SNEX - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the StoneX Group Inc. conference call. At this time, all participants lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now StoneX hand CFO, would to conference I speaker, your Bill Instructions] like the to over [Operator Dunaway. Sir, the floor is yours.

William Dunaway

to Ended After third fiscal Welcome Fiscal release reporting we call morning. our of for Call press Conference Good our results for issued XXXX. release is Third a will www.stonex.com Quarter market June the XXXX. quarterly the quarter our XX, as closed yesterday, well Earnings which year-to-date This available we at results. discussions of slide to refer in results and this on as our on our our our presentation, website

available You to our call’s the signup view on an website to will The conclusion. presentation. the be presentation and need webcast live on order the the archive after webcast in of to also will

following underway, our unknown and of XXXX and within Securities Capital reports to notes we note, Quarterly Form Annual XX-K, Group contain subsequent recent financial Securities other statements StoneX This with required XX-Q participants risks statements are by Section the should Reports on on of as with XXXX. SEC. the filings most Form most Act thereto in discussion well are the SEC be Exchange getting the advise filed should the and involve all and the of XXA and and discussion uncertainties, Before meaning you as taken statements Report GAIN with conjunction in recent Inc. Act Section known the forward-looking XXE of the may Inc. Holdings, and of detailed forward-looking These which

or are will turn cautioned and update no market assumptions guarantees by forward-looking performance. information, not the events are forward-looking to statements no the its actual that assurances a The conditions, as over materially Readers results results regarding statements not statements. publicly company’s there that, believes call its or company’s company the result upon the any expressed forward-looking undertakes of O’Connor, any now be or I any Although future reasonable from the are differ to of CEO. company company’s new otherwise. forward-looking implied obligation will that revise can that future business Sean future statements based whether With

Sean O’Connor

Thanks, and our call. quarter and And thanks Bill. everyone, Good XXXX healthy. your morning, third joining hope are fiscal for I all earnings families you

livelihoods to thoughts be have with remain pandemic. who the loved than and in We this into in which, of to lost expect opinion, times, the also for continue in probably lost will sympathies people much continue ones XXXX. unprecedented and everyone Our millions my who well longer and businesses have midst and most

and as is services an prices and road deal and rough good this I durable being robust repeat risk perhaps clients, of I position solvency to unclear when and left large Thereafter, been remain that issues ourselves even time. started in this big way event management fiscal many on of future will a we recently approach we us continue GAIN number we and to and getting I to well focus have on so through which stronger may acquisition to normal, book play accelerated the I businesses, on of which sense out, last for compete demonstrable find ability whatever environment. will social with, a but I value at and clients deal said achieve significant stand To with much abated, of our some And the like. ahead believe that that many our providing while and think how are many inflicted there’s economy to have are the and the will quarter, to that as what businesses both our fashion. liquidity in permanently. in This to us confident after brought stead. also will our or industries support in we’ll capital normalize without without we and adapt add the with and time. change will to strong a In ways, an disrupted will small, reformatted to forward global turmoil common and health have of economic current and believe focus monetary enhances difficult repercussions, that and economic weak global ability stimulus. navigate damage a value and the our major closed be aftermath is have value-added our new in a capital the looks the be

said onset crisis, at last execute COVID our keep adopted simple and we continue four-point the all a which we of As plan, on. one, of their family time, the safe. to Point we employees

environment. any going not in this I’m change We is way a are home from anytime material in sure to XX% still soon. work

or highest to managed And noticed in to stage, said, to operate business, support service a clients they – and decisions a serve Point That to our risk our degrading our risk. of do of as we volatile to major believe our not most appreciation I believe allow I provide our full take of ability defensive And And lastly, result. this clients. possible to say our are assuming liquidity clients, the in so or our see benefits long-term see continue business Three, proud even appropriately a clients that times. continue management make and our I I’m at supported better and levels risk believe the risks to and have office. have environment result. by the prudent we’ll reduce they We our risk is two, was position clients this ensure our to wise. in a taking us this as that either collaborative to seamlessly of without clients of that environment. no do operationally suited support and an

to from overall revenues fully record of year-to-date but points. interest services and positive of the Diluted the our quarter. year somewhat months income period financial for as well the up customer on by was impacted our The down and was to for revenues start to XX.X%. on million, income the ROE We a Net with basis, We strong also compensation quarter. X% for on XX% in in were $XX.X due largely the higher last in net Against in metals, expenses last the – equities dramatically operating driving return the total tangible XX%, for were two record $X.XX just was XX X% from this, up convention would total a quarter. precious operating net in XX%, increased as was up period on XX%, net volatility the diluted nine-month from The rates was the ago, up expenses the financial around especially the earnings. QX. percentage quarter QX. increasingly benefited volatility, in quarters resulted decline to more markets, two EPS impact million, variable offset our somewhat float, a XX% by of obviously results companies which XX%. particularly a in the resulting and saw normal in quarter. $XXX which at several our XX% ROE securities, market both situation Moving be EPS gradual increase fixed up a rapid $X.XX in below equity an ROE XXX% evident

GAIN which to results, touch reported we Before I’d ago, highlights, on a as weeks the I GAIN set results like company. move for on briefly to the standalone last some quarterly segment two of

you quarter, the of In prior of On an results Glenn we GAIN of incremental a the an produced overview run, would closed of breaking who their on As million, revenue two in this last equate $X.XX. second. we CEO, our $XXX and count, income The all of present announced Stevens, the EPS second has with XX, around records on know, an their net million. will call, transaction business net that they $XX.X that had July quarters. incredible to over share have the

Some StoneX business. highlights on the

interest strong details declined large ago well with declined in revenues revenue X% as and as revenues we segment Difficulty] our markets, to income revenue XX% revenues side. was up charge. performance again and equities Execution declined fixed Global income in of in part a the capture This operating the declined Hedging to segments segment segment fixed segment big up capture. by XXX% in [Technical income due million. more operating metals primarily market a income, it million a Commercial X% volume, as largest. dislocation. recorded segment volume income For This and ag XX% the due a and up $XXX be increased in where Payments actually revenue increase while Bill rates for driven $XX.X a Security quarter, up was XX% driven on but the later. increase income increase volumes, decreased a large these XX% XX% a precious in of XX%, record decline our revenues areas although decline Clearing the Physical decreased events the low by XXX% – QX, XX% operating lower in capture to year experienced quarter, a result one segments, back down current providing to as volatility due was the of to in will and was lower the equity in XXX% quarter, due but commodities increases XXX% XX% volatility. few in as debt segment strong bad up the stand and to well this on with weather and prior was to both income

direct and as big was with in we was X rates up well a now well, at step the future. strongly. first no successful was unique given issuing order book, as traded for As will comparables. and institutional access high-quality and as in better progression dislocation for easy market, the we’re task coupon a market fairly part transaction the our million company’s the a the first-time X/X the GAIN GAIN has oversubscribed which bond the and which up were $XXX in This five-year hopefully, is that few us. is that issuer the since ended institutional we with a volatility, We of bond fact capital This very to – transaction, well into have

after we progress the integration and on offering better to progress products, governance certain structure. mentioned and very increased flows even have but power serve did yet The diversified over of clients already As to that give every stands The financial as far. you us we level. with of acquisition to I’ll you much transaction Glenn now client current our aligning trading hand well to larger, the this earnings by do, results. stronger, their in as now lot recent I combining broader Stevens, much GAIN transaction made crisis. enhanced on of and good With that, financial GAIN, the a the the and our and have earlier, brings Glenn? We GAIN product like thus brief more happy a overview advantage is CEO a I’m liquidity. in accretive market a resilience base, stead closed scale emerge to take dislocation There’s

Glenn Stevens

Thanks, Sean.

here. information slides our quarter, that But an as from give as updated just So most a to background of a as said, here two more company. for I’ll recent Sean the a there’s just use some independent little reference as bit financials

As translated Sean heightened in what in to quarter QX onboard trade to different mentioned, and so being into our a look overall for had prevailing given levels being able and new and was as quarter future. us and able the after that QX, another standout many of at we level importantly, a higher, activity lot volatility our activity record markets, customer clearly, strong and different trade most being for we environment customers being customers volume towards high the per of markets with higher even attract

there, review. X just Slide a quarter second on summary, So

XXXX. for the revenue was $XXX QX a over quarter to in $XX little was prior net million that Our million, compared for

QX Our income we’re compared that’s $X.X EBITDA our from income and the operating And illustrate for million same the Important of there business goes income was the of with much net the net before we that costs it and $XX.X net million period takeaway $XX.X XXXX. to trail compared leverage of million year to leverage fixed to is adjusted million when scale along. able the in exhibited are don’t to operating as business, up. able our EBITDA higher $XX

see to whether customers metals for the currencies We it energies or of a volatility, vol product indices, heavily terms that’s equity types, did In engaged. our continuing for lots overall example. be big or different or be again, more driver of

market-making look volume, convert for billion retain the to XX% as our able capture our ADV, them at they on was the call to activities. three, average we of higher compared million, able represents our up two, three-month of accounts, number spread number said, quarterly us. daily our new And the That’s one, importantly, what and XX% XX,XXX. RPM, increased if $XXX trading customers; And year is And or to, so side per number or ability a and And of opportunity portion being into attract them, bigger through onboard record prior. to the the to them. most it’s you bid/offer the $X.X I a active customers; being of revenue

three to those you markets as is sets progress. forward of combination your the go what up business – So

And many be maintained to there we because globally globally. its across direct and X that with That direct increase even account us, sector different show QX, see can us, on can left. wanting there, for next then accounts four per levels on base. new because that record see in just in the the a the retail volume the a major high operate right the On And charts rolled you trade the active. also active really into slide, QX engagement upper to upper that’s all Slide is to for we so broader you going the markets after there, customers markets outsized

So you’re in across going in have against one, but base. some volatile wasn’t to lower there, numbers as QX QX, going as because number it going hence, was it also a – broader

three-month trailing the also to the on that’s bar. on blue the direct look actives at there thing other the important The business, –

great, basis be And as it for that to volatility, on well older that highs can you ones chart, as means us, though to labeled add because customers just should well, the accounts fold. new retention in to new compared is see really a important. have not new surprising. continues is holding the slightly are on staying of trailing those You up QX we what active you accounts, can see lower volumes you really there for had even increase And and levels overall finally, get which the again, those right QX lower volume to of

to it key looking ecosystem and forward I I what’s we’re here be able able hand be is back I Bill, think leverage that, before over vast Board to to new to think, the provides customers financial that to our StoneX active give to sticky, more be services products the and more for ultimately, the even more customers, markets customers. which diversification more enhances in more attract be and across to

an So for I this really complementary a situation us. think that that’s brings business is opportune

that, to Bill with turn on. continue So I’ll it over Thanks. to

William Dunaway

over the starting be I’ll our Glenn. fiscal performance quarters. shows you, #X, Thank last with Slide which five

strong $X.XX a third quarter performance equity net quarter $XX.X of shown, another million, with share income diluted of and $X.XX As our period, for return the per and fiscal XX.X% following earnings our $X.XX the of of for the diluted in for with of performance in of up year-to-date all earnings XXXX. preceding quarter record exceeded immediately which the we’re fiscal per share

$XXX.X were to Operating the of Slide on bridge prior XX% for year. to the or current period, current period. between operating million, the the year million revenues which a quarter $XX.X Moving last up represents third revenues over #X, in

pandemic. Commercial volatility the As Physical by activity slowdown was due continued periods the to headwinds segment, Securities driven global and the interest Commodities activity the well the client in in quarterly as effect extent, the economic larger heightened of of offsetting performance segment. our hedging operating segment, this Sean Hedging noted, which to the reduced driven our COVID-XX short-term Partially Hedging primarily drove and was by reduced of our and Commercial and, rates, our as resulting CES revenues drop both a client in

the revenues XX% versus the doubled in more or million, traded. prior had volumes Equity XX% market an operating versus prior XXX% strong $XX.X $XX.X in XX% than a or and metals $XX.X year widening metals million. global $XX.X Physical this contracts. volumes unrealized the X%. note, revenues, prior subsidiaries. growing added operating delivered increase driven Markets revenues precious positions $X,XXX of Capital adding million a a Within dislocations XX% is cost $XX the and The precious prior segment in record drove year. spreads our year held million physically an its Markets in loss revenues, year. increase the increase included precious in Capital $XX.X to Securities is derivative in carried operating lower the $X.X million, Our segment on the operating revenues primarily increased on and per Commodities premiums the non-broker metals widening prior at market Debt period quarter, versus the million a in to This of spreads year It increase adding also revenue million a by on inventories dealer against versus as

Physical added in the In to $XXX,XXX in current addition, our Energy Ag – revenue operating and $X.X million period. business operator

period, which despite to realizable what the year Operating weather-related tempered contributing grain held Commercial volumes of inventories as strong to XX% to segment client year South Physical interest also primarily rates. revenues versus Precious Exchange-traded in in operating volatility was against a which $XX million strong in been the declined had positions than markets, in and result to from a domestic derivative an a prior in in by income, has billion decline a sharp period. per $X.X to time unrealized loss our revenues the decline volume million. million by decline cost interest quarter. average Services Lower current time value. the energy XX% XX% XX% versus versus in segment Also year year declined American our in average $XX.X to revenues decreased the increase $XX.X the in prior aided drove OTC Hedging prior segment short-term Execution $X.X million interest the prior revenue increase short-term carried period current contract, a markets. $X.X as $XX.X decline lower more happens and a equity on this Clearing business, in in in revenues similar decline of million However, the our the offset at the were by Energy Ag rates grain in or Metals a million is OTC net

Our most interest $X.X in a million income million, declined segment, saw sensitive $X.X to $X.X rate fee income in to segment business correspondent our this decline client suite and $XXX,XXX. interest million to related clearing balances

a on compared $X.X equity However, the volumes increased increased and average billion. balances positive to sweep XX% note, increased $X.X to client exchange-traded to FDIC as prior billion XX% year. XX%

the in expansion operating revenues segment in $XX.X payments declined XX% by $X.X as onboarded flow an to clients. revenue average Finally, more recently our Global million period number number the payment. was the increase banking XX% current per of of of driven made from The commercial payments in by a in in million the offset was increase Payments decline than the payment

to And as while to Securities prior revenue $XX.X decline of segment led The the compared the million and fixed drove million Non-variable larger increased a the year in per segment next period. growth The and operating economic the performance the year $XX adjustments result compensation recent slowdown variable increase bridge to $XX.X due operating in for quarter this in commensurately prior the #X in of variable to our Slide million our a income XXXX compensation the the component. banking to clients and of income due compensation payments million $X quarter increased a pre-tax current increase made build-out the to significant income reducing from continued merger of structure strong the However, to from as segment of pre-tax percentage of direct several third of versus a portions as revenue acquisition commercial in segment a represents decline the payment. number component global of the expenses revenues a year. initiatives. in versus prior

the Commodities prior segment In our these $X.X the which versus the decline change business. $X.X revenues. of current revenue. offset expenses segment back gains, Partially increase decline Commercial operating year in by addition, as segment in as income in the net income operating in partially debt to Hedging declined $X.X million a decline operating Physical increased bad a Global in revenues, of off was million, million million as added well in million income prior – due as segment recoveries and segment of CES $X.X to record favorable offsetting a $XXX,XXX million a revenues, income for due declined exchange-traded $XX.X of in the year, $XX.X decline Payments quarter. result the versus result operating the bad of debt million $X our declined primarily in non-variable level

value Finally, result the change year million stock $X.X a $XX.X net versus prior held partially costs in versus unallocated is purposes. variance mark-to-market overhead clearing This year. exchange prior million of for the the of increased a

In addition, in year $X of departments, result $X.X in accounting. of million compliance year. versus prior million company Fixed benefits overall IT, increase benefits administrative a prior and headcount several compensation increased compensation the as a performance and increased the versus including as and improved result variable

as the professional as well of and incremental wealth client #XX of during GAIN businesses, as our client shows exchange-traded funds intangible acquisitions, related held in in Capital correspondent the clearing Holdings; costs fee of balances income Slide to well in management increase businesses. and primarily acquired as assets on futures an the businesses. interest in amortization independent the our Finally, investment fees, options purchased remaining the related variance the fiscal in recent related acquisitions year; was including increase closed to to

months XXX the XX has basis year declined earnings of period. basis on the on the points $X.X current balances, to have over which points As in slide, this the our caused decline yield balances prior last declined on effect in million significant a as to versus $XX.X noted these the these by our transactions million XX

just brings our Moving our financial Variable I’ll well expenses highlight our total of variable our target quarterly of a XX% months than XX.X% Slide on The nature. to to XX%. reported keeping a million expenses dashboard. items million. quarter, $XX.X of above results total on in stated in income of the quarter, our the above third income of expenses represented of target quarterly #XX, $XXX.X note. net We the for XX.X% more yielded couple XX net equity for trailing well our of which return

total increased year, Our in primarily client prior XX% the assets versus due to the balances. strong growth

in results, the the book $XX.XX. Finally, out increased closing share review close the to at per our value of quarterly $X.XX quarter out

or by on as period, the our move in year-to-date strong during added to of revenues exception increase was of I’ll Debt million, compared second growth Next, of Year-to-date, businesses with reported Execution and particularly volatility in million to were fiscal year. to to the the Equity prior Capital revenues year-to-date discussion Securities #XX. Clearing refer driven segment, million, and segments heightened fiscal $XXX.X third a in and current quarters. our the Slide periods $XXX.X both All increases which up the Services. our and $XXX of Markets, operating in The results operating XX% largest

by in the third due $X.X million as $X.X a fiscal versus XX% year, prior Our of revenues decline strong revenues the gains income. dislocation, driven prior more modest segment Precious Hedging as growth Operating result prior quarter year operating Commercial of of primarily CoinInvest revenues energy as These COVID-XX-related as a result offset million period, the partially increase acquisition increased in interest versus widened spreads the the as doubled as exchange-traded Commodities XXXX. in versus as market performance the well $XX.X Physical Metals in were million added a year-to-date to our by well of markets, segment in in OTC revenues. than

income CES while Our $X.X in prior period. the the segment $X.X interest operating million. revenues added revenue, declined segment operating a $XX.X Payments decline in million CES $XX.X versus operating result primarily million revenues declined million year-to-date as to of Global

in the #XX. largest Services Slide declined and to year-to-date Clearing Pre-tax increase million on except segment, million which previous and in as added increased segment, non-variable for $XX.X $XX.X income an million compensation our strong segment $XX.X in by Moving million segments revenues, increase The which on prior in partially percentage expenses income the revenue offset $XXX.X was operating million. offset driven a noted operating a slide Execution variable for increase – in of period. growth, to income, versus by by segment direct year, increased revenue. All the $XX.X our Securities particularly current an

versus in year included million Our Physical note added coal. on bad added $X.X of of Payments segment income It prior a of and the segment Global $XX income $XXX,XXX million year. the versus Commercial prior Hedging recovery is that $X.X Commodities prior the million the debt added year. physical segment

increased the Finally, net cost year. prior in unallocated overhead $XX.X million versus the

the in the period. the bargain realized prior year-to-date GMP of to purchase million $X.X related variance However, was

which like partially during period, as In a in exceeding performance. $XX.X target $X.X of income of XX% mark-to-market in $XX.X value final increase primarily million are and prior versus of exchange dashboard. Compensation the increased to $X.X compared current year-to-date was stock year-to-date is a the to revenues million internal the expenses. benefits held the year-to-date return Net up. represented with our it year of $X.X period. I year, equity XX.X%, prior year-to-date on above variance change an clearing which that, is for the this the compensation and With wrap increased review turn purposes. result back to is And the to XXXX. internal for prior over Sean to of the XX%. period would acquisitions XX.X% made million will a addition, of total of a above the improved million at total Variable target for fees our to XX% expenses related of coming of the – fiscal up finish variable increase company Professional due I million,

Sean O’Connor

Bill. Thanks,

and The we’ll I this to think manage clients model, adding risks quarters have have a our and we unusual will during around variety navigate to risk. results not value philosophy through business dislocations. how market period of produced necessarily easy upcoming financial and our difficult we be and validate our

We I’m cautious, than remain bigger will emerge vigilant we stronger but will optimistic and and before.

our actually done, challenges to clients, the commitment which the colleagues. willingness Amazing there for world StoneX people if be While Operator, This was lower are that will questions to interest the the and the I’d the by established will financially, We may our be to asset noticed, the on. dealing It’s where and with now you’ve but offering I’m a strategically every there services to amazing their us markets for as the may the name entire become we’re finally Well value allow Chicago enhance to task, integrated us believe accretive rebranded clients, like, to exchange have pronounceable that with founder, of and and to market vertically across increase classes Saul lower financial one the it global lastly, ready rates, have we best-in-class certain big both with foundation also people acquisition be just team, Stone that today’s pick firm. very to in any. assets strongly embrace head counts volatility and carries member our valuable clearing. performance. StoneX. clients received that environment pleased, will future to opportunities was around growing GAIN our he any to and XXXX, execution thank up X,XXX share probably reordering challenging folks well of in the became clients of good financial very This are strategy Also and remember. take ourselves our name businesses to everyone. industry a connecting a in sense, intellectual forward franchise. and platform, by to

Operator

Certainly. Russell with ahead with go [Operator Instructions] first will Ten Mollen question. Nine from the Please question Capital. line come Your of your

Russell Mollen

Hey, how are you doing?

Sean O’Connor

Good How are Russell. you?

Russell Mollen

I a or I good. Glenn Good, here have for, question guess, here. you maybe

account, On the into a help results, upper-right per their much client, customer accounts chart. sure And trading, it GAIN what’s the table thing? who not that, are table of active client, direct much that that or you of the follow I’m describe? just help are, of how of you active amounts putting where that how chart just they’re maybe get understand, here, they second can with the the retail kind how of kind profile dollar they kind just I volume me – says

Sean O’Connor

I, that’s Glenn, you, Well, for think definitely.

Glenn Stevens

absolutely. Yes,

answer saying, can if what So, get see I’ll try to an you. for address Russell, we you’re

says, the account putting volume in respect, what just number active So is, it the per that direct of active numerator, accounts. denominator,

customers divided What’s So active combination are drive volume. markets. to volatility are these over of total and a going just These previous that by that aren’t three accounts. months then the in certain is the onboarded

over XXX,XXX service So mind in various in that customers keep markets. we

energy, some the we’ll like U.S., interest in equities, ForEx like like metals, means U.K. other So CFD the provide In rates, trading. you. or which we’ll markets what the other markets markets, trading, provide in Asia, have

how So that markets moving, are each depending comes will per those on drive much which of volume client.

markets trading access might on So to important measure all – for again, ours show if and concentrated currencies then moving particular example, up, you’ll U.S. environment, But to I currencies it’s you an up it activity customers all for the then we’ll customer. have would of and how example, show an move us markets. for equity energies it’s those for that if If a the like in have see per move, market, is move those indices end with just

the upper are where you a Now a in on direct left the a case lot engaging. spike because accounts, new for of the we of onboarding notice here, will lot had of chart customers big

trading a are markets other self-directed GAIN, on a in side, you’re people retail seeing not uptick in with of engaging lot way. but providers the following it’s and their in If along accounts the just an

that So newfound in kind we participated well. as phenomenon of

of the that’s coming QX new customers you versus up QX, in onboard. jump So XXXX see material pretty

numbers, you’re that that there slightly into to because of lower able call was would part during products. can all want account, direct to per because volume even and a show And you numbers we of getting actually them what by give ad my services I more has, that mentioned the StoneX increase those in So products plug bigger customers. the already

StoneX So want be ecosystem that’s to cash an equities of metals other services that or we already whether types it’s or physical, to leverage. has, able

the answers access I same that have customer more your Now hope services. to question. will

Russell Mollen

Yes.

notional somewhere $X or $X don’t is that’s value… million, I million around, this know, So

Glenn Stevens

value per and, be customer That’s a going to an again, it’s notional average.

going or their based $X,XXX little vary. if have change you to on $XXX,XXX, is a mix. the notional customer going bit a So to that with notional is product And

So gold of if that that will then number, move at to aggregate amounts you as notional look versus notional if they’re yen, trading the of will. important look and amounts of dollar the It’s more well. the at kind trends

Russell Mollen

familiar not your amounts like big, base. the – the I on this, the don’t being retail are customer understand those with as side business really And

how of leverage So trading the in the of offered type are that you they million the is margin dollars offer that in? or Like currency, is of in what amount commodities much capital putting or industry currency or level? you’re

Glenn Stevens

That’s right, yes.

a mind So the one, varies in requirements on exchanges of and things. also from and volatility based couple each based product-to-product on from the product. Number it of but such, keep underlying

look move for X%, might payer, currency in a a or stocks, move. you at move a X%, at volatility, major you tech of in example, XX%, you a if X% X% So you might have the look have if a whereas move

So right commensurate to each provided. commensurate volatility, going a area. have the to regulation going there, driven local in be leverage of means that’s you’re And lot by which

up is kind the line of with side. a As we on which very well approach risk to towards and StoneX’s careful going kind of company, conservative management, be

on So we’re regulatory that the one. guidelines going and kind well all to of stay such within

under philosophy we of the as this customer risk that, But terms predicated really just from and managing managing I’ll lot in to have in a situation kind terms markets, is access giving customers history a And that say exposure so it’s and of a leverage. but creating of company what not of longstanding way. a

your case, depends the so And this mix. answer in question product the really on to

a said, I notional give to notional an were more trading speaking, you you if to stock will as S&P going single example, provide generally intraday the just to so, is generally Because than speaking, you a kind going move example, trading than you were larger a currencies if of And leverage. would. trading S&P for – And, the stock, much leverage right? single that’s contract, give more have the for potential

you’d those trading or get on than you on And leverage, future a S&P, more the the would in for notional cases, so in equivalent single required CFD stock. notional

Sean O’Connor

if in, maybe chime I I could Russell, Hey, because think…

Russell Mollen

Sure.

Sean O’Connor

from coming know …I there. you’re where

look and So you’ve margin. when got Reg somewhere margin, the customers got the much most right, XX% the you’ve futures business, X% very it’s the futures, cash of alike we equities initial – got you’ve on which looked of which basically the business, number, is as is they a guess, sort versus got we which our middle; I in you’ve sort side, of a just at side the T, notional GAIN of then is where of one your kind blunt provide leverage, kind probably of

of So clients. provide margin you stable GAIN much, They they margin. Glenn spectrum. certainly that for like the – they currency move deleverage because, sort don’t pairs, said, tend at more like is more of a of the give that maybe can end sort as will so but aggressive to that slightly they And X% more

reputation really reconstructing look form they trades CFDs But that’s of do thing bad a a you market. when what in have is, The the sort interesting generically. actually think, CFDs. futures note of really at are, just of overseas they other what to sort CFDs, lot I are the on And the

doing how futures an customers. doing trade CFD doing index a CFD would index, or you’re same an on gold GAIN that market what retail if the in replicating a So just a on format is and is really for on

guys basis, So products of to because sort active don’t These really trading leverage these think broadly. of $X mean, to start multiples They’re not the numbers. are $X XX-XX And at GAIN a on a investors basically, sort I But that. higher trade see of futures-type be professional of million it mom-and-pops mom-and-pops, trades to would rule, investors. XX% you as customers there, of all GAIN’s of I to that. higher-end much between XX%, will tends they’re million. but they it’s business maybe and trading trade like somewhere

sort active if So traders’ future-style a sort professional business, makes traders’ of it’s market. It’s market. that an of you. sense And it’s to really a

Russell Mollen

appreciate I Thank that added color. It you. does.

Sean O’Connor

else, Russell? Anything

Russell Mollen

I don’t think so.

Solid, solid…

Sean O’Connor

Okay.

Russell Mollen

a is world what there. crazy …in out

Sean O’Connor

Yes.

So it’s – wow, crazier. even

be to we’re week no a We’re what and power, sitting there’s here going for telling Westchester, out they’re in is us.

well. crazy it’s over So here as

William Dunaway

everything. of top On

Russell Mollen

right. All

Sean O’Connor

Anyhow, operator, other questions? any

Operator

do Please line with question. We question ahead your of from have a Raj go with B. the Riley. Sharma

Raj Sharma

Thank you taking for question. Yes. my

on the platform. the fit the congrats overall StoneX excellent great So to and acquisition

how question to is when trying we plays? And model it StoneX, GAIN So maybe into understand this I’m just Glenn. a for

Glenn Stevens

Hi, Raj.

Raj Sharma

account do growth the because of COVID? COVID that And other GAIN would it forward? is vision, volatility? account it new is And growth all all Or new you how GAIN’s got to think at the – year, would look should few – is it from Hi. questions. much – at much a how I’ve last attribute you going how of we On then

Glenn Stevens

for question? okay that to Sean, me

Sean O’Connor

Yes. Go ahead, dear.

Glenn Stevens

Yes.

work done to hey, you. So, you’ve Raj, us I know and good hear it’s on

So a couple of things.

it’s initiative On our try the installed. it’s quite each an way to making months, one look easier is journey of the to three trailing months, customers, – organic the six on for year the is on one on – hand, platforms, onboarding, after lot initiative work we simply, a measure at look

their a get and minutes a seconds are example, for for to new heck we in that makes onboarding lot tool days. and it So, able recently hours accounts a easier of in sorted customers put instead literally of

huge So part you in at it’s at hard just put improvement, when three particular over in it months change that the let’s clearly of say, had say made is just general in gets XX%, Where it totally markets. into awareness look you volatility customer though, that clear challenging, this and you goes in you and journey put up that in that difference. material happens months, we a three we that the door – because great, you look say, the and jump a new followed, front store a

look you COVID. – so said you And if

What I’m It with metals. because saying much, We yes. question, just the wasn’t look singular It just at currencies year to just volatility ask had to last changes onboard never wasn’t answer in them. you energy. bunch it Board, when wasn’t and just I’m a the equity it. wasn’t a the moving. It just So and easier. trying to market. a you all customers is them engagement we’ve market indices. not the It wasn’t our across better was much our That said, It made make ability of not of environment,

so clearly, two, Number environment does interesting, engaging hand, with the mental being there with to of being appear the on kind many individuals. customers definitely shift different be so markets And a one helped. or the

You’re not just seeing it at GAIN.

You’re seeing at other it peers.

are it seeing Hood, they – want other providers, brokers, that to Board, more the You’re trade. engaged whatever, Robin customers and interactive so at across and

of that a you are when the that of effect? of them we’re So most a well. and layer the this, piece beneficiary in, as bunch which lasting that have ones have then is that’s – definitely you improvements though, The last

Raj Sharma

Right.

Glenn Stevens

have little wait bit. dust for You a settle to to

So are high we worth regressed have normal, the to year’s let’s over months markets to look to will, with mean like the a more QX next six say, year. QX at a if you or and spikes and

GAIN? baseline we we You a retain, But year-over-year. do all should improvements say, of so have Or because have we did more well, these It’s markets? also aberrational this because how much a to it because that it know. enticing benefit incredibly we much both. jeez, of made is and are of markets, when in easy activity, normal kind deal now combination hard this increase to see is with these it’s you

that’s have model, your before. which all However, the that in access we products StoneX you last to stuff is at isn’t piece the I’ll has, look if mention, didn’t

make now to some So function us help with say, know "jeez, a services in let all we saying, new bear. can we So out." into you for is customer "Oh, interest to plug that’s say products to to that’s the do engagement with be step do that." that physical the that streams I how of have we on, say, how how us gold." we these and Now says, all a these integration part Instead of work of journey let’s going "Hang "Well, because and all next when here these make bring GAIN, opportunities you customer really and

Raj Sharma

that’s So yes, great. that’s –

model try model So into benefits. there now to when to it I clearly, are going based StoneX, be it and – the

Now at revenues still a mean a relatively EBITDA StoneX, from to do the business? XX% benefit much used that’s earnings.” the I for So, the – in XX% can used XXXX, the view? ago, example, of GAIN year to talk right, margins by “We look higher lot resulting and of a flat outside is with to overhead, about, way higher sort that hey,

Glenn Stevens

the and number expense business leverage the by will, moves our revenue and new and Look, every clients. have underlying just go that inherent to compliance getting you admin add staff operating service We to very little have customer and I profitability a an because The to is then time extra in hard on basis is part add clients scaling to have XX we another base. all of doesn’t that’s the onboard that from the don’t and if design, being technology XX flows to away. model, able that, mean, capability, the underlying scale service of them. customers, them,

as So underlying products meaning, into it, the bring But And more of yes, have for to of you it, foundation scale reasons. add more in stays you business the with different arguably, the it. operating expenses that customers leverage intact. doesn’t

products have we across to means enticing we’re just if able And other the add, it the just scale to business more using You’re technology. Board.

Raj Sharma

Got just And it. one last question.

that internal So the when first-half were and at improvements much GAIN, look high what throughput? of you versus we think results, the of volume how COVID versus –

Glenn Stevens

that, unfortunately, – your periods. answer compare is not to know I it’s the we to trying tell again, – best not both, be I’m way and right? to And like-for-like Yes. question except

Raj Sharma

Right.

Glenn Stevens

what we to percentage we approved get call, to and and that?” …because not quickly going how they you to journey the And like customer. new the the, what “Hey, attributed all funnel our are at being see applications we from do of the clearly like of look say, That’s things funded when proved – in parts be COVID.

to it, get However, clearly, my and self-serving you say, motivated are trading Oh, that need and you volatility moving there’s a in meet Oh, I’ll change that work. market, cases, ID versus be to more very will market low didn’t a compliance. in to some sideways very resubmit. there be have involved "Oh, to are I’ll when to customers markets enticing me that clearly in so they’re right going now, lunch." "Oh, When you to However, have for it." periods do look and "Yes. improvement." points hustle get at look And I’m the journey. operational to around be go at I’ll we say, seeing they’re like, but have improvements different able not, then to and like-for-like

compare the back of is and they’re best So question, working. and what isolate you it similar-type can period extent, then we to the to kind way To your do know to benefit. answer look

Raj Sharma

I how… mean

Sean O’Connor

we at sort really a Raj, very simple right? what cycle, is, level, guess, the I of would control I can’t macro say

Raj Sharma

Right/

Sean O’Connor

deal slowly big and think advantage; macro market things: we control we set with, – competitive of more operationally is. kind macro of we clearly both went mean, offer and can What to of those we easier is diverse …I that and share product this do should a if things gives us we environment we And thesis than what get become a two our sort can cycle. investment competitors. can more the through of the matter right, I no

Raj Sharma

Gotcha.

Sean O’Connor

that’s no market guess, share period, should I right? do out would having as more to So period it. I that product So, about efficient the a suite and things are the peer as best have matter – we’re group. And if think trying we get become we can whether a there how we’re right, or relative the to we operationally quiet solve busy for

Raj Sharma

it it. you. you. That Thank helps. I’ll Got Thank Got offline. it. you. Thank take

Sean O’Connor

Okay.

Raj Sharma

Thanks.

Sean O’Connor

else? anyone Operator,

Operator

time. this other are There no questions at

Sean O’Connor

again, transaction And of I transformational. us. power. well not extremely come Well, closed, stronger, only a earnings rationale, current I this much more positions time we think, thank everyone, environment, to much much see with would environment like market the greater in us with as for GAIN really a to diversified but the we this lots the for in now With once of commercial back-end of exciting out us Okay. think great current

twists Lots But turns of very ahead, really exciting are work the and us. confident unforeseen time excited. with markets. of for I’m So lots very ahead. Obviously, and sure, we

of Stay all. safe enjoy the thanks summer. rest So the and

Operator

conclude does you, us the Thank conference. again, for today. This joining Thank you.

now You disconnect. may

StoneX (SNEX) 12 Aug 202020 Q3 Earnings call transcript