Bgc Group, Inc. · NASDAQ:BGC
Bgc — Q2 2023 Earnings Presentation
40 slides from Bgc's earnings presentation, 2023
Slide 1: BGC Group, Inc. Earnings Presentation Q2 2023
BGC GROUP, INC. NASDAQ: BGC E A R N I N G S P R E S E N TAT I O N Q 2 2 0 2 3
Slide 2: Disclaimer
2 DISCLAIMER 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: Investment Highlights
3 INVESTMENT HIGHLIGHTS ACCELERATING GROWTH COMPLETED CONVERSION TO FULL-C CORPORATION ▪ Completed on July 1, 2023 ▪ BGC revenue growth accelerated in Q2 2023, ▪ New Company Name: BGC Group, Inc. up from 13% yr/yr ▪ New Nasdaq Ticker Symbol: BGC ▪ Revenue grew 9% yr/yr in H1 2023 ▪ At the beginning
Slide 4: Q2 2023 Performance
4 Q2 2023 PERFORMANCE Highlights of Consolidated Results BUSINESS HIGHLIGHTS Q2 2023 Q2 2022 Change (USD millions, except per share data) Revenue: Accelerating growth Revenues $493.1 $435.8 13.2% ▪ 13.2% yr/yr growth ▪ Fenics revenue of $125.1mm, +14.2% yr/yr GAAP income (loss) from operations befor
Slide 5: Revenue by Asset Class
5 REVENUE BY ASSET CLASS Revenue By Asset Class Q2 2023 Q2 2022 Change DIVERSIFIED BUSINESS MODEL ACROSS ALL FINANCIAL (USD millions) MARKETS AND ENERGY & COMMODITIES PRODUCTS Rates $144.2 $137.1 5.2% DATA, NETWORK FX 77.5 74.3 4.3% & POST-TRADE AND OTHER2 Credit 65.8 61.3 7.4% 10% EQUITIES RATES En
Slide 6: Revenue by Geography & Currency
6 REVENUE BY GEOGRAPHY & CURRENCY Q2 2023 GLOBAL REVENUE REVENUE BY CURRENCY (USD Equivalent1) EMEA Q2 2023 $244mm AMERICAS APAC $303.9mm +10% yr/yr 61.6% $181mm (49.5% of total) $68mm $101.1mm +22% yr/yr +5% yr/yr (36.8% of total) 20.5% (13.7% of total) $32.8mm 6.7% $55.3mm OTHER 11.2% 1. GBP to US
Slide 7: Front Office Productivity Continues to Grow
7 FRONT OFFICE PRODUCTIVITY CONTINUES TO GROW FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s)1 Period–end Front Office Headcount LTM Front Office Productivity LTM front office productivity, $908 $908k 9% growth yr/yr $861 $834 $811 $766 $744 $749 $750 $736 Q2 2023 front office 2,5
Slide 8: Fenics Represents BGC's Valuable Fintech Assets
8 FENICS REPRESENTS BGC’S VALUABLE FINTECH ASSETS +14% FENICS CONTINUES TO BECOME A LARGER PART OF BGC’S $125mm BUSINESS, REPRESENTING 26% OF Q2 2023 LTM REVENUE $110mm $18mm $125mm $12mm 26% Q2 2023 Revenue $107mm 22% $97mm +14% $480mm Growth yr/yr $401mm 14% Q2 2022 Q2 2023 13% Fenics Markets Feni
Slide 9: Overview FMX Opportunity
9 OVERVIEW FMX OPPORTUNITY1 Electronic U.S. Treasury, Rates Futures and Spot FX platform Fenics UST is the second largest CLOB U.S. Treasury trading 23% of CLOB platform Market (Q2 2023) CME 30% CME Market Cap: Revenue by Partnership with LCH, largest clearer of interest rate derivatives Rates Busin
Slide 10: U.S. Treasury CLOB Market Share
10 PERFORMANCE HIGHLIGHTS U.S.TREASURY CLOB MARKET SHARE2 25% 42% Revenue growth in Q2 2023 June 23% 21% 20% 20% 20% 25% Record CLOB market share June 2023 17% 19% 19% 18% Estimated client cost savings in Q2 2023 and $429 million $27mm since January 2019 1 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q2
Slide 11: Highly Recurring, Subscription-Based Revenue Business
11 HIGHLY RECURRING, SUBSCRIPTION-BASED REVENUE BUSINESS DATA, NETWORK & POST-TRADE BUSINESSES: Provider and generator of data across global financial and commodity markets, supported by DATA NETWORK POST-TRADE BGC’s deep wholesale liquidity pools Revenue growth in Q2 2023; continuing to deploy 16%
Slide 12: Q3 2023 Outlook
12 Q3 2023 OUTLOOK OUTLOOK Guidance Actual Metric (USD million) Q3 2023 Q3 2022 Revenues $445 – $500 $416.6 Pre-tax Adjusted Earnings $87 – $110 $82.8 Metric (%) FY 2023 Adjusted Earnings Tax Rate 6.0% – 9.0% BGC expects to update its quarterly outlook towards the end of September 2023. 12 12
Slide 13: GAAP Financial Results
GAAP FINANCIAL RESULTS
Slide 14: Balance Sheet
14 BALANCE SHEET BGC GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) June 30, December 31, June 30, December 31, 2023 2022 2023 2022 Assets Liabilities, Redeemable Partnership Interest, and Equity Cash and cash equiv
Slide 15: Income Statement
15 INCOME STATEMENT BGC GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 2023 2022 2023 2022 Reven
Slide 16: Appendix I: Corporate Conversion
APPENDIX I: CORPORATE CONVERSION
Slide 17: Corporate Conversion Completion
17 CORPORATE CONVERSION COMPLETION BGC COMPLETES CORPORATE CONVERSION, NAME CHANGE & TICKER SYMBOL CHANGE1 “Today represents an important step for BGC, with its conversion to a simpler, more efficient corporate structure. BGC Group, Inc. (Nasdaq: BGC) completed its corporate conversion to a Full C-C
Slide 18: Corporate Conversion Completion
18 CORPORATE CONVERSION COMPLETION SIMPLIFIES IMPROVES INCREASES ATTRACTS More transparent Operational efficiencies Potential index inclusion Broader and more corporate structure with capital synergies with improved trading diversified addressable liquidity investor base 18 18
Slide 19: Conversion Simplifies Corporate Structure
19 CONVERSION SIMPLIFIES CORPORATE STRUCTURE BGC GROUP BGC PARTNERS Full C-Corp Umbrella Partnership/C-Corp (New Structure) (Former Structure) Partnership within a Corporate Structure Simple / transparent publicly traded company Tax benefits of Tax Treatment Similar tax rates for Adjusted Earnings o
Slide 20: Financial Impact
20 FINANCIAL IMPACT ESTIMATED ADJUSTED EARNINGS EFFECTIVE TAX RATE1,2 • FY 2023: 6% to 9% • FY 2024: 7% to 10% OPERATIONAL EFFICIENCIES • Targeting annual operational efficiencies of $4 million to $7 million • Unlocking capital that sits across entities and geographies following the corporate conver
Slide 21: Estimated Changes in Fully Diluted Share Count
21 ESTIMATED CHANGES IN FULLY DILUTED SHARE COUNT BGC’S CORPORATE CONVERSION RESULTED IN AN APPROXIMATE 21 MILLION SHARE REDUCTION, WHICH LOWERED BGC’S FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT BY 4 PERCENT POST-CORPORATE CONVERSION PRIOR TO CORPORATE CONVERSION BGC Group, Inc. BGC Partners, Inc. S
Slide 22: Expected Increase in Institutional Investor Base
22 EXPECTED INCREASE IN INSTITUTIONAL INVESTOR BASE CONVERSION IS EXPECTED TO INCREASE THE BGC PEERS HAVE HIGHER LEVELS OF INSTITUTIONAL ADDRESSABLE INVESTOR BASE,TRADING VOLUME AND OWNERSHIP & MUTUAL FUND INCLUSION1,2 LIQUIDITY OF BGC STOCK BGC (Former Umbrella Partnership/C-Corp structure) Electro
Slide 23: Expected Increase in Institutional Investor Base
23 EXPECTED INCREASE IN INSTITUTIONAL INVESTOR BASE CONVERSION LED TO IMPROVED LIQUIDITY & OWNERSHIP FOR APOLLO & ZOOMINFO TECHNOLOGIES CHANGE IN TRADING VOLUMES CHANGE IN INSTITUTIONAL OWNERSHIP +233% +40% Prior to Conversion Post-Conversion Up-C Structure Full C-Corporation Increase in trading vol
Slide 24: Appendix II
APPENDIX II
Slide 25: Interdealer Brokers (IDB) Overview
25 INTERDEALER BROKERS (“IDB”) OVERVIEW FINANICAL INTERMEDIARIES THAT FACILITATE TRANSACTIONS IDB ADVANTAGES BETWEEN FINANCIAL INSTITUTIONS Deepest and most diverse pools of liquidity LIQUIDITY IDBs are critical capital markets provide better prices and speed of execution infrastructure that act as
Slide 26: BGC's Fully Diluted Share Count Summary as of 6/30/2023
26 BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF 6/30/2023 FULLY DILUTED SPOT SHARE COUNT (MILLIONS) BGC Group, Inc. Fully Diluted Share count Summary Fully-Diluted Ownership (%) 546 (as of June 30, 2023) Shares (millions) 539 PUBLIC 328.3 65% Class A owned by Public 328.3 65% 501 504 EMPLOYEES 65.3
Slide 27: Strongly Capitalized & Investment Grade Credit Profile
27 STRONGLY CAPITALIZED & INVESTMENT GRADE CREDIT PROFILE BGC Group, Inc. As of 6/30/2023 INVESTMENT GRADE CREDIT RATING Cash and cash equivalents $526,293 ▪ Investment Grade Credit Rated: Reverse repurchase agreements 200,000 • Fitch: BBB- (Outlook: Stable) Financial instruments owned, at fair valu
Slide 28: Fenics Ecosystem
28 FENICS ECOSYSTEM DATA, NETWORK & 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 • High Yield Bonds (HY) • FX Options (Fenics Markets associated • GILTs • Sovere
Slide 29: BGC Revenue Correlation & Industry Volumes
29 BGC REVENUE CORRELATION & INDUSTRY VOLUMES BGC’S ASSET CLASS REVENUES ARE GENERALLY CORRELATED TO RELEVANT INDUSTRY SECONDARY MARKET TRADING VOLUMES Brokerage revenues are driven by Q2 2023 VS Q2 2022 ASSET CLASS REVENUE TO INDUSTRY VOLUME CORRELATION CORRELATION1 INDUSTRY METRIC secondary market
Slide 30: Shareholder Value Creation
30 SHAREHOLDER VALUE CREATION BGC HAS A STRONG HISTORY OF CREATING VALUE FOR SHAREHOLDERS THROUGH ORGANIC GROWTH, ACQUISITIONS & INVESTMENTS IN TECHNOLOGY 1999 – eSpeed, leading electronic 2023 – Completed UST platform, IPOs conversion to Full C-Corporation5 2004 – Cantor forms BGC Partners, separat
Slide 31: Non-GAAP Definitions and Reconciliation Tables
NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 32: Reconciliation of GAAP to Adjusted Earnings
32 RECONCILIATION OF GAAP 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 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Three Months Ended June 30, Three Months Ended June 30, 202
Slide 33: Reconciliation of GAAP to Adjusted Earnings Footnotes
33 RECONCILIATION OF GAAP TO ADJUSTED EARNINGS FOOTNOTES FOOTNOTES (1) The components of equity-based compensation and allocations of net income to limited partnership units and FPUs are as follows (in thousands): Three Months Ended June 30, 2023 2022 Issuance of common stock and grants of exchangea
Slide 34: Other Select Financial Data
34 OTHER SELECT FINANCIAL DATA RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON FULLY DILUTED WEIGHTED-AVERAGE SHARE COUNT STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) (UNAUDITED) (IN THOUSANDS) (UNAUDITED) Three Months Ended June 30, Three Months Ended June 30, 2023 2022 2023 2022 GAA
Slide 35: Differences Between Non-GAAP and GAAP Consolidated Results
35 DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS NON-GAAP FINANCIAL MEASURES The non-GAAP definitions below include references to certain equity-based compensation instruments, such as restricted stock awards and/or restricted stock units (“RSUs”), that the Company has issued and outsta
Slide 36: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 36 (CONTINUED) The amounts of certain quarterly equity-based compensation charges are based upon the Company’s estimate of such expected charges during the annual period, as described further below under “Methodology for Calculating Adjusted
Slide 37: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 37 (CONTINUED) To determine the non-GAAP tax provision, BGC first adjusts pre-tax Adjusted Earnings by recognizing any, and only, amounts for which a tax deduction applies under applicable law. The amounts include charges with respect to equ
Slide 38: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 38 (CONTINUED) ADJUSTED EBITDA DEFINED BGC also provides an additional non-GAAP financial performance measure, “Adjusted EBITDA”, which it defines as GAAP “Net income (loss) available to common stockholders”, adjusted to add back the followi
Slide 39: Differences Between Non-GAAP and GAAP Consolidated Results (Continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 39 (CONTINUED) LIQUIDITY DEFINED BGC may also use a non-GAAP measure called “liquidity”. The Company considers liquidity to be comprised of the sum of cash and cash equivalents, reverse repurchase agreements (if any), financial instruments o
Slide 40: Media and Investor Contacts
40 40 Media Contact: Karen Laureano-Rikardsen +1 212-829-4975 Investor Contact: ir.bgcg.com Jason Chryssicas twitter.com/bgcgroupinc +1 212-610-2426 linkedin.com/company/bgc_group