Bgc Group, Inc. · NASDAQ:BGC
Bgc — BGC Partners — Q1 2023 Earnings Presentation
38 slides from Bgc's earnings presentation, 2023
Slide 1: BGC Partners, Inc. Earnings Presentation 1Q 2023
BGC PARTNERS, INC. NASDAQ: BGCP E A R N I N G S P R E S E N TAT I O N 1 Q 2 0 2 3
Slide 2: Disclaimer
DISCLAIMER 2 DISCUSSION OF FORWARD-LOOKING STATEMENTS ABOUT BGC Statements in this document regarding BGC that are not historical facts are “forward-looking statements” that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statem
Slide 3: BGC Investment Highlights
BGC INVESTMENT HIGHLIGHTS 3 ACCELERATING GROWTH • BGC revenue growth accelerated to 9% through first 19 trading days of 2Q 2023, up from 5% yr/yr growth in 1Q 2023 • Overall market trending towards a stronger macro trading environment • BGC continues to expect sustained levels of higher secondary ma
Slide 4: Business Overview: 1Q 2023
BUSINESS OVERVIEW: 1Q 2023 4 Highlights of Consolidated Results Constant REVENUE: 1Q 2023 1Q 2022 Change Currency (USD millions, except per share data) Change1 $533M Revenues $532.9 $506.5 5.2% 7.0% 33.2 (26.7)% 26% GAAP income (loss) from operations before income taxes 45.4 GAAP net income (loss) f
Slide 5: BGC Revenue by Asset Class
BGC REVENUE BY ASSET CLASS 5 BROKERAGE REVENUES IMPROVED ACROSS ALL ASSET CLASSES DATA, SOFTWARE & POST- Constant TRADE AND OTHER1 Revenue By Asset Class 1Q 2023 Change Currency (USD millions) Change 8% RATES EQUITIES Rates $164.7 3.7% 6.6% 13% 31% FX 80.2 0.2% 1.0% Credit 89.5 6.7% 9.0% 1Q23 17% En
Slide 6: Overview: Revenue by Geography & Currency
OVERVIEW: REVENUE BY GEOGRAPHY & CURRENCY 6 BGC’S REVENUE IS WELL DIVERSIFIED ACROSS GEOGRAPHIES GLOBAL REVENUE REVENUE BY CURRENCY (USD equivalent1) EMEA 1Q 2023 $273M AMERICAS (51.3% of total) APAC $332.7M $188M $71M 62.4% (35.3% of total) (13.4% of total) $31.6M 5.9% $111.2M 20.9% $57.3M OTHER 10
Slide 7: Rates Macro Environment
RATES MACRO ENVIRONMENT 7 Primary Dealer Trading Volumes for U.S. Government “Historically, huge new issuance, as we have seen over the past decade, would have produced record trading Coupon Securities were historically strongly correlated to volumes. Instead, zero interest rates over the last 14-ye
Slide 8: Credit Macro Environment
CREDIT MACRO ENVIRONMENT 8 Primary Dealer Trading Volumes for U.S. Corporate Securities “During the last 14-years of zero interest rates, the relationship between new issuance and trading volume were historically strongly correlated to Gross Issuance growth broke down.” $600B $2,500B 2001 - 2007 Cor
Slide 9: Front Office Headcount & Productivity
FRONT OFFICE HEADCOUNT & PRODUCTIVITY 9 FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s)1 PRODUCTIVITY STATS Period–end Front Office Headcount $882 LTM Front Office Productivity $861 $847 $870 $825 $834 LTM 1Q 2023: $811 $820 $791 $756 $766 $770 $882k +7% PRODUCTIVITY GROWTH YR/YR
Slide 10: Fenics Overview
FENICS OVERVIEW 10 FENICS REPRESENTS BGC’S HIGHLY VALUABLE FINTECH ASSETS +12% $140M Fenics Markets $125M $17M +12% $13M +10% Growth yr/yr $123M $123M Growth yr/yr +12% $112M 1Q 2023 Revenue +14% Constant Currency Growth yr/yr Constant Currency Growth 1Q 2022 1Q 2023 yr/yr Fenics Markets Fenics Grow
Slide 11: Fenics Transformation Strategy
FENICS TRANSFORMATION STRATEGY 11 FENICS’ OPERATING STRATEGY FOCUSES ON: 1 2 CONVERTING VOICE / HYBRID BUSINESS INTO HIGHER-MARGIN TECHNOLOGY FENICS GROWTH PLATFORMS: INDUSTRY LEADING GROWTH OF +33% DRIVEN FENICS REVENUE FENICS REPRESENTED 26% OF BGC’S OVERALL REVENUE IN 1Q 2023 Fenics Growth Platfo
Slide 12: BGC's Fully Electronic U.S. Rates Platform
12 BGC’S FULLY ELECTRONIC U.S. RATES PLATFORM FMX OPPORTUNITY1 Electronic U.S. Treasury and Rates futures platform 21% of CLOB Fenics UST is the second largest CLOB U.S. Treasury trading platform Market (1Q23) CME CME Market Cap: 30% Revenue by Rates Business $67B2 To be launched Partnership with LC
Slide 13: BGC's Cash U.S. Rates Trading Platform
13 BGC’S CASH U.S. RATES TRADING PLATFORM PERFORMANCE HIGHLIGHTS Quarterly Average U.S.TREASURY CLOB MARKET SHARE3,4 21% 20% 20% 20% 24% 19% 19% Revenue growth in 1Q 2023 17% 17% 18% Streaming offering reached record levels in 1Q 2023, more 2x than doubling ADV yr/yr; earns significantly higher fee
Slide 14: Infrastructure & Connectivity Offering with Recurring Subscription Revenue
14 INFRASTRUCTURE & CONNECTIVITY OFFERING WITH HIGHLY RECURRING, COMPOUNDING SUBSCRIPTION REVENUE MODEL PERFORMANCE HIGHLIGHTS Provides critical infrastructure to the capital markets ANNUAL RECURRING REVENUE +188% Significant increase in subscription revenue since 1Q 2019 Leverages BGC’s existing gl
Slide 15: Leveraging BGC's Ecosystem to Develop Market Data Products
15 LEVERAGING BGC’S GLOBAL CAPITAL MARKETS ECOSYSTEM TO DEVELOP HIGHLY VALUABLE MARKET DATA PRODUCTS MARKET OPPORTUNITY Record global consumption of financial market data in 2022 totalling $37.3B1 Recurring, compounding subscription-based model Independent data sourced from BGC’s global wholesale li
Slide 16: End-to-End Global Electronic Trading Platform for Block-Sized Listed Options
16 END-TO-END GLOBAL ELECTRONIC TRADING PLATFORM FOR BLOCK-SIZED LISTED OPTIONS PERFORMANCE HIGHLIGHTS Web-based platform with API connectivity offering next generation multi- protocol execution capability & support compliance with regulatory requirements, such as best execution Partnered with leadi
Slide 17: 2Q 2023 Performance Quarter-to-Date
2Q 2023 PERFORMANCE QUARTER-TO-DATE (“QTD”) 17 QTD REVENUE PERFORMANCE OUTLOOK Guidance Actual Metric (USD million) 2Q 2023 2Q 2022 +9% Revenues $450 – $500 $435.8 Pre-tax Adjusted Earnings $90 – $110 $90.2 +22% Metric (%) FY 2023 FY 2022 Pre-Corporate Conversion Adjusted Earnings Tax Rate 5.0% – 8.
Slide 18: GAAP Financial Results
BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 19: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 19 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) March 31, December 31, 2023 2022 Assets Cash and cash equivalents $ 493,496 $ 484,989 Cash segregated under regulatory requirements 16,424 17,021 Financial in
Slide 20: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 20 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended March 31, Revenues: 2023 2022 Commissions $ 377,288 $ 356,664 Principal transactions 114,929 115,601 Total brokerage revenues 492,217 472,265 Fees f
Slide 21: Appendix
MN BGC PARTNERS, INC. + bgc (5 SF! Fenics
Slide 22: Interdealer Broker (IDB)
INTERDEALER BROKER (“IDB”) 22 IDBs: FINANICAL INTERMEDIARIES THAT FACILITATE TRANSACTIONS BETWEEN FINANCIAL INSTITUTIONS IDBS ARE CRITICAL CAPITAL MARKETS INFRASTRUCTURE IDB ADVANTAGES Deepest and most diverse pools of liquidity provide better LIQUIDITY IDBs act as an exchange for financial prices a
Slide 23: Significant Operating Leverage Through Scale & Tech
SIGNIFICANT OPERATING LEVERAGE THROUGH SCALE & TECH 23 PRE-TAX ADJUSTED EARNINGS 30 - 40% 50 - 60% 60 - 70% VOICE / GROWTH MARKETS HYBRID PLATFORMS INCREMENTAL MARGIN FROM REVENUE GROWTH: 23 23 23
Slide 24: BGC's Fully Diluted Share Count Summary as of 3/31/2023
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF 3/31/2023 24 FULLY DILUTED SPOT SHARE COUNT (millions) BGC Partners, Inc. Fully Diluted Share count Summary Fully -Diluted Shares Ownership (%) (as of March 31, 2023) (millions) 557 539 PUBLIC 319.9 63% Class A owned by Public 319.9 63% 503 505 EMPLOYEES
Slide 25: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 25 25 BGC Partners, Inc. As of 3/31/2023 INVESTMENT GRADE CREDIT RATING Total Liquidity1 $534,798 Investment Grade Credit Rated: Unsecured senior revolving credit agreement $73,295 • Fitch: BBB- (Outlook: Stable) 5.375% Senior Notes due July 24
Slide 26: Fenics Ecosystem
FENICS ECOSYSTEM 26 MULTIPLE TRADING PROTOCOLS ACROSS A COMPREHENSIVE SET OF FINANCIAL INSTRUMENTS DATA, SOFTWARE & RATES CREDIT FX EQUITIES POST-TRADE KEY PRODUCTS: KEY PRODUCTS: KEY PRODUCTS: KEY PRODUCTS: • Interest Rate Derivatives • Investment Grade Bonds (IG) • FX Spot • LatAm Equities • EGBs
Slide 27: BGC Revenue Correlation & Industry Volumes
BGC REVENUE CORRELATION & INDUSTRY VOLUMES 27 1Q23 VS 1Q22 REVENUE CORRELATION BY ASSET CLASS CORRELATION1 INDUSTRY METRIC VOLUME CHANGE RATES Eurex Interest Rate Derivatives (Total Contracts Traded) 0.73 12% BGC’s revenues across each asset class are generally correlated over time to relevant indus
Slide 28: Shareholder Value Creation
SHAREHOLDER VALUE CREATION 28 BGC HAS A STRONG HISTORY OF CREATING VALUE FOR SHAREHOLDERS THROUGH ORGANIC GROWTH, ACQUISITIONS & INVESTMENTS IN TECHNOLOGY 1999 – eSpeed, leading electronic 2022 – Fenics eclipsed UST platform, IPOs $449M in revenue 2004 – Cantor forms BGC Partners, separating its bro
Slide 29: Non-GAAP Definitions and Reconciliation Tables
BGC PARTNERS, INC. NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 30: Reconciliation of GAAP Income to Adjusted Earnings
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED EARNINGS & GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS 30 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) GAAP income (loss) from operations before income taxes $ Q1 2023 33,231 $ Q1 2022 45,358 30 Pre-tax adj
Slide 31: Reconciliation of GAAP Income to Adjusted Earnings (continued)
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES TO ADJUSTED EARNINGS & GAAP FULLY DILUTED EPS TO POST-TAX ADJUSTED EPS 31 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (1) The components of equity-based compensation and allocations of net income to limited partnership un
Slide 32: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) 32 (UNAUDITED) Q1 2023 Q1 2022 GAAP net income (loss) available to common stockholders $ 18,978 $ 25,972 Add back: Provision (benefit) for income taxes 12,061 14,657 Net income (loss) attribut
Slide 33: Fully Diluted Weighted-Average Share Count and Liquidity Analysis
FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT UNDER GAAP AND FOR ADJUSTED EARNINGS & LIQUIDITY ANALYSIS (IN THOUSANDS) 33 (UNAUDITED) 33 FULLY DILUTED WEIGHTED AVERAGE SHARE COUNT LIQUIDITY ANALYSIS Q1 2023 Q1 2022 March 31, 2023 December 31, 2022 Common stock outstanding 375,220 368,323 Cash and cash
Slide 34: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 34 NON-GAAP FINANCIAL MEASURES 34 This document contains non-GAAP financial measures that differ from the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United St
Slide 35: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 35 (CONTINUED) CERTAIN OTHER COMPENSATION-RELATED ADJUSTMENTS FOR ADJUSTED EARNINGS 35 BGC also excludes various other GAAP items that management views as not reflective of the Company’s underlying performance in a given period from its calc
Slide 36: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 36 (CONTINUED) BGC incurs income tax expenses based on the location, legal structure and jurisdictional taxing authorities of each of its subsidiaries. Certain of the Company’s entities are taxed as U.S. partnerships and are subject to the U
Slide 37: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 37 (CONTINUED) 37 The Company’s management believes that its Adjusted EBITDA measure is useful in evaluating BGC’s operating performance, because the calculation of this measure generally eliminates the effects of financing and income taxes
Slide 38: Media and Investor Contact
38 38 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: ir.bgcpartners.com Jason Chryssicas twitter.com/bgcpartners +1 212-610-2426 linkedin.com/company/bgc-partners