Press release·03/02/2025 23:43:00

Overview

StoneX Group Inc. operates a global financial services network that connects companies, organizations, traders and investors to the global market ecosystem. The company has a unique blend of digital platforms, end-to-end clearing and execution services, high touch service and deep expertise. StoneX strives to be the trusted partner to its clients, providing its network, products and services to allow them to pursue trading opportunities, manage market risks, make investments and improve business performance.

The company reports three operating segments based on the nature of the clients served (commercial, institutional, and self-directed/retail), as well as a payments business segment. StoneX achieved record net operating revenues and net income in the first quarter of fiscal 2025, driven by continued growth in client engagement and transaction volumes across its product offerings.

Financial Performance

In the first quarter of fiscal 2025, StoneX’s total revenues increased 43% to $27.9 billion, while operating revenues grew 20% to $944.3 million compared to the prior year period. This strong performance was led by the Institutional segment, which saw a 24% increase in operating revenues, as well as the Commercial and Self-Directed/Retail segments, which grew 17% and 34% respectively.

The Payments segment was the only one to see a decline in operating revenues, down 4%, primarily due to a 17% drop in the rate per million (RPM) traded, partially offset by a 12% increase in average daily volume (ADV).

Net operating revenues, which exclude transaction-based clearing expenses, introducing broker commissions and interest expense, increased 17% to $492.1 million. This growth was driven by higher revenues across most product categories, including a 32% increase in FX/CFD contracts, 27% increase in securities, and 80% increase in physical contracts.

Interest and fee income earned on client balances also increased 9%, reflecting higher average client equity and money market/FDIC sweep client balances.

On the expense side, variable expenses, which include variable compensation, transaction-based clearing expenses and introducing broker commissions, were 52% of total expenses, down from 54% in the prior year period. Non-variable expenses, excluding bad debts, increased 17% primarily due to higher fixed compensation and benefits, occupancy and equipment rental, depreciation and amortization, professional fees, and non-trading technology and support.

Income before tax increased 22% to $116.9 million, while net income grew 23% to $85.1 million. Diluted earnings per share was $2.54 compared to $2.13 in the prior year period.

Segment Performance

Commercial Segment The Commercial segment saw a 17% increase in operating revenues to $232.3 million, driven by a 78% increase in physical contracts revenues, partially offset by an 18% decline in OTC derivatives revenues. Net operating revenues grew 16% to $189.2 million. Segment income increased 17% to $102.2 million.

Institutional Segment The Institutional segment’s operating revenues grew 24% to $539.6 million, led by a 27% increase in securities revenues. Net operating revenues were up 17% to $174.0 million. Segment income increased 20% to $78.1 million.

Self-Directed/Retail Segment The Self-Directed/Retail segment’s operating revenues increased 34% to $124.1 million, with a 34% rise in FX/CFD contracts revenues and a 25% increase in securities revenues. Net operating revenues were up 41% to $94.6 million. Segment income nearly doubled to $56.9 million.

Payments Segment The Payments segment’s operating revenues declined 4% to $58.1 million, primarily due to a 17% drop in RPM, partially offset by a 12% increase in ADV. Net operating revenues decreased 5% to $55.4 million. Segment income was down 3% to $34.1 million.

Strengths and Weaknesses

StoneX’s key strengths include:

• Diversified business model across commercial, institutional, self-directed/retail and payments segments
• Strong growth in client engagement and transaction volumes
• Ability to maintain a variable cost structure, with variable expenses at 52% of total
• Increasing interest and fee income from higher client balances
• Successful integration of acquisitions and expansion of product offerings and geographic reach

Potential weaknesses and risks include:

• Exposure to counterparty credit and liquidity risks from clients and trading partners
• Reliance on regulatory capital requirements and compliance across multiple jurisdictions
• Potential impact of inflation on expenses that may not be readily recoverable
• Competition from larger banking institutions and other financial services providers

Outlook and Conclusion

StoneX’s strong first quarter results demonstrate the company’s ability to capitalize on growth opportunities across its diversified business lines. The continued expansion of client activity, transaction volumes and new product offerings position the company well for continued success.

However, StoneX will need to remain vigilant in managing counterparty risks, regulatory compliance, and inflationary pressures that could impact profitability. Ongoing investments in technology, talent and geographic expansion will also be critical to maintaining the company’s competitive edge.

Overall, StoneX appears to be executing well on its strategy of being the trusted partner to its global client base. The company’s solid financial performance, diversified business model and growth initiatives suggest a positive outlook for the future.