BGC Group, Inc. · NASDAQ:BGC
BGC — BGC Partners — Q1 2022 Earnings Presentation
32 slides from BGC's earnings presentation, 2022
Slide 1: BGC Partners Earnings Presentation 1Q 2022
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 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: 1Q 2022
HIGHLIGHTS OF CONSOLIDATED RESULTS: 1Q 2022 3 REVENUE: Highlights of Consolidated Results 1Q 2022 1Q 2021 Change (USD millions, except per share data) $506M Revenues (excluding Insurance)1 $506.5 $515.1 (1.7)% Revenues 506.5 567.6 (10.8)% 25% GAAP income from operations before income taxes 45.4 73.5
Slide 4: Revenue Overview
REVENUE OVERVIEW 4 BGC’S REVENUE IS WELL DIVERSIFIED ACROSS GEOGRAPHIES, ASSET CLASSES AND TYPE REVENUE MIX GLOBAL OFFICE LOCATIONS & REVENUE BGC generates >10% of its revenue from fixed, recurring revenue streams AMERICAS EMEA APAC Fixed Variable 1Q 2022 1Q 2022 1Q 2022 Revenue: Revenue: Revenue: $
Slide 5: Fenics Overview
FENICS OVERVIEW 5 BUSINESS OVERVIEW FENICS REVENUE NET REVENUES: Percentage of Total Revenue1 $125M 23% 25% 17% Credit +16% yr/yr $125M $108M $13M 17% 39% $11M 13% 14% 23% 1Q Rates 9% FX $125M $112M $97M 2% 19% Data, Software Equities & Post-trade 1Q21 1Q22 FY14 FY16 FY18 FY20 TTM 1Q22 1Q22 Fenics M
Slide 6: FMX
FMX 6 FMX OVERVIEW LCH CLEARING AGREEMENT Cross margining FMX U.S. Rates Futures with LCH U.S. Rates collateral will provide powerful capital efficiencies Announced FMX in November 2021, which combines Fenics UST’s leading U.S. Treasury business with cutting-edge U.S. Interest Rates IRS Initial Marg
Slide 7: Fenics UST
FENICS UST 7 UST TRADING VOLUME1 UST CLOB MARKET SHARE2 1Q 2022 Quarterly Average Dealerweb3 (ADV yr/yr change) (incl. former Nasdaq FI) 20% 20% 9% CME Dealerweb3 Primary Primary 19% Fenics UST BrokerTec Dealerweb (incl. former Nasdaq FI) Dealer4 17% 17% 18% 14% Fenics UST 12% 20% 8% 2% 9% 10% Mar 2
Slide 8: Lucera
LUCERA 8 INFRASTRUCTURE & CONNECTIVITY OFFERING WITH HIGHLY RECURRING, COMPOUNDING SUBSCRIPTION REVENUE MODEL REVENUE LUMEMarkets Connect LUMEMARKETS 71% 1Q22 1Q22 Revenue Low latency aggregator, providing a single access point across Revenue Split 29% +56% multiple fragmented marketplaces and exc
Slide 9: Fenics Market Data
FENICS MARKET DATA 9 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 Recurring, compounding subscription-based model Signed 47 new contracts in 1Q22 wit
Slide 10: Cryptocurrency Initiatives
CRYPTOCURRENCY INITIATIVES 10 COMPREHENSIVE MULTI-CHANNEL DIGITAL ASSET PLATFORM POWERED BY MULTI-BILLION DOLLAR INFRASTRUCTURE & STATE-OF-THE-ART FENICS TRADING TECHNOLOGY Execution • Connected to 26 of the deepest • Futures Exchange: CFTC Regulated DCM cryptocurrency liquidity pools with a & DCO s
Slide 11: Shareholder Value Creation
SHAREHOLDER VALUE CREATION 11 BGC HAS A STRONG HISTORY OF CREATING VALUE FOR SHAREHOLDERS 11 BGC Insurance Working with strategic Brokerage partners to launch a CRYPTOCURRENCY U.S. Interest Rates Newmark futures exchange5 OFFERINGS Sold to The Ardonagh Group4 Trayport Successfully completed tax-free
Slide 12: Growing Digital Asset Opportunity
GROWING DIGITAL ASSET OPPORTUNITY 12 INCREASING INSTITUTIONAL DEMAND FOR DIGITAL ASSETS1 CRYPTOCURRENCY TRADING VOLUMES BY TYPE >71% Derivatives account for approximately 62% of Crypto trading volumes; Spot accounts for the remaining 38%2 (March 2022) 52% As September 2021, over 71% 36% of instituti
Slide 13: Outlook: 2Q 2022
OUTLOOK: 2Q 2022 13 13 Guidance Actual Metric (USD million) 2Q22 2Q21 Revenues (excl. Insurance) $420 - $470 $458.0 Revenues $512.5 Pre-tax Adjusted Earnings $81 - $101 $97.4 Metric (%) FY 2022 FY 2021 Adjusted Earnings Tax Rate 8 - 10% 6.4% BGC’s revenues were approximately 2.5 percent lower for
Slide 14: GAAP Financial Results
BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 15: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 15 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) March 31, December 31, 2022 2021 Assets Cash and cash equivalents $ 509,206 $ 553,598 Cash segregated under regulatory requirements 14,380 13,201 Securities o
Slide 16: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 16 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended March 31, Revenues: 2022 2021 Commissions $ 356,664 $ 435,220 Principal transactions 115,601 98,763 Total brokerage revenues 472,265 533,983 Fees fr
Slide 17: Appendix
MN BGC PARTNERS, INC. + bgc (5 SF! Fenics
Slide 18: Front Office Headcount & Productivity
FRONT OFFICE HEADCOUNT & PRODUCTIVITY 18 FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s)1 $825 $811 $820 TECHNOLOGY $791 $753 $749 $766 $750 $756 $735 $770 2,491 2,351 2,297 $720 AUTOMATION 2,388 2,238 2,196 2,148 2,111 2,046 $670 $620 HIGHER 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2
Slide 19: Fully Diluted Share Count Summary as of 3/31/22
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF 3/31/22 19 19 BGC Partners, Inc. Fully Diluted Share Count Summary Fully-diluted Shares PUBLIC OWNERSHIP OF CLASS A SHARES OVER TIME Ownership (%) (as of March 31, 2022) (millions) (On a fully diluted basis) Public 304.5 61% Class A owned by Public 304.5
Slide 20: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 20 BGC Partners, Inc. As of 3/31/2022 20RATING INVESTMENT GRADE CREDIT Cash and Cash Equivalents $509,206 Investment Grade Credit Rated: Securities Owned 37,513 • Fitch: BBB- (Outlook: Stable) Marketable Securities 402 Repurchase Agreements (7,
Slide 21: Fenics Ecosystem
FENICS ECOSYSTEM 21 MULTIPLE TRADING PROTOCOLS ACROSS A COMPREHENSIVE SET OF FINANCIAL INSTRUMENTS Data, Software & Rates Credit FX Equities Post-trade Key KeyProducts: Products: Key Products: Key Products: Key Products: Key Products: Products: Key Products: Interest ▪ Interest RateRate Derivatives
Slide 22: BGC Revenue Correlation & Industry Volumes
BGC REVENUE CORRELATION & INDUSTRY VOLUMES 22 1Q22 vs. 1Q21 BGC Asset Class 1 Industry Metric Correlation Industry Metric (Revenue) Volume Change vs. Eurex Interest Rate Derivatives (Total Contracts Traded) 0.79 16% Rates vs. Primary Dealer U.S. Government Securities Trading Volume (ADV) 0.75 2% vs.
Slide 23: Non-GAAP Definitions and Reconciliation Tables
BGC PARTNERS, INC. NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 24: 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 24 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) 24 Q1 2022 Q1 2021 GAAP income (loss) from operations before income taxes $ 45,358 $ 73,515 Pre-tax adj
Slide 25: 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 25 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (1) The components of equity-based compensation and allocations of net income to limited partnership un
Slide 26: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) 26 (UNAUDITED) Q1 2022 Q1 2021 GAAP net income (loss) available to common stockholders $ 25,972 $ 42,716 Add back: Provision (benefit) for income taxes 14,657 14,939 Net income (loss) attribut
Slide 27: 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) 27 (UNAUDITED) 27 FULLY DILUTED WEIGHTED AVERAGE SHARE COUNT LIQUIDITY ANALYSIS Q1 2022 Q1 2021 March 31, 2022 December 31, 2021 Common stock outstanding 368,323 374,318 Cash and cash
Slide 28: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 28 NON-GAAP FINANCIAL MEASURES 28 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 29: Differences Between Non-GAAP and GAAP Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 29 (CONTINUED) All share equivalents that are part of the Company’s equity-based compensation program, including REUs, PSUs, LPUs, HDUs, and other units that may be made exchangeable into common stock, as well as RSUs (which are recorded usi
Slide 30: Differences Between Non-GAAP and GAAP Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 30 (CONTINUED) 30 After application of these adjustments, the result is the Company’s taxable income for its pre-tax Adjusted Earnings, to which BGC then applies the statutory tax rates to determine its non-GAAP tax provision. BGC views the
Slide 31: Differences Between Non-GAAP and GAAP Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 31 (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 32: Media and Investor Contacts
32 32 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