BGC Group - Earnings Call - Q3 2025

Executive Summary

• BGC delivered record Q3 revenue of $736.8M (+31.3% y/y) and post-tax Adjusted EPS of $0.29 (+11.5% y/y); sequentially, revenue and EPS declined from Q2’s records on mix and expense step-up from the OTC acquisition. Versus S&P Global consensus, BGC posted a small EPS beat ($0.29 vs $0.28*) and essentially in-line revenue ($736.8M vs $736.2M*), with limited sell-side coverage (EPS: 2 ests; Revenue: 1 est) [GetEstimates]*.
• Fenics/FMXX momentum remained the primary growth engine: U.S. Treasuries market share reached a record 37% (from 35% in Q2 and 29% a year ago), UST ADV was $59.4B (+12% y/y), and SOFR futures ADV/open interest more than tripled sequentially; FMX FX ADV rose 44% y/y to $13.1B.
• Q4 2025 guidance calls for $720–$770M revenue (≈30% y/y at the midpoint) and $152.5–$167.5M pre-tax Adjusted Earnings (≈24% y/y at the midpoint); FY25 Adjusted tax rate maintained at 10–12%.
• Capital allocation remains active: $400M repurchase authorization reapproved and the company plans to repay $300M senior notes due Dec 15; liquidity stood at $924.7M at quarter-end. Key stock catalysts include continued FMX share gains, delivery on the $25M cost reduction program by year-end, and Q4 execution vs guidance.

What Went Well and What Went Wrong

• What Went Well
  • Record Q3 revenue and Adjusted EPS with broad-based growth across assets and geographies; “Our U.S. Treasury market share grew to an all-time high of 37%” (Co-CEO).
  • FMX outperformance: UST market share reached 37%; SOFR futures ADV/OI more than tripled sequentially; FMX FX ADV up 44% y/y to $13.1B.
  • ECS strength with OTC integration: ECS revenues up 114% y/y to $241.6M; ex-OTC ECS up 21.8% y/y, showing organic momentum.
• What Went Wrong
  • Margin compression: Adjusted EBITDA fell to $167.6M (−21% q/q), with EBITDA margin declining to ~22.8% vs ~27.2% in Q2, reflecting higher compensation and non-comp expenses from OTC onboarding.
  • Credit growth modest: Credit revenues rose just 1.6% y/y to $69.1M; management highlighted ongoing work to launch new electronic credit protocols and a new global buy-side platform.
  • Limited estimate coverage: Only 1 revenue estimate and 2 EPS estimates may reduce “headline” beat impact and raises variability in consensus comparisons [GetEstimates]*.

Transcript

Operator (participant)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Chryssicas, Head of Investor Relations. Thank you, sir. You may begin.

Jason Chryssicas (Head of Investor Relations)

Thank you. Hello, everyone. This morning, we issued BGC's third quarter 2025 financial results, which can be found at ir.bgcg.com. Any historical results provided on today's call compare only the third quarter of 2025 with the prior year periods, unless otherwise specified. All references on today's call to historic and record results are to BGC's standalone financial results, excluding Newmark prior to the spinoff in November 2018. We will be referring to our results on a non-GAAP basis, which include the terms adjusted earnings and adjusted EBITDA. Please refer to today's investor materials on our website for additional details on our financial results and for complete and updated definitions of any non-GAAP terms, reconciliations of these items to GAAP results, and how, when, and why management uses them, as well as relevant industry and economic statistics. The outlook discussed today assumes no material acquisitions or dispositions.

Our expectations are subject to change based on various macroeconomic, social, political, and/or other factors. Information on this call contains forward-looking statements, including without limitation, statements about our economic outlook and business. These statements are subject to risks and uncertainties which could cause actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward-looking statements. For information on factors that could cause actual results to differ from forward-looking statements and a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings, including but not limited to the risk factors and disclosures within the SEC documents. With that, I'm now happy to turn the call over to John Abularrage, Co-Chief Executive Officer of BGC Group.

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

Thank you, Jason. Good morning and welcome to our third quarter 2025 conference call. With me today are my fellow Co-Chief Executive Officers, Sean Windeatt and JP Aubin, along with our Chief Financial Officer, Jason Hauf. We delivered another outstanding quarter with record third quarter revenues of $737 million, up 31% from $561 million a year ago, and revenues of $628 million, up 12% excluding OTC, was also a record. This was driven by growth across every asset class and geography. Our ability to deliver strong growth in a mixed macro environment demonstrates the strength and scale of our global platform. FMX continues to outperform, setting new records in SOFR Futures and U.S. Treasuries. SOFR Futures saw both ADV and open interest increase more than threefold versus the previous quarter. This momentum continued into October, where we set multiple new daily volume and open interest records.

Our U.S. Treasury market share grew to an all-time high of 37%, significantly outpacing the market. Our $25 million cost reduction program will be completed by year-end. This program will enhance our profitability and margins as we continue to focus on delivering long-term shareholder value. With that, I'd like to turn the call over to Sean to go over the quarterly results of the business in more detail.

Sean Windeatt (COO)

Thank you, John. We delivered record third quarter revenues and adjusted earnings. Our ECS revenues grew by 114% to $241.6 million, driven by OTC and strong organic growth across the broader energy complex. Excluding OTC, ECS revenues grew by 21.8% versus last year. Rates revenues increased 12.1% to $195.3 million, reflecting higher volumes across all major interest rate products, including strong double-digit growth in interest rate swaps, emerging market rates, and repo products. Foreign exchange revenues were up 15.9% to $106.7 million, primarily due to strong growth in emerging market currencies and FX option volumes. Credit revenues increased by 1.6% to $69.1 million, driven by higher credit derivative and structured credit volumes. Equities revenues grew by 13.2% to $60.4 million, reflecting strong European and U.S. equity volumes and continued market share gains in these geographies.

Data, network, and post-trade revenues grew by 11.9% to $34.3 million, excluding Capital Lab, which we sold in the fourth quarter of 2024. This growth was driven by Fenix market Data and Lucera. Including Capital Lab, data, network, and post-trade revenues grew by 5.2%. Now turning to Fenix. In the third quarter, Fenix revenues increased by 12.7% to a third quarter record of $160 million. Fenix markets reported revenues of $134.1 million, an increase of 12.5%. This growth was primarily driven by higher electronic trading volumes across rates and foreign exchange products and increased Fenix market data revenues. Fenix growth platforms generated revenues of $25.9 million, a 24.2% increase, excluding Capital Lab, driven by strong double-digit revenue growth in FMX and Portfolio Match. Including Capital Lab, Fenix growth platforms grew by 13.5%.

FMX UST generated record third quarter average daily volume of $59.4 billion, more than 12% higher compared to last year, outpacing all electronic U.S. Treasury platforms. This strong growth drove market share to a record 37% for the third quarter, up from 35% last quarter and 29% a year ago. FMX Futures Exchange continued to scale its SOFR Futures ADV and open interest to record levels during the third quarter. SOFR ADV and open interest each increased sequentially by more than threefold. FMX, along with its partners, continues to prioritize growing SOFR ADV and open interest, and we expect to see similar adoption in our U.S. Treasury Futures offering in 2026. FMX FX ADV increased by 44% to a third quarter record $13.1 billion, driven by continued support from FMX's equity partners, as well as the addition of new products and participants.

Portfolio Match ADV more than doubled, reflecting strong growth in the U.S. and EMEA credit markets. Portfolio Match continues to gain market share in this fast-growing segment of the credit market and has rapidly expanded its non-U.S. volumes and client base. Momentum is being driven by the greater adoption of algorithmic trading and larger average trade size, which reached record levels in the third quarter, with U.S. investment-grade average trade size up nearly 50% year-over-year. Lucera, Fenix network business providing critical real-time trading infrastructure to the capital markets, once again registered double-digit revenue growth. Lucera is rapidly growing its client pipeline for its newer rates products and continues its global expansion into EMEA and Asia-Pacific. With that, I'd now like to turn the call over to Jason.

Jason Hauf (CFO)

Thank you, Sean. Hello, everyone. BGC generated record third quarter revenues of $736.8 million, reflecting growth across all of our geographies. EMEA revenues increased by 37.4%. Americas revenues increased by 28.1%, and Asia-Pacific revenues increased by 17.4%. Turning to expenses, compensation and employee benefits under GAAP and for adjusted earnings increased by 47.5% and 42.1%, respectively, due to higher commissionable revenues and the acquisition of OTC. Non-compensation expenses under GAAP and for adjusted earnings increased by 20.9% and 19.2%, respectively, primarily driven by the acquisition of OTC. Excluding OTC, non-compensation expenses under GAAP and for adjusted earnings increased by 10.3% and 7.1%, respectively. BGC's $25 million cost reduction program launched in the third quarter and will be completed by year-end 2025. We look forward to providing more detail on the program on our fourth quarter earnings call. Moving on to our record third quarter adjusted earnings.

Our pre-tax adjusted earnings grew by 22.4% to $155.1 million. Post-tax adjusted earnings increased by 11.5% to $141.1 million, resulting in post-tax adjusted earnings per share of $0.29. Our adjusted EBITDA increased by 10.7% to $167.6 million. Turning to share count. BGC's fully diluted weighted average share count for adjusted earnings was 494.2 million shares during the period, a 1.2% decrease compared to the second quarter of 2025 and a 0.1% decrease compared to a year ago. We remain committed to repurchasing our shares, and on November 5, 2025, BGC's board and audit committee reapproved our share repurchase authorization for up to $400 million. We anticipate reducing our full-year share count further in the fourth quarter of 2025, in addition to repaying our $300 million senior notes due December 15. As of September 30, our liquidity was $924.7 million compared to $897.8 million as of year-end 2024. With that, I'd like to turn the call back to John to go over our fourth quarter outlook.

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

Thanks, Jason. I'm pleased to provide the following guidance for the fourth quarter of 2025. We expect to generate revenues of between $720 million and $770 million as compared to $572.3 million in the fourth quarter of 2024, which at the midpoint of our guidance would represent approximately 30% revenue growth. Excluding OTC, we expect fourth quarter revenues to grow around 11% at the midpoint. We anticipate pre-tax adjusted earnings to be in the range of $152.5 million-$167.5 million versus $129.5 million last year, which at the midpoint of guidance would represent approximately 24% earnings growth. We expect our adjusted earnings tax rate to be between 10%-12% for the full year 2025. With that, operator, I'd like to turn to open the call for questions.

Operator (participant)

Thank you. At this time, we will conduct a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star two to ask a question at this time. One moment while we poll for the first question. The first question comes from Patrick Moley with Piper Sandler. Please proceed.

Patrick Malcolm Moley (Director)

Yes, good morning. Thanks for taking the question. I wanted to start off kind of broad. In the third quarter, we saw on-exchange volumes in some of the asset classes you're active in slow down significantly. Your results, though, were quite strong. Could you help us better understand what allowed BGC to kind of outperform some of those industry proxies? Thanks.

Sean Windeatt (COO)

Yeah, morning, Patrick. Thanks for that. I think, look, twofold. Number one is, as you know, we've targeted growth within the ECS sector. Even excluding the acquisition, you saw growth of 21% excluding OTC. It was broader than that. You also saw good growth in both rates and foreign exchange and equities. That's been very much because of the hiring that we've been doing over the last 18 months, where we've added around 150 new brokers, obviously generating great revenues on a revenue-per-head basis. That's enabled us to take market share, targeted growth in certain geographies and asset classes, and, of course, the growth of ECS.

Patrick Malcolm Moley (Director)

Great. Just as a follow-up, you highlighted the strong growth you've seen in FMX. Could you help us kind of get a better sense for what's going on behind the scenes there? What are your expectations for FCM onboardings in the coming quarters? Sean, could you maybe elaborate on the comment you made in your prepared remarks about UST futures growing in 2026? What needs to happen between now and then to really get that going? Thanks.

Jean pierre Aubin (Co-CEO)

Yeah, hi, Patrick. Look, we're just ending year one of FMX, right? We're starting year two. Three points about year one. One, everything we said we would do in year one, we have done. We launched, we have recalled open interest in ADV, and onboarded 11 FCMs. We are in line with where we were with cash U.S. Treasuries at the same time after launch. Two, SOFR futures ADV and open interest both increased by more than threefold from the second quarter. Three, we are encouraged by the steady bulk of open interest, which signals that FMX clients are really happy to keep their position open at FMX and cleared at LCH.

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

Thanks, JP. Yeah. Sorry, Patrick, just to add on it, Sean. What's going on behind the scenes now, as we've discussed with you before, is taking that integration and deepening it, right? We told you that the 11 FCMs were on board. We will certainly get to that 12 number that we talked about. This is just becoming BAU and integrated into aggregators and to smart order routers and making sure that SOFR becomes BAU. In 2026, there is nothing necessarily that needs to be done to address your question other than getting ourselves the position that we said we would get to in SOFR and then shifting that attention with our partners over to U.S. Treasuries.

Patrick Malcolm Moley (Director)

Okay. Great. That's it for me. Thanks, guys, and congrats on the strong quarter.

Operator (participant)

Thank you. The next question comes from Elie Abou Haydar with Bank of America. Please proceed.

Elie Abou Haydar (Project Manager)

Good morning. Thanks for taking the question. Can you walk us through the strong share growth in your FMX cash markets? What would you attribute that to? How much of this is coming from those strategic partners? Specifically on the treasury platform, I know you have a couple of different protocols there, a public club and then a private club. Which one of those would be driving the share gains?

Sean Windeatt (COO)

Why don't I start by. In terms of the overall market share growth in treasuries, I think that is. There was a sort of monopoly, okay, sort of monopoly, if you like, with CME. Really, that's why we got back into the marketplace on cash treasuries. What you've seen, Elie, is you've seen the hard work of that go on for a number of years. Now it's just further adoption, yes, by our FMX partners, but also because it's the most viable second choice for, one of a better phrase, and one would almost say equal first choice now. That's why you've seen the growth, I think, up to 37%. What was the second part of the question?

Elie Abou Haydar (Project Manager)

I know you have a couple of different protocols in the treasury platform. I think there's a Public Club and then a Private Club. Were either of those an outsized contributor to the share gains?

Jason Hauf (CFO)

No. As Sean said, we're seeing it mainly across the board. As we get more participants on both the PEAQ Club and your regular club, you're seeing both the partners and other participants come into it. There's not an outlier. There's nothing major that is different than kind of the underlying onboarding of our new participants and our partners leaning in.

Elie Abou Haydar (Project Manager)

Got it. For my follow-up, how much leverage does your energy segment have to higher adoption of cloud and artificial intelligence going forward? Are data centers a meaningful client channel for you today? Is there anything you can share to help us quantify the extent to which higher electricity demand from these users moves the needle on your energy revenues?

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

On the revenue side, probably not. On the story, the answer is we are very fortunate to have once been combined with Newmark. You will have seen publicly that Newmark has done a lot on the data center side and the hyperscaler side. That affects us because part of Americas is energy procurement. We have a great business on the energy procurement side. Newmark has been kind enough to introduce us to some of the people that they are in contact with. That spills over to us on the energy side. The short answer, and I apologize for the long-winded one, is that yes, we are involved. We continue to be more involved. The way that it affects us is by procuring energy for those data centers.

Elie Abou Haydar (Project Manager)

Got it. Maybe just the last one for you here. Electronic credit revenues are flattish year to date. I think they're up 1%. Can you talk about what you're seeing in that business and the headwinds? Maybe stepping back, is this a business that you think can grow at a similar pace as Tradeweb or MarketAxess longer term, or are there structural differences that would likely cause a delta in growth?

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

To take the last part first. The answer is yes, we can grow at those rates. When it comes to electronic credit, I think it's growing a bit faster than that. Certainly faster than the average that you will see. As we said to you last time, we are launching new electronic protocols all the time. We are gaining market share, as you see in the sweep, which we pull out for our Portfolio Match. You will see other products of ours start to gain market share. As the electronic offering becomes a greater percentage of our own credit business proportionately, you will see the overall credit start to move at a faster rate. Actually, JP, why don't you talk about our new offering?

Jean pierre Aubin (Co-CEO)

Yeah, hi, Elie. Look, we do recognize the shift towards more electronic and institutional credit markets. We launched a new fully electronic global credit platform for buy-side institutional clients, which we like to continue to move our business more electronic. I can tell this platform is already live globally.

Elie Abou Haydar (Project Manager)

Got it. Thanks, guys.

Jean pierre Aubin (Co-CEO)

Thank you, Elie.

Operator (participant)

There are no further questions in queue at this time. I would like to turn the call back over to Mr. Abularrage for closing comments.

John Abularrage (Co-CEO and Co-Global Head of Financial Services)

Guys, thank you very much. Appreciate it.

Operator (participant)

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.