StoneX(SNEX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents unaudited financial statements, management's discussion, and market risk disclosures Item 1. Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Q1 and H1 2025, including balance sheets, income, cash flows, and detailed notes Condensed Consolidated Balance Sheets Snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates Balance Sheet Summary (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total assets | $31,282.9 | $27,466.3 | | Total liabilities | $29,400.9 | $25,757.2 | | Total equity | $1,882.0 | $1,709.1 | - Total assets increased by $3,816.6 million (13.9%) from September 30, 2024, to March 31, 2025, primarily driven by increases in securities purchased under agreements to resell, financial instruments owned, and physical commodities inventory[9] - Total liabilities increased by $3,643.7 million (14.1%) over the same period, mainly due to a significant rise in securities sold under agreements to repurchase and financial instruments sold, not yet purchased[9] Condensed Consolidated Income Statements Company's financial performance, including revenues, expenses, and net income for the reported periods Income Statement Highlights (in millions, except share and per share amounts) | (in millions, except share and per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales of physical commodities | $35,992.6 | $21,321.9 | $63,043.7 | $40,142.8 | | Total revenues | $36,890.7 | $22,106.1 | $64,826.0 | $41,679.1 | | Operating revenues | $956.0 | $818.2 | $1,900.3 | $1,602.4 | | Net income | $71.7 | $53.1 | $156.8 | $122.2 | | Basic EPS | $1.49 | $1.12 | $3.26 | $2.59 | | Diluted EPS | $1.41 | $1.09 | $3.10 | $2.51 | - Net income increased by 35% to $71.7 million for the three months ended March 31, 2025, compared to $53.1 million in the prior year, and by 28% to $156.8 million for the six months ended March 31, 2025, compared to $122.2 million in the prior year[11] - Operating revenues grew by 17% to $956.0 million for the three months ended March 31, 2025, and by 19% to $1,900.3 million for the six months ended March 31, 2025, reflecting strong performance across various revenue streams[11] Condensed Consolidated Statements of Comprehensive Income Details changes in equity from non-owner sources, including net income and other comprehensive income components Comprehensive Income Summary (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $71.7 | $53.1 | $156.8 | $122.2 | | Foreign currency translation adjustment | $12.0 | $(4.6) | $(6.3) | $2.3 | | Cash flow hedges | $6.6 | $(0.8) | $(0.3) | $19.9 | | Total other comprehensive gain/(loss), net of tax | $18.6 | $(5.4) | $(6.6) | $22.2 | | Comprehensive income | $90.3 | $47.7 | $150.2 | $144.4 | - Comprehensive income for the three months ended March 31, 2025, was $90.3 million, a significant increase from $47.7 million in the prior year, driven by higher net income and a positive foreign currency translation adjustment[14] Condensed Consolidated Statements of Cash Flows Cash inflows and outflows from operating, investing, and financing activities for the periods Cash Flow Summary (in millions) | (in millions) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(632.3) | $936.4 | | Net cash used in investing activities | $(42.7) | $(26.1) | | Net cash (used in)/provided by financing activities | $(18.3) | $457.0 | | Net (decrease)/increase in cash, segregated cash, cash equivalents, and segregated cash equivalents | $(700.0) | $1,369.5 | | Cash, segregated cash, cash equivalents, and segregated cash equivalents at end of period | $5,972.6 | $7,411.2 | - The company experienced a net decrease of $700.0 million in cash, segregated cash, cash equivalents, and segregated cash equivalents for the six months ended March 31, 2025, primarily due to cash used in operating activities[17][323] - Operating activities used $632.3 million in cash, a significant shift from $936.4 million provided in the prior year, largely influenced by changes in operating assets and liabilities such as securities purchased under agreements to resell and financial instruments owned[17][323] Condensed Consolidated Statements of Stockholders' Equity Outlines changes in the company's equity, including common stock, retained earnings, and comprehensive loss Stockholders' Equity Summary (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Common Stock | $0.5 | $0.5 | | Treasury Stock | $(69.3) | $(69.3) | | Additional Paid-in Capital | $436.9 | $414.2 | | Retained Earnings | $1,545.7 | $1,388.9 | | Accumulated Other Comprehensive Loss, net | $(31.8) | $(25.2) | | Total Equity | $1,882.0 | $1,709.1 | - Total stockholders' equity increased by $172.9 million to $1,882.0 million as of March 31, 2025, from $1,709.1 million at September 30, 2024, primarily driven by net income and increases in additional paid-in capital[23] - Retained earnings increased by $156.8 million, reflecting the net income for the six months ended March 31, 2025[23] Notes to Condensed Consolidated Financial Statements Detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 – Basis of Presentation and Consolidation and Accounting Standards Adopted Basis of financial statement presentation, consolidation, and impact of the 3-for-2 stock split - StoneX Group Inc. operates as a global financial services network connecting clients to the global market ecosystem through digital platforms, clearing, execution, and expertise[25] - On March 21, 2025, the Company completed a 3-for-2 common stock split, retroactively adjusting all share and per share amounts[33][156] - The company's valuation policy for physical commodities inventory includes estimating the cost to complete refining, material type, and market prices to determine the lower of cost or net realizable value[32] Note 2 – Earnings per Share Details the calculation of basic and diluted earnings per share (EPS) using the two-class method Earnings per Share Data (in millions, except share amounts) | (in millions, except share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income allocated to common stockholders | $69.6 | $51.2 | $152.0 | $117.9 | | Diluted weighted-average common shares | 49,376,423 | 47,248,414 | 48,981,445 | 47,060,608 | - Options to purchase 259,514 and 2,774,979 shares for the three months ended March 31, 2025 and 2024, respectively, were excluded from diluted EPS calculation as they were anti-dilutive[38] Note 3 – Assets and Liabilities, at Fair Value Fair value measurement framework, classifying assets and liabilities into Level 1, 2, or 3 - Fair value measurements are categorized into three levels: Level 1 (unadjusted quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or models with observable inputs), and Level 3 (unobservable inputs)[44][45][46] Fair Value Assets and Liabilities (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total assets at fair value | $11,838.7 | $10,523.8 | | Total liabilities at fair value | $3,582.5 | $3,120.1 | - The company uses independent price verification controls to validate relevant prices and considers counterparty credit risk for OTC derivative instruments[41][43] Note 4 – Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk Addresses off-balance sheet risk from financial instruments and concentrations of credit risk Derivative Contracts Fair Value (in millions) | (in millions) | March 31, 2025 Assets | March 31, 2025 Liabilities | September 30, 2024 Assets | September 30, 2024 Liabilities | | :--- | :--- | :--- | :--- | :--- | | Gross fair value of derivative contracts | $6,149.0 | $5,935.7 | $7,235.9 | $7,144.1 | | Impact of netting and collateral | $(6,006.0) | $(5,956.8) | $(6,670.6) | $(6,614.6) | Notional Value of Hedging Instruments (in millions) | (in millions) | March 31, 2025 Notional Value | September 30, 2024 Notional Value | | :--- | :--- | :--- | | Interest rate contracts | $— | $500.0 | | Foreign currency forward contracts (USD equivalent) | $204.4 | $126.3 | Net Gains from Derivative Contracts (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net gains from derivative contracts | $87.3 | $104.0 | $321.8 | $150.5 | - The company manages credit risk by establishing credit/position limits, monitoring collateral levels daily, and requiring margin deposits from counterparties and clients[80][81] Note 5 – Allowance for Doubtful Accounts Details allowance for doubtful accounts related to receivables and its activity for the six months ended March 31, 2025 Allowance for Doubtful Accounts (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Allowance for doubtful accounts (broker-dealers, etc.) | $0.1 | $0.0 | | Allowance for doubtful accounts (clients) | $49.1 | $51.9 | Allowance for Doubtful Accounts Activity (in millions) | (in millions) | Six Months Ended March 31, 2025 | | :--- | :--- | | Balance as of September 30, 2024 | $51.9 | | Provision for bad debts | $1.5 | | Allowance charge-offs | $(4.1) | | Other | $(0.1) | | Balance as of March 31, 2025 | $49.2 | Note 6 – Physical Commodities Inventory Details the composition of physical commodities inventory, including agriculture, energy, and precious metals Physical Commodities Inventory Composition (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Physical agriculture and energy | $255.1 | $169.0 | | Precious metals - held by broker-dealer subsidiary | $248.0 | $207.6 | | Precious metals - held by non-broker-dealer subsidiaries | $293.1 | $304.5 | | Physical commodities inventory, net | $796.2 | $681.1 | - Physical commodities inventory, net, increased by $115.1 million (16.9%) from September 30, 2024, to March 31, 2025[86] Note 7 – Goodwill Presents the allocation of goodwill across operating segments: Commercial, Institutional, Self-Directed/Retail, and Payments Goodwill by Segment (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Commercial | $38.1 | $33.3 | | Institutional | $11.8 | $9.8 | | Self-Directed/Retail | $7.9 | $7.9 | | Payments | $10.0 | $10.0 | | Total Goodwill | $67.8 | $61.0 | - Total goodwill increased by $6.8 million from September 30, 2024, to March 31, 2025, with increases primarily in the Commercial and Institutional segments[87] Note 8 – Intangible Assets Provides gross and net carrying values of intangible assets by class, including amortization expense Intangible Assets Summary (in millions) | (in millions) | March 31, 2025 Net Amount | September 30, 2024 Net Amount | | :--- | :--- | :--- | | Intangible assets subject to amortization | $16.4 | $13.8 | | Intangible assets not subject to amortization | $5.8 | $5.8 | | Total intangible assets | $22.2 | $19.6 | Amortization Expense (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Amortization expense related to intangible assets | $1.2 | $2.1 | $2.3 | $4.1 | - The company wrote off $16.2 million of fully amortized intangible assets during the six months ended March 31, 2025[89] Note 9 – Credit Facilities Details committed and uncommitted credit facilities, outstanding balances, and covenant compliance Credit Facilities and Borrowings (in millions) | (in millions) | March 31, 2025 Outstanding | September 30, 2024 Outstanding | | :--- | :--- | :--- | | Committed Credit Facilities | $237.0 | $227.0 | | Uncommitted Credit Facilities | $97.2 | $104.9 | | Note Payable to Bank | $6.7 | $6.9 | | Senior Secured Notes due 2031 | $543.6 | $543.1 | | Total outstanding borrowings | $884.5 | $881.9 | - The company has committed credit facilities totaling $1,205.0 million, with $237.0 million outstanding as of March 31, 2025[91][95] - The company issued $550 million in 7.875% Senior Secured Notes due 2031 on March 1, 2024, with a carrying value of $543.6 million as of March 31, 2025[94][95] Note 10 – Securities and Commodity Financing Transactions Describes repurchase agreements, securities borrowing/lending, and collateralization practices Secured Financing Transactions (in millions) | (in millions) | March 31, 2025 Total | September 30, 2024 Total | | :--- | :--- | :--- | | Securities sold under agreements to repurchase | $24,045.9 | $16,527.9 | | Securities loaned | $1,509.9 | $1,615.9 | | Gross amount of secured financing | $25,555.8 | $18,143.8 | Net Collateralized Transactions (in millions) | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Securities purchased under agreements to resell (Net) | $6,917.6 | $5,201.5 | | Securities borrowed (Net) | $1,803.9 | $1,662.3 | | Securities sold under agreements to repurchase (Net) | $11,137.3 | $8,581.3 | | Securities loaned (Net) | $1,509.9 | $1,615.9 | - The company monitors the fair value of securities loaned and borrowed daily and adjusts collateral as appropriate to limit credit risk[99] Note 11 – Commitments and Contingencies Discloses involvement in legal actions and proceedings, including a civil complaint and related subpoenas - BTIG filed a civil complaint against the company and StoneX Financial Inc. in November 2023, alleging theft of trade secrets, which has moved to FINRA arbitration[106] - The company received subpoenas from the DOJ and SEC related to the BTIG complaint and is cooperating with these agencies[106] - Management believes that possible exposure from loss contingencies in excess of accrued amounts is not likely to be material to the company's earnings, financial position, or liquidity[107] Note 12 – Accumulated Other Comprehensive Loss, Net Summarizes changes in accumulated other comprehensive loss, net, including foreign currency translation and cash flow hedges Accumulated Other Comprehensive Loss Changes (in millions) | (in millions) | September 30, 2024 Balance | Other comprehensive loss, net of tax | March 31, 2025 Balance | | :--- | :--- | :--- | :--- | | Foreign Currency Translation Adjustment | $(31.3) | $(6.3) | $(37.6) | | Pension Benefits Adjustment | $(1.2) | $— | $(1.2) | | Cash Flow Hedge | $7.3 | $(0.3) | $7.0 | | Accumulated Other Comprehensive Loss, net | $(25.2) | $(6.6) | $(31.8) | - Accumulated other comprehensive loss, net, increased from $(25.2) million at September 30, 2024, to $(31.8) million at March 31, 2025, primarily due to foreign currency translation adjustments[110] Note 13 – Revenue from Contracts with Clients Details revenue recognition policies and disaggregates total revenues by source and primary geographic region Total Revenues by Source (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues from contracts with clients | $820.4 | $509.2 | $1,483.5 | $1,136.6 | | Other sources of revenues | $36,070.3 | $21,596.9 | $63,342.5 | $40,542.5 | | Total revenues | $36,890.7 | $22,106.1 | $64,826.0 | $41,679.1 | Total Revenues by Geographic Region (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | United States | $1,880.0 | $1,407.7 | $3,664.4 | $3,011.2 | | Europe | $840.2 | $560.2 | $1,546.0 | $1,218.6 | | South America | $141.7 | $105.0 | $305.0 | $233.0 | | Middle East and Asia | $34,024.2 | $20,025.1 | $59,314.9 | $37,200.7 | | Other | $4.6 | $8.1 | $(4.3) | $15.6 | | Total revenues | $36,890.7 | $22,106.1 | $64,826.0 | $41,679.1 | - Revenues from contracts with clients as a percentage of total revenues were 2.2% for the three months ended March 31, 2025, and 2.3% for the six months ended March 31, 2025[115] Note 14 – Other Expenses Provides a detailed breakdown of other expenses, including non-income taxes, insurance, and employee-related costs Other Expenses Breakdown (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Non-income taxes | $2.5 | $2.8 | $5.3 | $5.3 | | Insurance | $2.6 | $3.2 | $6.2 | $6.1 | | Employee related expenses | $1.7 | $1.7 | $3.6 | $3.6 | | Other direct business expenses | $3.9 | $3.5 | $7.9 | $7.9 | | Membership fees | $1.0 | $1.0 | $1.9 | $1.9 | | Director and public company expenses | $0.7 | $0.7 | $1.2 | $1.2 | | Office expenses | $0.6 | $0.5 | $1.3 | $1.1 | | Other expenses | $1.8 | $1.9 | $4.1 | $5.1 | | Total other expenses | $14.8 | $15.3 | $31.5 | $32.2 | Note 15 – Income Taxes Outlines income tax provision, effective tax rate, and factors differing from the U.S. federal statutory rate Income Tax Expense and Effective Rate (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income tax expense | $25.4 | $19.2 | | Effective tax rate | 26% | 26% | - The effective tax rate was higher than the U.S. federal statutory rate of 21% due to U.S. state and local taxes, GILTI, U.S. and foreign permanent differences, and foreign earnings taxed at higher rates[127] - The OECD's Pillar Two global corporate minimum tax rate of fifteen percent became effective for the company on October 1, 2024, but is not expected to have a material impact for fiscal 2025[125] Note 16 – Regulatory Capital Requirements Details regulatory capital requirements for key subsidiaries and confirms their compliance as of March 31, 2025 Regulatory Capital Compliance by Subsidiary (in millions) | Subsidiary | Regulatory Authority | Actual (in millions) | Minimum Requirement (in millions) | | :--- | :--- | :--- | :--- | | StoneX Financial Inc. | SEC and CFTC | $426.5 | $252.2 | | StoneX Financial Ltd. | FCA | $563.0 | $437.2 | | Gain Capital Group, LLC | CFTC and NFA | $56.2 | $30.8 | | StoneX Financial Pte. Ltd. | MAS | $112.0 | $24.3 | | StoneX Markets LLC | CFTC and NFA | $245.4 | $134.2 | - All of the company's subsidiaries were in compliance with their local regulatory capital requirements as of March 31, 2025[128][129] Note 17 - Acquisitions Details recent and pending acquisitions, highlighting their strategic importance and financial terms - On October 1, 2024, StoneX Metals Limited acquired JBR Recovery Limited, a UK-accredited silver recycling and refining business, for $8.0 million cash and $12.6 million in silver bullion, enhancing supply chain integration[131][132] - On January 31, 2025, the company acquired Octo Finances SA, a fixed income broker in Paris, for $7.5 million cash, expanding its fixed income offerings and European capabilities[133][134] - The company announced agreements to acquire R.J. O'Brien for approximately $900 million (cash and stock) and The Benchmark Company, LLC for approximately $75 million, both expected to close in the third calendar quarter of 2025, strengthening FCM position and capital markets offerings[135][136][137][138] Note 18 – Segment Analysis Describes operating segments, defines key performance measures, and summarizes total segment results - The company manages its business through four reportable segments: Commercial, Institutional, Self-Directed/Retail, and Payments, reflecting its global footprint and diverse client base[139][142] - Key performance measures include Operating revenues (total revenues less cost of sales of physical commodities), Net operating revenues (operating revenues less transaction-based clearing expenses, introducing broker commissions, and interest expense), Net contribution (net operating revenues less variable compensation), and Segment income (net contribution less non-variable direct segment costs)[146][147][218][219][220] Total Segment Results (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $36,890.7 | $22,106.1 | $64,826.0 | $41,679.1 | | Operating revenues | $956.0 | $818.2 | $1,900.3 | $1,602.4 | | Net operating revenues (loss) | $487.3 | $422.3 | $979.4 | $843.9 | | Net contribution | $366.6 | $329.0 | $768.0 | $665.8 | | Segment income | $229.7 | $204.7 | $501.0 | $420.8 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial performance, condition, liquidity, capital resources, and off-balance sheet arrangements Overview General introduction to the company's global financial services network and operating segments - StoneX Group Inc. operates a global financial services network, connecting clients to the global market ecosystem through digital platforms, clearing, execution, and expertise[154] - The company reports three operating segments based on client nature (commercial, institutional, self-directed/retail) and a fourth segment for its payments business[155] - As of March 31, 2025, the company had over 4,700 employees, supporting its global infrastructure and client-first approach[154] Executive Summary Highlights key financial achievements and strategic developments for the reported period - The company achieved strong growth in Q2 fiscal 2025, with a 15% increase in net operating revenues and a 35% increase in net income, driven by increased transaction volumes across all product offerings[157][163] Executive Summary Key Metrics | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net operating revenues | +15% | | | | Net income | +35% | | | | Diluted EPS | $1.41 | $1.09 | +29.4% | | Listed derivatives RPC | +2% | | | | OTC derivatives RPC | +4% | | | | Securities RPM | Increased | | | | FX/CFD RPM | Decreased | | | | Payments RPM | Decreased | | | - Key acquisitions announced include R.J. O'Brien for approximately $900 million (cash and stock) and The Benchmark Company, LLC for approximately $75 million, both expected to close in the second half of calendar 2025[164][165][166][167] Selected Summary Financial Information Presents key financial metrics and performance indicators for the current and comparative periods Selected Financial Highlights (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Sales of physical commodities | $35,992.6 | $21,321.9 | 69% | | Operating revenues | $956.0 | $818.2 | 17% | | Net operating revenues | $487.3 | $422.3 | 15% | | Net income | $71.7 | $53.1 | 35% | | Return on average stockholders' equity | 15.7% | 14.0% | | | Total assets | $31,282.9 | $25,651.0 | 22% | | Stockholders' equity | $1,882.0 | $1,542.6 | 22% | - Operating revenues increased by 17% for the three months ended March 31, 2025, and by 19% for the six months ended March 31, 2025[169] - Net income increased by 35% for the three months ended March 31, 2025, and by 28% for the six months ended March 31, 2025[169] Operating Revenues Analyzes the company's operating revenues by product offering and their respective growth drivers Operating Revenues by Product (in millions) | Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Listed derivatives | $128.4 | $111.7 | 15% | | OTC derivatives | $60.3 | $53.0 | 14% | | Securities | $426.7 | $340.7 | 25% | | FX / Contracts For Difference ("CFD") contracts | $70.9 | $80.3 | (12)% | | Payments | $49.2 | $48.4 | 2% | | Physical contracts | $72.6 | $45.9 | 58% | | Interest / fees earned on client balances | $101.7 | $104.2 | (2)% | | Other | $43.7 | $31.0 | 41% | | Corporate | $16.7 | $14.4 | 16% | | Eliminations | $(14.2) | $(11.4) | 25% | | Total Operating Revenues | $956.0 | $818.2 | 17% | Volumes and Other Select Data | Volumes and Other Select Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Listed derivatives (contracts, 000's) | 61,153 | 53,805 | 14% | | Listed derivatives, average rate per contract | $2.02 | $1.98 | 2% | | Securities average daily volume ("ADV") (millions) | $8,915 | $7,473 | 19% | | Securities rate per million ("RPM") | $279 | $239 | 17% | | FX/CFD contracts ADV (millions) | $11,539 | $10,453 | 10% | | FX/CFD contracts RPM | $97 | $120 | (19)% | | Payments ADV (millions) | $77 | $64 | 20% | | Payments RPM | $10,526 | $12,327 | (15)% | - Operating revenues increased by $137.8 million, or 17%, to $956.0 million for the three months ended March 31, 2025, with significant growth in securities (+25%) and physical contracts (+58%)[174][176][178] Interest and Transactional Expenses Details the company's interest and transaction-based clearing expenses, analyzing their components and changes Interest and Transactional Expenses Breakdown (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Transaction-based clearing expenses | $91.8 | $78.5 | 17% | | Introducing broker commissions | $45.5 | $42.0 | 8% | | Interest expense (Trading activities) | $316.6 | $259.2 | 22% | | Interest expense (Corporate funding) | $14.8 | $16.2 | (9)% | | Total interest expense | $331.4 | $275.4 | 20% | - Transaction-based clearing expenses increased by 17% for the three months ended March 31, 2025, driven by higher activity in Equity and Debt Capital Markets, Exchange-Traded Futures & Options, and Financial Ag and Energy businesses[186] - Interest expense attributable to trading activities increased by 22% for the three months ended March 31, 2025, primarily due to growth in security repo and securities lending businesses and increased physical precious metals and commodities activities[188] Net Operating Revenues Analyzes net operating revenues by product, reflecting performance after direct transaction costs Net Operating Revenues by Product (in millions) | Net Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Listed derivatives | $60.3 | $48.2 | 25% | | OTC derivatives | $60.2 | $53.0 | 14% | | Securities | $120.8 | $88.6 | 36% | | FX/CFD contracts | $62.5 | $71.8 | (13)% | | Payments | $46.5 | $45.9 | 1% | | Physical contracts | $48.6 | $36.8 | 32% | | Interest, net / fees earned on client balances | $74.5 | $74.0 | 1% | | Other | $22.5 | $16.8 | 34% | | Corporate | $(8.6) | $(12.8) | (33)% | | Total Net Operating Revenues | $487.3 | $422.3 | 15% | - Net operating revenues increased by 15% to $487.3 million for the three months ended March 31, 2025, with strong growth in securities (+36%) and physical contracts (+32%)[193] Compensation and Other Expenses Breakdown of compensation, benefits, and other operating expenses, detailing their changes Compensation and Other Expenses Breakdown (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Variable compensation and benefits | $146.7 | $123.7 | 19% | | Fixed compensation and benefits | $120.4 | $110.7 | 9% | | Total compensation and benefits | $267.1 | $234.4 | 14% | | Trading systems and market information | $19.5 | $19.4 | 1% | | Professional fees | $16.5 | $19.3 | (15)% | | Non-trading technology and support | $20.9 | $18.0 | 16% | | Occupancy and equipment rental | $13.1 | $13.6 | (4)% | | Selling and marketing | $13.4 | $15.6 | (14)% | | Depreciation and amortization | $15.6 | $12.3 | 27% | | Bad debts, net of recoveries | $0.1 | $(0.4) | n/m | | Total compensation and other expenses | $390.2 | $356.9 | 9% | - Total compensation and other expenses increased by 9% to $390.2 million for the three months ended March 31, 2025, primarily due to higher variable and fixed compensation and benefits[195] - Fixed compensation and benefits increased by 9%, driven by higher non-variable salaries due to increased headcount and annual merit increases, and a 14% increase in share-based compensation[196][197] - Depreciation and amortization increased by 27% due to incremental depreciation from internally developed software, partially offset by lower amortization as some intangibles became fully amortized[199] Variable vs. Fixed Expenses Analyzes the proportion of variable versus fixed expenses within the company's cost structure Variable vs. Fixed Expenses Summary (in millions) | (in millions) | Three Months Ended March 31, 2025 | % of Total | Three Months Ended March 31, 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Total variable expenses | $284.0 | 54% | $244.2 | 51% | | Total non-variable expenses | $243.5 | 46% | $233.2 | 49% | | Total non-interest expenses | $527.5 | 100% | $477.4 | 100% | - Variable expenses constituted 54% of total non-interest expenses for the three months ended March 31, 2025, up from 51% in the prior year, reflecting the company's variable cost model[214] Segment Information Detailed analysis of the financial performance of each operating segment Commercial Segment Commercial segment operating revenues increased by 24%, driven by strong performance in derivatives and physical contracts Commercial Segment Operating Revenues (in millions) | Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Listed derivatives | $75.5 | $59.1 | 28% | | OTC derivatives | $60.3 | $53.0 | 14% | | Physical contracts | $71.4 | $43.9 | 63% | | Interest / fees earned on client balances | $34.7 | $38.1 | (9)% | | Total Operating Revenues | $248.6 | $200.5 | 24% | - Listed derivatives operating revenues increased by $16.4 million, driven by 19% higher contract volumes and a 7% increase in average rate per contract, particularly in agricultural, energy, and base metals markets[228] - Physical contracts operating revenues increased by $27.5 million, with precious metals and physical agricultural and energy operating revenues rising due to increased client activity and market volatility[230] Institutional Segment Institutional segment operating revenues increased by 21%, primarily due to significant growth in securities transactions Institutional Segment Operating Revenues (in millions) | Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Listed derivatives | $52.9 | $52.6 | 1% | | Securities | $398.8 | $314.9 | 27% | | FX contracts | $7.9 | $7.6 | 4% | | Interest / fees earned on client balances | $66.4 | $65.4 | 2% | | Total Operating Revenues | $561.2 | $463.4 | 21% | Institutional Segment Volumes and Data | Volumes and Other Select Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Securities ADV (millions) | $8,915 | $7,473 | 19% | | Securities RPM | $279 | $239 | 17% | | Average client equity - listed derivatives (millions) | $4,902 | $4,380 | 12% | | Average money market / FDIC sweep client balances (millions) | $1,283 | $1,047 | 23% | - Securities operating revenues increased by $83.9 million, driven by 19% higher ADV and a 17% increase in securities RPM, attributed to increased client activity and widening spreads in equity markets post-U.S. election volatility[245] Self-Directed/Retail Segment Self-Directed/Retail segment operating revenues decreased by 8%, primarily due to a decline in FX/CFD contracts RPM Self-Directed/Retail Segment Operating Revenues (in millions) | Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Securities | $27.9 | $25.8 | 8% | | FX/CFD contracts | $63.0 | $72.7 | (13)% | | Physical contracts | $1.2 | $2.0 | (40)% | | Interest / fees earned on client balances | $0.6 | $0.7 | (14)% | | Total Operating Revenues | $93.4 | $102.0 | (8)% | Self-Directed/Retail Segment Volumes and Data | Volumes and Other Select Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | FX/CFD contracts ADV (millions) | $8,591 | $6,388 | 34% | | FX/CFD contracts RPM | $116 | $177 | (34)% | - FX/CFD contracts operating revenues declined by $9.7 million, primarily due to a 34% decrease in RPM, which more than offset a 34% increase in ADV[263] Payments Segment Payments segment operating revenues increased by 2%, driven by higher ADV, partially offset by a decline in RPM Payments Segment Operating Revenues (in millions) | Operating Revenues (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Payments | $49.2 | $48.4 | 2% | | Other | $1.1 | $0.9 | 22% | | Total Operating Revenues | $50.3 | $49.3 | 2% | Payments Segment Volumes and Data | Volumes and Other Select Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Payments ADV (millions) | $77 | $64 | 20% | | Payments RPM | $10,526 | $12,327 | (15)% | - The increase in operating revenues was principally due to a 20% increase in Payments ADV, which was partially offset by a 15% decline in Payments RPM[276] Overhead Costs and Expenses Analyzes the company's overhead costs and expenses, including their allocation to operating segments Overhead Costs and Expenses Summary (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Overhead costs and expenses | $124.0 | $119.6 | 4% | | Allocation of overhead costs | $(43.4) | $(39.4) | 10% | | Overhead costs and expense, net of allocation to operating segments | $80.6 | $80.2 | 0% | - Overhead costs and expenses increased by 4% for the three months ended March 31, 2025, primarily due to increased non-variable compensation related to IT personnel reorganization and hiring in support departments[283][284] - Non-trading technology and support costs increased by $2.5 million due to higher software maintenance and support costs, driven by increased headcount[285] Liquidity, Financial Condition and Capital Resources Discusses the company's liquidity, overall financial condition, and available capital resources - As of March 31, 2025, the company had total equity of $1,882.0 million, outstanding loans of $340.9 million, and $543.6 million in senior secured notes[300] - Approximately 97% of the company's assets were liquid as of March 31, 2025, consisting of cash, securities purchased under agreements to resell, securities borrowed, and other financial instruments[301] - Net cash used in operating activities was $632.3 million for the six months ended March 31, 2025, while investing activities used $42.7 million and financing activities used $18.3 million[323] Off-Balance Sheet Arrangements Describes the company's off-balance sheet arrangements and associated risks - The company is party to financial instruments with off-balance sheet risk, including futures, forward, foreign exchange contracts, and options, primarily for client order execution and risk mitigation[331] - The company manages credit risk by requiring margin deposits, monitoring collateral levels daily, and establishing contract limits for clients[332] - Short positions, totaling $3,806.1 million as of March 31, 2025, are held to offset risks related to financial assets owned and physical commodities inventory[337] Effects of Inflation Discusses potential impact of inflation on expenses, revenues, and financial position - Inflation may increase expenses such as compensation, clearing, and occupancy, which may not be readily recoverable through price increases[340] - While higher interest rates are generally favorable, inflation-driven rate changes could adversely affect financial markets and the value of inventory, impacting financial position and results[340] Critical Accounting Policies Addresses the company's critical accounting policies and any material changes - There have been no material changes to the company's critical accounting policies as discussed in the most recent Annual Report on Form 10-K[341] Other Accounting Policies Addresses other significant accounting policies and any material changes - There have been no material changes to the company's significant accounting policies as included in Note 1 to the Consolidated Financial Statements in the most recent Annual Report on Form 10-K[342] Accounting Development Updates Provides updates on new accounting pronouncements and their potential impact on the company - ASU No. 2024-03 (Disaggregation of Income Statement Expenses) is effective for the fiscal year ending September 30, 2027, requiring enhanced expense disclosures[343][344] - ASU No. 2023-09 (Improvements to Income Tax Disclosures) is effective for the fiscal year ending September 30, 2026, requiring additional income tax rate reconciliation and disaggregation of taxes paid[345] - ASU No. 2023-07 (Improvements to Reportable Segment Disclosures) is effective for the fiscal year ending September 30, 2025, requiring disclosure of significant segment expenses and CODM information[346] Item 3. Quantitative and Qualitative Disclosures about Market Risk Discloses the company's exposure to market risks, including credit, market, interest rate, and foreign currency risks Credit Risk Addresses the company's exposure to credit risk from clients and counterparties - Information regarding credit risk is cross-referenced to Note 4 of the condensed consolidated financial statements[347] Market Risk Discusses the company's exposure to market risk from price movements, volatility, and liquidity changes - The company's market-making and trading activities expose its capital to significant risks from price movements, volatility, and liquidity changes[348] - Market risk is mitigated through diversification, position limits, capital allocation based on estimated risks, and daily monitoring of positions and mark-to-market profitability[351] - The company does not initiate market positions for its own account in anticipation of future price movements, focusing on managing net exposure from client-driven transactions[350] Interest Rate Risk Details the company's exposure to interest rate fluctuations and their potential impact on earnings - The company is exposed to interest rate risk from changes in financial instrument values and interest income earned, particularly from fixed income securities trading and client deposits[356] - An immediate 25 basis point decrease in short-term interest rates is estimated to result in approximately $7.1 million less in annual net income as of March 31, 2025[358] - As of March 31, 2025, $340.9 million of outstanding principal debt was variable-rate, and $550.0 million was fixed-rate long-term debt[359] Foreign Currency Risk Addresses the company's exposure to foreign currency exchange rate fluctuations and hedging strategies - Currency risk arises from fluctuations in foreign exchange rates impacting earnings and assets, as entities hold assets and liabilities in various currencies[360] - The company uses foreign currency derivatives, such as forward contracts, to hedge against volatility in certain foreign currency exchange rates[360] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, providing reasonable assurance that objectives were met[361][362] - There were no material changes in internal controls over financial reporting during the quarter ended March 31, 2025[363] PART II. OTHER INFORMATION Additional information on legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Refers to Note 11 for information regarding the company's legal proceedings - For information on legal proceedings, refer to Note 11, 'Commitments and Contingencies' in the notes to the Condensed Consolidated Financial Statements[364] Item 1A. Risk Factors Directs readers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors - Information regarding risks affecting the company is detailed in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[365] - Additional risks and uncertainties not currently known or considered non-material may adversely affect the business in the future[365] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchase program and activity for the three months ended March 31, 2025 - The Board of Directors authorized the repurchase of up to 2.3 million shares of common stock from October 1, 2024, to September 30, 2025[366] Common Stock Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 1, 2025 to January 31, 2025 | 950 | $73.29 | | February 1, 2025 to February 28, 2025 | 2,888 | $79.02 | | March 1, 2025 to March 31, 2025 | 44 | $80.15 | | Total | 3,882 | $77.63 | - As of March 31, 2025, 2,250,000 shares remained to be purchased under the program[367] Item 5. Other Information Confirms no directors or officers adopted or terminated Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[368] Item 6. Exhibits Provides a list of exhibits filed as part of the Form 10-Q, including key agreements and certifications - Key exhibits include the Agreement and Plan of Merger for R.J. O'Brien, various employment agreements, the 2022 Omnibus Incentive Compensation Plan, and certifications from the CEO and CFO[369] Signatures Contains the official signatures of the company's principal executive and financial officers - The report is signed by Philip A. Smith, Chief Executive Officer, and William J. Dunaway, Chief Financial Officer, on May 7, 2025[372]