BGC - Earnings call transcript Q3 2024

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Operator

Greetings, and welcome to the BGC Group Inc.

Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce Jason Chryssicas, Head of Investor Relations. Mr. Chryssicas, you may now begin.

Jason Chryssicas

everyone. hello, and you, Thank This morning, press XXXX Results Third issued and earnings BGC's release Quarter presentation. Financial we

on You press can results adjusted only EBITDA. Please our quarterly and tables find any these items be the our in prior for acquisitions additional at complete ir.bgcg.com. Except terms we investor and updated them. The non-GAAP release, provided of our supplemental with presentation to will GAAP today's refer price. any basis, how year stock these quarter website details on include management material uses or period, historical to reconciliations outlook results as and adjusted on call meaningful a third earnings compare results and when our and to the corresponding of referring for discussed XXXX changes today's and and the on results no non-GAAP today otherwise definitions of terms, specified, which assumes

change I on contains macroeconomic, should including, that goals Our statements, expectations our considered None based or on this various information and you are guidance. Also, economic social, formal update to other any business. from forward-looking statements. could to beyond be outlook concerning statements are targets as Such required subject XXXX forward-looking of factors. Except remind expectations. to call subject without statements actual results limitation, undertake we risks obligation no our which uncertainties, differ political and and cause to by law,

forward-looking most filings. risk factors statements, For limited the but our disclosures including, other that regarding SEC not complete factors may impact a of see information these recent forward-looking the discussion and our risks to, SEC in and filings,

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

Howard W. Lutnick

quarter you, $XXX revenues delivered Financial Operating XX% Good million, to Huff, Windeatt, compared is to today and third and Sean Jason. quarter third of last Officer; record conference Chief Officer. our our We Chief morning, With year. XXXX call. Jason me welcome Thank our up

We Holdings, drove than month, of energy the strong across Our closed Global reflected we acquisition adjusted Partners. more Sage growth we and performance pretax this acquire Energy our class and broker, agreed OTC our to largest independent earnings region. commodities and up every asset XX%. Earlier

dramatically transactions We volumes and $XXX much treasury FMX million more both U.S. to generating needed platforms. be efficiencies. expect will across peers, continues and launched pricing add our clients record accretive FMX annual capital together outperform immediately September with in its innovation, improved and provides than XX, Exchange, to which Futures FX revenues. superior

connect FCMs XX couple call additional I'll to to the over the that, an Sean. expect of largest X We next of over to turn the quarters. With

Sean Windeatt

day, Thanks, and everyone. good

BGC's increased growth across $XXX.X ECS asset complex class. energy revenues by and grew the organic brokerage XX.X% XX.X% revenues and third quarter Our million. grew to Total and million, grew $XXX.X asset strong $XXX.X quarter revenues across business. to $XXX.X to revenues million, reflecting to representing region. XX.X% every driven the by across XX.X% class by reflecting revenues million, leading Rates third higher by environmental growth strong by record volumes

allowing acquisitions transform entire with will to earlier, the what our broker about bring time franchise. business. our further and As barrel. Sage environmental independent to and our business, Howard us strengthening aligns shipping, mentioned OTC commodities offering we're Sage world's and the oil excited in leading the broker, OTC, first our ECS for energy largest the will seamlessly

credit driven improved to equity by lower grew Data, Asian increased volumes. by $XX.X $XX.X by and markets by driven X.X% equity revenue derivative Equities post-trade strong options driven $XX.X by U.S. XX.X% revenues million, subscription-based Foreign to across and network and exchange $XX Lucera. Fenics volumes, Market and volumes. Credit revenues activity. and by emerging Data XX.X% revenues offset million, derivatives products emerging European improved Fenics revenues Portfolio X.X% partially higher market and led million, by GXX Match million, higher growth to to by by European

to to million. increase revenues million, was produced electronic improved of Markets XX.X% the X.X%. This $XXX.X Turning quarter, of volumes rates $XXX.X third and by Fenics by Fenics Fenics. revenues growth across foreign driven exchange. higher an In

This Wells FMX growth last global XX.X% more revenues share enormous foreign quarter, quarter generated exchange September ADV compared year compared and exchange of RBC on Fargo. outperform to Match share to Fenics launched on Our platforms to XX.X%, FX for of The the market third Marex, billion and futures grow last world. average ago. the launched than record of more largest a Lucera. FMX FX Exchange with volumes trading improved $XX.X FMX, Futures up in volume SOFR market. FMX contract average up daily compared million, notional by to the and FMX the $XX billion. UST daily JPMorgan, XX% for continues market generated Portfolio translated than Sachs, FCMs, in year. futures, to driven $X Goldman XX, the its XX.X% year third XX% record X

leveraging X its revenue We network infrastructure launch grew futures Lucera and first quarter the its landscape. markets compared providing Treasury to largest our critical ninefold Match XX an the increased credit in in XX%. volumes XXXX. strength business, U.S. trading over over to the of additional the rate than XXX% European year. Lucera, the by U.S. expect capital its to is of of expanding up to FX markets, connect volumes more across Portfolio real-time and the last FCMs were for

XXXX. the fourth Turning to of to provide pleased our outlook. guidance I'm following the for quarter

the like the revenue earnings $XXX.X over of year pretax We be fourth to over year, last the turn around guidance represent the for full quarter expect XXXX. which compared the to midpoint versus of our earnings total growth as that, range revenue We year the guidance the million in Jason. growth would to million between of for million XXXX, to anticipate I'd $XXX $XXX of $XXX million $XXX.X to represent adjusted at which XX% full and call midpoint in would $XXX million at XXXX. With of million XX% to generate

Jason Chryssicas

$XXX.X everyone. generated geographies. quarter increased Pacific third growth million, increased hello, XX%, and of revenue all you, Sean, Europe, by revenues by revenues increased by across Africa BGC X.X%. XX.X% and and Americas revenues Asia Thank East Middle reflecting

and by Compensation under interest employee which and higher respectively, expenses. increased expenses driven GAAP adjusted for interest during due to GAAP by for to income. revenues largely increased the commissionable and and XX.X%, Turning XX.X% primarily XX.X%, earnings higher by than offset was benefits and under respectively, adjusted XX.X% more period. expense, Non-compensation earnings higher by

earnings. to on Moving

increased grew and post-tax million XX.X% Post-tax earnings to earnings per adjusted Our $XXX.X share. pretax per earnings by million. XX.X% by to XX.X% improved adjusted by share $XXX.X $X.XX adjusted to

EBITDA third adjusted Our quarter improvement. million, XX.X% an was $XXX.X

to count. Turning share

share expect weighted average earnings the quarter, XXXX. count remain its adjusted million a Our diluted count for full XXXX. third to fully BGC was decrease fully flat compared X.X% continues of during quarter diluted XXX.X average second to year to weighted approximately the the share for

compared As to our $XXX.X we was that, year-end $XXX.X XXXX. With of for as the million of XX, million with September questions. call like turn liquidity operator, open would

Operator

Moley the is line Our first Sandler. Piper with Patrick question [Operator from of Instructions]

Patrick Moley

now start just since been It's a off to month little want FMX. a over a I SOFR question contract. you on launched the with

to union the few launch. And you a additional maybe I'm we connect XX could been on couple was on just that the next those are So over Howard, then plan the largest hoping assuming of state of X strategic with FCMs get the of you from a how I the quarters, to you've of satisfied investors.

in any wondering is that? what delays what getting them there's -- if and the So kind of driving holdup maybe connected, what's just

Howard W. Lutnick

Sure.

on FMX So we're just bit going futures. little a to focus for

fully So the start all all you it Many after along, to of. plus the just we was when open hopefully all listed X the process FCMs said do It's and which of if was between up. first have we would connected. mean that's balance with on process field, would year X and right? X the FCMs said after and opening. just over after is We why the totally expect to players would the with few which all remember we of quarters a didn't partners our of That we was and it X connecting be which the we That were FCMs, I objective, And opened a get aware I've next said signed approved it FCMs, announced until others. the today.

top expectation X year we There was would get to then the take bring signed have Then we first first FCMs end all our CME. it clients XX are course. we'd focused end of by would the the of the have the of FCM we the on year But all up. we're XX, full up. us ones, the year, and signed competition signed in full-on up, of ready the would be the So in the but Obviously, FCMs the the year, second to largest hope FCMs. all to all

we X, So the high which we end expected. opened what with of was

X. definition, us with clients have So are only those happy. the very I But business only X who FCMs, do meaning people we can was the of by first

add XX partners signed them of the most, over all We should to couple -- next the if all, expect have X of of up. we most not not if to them them, of of And quarters.

trading As and they more it exchange well. sign treasury up, with as comes foreign often what is

platform. the other U.S. which additional and treasury get FMX, you up foreign nice exchange So platform our bump a our in benefit of assets is of

that as and market So as points I connectivity. expectation with do share We will those comes that bump added well. volumes think an the do they that have up

end that pains and going the I'm It's we this not LCH. thought a nicely doing They out slightly day. ongoing. will new way trying out sort So simpler, sort that we open forward. I of easier smoother, than the -- going we a in think are it's its of think these make always teething to and that's And X I variety excellent business. expect overdo and go sorted had as it X, expected whole going we I interest of through the into There's every that things have perfectly would all think for fine. to to in be be FCMs much would There's That's better of year. of I year, we'll to next process shape it.

Patrick Moley

quarter market one rest It sequentially I the in first the other the move looked time you FMX third on before to on one for ever. the CLOB declined of Just like think, the share business.

So think market that how share business? that was here just of loss from driver in share and trajectory we then curious what the about should

Howard W. Lutnick

Sure.

quarter, -- like like why XX.X%, that. XX.X% other show that I like was -- the you this So some we number, -- XX quarter there rounded you quarter last last something I up. or and the gave to was And think, so that's

quarter the was And was but a was was in as it's one one there round similar. and firms the spike a not happened remember, between business slight spike So there down, and dramatic other up on trading with round you a slight that's in irrelevantly trading in CME. focus volume, on. we volume that a professional What each was

not and market the So made on volatility high between was share slightly was the firms, the professional something pie very larger. we focus trading -- which trading is large

so market I only share that not was U.S. for our our changed. on the change. higher much expect has And would business Treasury

Our outlook I to you forward changed. way. it think go has not positive very in would And a expect

of they're it we their it's have As to have I come of And nice pods their and the trading and know really with in expectation on And very of more I of line firm. I as treasury we we optimistic bumps the are forward. from, to clients. think where sight some our the partners positive. going coming going on with said, within business think come with FCMs, We

Patrick Moley

energy and Okay. Understood. And then OTC transformational. Global Pretty the and Holdings Sage to business the acquisitions. shifting gears

a going You're to have to sector. lot the energy exposure more

the to when overall and that bit about And acquisitions should you margin of little to OTC, then us specific, now forward? revenues, good be like there quantify a way means Why maybe helpful how how comes expect business now? we much trajectory give million a acquisitions if getting how what in like be So time going could this? And is think the versus of us any company, your you $XXX about could you as accretive these then growth a very make is the would for earnings? that this well. from think help you breakout Sage think Why just more the we outlook to

Sean Windeatt

A lot of things.

Okay.

a for I overall in terms we're the number in said So think years, undersized we of acquisitions, of Americas.

of now were a with will in this these of huge significant seen particular make that very market. big X growth in you've us growth We in participants. sector And place, as the a and do, we now group Commodities will And It's It's what said Americas. in you've not And of where were diversified players. grow Energy this main a -- there. or we Now continues one undersized that trajectory & seen large. huge us shipping. this marketplace

from -- in OTC. stronger complete our you've overall. our and not we've got us give Europe. as course, said, particular, environmental -- of us us done we play links plug This existing business make business, existing in picture Sage, as and We U.S., will one strongest Europe, the with in So were U.S., and then, strong And strengthen in also our which in of X the acquisitions the in the it's seamlessly business. in and there's with oil

that prepared and on excited we get of we us given QX, estimate both said in revenues of in is excess towards revenue And in today -- we and what by immediately $XXX of million. be of already annualized So we've end obviously our expect on we said our haven't accretive notes, as an of revenues be EPS, both will acquisitions. for close on a us, both part we very to EPS. and transactions Sage. will we're the From said the both whilst once today closed accretive. closed, And OTC estimate those of immediately We've those will strategy,

Patrick Moley

that the fourth forward to how would is a is guess organic size about that guess on of versus come in acquisitions? tie much year-over-year the then Of going I going And Okay. from I growth, breakout, guide this for nonorganic? And as it's the low acquisitions much in you're it XX% Any that these well? models, then in revenue the as how quarter. color existing them -- be build question energy I helpful. range we but would fair model is just assume we accretive, of and these our into mean, the should the to margins there just XX% still business business for

Sean Windeatt

Okay.

business So in being acquisition, still between is -- X%. and the have just QX, the balance organic a and XX% is between is X% from X% over And we you'll whilst perspective, I the a start it's going to fractionally but that large and to balance slightly think getting you integrate a sounds once with think me. OTC as closes, you then level then -- X% accretive, acquisition, from and margin acquisition, acquisition, lower good I any to with so with forward, -- big X% XX% immediately of the X% to around margin that pretty margins, say,

Patrick Moley

you would get just, priorities? Okay. updated thoughts capital there updated could within And maybe just to guess, And once are acquisition, any potential look OTC if you Sage there on that Just share any then the thoughts I past businesses the Fenics be divest? could great. we possibly allocation or

Howard W. Lutnick

right allocation. acquisitions our you're be So we've that accretive capital in part of made when that will

it's And of I that shareholder did think for value think I were the clear capital. we would of study use best acquisitions be our superior. a what our these

made And those acquisitions. so we

us good they they're great the profitability grow businesses and prices grow for EPS. to are our think and and I

the share period So will pay -- will time these money I we're of for think obviously that our period it acquisitions. putting repurchasing reduce aside that to during

And it's should done that. on all the that so the share you we've and count accretive. expect rest, and calculation But

that's So shareholders. to our beneficial

them assets electronic very, are that might there nicely buy and that and trade at. point, of higher from your like who tech that few multiples attention very what multiples we and think attract would we multiples are to do some at significant others assets, turning we them have Thereafter, growing than to a

be accretive. also And so would that

of that just open-minded. things based. We're We are open-minded so. And to We've said those timing for kind sure. are

and who with We us. have have come chatted suitors

over open-minded than worth We of talking more, so businesses see time, that are you the at kind our cap I'm will not about giant think that I divest market it. much about will talking would company businesses. more I'm assets are And about electronic us we have point these some probably that but multiples. prove our the of small businesses,

expect I that year, close. expect we like over think that would So to that's we something next the --

Operator

We Piper have [Operator line Patrick Moley with the follow-up Instructions] a Sandler. from of

Patrick Moley

go How So so the fourth from said organic can like you've XX% quarter, outlook, that? -- you're dipping revenue Is below that an the in think Howard, I should to to in have that the that forward. generate looks going it still we fourth you quarter? back tough dip temporarily might comp, around organic the mind? about past, below achievable a growth that in standpoint. just you you you expect your wanted know Is that I growth And in that maybe

Howard W. Lutnick

delivered think beginning quarter, revenue expected maximum year year revenue from growth the just XX%. we XX%, this don't the on out out. We know are Obviously, you December. the -- I and I we was focuses play as growth don't don't blowout the saw out. don't our know we will how election its to play play back, versus will company for but I December stepping XX% which see stuff that after the of know anything year. the said how above year, of guiding performance, how I election a last will

So XX%. changed we reasonable Nothing we're at with I expectations, all. growth being of has but are very just our with organic think comfortable

Patrick Moley

once election, how just the into one overall business then just levels and Any volumes maybe kind of trend to And me. Okay. of on And expect side last we activity end update the the other your you for of quarter-to-date on in get trends? year? the

Howard W. Lutnick

more of -- lovely we are to XX%, that sort going things is expectation at up more slightly By than guiding tell our you revs remain BGC. than

Operator

comments. turn the for floor back to closing like I'd Mr. Lutnick, you to

Howard W. Lutnick

you. Thank

So strong growth. line and we to bottom top deliver continue

good month opened a about really Our it. FMX and actively clients, ago, which we onboarding feel Futures Exchange,

SOFR share trajectory far experienced and where exceed to and know growth in futures that with market U.S. the expect Treasury business, now. our FMX is what we you We

business. happy from in I very, So to Things, I as and year. new welcome very we BGC, we Sage forward Energy look the morning. quarter. to feeling forward you to look to you joining positive us futures this things Thanks, are for and next SOFR OTC appreciate we're expect everybody. seeing welcoming said, And very our BGC, we Partners good

Operator

We Thank you. teleconference. you today's conclude does participation. for your This thank

lines now may disconnect your You this at time.

BGC (BGC) 31 Oct 242024 Q3 Earnings call transcript