Hello, and thank you for standing by. Welcome to StoneX Group, Inc. First Quarter Fiscal Year '26 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Bill Dunaway. Sir, you may begin.

Good morning, and welcome to our earnings conference call for our quarter ended December 31, 2025, our first quarter of fiscal 2026. After the market closed yesterday, we issued a press release reporting our results for the quarter, and this press release is available on our website at www.stonex.com as well as a slide presentation, which we will refer to on during this call. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we are 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 as well as 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 a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to Philip Smith, the company's Chief Executive Officer, for a brief introduction.

Thank you, Bill. Good morning, everyone, and thank you for joining our first quarter earnings call for fiscal 2026. I'm very pleased to report a very strong start to our fiscal year, reporting record net operating revenues, net income and EPS, which showcases the power and the scale of the ecosystem we have built at StoneX and of which we are incredibly proud of. We play a vital role in the global financial and physical markets by serving a wide and diverse range of clients. Our platform enables clients to access multiple markets, giving them the flexibility and choice they need to pursue opportunities and/or mitigate risk wherever they arise. This broad market access positions us with several avenues for growth as demonstrated by our performance this quarter. When conditions shift from one market to another, we have the breadth of products and services to support our clients' needs wherever they arise. This diversification is a core strength of our business model. Bill will go into more detail around our financials, but I would like to highlight a few areas that helped drive our record results. Record listed derivatives volumes and average client equity, significantly enhanced by the acquisition of R.J. O'Brien. Record commercial performance driven by an exceptional performance in global metals and in particular, in our precious metals business, which generated $75 million in segment income this quarter, which is $24 million more than it did in the entire financial year '25. This was an exceptional quarter, whereby our global footprint, the depth of our product vertical and our logistics expertise in being able to move physical metal globally in order to take full advantage of locational discounts and premiums being second to only the largest two global bullion banks allowed StoneX to record its best revenue quarter…

Thank you, Philip. I will begin with a financial overview for the quarter, and we'll be starting on Slide #4 in the slide deck. First quarter net income came in at a record $139 million with diluted earnings per share of $2.50. This represented 63% growth in net income. However, earnings per share grew at a 48% rate due to the additional shares outstanding as compared to the prior year, primarily related to the issuance of approximately 3.1 million shares for the acquisition of R.J. O'Brien during the immediately preceding quarter. Net income and diluted earnings per share were up 62% and 59%, respectively, versus the immediately preceding fourth quarter of fiscal '25. This represented a 22.5% ROE despite a 70% increase in book value over the last 2 years. We had operating revenues of just over $1.4 billion, up 52% versus the prior year and up 20% versus the immediately preceding quarter. As a reminder, our operating revenues include not only interest and fee income earned on our client balances, but also carried interest that is related to our fixed income trading activities. Net operating revenues, which nets off interest expense, including that which is associated with our fixed income trading activities as well as introducing broker commissions and clearing fees were up 47% versus a year ago and 24% versus the immediately preceding quarter. Total fixed compensation and other expenses were up $75.6 million or 31% versus the prior year quarter. $44.4 million of this is attributable to the acquisition of RJO and Benchmark during the fourth quarter of fiscal '25. Total fixed compensation and other expenses were up 10% or $29.4 million versus the immediately preceding quarter, with $12 million of this change attributable to the acquisitions of RJO and Benchmark, each of which were only in…

Thank you, Bill. Moving to Slide 11. And as Bill mentioned, this is the first quarter of our combined and consolidated operations of StoneX and R.J. O'Brien. On last quarter's call, we provided a detailed overview of the integration process and reiterated our confidence in achieving the synergies set out in our initial announcement. The transaction has transformed StoneX into the leading nonbank player in this space. And now 5 months into the integration, we are seeing increased cross-sell opportunities due to our scale and breadth of offering, which I will touch on later. In terms of integration, this remains firmly on track and continues to follow the sequence we outlined last quarter. As a reminder, this includes the consolidation of our non-U.S. entities. We stated this will be completed in quarter 2 2026. As an update, we have migrated the business and assets of the largest subset of these entities, the R.J. O'Brien U.K. entity into the StoneX U.K. entity successfully in the first week of January. I expect the others to follow our execution and integration plan we set out previously. The U.K. consolidation has released $20 million in capital. The consolidation of the U.S. entities, this remains on track and is targeted to be completed by the end of the fiscal year. We are working hard to ensure a smooth and seamless transition for clients as we have prioritized revenue protection and continuity for clients of R.J. O'Brien. All in all, the integration remains on track, and we remain confident in achieving the synergies we set out at announcement and are making strong progress in providing a holistic integrated offering to clients across StoneX and R.J. O'Brien. Now moving to Slide 13. As done in previous earnings calls, we think it's helpful to go a little deeper…

[Operator Instructions] Our first question comes from the line of Jeff Schmitt with William Blair.

In the physical trading business, obviously, a really strong quarter there due to precious metals. How much of that strength came from cross-selling RJO clients? Or was that really kind of mainly volatility driven? And then just curious how that business is trending here in January, February with now that gold is pulling back?

There was limited upside from the precious metals revenues and volumes from traditional R.J. O'Brien client base. So I think a lot of it was primarily driven on the fact that we saw a heightened level of interest in this space, both in the wholesale and also at a retail level. Now you'll recall, in 2019, we purchased a company called CoinInvest, which we subsequently rebranded as StoneX Bullion. That was our direct-to-consumer retail trading platform. That has exceeded our expectations. And I think it's fair to say that when it was purchased, it was making probably $1.5 million a year. They've achieved that in a single day recently. So I think that's been a transformational expansion of our ecosystem because it gives us that ability to go directly to consumers. And at the same time, the wholesale business is also supplying physical material and refined products, mint-produced coins and small bars to other B2C companies, which themselves have been benefiting from the recent uptick in interest from a retail level. And at the same time, the disconnect that we often see in these markets and have seen for many years where there is a physical price disconnect between jurisdictional country A and country B. And because of our ability to move physical around the world sufficiently [Technical Difficulty] where there was a significant shortage of silver in India and it is not the easiest place for people to move gold into, but we've been [Technical Difficulty].

Okay. And then on the cost synergies, those appear to be on track or maybe you're realizing them even faster than expected. As you dig into the RJO business, I guess, are you seeing any potential upside to the $50 million? Or is it still kind of too early to tell?

Yes, Jeff, I mean, at this point, I think that we're still kind of just confirming the $50 million. I mean I think that it's coming along as we talked about last quarter. I think that we've seen some of the wins thus far. They'll continue to pick up throughout the rest of the fiscal year. The kind of milestones we have will be later this year. Over the summer, we will migrate the largest entities combined. So kind of coming out of fiscal '26, I think we'll probably be in a pretty good spot of having about 40 of them kind of in the run rate. And then going forward, we'll capture the rest over fiscal '27. But I think we're still kind of affirming at this point that $50 million figure.

Okay. Great. And then just one quick one on the institutional segment. The securities business there had a great quarter. And you mentioned moving into U.S. stocks in the market maker business. I'm just curious how much of the mix that is? And maybe if you could talk about that. The rate per million there, I know you've talked about that inflecting up, but are we at a point where we're at a better run rate there? Or is there more upside to that?

Yes. I think that part of the business is still quite early stages in terms of its expansion. Most of the increase we've seen is very much across equities market making, fixed income and prime services. So as a subcomponent, we continue to grow in that space. That space has probably the addressable market of all areas, but it is one small step at a time. We continue to see growth, but not at the level and not at the level of maturity that you will see, say, in our market-making business for our unlisted ADRs, where we continue to be ranked #1 and have been for the last 11 years. So we'd love to be in that situation for mainstream equities, but it's a big market, and we're not there yet, but we're very pleased with the progress made so far.

Great. And is that rate per million, I mean, do you expect that to inflect up more? Or are we at a point where maybe it's a good -- a better run rate?

Yes. I mean I think at this point, Jeff, it's probably kind of getting back to more of a run rate. I mean it kind of really dipped as we moved into some of those stocks. And as our institutional sales and trading business has picked up and some of the other the equity market making continue to perform. I think we've gotten -- this is obviously a high watermark, right? We're 320-ish. And we were a year ago -- I'd say a year ago, we were kind of at the low inflection point. I think somewhere in this 300 -- a little over 300 range is probably a more normalized rate for us now going forward.

Our next question comes from the line of Dan Fannon with Jefferies.

Just wanted to follow up on the environment. And obviously, you've seen a lot of movement in the underlying, whether it's gold, silver, all this stuff. So I was just curious about the health of the customer kind of post quarter, if there's been any changes in losses or as you just think about activity levels still being good and just the environment being constructive versus maybe this point in time, we've seen bad volatility. And so I just want to understand if this is still a constructive environment for you guys.

Yes. And I think we've discussed this previously. I mean we obviously benefit from increased volatility in the markets across multitudes of products within the StoneX ecosystem. But when it reaches a point of extreme volatility, that stress can become heightened and more of a concern for our underlying clients. I think the closeness of the relationship helps us through that. We obviously don't want our clients to get into a situation where such positions or such transactions put them in a hazardous situation. And I think identifying concerns and talking to our clients, speaking with them on a daily basis and just walking them through how they are hedging their positions, but at the same time, ensuring they have sufficient liquidity to stay at the table and to not be forced into taking off their hedges. So it's an engagement exercise. We obviously like the volatility. We don't like extreme volatility because of that potential negative impact on our clients. But that's been the case for many years for us.

Understood. And then just on the R.J. O'Brien deal in the context of what you see as the kind of most near-term kind of cross-sell opportunity in the context of some of -- there weren't numbers that were outlined when the deal was announced, but obviously, you've talked about multiples in size versus the expense synergies. So I just want to, again, if you could reprioritize kind of where you see those opportunities and what we should see as we think about the next couple of quarters.

Well, I mean, it's a sort of dual approach in terms of we have the integration process itself. And as we said, we've begun that with the U.K. entities. That's been completed. We're seeing the schedule of time lines for further integration and building up to the largest part of it in the U.S. That is a big part of the potential cross-sell. Because don't forget that until such time as we can kind of consolidate the entities, there's still the case of repapering with other legal entities within the StoneX Group. There's still an education process in many areas. So we talk about comparing and whilst we didn't specify the potential revenue expectations from cross-selling, we do anticipate based upon looking at our OTC, as an example, revenues versus our exchange-traded derivatives revenue and how that's morphed over the years and the revenue attributable to the OTC side of the product, we can then superimpose that onto a lot of the RJO revenue. It's not a guarantee, it's not a certainty. There's work to be done. There's education exercises to be done. We have to help all the RJO employees to sort of be confident enough and be able to engage with the clients and most importantly, make sure that it is the right thing for all the clients involved. We talk about some simple wins in that R.J. O'Brien across the entire organization did not have the ability to offer foreign exchange. That's a relatively mainstream vanilla product for us within StoneX. So things like that, we are gradually introducing more and more capability to across the organization. And even before the integration is completed, we're trying our best to ensure that we can get as much capability and products in front of our incoming R.J. O'Brien clients as possible. But it's -- we've had a lot of small wins that have built up, and we continue to encourage that, and we welcome it and we circulate internally some success stories. But we're not at the point to be able to say, here you go, we recognize this about so far. But we continue to be very optimistic about the potential there.

Understood. Okay. And then Bill, just in the context of the expenses and since we -- this is the full quarter with both the last couple of acquisitions in there. As we think about the run rate and the kind of go forward, anything to normalize based on integration or other things from an expense perspective or areas where you think the growth and/or movement of -- at a line item level might be most?

I mean I think we'll see, as you see every year, right, our Q2 is the start of the calendar year, right? So we'll see a tick-up in nonvariable compensation kind of related to the annual merit increases, kind of all the taxes and benefits and all those kind of things reset. So we'll see a tick-up from there. But I don't see -- I don't think there's other line items, Dan, that we would expect to materially change other than as we see some of the synergies come through. We should see hopefully some downtrend on that nonvariable comp line as well as some of the tech spend and on the longer term is where you'll start to see some occupancy, et cetera. But most notably here at start of the calendar year will be -- kind of there will be a bit of a tick up on the nonvariable compensation line.

[Operator Instructions] our next question comes from the line of Lukas Jaeger with Liberty One Investment Management.

Okay. So long time listener, first-time caller. I have a question in regards to sort of the pre-existing business of StoneX not really focused on the R.J. O'Brien and Benchmark acquisitions. This time last year, some of the discussion was within the securities business and sort of the sort of client group in the active ETF space sort of adding an additional piece of growth. And I guess I'm just sort of further looking for a discussion on some client groups that are going to come into the existing pre-existing StoneX client business that will kind of show sustained interest within sort of your risk management contracts and trading services?

Not quite clear in terms of the question. But from an institutional perspective, we do see a big sort of sizable shift in terms of the client space in the regional banks in the U.S., for example, where what we're seeing now is that if you turn up to one of the regional banks knocking on their door and saying, I'd like to talk to you about this particular product. They're not interested. What they are becoming very interested with us is the multitude and the breadth and depth of our product offering. So we're suddenly seeing some dividends coming through with regards to our ecosystem, which we talk about on a near constant basis and very proud of. But it's now becoming a big distinction between us when talking to new and potential clients in the -- just in the regional community bank space in the United States. So that's where we're optimistic in terms of this could be another phenomenal uptick in terms of revenue that we're looking to benefit from, but also to be able to solidify the relationship we have with said banks because what we increasingly can see across all of our products is where we fit in, I guess, in the level of priority or relevance from their perspective to us. We aspire to be a one-stop shop offering as much capability and product to as many clients as possible through a single avenue through to StoneX and our ecosystem. But it's starting to become a door opener in ways that perhaps we weren't necessarily expecting, just like we weren't expecting the growth in our build-out of our fixed income business in APAC to hit the ground so quickly and build so rapidly. Because we -- I don't think we fully understood the lack of alternatives, lack of service and lack of localized dealing desks in that region. So there are a lot of areas where we're looking to expand our capability. But at the same time, sometimes it takes a while for us to really get the benefit of something perhaps we weren't necessarily expecting in the first place. And the intro into those regional banks has demonstrated that. So we will talk to household names in terms of regional community banks. But the fact that we're offering -- we're able to offer a multitude of fixed income products. We're able to offer them access to SWIFT. We're able to offer them payments. We're able to offer them equities, overseas equities, ADRs, things like that, which you previously would be expecting them to be using multiple providers for, they can now do it in a single avenue. So that's where we see some sizable momentum coming down.

Perfect I appreciate the additional color. And despite my poor phrasing, you look -- you answered my question very well. Moving on to sort of the FX and sort of CFD area of the business. I'm kind of just curious, so I saw that the rate per million is down around 30% compared to last year. And I was hoping to unpack sort of the reasons for that. My understanding would probably be that's largely because of some lower volatility. So I think the CVIX like average from this period compared to the last period is down around 15%. But I'm wondering if you could have further unpacked that rate per million figure just so that I can understand it.

Sure. I think I'll take that. So I mean, last year, just a reminder, we were -- that was probably the highest rate per million that we've seen out of the business since the acquisition of GAIN Capital back in -- or in 2020. So we did still kind of see -- I mean, the FX space, both as a reminder, in the FX/CFD space, we do that both on the institutional side as well as obviously the bigger piece of it in the self-directed. But overall, I think we continue to see kind of the FX volatility being somewhat muted and not the greatest environment for us. And obviously, it benefited tremendously in our physical space and the commodity space from the movements in gold, but it proved to be a bit more challenging in that space on the retail side with the markets moving around. So a combination of everything. And so I would say that it's not -- the rate per million that we're seeing now isn't out of line with expectations. I think it was more last year was just such a bang-out quarter for us on the retail side with really strong spreads. So I would say that this is probably a bit more normalized environment, something in the -- if you look at the retail -- the self-directed retail, we were at 110. We've kind of averaged over the last 4 quarters around 116. And I would say -- so it's not out of the realm of what the expectation is. It's just last year's comparable period of 185 was very strong.

That makes complete sense. I mean that sort of falls with what the graphs on Bloomberg tell me so that I appreciate the additional color. Is there any particular currency pairings that sort of self-directed client group is interested in, just as a follow-up question.

No, I don't think we can step that into the mix. It's not as easy to sort of simply say, yes, this is the pair that we find more interesting than others. I think what you'll find is that the volume going through certain currency pairs and euro-dollar is one of probably the largest currency pair that we trade. But it's market-driven. So our clients will -- our clients in the wholesale FX business will be looking to hedge, looking to hedge their exposure, looking to lock in forward rates. And our retail CFD business is much more of a looking to take advantage of market moves at a retail level. But it will vary. And it's not something we really publish, but it's -- you would expect currency pairs and I include gold in those currency pairs because it trades like a currency where dollar-euro, dollar gold, dollar silver will be consistently high.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Philip for closing remarks.

Thank you, operator, and huge thank you to everyone [Technical Difficulty].

Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.