SNEX - Earnings call transcript Q3 2023

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Operator

Good day, and thank you for standing by. Welcome to the StoneX Group Inc. Q3 Fiscal Year 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Dunaway.

William Dunaway

conference our earnings June quarter the XXXX. XXth, to call third for ended Welcome closed issued of yesterday, reporting market the After we for third our a our fiscal quarter XXXX. results release press on our presentation, our results. slide refer discussions This release our we'll is website www.stonex.com and as which call as this on quarterly at to of a well in year-to-date available our conclusion. on archive The webcast available after the an be of our presentation the call's and also will website

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

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

Sean O'Connor

our volatility during moderating due of tangible transactional produced market across prior In results saw to our period. versus products Good despite period. results the Interest prevailed been believe years the as on higher earnings morning, third as $X.XX fiscal ever our of a ROE equity. we generally this as for that client volumes quarter our and aggregate, strongest and industry growth capturing these almost our in significantly for the diluted have We all increased solid XXXX, earnings on outliers quarter call. well are joining our thanks everyone, some revenue they EPS with XX.X% for year-to-date rates the that significant now. indeed financial In and for a our results float positive

the up up this immediately was a was rate which to Listed by of last QX. due were X business the volatility. quarterly year. as this Slide case versus versus capture Ags despite although for and X% quarter a XX% lower is were deck, capture increases.As the of due and were in gross-up tough commodities revenue higher well quarter, and slight revenues aggregate Securities strong CDI, up business, while quarter down volumes generally a income revenue XX% the equities volumes down a a XX% and market revenues to of up ago to preceding versus immediately up derivatives in versus versus up Aggregate subdued ago product more operating revenues revenue QX was in XX% with in Operating Revenues versus acquired the compares were of the quarter this year were better a slightly.Physical the with earnings energy the XX% the in conditions. much the interest result for which quarter. fixed a in XX%, a X% year-to-date Fed revenues the for our inflated despite and proceed in was up XX% addition as Turning preceding surging derivative revenues XX% versus year up year as QX revenue XX% up was OTC a was the the up X%, decrease results revenue ago. of X%. strong

group QX. as XX% On continued Payments but although another the other capture capture down strong was hand, reflecting business the XX%, X%, market push declined ABV products.Global the conditions with tougher across a up fixed up XX%. into quarter X% Overall, lower-margin revenues up ago turned and versus as income in securities up revenue had was versus XX%, strong another Volumes and year a result. revenue were both equities well

XXX% X% our was XX%, the market up versus preceding XX% the at down positive clients exceptionally rate we prior the now the on quarter, aggregate a being immediately increase XX% from over and although XX%. cumulative impact and in a CFD This resulted Our higher-yielding revenues XX% immediately float interest revenue the the was capture down was of client realized the quarter. FX stands $XX.X moved client aggregate $X.X earnings float the quarter. X% an and as Revenue in decline in year FDIC This to a balances FX preceding million, flow and realized balances tougher XX%. represented the our larger prior on in year balances reduction which immediately the was deposits. sweep year into billion. increases, increase volumes in Interest client income conditions ago as and interest up client on largely to down securities due resulted versus aggregate client was CFD fee preceding conditions versus retail reduce Versus quarter,

now trailing and down across period revenue to and months. which which the the more CFDs, derivatives, coming despite challenging Moving we for X, Slide which Over same on realized XX%. comparisons XX this all data listed strong was bear, except FX shows longer flat were products, to growth

with lower more volatility. volumes generally the We seen challenging capture have generally across increase revenue has while in board, been

We $XXX.X million, the XX-month from XX% of quarter. revenues up versus recorded XX% year and third of and up to Slide summary our Turning X prior and preceding operating a quarter the trailing results.

expense float fixed our and also up compensation, mentioned is income variable preceding Net by recognized client Versus in fixed nets revenues in both ago. compensation operating earlier. compensation I up up unchanged the the that interest was interest versus $XX.X as which fixed well and immediately the excluding reorganization preceding at retirement and and compensation immediately X% quarter, the with charges XX%. and and quarter Our other was in quarter, items, Total $XX.X was for while as operating excludes income our trading, year the million revenue, quarter. income, introducing were acquisition-related a growth a on which were XX% XX% We interest boosted costs, net commission as clearing off expenses net embedded $XX.X $X.XX EPS for in million and record diluted the quarter, million. reported adjusted for up

tangible Our XX.X% value. ROE is value XX.X% on on book and stated book

the XX% basis the in value larger at income.Looking yield $X.XX due float was XXX per quarter. versus other for during versus the and basis quarter. for XX increased ago changes quarter year a share at our on months. closed the average quarter comprehensive Our $XX.X client the up than XXX quarter gross for positive EPS Again, points summary points to trailing prior our this the Book immediately

a XX% billion, were the period. record trailing revenues prior up over XX-month $X.X operating Our

income net $XXX.X Our was million, XX%. up

our last the was XX.X% for EPS XX diluted increasing XX%. months, years. two equity trailing ROE $XX.XX despite over up Our XX% the was

X, on income summary, before detail.For XX%. up Slide quarter, into to up highlights now revenue XX% was segment segment the Bill just Turning segment more was our to the gets operating touch and

segment on income in the XX% Commercial physical segment off XX% the segment, both were operating XX%. segment OTC note now revenues which OTC derivative the that the up the interesting in preceding years XX commodity primary ago. increase XX% listed was segment in revenue Versus was by income strong exceed was performance commercial revenues and up is segment with in side. up and Our driver immediately of and far a derivatives, to It products back quarter, revenues, physical the

in driven income. two interest client by to between saw X% by segment interest income the The fixed paid higher on the caused as the in float. is on institutional carry revenue as revenues reduction Our XX% segment well increase being increase side disparity by these numbers the an the

a Payments XX%, Global from Operating was a down from securities income was had segment revenue good QX, year versus XX% ago, listed FX. ago, as but to was but exceptional quarter, XXX% preceding was the QX. reorganization quarter, another income quarter, business result quarter. did up year segment was up due X% compared segment XX% versus prior institutional Equities As had up the was was ago. clearing Retail versus XX% revenue the XX% Segment market The up were X%, up the income income. quarter. the preceding tough and and when was preceding in XX% a Versus XX%. but down up by to charges year largely and results and improved a boosted much down up prior revenue challenged conditions, recorded earlier, especially the mentioned and segment while derivative fixed quarter. our revenue with income fee from the business was the Versus income interest continued

double-digit was trailing we segment growth the of which operating exception income the revenue with months, had in XX For segment down. and retail,

we As long-term how and we franchise. manage repeatedly, view grow the a on we how said we take company have our

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

for which CDI and of trailing XX-month disclosed quarters. earnings These acquisition adjusted been reconciliation the to related gain prior in last the in out numbers the in our appear Turning in appendix stack. Slide X, to which provided have accounting treatment now nine the our over this sets filings the performance as

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

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

Our are this XX% CAGR. trailing period billion XX-month a operating over for up $X.X revenues

compound adjusted significantly growth annual pretax income has likewise grown at rate. XX% a Our

is the the Dunaway million two above right-hand XX% years side results. discussion ROE, period. our for line our target, see of the buyers, by capital On detailed the to which the up XX% XX% more financial has net Bill grown I'll over this though a even for over our you right-hand has you that, the in hand our adjusted $XXX And on dotted which income CAGR. represents a side, can over remained With

William Dunaway

I'll a quarter for the be our highlights then just #X, move Slide highlight third the summarizes many segment covered which of consolidated statement to for I'll quarter, Sean a income and fiscal so starting discussion. 'XX. few on consolidated of the on

operating clearing acquisition, a expenses as CDI a business.And well result expense effective expense XXst, declined million versus side, also to decline due ADR year, our CFD the lower XXXX. to $XXX.X balances. activity Interest expense $XX.X to paid $XX.X Interest related results million year increased a revenues current $XX.X interest period in derivatives increased million revenues of On space of principally in was income the due commissions versus institutional the in million to and the in in expansion net increase in fixed rates. to result from merit FX among represented the were funding Payments of current operating support in which year and our increase XX% Variable X% in an as increased increase increase in business of a significant to versus increased in in year increase in due increase effect operating on $XXX.X our well the prior compensation to due fees to $X.X as client compensation million and well headcount million the expense listed interest year, XX% facilitate these as as million prior in $X.X increases in both a resulting annual October of of as versus prior lines compared preceding Other $XX.X revenues short-term areas share-based $X.X period. of in as the quarter. net the net this as to million year borrowings. the capabilities immediately increased $X.X principally equity the Both the the commercial compared in period, growth, current expenses year. as the as interest Global principally increase corporate average prior XX% interest derivative of the a prior as in rates short-term the an on prior Fixed increase prior increased volumes. to well the versus transaction-based fixed and business million the XX% compared listed Introducing as the broker million in our result $X.X million period, the segment, compensation to and increased

and principally quarter. year the was CFD XXXX Energy prior expense in $X systems increased increased and trading fiscal to the amortization and debt for $X.X $XX.X XX% information Ag income and retail prior to million, which period. increase due related million compared As million versus development to travel market business increased higher amortization year, $X.X prior third $XXX,XXX was of as OpEx million, a related developed to Ag versus expense to and year incremental in software XX% in the represents of and This depreciation intangibles $X.X the depreciation and debt million million, $XX.X net the $X.X the Bad well that versus we and a Net internally a Financial quarter current our increase as in immediately and preceding energy, of increased period is increase physical bad increase million recovery recoveries acquired. in businesses.

operating I'll on to #X. Slide on some information Moving our segments. provide

in segment $XX.X million was over year the million revenues compared the a revenues, feedstocks acquisition $XX.X driven $XX.X The revenues in added by and operating Brazilian preceding in operating million million derivative notably physical the the to most as increased and to quarter. Commercial Our prior biodiesel in in $XX.X CDI well markets. increase transactions when immediately of as prior versus a operating increase activity from year OTC increase due

on period, debt and other prior was and income interest compared million of million $X.X equity in short-term of increased balances declined quarter development increases technology fixed prior as Russian million compensation prior elevated a preceding expense invasion nontrading following and prior and with year Segment $XX.X as Ukraine. a including increased XX%, the year expenses of Average earned period increased as the over prior Fixed one versus significant and margin the the period. the Bad and year, $X.X the $X the result increase $XXX support, in client increase addition, was interest to requirements and XX% travel million, versus business for and amortization. depreciation benefits XX% respectively. year In an period million rates. client year increased

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

decline as down $XX.X as by money a As Sean the immediately and $X.X preceding on quarter mentioned increase the short-term FDIC and XX% was for result balances the income operating securities income activities increase increased million, money prior nonvariable the including in the a declined interest client the compared expenses, fee declined by earlier, I'll year. was the increase client million. Interest quarter. increase sweep offset Interest balances FDIC Interest the in versus touch which compared in paid versus than increased average benefits, income $XXX.X client increase more of million million current and million rates a expense in rise versus XX% interest in revenues $X.X interest were as on decline market related rates in to in market a in in fixed interest million negative The the as a prior income $XXX,XXX in million in a a also information in in momentarily. while and fixed million period, $XX.X in million professional client well and partially in prior the year. versus of $X.X earned $XX.X increase and as a income and lending expense versus X% drove $XX.X and period and immediately increase to trade led $XX.X Segment as trading as comp significant increase million to decline an short-term development. business interest prior on year. $X.X offset million equity to balances partially respectively, the in to market offset and $X.X $X.X compensation year, the average These fees, net expense year securities-related of as variable million equity. the Segment million prior variances to rates. short-term a systems increase $XXX.X $X.X client balances million increased client average clients preceding rates well in an as increase increase This a decrease result fee travel

was Moving in prior the immediately year. income slide. year, prior direct a $X.X slide. the increased average period, revenues, revenues year. CFD Segment declined per which the build quarter in driven was our compensation out the million Global prior capabilities. in or next partially $XX.X prior segment revenues $XX.X of X% expenses.Segment a FX growth current retail included current to decline million the preceding the as fixed decline by we income decrease reorganization a which of as $XX versus showed in XX% XX% in payment XX.X% Segment a versus primarily million XX% in of $X.X $XX.X preceding operating partially next period operating in increase the income is which Operating however, segment with and immediately by increased was primarily primarily and quarter. nice as in to income declined XX% our in million by quarter million preceding in the $XX.X a to $X.X compared million retirement result per offset revenues million. as increase as quarter on nonvariable increased offset by driven improvement to year, Closing versus compared Segment The rate increasing Payments the in million preceding in to the offset to XX% which immediately Retail million a CFD increased partially a period, over revenues, in result revenues segment $XX.X million $XX by result a continue versus current a rate the discussion the Operating the off as as increase daily FX operating the volumes, decline million a the million the costs.

for in of was IT bridge the as third revenues represents growth primarily million operating $XXX.X driven of current increase and $XXX.X to as over Overall of This to on of as well the unallocated Moving revenues period, the result the continued in quarter $XX.X support of year. acquisition of pretax period discussion. which year which the million XX, current of operating were walked a million negative in $XX.X operating $X.X covered segment between across through, quarter the from represents I $XX.X variance current to the by variance a segments. our pretax million up associated million our third XX% income CDI. The just in the a the fixed to #XX, next functions income Slide bridge XXXX period. incremental business benefits million the the prior or in with is move compensation so I'll build-out a and to Slide primarily last costs on compliance our overhead

addition, performance and result compensation of $X.X increased as -- company In increased headcount. variable additional improved million a

$XX.X the as fee effect change fee which well and short-term paid and as to on Interest which interest sensitivity and Finally, on to of depicts interest interest table shows rate earned #XX, balances net the a rates. the annualized for by the driven money This million preceding clients income Slide client in moving in market income quarter our in primarily average from period as rate in sweep a equity a balances. swaps $XX.X prior immediately quarter, current decline of million to interest million $XX.X compared decline represents by the million increased the year. client FDIC $XX.X to and

back income short-term the annualized result I'd that, would or per in share rates noted over estimate like net or down, the XXX point pass it million by With change basis interest $X.XX either to to a Sean. basis. change we up on in an table, As to a $XX in

Sean O'Connor

to operating model, excellent our interest Slide volatility, another final Let's We on client #XX. move of best-in-class validating moderating float, deliver set the our up, was on which as business achieved results. was returns. continues Despite revenue our to core transactional

For book value XX.X% the of of on of EPS on and a and quarter, XX.X%. tangible an book diluted we $X.XX recorded ROE value ROE stated

ROE recorded For XX equating have the or on book. in trailing XX.X% income net we of $XX.XX months, million EPS, $XXX.X to stated a

trajectory, stands as ago. the is $XX.X trailing compound per out compound longer-term adjusted to such XX% evens value book XX continue Our growing show strong which last slightly quarterly a and growth performance revenues through at over a share a upward at our versus XX% lens growth results our used months up When annual year our a rate earnings anomalies, our annual XX% at rate. two years, now

volatility, to that our While trading conditions and to believe moderated growing lower continue with multiple earning drive we growth generally and business will deliver drivers shareholder and diverse value.

across to again continue model client new acquisitions products our relevance across market. our client our business our volumes our in which and segments, growing client growth see validates trading in and and We

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

front have the line addressable point. We us. a if we large open broad ecosystem see Operator, of have a let's any and and with financial at this market unique very in questions

Operator

stand now we question-and-answer Instructions] We the compile by Please conduct [Operator will while Q&A roster. the session.

first comes Financial. Our Blackbird Yehuda of from question Weil

Yehuda Weil

I two just questions. have

on growing first One in StoneX of is, us much picture The or a can spending pressure how on pay And competitor? leaving marketing interest two, client rates any to higher you you're you feel flow give infrastructure? do to and a

Sean O'Connor

think up X%, we ratcheted most last previous That they don't X Dealing happened last with as some our from to push seen the in over think interest of over I above see X.X%, I interest any our and has gradually. we in much different have we're the greater we clients of At that's about FDIC and moved to the on client to quarter. bases pay out I did sweep. we've think of the wanted interest interest interest it's rate that paying a capture quarter than hear nominal of there, interest of or rate them. that average variety the the balance, started payouts. question the XX% On on about we pretty we across rate majority our sweep, first. guess, out, really haven't I that quarters, On the stabilized. still moment, we I X rates vast changed think

the probably around started ago. happening the One. That's is One we are that seen clients balances the or locked relatively there. We who we've the StoneX is of It or biggest I small. FDIC StoneX have have X-X money move clients out bulk continue sweep balances moved the the not and think, some had easy impact, to large on in our larger develop and because cash relatively been buy to of FDIC into of them small has bulk treasuries. months for the The and remainder the On treasuries launched. It go balances sweep

material We are marketing not of money spending this point. amounts it at

ramping I It's up we're think not slowly. number. significant a that

to optimistic growth, for traction. we're StoneX We're believe including see out rolling and for all digital and switch immediately. going and there will as of move flip important should very not I starting see I to our initiatives, the things incremental you these I've before, have some ours, think with initiatives where over slowly. hopes said digital you'll we're time, see critically One. high as though, slow moves, the be them needle It's these

about and up is time to features a moderate that, should answer that Does over your think at adding ramp you are start it. questions? would see We I how rate to that

Operator

LLC. comes of Jefferies from Our Fannon Daniel next question

Daniel Fannon

been and I frankly, because an period wondered environment activity, time. for about just revenues of have the chat extended volumes to your strong

make you to of a look a of I and maybe we factors just sustained your thinking know to As hard of of volumes, how kind haven't of but it's markets, more to you're going sense the get predict health about sustainability inflation the at want ultimately historically that backdrop. very seen are health this like your customers,

your about curious around Just thoughts backdrop. that

Sean O'Connor

is of I would so mean into financial financial we I in prognostication to I unknowns the and there's markets What two moderation the say get been what our flattening definitely at I far volatility saw think Yes. over too heightened of realm is the don't has crosscurrents want the many out. because moment. the there are a years on COVID. results That's definitely showing

industry think seen in being the I that broadly. reflected you've

in particularly I seeing in two years, it to in, you're time slightly of We're being in revenue numbers revenue see the being or capture first think numbers reflected down numbers. our the growing. not those for either capture starting some

those more volatility back one last I revenue go X definitely you we're higher every the higher. captured revenue If tougher think our quarters, with showing volume of a numbers. was charts, our was capture and up seeing subdued

side, On the other growth we broadly are still seeing in volumes.

we think well, probably just volume continuously. flatten I is market a it's there are that that's and I growth. is mirror I the industry putting now, of starting that, in as probably tougher become market conditions I think all not in and market you've before. with the showing do industry growth that dislocation numbers that's us excitement stable think COVID generically, show rearview share think gaining really the up to Despite the more seen probably

grow those If COVID, I was two don't we XX%. where revenue things like I you up put to I feel the still in together, going we're our did transactional during years number would two think think about every good say we growing.

us there's a think for of to get. lot there out share market I

The this capital out. wave side, next for just trading great business requirements the the on banks capital There's going pushing collateral. requirements additional friendly clients banks. We our We've of you're the for kind aren't with. holding The are now to clients of XX of movie banks see to which years the requirements are to not recalibrating that that continuously they continue have Basel III want keep. very seen is deal banks to if for

think I banks more to capital put are up. even now having

all think share. market for in us of that well I bodes gaining

like the about COVID, grow that still transactional to to we place pretty environment for to Clearly a revenue. I not be I but there's side. our feel think on think going to us continue be transactional going good

all very have number you throw There Now that for you change things are in a a that of can of could that. bump quickly if volatility. that there would argue out

an got coming election You've up.

unbelievable which go that's on, You've political device could got badly. going

path some unprecedented else, revenue by You've Absent anything you're of see the mean If that debt U.S. happens, steady course, we these I our an level that will inject capture for transactional the say. take of government, of is on share to you've all in things outside to settle. boost got of think level a volumes then above-trend see component rates tack inflation our a may that at I market. Fitch some view and us take of interest growth Then issuance you an view volumes. going downgrade, would line a could boost to because interest the think bottom on will on industry volatility big then market a to I got gains, and because where grow side,

can rates pushed thought the as has They wrong. that think there and I would has here. ago. have result Fed's a I The don't through got the has underestimated to far XX-XX be as market see, it months got generally just I level think continuously Fed anyone

growing there's consensus think a be may be to now longer. for it I starting that higher

time. there It a you to seem we're XX-XX that of are how Obviously, panning things happening. here that back environment Anyway, your things go your rate and still good you would question, to part I doesn't pretty feels cuts me everyone what in go. lots thought answered hope I but out. rambling be seeing for now a see be you open views and If to are these months ago,

Daniel Fannon

color. the appreciate I

Sean O'Connor

on trading, business business firing really thing other I'd result on by look mean, I our this physical it, when but commercial a just really good in wasn't funny OTC renewable I largely we cylinders, like at the largely The a quarter I on mean, the we add that all had Brazil, our just side. in way, there, have driven driven side, quarter, exceptional looking to at

before. quarter year Our business but versus retail struggling is versus a improved ago, the

so upward Our payments trajectory, business, good. steady that's

challenged. we're only other I still four two Yet, were segments results. the really well doing two so produced that, doing look If record is business Our we got at of institutional our well. and that sector we've

market and firing think, but we what still see certainly cylinder didn't can time. business think our at right. of either I there's What they get same businesses these did firing exceptional some time, never other rate obviously. see is a us going every good see upside we We maybe conditions. can one to do we're environment, interest we every our if in we the doing businesses for didn't see one I of all at think very

Daniel Fannon

and looking are but at you of means I your for you and as the think we Balance Just -- interest both that going in pass-through houses and rate but in briefly, rates as Or XX. changes lower was that Slide down. is on you just the requirements down rising, that the keep same about, the are clearing side, if pass-through? shouldn't guess, dynamic here implies margin then at know asked EPS, I some rate the what is assuming table there, sensitivity coming Is shifts? I just other question, think assuming rates up it

Sean O'Connor

that. assumptions tell are on Well, what you can his Bill

Let me your first of answer the question. part

the do we have clients? keep clients maybe go where keep all the where The our of the flexibility clients the large there of client marginal had I we float. to In impactful the and to the interest do those of rate up in to some who calculus and that it portion buy most treasuries. and so decline FDIC is biggest terms We was Or declines numbers payout on, aggregate our sweep. the think and level lose our about marginal to think it

the unless way of to We're trade about FDIC was that the rates going FDIC close which push you're probably it's take for to marginal clients it limited, each of not marginal individual going the aggregate. keep very pretty off sweep, that majority is clients remainder cash line. us of T-bill to calculus an and of impactful FDIC letting $XXX The a those obviously is lost is impactful individually, That's the Our of float. very pretty are to our a better all to probably ability million of to what out The part We out the the small sweep. collection for some move it's of lucrative vast the of them balances. propensity client but our those or rate. in

Those small we of think millions trading had because in us still volume. were on from trading very side, those very We're particular impactful desired there lot other a left, withdrawn weren't the of to of On payouts who but because weren't side, as get interest our Those a collateral I back funds individually high impactful for with our pay the and the funds that lot funds returns. funds able the strategies had the margins we had derivative very a retention. of those were large on funds have on number was of big We clients hundreds to strategies. dollars us. those and balances

you remains I think see really generally happened. subdued by I what's move impact. we that the obviously, that's down see will volatility mean and levels exchanges, if collateral

I more Bill, we maybe the think it payouts want how mentioned. variables the just you to was things down. think and I of on up about touch and two

William Dunaway

in as markets, in Sean's Just the later quarter, particularly saw Delta," the the earlier June, we certainly, of that volatility is the in echo the With but them margin back "Big up quarter pointed institutional fall the to out, did on point, start the FDIC harvest, side. off. we Ag side, coming requirements in see the Sean commercial to pick

it's as sensitivity, down far as what the those, tweak there adjust we retention we on right a but basis, right pretty much sizably, we're not around Assumptions on those but quarter-by-quarter Dan, we're how as retaining now. anticipate now more paying are far off than point clients much paying right at and retaining. out the this that wouldn't we We as much going, clients,

I think pretty would on maybe actually bit. and that see the a little what pay to high improve clients we're potentially we'd close watermark to we

we in to of uptick going talked cycle are off. early this past, into in have to that of some to, start in are rate on going lagged the we've swaps we interest As some the interest roll rates those those that

a now, they're currently. would Some is. set are obviously, little level basis. more of seeing on probably bit what lower environment margin incremental go-forward we're current having Right at rates those anticipate actually market than a We

Daniel Fannon

growth, the variable obviously there's on Just growth in component. and the expenses with always the revenue outlook,

maybe year seeing or different at that otherwise trajectory you for of been bit projects a be next look the fiscal As you planning guys, just or the, about rolling that's might as off is what and/or there think little your than you coming year benefit. broader any online there's investment that spend, we've

Sean O'Connor

COVID of There Good and question, obviously of we significant as share, Dan, all a pretty in a the our market just because footprints, clients' was cycle massive increase spend. budget ramp increase that we're heading We've here into saw seen volumes. significantly our lift this during costs was years. in Part planning big our our speak. those We up in things.

If you at was up. at as going was look our the it the revenue backwards ratio same trajectory,

had I think certain we certain deficits other areas, in up catch were we -- had areas. some we that to support

on backfilled growth think and have I without feel we certain could take now, a in areas. think significant amount of I future we that investment we any fair

curve refactored hard to cost get pushing are our down. We try now and

We lot a put flatten. that I spent If We've anything, money. I in would a lot stuff. infrastructure. see we a of invested of in trajectory lot like think to of

to think is ourselves we view the at push up. adding. from moment management about for moment reprioritize, I some there's harder scope we think sure at the reallocating spend maybe That's to just and us set need rather than make the

but like I the made think we've going see head We'll in all we cycle. to from as investments it's all investments, to. people trajectory in our there, we over I last flatten to we would into the certainly where can significantly planning orders but that's been kept think need get reduction there's two be we've don't our years. any if see the the method marching I

William Dunaway

pressure subject that increases the I we've and There costs mean everyone game market we're just number. medical adherence about not make mean do paying still we pressure steps same who seen sure been that going going there's that. in is of a it's to maintain, to else have but mean going I I there to difficult benefit the there. here. some market we're there to to necessary We're is. mean inflationary to unicorn up up, said, have are we the -- I being there. still guess I add to that there, information, we're our what pressures some third-party control mean, inflationary it's the to right we're paying certainly would costs make I taking just everything and events try going Dan. we're can. be is to that I

Daniel Fannon

prospects potential the so Or M&A environment Lastly, on maybe in about not coming were as deployment capital just in, you just think dialogue curious maybe valuations today? much and about now. inorganic and opportunities the and/or

Sean O'Connor

seeing we're bit potential a engaging more we're more say little opportunities. would I activity, and with

prior. ago, I much has say, all. we think the say increased. asked question at weren't would would I cadence at XX this months looking that I definitely you've

to and more not like be are we reasonable because but would the the low I may disciplined speaking, see opportunities they're more to extremely that real. at They generally like, are there is prices rate hit be Our more Iit's opportunities very around say this. prices. good we

be into small favorable, bit line may opportunity bank more we're I getting an certainly some the if type an it's acquisitions, bolt-on where to little Definitely think environment frankly. on find lucky. looking but wouldn't there anything, I down a

three Frankly, on has our already significantly the a been I enhanced have lot are to The we to think is a I I occupying years. low. brand guess, I with we separate what We're is think last lot very On hit a disciplined. market and on credibility have very of is compelling matter, what opportunities seeing and going would a -- internally, of our acquisition. our the but our table. the energy. have in very say certainly that which talent compete our lot related rate be reputation we over our time and

from We people, entertaining who of teams impressive with some We've moving interested small here. people are larger now potentially in conversations teams. competitors acquired over of are those

discount to difference. nice but individuals the think I In terms are as significant wouldn't that impactful a the talent in I in those be way bringing and some not teams we people, revenue drive of really numbers, as of acquisition small make bring. a revenue. Some they areas, teams a acquisition will as certain can

part we usual. that's do is business of what as think I

I think that market. become in known better environment positive has for as we the become more us

on I great people are noticed big I'm idea. was joining how I there, spoke to a I at investors reviews bank, like guys, don't Some of thinking telling StoneX about no us these I've and got I it all unhappy, incredible my StoneX, and you and I'm that I had was,

want hear hear we're starting people. from come work just you you that and lot a add guys. I Now that really as Would to when that, in well. great with It's to

Operator

at questions this time. the We'll further conference turn for and no showing closing to I'm back go comments. ahead you

Sean O'Connor

Great all your I everyone a and continues shareholders. everyone. the just in wish Thanks, the our to very Thanks see rest for attention. Well thanks, fall. everyone. deliver summer also who enjoy done for the phenomenal talented to team. results at shout and Well, out you We'll StoneX amazing the of team performance.

Operator

concludes Thank This for you conference participating. call. today's

You disconnect. may now

StoneX (SNEX) 3 Aug 232023 Q3 Earnings call transcript