StoneX Group Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Financial Overview: First quarter net income was a record $139M, diluted EPS $2.50, 63% growth in net income. Operating revenues over $1.4B, up 52% y-o-y. Net operating revenues up 47% y-o-y, driven by listed derivatives, physical contracts, securities, and OTC derivatives.
• RJO Integration: Integration on track; U.K. entities consolidated, U.S. entities consolidation targeted by end of fiscal year. Cross-sell opportunities increasing due to scale and breadth of offerings.
• Global Hedging Business: Core to StoneX's history, represents ~60% of Commercial segment income. Offers deep market access, customized OTC products, market intelligence, and digital platforms. Expanding ecosystem, diversifying client base, and digitizing the business.

Segment Performance

• Commercial Segment: Net operating revenues increased 65%. Listed and OTC derivatives grew 56% and 72% respectively. Physical contracts up 75%, net interest and fee income up 50%. Segment income up 72% y-o-y; q-o-q, net operating revenues up 50% and segment income up 61%.
• Institutional Segment: Record net operating revenues and segment income, up 86% and 78% y-o-y. Driven by securities revenues, listed derivatives, and interest and fee income. Q-o-q, net operating revenues up 11% and segment income up 4%.
• Self-Directed Retail Segment: Net operating revenues down 34%, segment income down 67% due to 41% decline in rate per million in FX/CFD contracts, partially offset by 13% increase in average daily volumes. Q-o-q, net operating revenues up 25% and segment income up 26%.
• Payments Segment: Net operating revenues down 3% y-o-y, segment income down 1%. Average daily volume up 11% y-o-y, rate per million down 10%. Q-o-q, net operating revenues up 10% and segment income up 13%.

Guidance

• Management affirms progress on RJO integration and synergy realization, expecting $50M in cost synergies. Anticipate continued growth in institutional and global hedging, with normalized rates in areas like institutional sales and trading.

Risks

• Volatility in markets can stress clients and impact business. Integration process has risks, though on track. Forward-looking statements involve known and unknown risks detailed in SEC filings.

Question and Answer

Q: In the physical trading business, how much of the strength came from cross-selling RJO clients?

A: Limited upside from RJO client base, mainly driven by heightened interest in precious metals, including direct-to-consumer growth via StoneX Bullion.

Q: On cost synergies, are they on track?

A: Still confirming $50M, with milestones later in the year, including migration of largest entities over summer.

Q: Thoughts on the institutional segment's rate per million?

A: Rate per million is normalizing, with a more normalized range expected going forward, after a dip from entering new stocks.

Q: Health of customers post quarter?

A: Benefit from volatility but need to manage extreme volatility to ensure client liquidity, with close client engagement.

Q: Cross-sell opportunities with RJO?

A: Gradually introducing more products, with small wins, but not at a point to specify exact figures yet, focusing on education and capability expansion.

Q: Expenses normalization?

A: Expect a tick-up in nonvariable compensation due to annual merit increases, but synergy realization will help downtrend in nonvariable comp and other lines.

Q: FX/CFD rate per million?

A: Rate per million is normalized, with last year being an exceptional period, and current rates in a more typical range.

Q: Interest in specific currency pairs?

A: Varies, with euro-dollar and gold-silver pairs being significant, but market-driven, not specified as a singular focus.