BGC(BGC) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - BGC delivered record-breaking revenues for both the fourth quarter and full year 2025, with increases of 32% and 30% respectively, approaching $3 billion in revenues [4] - Adjusted EPS grew by 24% under GAAP and 19% for adjusted earnings [4] - Pre-tax adjusted earnings grew by 24.5% to $161.3 million, representing a pre-tax margin of 21.3% [18] - Post-tax adjusted earnings increased by 21.1% to $149.6 million, resulting in a post-tax adjusted earnings per share of $0.31 [18] Business Line Data and Key Metrics Changes - Total brokerage revenues grew by 34.6% to $694.6 million, driven by growth across all asset classes [9] - ECS revenues grew by 92% to $257.5 million, with strong organic growth across the broader energy complex and shipping business [9] - Rates revenues increased by 16.4% to $197.4 million, reflecting strong growth in G-10 interest rate products [10] - Foreign exchange revenues were up 9.8% to $102.8 million, primarily due to strong growth in emerging market currencies [10] - Fenics revenues increased by 15.4% to a fourth quarter record of $163.9 million [11] Market Data and Key Metrics Changes - EMEA revenue increased by 39.2%, Americas revenues increased by 25.7%, and Asia Pacific revenues increased by 24.2% [16] - FMX UST business ended 2025 with a 40% market share, with average daily volume increasing by 12% compared to last year [12] - FMX Futures Exchange saw record volumes in open interest, with ADV and open interest increasing 82% and 97% respectively [12] Company Strategy and Development Direction - The company completed the first phase of its cost reduction program, realizing $25 million of annualized savings in 2026 [5] - BGC aims to focus on higher growth areas within its portfolio, having sold lower growth businesses to enhance shareholder value [28] - The company is positioned for continued success as it moves into 2026, with a record-breaking start to the year [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, with guidance for first quarter 2026 revenues expected to be between $860 million and $920 million, representing approximately 34% revenue growth [20] - The company anticipates pre-tax adjusted earnings to be in the range of $202 million to $222 million, indicating over 32% earnings growth [20] - Management noted that the trading environment remains strong, contributing to organic revenue growth [25] Other Important Information - The company achieved the strongest annual results in its history, significantly expanding its market share and becoming the world's largest energy broker [4] - The liquidity as of December 31 was $979.1 million, compared to $897.8 million at year-end 2024 [19] Q&A Session Summary Question: About the first quarter guidance and organic revenue growth - Management indicated that the strong growth is driven by a combination of a favorable trading environment and sustainable growth drivers across the business [25] Question: Thoughts on the sale of KACE and future divestitures - Management stated that the sale was driven by a focus on shareholder value and that they remain open to future divestitures if they do not align with growth objectives [28] Question: New logo growth in the energy space - Management confirmed that there is a proliferation of new players in the ECS business, benefiting from the current market environment [34] Question: Market share of ECS exceeding combined market share of BGC and OTC - Management confirmed that the benefits of acquiring OTC have become evident, with strong positioning in key asset classes [36] Question: Timetable for recognizing revenue related to FMX futures - Management indicated that changes in fee structures will occur in the summer, and the launch of Treasury futures will follow the success of SOFR [42][43] Question: Additional fixed income products within Lucera - Management mentioned that Lucera is moving into credit markets, which could represent a significant portion of future revenue if successful [49]