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01/11 18:31
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with significant revenue and EPS growth, driven by acquisitions and improved market conditions. Positive developments in precious metals trading and sustainable increases in rates per contract further bolster the outlook. While management was vague on some metrics, the overall sentiment is positive, with strategic expansions and synergies expected. Given the mid-cap market cap, the stock is likely to react positively, with a 2% to 8% increase.
Net Income (Q4 FY 2025) $85.7 million, a 12% growth year-over-year. Reasons for change include strong performance across segments and acquisitions like R.J. O'Brien.
Diluted Earnings Per Share (EPS) (Q4 FY 2025) $1.57, a 1% growth year-over-year. The slower growth compared to net income is due to additional shares issued for the R.J. O'Brien acquisition.
Operating Revenues (Q4 FY 2025) $1.2 billion, up 31% year-over-year. Growth driven by increased transactional volumes and contributions from acquisitions like R.J. O'Brien.
Net Operating Revenues (Q4 FY 2025) Up 29% year-over-year. Growth attributed to increased interest and fee income and contributions from acquisitions.
Fixed Compensation and Other Expenses (Q4 FY 2025) Up 24% year-over-year. Increase driven by acquisition-related costs, including R.J. O'Brien and Benchmark.
Professional Fees (Q4 FY 2025) Increased by $12.2 million year-over-year, primarily due to $8 million in investment banking fees related to acquisitions.
Acquisitions' Contribution to Pretax Net Income (Q4 FY 2025) R.J. O'Brien contributed $22.1 million, and Benchmark contributed $2.4 million.
Operating Revenues from Listed Contracts (Q4 FY 2025) Increased by $89.4 million (76%) year-over-year, with R.J. O'Brien contributing $89.5 million.
Operating Revenues from OTC Derivatives (Q4 FY 2025) Increased by 27% year-over-year, driven by higher transactional volumes.
Operating Revenues from Physical Contracts (Q4 FY 2025) Increased by 24% year-over-year, driven by a $19.5 million increase in agricultural and energy revenues, partially offset by a $6.8 million decline in precious metals revenues.
Securities Operating Revenues (Q4 FY 2025) Up 26% year-over-year, driven by a 25% increase in volumes and a 23% increase in rate per million.
Payments Revenues (Q4 FY 2025) Up 8% year-over-year, but down 3% sequentially, primarily due to a decline in rate per million.
FX CFD Revenues (Q4 FY 2025) Down 34% year-over-year, driven by a 7% decline in ADV and a 32% decline in rate per million due to low FX market volatility.
Interest and Fee Income on Client Balances (Q4 FY 2025) Increased by $52 million (46%) year-over-year, with R.J. O'Brien contributing $50 million.
Net Operating Revenues from Securities (Full FY 2025) Increased by $126.1 million year-over-year, driven by a 27% increase in ADV and a 9% increase in rate per million.
Net Operating Revenues from Listed Derivatives (Full FY 2025) Increased by $46.3 million year-over-year, primarily due to the acquisition of R.J. O'Brien.
Net Operating Revenues from Physical Contracts (Full FY 2025) Increased by $34.7 million year-over-year.
Net Income (Full FY 2025) $305.9 million, up 17% year-over-year. Growth driven by strong performance across segments and acquisitions.
Earnings Per Share (EPS) (Full FY 2025) $5.89, with a return on equity of 15.6%, above the 15% target.
Book Value Per Share (End of Q4 FY 2025) $45.56 per share.
R.J. O'Brien acquisition: Acquisition of R.J. O'Brien, the largest non-bank FCM in the U.S., is expected to be transformational. It adds new clients, products, and capabilities, including clearing and risk management for regional banks, and introduces significant cost and capital synergies.
Benchmark acquisition: Acquisition of Benchmark, a midsized investment banking firm, brings new relationships with hedge funds and investment banking capabilities. It also leverages StoneX's balance sheet for larger transactions.
JBR acquisition: Acquisition of JBR, a U.K.-based silver recovery refiner, allows StoneX to produce its own silver bars and expand its customer base with industrial clients.
Right Corporation acquisition: Acquisition of Right Corporation adds physical meat trading capabilities, complementing StoneX's existing expertise in the meat and livestock industry.
Octo Finance acquisition: Acquisition of Octo Finance, a French fixed income broker, expands StoneX's credit research and European bond trading capabilities.
Bamboo Payments investment: Investment in Bamboo Payments extends cross-border payment capabilities in South America, targeting new client types like marketplaces and ride-hailing services.
Dubai market expansion: R.J. O'Brien's presence in the Dubai International Financial Center enhances StoneX's ability to compete in the region by offering a full suite of products.
Latin America wealth management: Two agreements with LatAm-focused wealth management firms expand StoneX's brokerage and investment advisory services in the region.
Cost synergies from R.J. O'Brien: $50 million in annual cost synergies expected within 24 months, with $20 million already realized.
Capital synergies from R.J. O'Brien: $50 million in capital synergies expected, with $42 million in excess cash already released.
Digital asset services: Approval to provide digital asset services to institutional clients in Europe, including execution and custody services.
Grain management platform: StoneX Hedge platform surpasses 1 billion bushels of grain managed, with plans to merge with R.J. O'Brien's similar platform.
M&A strategy: StoneX completed six acquisitions in 2025, focusing on accretive opportunities that align with its ecosystem and provide long-term value.
Organic growth initiatives: Enhancements to metals vault, prime brokerage, and OTC products to capture more client business and expand service offerings.
Acquisition-related charges: The company incurred $9.3 million in pretax acquisition-related charges, including $1.3 million in bridge loan financing charges and $8 million in investment banking fees, which impacted diluted EPS by $0.13 per share.
FX/CFD revenue decline: FX/CFD revenues declined 34% year-over-year and 36% quarter-over-quarter due to a 7% decline in average daily volumes and a 32% decline in rate per million, primarily driven by low volatility in FX markets.
Self-directed retail segment performance: Net operating revenues in the self-directed retail segment declined 35%, and segment income was down 51%, driven by a 4% decline in average daily volumes and a 31% decline in rate per million.
Integration risks for R.J. O'Brien acquisition: The integration of R.J. O'Brien's U.S. FCMs is complex and may face delays to ensure seamless client migration, with potential risks of revenue attrition due to client duplication or revenue producers leaving.
Cost and capital synergy realization: Achieving the $50 million cost synergy target and $50 million in capital synergies from the R.J. O'Brien acquisition is dependent on successful integration, which may take up to 24 months.
Revenue attrition risk: There is a risk of revenue attrition from the R.J. O'Brien acquisition due to potential client overlap and revenue producers leaving, though the company reports limited attrition so far.
Decline in payments segment revenue: Payments segment net operating revenues declined 2% quarter-over-quarter, primarily due to a decline in rate per million.
Regulatory and operational challenges: The company faces regulatory and operational challenges in integrating multiple acquisitions, including R.J. O'Brien, Benchmark, and others, which require significant resources and coordination.
Revenue Growth: The company expects strong organic growth in 2026, driven by recent acquisitions such as R.J. O'Brien and Benchmark, which are anticipated to be accretive to earnings and return on equity (ROE).
Cost Synergies: The integration of R.J. O'Brien is expected to achieve $50 million in annual run-rate cost synergies within 24 months of deal close, with $20 million already realized. The integration of U.S. FCMs is expected to account for 40%-50% of the synergy target by Q4 2026.
Capital Synergies: The company anticipates $20-$30 million in capital synergies from the integration of non-U.S. entities and broker-dealer businesses by Q2 2026, with an additional $30 million from the merger of U.S. FCMs by Q4 2026.
Revenue Synergies: While no specific target was disclosed, the company expects significant revenue synergies over time from cross-selling opportunities and leveraging the larger balance sheet to win more wallet share from R.J. O'Brien's clients.
Market Expansion: The acquisition of R.J. O'Brien has expanded the company's footprint in new markets, including the Dubai International Financial Center, enabling competition with other financial brokerage firms by offering a full suite of StoneX products.
Client Assets: Client equity balances have reached a record $13.7 billion as of September 2025, with further growth expected due to inflows from institutional and introducing broker clients.
Interest Rate Sensitivity: A 100 basis point change in short-term interest rates is estimated to result in a $53.8 million change in net income or $1.02 per share on an annualized basis.
The selected topic was not discussed during the call.
The earnings call reveals strong financial performance with significant revenue and EPS growth, driven by acquisitions and improved market conditions. Positive developments in precious metals trading and sustainable increases in rates per contract further bolster the outlook. While management was vague on some metrics, the overall sentiment is positive, with strategic expansions and synergies expected. Given the mid-cap market cap, the stock is likely to react positively, with a 2% to 8% increase.
The earnings call presents a mixed bag: while there are positive aspects like increased securities and retail segment revenues, and optimistic future projections from acquisitions, there are significant negatives too. The commercial segment is weak due to tariff uncertainties and low volatility, and there's a decline in operating revenues for physical and OTC derivatives. The Q&A reveals management's lack of specifics on synergies and macro clarity, which may concern investors. The market cap suggests moderate reaction, leading to a neutral prediction.
The earnings call highlights strong financial performance with significant year-over-year growth in net income and EPS, despite a quarterly decline. The acquisition of R.J. O'Brien is expected to enhance margins and EPS, with cost synergies identified. The Q&A reveals optimism about increased market volatility and growth in the payments business due to a new system launch. While management was vague on some specifics, the overall sentiment is positive, supported by strategic acquisitions and expected growth. Given the company's market cap, a positive stock price movement of 2% to 8% is anticipated.
StoneX reported strong financial performance with 20% YoY revenue growth and a 19.5% ROE. Despite challenges in OTC derivatives and payments, optimistic guidance and strategic acquisitions bolster future prospects. The stock split and increased client engagement signal confidence. Q&A reveals some uncertainties but overall sentiment is positive, particularly with the digital transformation and market penetration strategies. Given the market cap, the stock is likely to see a positive reaction, though not exceedingly strong.
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