Marex Group plc Ordinary Shares Q1 Earnings Call Highlights

Key Points

• Record quarter despite a client default: Revenue rose 48% to $692M and adjusted profit before tax climbed 59% to $153M (basic EPS $1.52, ROE 34.4%), even after a January natural‑gas client default that produced a $34M loss within Clearing but did not materially impair overall profitability.
• Broad-based segment growth and strong balance sheet: Agency & Execution, Market Making and Solutions all posted large gains (e.g., Market Making revenue +164% to $140M), average Clearing client balances rose to $16B, regulatory capital stood at $1B (253% of requirement) with ~$1.4B liquidity headroom, and management highlighted a ~$40M capital benefit from selling Winterflood’s custody business plus a raised quarterly dividend of $0.16.

Marex Group plc Ordinary Shares NASDAQ: MRX reported record first-quarter 2026 results, with management citing a combination of elevated market volatility, high exchange volumes and what it described as continued structural growth across its franchise.

Record quarter despite client default

Group CEO Ian Lowitt said Q1 2026 was “a record quarter” that was “materially above” the prior record in Q4 2025 and “somewhat above the top end” of the profit range the company provided at its March 26 Investor Day. Lowitt characterized the period as one of “high exchange volumes and extremely elevated volatility,” which supported activity across Marex’s businesses.

For the quarter, Lowitt said revenue rose 48% to $692 million and adjusted profit before tax increased 59% to $153 million. Basic EPS grew 55% to $1.52, with trailing 12-month EPS of $4.66. He added that return on equity was 34.4%, up 570 basis points, and adjusted profit-before-tax margin was 22%.

CFO Rob Irvin noted expenses increased 44%, reflecting higher revenues, growth investments, and the impact of acquisitions completed since Q1 2025. He reiterated that the cost base remains “highly flexible,” with about 55% of expenses variable and linked to performance.

Management also addressed a natural gas client default that occurred in January. Irvin said the event resulted in a $34 million total loss within Clearing, consisting of approximately $28 million of trading losses (driving trading revenue to negative $18 million) and about $6 million of credit loss provision. Despite the loss, Clearing adjusted profit before tax rose 2% to $58 million, supported by underlying business growth. Lowitt said other credit situations involving “illiquid but not insolvent” clients during the volatile period have since been resolved and that, aside from the January loss, Marex saw no further material credit issues.

Segment performance broad-based

Lowitt and Irvin both emphasized that performance was broad-based, with contributions from all business lines. Irvin outlined results by segment:

• Clearing: Revenue increased 15% to $137 million. Net commission income rose 30% to $88 million, reflecting heightened activity and a broadened regional product offering. Average Clearing client balances rose to $16 billion from $12 billion a year earlier and $14 billion in Q4, driving net interest income within the segment to $68 million despite a 70 basis point year-over-year decline in average Fed funds rates.
• Agency and Execution: Revenue increased 35% to $322 million. Securities revenues grew 42% to $214 million, which Irvin attributed to equities market share gains, higher activity in rates, and continued FX momentum after integrating Hamilton Court. Energy revenue rose 20% to $106 million, which he said benefited from U.S. weather-related disruption in January and heightened volatility following the conflict in the Middle East in March. Adjusted profit before tax increased 61% to $91 million and margin expanded to 28%.
• Market Making: Revenue grew 164% to $140 million, driven by particularly strong results in metals and energy. Metals revenue more than doubled to $65 million, while energy revenue increased more than three times to $32 million. Securities revenue rose 127% to $33 million, reflecting the inclusion of Winterflood after its December completion. Adjusted profit before tax increased to $56 million, with margin expanding to 40%.
• Solutions: Revenue more than doubled to $93 million. Hedging solutions revenue increased to $36 million, and financial products revenue rose to $58 million, supported by structured products issuance and the rollout of a new technology platform last year. Adjusted profit before tax nearly tripled to $33 million, with margin improving to 35%.

Balances, funding and risk metrics

Lowitt highlighted Clearing client balance growth as a “clear” indication of structural franchise expansion. He said average Clearing client balances increased to $16 billion in Q1 from $14 billion in Q4, driven by higher exchange margin requirements, new larger clients, and increased balances from some larger trading clients. He said Marex was already ahead of its annual target for net new balances, though he expects growth to continue at a moderating pace.

At the group level, Irvin said net interest income was $41 million, down from $53 million in Q1 2025, as higher interest expense more than offset higher interest income. He attributed the higher interest expense to the company’s $500 million senior debt issuance in May 2025 and structured note issuance in Solutions. Irvin also said the company is maintaining significant liquidity headroom—about $1.4 billion—which he described as a deliberate “insurance cost” that strengthens the balance sheet.

Irvin said total assets ended March at $36.5 billion, driven by growth in Clearing balances. Regulatory capital was $1 billion against a requirement of $403 million, representing a capital ratio of 253%. Total corporate funding increased to $6.7 billion from $6.2 billion at year-end 2025.

On risk, Irvin said average daily value-at-risk increased to $5 million in Q1, reflecting commodities volatility, but noted the market-making profile included “only six negative trading days.” He also stated there were no realized credit losses in the quarter.

Acquisitions, Winterflood update and corporate actions

Lowitt said Winterflood was included for a full quarter within Market Making for the first time in Q1 and “started strongly” ahead of expectations, with an opportunity for margin expansion as it scales. He added that regulatory approval has been received for the sale of Winterflood’s custody business and that closing is expected in Q2, generating about a $40 million capital benefit that will increase reported earnings in Q2 and provide equity to deploy for growth.

On the call, Lowitt said the integration of Hamilton Court has gone well, describing it as performing “very strongly” and adding new clients. He later told analysts the business “may actually operate at a level which is almost double what it was prior to acquisition,” citing benefits from being on the Marex platform, including hedging and liquidity advantages.

Lowitt also said Marex completed a $500 million senior unsecured debt issuance that priced 50 basis points tighter than its previous deal and was “highly oversubscribed,” which he said diversifies funding and reinforces balance sheet strength.

Separately, Lowitt said the company is progressing toward a proposed redomiciling to Bermuda, expected in the second half of 2026, subject to shareholder approval at the May 21 AGM and regulatory approvals. He said the redomiciling would not change the operating model and was not driven by tax or capital benefits, though he expects “relatively modest” operational efficiencies from reducing complexity associated with being U.K.-incorporated and U.S.-listed.

Lowitt also discussed seeking shareholder authorization for share buybacks, saying the company wants the ability to repurchase shares if deemed sensible by the board, while maintaining its existing capital allocation priorities of supporting an investment-grade rating, paying a dividend, and using excess capital for acquisitions.

April trading update and dividend increase

Lowitt said April continued Q1’s momentum and was tracking above last year’s April, though below March’s exceptional levels. He quantified monthly performance by saying April is running above February’s $38 million level but below March’s $78 million. In response to analyst questions, Lowitt said that if the company maintained April’s level through the rest of the quarter, results would be “in and around” Q1’s aggregate performance.

During the Q&A, Lowitt described softer conditions in parts of energy trading, with less activity from pure traders and some market makers, while hedging activity from physical market participants remained strong. He said spreads have remained wider, helping offset lower volumes.

As a signal of confidence, Lowitt said Marex’s board approved an increased quarterly dividend of $0.16 per share, with Irvin stating it will be paid on June 3.

About Marex Group plc Ordinary Shares NASDAQ: MRX

Marex Group PLC is a financial services platform, providing liquidity, market access, and infrastructure services to clients in the energy, commodities, and financial markets. The Group's operating segments are: Clearing, Agency and Execution, Market Making, Hedging and Investment Solutions, and Corporate. Maximum revenue is generated from the Agency and Execution segment, which offers liquidity and execution services to clients mainly in the energy and financial securities markets by connecting buyers and sellers in the energy markets, offering liquidity and risk management solutions for financial markets, and providing clearing, custody, capital introduction, portfolio financing, and outsourced trading services.

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