StoneX Group (NasdaqGS:SNEX) Q1 2026 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsBill Dunaway - CFOPhilip Smith - CEOConference Call ParticipantsDaniel Fannon - Managing Director and EquityResearch AnalystJeff Schmitt - Research Analyst Financial Services and TechnologyLukas Jaeger - Junior Investment AnalystOperatorHello, and thank you for standing by. Welcome to StoneX Group Inc. first quarter, fiscal year 2026 earnings conference call. At this time, all participants are in a listen-on ...

StoneX Group (NasdaqGS:SNEX) Q1 2026 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsBill Dunaway - CFOPhilip Smith - CEOConference Call ParticipantsDaniel Fannon - Managing Director and EquityResearch AnalystJeff Schmitt - Research Analyst Financial Services and TechnologyLukas Jaeger - Junior Investment AnalystOperatorHello, and thank you for standing by. Welcome to StoneX Group Inc. first quarter, fiscal year 2026 earnings conference call. At this time, all participants are in a listen-on ...

StoneX Group (NasdaqGS:SNEX) Q1 2026 Earnings call February 05, 2026 09:00 AM ET Speaker2Hello, and thank you for standing by. Welcome to StoneX Group Inc. first quarter, fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. ...

Core Insights - StoneX Group Inc. reported record fiscal year results with net income of $305.9 million, a 17% increase year-over-year, and quarterly net operating revenues of $585.1 million, up 29% [1][2] - The company achieved a record quarterly net income of $85.7 million, with a quarterly return on equity (ROE) of 15.2% [1][2] - The strong performance was attributed to growth in equities trading, prime brokerage, and fixed income, alongside the successful acquisitions of R.J. O'Brien and The Benchmark Company, LLC [2][3] Financial Performance - For the fiscal year ended September 30, 2025, total revenues reached $132.4 billion, a 33% increase from $99.9 billion in the previous year [5] - Quarterly net operating revenues increased to $585.1 million from $454.8 million, marking a 29% rise [26] - The company reported a diluted earnings per share (EPS) of $1.57 for the quarter and $5.89 for the fiscal year, reflecting increases of 1% and 11% respectively [1][5] Revenue Breakdown - Operating revenues from listed derivatives increased by 76% to $207.6 million for the quarter, driven by the acquisition of R.J. O'Brien [13][17] - Securities transactions saw a revenue increase of 26% to $519.4 million, supported by a 25% rise in average daily volume [19][20] - Operating revenues from physical contracts rose by 24% to $65.9 million, primarily due to increased agricultural and energy revenues [21] Segment Performance - The Commercial segment reported revenues of $31.8 billion for the fiscal year, a 33% increase, while the Institutional segment's revenues grew by 27% to $2.5 billion [33] - The Self-Directed/Retail segment experienced a decline in quarterly revenues by 22% to $81.1 million, although it saw a slight annual increase of 4% [9][10] - Payments segment revenues increased by 7% to $52.1 million for the quarter, with a 2% annual growth [9][10] Cost and Expense Analysis - Total interest expense for the quarter was $436.3 million, a 29% increase from the previous year, primarily due to growth in the securities repo and lending businesses [23][24] - Variable compensation and benefits increased by 52% to $183.2 million for the quarter, reflecting the company's growth [27] - Total non-variable expenses were reported at $293.8 million, accounting for 45% of total expenses, compared to 49% in the previous year [27] Strategic Outlook - The company aims to enhance its product offerings and client base through the integration of recent acquisitions, focusing on expanding geographic reach and maintaining high client service standards [3][2] - The acquisition of R.J. O'Brien is expected to significantly contribute to future revenue growth, with an incremental $5.6 billion in average client equity post-acquisition [22][17]

Financial Data and Key Metrics Changes - The third quarter net income was $63.4 million, with diluted earnings per share (EPS) of $1.22, reflecting a 2% growth in net income but a 2% decline in diluted EPS compared to the prior year due to additional shares outstanding [5][42] - Operating revenues reached $1.024 billion, up 12% year-over-year and 7% sequentially [5][6] - Return on equity (ROE) was 13.1%, with a 49% increase in book value over the last two years [5] Business Line Data and Key Metrics Changes - The securities segment saw a 30% increase in operating revenues, driven by a 25% increase in volumes and a 15% increase in rate per million [10] - Payments revenues increased by 5% year-over-year and 6% sequentially [10] - The commercial segment's net operating revenues declined by 24%, primarily due to a 44% drop in physical contracts [12][14] - The institutional segment achieved record net operating revenues and segment income, with growth of 27% and 41% respectively [13] Market Data and Key Metrics Changes - Interest and fee income on client balances decreased by 11% year-over-year, primarily due to lower short-term interest rates [11] - Average daily volume in FX CFD contracts increased by 34%, contributing to the self-directed retail segment's 18% increase in net operating revenues [14][15] Company Strategy and Development Direction - The company closed the RJO and Benchmark acquisitions, which are expected to be transformational and position the company as a market leader in global derivatives [17][18] - The integration of RJO is anticipated to enhance earnings and margins, with a focus on realizing synergies within the next 3 to 12 months [22][73] - The company aims to expand its custody and clearing capabilities, including digital asset custody, to meet evolving client needs [30][40] Management's Comments on Operating Environment and Future Outlook - Management noted that the commercial segment faced challenges due to tariff uncertainties and diminished volatility, impacting client activity [48][49] - The company remains optimistic about the growth trajectory following the acquisitions, expecting to capitalize on industry transformations driven by regulatory changes [43][44] - Management emphasized the importance of maintaining a strong client-centric approach amid ongoing market volatility [77][80] Other Important Information - The company reported a trailing twelve months net income of $296.9 million, up 26%, with an EPS of $5.87 [8] - The company has a robust balance sheet and diverse offerings, which are expected to support long-term growth [44] Q&A Session Summary Question: Can you elaborate on the weakness in the commercial segment? - Management indicated that the weakness was primarily due to tariff uncertainties and lack of volatility in the agricultural sector, which affected trading volumes [48][49] Question: Any updates on revenue synergies for RJO now that it's closed? - Management stated that while it is difficult to quantify revenue synergies immediately, they believe the potential is significant, particularly in the commercial segment [55][56] Question: What are the longer-term plans for the retail segment? - Management outlined plans to expand the retail segment into a multi-asset class offering, with infrastructure improvements expected to be completed by the end of the fiscal year [61][65] Question: What should we expect from the integration of RJ O'Brien? - Management plans to provide updates on synergy realization, with a focus on international integration expected to yield quick wins [70][73]

Financial Data and Key Metrics Changes - Second quarter net income was $71.7 million with diluted earnings per share of $1.41, representing a 3529% increase year-over-year but down 1617% from the previous quarter [6][50] - Operating revenues reached a record $956 million, up 17% year-over-year and up 1% from the previous quarter [6][50] - Return on equity was 15.7%, despite a 51% increase in book value over the last two years [6] Business Line Data and Key Metrics Changes - Operating revenues from physical contracts increased by 58% year-over-year, driven by strong growth in precious metals and physical agriculture and energy businesses [8] - Operating revenues from listed derivatives were up 15% year-over-year and quarter-over-quarter, primarily from the commercial segment [9] - Operating revenues from OTC derivatives increased by 14% year-over-year and 65% from the previous quarter, particularly in Brazil and European markets [9] - Payments operating revenues were up 2% year-over-year but down 13% from the previous quarter [9] - FX and CFD revenues decreased by 12% despite a 10% increase in average daily volume, due to a 19% decline in rate per million [10] Market Data and Key Metrics Changes - The company experienced a challenging market environment for FX and CFDs, with a significant decline in rate per million [11] - Interest and fee income from client balances decreased by 2% year-over-year, primarily due to lower short-term interest rates [16] Company Strategy and Development Direction - The company announced a planned acquisition of RJ O'Brien, which is expected to enhance its position in global derivatives and financial market infrastructure [18][24] - The acquisition is anticipated to provide significant revenue synergies and enhance margins, EPS, and return on equity [24][51] - The company is also expanding its ecosystem through partnerships, such as with Bamboo Payment Systems for local payment services in Latin America [27] Management's Comments on Operating Environment and Future Outlook - Management expects higher volatility in the next twelve months due to geopolitical tensions and supply chain uncertainties, which could be beneficial for the company [56][60] - The company is optimistic about its growth trajectory following the acquisition of RJ O'Brien and believes it will capitalize on ongoing industry transformations [51] Other Important Information - The company received CME approval for its New York-based metals vault, enhancing its capabilities in the metals market [30] - The company is actively expanding its presence in the Indian market through its establishment in Gift City [46] Q&A Session Summary Question: Health of the markets and near-term outlook - Management noted that while volatility had declined over the past year, recent months have seen a dramatic increase in volatility due to tariffs and trade reform, which is expected to be a net positive for the company [55][60] Question: Catalysts for growth in the payments business - Management discussed the recent technology upgrades that have increased capacity and allowed for higher transaction volumes, indicating a potential turnaround in the payments segment [62][64] Question: Fee per million in the retail segment - Management explained that the decline in fee per million was due to a normalization from previously high levels and a product mix that included tighter spreads [74][75] Question: Risk management policies during higher volatility - Management highlighted the effectiveness of their risk management systems during periods of high volatility, noting that they performed well without significant issues [82]

Financial Data and Key Metrics Changes - Second quarter net income was $71,700,000 with diluted earnings per share of $1.41, representing a 3529% growth year-over-year but down 1617% from the previous quarter [6] - Record operating revenues reached $956,000,000, up 17% year-over-year and up 1% from the previous quarter [6] - Return on equity was 15.7% despite a 51% increase in book value over the last two years [6] Business Line Data and Key Metrics Changes - Operating revenues from physical contracts increased by 58% year-over-year, driven by strong growth in precious metals and physical agriculture and energy businesses [9] - Operating revenues from listed derivatives were up 15% year-over-year and quarter-over-quarter, primarily from the commercial segment [10] - Operating revenues from OTC derivatives increased by 14% year-over-year and 65% from the previous quarter, particularly in Brazil and European markets [10] - Payments operating revenues were up 2% year-over-year but down 13% from the previous quarter [10] - FX and CFD revenues decreased by 12% despite a 10% increase in average daily volume, due to a 19% decline in rate per million [11] Market Data and Key Metrics Changes - The commercial segment saw an 18% increase in net operating revenues, driven by strong performance in physical contracts [12] - The institutional segment experienced record net operating revenues and segment income growth of 28% and 41% respectively [13] - The self-directed retail segment reported a 14% decline in net operating revenues and a 34% decline in segment income [14] Company Strategy and Development Direction - The company announced a planned acquisition of RJ O'Brien, which is expected to enhance its position in global derivatives and improve its market access and service capabilities [18][19] - The acquisition is anticipated to provide significant revenue synergies and enhance margins, EPS, and return on equity [24] - The company is also expanding its ecosystem through partnerships, such as with Bamboo Payment Systems for local payment services in Latin America [27] Management's Comments on Operating Environment and Future Outlook - Management anticipates higher volatility in the next twelve months due to geopolitical tensions and regulatory changes, which could benefit the company's performance [56] - The company is optimistic about its growth trajectory following the acquisition of RJ O'Brien and believes it is well-positioned to capitalize on industry transformations [49] - Management emphasized the importance of maintaining a strong risk management framework during periods of high volatility [80] Other Important Information - The company received CME approval for its New York-based metals vault, enhancing its capabilities in the metals market [30] - The company completed the acquisition of JBR Recovery, a silver recycler, which strengthens its position in the metals ecosystem [31] Q&A Session Summary Question: Health of the markets and near-term outlook - Management noted that while volatility had declined over the past year, recent geopolitical events have led to increased volatility, which is expected to continue [54][56] Question: Prospects for the payments business - Management discussed recent technology upgrades that have improved capacity and efficiency, leading to increased volumes in the payments segment [62][64] Question: Retail segment performance and fee per million - Management explained that the decline in fee per million was due to a normalization from previously high levels and a product mix that included tighter spreads [73][74]