BGC Group Q1 2025 Earnings Report

BGC Group EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.29
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

BGC Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BGC Group Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 10:00AM ET

BGC Group (NASDAQ:BGC) operates as a financial brokerage and technology company in the United States and internationally. The company offers various brokerage products, such as fixed income, such as government bonds, corporate bonds, and other debt instruments, as well as related interest rate derivatives and credit derivatives; equities, energy and commodities, shipping, insurance, and futures and options. It also provides trade execution, connectivity solutions, brokerage services, clearing, trade compression and other post-trade services, information, and other back-office services to an assortment of financial and non-financial institutions. In addition, the company offers electronic and hybrid brokerage, other financial technology solutions, market data and related information services. Further, its integrated platform is designed to provide flexibility to customers with regard to price discovery, execution and processing of transactions, Hybrid, or in various markets, as well as fully electronic brokerage services in connection with transactions executed either OTC or through an exchange. The company primarily serves banks, broker-dealers, investment banks, trading firms, hedge funds, governments, and corporations, as well as investment firms. BGC Group, Inc. was founded in 1945 and is headquartered in New York, New York.

BGC Group Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the BGC Group First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. And as a reminder, this conference is being recorded.

[Operator]

It is now my pleasure to introduce to you Jason Kraseckis, Head of Investor Relations. You may begin.

[Jason Chryssicas, Head of Investor Relations at BGC Group]

Thank you, and hello, everyone. This morning, we issued BGC's first quarter twenty twenty five financial results, which can be found at ir.bgcg.com. Any historical results provided on today's call compare only the first quarter of twenty twenty five with the prior year period unless otherwise specified. We will be referring to our results on a non GAAP basis, which include the terms adjusted earnings and adjusted EBITDA. Please refer to today's investor materials on our website for additional details on our financial results and for complete and updated definitions of any non GAAP terms, reconciliations of these items GAAP results and how, when, and why management uses them.

[Jason Chryssicas, Head of Investor Relations at BGC Group]

The outlook discussed today assumes no material acquisitions or dispositions. Our expectations are subject to change based on various macroeconomic, social, political, and or other factors. Information on this call contains forward looking statements, including without limitation, statements about our economic outlook and business. These statements are subject to risks and uncertainties, which could cause our actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward looking statements.

[Jason Chryssicas, Head of Investor Relations at BGC Group]

For information on factors that could cause actual results to differ from forward looking statements and a complete discussion of the risks and other factors that may impact these forward looking statements, see our SEC filings, including, but not limited to, the risk factors and disclosures within these SEC documents. And with that, I'm now happy to turn the call over to Sean Windiett, Co Chief Executive Officer of BTC Group.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Thank you, Jason. Good morning, and welcome to our first quarter twenty twenty five conference call. With me today are my fellow co chief executive officers, John Aboularaj and JP Oban, along with our chief financial officer, Jason Hoff. We delivered record quarterly revenues of more than $664,000,000, a 15% increase versus last year's record first quarter. Our strong results were driven by robust organic growth across both our voice hybrid and Fenics businesses, which each achieved new all time highs.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

FMX had its best ever quarter with record volumes and market share across both our FMX UST and FX platforms, driven by strong support from our FMX equity partners. On April 1, we completed our transformative acquisition of OTC Global Holdings that is expected to add over $400,000,000 in annualized revenue, nearly doubling the size of our existing ECS business. This positions us as the world's largest ECS broker and makes BGC a more comprehensive and diverse company. We expect the acquisition of OTC to be immediately accretive and generate meaningful shareholder value. We're happy to welcome the entire OTC team to VGC.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Our respective strengths and complementary businesses enhance our combined value, and we're excited about the benefits of integrating OTC into BGC's global platform. In the second quarter, we've continued to build on our success with global market volatility leading to broad organic growth across our businesses. As a reminder, volatility benefits BGC by increasing secondary trading volumes as market participants seek to hedge their or risk their their capitalized on price fluctuations. These activities are most efficiently executed in our wholesale markets known for their depth and liquidity. And with that, I'd like to turn the call over to John to go over the quarterly results of the business in more detail.

[John Abularrage, Co - CEO at BGC Group]

Thank you, Sean. It's an honor to join all of you for the first time as BGC's co CEO. As Sean mentioned, we registered record quarterly results, reflecting substantial growth across every region in our largest asset class. Our rates revenue increased 14.8% to a record $200,900,000 reflecting higher volumes across all our major interest rate products. ECS revenue grew by 26.6% to a record $149,900,000, driven by strong growth across environmental and energy transition products as well as our oil and refined products.

[John Abularrage, Co - CEO at BGC Group]

Foreign exchange revenues were up 31% to to a record $110,000,000, reflecting broad based growth across all FX products. Credit revenues decreased by zero spot 7% to $86,900,000 due to lower emerging market and European credit volumes, partly offset by record portfolio match volumes and strong US credit activity. Equities revenues were flat at $62,900,000 as a result of higher European and US equity volumes being offset by lower Asian equity derivative volumes. Data, network, and post trade revenues increased by 5.2% to 32,500,000. This growth was primarily driven by Fenics Market Data and Lucera, partly offset by lower post trade revenues due to the sale of our Capitalab business in the fourth quarter of twenty twenty four.

[John Abularrage, Co - CEO at BGC Group]

Excluding Capitalab, revenues grew by circa 10% year over year. We expect growth in these businesses to accelerate throughout the year as we work through the large revenue pipelines in place. Now turning to Fenics. In the first quarter, Fenics revenues improved by 15.6% to a hundred and $72,700,000. Fenics Markets reported revenues of a hundred and $45,500,000, an increase of 14.2%.

[John Abularrage, Co - CEO at BGC Group]

This growth was primarily driven by record electronic volumes across rates and foreign exchange. Fenics Growth Platforms grew by 23.7% to $27,100,000. This growth was primarily driven by FMX, PortfolioMatch, and Lucera, partly offset by the sale of Capital Lab. Excluding Capital Lab, Fenics Growth Platform's revenues grew by approximately 30% year over year. FMX UST generated record average daily volume of over $60,000,000,000 in the first quarter, a 33 increase compared to last year.

[John Abularrage, Co - CEO at BGC Group]

This growth was driven by strong support from FMX's equity partners, which drove market share to approximately 33% for the first quarter, up from 3030% last quarter and 28% a year ago. Notably, FMX daily volume exceeded $100,000,000,000 for the first time on the 02/28/2025. FMX FX more than doubled its ADV to a record $14,500,000,000 in the first quarter, driven by deepening support from FMX's equity partners as well as onboarding new participants onto the platform. FMX futures exchange continued to make progress connecting new large FCMs while preparing for the launch of US treasury futures, which following extreme volatility in April is scheduled for this month. As FMX continues to integrate more FCMs, ADV and open interest on the exchange are expected to meaningfully accelerate.

[John Abularrage, Co - CEO at BGC Group]

In periods of high volatility, liquidity typically migrates to established trading platforms and the exchanges with the deepest liquidity pools. Our successful work over the past few years to develop FMX UST into a leading treasury platform enabled us to achieve and seamlessly process record volumes during the recent periods of extreme volatility. During the April, FMXUST set consecutive daily records, including record daily volume of more than $142,000,000,000 on April 2025. Portfolio match ADV doubled due to strong growth across both US and European credit volumes. Portfolio match continues to capture market share in this rapidly growing segment of the credit market.

[John Abularrage, Co - CEO at BGC Group]

Lucera, Fenics network business providing critical real time trading infrastructure to the capital markets, increased its revenue by more than 15% and grew its client pipeline for sustained future growth. Lucera plans to launch new foreign exchange and rates products throughout 02/2025, which are expected to drive new growth opportunities. I would now like to turn the call over to Jason.

[Jason Hauf, Chief Financial Officer at BGC Group]

Thank you, John, and hello, everyone. BGC generated first quarter revenue of $664,200,000, reflecting growth across all of our geographies. Americas revenues increased by 23.3%. Europe, Middle East, and Africa revenues increased by 12.2%, and Asia Pacific revenues increased by 2.4%. Turning to expenses.

[Jason Hauf, Chief Financial Officer at BGC Group]

Compensation and employee benefits under both GAAP and for adjusted earnings increased by 17.5% versus the February due to higher commission revenues during the period. Noncompensation expenses under GAAP and adjusted earnings increased by 5.26.6% respectively. Moving turns. Our pretax adjusted earnings grew by 18.4% to $160,200,000. Post tax adjusted earnings increased by 16.1% to $143,000,000, and post tax adjusted earnings per share improved by 16% to $0.29 per share.

[Jason Hauf, Chief Financial Officer at BGC Group]

Adjusted EBITDA decreased by 4.1% to $199,800,000 due to a $36,600,000 mark to market gain in the prior period related to a firm investment. Excluding this gain from the prior period, adjusted EBITDA would have increased by 16.3%. Turning to share count. BGC's fully diluted weighted average share count for the adjusted earnings was 501,500,000.0 shares during the period, a 1.2 increase compared to the February and a 1.3% increase compared to a year ago. As a reminder, we repurchased the fewest amount of shares in the first quarter due to seasonal capital requirements.

[Jason Hauf, Chief Financial Officer at BGC Group]

In addition, we acquired OTC Global Holdings on 04/01/2025. We have significant runway under our share repurchase authorization and buybacks continue to be an integral part of our capital allocation policy. We expect our share repurchases to increase throughout the remainder of the year. As of March 31, our liquidity was $1,146,100,000 compared to $897,800,000 as of year end 2024. With that, I'd like to turn the call back to Sean to go over our second quarter outlook.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Thank you, Jason. I'm pleased to provide the following guidance for the second quarter of twenty twenty five. We expect to generate total revenues of between $715,000,000 and $765,000,000 as compared to $550,800,000 in the second quarter of twenty twenty four, which at the midpoint of our guidance would represent approximately 34% revenue growth. Excluding OTC, we expect second quarter revenues to grow between 1017%. We anticipate pretax adjusted earnings to be in the range of $156,000,000 to $171,000,000 versus $125,800,000 last year, which at the midpoint of guidance would represent 30% earnings growth, and we expect our adjusted earnings tax rate to be between 1012% for the full year 2,025.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

And operator, with that, we'd like to open the call for questions.

[Operator]

Thank you. We will now be conducting the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two to remove yourself from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And the first question comes from the line of Patrick Molley with Piper Sandler. Please proceed with your

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

So I wanted to just start off talking about the FMX launch. It's been slightly delayed here. You're still planning to launch this month, though. So I was hoping you could just maybe elaborate on what's driven the delay so far. Is this entirely due to the environment and just not wanting to launch into some of the extreme volatility that we've seen?

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Are there any other technological or specific onboarding issues that have contributed to the delay? And then as a second part to that, there was an article that came out yesterday citing a source from inside the LCH that said that they were maybe dealing with some settlement or delivery issues on their end. So the extent that you're willing to address that, is there any validity to those reports? Thanks.

[JP Aubin, Co - CEO at BGC Group]

Hello, Patrick. JP here. So you're correct. The extreme volatility in April, created an environment not ideal for a successful launch. But the good news is, we're launching this month in May.

[JP Aubin, Co - CEO at BGC Group]

So to come back to the article, we are aware of this article and while we don't comment on rumors, we can say that we spoke to our with our clearing partner LCH. And by the way, we spoke to them every day. So we spoke to LCH as recently as last evening following the release of his article. And guess what? They are ready.

[JP Aubin, Co - CEO at BGC Group]

LCH is ready. We are ready, and we will be launching in this month, period.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Okay. Thanks for that. And then as follow-up, one more. You closed OTC Global Holdings about a month ago. You've had a little while now to look under the hood.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

So I was hoping to get your updated expectations on how accretive this acquisition could be, what the revenue upside looks like in terms of cross sells between the two customer bases? And then on the margins, it seemed like the second quarter margins were maybe a little bit softer than we were expecting. So any color you can give on kind of how you're expecting margins to trend from here would be great. Thanks.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Yes. Sure. Thanks. I mean, it's good, right? You know, we've had we've had a total of, I think, thirty seven days of, of owning OTC.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

So but rest assured, as you know, as Patrick, we're we're hard at work with the with the integration, and, we're we're very happy with with the, what we've seen so far. I mean, look. In the implied guidance, we separated guidance out for you. So you saw at the sort of midpoint of guidance, we expect a hundred and 15,000,000, which, as you would guess, shows decent growth growth from the 400,000,000 that, we initially expected. Look.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

In terms of and in terms of, the the margin itself, I think we we'd said on the previous call that BGC as a group has margins in excess of pretax margins in excess of 20%. Whereas when you're buying a larger company like, like OTC, you know, that has, smaller margins, to start with. And as you can see, you you can work out the implied margin from our guidance. That's why we did that work for you. But that's immediately.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

You know, we've done huge amounts of small transactions, and and then we get the economies of scale. We're also very experienced at the larger transactions such as GFI. And what will what I would expect is, as I said before, whilst we don't think the OTC business will get up to the BGC margins in the short term, you'll you will definitely see a growth in those margins by the end of year one, beginning of year two. Maybe maybe maybe, John, you wanted to add something in terms of the the business itself and the and the synergy.

[John Abularrage, Co - CEO at BGC Group]

Yeah. Hey, Patrick. Just, you know, what I would say is what I think we said last time, you know, we've we've spent a lot of time and effort mapping, both front office, back office. And, you know, the best example I can give you in terms of what synergies look like from the product side is it seems counterintuitive to, you know, broker an underlying product and ship an underlying product and not have those two connected. And so that work has already begun.

[John Abularrage, Co - CEO at BGC Group]

You know, the the people inside OTC are fantastic. Everything we've seen is as good or better than we expected, and, you know, we expect to generate serious shareholder value, you know, in both the short term and long term.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Okay. Great. That's it for me. Thanks, guys.

[Operator]

And the next question comes from the line of Eli Aboud with Bank of America. Please proceed with your question.

[Eli Abboud, Equity Research Analyst at Bank of America]

Good morning, everyone. Thanks for taking the question. After treasury futures, what are the next key milestones or product launches that investors should be on the lookout for? When should we expect longer tenure treasury futures and options on futures to go live?

[JP Aubin, Co - CEO at BGC Group]

Hey, Halai. JP here. Look. As you know, our year one is about connectivity. We in year one.

[JP Aubin, Co - CEO at BGC Group]

Right? And, as I mentioned previously, we are launching this month in May our USD futures. Our bank partners, equity partners are the main users of USD futures. It's great news. We do expect their respective trading desk to become highly active on our exchange, which we drive volumes up.

[JP Aubin, Co - CEO at BGC Group]

It's our target today. Obviously, you know that you know our plan, right? As a reminder, year one connectivity, Year two, deepening client connectivity and increasing volumes and open interest. And year three, full competition with CME. We stick to our plan.

[JP Aubin, Co - CEO at BGC Group]

It's a three year plan. We are one. And for the time being, we match it's matching our expectations.

[Eli Abboud, Equity Research Analyst at Bank of America]

Got it. And based on the noncontrolling interest deduction, it looks like FMX still hasn't reached profitability. Can you help us quantify the cash burn related to FMX futures? And once the futures exchange starts to breakeven, what do you think the normalized profit margins of FMX should look like?

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

So so, obviously, we we don't break out FMX, independently. However however, to to be clear, the cash burn to, BGC is zero. So, as, you know, part of the, part of the deal with our with FFX's partners, we contributed, the business, and and they they are funding, if you like, the, the future development of futures. How about that? So the cash burn to BGC is is zero.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

And then in terms of in terms of profitability and and where the margin will get to, I think I think in the, in the short term, we get certainly get to breakeven and slightly beyond. And in terms of, the medium medium to long term, I think it's commensurate with with other exchanges, yeah, which is, which is around the 40% to 50% level.

[Eli Abboud, Equity Research Analyst at Bank of America]

Got it. And then just the last one for me. Do we have any additional clarity yet on the outcome for Howard shares? My math's right. I think we're getting close to the ninety day mark for for divestment.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Okay. I think I think all as probably as you'd expect, Eli, all we can we can say is that, you know, Howard will comply with all the Senate Ethics Committee standards, including his, you know, divesting his holdings. You know, the the public SEC filings will be required when he does so. And as as we previously stated, we don't expect any sales in the open market, and we expect no changes equally to the corporate structure. And, on your point of math is, I I would agree with you ninety days is fast approaching.

[Eli Abboud, Equity Research Analyst at Bank of America]

Got it. Thanks, everyone.

[Operator]

And the next question is a follow-up from Patrick Molley with Piper Sandler. Please proceed with your question.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Yes. Thanks for taking the follow-up. So I just have two modeling The first is on the tax rate. It came in at 11.9%.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

By my calculation, this quarter was the highest it's been in a little while. So any color you can give on tax rate expectations going forward? And then secondly, on the acquisition of OTC Global Holdings, what should we assume in terms of the cash outlay this quarter for that acquisition?

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Sure.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

So, yeah, look, the the reason we added, as as we have done, before in my prepared remarks, I I suggested that the tax rate our expected tax rate is between 1012% for for for 02/2025. In terms of in terms of, you know, cash outlay for for OTC, it was, 325,000,000. So, as as, you know, it's now sort of fully fully disclosed. So that was, that was paid on, on a on April.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Alright. Thank you.

[Operator]

And ladies and gentlemen, there are no further questions at this time. I would like to turn the floor back over to Mr. Windiatt for closing remarks.

[Sean Windeatt, Co-CEO & Chief Operating Officer at BGC Group]

Well, thanks, everybody. Thanks for joining us today on our earnings call. And I just wish you all a great day and look forward to updating you again very soon. Thanks very much.

[Operator]

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Participants

Executives

• Jason Chryssicas, Head of Investor Relations
• Sean Windeatt, Co-CEO & Chief Operating Officer
• John Abularrage, Co - CEO
• Jason Hauf, Chief Financial Officer
• JP Aubin, Co - CEO

Analysts

• Patrick Moley, Sr. Research Analyst at Piper Sandler Companies
• Eli Abboud, Equity Research Analyst at Bank of America