BGC Group, Inc. · NASDAQ:BGC
BGC — BGC Partners — Q4 2022 Earnings Presentation
38 slides from BGC's earnings presentation, February 2023
Slide 1: BGC Partners Earnings Presentation 4Q & FY 2022
BGC PARTNERS, INC. NASDAQ: BGCP E A R N I N G S P R E S E N TAT I O N 4 Q & F Y 2 0 2 2
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: Highlights of Consolidated Results: 4Q 2022 & FY 2022
HIGHLIGHTS OF CONSOLIDATED RESULTS: 4Q 2022 & FY 2022 3 Constant Constant Highlights of Consolidated Results 4Q 2022 4Q 2021 Change Currency FY 2022 FY 2021 Change Currency (USD millions, except per share data) Change1 Change1 Revenues (excluding Insurance)2 $436.5 $441.7 (1.2)% 1.9% $1,795.3 $1,837
Slide 4: Highlights of 1Q 2023 Performance Quarter-to-Date
HIGHLIGHTS OF 1Q 2023 PERFORMANCE QUARTER-TO-DATE 4 FIRST QUARTER-TO-DATE 2023 REVENUE PERFORMANCE FIRST QUARTER OUTLOOK GROWTH ACROSS ALL ASSET CLASSES FENICS GROWTH ACCELERATING Guidance Actual Metric (USD million) 1Q 2023 1Q 2022 Revenues $515 – $565 $506.5 +8% +11% Revenues $525 – $575 Constant
Slide 5: Rates Macro Environment
RATES MACRO ENVIRONMENT 5 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 6: Credit Macro Environment
CREDIT MACRO ENVIRONMENT 6 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 Issuance1 growth broke down.” $600B $2,500B 2001 - 2007 Co
Slide 7: Significant Operating Leverage Through Scale & Tech
SIGNIFICANT OPERATING LEVERAGE THROUGH SCALE & TECH 7 PRE-TAX ADJUSTED EARNINGS 30 - 40% 50 - 60% 60 - 70% VOICE / GROWTH MARKETS HYBRID PLATFORMS INCREMENTAL MARGIN FROM REVENUE GROWTH: 777
Slide 8: Fenics Transformation Strategy
FENICS TRANSFORMATION STRATEGY 8 FENICS’ OPERATING STRATEGY FOCUSES ON: 1 2 CONVERTING VOICE / HYBRID BUSINESS INTO HIGHER-MARGIN TECHNOLOGY CONTINUING TO GROW AND SCALE BGC’S FENICS GROWTH PLATFORMS DRIVEN FENICS REVENUE FENICS REPRESENTED 25% OF BGC’S OVERALL REVENUE IN 2022 Fenics Growth Platform
Slide 9: Fenics Overview
FENICS OVERVIEW 9 FENICS REPRESENTS BGC’S HIGHLY VALUABLE FINTECH ASSETS REVENUE PERFORMANCE 1Q 2023 QTD1 +10% yr/yr +22% yr/yr Fenics 4Q 2022 Revenue +11% yr/yr Fenics Markets $109M $94M +7% yr/yr +7% (+13% in Constant Currency) 1Q22 QTD 1Q23 QTD 1Q22 QTD 1Q23 QTD +12% Constant Currency Fenics Grow
Slide 10: FMX
FMX 10 FMX OVERVIEW LCH CLEARING AGREEMENT Cross margining FMX U.S. Rates Futures with LCH U.S. Rates collateral will provide powerful capital efficiencies IRS Initial Margin at Major CCPs1 JPX • World’s second largest UST CLOB • Developed to challenge the status quo 3% Platform of the current futur
Slide 11: Business Overview: 4Q 2022 & FY 2022
BUSINESS OVERVIEW: 4Q 2022 & FY 2022 11 4Q 2022 FY 2022 REVENUE: REVENUE: $437M $1,795M 25% 25% Voice / Hybrid1 4Q Fenics Markets 22% FY Fenics Markets 22% Voice / Hybrid1 75% 75% Fenics Growth Fenics Growth Platforms Platforms 3% 3% PRE-TAX ADJ. EARNINGS: PRE-TAX ADJ. EARNINGS: $87M $373M (PRE-TAX
Slide 12: BGC Revenue by Asset Class
BGC REVENUE BY ASSET CLASS 12 4Q 2022 REVENUE BY ASSET CLASS FY 2022 REVENUE BY ASSET CLASS DATA, SOFTWARE & POST- DATA, SOFTWARE & POST- TRADE AND OTHER1 TRADE AND OTHER1 RATES 8% RATES 9% EQUITIES EQUITIES 13% 31% 14% 28% 4Q FY 16% 17% ENERGY & ENERGY & 16% COMMODITIES COMMODITIES 15% 17% 16% CRED
Slide 13: Overview: Revenue by Geography & Currency
OVERVIEW: REVENUE BY GEOGRAPHY & CURRENCY 13 BGC’S REVENUE IS WELL DIVERSIFIED ACROSS GEOGRAPHIES GLOBAL REVENUE REVENUE BY CURRENCY (USD equivalent1) EMEA 4Q22: $220M AMERICAS (50% of total) APAC 4Q 2022 FY 2022 4Q22: $152M FY22: $913M 4Q22: $65M $280.4M $1,106.8M (35% of total) (51% of total) (15%
Slide 14: Front Office Headcount & Productivity
FRONT OFFICE HEADCOUNT & PRODUCTIVITY 14 FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s)1 PRODUCTIVITY STATS Period–end Front Office Headcount $861 $870 LTM Front Office Productivity $847 $834 $811 $825 FY 2022: $820 $791 $750 $756 $766 $770 $861k +6% PRODUCTIVITY GROWTH YR/YR 2,2
Slide 15: Fenics UST
FENICS UST 15 UST TRADING VOLUME1 EST. CLOB MARKET SHARE2 UST CLOB MARKET SHARE2 FY 2022 ADV (yr/yr) Quarterly Average 20% Dealerweb3 20% 20% (incl. former Nasdaq FI) CME Dealerweb3 Primary Primary 19% 19% 10% Fenics UST BrokerTec (incl. former Nasdaq FI) Dealerweb Dealer4 18% 17% 17% 10% 9% 14% Fen
Slide 16: Lucera
LUCERA 16 INFRASTRUCTURE & CONNECTIVITY OFFERING WITH HIGHLY RECURRING, COMPOUNDING SUBSCRIPTION REVENUE MODEL REVENUE LUMEMarkets Lucera Connect1 4Q22 Revenue LUMEMARKETS +19% 4Q22 33% Low latency aggregator, providing a single access point across multiple 67% Revenue Split fragmented marketplaces
Slide 17: Fenics Market Data
FENICS MARKET DATA 17 LEVERAGING BGC’S GLOBAL CAPITAL MARKETS ECOSYSTEM TO DEVELOP HIGHLY VALUABLE MARKET DATA PRODUCTS MARKET OPPORTUNITY Record global consumption of financial market data in 2021 totalling $36B1 Revenue increased over 20% yr/yr in 4Q22 Recurring, compounding subscription-based
Slide 18: Fenics GO
FENICS GO 18 END-TO-END GLOBAL ELECTRONIC TRADING PLATFORM FOR BLOCK-SIZED LISTED OPTIONS INDEX OPTION PRODUCTS Web-based platform with API connectivity that offers next generation multi- EURO STOXX 50 NIKKEI 225 protocol execution capability Partnered with leading global liquidity providers to prov
Slide 19: GAAP Financial Results
BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 20: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 20 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) December 31, December 31, 2022 2021 Assets Cash and cash equivalents $ 484,989 $ 553,598 Cash segregated under regulatory requirements 17,021 13,201 Financial
Slide 21: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 21 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended December 31, Year Ended December 31, Revenues: 2022 2021 2022 2021 Commissions $ 315,658 $ 349,896 $ 1,281,294 $ 1,541,900 Principal transactions 82
Slide 22: Appendix
MN BGC PARTNERS, INC. + bgc (5 SF! Fenics
Slide 23: BGC's Fully Diluted Share Count Summary as of 12/31/2022
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF 12/31/2022 23 FULLY DILUTED SPOT SHARE COUNT (millions) BGC Partners, Inc. Fully Diluted Share count Summary Fully -Diluted Shares Ownership (%) (as of December 31, 2022) (millions) 553 539 PUBLIC 304.8 62% Class A owned by Public 304.8 62% 498 501 494 E
Slide 24: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 24 24 BGC Partners, Inc. As of 12/31/2022 INVESTMENT GRADE CREDIT RATING Total Liquidity1 $524,308 Investment Grade Credit Rated: Collateralized Borrowings (Maturity: April 8, 2023 & April 19, 2023) $3,251 • Fitch: BBB- (Outlook: Stable) 5.375%
Slide 25: Operating Performance Not Reflected in BGC Valuation
OPERATING PERFORMANCE NOT REFLECTED IN BGC VALUATION 25 BGC HAS A HIGHLY ATTRACTIVE TRADING MULTIPLE; OFFERING THE BEST VALUE PROPOSITION Metric TODAY1 Change TWO YEARS AGO2 Pre-tax Adjusted Earnings $373.1M +7% $349.8M Pre-tax Adjusted Earnings Margin 20.8% +377 bps 17.0% Operating Fully Diluted Po
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 4Q22 VS 4Q21 REVENUE CORRELATION BY ASSET CLASS CORRELATION1 INDUSTRY METRIC VOLUME CHANGE RATES Eurex Interest Rate Derivatives (Total Contracts Traded) 0.71 6% BGC’s revenues across each asset class are generally correlated over time to relevant indust
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 & Post-Tax Adjusted EPS
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 $ Q4 2022 1,607 $ Q4 2021 104,750 $ FY 2022 97,4
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) Q4 2022 Q4 2021 FY 2022 FY 2021 GAAP net income (loss) available to common stockholders $ 2,216 $ 76,453 $ 48,712 32 $ 124,007 Add back: Provision (benefit) for income taxes (1,
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 Q4 2022 Q4 2021 FY 2022 FY 2021 December 31, 2022 December 31, 2021 Common stock outstanding 371,174 370
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 Contacts
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