StoneX Group Inc. (SNEX)·Q1 2025 Earnings Summary

Executive Summary

• StoneX delivered another record quarter: Net operating revenues $492.1M (+17% y/y), net income $85.1M (+23% y/y), diluted EPS $2.54 (+19% y/y), ROE 19.5% .
• Sequentially, net income rose 11% and diluted EPS 9% vs the record Q4; operating revenues increased 3% q/q to $944.3M .
• Product mix drove outperformance: physical contracts operating revenues +80% y/y on precious metals, cotton, cocoa; FX/CFD +32% y/y; securities +27% y/y with ADV +40% despite RPM pressure .
• Management announced a three-for-two stock split effective March 24, 2025 (record date March 11, distribution March 21), a potential sentiment catalyst .
• Wall Street consensus estimates via S&P Global were unavailable at time of query; estimate-based beat/miss analysis not shown.

What Went Well and What Went Wrong

What Went Well

• Record profitability and operating leverage: Self-Directed/Retail segment income nearly doubled (+98% y/y) on 41% net operating revenue growth, reflecting improved capture and broader product mix .
• Physical contracts strength: Precious metals volatility (tariff noise), CDI expansion (coffee), and cocoa price volatility lifted physical revenues (+80% y/y) and segment contribution; “really nice strong performance” per CFO .
• Diversification and scale: Securities ADV +40% y/y and interest/fees on client balances +9% y/y underscored broad-based growth across products and segments .

What Went Wrong

• Rate and spread pressures: Securities RPM declined 20% y/y; Payments RPM fell 17% y/y on tighter FX spreads; OTC derivatives revenue capture down 22% .
• Interest sensitivity headwind: Net interest/fee income on client balances fell $6M q/q as Fed cuts began to bite; a 100 bps move shifts annual net income by ~$27.7M/$0.78 per share .
• Expense intensity: Overhead costs rose 27% y/y; fixed compensation included a $5.8M charge tied to a departing executive, raising cost base in the quarter .

Financial Results

Segment Operating Revenues ($USD Millions)

Segment Income ($USD Millions)

Key Operating Metrics

Notes:

• Other gains included $5.7M nonrecurring proceeds from class action settlements, lifting income before tax .
• Overhead costs and expenses rose to $133.3M (+27% y/y), net of allocation $90.6M (+36% y/y) .

Guidance Changes

Corporate Action (for awareness):

• Three-for-two stock split: Record date March 11, 2025; distribution March 21, 2025; trading begins split-adjusted March 24, 2025 .

Earnings Call Themes & Trends

Management Commentary

• “We achieved another record quarterly result… net income of $85.1 million… diluted EPS of $2.54, and a 19.5% return on equity… despite relatively low volatility.” – Sean O’Connor .
• “Net operating revenues increased 17%… largest gains from physical contracts up $35.1M and FX/CFDs up $24.1M… interest and fee income on client balances increased $14.4M.” – CFO Bill Dunaway .
• “We just last week closed the acquisition of Octo Finance… provides broad access into the EU institutional market… we believe we’ll significantly enhance and grow the Octo product offering.” – Sean O’Connor .
• “We received approval… as a virtual asset service provider… allowing us to operate a digital asset business in Europe… integrated into our suite of prime brokerage services.” – Sean O’Connor .
• Payments deep dive: “Second strongest quarter in the history of this business… ADV +12% y/y to $84M; RPM contracted ~17% y/y but volumes up ~15%.” – Philip Smith .

Q&A Highlights

• Physical contracts sustainability: CFO cited precious metals tariff noise, expanding CDI (coffee), and cocoa volatility as key drivers; sustainability depends on tariff developments and commodity volatility, with cotton/cocoa momentum continuing .
• Retail capture and expansion: Management believes capture is near a high watermark; growth to come from product suite expansion into securities and mainstream assets, emphasizing consistency and new clients/products .
• Payments spread dynamics: RPM declines stem from corridor-dollar scarcity cycles and regional factors; strategy is to control volumes, diversify corridors, and avoid concentration, not to rely on intermittent spread spikes .

Estimates Context

• S&P Global consensus estimates for EPS and revenue were unavailable at time of query; comparisons to Wall Street estimates are therefore not shown.
• Implications: Without consensus, we note record EPS ($2.54) and net income ($85.1M) with sequential improvement; however, management flagged a $6M q/q decline in interest/fee income due to initial Fed cuts, which may temper forward EPS expectations .

Key Takeaways for Investors

• Broad-based strength with record net operating revenues ($492.1M) and EPS ($2.54) amidst low volatility signals resilient model diversification .
• Physical commodities and FX/CFD were key growth engines; watch precious metals tariff developments and soft commodities volatility for continued tailwinds .
• Securities franchise scaling: ADV +40% y/y, but RPM compression indicates mix headwinds; increasing volumes help offset spread pressure .
• Rate sensitivity matters: A 100 bps rate move changes annual net income by ~$27.7M/$0.78 per share; ongoing Fed cuts modestly pressure interest/fee income (−$6M q/q) .
• Self-Directed/Retail exhibits strong operating leverage (segment income +98% y/y); expansion into securities/mainstream assets is the next growth leg .
• Strategic optionality increasing: Octo Finances acquisition deepens EU fixed income; EU digital asset approval positions StoneX for integrated prime services in crypto .
• Corporate action: Three-for-two stock split effective March 24, 2025 may broaden ownership and support trading liquidity .