Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the StoneX Group Inc.

First Quarter Fiscal Year 2023 Conference Call. At this time all participants’ are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. advised conference be be Please Instructions] that may today's recorded. [Operator

Please the now Bill to Officer. like would conference Dunaway, ahead, to Financial Mr. I today, hand over sir. host your Chief go speaker

Bill Dunaway

My press call as our of XXXX. After of release results conference the at reporting morning. our first XX yesterday, release closed ended slide for available name on we'll quarter Welcome website to our first Dunaway. in Good to well Bill we earnings results. market December the quarter our this www.stonex.com XXXX. is as refer is issued This for a which our presentation, call fiscal on our a quarterly discussions

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

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

company's not there from its the be that statements. results that its differ and no believes company are will conditions, by or upon implied any actual assumptions the statements can results materially company's the expressed business Although forward-looking based reasonable future market forward-looking regarding assurances

that a information, update obligation whether any no performance. forward-looking any not of of are cautioned otherwise. future to future new undertakes result revise guarantees Readers statements, or are or company statements The publicly forward-looking events as

the call Sean now over O'Connor, I'll CEO. company's With to that, turn the

Sean O'Connor

call. our quarter for XXXX morning, Thanks, fiscal thanks earnings Bill. everyone, and first joining Good

of inflationary especially short-term quarter physical XXXX markets experienced XXXX, of level the of the effect with in of increases first in towards a however, rates. markets, The diminished the both and interest more continuing continued global fiscal much on significant for fiscal than we pressures end Volatility marked quarter. at was and financial

of deck, slide of three versus operating from derivative capture. compares in next reverse quarterly were to as XX%, Turning against as tighter down volumes the were off and metals derivatives addition a the higher a revenue earnings volumes strong by by offset essentially which as quarter. ago. lower product were was revenues activity. mark-to-market Revenue the flat were despite revenues to loss Listed a lower back on over-the-counter $X.X slightly CDI, from good X% derivatives year well inventories, which million held spreads. up due Physical results revenues the precious This should

Securities and interest as operating of were rates. up revenues a also XX% result significantly higher volumes

but higher the This also positions, interest statement. related in financing we of securities, results up trading earn trade operating in the interest incur gross rates experienced related While which our income income bonds, expense helped bit the happens increase expense carried the to fixed as the a we on interest on interest on increase in revenue, securities well. when our significant as we drive a

declined per year We related deducting this to for securities Factoring income expense changed now associated in, this and rate our fixed the this revenue calculating quarter have securities million method volumes. capture the aggregate, are our interest trading. year the XX% increased and well versus XX% first which as to to million increased the per quarter, interest and compared prior as rate as of peering with revenues, address prior $XXX driven the the expense net the $XXX in prior Securities IB operating in by costs year. in commissions, the deducts

Global Payments up quarter and revenue up up X%. with revenues volumes best their and recorded XX% capture ever XX%

realized over to up off ago. of which rate balances float, impact largely of our in CFD income million, XX% and and tougher XX% market down on versus conditions, a year Interest was resulted was FX increases XXX% the $XX.X as the interest capture, fee in revenue client billion. total at we stands Our due down a back lower cumulative XX% revenue client now which increase the $X.X

longer shows period, except listed revenue slide across the the strong was X%. Moving double-digit Over XX-months. which to same four, data derivatives, growth which all we on for products, trailing realized this up

period revenue both capture. this with volumes capture the and have derivatives revenue securities seen showing in of listed We exception over and increases generally in declines

now slide operating recorded and quarter the up a million, We trailing XX-month prior of summary and revenues results. five year. to versus Turning our $XXX.X XX% of first

off introducing revenues as fixed interest our revenues, were trading, and operating boosted clearing interest both is the in float our costs, income XX%. Our client the as I expense, also interest broker nets embedded was by on that up well mentioned earlier. operating and which commissions Net as

quarter operating for and Fixed immediately up other growth compensation with prior the quarter revenue versus XX% up Total XX%, rate. expenses in were line with compensation related year and slightly and versus compensation the increased variable below quarter. the X% ago costs were -- a the net

with of merchant resulted Africa, the clients APAC acquisition in and well global both acquired and we based on This cotton after a producers as in $XX.X West in CDI, and million, buyers as in before gain Brazil quarter, the tax. Switzerland, region. During business a acquisition

X% year prior quarter. of the gain we recorded, and the XX% Excluding acquisition amortizations up the adjusted intangible $XX.X of immediately million and the income over net up on $XX.X last million,

resulting the segments. operating reported, realized an our on and basis, achieved Including were Institutional in earnings $XX.X ROE of of an adjusted acquisition, XX.X%. On XX.X%. million, gain and revenues this our We Global ROE both we as Payments for same record

$XXX the was and $XXX.X was related up up XX-months. Looking over at gain a were million, record intangible summary XX% and, Net prior Operating XX%. amortization, billion, a excluding the record million, for year. the the up revenues $X.X trailing XX% the income acquisition

Our diluted for XX%. $XX.XX XX-months, EPS up the trailing was

Our ROE the was despite XX% years. two increasing XX% equity over last

our by interest to fee and as client full boosted of on income started financial results the benefit we increases. higher were rate realize the Our interest accumulated float

As new last interest-earning our take XX-days to assets generally rates. reprice about quarter, to mentioned

versus $XX.XX, float paid a XX% and with on quarter. gross was basis for points quarter. yield prior average our And We increased year what deducting versus versus is income to for ended Our $XX.X fourth client the XXX the interest up after year value of a points the basis our quarter net book finance quarter million the XXX fee ago.

summary. which is segment Turning now to six, slide our

highlights into detail. more gets touch on some before to Bill Just

client operating XX%, For and segment with was XX% strong all, one income revenue performances net the up segment of quarter, our was but very segments. up across

segment CDI, following our client performances as in effect the up Commercial a of physical segment Our the off operating back income acquisition higher of from the XX% increase business was as XX% with strong revenues, of in well rates. interest

compared a market increase had a conditions, in and in in a into our to versus largely much-improved ago, well Our capture XX% revenues, Retail This was particularly to increase translated year. more interest softer challenging which quarter income. segment Institutional much due lower was equity securities environment segment increase a from a business income. market-making fee revenue tough quarter XXX% a favorable more with resulting year performance as in last a and as the

solid Operating segment with operational was of that digital with income both the million, and revenue was leverage increases down segment both and Payments revenue have ways. in was revenue loss platform XX% a up we resulted volumes $X.X the which works demonstrating XX%, XX% Global high up in capture.

take long-term operating our we segment double-digits revenue have the up the we manage on across how were we results, strong and repeatedly, For company as XX-months, we quarterly segment and board. had view grow These the trailing income franchise. but said a

such, such to rather gauge in best believe the As specific is quarters as XX-months taken trailing progress longer-term and way look than results we the performance, isolation. at that our to

seven, at disclosed deck. gain to performance in accounting filings, These last over provided have quarters. sets all the trailing and been this earnings related appendix the which end in prior Turning financial nine out appear to for the the in slide the CDI of adjusted our treatment numbers reconciliation the acquisitions as which our XX-month

bars operating last over On revenue nine the the represent XX-month the our trailing side, quarters. left-hand

see, a we smooth as been steadily trend strongly has capabilities. you have this upward and and As expanded can our footprint

over for XX% period are annual this compound a operating Our rate. up XX% growth average revenues

income CAGR. adjusted Our a pretax likewise has significantly grown at XX%

you a XX% by our side, can two which dotted XX% our right period. has line The the has ROE, the capital our represents CAGR. On target, above which is for in XX% our even net this XXX% income though grown up bars, over remained years see over adjusted

Dunaway Bill the hand With of for Bill? a that, to financial discussion I'll results. you over

Bill Dunaway

fiscal first the so the with slide starting statement be Sean. many XXXX. Sean shows you, of covered more consolidated quarter, segment the then and the highlight eight, I products of income for for highlights our Thank volume. will to X% few decline move due number a FX/CFD which quarter I'll million clearing period, and expenses contracts average on in declined and current equity Transaction-based $XX.X lower discussion. daily to the to fees a primarily in consolidated

to in declines the million acquisition. partially principally management offset which period commissions from independent business, and to due retail by FX/CFD X% CDI broker declined in current incremental the our expense Introducing $XX.X was wealth

significant rates. fixed as their $XX.X in a interest related Interest million as the expense our clients year, $XXX.X in Sean short-term to institutional paid as increase expense prior increase a business, income million interest $XX.X of deposits interest as which increased result a primarily to the earlier, versus noted well in the result million of increase on

of increased $XX.X Variable revenues year, prior the revenues in average XX% due million compared period, and short-term the period. year interest as result expense well in operating compensation the $X.X operating represented Interest prior net in borrowings. funding net as year, an versus versus prior to in the operating of net increase as corporate of increase the XX% a on increased rates, million revenues increase the current to also in

related as an costs which the which of increase was and Fixed million year, $X.X to the in benefit deferred compensation. compared the XX%, to count, compensation principally offset increased head year prior prior salary versus with by partially increased growth increased

over $XX.X which $X.X million expenses year to quarter. prior to preceding Other million compared the million, immediately as the represented also increased increase $XXX.X a

prior the our information systems to increased $X.X business. and compared As primarily million, in trading securities market year,

the principally accounting legal, prior million fees professional other year $X versus due addition, and higher to consulting In fees. increased

support due expenses software $X.X expenses increased business, to marketing as and Non-trading our across businesses. additional implementations, increased and million retail FX/CFD our in increased due $X.X campaigns principally hosted to non-trading as marketing and selling technology conferences million and well

to year. uptick We continue compared to the in see $X.X increasing business million development, an prior as

acquired. intangibles amortization to well debt in incremental and to software, the as quarter and due of $X.X for We recovery prior year of average prior expense bad related versus $XXX,XXX depreciation the compared had year as depreciation recoveries $XXX,XXX to net developed increased leasehold period. Finally, the higher million as internally improvements a

fiscal for versus $XX.X increase prior a XX% quarter. the of and XX% million immediately preceding was an income Net represented year quarter XXXX increase over and first the the

of includes acquisition As current a Sean gain CDI noted, non-taxable the in the on net income period.

I'll our to slide on information Moving segments. nine. provide operating on some more number

client result equity, increase rates. Our to Commercial in compared when XX% increase added well as as preceding year increase versus client segment however increase in million This the revenues average operating prior million significant driven in earned interest balances $XX.X million a on a quarter. versus of prior $XX.X the interest as by year, a immediately short-term the was in declined $X.X a

Segment revenues to prior offset million the respectively. acquisition operating listed year $XX.X and X%, These transactions $X.X and $X.X increases the were physical operating increase OTC of an as million by year activities. due derivatives, and metals quarter to from in million principally revenues partially compared addition, an as of $XX.X prior well income over respectively. and the period, In CDI, from precious increased the preceding million, for declines increase in XX% was

and a increased as operating daily transactions, primarily million Moving market compared markets the on of fixed the volatility of year securities increase year interest revenues, of in as $XXX.X increased increase income by and Institutional driven as result to million in increase $XXX.X increase result prior driven volume revenues slide increase Operating well securities the continued a share. equity ADV versus in to a an The average in XX. primarily XX% both our as volumes securities by number in in prior segment was rates. the in

products, also respectively, touch the rates derivatives million related earlier, in mentioned significant FX and in and in Sean for a interest both As the $X.X interest expense increase volumes. driven FX increase in listed derivative revenues the on which Operating increased led listed period, I to contract by momentarily. million $X.X and securities will growth

increase of increased and million in as client in Finally, period a an short-term with on year as rates interest earned versus average interest short-term the XXX% expense the versus interest well client increase prior prior balances year. income rates, result in fee rise The the drove as in $XX.X million expense interest the a increasing $XXX.X equity. increase for

and expense year, the to securities prior and to compared fixed $XX.X as paid million increased respectively, related $X.X $XX.X Interest to income lending trading while million. activities million, clients increased interest

revenues. Segment income $X.X of build increase Variable and million increased million, XX% fees, $X.X as compensation million systems a the and product operating net while of $XX Fixed increased in operating we income benefits as XX% as the period million out a increased increase increase revenues. increased result to compensation expenses $X.X professional result $XX.X fixed the growth in market Segment current a immediately million or million in other net versus $XX increased our a versus in million the in preceding the million trading information. including quarter. prior $X.X offering, year $XX.X

Moving declined volume compared million decline well segment in year, Retail in $XX.X XX% revenues FX the next million $XX.X driven of decrease the in result as the as which CFD by a a prior in Operating prior primarily the was decline and daily a to XX% as year. RPM, our as FX/CFD average to revenues slide. versus

prior physical year operating from in million, contracts Operating the $X.X declined $XX.X Operating preceding period. immediately compared Retail the the revenues revenues segment as revenues transactions to million, securities million quarter. versus $X.X declined added from while

year a result expenses increase in million, in $XXX,XXX by of selling prior as of We operating fixed increase segment loss million million $X.X and decline prior marketing, driven recorded $XXX,XXX primarily a increase in revenues. segment $XX.X increased a the in versus year period and costs $X.X and business and a depreciation the the development. million current non-technology Other in a in support to in income $X.X million compared amortization, increase $X.X and the travel

Closing out the million increase daily increased $XX increase in X% average in and slide, a million prior as next year per driven the Global XX% segment the discussion in the versus revenues by compared operating to the Payments on volume rate a payment both and to in the the year. and the prior expenses of income expansion increased offerings. over $XX.X is increase Segment related Non-variable the $X.X prior XX% was and million a million quarter. immediately our year period represents primarily current preceding

the number Moving over for the revenues the represents period, $XXX.X operating segments. operating million a operating year. Overall XX, on to which $XXX.X last slide million bridge between year up quarter current of current prior our were first the in to across revenues XX% or period

for I our have changes operating the revenues covered segments. in

period. in an increase prior revenues However, to is the of variance positive to $X.X in an net million related the loss income year overhead compared as unallocated FX unallocated primarily interest hedge-related in

a gain increase $XXX,XXX as and million $X.X fees, million result travel in represents professional development. in increase a $XX.X of current on depreciation XX, pretax systems in by variance and positive driven $X.X to from in a compensation the and overhead as income $XX.X amortization, million $X improved increase in mentioned, acquisition, million a $XX.X of increase million variance The pretax of $X.X slide unallocated and million increase market a income bridge partially quarter in as was just in positive So $XX.X was business number million offset which performance, well in million $XXX,XXX a revenues a of next period. I XXXX a information by variable first trade the

the $X earned clients income and interest table million Interest the to well interest and fees to rates. slide Finally, $XX.X by and effect compared as balances a fee client year. in shows sensitivity prior net short-term on as of quarter, to to paid in XX, moving million interest depicts rate million which of annualized increased current as change which the rate the swaps period for $XX.X our on a interest in

down either the $XX.X or on a change per share result XXX-basis up an income $X.XX in short-term to net table, in million rates interest point noted As in basis. or would change by we estimate annualized a

turn With back would it Sean. to I like to that,

Sean O'Connor

Thanks, Bill.

on operating in strong move quarter very Let's the over in of which rate and interest achieved fiscal an XX. assets income, double-digit $XX.X a revenues our and $X.XX acquisition the We significant increase and the reflecting XXXX, interest $X.XX resulted the on results These slide, higher which first growth XX% final to increases contributed of the non-taxable for delivering of per million of earnings net results EPS environment. diluted in client in quarter. in CDI, diluted and included income, share gain ROE a

drivers While of quarter, to our model. in of and our core in operating and the exemplify end trading our operating assets believe including the growth conditions diversity client to empower deliver acquisitions, our clients moderated multiple to towards approach drive business, these the shareholder first that and our and ongoing investments us We disciplined strong the continue growth position the drivers our our multiple value. performance,

a our anomalies, is at to two lens our show over through strong evens a results XX% last performance quarterly XX-months adjusted slightly growing CAGR revenues a years, and the trajectory, as upward viewed When a our longer-term CAGR. continue XX% trailing our which our earnings such at

our We continue and to which to in underlying client products engagements. client strong assets segments, across all trading growth and speaks in all client client see volumes growth

financial We talent. ecosystem, our continue in expanding and our capabilities invest products, to

very with of addressable We market front have a unique and in a ecosystem comprehensive us. large financial a

$X.XX XX-years StoneX. and ago, revenues I well $X.X would into XXth $XX value company was were the of than less would this of represents stock million. anniversary note the market like that the week million, become was annual operating price to and the the what investment just the

XX-years, Over have shareholder the And value times. annum, the at the market annum. of revenues power XX% compounding, of have we by equity per over operating at past we increased per harnessing XXX company XX% compounded phenomenal the

commitment business owner-based have into all acquisitions Our long-term our to investing been underpinnings and approach risk our to of and our our clients, around and growing success. key discipline the

believe that record early the largely are proud we the in and peers, much is available it than of XX of our next likely believe for are be that have of are XX is no our I we we doubt to by also -- still opportunity the more StoneX that stages While last us. unmatched the track and front in were. that years

let's Operator, open questions. for

Operator

Instructions] question we a of Thank you. Jefferies. [Operator have I'm showing Fannon line Daniel from coming the with

Unidentified Participant

thanks taking of for Hi, actually my This behalf June Dan. question. is on

a versus maybe with we the on what started of off discussion how So backdrop and on just has can environment the XXXX. maybe that current just quick start XXXX, was

Sean O'Connor

Obviously, business. Sure. change in fast our can things

general can these So change by comments minute. the

that were we think if our view discussion at continue to my I driver go back was to which And that's somewhat see going two had is I the a it maybe volatility but obviously you elevated than lower year-end, And volatility, years. last our still key think would higher pre-pandemic, to see. what business. been we slightly than was be it for for

things a to I closed fell here normal it December, such quarter that in down. of a And seen think the also of quieted We've a obviously pick sort last lot It down. might more maybe just In last the quarter way days it it went up was beginning January. period. people that over over was of cadence be down the rough Things Christmas Christmas. the

not pre-COVID. but going as volatility us continue I than quite will in I environment moderately was good it COVID, that to is time was an think we're And for as yet. some think it that on good side, better for the So see

to And really rates kick a to don't environment in looks where obviously, see now in X% mean X%, fourth to stay I'm it which we're to any like side, interest at We where I On and a going. financial of full an they're of interest in forget But think these of interest I other of results increases. are either see I always came side sure rate is now our a sort seen for the X% that in we're there than be impact up better we're attractive environment while. that's And the sort not mean, years, in. over environment obviously I get any feel year. showing starting to we've we by how about. better very and increases us, out the magnitude point point we've started much quarter. where And how the had going really fast quick obviously certainly the than last starting interest only soon. That's for anytime at time last and four a they'll them

a rates. as said, I very the from interest we only mean, I small saw last benefit year,

good material. volatility. for So think those I a I environment would think is things rate The impact environment honestly. say if still a two you we're I put interest in And for decent us, together, it's pretty

So view. my would be that

So I as dramatically said, -- quickly in things can business. our change

interest least do. Obviously, beyond But volatility rates don't go I months. this at good for I than interest that, a to might still how us environment going think for I know hard XX down, them mean below far to X%. to is see to changes but rates XX faster be going

question, is business. June? So in X.X% us your for environment Does that attractive answer very anything our above a

Unidentified Participant

somewhat going maybe you just some the absolutely. on dynamic here? like way then is down? some at since or yes, up similar And interest as markets your point be super on pricing interest That so it way there Yes, seems will helpful. kind rates mentioned down of sort similar next, and the this versus to -- was sensitivity rates year just way rates earnings down Or of

Sean O'Connor

interest up rate because thing weight goes the way clients. same down, down. quicker it more to down. as dynamic of the we mean, sort on might And take from interest same. the I But the will obviously, the Yes, reprice way incremental be will mean, little of reduces, on the to pay I take happens. be our way the the assets of more We same. it take a

way a above symmetrical. sort of should bit you muted as get it X%. But be each it's little So

Unidentified Participant

balance do rates any related of that terms in margin and changes? see requirements just rate between maybe client And margin interest you dynamics -- -- balances, to interest

Sean O'Connor

Yes.

seen some because I have interest equity don't could seen But changes rates the higher buy money the clearing We find largely or starting they're in think or something. X% mean take seen go retail that's here certainly, clients know there. I and business, I deposits. we've small immaterial. our full some on down we've they were market elsewhere having people if to money into But than sidelines. that rather or

And in depends then our it leave with margin that to on the much volatility of other markets because the side drives business, people obviously somewhat on how the us. have

balances. going if top to volatility pullback of client tends margin bit reasonably volatile. of to the our little see a client that's as long So could just reasons. be I a balances moderates probably or which markets guess, it of little on our client bit there, be we there's But client move more may core XX% of, reasonably sort a on balances underpins level little But are those aggregate just stable. XX% footprint, sort And our active, bit, a a around The of for as right?

Unidentified Participant

Got business. specifically it. And Retail the it. on just Got

to rate capture was mostly volatility. diminishing mentioned market decline due You

on So and more just would a market little rate rate? the what a you normalized dynamics volatility you depth going in And forward, that can of we're seeing as bit go describe here. the maybe

Sean O'Connor

Yes.

in a quite in even What damn it's revenue time. revenue quarterly, over monthly, weekly, a time. of long period business capture. a there be short-term, capture the period of lot sort over do stable have pretty volatility we we see data that that of in can of is, So And around

sort revenue terms on we say capture make we think also where on on in that lot average a mean product because less something with about long-term FX $XX, $XX CFDs say obviously the would is do I I So indices. the than we around of the mix is. differs of

that see where in So is region we'd probably like something it. to

Now at XX are this we quarter.

But long-term at immediately see quarter ago, of XXX. we as were average. prior quarter, type the So we below in preceding level And we the that at the look had if we're significantly you X,XXX a sort XXX. the year

massively the long-term XX, going think say underperform quarters those where line in And of point. to see to the with going that mean to we XXX at the sort would overachieved to sort quarters. I So of a type is some trend bring in we're levels average. back of of we're sort We're you average couple that back probably

So XX we to saw the conditions market certainly in last that over business. exceptional XX-months

revenue And a Our capture a of now and was trend. environment bit seen tougher we're trend. above below now we've

we So out time. middle the be should somewhere here in over evening

Unidentified Participant

the quick understand you. doing XXXX? And Thank maybe, one thinking just you a for Bill, but fixed I expenses Understood. you. about is for that business well, are how

Bill Dunaway

interest riding volatility. increase Well, try certainly, bit relatively it's control, the something was elevated slightly rates obviously, And that higher QX continue here. tailwind modest a we to we're to of look the and to right? from into QX We're that, cognizant

talked of on previous at increase about trying we due is that expectation that versus year looked us Sean's what what offerings. our more But probably you basis QX a we here that would I relatively digitize to moderate of expand QX the is last to business on a did of, So go-forward kind QX. expenses, and would to to sizable calls, saw from when think our QX like expect fixed going the growth QX forward kind it in versus with QX over indicative

Unidentified Participant

more at are this Got on point? digesting you for or lastly looking it. of it. still opportunities CDI And you're just sort of M&A. the acquisition Do then think kind you Got

Sean O'Connor

that, Bill, you I'll take if like.

of, things. is these statements That is easily you a and through, for for our quickly small have I mean, to sort be deal CDI pretty us. financial how relatively So us. disproportionate think, deal I it to digested, on had by impact a account going

factor in So us opportunities. at always at not for anything always at a the we're it is this market. point. looking looking And gating We're else

And interest I and earnings, on obviously want seen sort would seen previous spat press and to you I've no think involved say, now on earnings, financial right? -- everywhere put we I a us. owners What read in up on well is not obviously, until any that environment, in is, we're the to of basis. calls, peak different which we've getting acquisitions totally this seeing hit of said now, see multiples served peak as were we've businesses and

of these performing and road now they've halfway of it building of And of the not of down lot a maybe of capabilities. for the them that bit a a dried funding and a there. businesses, of sort was well, little got that lot sort has of Some their bump start-up additionally, are so out COVID businesses are up them realized sort

seeing a opportunities. of lot we're kind of So those

We're like sort -- not we start a the ourselves as think to we we take capitalists. businesses don't of but -- of guess all ourselves, time I venture don't

will we M&A. there now and think and if grow our think real is a a opportunity accounts additional we're with of I That's those at environment getting bring we capability and more sort modest real and amount ecosystem. interesting. businesses. of those So And investment there for But rational bias, into can we interesting more to look

We could rational mean anything, buy saying our take XX I think of going So still become of footprint. to we've a another months happen. for our sort filled think to for six and prices. But expanded that will in down settle around we to not go that it's to gaps. because I'm totally I that lot people

add default significantly make best, was buy way focused we've That's growth. to have fewer when to is better something, we so gaps no are Otherwise, value can organic less. our we it and added And shareholder always And we it. it right? we bought on are needs our When the value. than our the

ecosystem. our -- is default our So

place. at on I are notice story the We so the talent think all and run And the clients tremendous garnering the market think be exciting share and we at and us. is I moment. over moment, to have of seem taking a

our well So we're what think that an And through accretive just good at, if is continue always priced, default a doing it to that. about is to is we our business which organically. growing faster see we think do acquisition good opportunity we'll

Unidentified Participant

Okay, again taking all questions. that for Thanks was super helpful. my

Sean O'Connor

do we other any you. Of Operator, Thank have course. questions?

Operator

& Punch from Paul [Operator Yes, you. of Investment. next our the line Associates Thank coming sir. And with Instructions] Dwyer question

Paul Dwyer

guys. Hi, morning, good

Sean O'Connor

Hey, you Paul. How doing? are

Paul Dwyer

Thanks taking for questions. my

Bill Dunaway

Good morning.

Paul Dwyer

-- Can Good. this the a you about Can follow-up drove million what think it's on like Maybe on just only $XX I talk spend to acquisition? you gain deal. CDI.

Sean O'Connor

sort get doing I a of proprietorship. in And mean but think announced a to was we too on quarter want the don't said I weeds we of much sole ago. Yes. we when deal were some this I this, the

business I of it's see for One to he company, sad in of five, a We apparent. us. was become the and years heir were employees the ago to him Brazil the think sort our joined in cotton tough competitor go, top six

this did the to process. And business, We thought of he just there right up his call a wanted alley, us when and is And deal. was no immediately said principal them. let's sell StoneX's

took the was of on the capital because, remain my he he the think the anything as the just owner this took would a if be profits if be out sold tax out he a tax-free I that can I understand business, him. the be company, But tax would company. receipt would get inside for it, him, taxed of company -- that and had view advantage for the there I big let he treatment

So a the sort there was him to for years. a sell accumulated capital over significant that advantage of tax business

of And That price tangible were the pressure So the was add-on basis sort value. is the few on of cash the sort results which deal on was we book based company until the December. of payments $XX a up there million, in did. a

we small additional made So some payments.

deal the that's did. we So

amounts wasn't the think deal There negotiation. of huge I that's he wanted.

was that's looking the he I for. deal think

The on basis, does difference -- base cash Swiss always a how for company GAAP his accounts which it. is, for him, he is his

have account the revenue their to a next portion contracted year's business, significant basis. on for a And they in. have business of mark-to-market their We

some to had market, that to of led mark which the to obviously we So gains.

So we've -- of that came that the gain revenue. some part next was acquisition, now portion brought forward realized. part of their sort of of And as of because we the sort we year's

a and do business Additionally, our third-party process do value do they the it to look the relationships, we that. They we independently, businesses. use when go acquisitions. to value to have things so we have independent suppliers through they of on. the and like an And for at all valuation And the acquire

I value just and because up I if of So it of the I intangible we think suppliers. intangibles, the the and an there them would agrees, mean to is we prefer, have contracts up to me, to back were those never write write-up write down. Bill prefer

anything intangibles And and think. we that's how cash, really. worth for aren't hard not me, It's

So part of that that happens. is anomaly just sort of an accounting

we of So But that's really will the of it. have to write down. some gist that

relatively of how sort a small much show So acquisition, the but on reason. a of that's we gain bizarre a it when would saw was outcome

Paul Dwyer

Yes.

Okay.

Payments, the a just for like a to Global get just in continuing its you segment? growth. seems accelerate spend and have that time drivers talking been what landscape general Can deal. like the Sounds more it the little nice On about to acceleration it's

Sean O'Connor

affair] sort of of feel ago, I sort we we're And that busy years doing (ph). mean they're much maybe of sort business four, new me got because so the that, frustrating to stop businesses angles, has three, I because which people starting definitely, is invest think of core energy weren't in to sort well, renewed five of in sort right? and money, do Yes. was our we [on always when making investing business that's business

think always both. I do we've And to got

but got you've take to think the your franchise. sun and investing you've also -- we while sort to business, got want about make You've of hay the to to advantage because got in shines, grow

in conditions market you the invest. your long-term business that profitable those unless sometimes sustainable And make or

we energized in in lot recruited really that and now. sort making technology-based. P&L. are of lot payments years is that people up right of in business the I big these hard the team. sort a of people. to business, much about more investments three how a pushed We've sort showing initiatives of with We've And think I the think them the team. But the reinvest -- yet And we're think it about to new got younger really not two, are very ago they So grow business. All

sort people. of younger recruited we've So technology-based

be sort that, the feel launched and significant, business would we tone for the our us. good about of I of general of sort payments So think, and potentially us capability where very when local taking it's

money is perversely I was a why doing In of, People kind payments I size COVID, that with on stopped where payments picking now, we up. think this the that subsidiaries, investing is the are making tailwind. lot really businesses make corporations of terms into lot of one mean, the of slowed experience investing larger and the a business didn't now overseas. of a better down COVID during

tough So this our that the of other for generally. getting little businesses, and would back say is think, it I margin, what opposite which right? business, would I that's environment more of COVID was we're takeaway bit So describe of on the high-level some a sort environment, a a sort normalized I to is of Yes.

Paul Dwyer

operating perfect. to you relative to this that's if great. picture, just Yes, now particularly be the are business. rate in accurately really about income do costs, drive, to then Okay, big how be unallocated nice quarter. guess, And again interest able segment to benefits reflected I leverage the continuing more think starting

Sean O'Connor

be response Well, say you finally. when would we my that leverage, operating to better got

of But in our operational investing start sort those short-term, And be seem and you more add So trying benefits at that, that the to point, more much we some to of the net so fore. come infrastructure efficient, see costs. you to in just scalable. leverage it's a sort hope to make of always in scalability

see getting where and from of hard the I only unallocated So trying right? level revenues should push sort hopefully, very the aggregate, going leverage mean, continual cost and we leverage been long we volumes keep have not digitize going but It's our your regulators the a it's forward. if to business continue And environment, the And you point because a now and up, the to we time do, out. better, always there's can are we're operating significant will to sort to base of, technology on in coming. costs

The more more always on regulators more us, and are more and imposing costs processes.

good. Some of that's

even maybe then up Some inflation digitizing, are more faster sort deal environment. is things And to all of, than but the with that high And you so are at moment. is costs costs that. have work those related than of we're to cybersecurity have that with going like the continuously, that the and required, we're you seeing all to as

starting the we're costs there out made forward. point, challenge to be though even work to XX-years. managed be there's that some going -- to should major real we last flatten with, some there's But tapping out. we here and going we've over a pushes So feel some to at investments We've are definitely

see that. starting payoff bit for we're a think I little the to of

continue. will that hopefully, So

at grew, always interest, when operational have that, than looks coming no we interest Obviously, that revenues cost of, and without There's faster cost. zero no because positive a it systems right? remember And better you cost always environment, in your against costs, have your point. kind that

right? the also So numbers skews is So little interest operational leverage on XXX%, the that bit. a

of sort rambled So question, answer I Paul? your it. I on Did

Paul Dwyer

but keep Yes. that's like then market the no it to market last continue share and share? current any to taking being able gains, the grow landscape just you're core add competitive No, terms great. the to business, with just just me, That's of And ability issues perfect. in sounds color for having can you

Sean O'Connor

speaking, our you But increase look revenue point, may decline some But at happen it's That share XX managed incremental growing growth Yes. of XX% we over organically, we've happened of, the capture what's client guys is base. pressure. face generally I activities. argument our market maintain we our managed in you happened to to to to XX And side. sort five was years, capture. over which And at mean some any now the we tend revenue revenue we're our be you in seem last there I or margins our sort customers if material and of haven't our the in pricing. in it years, five activity. XX% to on and market to in of the with some that seen mean, capture share on giving always data line

won't I given that higher. I boost high maybe And the a capture do and environment revenue us any has why see was reason mean, continue. because don't was think volatility I

customers. growth more work here. getting going acceptability than been sort think be reason offering. kind And the XX. And we're the to underlying for in core So it who organic in is think us. But People some a we trend has in a long-term last in and know to we are. in our come the Clients that's at of scale, I pretty much from sort is of the good. relative the to steady want tipping the of looked made I it say I comments and point That's than ways, that exciting the in next better think XX-years driver feel to that People was. a value see I counterparties. And fact I end, bit

does we sort holy and a XX-years right? get heard to this we as that sitting bit or back grow, XX-years business as ecosystem. a were I mean think bit you I [Indiscernible], scale you of pull grow I were to ago easier little a your become I'm no And like little of managed of. had And off, little if one think how we that five tiny ago, we managed and where

it. that about for and saying not think feel that I'm us easy, it's So an but I confident trend opportunity continue to there's

view. my So that see, would but anyway, we'll be

Paul Dwyer

it Okay, for time. you Thank the me. from That’s great.

Sean O'Connor

Operator Yes, is anyone else? of course. there

Operator

any I'm at not further questions time. this showing

Sean O'Connor

Well, we Bye-bye. much. attending. appreciate in for support, speaking time. and your I months' will be thanks, everyone, very to Okay. you three Thanks

Operator

for conference your today. participation. the conclude does that gentlemen, you and Thank Ladies for

You disconnect. may now

StoneX (SNEX) 8 Feb 232023 Q1 Earnings call transcript