Core Viewpoint - StoneX Group Inc. is set to release its fiscal 2026 first quarter results on February 4, 2026, with a conference call scheduled for February 5, 2026, to discuss these results [1][2]. Company Overview - StoneX Group Inc. operates a global financial services network that connects various market participants through digital platforms, clearing and execution services, and expert support [3]. - The company is headquartered in New York City, listed on the Nasdaq Global Select Market (NASDAQ: SNEX), and employs over 5,400 staff [3]. - StoneX serves more than 80,000 commercial, institutional, and global payments clients, along with over 400,000 self-directed/retail accounts, from more than 80 offices across six continents [3].

Company Overview - StoneX Group Inc. (SNEX) is a small-cap company that acts as a middleman, providing clients access to capital markets [1] - The client base includes farmers, middle-market corporations, asset managers, hedge funds, retail traders, and other financial entities [1] Investment Philosophy - The investment approach is characterized by a hybrid top-down and bottom-up framework, identifying macro themes over a 3-5 year horizon and using fundamental analysis for security selection [1] - The strategy emphasizes high-probability setups and the importance of compounding returns over time rather than taking high-risk bets [1] Analyst's Position - The analyst holds a beneficial long position in SNEX shares through stock ownership, options, or other derivatives [2]

Company Overview - StoneX Group Inc. (SNEX) is a small-cap company that acts as a middleman, providing clients access to capital markets [1] - The company's clientele includes farmers, middle-market corporations, asset managers, hedge funds, and retail traders [1] Investment Strategy - The investment approach is characterized by a hybrid top-down and bottom-up framework, focusing on identifying macro themes over a 3-5 year horizon [1] - Fundamental analysis is utilized to select securities that are best positioned to capitalize on identified opportunities [1] Analyst Background - The analyst expresses a competitive drive and intellectual curiosity in investing, transitioning from Banking to Investment Management [1] - The investment philosophy emphasizes high-probability setups and the importance of compounding returns over time [1]

Core Insights - StoneX Group Inc. and Enhanced Digital Group Inc. have formed a strategic partnership to enhance their digital asset offerings, with StoneX leading EDG's Series A funding round and acquiring a minority stake in the company [1][5][7] Group 1: Partnership Details - The partnership aims to leverage the strengths of both organizations, allowing StoneX to utilize EDG's expertise in bespoke OTC derivatives and structured products for digital assets [2][3] - StoneX Digital, launched in June 2022, focuses on providing institutional clients with advanced digital asset trading tools and market access, aligning with EDG's mission to develop structured solutions for digital assets [4][5] Group 2: Market Position and Strategy - StoneX operates a global financial services network, serving over 80,000 commercial and institutional clients, and emphasizes the importance of security and reliability in digital asset trading [8][9] - EDG, founded in 2021, specializes in structured products and derivative solutions for digital assets, aiming to enhance trading strategies and operational integrity [10]

Core Viewpoint - StoneX Group Inc. has secured its Crypto-Asset Service Provider license under the EU's Markets in Crypto-Assets Regulation, enhancing its regulated digital asset capabilities and expanding its services across the European Union [1][2][3]. Group 1: Company Developments - StoneX Digital has been operating as a Virtual Asset Service Provider for over a year and will now offer digital asset execution and custody under stringent regulatory frameworks [3]. - The authorization aligns with StoneX's long-term strategy to help clients integrate new products and technologies into their existing operating and investment frameworks [4]. - StoneX Digital was launched in June 2022 with a mission to provide institutional clients with sophisticated digital asset trading tools and market access [4]. Group 2: Market Position and Strategy - The company aims to reduce friction between traditional and digital finance environments, allowing clients to focus on their investment strategies and corporate goals [4]. - StoneX's robust product portfolio and global scale provide the security and reliability that financial institutions demand as they seek regulated entities for their digital asset needs [4]. - StoneX Group Inc. serves over 80,000 commercial, institutional, and payments clients, along with more than 260,000 retail accounts across over 80 offices on six continents [5].

Core Insights - The banking and trading sectors are expanding their precious metals trading and storage capabilities to capitalize on the record surge in gold prices this year, marking a significant opportunity in the financial industry [1] - Gold and silver prices have recently accelerated, with spot gold surpassing $4,500 per ounce and silver crossing $70 per ounce, resulting in year-to-date increases of 71% and 150%, respectively [1] Group 1: Revenue Growth - Major banks' precious metals trading departments have seen a 50% increase in revenue in the first nine months of this year compared to the same period in 2024 [2] - The revenue from precious metals trading for 12 leading banks reached approximately $1.4 billion from January to September, indicating that 2025 could be the second-best year for bank gold trading, following 2020 [2] Group 2: Market Participation and Competition - Banks that previously closed their precious metals trading departments, such as Société Générale, Morgan Stanley, and Sumitomo Mitsui Banking Corporation, are re-entering the market and expanding their teams [3] - Non-bank competitors, including Swiss refiner MKS Pamp and financial platform StoneX, are also enhancing their precious metals trading operations, indicating increased competition in the sector [3] Group 3: Storage Business Revival - The storage business, once considered dull and low-margin, is regaining popularity among banks, with many exploring or already engaged in this area [4] - Citigroup is reportedly considering opening a vault, while MKS Pamp has expanded its operations and aims to become a leading player in the precious metals industry [4] Group 4: Advantages and Challenges - Wall Street banks possess significant advantages due to their large balance sheets, which have become crucial as smaller traders face funding challenges amid rising gold prices [5] - Non-bank competitors have specialized advantages in physical gold procurement, which is complex due to compliance with "good delivery" standards, making banks hesitant to engage early in the supply chain [6]

Core Insights - Caliber has selected StoneX as an institutional platform for trading and custody to support its Digital Asset Treasury (DAT) Strategy, enhancing its capabilities in digital asset management [1][2] - Caliber aims to provide differentiated exposure to Chainlink's Token, LINK, through disciplined accumulation and long-term holding, reinforcing its position in both real asset investing and blockchain infrastructure [2][3] Company Overview - Caliber is a diversified real estate and digital asset management platform with over $2.7 billion in managed assets and a 16-year track record in private equity real estate investing [3] - In 2025, Caliber became the first U.S. public real estate platform to launch a Digital Asset Treasury strategy centered on Chainlink (LINK), allowing investors to participate through publicly traded equity and private real estate funds [3] Strategic Partnership - StoneX will provide Caliber with access to deep liquidity and institutional-grade custody, leveraging its infrastructure trusted by major financial institutions [1][2] - StoneX Digital, launched in June 2022, focuses on providing institutional clients with advanced digital asset trading tools and market access, aligning with the growing demand for regulated digital asset services [4][5]

Core Insights - The return of La Niña is causing significant weather disruptions globally, including deadly flooding in Asia and early snowstorms in the US [1][2] Economic Impact - Global losses during recent La Niña years have ranged from $258 billion to $329 billion, indicating a trend of increasing extreme weather-related damages [2] - La Niña is linked to lower agricultural yields for key crops like corn, rice, and wheat, which can affect global food supply and prices [6] - Energy demand typically rises in colder regions due to La Niña, impacting fuel consumption and utility operations [6] Regional Effects - In South and Southeast Asia, La Niña contributed to tropical cyclones and flooding that resulted in over 1,600 fatalities and at least $20 billion in damages [7] - Flooding in Vietnam and Thailand has caused over $16 billion in damage, with La Niña's influence on rainfall patterns being a contributing factor [8] - China faces risks to winter wheat production due to below-average temperatures associated with La Niña [9] Agricultural Sector - Palm oil producers in Southeast Asia may experience disruptions in harvesting due to increased rainfall, affecting output and extraction rates [10] - Brazil's soybean production is under scrutiny as La Niña could lead to reduced rainfall in southern growing regions, although current forecasts suggest no prolonged drought [16][17] Climate Dynamics - The current La Niña is the fifth occurrence in six years, suggesting a shift towards more frequent La Niña events compared to El Niño [5] - La Niña's impacts are being modified by global warming, which exacerbates extreme weather patterns [20] - The current La Niña is expected to peak soon, with conditions potentially returning to neutral, but the effects on global weather may persist for months [21]

Financial Performance - Record net operating revenues reached $132.4 billion, up 33% from the previous year, with net income increasing 17% to $305.9 million[295][299][302] - Net operating revenues increased by 16% to $2.05 billion, with a diluted earnings per share of $5.89 compared to $5.31 in the previous year[299][302] - Operating revenues increased by $690.7 million, or 20%, to $4,126.9 million for the fiscal year ended September 30, 2025, compared to $3,436.2 million in 2024[305] - Total revenues for the fiscal year ended September 30, 2025, increased to $132,375.0 million, a 32% rise from $99,890.2 million in 2024[350] - Segment income for the fiscal year ended September 30, 2025, was $1,027.7 million, up 16% from $885.6 million in 2024[350] Client Balances and Equity - Average client equity and average money market/FDIC sweep client balances increased by 25% and 21%, respectively, compared to the prior year[296] - Average client equity for listed derivatives increased by 25% to $7,785 million, including an incremental $5.6 billion per month from RJO for two months post-acquisition[310] - Average client equity for listed derivatives rose to $2,114 million, a 23% increase from $1,715 million in 2024[355] - Average client equity for listed derivatives increased by 26% to $5,671 million for the fiscal year ended September 30, 2025[372] Acquisitions - The acquisition of R.J. O'Brien was completed for approximately $651.9 million in cash and stock, significantly enhancing the company's position in the global financial market[290] - The acquisition of Benchmark was completed for approximately $57.1 million in cash, with additional contingent payments valued at $25.3 million[292] - The acquisition of RJO contributed $141.0 million in operating revenues, with listed derivatives revenues increasing by $104.6 million, primarily due to RJO's contribution of $89.5 million[306] - The acquisition of RJO contributed 4.1 million listed derivative contracts in the fiscal year ended September 30, 2025[355] Revenue Sources - Operating revenues from securities transactions rose by $390.9 million, driven by a 27% increase in average daily volume (ADV) and a 9% increase in revenue per million (RPM)[307] - Operating revenues derived from listed derivatives increased by $53.8 million, driven by a 29% increase in contract volumes[357] - Operating revenues from physical contracts increased by $69.1 million, with significant contributions from agricultural and energy sectors[309] - Operating revenues from FX/CFD contracts increased by $59.0 million, driven by a 37% increase in FX/CFD contracts RPM[401] Expenses - Variable expenses accounted for 54% of total expenses, up from 52% in the previous fiscal year[298] - Total fixed compensation and other expenses increased by 14% to $1.04 billion, reflecting growth in acquired businesses and professional fees[302] - Total non-interest expenses for the fiscal year ended September 30, 2025, were $2,243.1 million, up from $1,907.4 million in 2024[337] - Total contractual obligations as of September 30, 2025 amounted to $152,343.7 million, with significant purchase obligations of $149,968.9 million due within one year[470] Interest and Fees - Interest income increased by $337.5 million to $1.7 billion, driven primarily by the acquisition of RJO, which contributed $50 million[296][302] - Total interest expense increased by $297.0 million, or 25%, to $1,480.5 million, driven by growth in the securities repo and lending businesses[314] - Interest expense rose by $259.8 million, or 24%, to $1,332.3 million for the fiscal year ended September 30, 2025, compared to $1,072.5 million in the previous year[372] - Interest and fee income earned on client balances increased by $45.7 million, mainly due to RJO's contribution of $50.0 million[310] Employee and Compensation - The number of employees increased by 874, or 19%, to 5,430 at the end of the fiscal year[323] - Total compensation and other expenses increased by $227.6 million, or 16%, to $1,649.5 million for the fiscal year ended September 30, 2025, compared to $1,421.9 million for the previous year[322] - Variable compensation and benefits rose to $607.1 million, a 20% increase from $506.5 million in 2024, representing 30% of net operating revenues[323] - Fixed compensation and benefits increased by 15% to $500.6 million, up from $435.9 million in 2024[323] Financial Position and Liquidity - Total assets as of September 30, 2025, were $45,268.0 million, compared to $27,466.3 million as of September 30, 2024, reflecting significant growth[445] - As of September 30, 2025, total equity was $2,377.4 million, with outstanding loans under revolving credit facilities and other payables amounting to $782.0 million[437] - The company reported cash, segregated cash, cash equivalents, and segregated cash equivalents increased by $4,847.6 million from $6,672.6 million as of September 30, 2024 to $11,520.2 million as of September 30, 2025[463] - The company had various committed bank credit facilities totaling $1,705.0 million, with $621.8 million outstanding as of September 30, 2025[454] Risk Management and Compliance - The company has implemented credit guidelines to limit current and potential credit exposure to any one counterparty, ensuring risk management in trading activities[479] - Inflation may lead to increased expenses in compensation, transaction-based clearing, and occupancy, potentially affecting the company's financial position and results of operations[481] - The company is in compliance with all financial covenants under its outstanding facilities as of September 30, 2025[456] Taxation - The effective income tax rate was 25% for the fiscal year ended September 30, 2025, down from 26% in 2024[335] - The company repatriated $73.5 million and $100.0 million of earnings previously taxed in the U.S. for the fiscal years ended September 30, 2025, and 2024, respectively[449]

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