Jeff Schmitt

Jeff Schmitt inquired about the top-line growth assumptions embedded in MIAX's 2026 adjusted operating expense guidance of 13%-18% and the sensitivity of this expense growth to trading volumes. He also asked for an update on MIAX's plans for launching crypto and event-based products later in the year.

Answer

Lance Emmons, CFO, explained that predicting total top-line revenue is challenging as 60% is transaction-based, but noted some discretionary investments could be adjusted if volumes deviate from expectations. Thomas Gallagher, Chairman and CEO, stated that following the sale of MIAXdx, the focus is on expanding options market share and executing the futures strategy. He clarified that crypto is not a primary focus for 2026, though opportunities are evaluated. Shelly Brown, CEO of MIAX Futures and Chief Strategy Officer, added that current tokenization discussions primarily concern equity clearing, a small part of MIAX's business, and not options trading.

Jeff Schmitt from William Blair inquired about MIAX's current plans and status regarding the previously mentioned launch of crypto and event-based products later in 2026.

Answer

Thomas Gallagher, Chairman and CEO, clarified that MIAX's primary focus is on expanding options market share and executing the futures strategy, especially after the MIAXdx transaction. He stated that crypto is not a primary focus for 2026, though opportunities are evaluated.

Jeff Schmidt inquired about the drivers behind MIAX's sharp increase in October market share to 19.4% and whether there was a rise in complex trades during the month.

Answer

Thomas Gallagher, Chairman and CEO, MIAX Exchange Group, deferred to Shelly Brown, CSO, MIAX Exchange Group. Shelly Brown explained that the October gains were broad-based across all four options exchanges. She confirmed continued growth in complex orders, which is a focus for MIAX due to capture rates, noting that MIAX remains the second-largest exchange in complex orders. She attributed the growth to the effective use of MIAX's technology.

Jeff Schmitt inquired about the drivers behind MIAX's sharp increase in October market share to 19.4% and whether there was a rise in complex trades during the month.

Answer

Shelly Brown, Chief Strategy Officer, explained that the October gains were 'across the board' for all four options exchanges. She confirmed continued growth in complex orders, noting MIAX is the second-largest exchange in this segment, and also saw growth in price improvement options, attributing these trends to the use of MIAX's technology.

Jeff Schmitt asked about the declining average fee rate in credit, specifically if competitive pricing pressures are a factor, and what fee rate decline assumptions are built into MarketAxess's medium-term revenue growth outlook.

Answer

CEO Chris Concannon explained that fee per million is influenced by product mix, protocol selection, maturity, spread, and volatility. He noted that new initiatives like Portfolio Trading and block volume, while having lower fee per million, drive incremental revenue. CFO Ilene Fiszel Bieler added that the January fee per million decline was due to a volume mix shift towards lower-capture products like Eurobonds and high-grade blocks. She clarified that the 8-9% average annual growth target is focused on revenue growth, with no fee per million accretions baked into the three-year plan.

Jeff Schmitt inquired about the declining average fee rate in credit, specifically whether competitive pricing pressures contribute to this trend beyond protocol mix shifts, and what assumptions MarketAxess is making regarding fee rate decline in its medium-term revenue growth outlook.

Answer

CEO Chris Concannon explained that fee per million is influenced by product mix, protocol selection, maturity, spread, and volatility, with new initiatives like portfolio trading and block volume, while growing incremental revenue, often coming at a lower fee per million. CFO Ilene Fiszel Bieler added that strong eurobond and high-grade block growth contributed to the January fee per million decline and confirmed that the company's three-year revenue growth targets do not bake in any fee per million accretion, focusing instead on volume and market share drivers.

Jeff Schmitt, a Research Analyst at William Blair, asked for an update on Cboe's pricing improvements for its exchanges, specifically regarding market maker incentives and rebate programs for multi-listed options.

Answer

Global Head of Derivatives Rob Hocking stated that the multi-listed space is highly competitive with 20 exchanges, but Cboe maintains around 22% market share and is number one overall. He confirmed ongoing evaluation and enhancement of pricing schemes and incentives across medallions, emphasizing intentional management of market share and revenue capture. Hocking also mentioned preparing to launch multi-listed trading during a limited GTH session and engaging with industry participants on ORF reform to align fees with trade execution locations.

Jeff Schmitt asked for an update on Cboe's efforts to improve pricing on its exchanges, specifically regarding market maker incentives and more attractive rebate programs, particularly for multi-listed options.

Answer

Rob Hocking, Global Head of Derivatives, confirmed Cboe's focus on the highly competitive multi-listed space, where it holds approximately 22% market share. He noted continuous evolution of functionality and pricing to balance market share and revenue capture. Initiatives include preparing to launch multi-listed trading during limited Global Trading Hours and engaging on Options Regulatory Fee (ORF) reform.

Jeff Schmitt asked about the drivers behind the healthcare business's tough organic growth quarter, its lack of momentum, and an update on the Elevance relationship regarding DomaniRx onboarding.

Answer

Bill Stone, Chairman and CEO, explained that healthcare is a long-term, lumpy business, noting large license sales in the prior Q4 and early Q1 2026. He highlighted new technology like Amisys and DomaniRx, acknowledging lower growth but healthy EBITDA margins. Regarding Elevance, Mr. Stone stated DomaniRx is ready, but acknowledged the challenges of long-standing relationships and the loss of the original sponsor, while still seeing potential.

Jeff Schmitt with William Blair inquired about the factors contributing to the healthcare business's organic growth weakness in Q4 and why it hasn't achieved better momentum, also asking for an update on the Elevance relationship and the likelihood of onboarding more business onto DomaniRx.

Answer

Chairman and CEO Bill Stone explained that healthcare is a long-term play, with quarterly lumpiness due to license sales timing, noting a significant one closed in early January 2026. He highlighted new technology and healthy EBITDA margins, viewing it as a $260-$270 million business with long-term potential. Regarding Elevance, Stone stated DomaniRx is ready, but acknowledged the challenges of breaking longstanding relationships and the departure of the original sponsor, while still seeing potential due to Elevance's investment.

Jeff Schmitt asked about the strategic rationale behind the Curo Fund Services acquisition, its revenue generation, and why it would be integrated into the GIDS business. He also requested an update on the implementation of agentic AI within Blue Prism and other SS&C businesses.

Answer

Chairman and CEO Bill Stone explained that the Curo acquisition provides a local presence in the African market, deepens relationships with two large insurer clients, and is integrated into GIDS due to its focus on life and pensions. He noted its revenue is negligible, around $15 million. Regarding AI, Bill Stone stated SS&C acts as "customer zero," infusing AI agents across its entire business to enhance existing technologies, leveraging its 27,000 employees and functional expertise to build smart agents for regulated industries.

Jeff Schmitt asked about the Curo Fund Services acquisition, seeking details on what attracted SS&C to the business, its revenue generation, and why it is being integrated into the GIDS segment. He also requested an update on the implementation of agentic AI in Blue Prism and its development for other businesses.

Answer

Bill Stone, Chairman and Chief Executive Officer, explained that the African market for fund administration is less developed, and Curo's clients are large insurers who jointly owned the business, hence its placement in GIDS. He noted the revenue generated is negligible, around $15 million. Regarding AI, Bill Stone stated SS&C acts as 'customer zero,' infusing all technologies with AI agents, leveraging its 27,000 employees and experts to build smart agents and become a trusted AI source in regulated industries.

Jeff Schmitt inquired about the revenue synergy potential from the Callistone acquisition and the drivers behind the sustained increase in capital expenditures.

Answer

Chairman and CEO William Stone explained that while it's early, significant cross-sell opportunities exist between SS&C's 10,000 addressable clients and Callistone's 4,500 clients in areas like ETFs and digital assets. He added that increased CapEx is funding growth initiatives, including new product development and market-specific software, and is expected to remain at elevated levels to support technological advancement.

Jeff Schmitt questioned why the excess cash flow guidance remained similar despite a higher GAAP earnings outlook, asking about GAAP versus statutory differences and any benefit from the Globe Life Re Bermuda transaction. He also followed up on the larger-than-usual drop in American Income agent count in Q4 and the details of retention initiatives.

Answer

Matt Darden, Co-CEO, and Tom Kalmbach, CFO, clarified that excess cash flow is primarily driven by solid statutory earnings from 2025 converting to parent dividends in 2026, with no significant GAAP or statutory model changes impacting it. Frank Svoboda, Co-CEO, confirmed no benefit from the Bermuda transaction is expected in the 2026 plan. Matt Darden explained that Q4 agent count drops for American Income are not uncommon, often reflecting less productive agents. He detailed new incentive compensation adjustments for middle management aimed at improving agent retention.

Jeff Schmitt followed up on the American Income agent count, noting a larger-than-usual drop in Q4, asking for reasons behind this trend and more details on the referenced agent retention initiatives.

Answer

Matt Darden, Co-CEO, explained that a sequential drop in American Income agent count in Q4 is not uncommon, having occurred in three of the last four years, often due to less productive agents leaving. He detailed that retention initiatives involve adjusting incentive compensation for middle management, with tweaks being implemented in early 2026, aiming to balance sales and agent retention. Overall agent productivity remains strong, driving sales growth.

Jeff Schmitt asked about the strength in the physical trading business, specifically precious metals, inquiring if it was driven by cross-selling R.J. O'Brien clients or market volatility, and how the business is trending in January/February. He also asked about potential upside to the $50 million cost synergies from the RJO acquisition and the mix and rate per million trends in the institutional securities business, particularly regarding U.S. stocks market making.

Answer

Philip Smith (CEO, StoneX Group Inc.) explained that the precious metals strength was primarily volatility-driven due to heightened wholesale and retail interest, with limited upside from R.J. O'Brien clients. He highlighted the success of StoneX Bullion (formerly Coininvest) and the ability to capitalize on physical price disconnects globally. Bill Dunaway (CFO, StoneX Group Inc.) stated that the $50 million cost synergies are on track, with milestones expected later in the fiscal year, aiming for a $40 million run rate by the end of fiscal 2026. Philip Smith added that the U.S. stocks market maker business is in early stages, with growth seen across equities market making, fixed income, and prime services, while StoneX remains a leader in unlisted ADRs. Bill Dunaway noted that the securities rate per million is likely normalizing around the 300-ish range, with the current 320-ish being a high watermark.

Jeff Schmitt inquired about the drivers behind the strong performance in StoneX's physical trading business, particularly precious metals, asking if it was primarily due to cross-selling R.J. O'Brien clients or market volatility, and how the business is currently trending in January and February.

Answer

CEO Philip Smith clarified that the strength in precious metals was largely volatility-driven and not significantly from R.J. O'Brien cross-selling. He highlighted the success of StoneX Bullion in direct-to-consumer retail and wholesale, and the company's ability to leverage its global logistics to capitalize on jurisdictional price disconnects, citing a silver shortage in India. CFO Bill Dunaway addressed the cost synergies from the R.J. O'Brien acquisition, stating that StoneX is confirming the $50 million target, with wins expected to pick up throughout the fiscal year, aiming for $40 million in the run rate by fiscal year-end 2026. Regarding the institutional segment's securities business, CEO Philip Smith noted it's in early stages, with growth mainly from equities market making, fixed income, and prime services. CFO Bill Dunaway added that the rate per million, currently around 320, is likely returning to a more normalized run rate after a low inflection point a year ago.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the specific drivers of weakness in the Commercial segment, requested an update on revenue synergies for the R.J. O'Brien acquisition, and asked about the long-term strategy for expanding the retail segment's product offerings.

Answer

Executive Vice Chairman Sean O'Connor and CFO William Dunaway attributed the Commercial segment's weakness to tariff uncertainty impacting the physicals business and lower volatility in agricultural markets reducing OTC revenue capture. Regarding R.J. O'Brien, Mr. O'Connor reiterated his belief that revenue synergies will be multiples of cost synergies, primarily from cross-selling StoneX's broader product suite to R.J. O'Brien's clients. Group President Charles Lyon detailed the retail segment's roadmap, explaining that an infrastructural rebuild is underway to support a multi-asset class offering, with new products expected to roll out in stages during fiscal year 2026.

Jeff Schmitt asked about the returns on LPL Financial's Liquidity and Succession Solution (L&S) compared to traditional M&A and recruiting, specifically inquiring about the multiples.

Answer

President and CFO Matt Audette stated that L&S operates within the target M&A range of 6x-8x, but offers higher quality earnings as it's 100% recurring non-cash sweep. He also highlighted strategic benefits beyond pure economics, such as supporting practice transitions and growth within the Linsco model.

Jeff Schmitt inquired about the returns on the Liquidity and Succession Solution (LNS), asking how they compare to traditional M&A and recruiting, and where they shake out in terms of multiples.

Answer

President and CFO Matt Audette stated that LNS operates within LPL's target M&A range of 6-8 times EBITDA. He highlighted the higher quality of LNS earnings, being 100% recurring non-cash sweep, and the strategic benefits of supporting practice transitions, growth, and efficiency for the next generation of advisors within the Linsco model.

Jeff Schmitt of William Blair & Company, L.L.C. pointed out that Commonwealth's guided core G&A expense appears more efficient as a percentage of AUM compared to LPL's and asked for the reason behind this difference.

Answer

President & CFO Matt Audette advised against focusing too heavily on the initial, pre-integration expense figures for Commonwealth. He clarified that these numbers represent the business as it currently operates and that once the integration is complete in 2026 and synergies are realized, Commonwealth's margin profile is expected to be in the same zone as LPL's.

Jeff Schmitt inquired about the strong growth in equity options volumes in the second half of the year and the fourth quarter, despite tough comparisons and lower volatility. He asked if this was driven by retail strength, if it represents a structural shift, and if it has carried over into 2026.

Answer

Adena Friedman, Chair and CEO, confirmed continued growth in equity and equity options volumes, attributing it to a broadening investor base (retail and institutional) and a structural shift in interest in public equities. She also cited an increase in ETF options overlay, bringing more institutional engagement, and mentioned plans to launch 23x5 trading in the Nasdaq Stock Market in late 2026.

Jeff Schmitt inquired about the sustained strong growth in equity options volumes during the second half of 2025, despite challenging comparisons and reduced volatility. He asked if this growth was primarily driven by retail strength, indicated a structural shift in the market, and if this trend had continued into 2026.

Answer

Adena Friedman, Chair and Chief Executive Officer of Nasdaq, confirmed continued strong growth in both equities and equity options volumes, attributing it to a broadening investor base, including both retail and institutional participants. She identified this as a structural shift reflecting increased investor interest in public equities and highlighted the growing impact of ETF options overlays in driving institutional engagement. Nasdaq is also looking forward to expanding its market reach with 23x5 trading in the second half of 2026.

Jeff Schmitt inquired about the AxiomSL to Calypso cross-selling opportunities, asking if Nasdaq's approach differs from Thoma Bravo's and if these opportunities are increasing under Nasdaq's leadership.

Answer

Adena Friedman, Chair and CEO of Nasdaq, noted that Thoma Bravo had already created a data connector between AxiomSL and Calypso, easing implementation. Nasdaq continues to build such connectors and emphasizes holistic conversations with high-level bank executives (COO, Chief Risk Officer) to address broader risk management and trading needs. This 'One Nasdaq' approach, leveraging Nasdaq's trusted provider status, fosters a more comprehensive dialogue and drives cross-sell opportunities across the bank's operations.

Jeff Schmidt inquired about the AxiomSL to Calypso cross-selling opportunities, asking if Nasdaq is approaching this differently than Thoma Bravo and if these opportunities are picking up under Nasdaq's leadership.

Answer

Adena Friedman, Chair and CEO, explained that Thoma Bravo had already created a data connector between AxiomSL and Calypso to ease implementation. Nasdaq continues to build these connectors and leverages holistic conversations with high-level clients (e.g., COO, Chief Risk Officer) to address broader needs across risk management, trading, regulatory compliance, and financial crime. Friedman noted that Nasdaq's ability to engage clients holistically, often prompting questions like 'what are other banks taking that I'm not?', significantly enhances cross-selling opportunities across the bank's operations, including wealth management.

Jeff Schmitt of William Blair & Company, L.L.C. asked about Verifin's international expansion, questioning whether the medium-term guide for mid-20s revenue growth assumes a significant contribution from it, or if there is potential upside.

Answer

Chair & CEO Adena Friedman clarified that European expansion is the third of three growth pillars for the business and is considered a 'longer leg' of the strategy. She stated that Europe is not expected to be a material revenue contributor in 2025 or 2026, but its future success is factored into achieving the medium-term outlook for 2027 and beyond.

Jeff Schmitt of William Blair inquired about the financial impact of the workforce reductions implemented late in the quarter, specifically asking about the underlying expense reduction and the expected run-rate impact by segment. He also asked if the IMS business margin of approximately 40% (adjusted for the revenue accrual true-up) was a sustainable run rate, given prior guidance of 39% or less due to ongoing investments.

Answer

CFO Sean Denham stated that the decrease in compensation from the workforce reduction was roughly offset by annual compensation increases effective January 1st, suggesting a relatively flat run-rate impact on overall compensation. Phil McCabe, President of Investment Manager Services, clarified that the IMS margin benefited from a $3 million revenue accrual true-up and about $2 million in other one-time items (conversion fees, professional services). Denham added that SEI continues to make investments and hire in anticipation of Q1 opportunities, particularly in Private Banking and IMS, which could impact future IMS margins.

Jeff Schmitt from William Blair asked about SEI's integrated cash program, specifically if any cash is allocated to fixed rates given the Fed's easing, and how the company manages the spread between earnings and investor yield. Jeff also inquired about the recent higher expense growth in private banking, asking if it's primarily due to talent investments and how the new service center's offshoring initiatives might affect future growth.

Answer

Paul Klauder, EVP and Head of Independent Advisors Solutions Unit, SEI, explained that SEI currently earns about 370 basis points and yields 55 basis points to investors. He noted that typically, a 25 basis point rate drop would impact investors by 15 basis points and SEI by 10 basis points, with a floor eventually. Ryan Hicke, CEO, added that the impact would be muted by SEI's larger fixed income portfolios. Ryan Hicke, CEO, and Sanjay Sharma, EVP, CEO, and Global Head of Private Banking and Wealth Management, SEI, stated that the expense growth is primarily due to investments in onboarding backlog and ensuring successful client delivery, not an unusual trend.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about client re-up rates in the current volatile environment and asked if the firm was experiencing any fee pressure in its private markets strategies.

Answer

CEO Michael Sacks described re-up rates as "fantastically strong" and a continuing positive feature of the business. President Jonathan Levin elaborated that while fundraising cycles elongated in 2023, clients continued to re-up, and those cycles are now normalizing. On fees, Sacks stated that conversations have been constructive and that pricing is not a significant point of pressure.

Jeff Schmitt of William Blair & Company, L.L.C. asked about sales force productivity, which is at the low end of its historical range, questioning if it could decline further and what would be needed for a turnaround. He also asked if the recent surge in recruits may have included less committed individuals.

Answer

CEO Glenn Williams explained that productivity is pressured by a growing sales force denominator and new agents entering a challenging sales environment. He expressed confidence that the issue is the environment, not the quality or commitment of the new recruits, who will adapt and improve their skills over time.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the future trend of the benefit ratio in the Global Lifestyle segment and the drivers behind the negative investment income from 'other investments' in the first half.

Answer

President and CEO Keith Demings expressed satisfaction with Global Lifestyle's Q2 performance, highlighting the strength in Connected Living. CFO Keith Meyer elaborated that while mix shifts can affect the benefit ratio, the key positive trend is the improving loss experience in the vehicle service contract business, marking an inflection point. Regarding investment income, Meyer stated the overall portfolio is performing well with rising book yields, and that quarter-to-quarter lumpiness can result from items like real estate transactions, but he expects overall investment income to be up for the full year.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the drivers for the increased 2-10 Home Buyers Warranty cost synergy forecast, from $10 million to $15 million, and the status of the long-term $30 million run-rate synergy goal. He also asked if the strong guidance for the upgrade program is exclusively for HVAC or includes other categories like water heaters.

Answer

Chairman and CEO Bill Cobb attributed the increased 2-10 synergies to finding new efficiencies across all functions as the company gains familiarity with the business. He affirmed the long-term synergy target of over $30 million by 2028 remains intact. Cobb also clarified that the current upgrade program revenue is entirely from HVAC, although the company is running tests for other product groups.

Jeff Schmitt of William Blair & Company, L.L.C. inquired about the drivers for the increased 2025 cost synergy forecast for the 2-10 acquisition, from $10 million to $15 million, and the status of the long-term synergy target. He also asked if the strong guidance for the non-warranty upgrade program is exclusively for HVAC.

Answer

Chairman and CEO Bill Cobb attributed the higher near-term synergy forecast to finding new efficiencies across all functions as Frontdoor gains familiarity with the 2-10 business. He reaffirmed the long-term synergy goal of over $30 million by 2028. Cobb also confirmed the upgrade program's current guidance is entirely for HVAC, noting that while tests for other appliance categories are underway, there is nothing significant to report yet.

Jeff Schmitt questioned the potential timing for reaching adjusted EBITDA breakeven in 2026 and asked about specific features of the next-generation platform, like auto-matching, that are expected to drive transaction volumes.

Answer

CFO James Nevin reiterated confidence in achieving breakeven in 2026, driven by platform scalability, the Liquidity acquisition, and offshoring efficiencies, but did not provide more specific timing. CEO Kelly Rodriques added that the new platform's initial release includes a novel automated negotiation process. He described it as a rolling release that will progressively add features to support various transaction structures and reduce friction.

Jeff Schmitt from William Blair & Company, L.L.C. questioned whether slowing top-line growth in wealth management might lead to more aggressive recruiting or outsourcing deals, and if the share buyback payout ratio could exceed the 85% target.

Answer

James Cracchiolo, Chairman & CEO, confirmed a focus on competitive recruiting but emphasized maintaining a strong client experience over simply 'rolling up' advisor networks. On capital returns, Walter Berman, EVP & CFO, stated that while they have the capacity to exceed the 85% payout ratio target, 85% remains the firm's current plan for the second half of the year.

Jeff Schmitt questioned if Ameriprise might pursue more aggressive recruiting or outsourcing deals amid slowing top-line growth and asked if the share buyback payout ratio could exceed the new 85% target for the second half.

Answer

Chairman & CEO James Cracchiolo affirmed their focus on recruiting with competitive packages but emphasized they are not interested in simply 'rolling up' advisor networks. On capital returns, EVP & CFO Walter Berman confirmed the 85% payout ratio is the current target, but they retain the capacity to evaluate it and will act in the best interest of shareholders.