Good day, and thank you for standing by. Welcome to the StoneX Group's Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Dunaway, Chief Financial Officer. Please go ahead.

Good morning, and welcome to our earnings conference call for the quarter ended March 31, 2025, our second fiscal quarter. After the market closed yesterday, we issued a press release reporting our results for the quarter. This release as well as a slide presentation, which we will refer to on this call, are available on our website at www.stonex.com. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we're required to advise you and all participants should note that the following discussion should be considered in conjunction with the most recent financial statements and notes thereto included in the Form 10-Q filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These forward looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company's actual results will not differ materially from any results expressed or implied by the company's forward looking statements. The company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward looking statements are not guarantees of future performance. I'll be starting with slide number four in the slide deck. So first, I'd like to highlight that during the quarter, our Board of Directors approved a three for-two stock split of our common shares. Trading on the stock split adjusted basis began on…

Thanks, Bill. Well, the big news of the quarter was our announcement of the planned acquisition of R.J. O'Brien. We covered a lot of the background of this transaction in a separate call when we announced the transaction, but perhaps it's worth a quick overview now as well. We believe that this is a transformational transaction and our largest ever that positions StoneX as a market leader in global derivatives and reinforces our position as an integral part of the global financial market infrastructure. With institutional grade global market access, end to end clearing and execution capabilities, high touch service and deep expertise, this acquisition enhances our entire franchise. It supports our goal of becoming the counterparty of choice for clients across asset classes, embedding our integrating offering into long term trusted relationships. R.J. O'Brien has been a leading FCM in the industry with a stellar reputation and a culture matching our own. And while we are active in the same derivative markets, we have a limited amount of customer overlap. RJO segments its business into commercial, introducing brokers, institutional and retail segments. The commercial segment consists of large commodity clients similar in nature to those in our own commodity segments and accounts for approximately 11% of RJO revenues. Additionally, many of RJO's introducing brokers serve as smaller commodity producers, which we at StoneX do not typically cover with our high touch approach. However, we believe that StoneX has the best in class toolkit to service these clients, including our extensive OTC and structured product capabilities as well as our physical logistics servicing capabilities allowing us to provide additional value added services such as embedding price protection into physical contracts to avoid hedge accounting complexities, assisting in moving goods on railcars or ships and running managed price protection programs secured…

Thank you, Sean. Like last quarter, when we provided a deep dive into StoneX Payments, this quarter we felt it topical and relevant to highlight StoneX Metals. For this discussion, I'd like to point you to slide number 13 in our deck. StoneX Metals is a truly global franchise powered by a diverse team of over 80 professionals operating from Hong Kong to Los Angeles with key hubs in Singapore, GIFT cities in India, Dubai, Hamburg, London, Charlotte, and New York. We provide an end to end offering across physical and financial metal markets, including trading, storage, logistics, and hedging capabilities, serving a global customer base of over 1,000 commercial and financial entities as well as over 127,000 retail clients. Our business is rooted firmly at the center of the global metals ecosystem. StoneX is uniquely positioned as the only non-bank participant in setting the gold, silver, platinum, and palladium daily price benchmarks. StoneX is also the only firm globally to hold these memberships in addition to being a category one ring dealing member of the global base metals benchmark setting venue, the London Metal Exchange or LME. Over the past five years, net operating revenues for StoneX Metals have increased by over 40%, now consistently exceeding $200 million annually. We continue to build on this momentum with strategic investments such as the acquisition of JBR Recovery Limited and LBMA Good Delivery silver recycler, LBMA being the London Bullion Metal Association -- Market Association. My apologies. And as Sean mentioned, the launch of a CME approved precious metals vault in New York and one of the first entities to establish a GIFT city presence providing access into the Indian Subcontinent. These developments strengthen our capabilities across refining, storage, and distribution, aligning with our mission to create a fully integrated global…

Thanks, Philip. Let's move to the final slide number 16 in the deck. This was another strong quarter for us in what has been a long series of quarters where we have exhibited growth off the back of our broad based strength across most of our products and segments. We achieved earnings of $71.7 million and diluted EPS of $1.41 up 35% and 25% respectively. Our business has shown its resiliency by producing these growing results in markets where volatility is generally being muted, albeit in a rising It seems to us that there's a period of higher volatility ahead, while interest rates have stabilized, which bodes well for the continued growth in our business. The addition of RJO will be significantly accretive to our earnings and our franchise generally and we believe the acquisition will further accelerate our current growth trajectory. As I mentioned earlier, there's been quite a transformation in the last five years since we acquired GAIN Capital. Since December 2019, we've grown our stock equity over threefold and following the acquisition of R.J. O'Brien on a pro forma basis including synergies, the combined entities will have around $750 million in EBITDA, up nearly 6 times without as yet factoring in any revenue synergies. We are now even better positioned to capitalize on the ongoing industry transformation driven by regulatory change and market consolidation to become the counterparty of choice for clients of all types looking for access to the global financial markets. These shifts will continue to create significant opportunities for StoneX to expand its market share and provide a substantial runway for growth. Our ecosystem underpinned by broad capabilities and diverse offerings enables us to deliver innovative solutions that will provide clients with access to markets, expand their market reach and create long term value. The one thing will always be constant for the StoneX team and that is to dedicate ourselves to better serve our growing client footprint around the world by providing them with the best financial ecosystem and the best client service to access the global financial markets. Operator, with that, let's open for questions, if there are any.

Thank you. At this time, we will conduct the question and answer session. [Operator Instructions] Our first question comes from Dan Fannon with Jefferies. Please go ahead.

Thanks. Good morning. Just wanted to touch base on just the environment. Obviously, a ton of volatility in the quarter and subsequently in April. The metrics you put out were obviously look strong, but just curious about the health of the markets and how things behaved in the quarter. And as you think about prospectively, do you I mean, obviously not be able to predict volumes, but do you think a return to normal or you is reasonable in terms of just kind of the near term kind of outlook?

Well, good morning, Dan. First of all, as I said in my remarks, we obviously, if you're looking back over a slightly longer period, say, the last 12 to 18 months. I think we generally saw volatility decline and sort of interest rate environment getting better for us. So those were the two sort of macro factors. I think we've now seen interest rates sort of stabilize. I think originally we thought they might move down a little bit faster. They haven't done that. But I think what we've also noticed is the volatility has dramatically increased, right, certainly over the last couple of months with tariffs and so on. This is my personal view. I don't have a crystal ball for the future, but I would anticipate that volatility will be higher in the next 12 months than it was in the last 12 months. I think the sort of chaos around tariffs, the reformatting of trade globally, the sort of high debt levels that we're seeing, uncertainty around supply chains and inflation. I think these are all things that will lead to volatility, maybe sporadic bouts of volatility, but I would say on average volatility being higher. So we feel good about the environment. I mean, we obviously thrive in volatility. I think what we volatility. I think what we don't want to see is massive dislocation. I think that's not good for us or for the market. And we certainly don't want to see extreme volatility. Because extreme volatility tends to sort of hurt clients. So you get a lot of, I guess, revenue while it's happening and then you sort of -- that revenue is sort of front ended and then sort of clients end up not doing much afterwards. So we don't want to see that environment. I think there were sort of a little bit of that around the gold market as Philip alluded to. I mean, that was sort of a dislocation, which, you know, for us was great because we had all the capabilities to take advantage of that situation. But I wouldn't want to see too much of that happening. So, my hope is that doesn't happen. And my prediction, if I had to make one, is that we'll see slightly higher volatility going forward, which I would say would be a net positive for us. I don't know if that adequately answers the question, Dan.

No, it's helpful. Obviously, no one has a crystal ball, but that is helpful. Question just on the payments business. You guys gave us additional detail last quarter, just in terms of how that's different in the market. But as you look at just kind of the results, the last four quarters, we've seen down year over year growth. As you think about the business today and the prospects for it going forward, what do you think gets or what are the catalysts to start to return to that more growth in that segment?

Okay. Sure if Philip wants to jump in here. So let me go first and then I'll let him fill in. I would say again looking over a slightly longer period, so the last sort of 24 months I would say and I think I mentioned this previously. I think we became a little bit challenged on the capacity side with our technology. I mean our business has obviously ramped significantly over the sort of prior 10 or 15 years. What we do is not easy. I mean, we are linking to 180 markets and correspondent banks in all those markets, some of which aren't on the leading edge of technology. So we built our technology and then I think we realized that we had sort of hit a plateau and we had to do a technology rebuild, which meant we had to back away a little bit from certain markets and certain high volume transactions with our business partners, which one hates to do. So we built our own in house system. It's called XPay. That's been about two years in the works. That was sort of the master plan to really significantly upgrade our tech stack there and provide us with significantly greater capacity as well as much higher STP rates. And pleased to say that is now operational. It was delivered in January. It's sort of working flawlessly. There are a couple more modules to add on to that, but it's allowed us to sort of open the taps a little bit. So I think what you'll see and what you notice in this quarter is volumes were up pretty nicely, and that's probably the first time in a while we've been able to let our volumes go up. I think don't have the number right in…

Well, I think you've covered pretty much everything there, Sean. But, just as illustrative, purposes, the capacity issue which forced us previously to have to turn away business because we had a lot of banks wanting to provide us access to their low value, high volume payments and which they struggle with. And because of capacity issues from our own systems, we were unable to take all this business on. So you can imagine the relief and the excitement from the team in rolling out our own XPay to give them that additional capacity in tenfold capacity. Where we were able to go back to these banks and say, okay. Thank you for being patient. Thank you for waiting for us. And, we are we're very happy to provide the service to you. And to give an example, this is literally this week, we had some 2,500 payments to Vietnam, which ordinarily would have been a struggle for us to do it over a period of a month. We did it in one morning out of our Singapore office. So very straightforward, very easy, and illustrating the increased -- the ability to service those clients. We should have been waiting patiently for us to build out the technology to do so. And as Sean said, we still look at the volumes, the volumes going throughout our channels as early indicator and being able to take advantage of the widening of spreads where appropriate and where they appear, which I think is pretty much what we covered in the last deep dive to highlight what we're building, why we're building it, and what will be the benefits of the build out.

Did that answer your question, Dan?

Yes, it does. And then just my last question is just on the retail segment. Fee per million came in much lower than we've seen over the last previous several quarters. And I guess I'm just a bit surprised just given the environment volatility, I thought spreads might have been a little bit wider and that might have been still a good constructive environment. So can you talk just a bit about the mix and kind of what happened or what was kind of driving that in the quarter?

Bill, I don't know if you want to jump in, but again let me give some initial comments. Firstly, and I think I said this previously, our revenue capture, was kind of off the charts previously, sort of way above where we expected it to be. And obviously, great when that happens, but very hard to sustain that level of revenue capture. So I think we're trending down to a more normalized level. So, yes, it's a decline from where we were. But I think we were sort of at unusually high levels in in the last two quarters, certainly. So I think this is the sort of level we probably anticipate, and I think there was a little bit of product mix which drove that as well. Bill?

Yeah. I mean, just to chime in there, I think at the beginning of the quarter, Dan, it was kind of a tough environment, a lot of banded trading and just generally directional markets that kind of limited. And as Sean touched on, there was also just kind of some product mix, if a lot of them flow was in very these indices that had pretty tight spreads. I think towards the end of the quarter that picked up and started to improve. So I think towards the end of the quarter, it was much stronger, obviously, as you would think from the standpoint of the volatility that was creeping in. But early in Jan, it was more of a difficult environment.

Great. Thank you.

You're welcome.

Any other questions?

Yes. Our next question comes from Jeff Schmitt with William Blair. Please go ahead.

Hi. Good morning, everyone. Could you talk about your risk --

How are you?

I'm good. I'm good. Could you talk about your risk management policies in general and just how you're able to avoid large losses during this higher volatility?

Well, that could be a really long conversation, so let me try making a making a short one. So, obviously, when volatility goes up, the potential for risk or risk manifests itself. Right? And these are times where we get a good sort of test of our systems. And, the first thing to say is I think we perform pretty flawlessly. Everything, sort of happened. Margin calls were made, and sort of almost hate to say this, but sort of unusually good. Right? I mean, you normally expect when you see this kind of volatility that you might have a few small problems here and there, but honestly didn't have any. So that was great. I would say generally with risk management is you can't stop changing your risk management or figuring out risk management when you're in the eye of the storm. Risk management is a culture. It's something that you've got to define upfront. You've got to create muscle memory around. You've got to have all the disciplines in all the time. So when the storm hits, you're sort of prepared and you're just executing your plan, right? When you start to try and make up things when the market hits you, it's too late, right? So I think we pride ourselves on making sure we instill those disciplines and get that muscle memory throughout the organization. So when we go through these times, everyone knows their assignments, everyone knows what to do and we sort of execute on plan. And I think that's pretty much what happened. And I would say generally speaking there's the fundamentals to risk management are to make sure that you are dealing with clients and the positions clients are running with you are appropriate to the size of organization you are and…

Okay. Great. And then just a question on if this administration were to loosen up banking regulations and capital requirements after the tariffs. Do you think it could cause some of your larger competitors to maybe get more competitive in some of your markets, or, could it change the kind of industry consolidation dynamics at all?

We've been asked this question a while. I think it might slow things down a little bit, but I don't think banks are going to reverse course on this. I think they've so reformatted their businesses. They're out of proprietary trading. The client's sort of execution side of the business has been dramatically sort of refocused onto large clients that do other business with the banks. I think that obviously welcome some relief, but I don't think they will reverse course is my personal opinion. You may find that they are less willing to sort of shed to --continue to shed more business and see less need to do that if they're not pushed by capital. So I don't think it's going to have an immediate impact that I can see. I think they are making so much money doing other things that they'll probably focus on those businesses that are meaningful for them and really sort of move the needle rather than sort of get into businesses like this, which probably, for them, aren't going to really move the needle that much. That would be my view.

Okay. That's helpful. And just last one on the RJO deal. I mean, any updates on revenue synergies, or do you sort of have to wait until that closes to get a better sense of that client list and the opportunities there?

Yeah. So, obviously, we are two competitors in a very competitive industry. And because of that, we have to stay sort of totally separate and aren't in a position to get sort of granular in terms of who the clients are and what we can do with those clients. So it's quite hard for us to put any definitive metrics around sort of the revenue in the way we can with say costs. And we'll only be able to really do that after closing. But having said that, we've had broad and sort of general discussions with the senior leadership at RJO and sort of demonstrated and shown them sort of what our capabilities are and what our toolkit is, which I think is much more broad than what they've had to date. And I think the general view is people are very excited over there. I think they should be. And I think we have a lot of products that are very applicable to their clients. And I think certainly the two of us as a combined force will be terrific. And I think we'll add a lot of additional revenue from their clients. It should be good for the brokers or the client relationship. People are going to make more money. We're going to make more money, and we're going to end up serving the clients better, which is the most important thing. So, no. So we I can't be definitive about it, but the basic work we've done and sort of looking at sort of how much money we generate out of similar clients to the RJO clients and comparing would lead us to believe that the revenue synergies are significantly larger potentially than the cost synergies on the bottom line. But it may take a while to realize, right? I mean, it could be sort of 12 to 18 months before we see those showing up. It takes a long time to educate the sales force and get the products into the clients. So it's a lot longer process potentially, but I think could be more significant.

Right. Okay. Thank you.

All right. Operator, is there anyone else?

I'm showing no further questions at this time. I'd like to turn it back to Sean O'Connor for closing remarks.

Alright. Well, thanks everyone for joining. We appreciate your time. As you can tell, it's been a pretty busy six months over here at StoneX and we're all very excited. And this could be the beginning of a really exciting new chapter with us and R. J. O'Brien as well as all the other acquisitions we've got. We certainly feel we've got a lot to do and a lot of opportunity, that we need to take hold of here. So very exciting, and, we look forward to reporting back. Thank you.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.