StoneX Group Inc. (SNEX) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with significant revenue growth driven by acquisitions and increased activity in key markets. Despite some declines in specific segments, overall financial health is robust, with positive synergies from recent acquisitions. Management's optimistic guidance and strategic plans for market expansion and cross-selling further support a positive outlook. The market cap suggests a moderate reaction, leading to a prediction of a positive stock price movement (2% to 8%) over the next two weeks.
Key Financial Performance
Net Income $139 million, representing a 63% growth year-over-year. The increase was driven by strong performance across various segments and the acquisition of R.J. O'Brien.
Diluted Earnings Per Share (EPS) $2.50, reflecting a 48% growth year-over-year. The growth rate was lower than net income due to additional shares issued for the acquisition of R.J. O'Brien.
Operating Revenues $1.4 billion, up 52% year-over-year. Growth was attributed to increased interest and fee income, carried interest from fixed income trading, and contributions from the R.J. O'Brien acquisition.
Net Operating Revenues Increased by 47% year-over-year. This growth was driven by higher interest income, listed derivatives, and physical contracts.
Fixed Compensation and Other Expenses Increased by $75.6 million or 31% year-over-year. $44.4 million of this increase was due to the acquisition of R.J. O'Brien and Benchmark.
Listed Derivatives Operating Revenues Increased by $157.3 million or 141% year-over-year. Growth was driven by the acquisition of R.J. O'Brien and strong base metals activity in LME markets.
Physical Contracts Operating Revenues Increased by 69% year-over-year, primarily due to an $83.9 million increase in precious metals revenues, partially offset by a $19.8 million decrease in agricultural and energy revenues.
Securities Operating Revenues Up 43% year-over-year, driven by a 22% increase in volumes and a 35% increase in rate per million.
Payments Revenues Decreased by 4% year-over-year, attributed to a 10% decline in rate per million, despite an 11% increase in average daily volume.
FX/CFD Revenues Decreased by 30% year-over-year, due to a 4% decline in average daily volume and a 30% decline in rate per million.
Interest and Fee Income on Client Balances Increased by $66.1 million or 61% year-over-year, with $63.8 million contributed by the R.J. O'Brien acquisition.
Commercial Segment Net Operating Revenues Increased by 65% year-over-year, driven by 56% and 72% growth in listed and OTC derivatives, respectively, and a 75% increase in physical contracts.
Institutional Segment Net Operating Revenues Increased by 86% year-over-year, driven by a $54.9 million increase in securities revenues and contributions from the R.J. O'Brien acquisition.
Self-Directed Retail Segment Net Operating Revenues Decreased by 34% year-over-year, due to a 41% decline in rate per million captured in FX/CFD contracts, partially offset by a 13% increase in average daily volumes.
Payments Segment Net Operating Revenues Decreased by 3% year-over-year, with an 11% increase in average daily volume offset by a 10% decline in rate per million.
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Operating Highlights
Record listed derivatives volumes and average client equity: Significantly enhanced by the acquisition of R.J. O'Brien.
Record commercial performance in global metals: Exceptional performance in precious metals business, generating $75 million in segment income this quarter, $24 million more than the entire financial year '25.
Unique precious metals vertical: Includes OTC liquidity provision, participation in daily price benchmarks, futures contracts access, wholesale and retail bullion services, and a CME accredited vault with $1.2 billion worth of metal in custody.
Global hedging business expansion: Reorganized to globalize regional businesses, with a presence in North America, Latin America, EMEA, and rapid growth in Asia Pacific.
New market entries: Expanded into power and electricity in Australia, carbon in Europe, and other environmental markets.
Geographical footprint expansion: New locations in Madrid and Paris.
Integration of R.J. O'Brien: On track with increased cross-sell opportunities and $20 million capital released from U.K. entity consolidation.
Digitization efforts: Advancing ERP integrations, expanding functionality of farmer-focused mobile apps, and utilizing AI to increase broker capacity and automate tasks.
Acquisition of R.J. O'Brien: Transformed StoneX into the leading nonbank player in the space, enhancing scale and breadth of offerings.
Focus on ecosystem growth: Expanding OTC products, linking financial hedging with physical sales, and diversifying client base.
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Risk or Challenges
Legal Fees: Higher legal fees related to defense and various legal matters, including fees related to the BTIG matter associated with the commencement of arbitration this quarter.
FX/CFD Revenues: Decline in FX/CFD revenues by 30% versus the prior year, driven by a 4% decline in average daily volume and a 30% decline in rate per million, primarily due to lower spread retention in the self-directed business.
Payments Revenues: Payments revenues were down 4% versus the prior year quarter, primarily due to a 10% decline in rate per million.
Integration of R.J. O'Brien: Integration of R.J. O'Brien remains on track but involves complex processes such as consolidation of non-U.S. and U.S. entities, which could pose operational risks.
Self-Directed Retail Segment: Net operating revenues declined 34% and segment income was down 67%, driven by a 41% decline in rate per million captured in FX/CFD contracts.
Interest Rate Sensitivity: A 100 basis point change in short-term interest rates could result in a change to net income by $43.2 million or $0.80 per share on an annualized basis, indicating exposure to interest rate fluctuations.
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Guidance & Outlook
Revenue Expectations: The company expects to capitalize on current market volatility and its diverse offerings to drive growth. The acquisition of R.J. O'Brien is expected to contribute significantly to revenue growth, particularly in listed derivatives and interest income.
Margin Projections: The company aims to increase margins by expanding its ecosystem, digitizing operations, and deepening client relationships. The integration of R.J. O'Brien is expected to enhance operational efficiency and margin growth.
Capital Expenditures: The company is investing in new markets such as power and electricity in Australia, carbon in Europe, and other environmental markets. It is also expanding its geographical footprint with new locations in Madrid and Paris.
Market Trends: The company is focusing on emerging markets like power, electricity, and carbon trading. It is also leveraging AI and digital platforms to enhance client engagement and operational efficiency.
Business Segment Performance: The Commercial segment is expected to benefit from the global hedging business, which represents 60% of the segment income. The Institutional segment is projected to grow due to the integration of R.J. O'Brien and Benchmark. The Payments segment is expected to see growth in average daily volume.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much of the strength in the physical trading business came from cross-selling RJO clients or was it mainly volatility-driven?
A:The strength was primarily driven by heightened interest in precious metals at both wholesale and retail levels, rather than cross-selling RJO clients. The StoneX Bullion platform, acquired in 2019, has exceeded expectations, achieving significant growth. The wholesale business also benefited from increased retail interest and the ability to move physical materials globally.
Q:Are the cost synergies from the RJO business on track, and is there potential upside to the $50 million target?
A:The $50 million target is still being confirmed. Progress is on track, with milestones expected later in the year. Full realization of synergies is anticipated by fiscal '27, with about 40% achieved by fiscal '26.
Q:How is the institutional securities business performing, and is there more upside to the rate per million?
A:The institutional securities business is in early stages of expansion, with growth in equities market making, fixed income, and prime services. The rate per million has normalized to a more stable range of over $300, following a dip during the transition into U.S. stocks.
Q:What is the health of the customer base post-quarter, given the volatility in gold and silver markets?
A:The company benefits from market volatility but avoids extreme volatility that could harm clients. Close client relationships and daily engagement help manage risks and ensure clients maintain sufficient liquidity.
Q:What are the near-term cross-sell opportunities from the R.J. O'Brien deal?
A:The integration process is ongoing, with efforts to introduce more capabilities to RJO clients. Cross-sell opportunities include offering foreign exchange and other products not previously available to RJO clients. Progress is being made, but revenue expectations from cross-selling are not yet specified.
Q:What is the expense outlook following recent acquisitions?
A:Expenses are expected to tick up in Q2 due to annual merit increases and other resets. Synergies from acquisitions should lead to a downtrend in non-variable compensation and tech spend over time.
Q:What is the outlook for the pre-existing StoneX business, particularly in the securities and risk management segments?
A:The company sees growth opportunities in regional U.S. banks, leveraging its broad product offering. The fixed income business in APAC has also grown rapidly due to a lack of alternatives in the region.
Q:Why has the rate per million in the FX and CFD business decreased compared to last year?
A:The decrease is due to lower volatility in the FX market compared to last year's exceptionally strong quarter. The current rate per million is more normalized, with euro-dollar and gold-dollar being among the most traded pairs.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue expectations from cross-selling opportunities in the R.J. O'Brien deal, citing ongoing integration and education efforts. Additionally, they did not specify which currency pairs are most interesting to self-directed clients, stating that it varies and is market-driven.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CFD revenue
FX CFD
LME
RJO Benchmark
RJO acquisition
RJO client
Record
Slide
StoneX nonbank
acquisition RJO
acquisition interest
addition derivative
balance RJO
base metal
benefit
bullion
close
consumer StoneX
contract increase
derivative interest
equity income
exception FX
financials
income acquisition
income record
increase volume
market FX
matter
metal StoneX
metal market
month period
payment volume
product exception
record share
revenue OTC
share stock
split stock
stock dividend
stock split
stockholder record
swap
SNEX Transcript
StoneX Group Inc. (SNEX) Q1 2026 Earnings Call Transcript
Positive2-5
The earnings call reveals strong financial performance with significant revenue growth driven by acquisitions and increased activity in key markets. Despite some declines in specific segments, overall financial health is robust, with positive synergies from recent acquisitions. Management's optimistic guidance and strategic plans for market expansion and cross-selling further support a positive outlook. The market cap suggests a moderate reaction, leading to a prediction of a positive stock price movement (2% to 8%) over the next two weeks.
StoneX Group Inc. (SNEX) Q4 2025 Earnings Call Transcript
Positive11-25
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.
StoneX Group Inc. (SNEX) Q3 2025 Earnings Call Transcript
Unknown8-6
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.
StoneX Group Inc. (SNEX) Q2 2025 Earnings Call Transcript
Positive5-8
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.
SNEX Slides
SNEX Report
Frequently Asked Questions
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