Operator

Yes, I'm further at no time. sorry, are this there questions

Howard W. Lutnick

good, speaking and We growth the forward conversion and fixed forward. as income Okay. forward. Thanks, incredibly line look volumes continue Thank issuance this for going going process we we in head with look morning. speaking finish to Thanks, of feel more to to to BGC's BGC's large everyone. us trading you underpin growth we updating you. We you growing you to towards corporate really forward as everybody. The will joining

BGC (BGC) 3 May 232023 Q1 Earnings call transcript