SNEX - Earnings call transcript Q3 2021

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Operator

Thank you for standing by. And welcome to the StoneX Group Third Quarter Fiscal Year '21 Earnings 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 may be recorded. now today, hand Mr. would to conference I speaker your Instructions] like the to over [Operator Bill CFO. Dunaway, Sir, you may begin.

Bill Dunaway

little here Good morning. of starting was call all technical difficulties. apologies My conferencing a having for some This is you Bill on Dunaway. late. center The to the

press I of After quarter our third a around we ended XX, XXXX. you So market here with closed bit issued our little appreciate call reporting to Welcome for all the yesterday, us. our hanging a release earnings www.stonex.com, conference June results of fiscal discussions this third which quarter of available on on XXXX. is our for our as our presentation, This quarterly our as slide to in release website a results. refer at we'll call well

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

meaning are of detailed XXA XXXX. in our are of note well most which SEC. and of statements may we Form with within discussion the you with the Securities statements of notes involve SEC. required Act recent advise following forward-looking underway, These with filed XX-Q taken contain statements Securities Exchange forward-looking the risks conjunction unknown XXXX uncertainties, and This be the XXE Section of as and thereto, Section the Act known the getting should and that the Before in to should and filings as financial participants the all discussion

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

Sean O'Connor

Good Bill. QX, again yields results reported despite XX% rate earnings ROE once third float. thanks quarter that morning, for Thanks, everyone near In zero joining we exceeded our client strong call. on for our and target our interest

started quarter, conditions us, market June markets of but in somewhat commodities, than the normalization year ago, a disruption the agricultural for we a the heightened low post During did we see in volatility perhaps of positive to remained prior although, quarters, in less see as COVID markets. particularly,

increased by you which volumes, areas through significantly - a of X% of pandemic. strong at contracts, So that. which earnings were Slide all physical for revenue where to for Institutional were down very XX% the the up derivatives quarter year-to-date the listed although, of segment. strong modestly, which for by up capture offset in which increases. with period. go X which with a in an strong up we'll Operating Global resulting if our deck, the for exception XX% segment, for a commodity in XX% XX% it's our Global that increased was Commercial revenues actively Operating significant and was repricing could with in volatility as segment. revenue and product been of down XX% our securities, turn which in in this record operating was up offset the where of the demand sector growth slightly prior of than more was with quarter volume very Payments the benefited have back the as metals we capture result Commercial off Institutional clients, a volumes the contracts X% listed up OTC securities, increased Revenue capture compared a as the our as segment, higher Revenue Payments, precious well in both decline increases for across offset small board revenue was driven were was offering. we for reduction quarter, although from the XX% derivatives, saw increase for exception Operating larger declined XX% strong a to in was outset Revenue our by

rates. respectively, average were quarter. are due in now listed year down volumes, we basis, a client rate billion, up well the and higher share with up and year on Interest securities a environment. due up from ago and starting from client growth balances a the clearing gains, higher On growth balances, year-to-date were client XX% lower XX% interest actually strong significantly and derivatives earnings client interest XX%, in and experienced float as compare the as both at fees now both from offset more post-COVID Our market strong by of balances ago X% as $X.X to than together to to preceding stands XX% was immediately

markets. operating overall derivatives the down the standout, were revenues earlier, due derivative a were volumes down CFD XX%. conditions. quarter, listed to capture X% consecutively XX% XX%, capture relatively to up due of market and the Payments as X% for reasons were mentioned consecutively down less while revenue revenues revenue with up As securities volume lower revenues was up revenue and down a OTC overall, to preceding flat. compared capture consecutively XX% with XX% immediately down volatile were Global were result revenues and moderation revenue in revenues

result still a QX, against little nonetheless. overall but So our strong down, a record

XX.X% Turning a We GAIN, base in the net million, capital addition of year. year about larger costs Net $XXX.X earnings this better due was per versus quarter, $XX.X XX% notable of than earnings. EPS see Aggregate can target number performance. share. recorded or we $X.X has where up now million, ago was of a quarter, versus down our XX% very X%, above increased long-term and summary ROE the conditions. were incentive to of which revenues to related had of a as $X.XX, for prior as the were the to year well compensation operating $X.XX million positive primarily diluted a Slide X, the ago. they're about about much there this despite you mentioned pre-tax market XX% our impact items There down of

months, net Looking our up XX%, over was for was up our XX%, up the business was our EPS at billion, million, ROE longer-term XX the trailing and cycle $X.XX, were XX%, operating $XXX.X $X.X and revenues income XX%. over our

where last our the year-to-date in of numbers gain were these of outpaced volatility nine results COVID-XX. I'm purchase included by tremendously Although, results Reflecting bargain we it pleased the onset volumes the the QX acquisition year. months, these on through the and last of increased accompanying assisted be on of the should results GAIN noted, market that the exceptional year, business

period, earnings is XX%, ago. XX% up and $XXX very period share the For a versus net the income year $X.XX, million, were year-to-date per up our strong comparative

X, only performance short-term like the Turning the that for now our to think through the evaluate is how includes our would point way which business cycles. to We Slide best out performed chart trend. quarterly our shows market at longer-term I numbers. our results to GAAP performance, attached looking

our now the exceeds estimate our $X.XX the date of months. equity a as trailing results on trailing most seen some at the for risen shareholders the quarters This XX% that encompasses is trailing number It's and recent was which StoneX long-term accumulated largely significantly in We target noting as purchase an XX market trend of EPS, earnings conditions, It as we is likely market the achieved during and and and conditions to our which quarter our bit GAIN that the over our moderate just QX in reflects pretty basis, to $XXX unusual which ROE adjusted the XX% our XX-month ROE likely on XX-month accounting also $XXX XXXX ago, million QX have accrue acquisition was eight includes was to not last the worth The GAIN, adjusted that of has include eight have which over from acquisition. lower ROE, accounting stands million. well. normalize. just shareholder current quarters XXXX

in So terms. more XX%, it's target dollar grown ROE challenging nearly making much the absolute

GAAP EPS our current QX of $X.XX year-to-date would XX-month rate annual and EPS EPS, adjust you run for indicate currently that trailing if Our is around diluted $X.XX.

on Turning period, XX% once that before and substantial as income here to touch customer and Commercial standout Slide continued up The gets the for quarter to more XX% our as up and into the for growth operating some were see our OTC X, comparative by client up I both detail. quarter. driven revenues summary, segment revenue derivatives, XX% highlights just had income listed up volume and despite which interest capture the is This challenging which Aggregate XX%, operating segment's to rates Bill pleased again was revenues our was segment, segment segment despite in gains in float. near zero was well footprint. on and

GAIN and market its a segment was harder to capture FX a due current down segment a revenue aggregate fourth to $XX by Commercial lower were to and the This commercial made the well OTC is per risk. physical down was which We very income of by immediately logistics revenue provide This bespoke capabilities spread products, business, lower which the million, our was segment operating in XX% million assist our bad last hedging of XX%, as includes XX% prior billion and internalization happened derivatives products The revenue the of with the on segment of revenue few revenue versus recorded and as as quarter, preceding our result trending revenues which in we versus million to and immediately support, the that significant in quarter, volatility physical $XX markets volume acquisition decline to contracts. prior to mentioned in price revenues. achieve. have experienced a segment commodities the gains on fact quarter This physical the revenues. derivatives, ability was tougher small set well quarter largely meaningful income, Average protection Retail times the compared to offset many flat we the the up as quarter. conditions the of were and the XX% and decrease. daily the Institutional was operating immediately side the preceding but that and In due best operating capture listed have $X securities revenues year. derivative volatile both quarter, evidenced in income versus of as Retail essentially segment their of only believe clients down even as less $X.X listed for into contracts, GAIN,

of amount even fair the announced As we we how conditions, from GAIN longer-term. caused the both is we retail the hedge over business a volatility, This trading when and which by flow. as the quarterly should discussed the internalize well transaction, has market spreads as out

weaker than We This we $XXX around quarter being was the which immediately are per equal, was would year-to-date. all where over longer-term, but prior trend. average much capture, anticipate is revenue million the above the exactly that quarter, to things probably for quarter

in our some the result result in saw is key think excess within which here report diversity resilience us within offset And, the The allowing target. even immediately business from weakness we and segments. takeaway of segment the of to our prior overall I and Retail Retail offset has strong weakness quarter, the course, results from segment, solid very still Commercial elsewhere. our segment a a within the the we strong have

So hand for Dunaway Bill now Bill, detailed a with to to over that, over discussion. you you. I'll more

Bill Dunaway

statement be quarter. for X, on quarter I'll Slide covered of Sean. consolidated of consolidated Sean the starting many income which for shows the you, the fiscal Thank third highlights XXXX. our

XX% current a the $XX.X due as fiscal as wealth severance year costs of financing X. year prior as the the period, Slide Interest operating average million Variable result costs. related activity So in GAIN, revenues, to incremental increased then million Other The $XX.X operating GAIN, broker few borrowings credit represented to expense revenues. on and compensation in as as XXXX increased GAIN facility. year as XX% related net increased growth well to acquisition, incremental senior million including the business of $XX.X the the borrowings quarter in independent of well year, expenses severance increased costs as of XX% the the compensation versus primarily acquired. primarily corporate facilities increase the versus with variable I'll the related period. on of Transaction-based million and XX% in to derivative the commissions just to prior of versus and million average $XXX,XXX the our expenses related to issuance GAIN to segment prior the as up up by primarily primarily by lower $X $X.X well versus current move discussion. late in in revenues listed period, lending acquisition activities. increase The $X.X expense were the securities note primarily clearing Interest or the as prior million on third primarily senior increased amortization offset year, intangibles versus highlight in prior prior increase a $XX.X period and partially incremental the funding an a GAIN secured a subsidiaries revenues in of secured of acquisition, the million were operating higher short-term acquired. growth increased year $XX.X net to operating on million listed to the comparable costs included management of Fixed noted in year, compensation the derivatives. in result $X.X in fixed prior million the in driven on was Introducing

professional as expense expenses and other increased non-trading declined development of the Bad in versus an costs, of versus developed the business internally a addition, $XXX,XXX prior increase software. debt result period. travel prior year depreciation and In year technology fixed fees,

final on million assumed to adjustment over the include a quarter. the Net income of million tax the Slide represented on the gain over quarter Sean the quarter other the in of preceding year related $X.X the acquisition primarily a to acquisition by this liabilities XX% for third X% immediately was prior XXXX disposal noted As fixed $XXX,XXX million gain the certain with assets. an decrease third X, other results gains, and fiscal and decline to related GAIN and $X.X remaining of gain $XX.X

as Finally, a we of share $XX.XX closed out $XX.XX share quarter value per the ago. year per a share with the net asset to compared

result on Moving $XX.X Commercial per metal revenues Within increased segment prior on a and increased XX% contract million rate as markets. more segments. information the in $XX.X derivative this segment, million the prior increase of year an to versus lifted some versus driven and The X, a Slide volatility revenues by volumes, in base increase provide I'll operating our in operating year. contract the XX% average operating agricultural added in

current in In in This the OTC transactions volatility earlier, of increased markets. up we a quarter Operating as by decline and in prior compared from $XX.X $XX.X million, million year million driven Sean Operating operating of with cost strong a at million revenues against addition, was had noted which to period the and partially as by the $X.X period for unrealized prior in year increase nature. also contracts the $X.X agricultural precious million of lower declined a derivatives include a metals a physical ag was derivative fiscal was as result in $X.X or unrealized revenues. versus $XX.X carried million the similar period primarily the commodity revenues, prior energy revenues. offset physical year physical held loss million period in market, on revenues $X.X inventories positions loss include while

X% and XX% fees. for the result the the interest an principally client in non-variable expenses due bad in $X.X period prior prior Finally, increased year to preceding a respectively. as million and client expense earned and was versus increase primarily average year, over XX% increased $XX.X of professional of increase million the period, on debt versus quarter $X.X increase Total equity. balances the year, the million prior income Segment

Moving Slide on XX. to

by on XX% in growth the - primarily decline derivative volumes. daily Interest the million in year, per was per balances markets offset to client which modestly declined volume rate period XX% increase added $XXX,XXX segment $X.X and a more per offset by related versus preceding was a onset of the listed fee in to of in than more a revenues as The in year increased prior Institutional increased the revenues, primarily a decrease million, operating wider declined primarily increase in in current the driven the in million XX% growth prior versus XX% increase as by client XX% $X.X Segment million rate income This security due volumes the the was a than the Our increase XX% prior volume the spreads contract average fixed decline to year. immediately versus offset the rate quarter. $X.X $X.X daily in securities revenues of partially the prior million million decline result in and securities average in quarter XX% benefiting average of versus income transactions. result in the a a $XX.X balances year COVID the and income a from driven pandemic. million

next slide, operating revenues the which GAIN driven primarily the year, added segment and acquisition. in by CFD Retail is $XX.X Moving from to $XX.X FX the million revenues million prior our versus in

to precious million slide, million declining benefits operating discussion variable on Our while related of year. compared acquisition GAIN. increased by increased Global driven decline Sean growth increase $X.X in and volume client is earlier. quarter, decrease well to primarily million FX in in GIROXX. the $XX.X continued acquisition Payments by the the the growth out driven as the current non-variable prior compensation earned per our a of was decrease the noted versus CFD versus the retail Segment physical added as metals $XX versus revenues This million and X% prior an period. income the in in by average in Closing preceding and increased related the with despite million the average direct the volume Non-variable primarily operating the to in versus expenses expenses business in XX% daily prior daily Segment rate prior year. our was and the year, next from to added XX% increased per clients, base. activity segment $X.X million year, The the $X.X million increase and $X.X as revenues NGO million income driven rate

acquisition Slide I operating the quarter million Overall, represents year were up across noted the of million period office well on current bridge noted expenses, severance current represents XXXX third operating segments. our $XXX.X revenues a as on variance pre-tax revenues operating the to the GAIN, previous XX for of or $XXX.X XX, between and negative occupancy of last Moving space. variance to period, revenue the which prior revenues slide, result operating XX% million in have third and unallocated overhead $XX variance rental the a foreign in in overhead the to of to over leased related in increase an Slide year. primarily losses. the however, income negative million the primarily in a decline from $XX.X revenues $X.X unallocated well related our the million The current pre-tax as is in segments, changes of an for increase operating in equipment and million covered to $XX expense earlier, currency unallocated the quarter as The a bridge in income additional is period. next as gain of related and

on Slide interest average to I'll on balances. Next, covers invested rate which client sensitivity XX, move the our

prior versus balances the year. can it, the increase continued have to As you see

annual COVID funds client with year in continue basis seen the back However, the rate an for With bottom At both an yield like or EPS. in strategy point the of muted earned the with on resulting pandemic balances, rate our a Sean the on additional post-tax incremental potential that, average to quarter. a with be a it the increase onset effect about we've would turn for $X.XX, to basis of XX to last the increase points the current on I XXX rate decrease change discussion. sensitivity following the

Sean O'Connor

Thanks Bill.

ongoing, strategic which flight to of as well but some projects objectives on, to in of that are these is management and highlights. Turning we focused now have these as objectives. updates quick high address the XX, level the Slide projects key each summarizes Most

client we're our to There them building services, ecosystem, new there creating column to the both stay relevant to clients best clients, ecosystem global and our by want financial the existing first connect to interest. are markets. and on the we in more focusing driven two products, areas capabilities First, by attention adding both and increased

clients publicly actively growing a We and This remains listed in hot and market. our as number space revenue to such us enter participants. crypto we a remain That clients exchanges other want and ensuring anytime intelligence space. is market well listed it into facilitating we cryptocurrency around Institutional unlikely topic we market by provide trading this a growing our access of as derivatives, growing for a by Retail is this said, First, to as to and growing Bitcoin entities, support ecosystem, relevant as well physical and source soon. as wallet will

time to is carbon is The instruments. to trading, second with is Again, which on carbon area all initiative. by the spending access our role we're propelled another credit ESG provide Global market growing clients

allows educating in the be how agricultural of participant potential role which a this process these have be Many for we In marketplace. we can credits which addition, Brazil, traded. carbon to carbon sources them. local best in to are authorized credits participate are of certification our of clients an our now monetized In clients on

Just in under in $X to management the with appointed help manage recently, we're Brazil ESG by this funds one billion nearly them largest process. assets of

used was platform assist week, a to become we platform our it. we digital last has closed more the a on to small our had results empirically on education effective Just of profitable And This this those who impact Chasing deployed acquisition called Returns. on retail a and real the have product traders. for trading clients

acquisition, not clients. providing commitment education to is services our of our underscores and a to all this value-added it While material

customer existing channels. and work to need and are Moving into our markets new customer-centric at consistently we customer we and to we footprint and a have on customers where growing new to the expanding serve market segments next business looking column, share,

and addressable capabilities service types customers currently. front low a with market us large penetration to in of of the market all all very have have We

platform quarter, us out opens EU, During the which permissions new for up the the regulatory big Retail Retail received to we our our on market roll into side. a

the process On need, the permissions proving is navigate. we regulatory the we already still Institutional post most and necessary somewhat although, to have acquired Commercial side, of Brexit entire difficult

growth scale not increase requires which unless our has engagement, acquisition processes will technology in enhance digitize This offering. not but customer to our with enhance accelerated of we necessary front better the has and to the scalability some This rethink our back will GAIN. time, increase a of from but achieve We only margins. been underway for now

cadence We on digital with are our footprint. pleased delivery of our

the business Finally, markets resources need capital our generated a is and growth and supported internally our access underpin by disciplined manner. with in when we appropriate capital to capital

During strong of yield of given uncertain million the is This notes abundance the call we original out an the impacting the high part to of to COVID note business, $XXX economic our the a XXX. put/call the had notes caution given opportunity feature economically. still We call in situation in growth things elected of at was quarter, not our offering. that

very liquid that to and well arise. growth we handle a As positioned result, and any may volatility remain

second We issue June in anniversary year the XXXX, have to yield high issue. the ability of entire call the the

be generally we June should As call course down significantly. coupon August of comparable have market of combination but facilities we the extended to bank would to at trading be to allow This refinance, currently optimal inside of our our and we advantage as capital yield million. XX-Q date, the will noted increasing able with our structure which of some subject that yield funding. debt companies notice the by the XXXX, high notes you'll most in the capital conditions filing, take to these are the well our bank of as of up fairly notes. to until in we reassess those This wholesale lines us we the time It size cost of strategically this XXXX will facility $XX when significantly overall being pay high maturity issued anticipate drive and

during You back will the also we that buy to stock note started our quarter.

We weakness our to use trying for price all but continue price, shareholders. the to share structured our approach advantage trying not to of support take

Moving really little by the the our up on and high ratio, to a This given time period competitive you as rate side, quarterly comfortably environment. the more as of this years. on now, the XX level although, last recent We've likely our our can right-hand Slide shortened targets low high sets changes. exists this growth here, interest we of customer that the on way compensation we we the see environment tough and managed to see dashboard. right over KPIs that our well shows for three talent the Slide targets, exceeded so stay XX, can up you are sort most the

drives This customers provide points data and every intended around and As some highest in mentioned context footprint. business. our aspect slide to our progress earlier, is what existing of to grow regard. our This this our priority is serve to our better is

an synergies. and integration Lastly, GAIN update on

of the exactly one-year almost We are closing at now this the anniversary transaction. of

of making initial most longer-term objectives progress As on of and we remain completed the good these track centers, as such as consolidation run data on for the mentioned challenges, renegotiation of duplicative premises come renewal. consolidation vendor off up last having time, integration contracts of leases as

time fully realize, pretty We so achieved for we and already make all integrating easy take far we hedging good us minimize capabilities more volatility of feel the potential progress the and excited cash will and as and in in should minimize seen ensuring Adding have some good remain but from about This This beyond the FX to wins. Retail margins and some just risk. earnings. and progress diversity front should been risk the we equity to in principal about book capture, such costs and and flow of the has what Retail maximize earnings expanding have each trading, allow to opportunity risk a products increase platform. scale reduce traded internalize more the to our in and from continue us. spread US, to company, product and the We central the platform, capabilities steady centralize have

to the Let's move on final closing summary. slide,

another been quarter result more normalize. has through conditions the for trailing said, to been This our client that volatility trailing has diversity moderate and and excess as The resilient two now is performance exceeded which XX% of conditions activity scale ROE transformed was somewhat in XX-month is of business target, believe exceptional as of in as a certainly by and represented XX-month likely market market and current our ROE strong we stated result. basis. on revenue COVID aided years a That a

also interest more increased of a environment, significantly volatility. normalized benefit will which the reduced impact should mitigate rates We in from

We we to make so better that and to progress market is to us. offerings, invest digitize able massive addressable to technology available are penetrate continue the our in

as be changes first envisaged to my to be part the than heights. providing team up, to bumps ways a we likely financial like for constant Lastly, global process footprint that the a ecosystem touch best access team like than rather live and in every COVID. just COVID. dedicate continue world and years too client taken the like executive much team, of think on will our serve we'll StoneX growing I'm Last ourselves seems StoneX the to to around to longer end, them Unfortunately, proud we talented is and It there'll with to are new have to looks the the the be changes I normalization. service will markets. propel in it not backward the away. grips me to and have profound lives, we our with slowly This lives, in us the US social seems the of will there at with seemed moving business are learn well this we these Many economy. we likely and take in in of travel, the also whether as this as global out our as mentioned I and to internationally. in always step, economy months role and get along and will a process One it clear pandemic of time it's in it government to towards many wrap time I we and work environment spoke whole that the soon the now continue new normal. to better extremely by will thing of unfold how The the be

So we for with can operator, open questions. that,

Operator

Instructions] our Dan And first from question Jefferies. comes [Operator Fannon from

open. line is Your

Dan Fannon

Thanks, good morning. Sean, just… is I first guess the question

Sean O'Connor

So, Dan before…

Dan Fannon

ahead. Go

Sean O'Connor

want to Before ask how you to estimates you I you do the Dan, get start, right penny? your often

Dan Fannon

case. not that's usually Yes, the

Sean O'Connor

Congratulation.

Dan Fannon

of it's math one. on and in first terms the the But capital Yes, was the that was just unique that guess I in ROE just some question a base. growth of targets understanding my

Sean O'Connor

Yes.

Dan Fannon

a seem to just bit did cautious near-term of you more But potentially achieve that. and just ability longer-term on kind generally a

upon could just you expand more? a bit that little hoping So

Sean O'Connor

Sure.

I of you And think generally footprint range, ROE the generally require right. need part that financial increased businesses to an business correlate is increased increased and to so support the because do on. capital capital and and revenues

exist in nature gravity of think So of laws of those or I financial businesses. tend laws to sort

ROE the environment loss, now that's it's up clearly are think look at situation environment we putting the that long-term. don't sustainable Sachs well whether Now unusual and Jefferies numbers pretty it's or into if Goldman XXs. a are I or you a

And of the I I trading in that reflecting low somewhat think is these companies right. aberration. sort PEs that market the an of that all think are is at

question long-term that. set cycles, the for always us target ROE a So look the think through yourself is around manage and I

made if that, So of without that the the we presentation the fact ROE the GAIN business we were additional if increased you you tracking scale we said at that XX%, of back acquired acquisition, somewhere was addition investor to think XX%, the issuance we in at go equity. out, there, put and GAIN to XX% pre-COVID, around we look

of keep was going sort it So constant, source. an had equity to but revenue we additional

was view range. XX% could our Our ROEs closer that to the push

Clearly, view we're in our should GAIN sort that not things rate assumption XX% of is equal, we envisaged. pretty normalized and normalized but that sort now, operating conditions. environment market we So being a of conducive environment, be all as but was plus, have interest market environment

the we've the been top forward. and net interest zero expectation sort above have that results We of end rates as going even of

do to to it going bumpy to going considered, how which COVID So be push. sort big I kick I although generally, to for interest all volatility us think is higher probably is be going rates slightly and of really that predict things track to think it's out. things would more hard in, argue may going for sporadic, be see point we're at some a are

I think Does set where we between are, target on sort of rates of interest come make and the on -- a dependent of long-term ROE sort So sort and kind sense think XX%, depending we XX%, that's that back or I of we to - environment be ourselves. should XX%

Dan Fannon

that no, no, does. does, that Yes,

Sean O'Connor

Yes.

Dan Fannon

in that. question So RBC thank is the increased the lot. My you on derivatives a listed which just next for

mentioned you have or if I thinking levels? upon the the about of in just of guys stickiness these could that proactiveness changes comments around your you expand types had, prepared kind pricing think you of

Sean O'Connor

this us a for do. Yes, tough been has I thing to -

particularly capital has drag that think you I about we a how sort I deal to was five And should a aggressive whereas also on a reduction us of that I which and serve committed margins to the our going ROEs in to always years think number So the it because ROE. was a always is you know compete sort assuming on at offering. we with if segment, have of of needed pricing you mean business, with think than of industry most the price. we make business the to of surplus think you better on clearers have firms in And means to a guy the power the a them are offering. all the the we last what little Institutional our somewhat be otherwise give rates, competition the better And and there we're obviously returned significant to resources changed. we're that, the that consolidation mean, about before undifferentiated but interest it who capacity, found business, the model revenue bit going that over directly of priced we

indicative you clients like be becoming trade capacity will may I different for the can gouge valuing we clearing So but of the that I off here you're honestly, classes, the serve increased market also point, running think our and understand, to rates, commodity, asset valuable people over were a we're business. down we on you most of some your guys, putting this to well. in logical a environment, significant don't And the it. some we get the we just said, clients just and resources, honest, we're return of with the not they our relationship and be and all mean, us want people these come to of folks, more not not got capabilities time but less it's be support customers. up renegotiation here, sat our like, to the the making yes, portion we trying a materially with business, And clients, accepted we're they which we part, capital

and doesn't I to capital, the right-size return doing make clients. we think of to make our out keep we if otherwise, don't help capital, can't capital we're the - trying justify we business model we reallocating that, just that and start sure right that return that on right we

your up have say, and the went relationship process see them can never think to So in an call we hey, way the It's and prices I But explained through. think easy you up. right we push we long interesting to a it was I results.

of sort generally customers that argument. think accepted I

customers work conversation. that sort calling in of and believe lots up having I that hard So of

Bill Dunaway

this a thing that add say in contract a of I also lot of others, be like tend rate brokers, a cover you of have that broker - seeing, the quarter, to - little was it's which some tend well. pretty big even With commissions increase our on ag the overall significant of there, bit in in introducing you where start than clients start seeing also, RPC, And but start I introducing to I - see only volatility some we them of the guess, RPC be just Dan. that extent you farmers, there not which as some would higher to and to drive individual from the they higher of see our per quarter in some activity but a and see seeing you increase a lot higher come commercial would good last commissions, side a a as pretty gross-up you bit saw issue well. commercial you there when you our then one overall tend -

kind a than rate large see a RPC, higher lower, top-line paying out are nets is. because bigger just those it So of but going you're to client commercial individuals a

light sheds that hopefully there. a more bit So little

Dan Fannon

was Yes, COVID. perspective a by to that's Payments, portion just then a was business mix the shifting that that And impacted helpful. of Global from

Just from thinking a both about from just how should kind think the perspective, that that capture volume and outlook for of business here? about we

Sean O'Connor

of I is that of depending those have sort not. a on So our internal I payments are routed, affected we about clearly. right, what track that. forward the through divisions automatically them honestly and think by mean, was payments all super-organized you're place get work going and are We're correct, of bank business have us of there is continue for banks of banks not COVID think through business sort traction lot sort happens the different sort back pretty to optimistic pretty would to because to because now they come dramatically, I banks, the of and think to of and largely. we on room always grow lots and entities relationships, to of inside go one you of with these but different mean we and all

GIROXX pick we've front that good and now in companies start before Brazil. we're that we with of US, I sort mentioned think really sort done that track rolling banks of going a out we the acquisition, going But to and really a some is now us track the there. to of the to Europe, haven't smaller record, in So there are to a do good We've We're of as a additionally, offering digital I up on relied before. it flow. think

customers commercial use that institutional to So really and and haven't that's XX,XXX a of one retail yet. we us customers additionally, refocusing sort And efforts for our make our to initiative integrated sure big their us. make offering XXX,XXX on that of payments, we're every trying

And So base pretty is that's internal for client right well. exciting just pretty mining that's significant now. us as the

We've them of that alarming things those a loss-making claim lot were of two a market say these back-end looked of providers bit some buying of they I ago, that, they the have. are three companies the So capability lot and the It's payments shocking seen but they market. sometimes we table. a use on entities. sort years, right at names, and caps not just to would getting I now. that these And to don't the us honestly will of that years are four of sort name that lot see are have companies because a come those

have that's successful. bit comprehensive segments we So that looking a a been out in And expand. there's they frustrating. could we where But I think there attack more certain way at are and

that. So we're definitely doing

decent some I that there think bunch you'll So a initiatives of to in business. are continue And out think place. see new I of hopefully growth

next should months. out that six talking months a We first to the here beta corporations are about in beta rolling three the I launch of basis the on happen was small for platform

on start cross-selling will We our platforms. all

that payments of and sort to incrementally, that out capabilities soon. pretty should start rolled be start but again should slowly Our

current things growth So is think I business that, on. going all track of the push are of sort those that to

So nicely like see keep basis but has that don't consistent you and a why on to business reason I specific sort forecast, top-line rate up. give a growth specific. can't bottom-line, grown We any don't hard pretty of to give that we and

Dan Fannon

and and curious of Understood. then that just just kind of part lastly just opportunity, that's inorganic of the construct you that's is that M&A me, or - are the something that be within something broader outlook, that crypto potential retail as GAIN's is expansion at expanding just of kind if mentioned And strategy? an institutionally, organically for you or of if a to could capability kind be the look launching you going that offering that,

Sean O'Connor

all are interesting we've sort of and of internally, watching of we everyone think And like over sort a the of right. actually we sort did It actually in crypto crypto revenue right. all was mean been sort the derivative make because much I moment ecosystem. contracts. at how We headlines, trade we trading look actually the that are the we from clients, getting our a companies, in lot we of surprised the public markets of who

think instruments trading we with sort research subset of want a think our how that. ecosystem So about And our of it offer the we're is good actually more ecosystem other a sort meaningful of businesses, should it's that to new what do clients. sure ecosystem, venues holistically not our some we to mean sort that, we and around we little be better. to clients ecosystem, we've about our are to this bit think thoughtfully of market access how But new do but thought we're about on. we're make in really of intelligence what clients, what putting as starting I an is to the going up current to now, sort do providing so wallets as I access never pop an think to assets and up. and go we of that become can exchange as pop provide

derivative sort bit thing there's still there. mean Wild little So I of market. have of new in of of our same a contracts. a of on the a we of to it, and trading - And a and forefront current that's our a providing sort Carbon, is that's lot to to massively of growing be the contracts, commercial want out there's carbon. approach And be think with there's new lot clients part it's and and you the I listed happening, at OTC Singapore to clients that. contracts liquidity want coming in also our elsewhere, West those

a customer proactive lot areas, demand money So two both how be them. figure can in to our already we've out of of we in got we're and facilitate making and these interest and

it. being a thoughtful a it's bit focused So around more and question just of little

Dan Fannon

segments both the through And just the to your it. crypto and clarify, that's way Retail to that's put then, so Institutional

Sean O'Connor

yes. correct, Correct,

Dan Fannon

Okay.

Sean O'Connor

exactly. Yes,

Operator

I'd Sean O'Connor this to I'm And showing remarks. Instructions] back any [Operator And conference to turn no over now further questions closing time. the at like for

Sean O'Connor

joining the speaking to we be summer of Thank the you. Enjoy Okay. will soon. thanks for everyone you call. end Well, and here,

Operator

today's Thank Thank wonderful you. disconnect. Everyone you concludes have day. conference now This call. a may participation, you your for and

StoneX (SNEX) 10 Aug 212021 Q3 Earnings call transcript