SIEBERT FINANCIAL CORP (SIEB)·Q3 2023 Earnings Summary

Executive Summary

• Q3 2023 revenue grew 26% year-over-year to $18.1M, net income available to common rose to $2.8M, and GAAP EPS was $0.07; management attributed performance to higher interest income, mark-to-market gains on U.S. government securities, and stronger commission/fee revenue .
• Retail customer accounts increased to 128,727 and retail customer net worth reached $14.6B, up from $13.5B at year-end 2022, indicating improving client asset levels alongside a favorable rate backdrop .
• Management highlighted momentum into Q4 and improving profitability; however, an 8-K disclosed legal uncertainty around the Kakao Pay second-tranche agreement, potentially increasing legal expenses and creating headline risk .
• Operational catalysts included HQ relocation to Miami Beach, a new NYC lease expected to reduce occupancy costs, and approval for Fully Paid Securities Lending to expand securities finance—each supportive of medium-term revenue durability .

What Went Well and What Went Wrong

What Went Well

• “Our results this quarter demonstrate the strength of our business model…we enter the fourth quarter with great momentum” — CEO John J. Gebbia, underscoring demand tailwinds and execution confidence .
• CFO: “Revenue grew 26% year-over-year…driven by higher interest income and revenues related to the mark to market on our U.S. government securities portfolio, along with higher commission and fee revenue,” plus improved pretax income and margins .
• Growth initiatives: HQ move to Miami Beach, new NYC lease to lower occupancy costs, and approval for Fully Paid Securities Lending to scale securities finance .

What Went Wrong

• Legal overhang: Siebert issued a notice to Kakao Pay citing a material adverse effect, and is evaluating rights and potential termination of the second-tranche stock purchase agreement; legal expenses tied to these matters are uncertain .
• No formal quantitative guidance provided for Q4 2023, limiting visibility despite positive commentary on continued trends .
• Broader regulatory/legal exposure remains a risk factor backdrop (FINRA, CFIUS, etc.) referenced across filings and forward-looking statements, which can affect transaction timing and costs .

Financial Results

• Siebert operates as a single reporting segment; no segment breakdown is disclosed .

Quarterly Trends (Q1 → Q3 2023)

Year-over-Year (Q3 2023 vs Q3 2022)

KPIs

Note: Margin percentages (EBIT margin, Net income margin) were not disclosed in the Q3 2023 press release or call materials; management did state margins improved in Q3 .

Guidance Changes

• No formal quantitative guidance ranges were provided for Q4 2023 in the Q3 press release; management indicated trends benefiting from the rate environment would continue .

Earnings Call Themes & Trends

• No Q3 2023 earnings call transcript was available in our document catalog; themes below derive from Q3 press release and Q1/Q2 10-Q MD&A.

Management Commentary

• CEO: “Our results this quarter demonstrate the strength of our business model… We enter the fourth quarter with great momentum and a tremendous opportunity for Siebert to capture opportunities in the current market environment while creating long-term shareholder value.” — John J. Gebbia .
• CFO: “Revenue grew 26% year-over-year… driven by higher interest income and revenues related to the mark to market on our U.S. government securities portfolio… we also delivered an improvement to both our pretax income and margins… and expect those trends to continue in the fourth quarter.” — Andrew Reich .
• Kakao Pay second tranche: Siebert delivered a notice citing a material adverse effect; rights under the stock purchase agreement are being evaluated, with potential for additional legal expenses .

Q&A Highlights

• No earnings call transcript was available; therefore, no Q&A highlights could be extracted from a call transcript for Q3 2023.

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2023 EPS and revenue was unavailable at the time of this analysis due to data access limits; as such, a formal comparison to consensus cannot be provided.
• Actuals: Revenue $18.10M, GAAP EPS $0.07 .
• Implication: Given management’s emphasis on interest income and MTM gains, estimate revisions, if any, would likely focus on the durability of rate-driven revenues and securities finance expansion .

Key Takeaways for Investors

• Rate environment remains a tailwind: higher margin interest and interest on segregated U.S. government securities supported revenue growth; management expects trends to continue into Q4 .
• Operating leverage improving: management cited improved pretax income and margins; the NYC lease and HQ move are expected to optimize occupancy costs, aiding profitability .
• Growth vectors: approval for Fully Paid Securities Lending expands revenue opportunities in securities finance; continued platform investment modernizes client experience .
• Legal overhang: second-tranche Kakao Pay uncertainty introduces headline and expense risk; monitor developments for potential capital plan/ownership impacts .
• Client asset momentum: account growth and higher client net worth indicate improving engagement and asset levels, supportive of commission and distribution fee durability .
• Near-term trading setup: narrative is supported by macro rates and securities finance expansion; however, legal/regulatory uncertainties may drive volatility around corporate actions .
• Medium-term thesis: diversified revenue streams (interest income, commissions/fees, securities finance) and operational optimization should support earnings resiliency through cycles .