BGC Group, Inc. · NASDAQ:BGC
BGC — BGC Partners — Q3 2022 Earnings Presentation
34 slides from BGC's earnings presentation, 2022
Slide 1: BGC Partners Earnings Presentation 3Q 2022
BGC PARTNERS, INC. NASDAQ: BGCP E A R N I N G S P R E S E N TAT I O N 3 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: BGC Expected Value Drivers
BGC EXPECTED VALUE DRIVERS 3 FENICS GROWING AT INDUSTRY LEADING PACE • High margin, technology driven execution, data, software and post-trade offerings • Fenics revenue represents over 25% of BGC’s overall revenue with 3Q 2022 LTM revenue of $442 million • Increased automation continues to drive AE
Slide 4: Highlights of Consolidated Results: 3Q 2022
HIGHLIGHTS OF CONSOLIDATED RESULTS: 3Q 2022 4 REVENUE: Highlights of Consolidated Results 3Q 2022 3Q 2021 Change Constant Currency $417M (USD millions, except per share data) Change1 Revenues (excluding Insurance)2 $416.6 $422.1 (1.3)% 4.1% 25% Revenues 416.6 473.7 (12.1)% (7.3)% Fenics Markets GAAP
Slide 5: Macro Environment
MACRO ENVIRONMENT 5 “For more than 14 years, BGC and the entire financial service industry’s trading volumes have been constrained by low interest rates and quantitative easing… 499 U.S.TREASURIES1 (indexed to 100) U.S. CORPORATE BONDS2 (indexed to 100) Issuance Issuance Primary Dealer Trading Volum
Slide 6: Revenue Overview
REVENUE OVERVIEW 6 BGC’S REVENUE IS WELL DIVERSIFIED ACROSS GEOGRAPHIES AND ASSET CLASSES REVENUE BY ASSET CLASS GLOBAL OFFICE LOCATIONS & REVENUE Rates AMERICAS EMEA APAC Data, Software & Post-trade and Other1 31% 9% 3Q 2022 3Q 2022 3Q 2022 Revenue: Revenue: Revenue: $145M $206M $66M Equities 12% 3
Slide 7: Front Office Headcount & Productivity
FRONT OFFICE HEADCOUNT & PRODUCTIVITY 7 FRONT OFFICE HEADCOUNT AND PRODUCTIVITY (Productivity in USD 000s)1 PRODUCTIVITY STATS Period–end Front Office Headcount $870 LTM Front Office Productivity $847 $834 $811 $825 LTM 3Q 2022: $820 $791 $766 $735 $750 $756 $770 $847k +7% PRODUCTIVITY GROWTH YR/YR
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 3Q 20221 Fenics Growth Plat
Slide 9: Fenics Overview
FENICS OVERVIEW 9 BUSINESS OVERVIEW FENICS REVENUE REVENUES: Percentage of Total Revenue1 $106M 25% 25% FX +11% yr/yr 22% Rates 23% 33% $106M $95M 17% $13M $11M 14% 14% 3Q $106M $93M $85M 19% Credit 2% 23% 3Q21 3Q22 FY18 FY19 FY20 FY21 LTM 3Q22 Equities Data, Software & 3Q22 Post-trade and Other Fen
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 CCPs2 JPX • World’s second largest UST CLOB • Developed to challenge the status quo 4% Platform of the current futur
Slide 11: Fenics UST
FENICS UST 11 UST TRADING VOLUME1 UST CLOB MARKET SHARE2 3Q 2022 Quarterly Average (ADV yr/yr change) Dealerweb 20% 20% 10% CME Primary Primary 19% 19% Fenics UST BrokerTec Dealerweb Dealer3 18% 17% 17% 22% 14% Fenics UST 18% 12% 14% Sep 22 4% CME Brokertec 72% (1)% 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q2
Slide 12: Lucera
LUCERA 12 INFRASTRUCTURE & CONNECTIVITY OFFERING WITH HIGHLY RECURRING, COMPOUNDING SUBSCRIPTION REVENUE MODEL REVENUE LUMEMarkets Connect 3Q22 Revenue LUMEMARKETS +30% 70% 3Q22 30% Revenue Split Low latency aggregator, providing a single access point across multiple fragmented marketplaces and exch
Slide 13: Fenics Market Data
FENICS MARKET DATA 13 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 18% yr/yr Recurring, compounding subscription-based model
Slide 14: Fenics GO
FENICS GO 14 END-TO-END GLOBAL ELECTRONIC TRADING PLATFORM FOR BLOCK-SIZED LISTED OPTIONS INDEX OPTION PRODUCTS EURO STOXX 50 NIKKEI 225 • Web-based platform with API connectivity that offers next generation multi- protocol execution capability • Partnered with leading global liquidity providers to
Slide 15: Outlook: 4Q 2022
OUTLOOK: 4Q 2022 15 15 BGC’s revenues were approximately 7% lower, or flat on a Constant Currency basis, Guidance Actual for the first 21 trading days of the fourth quarter of 2022, when compared to the same Metric (USD million) 4Q 2022 4Q 2021 period in 2021. Revenues (excluding Insurance) $390 –
Slide 16: GAAP Financial Results
BGC PARTNERS, INC. GAAP FINANCIAL RESULTS
Slide 17: Condensed Consolidated Statements of Financial Condition
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 17 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) September 30, December 31, 2022 2021 Assets Cash and cash equivalents $ 473,344 $ 553,598 Cash segregated under regulatory requirements 12,517 13,201 Financia
Slide 18: Condensed Consolidated Statements of Operations
BGC PARTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 18 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNDER GAAP) Three Months Ended S eptember 30, Nine Months Ended S eptember 30, Revenues: 2022 2021 2022 2021 Commissions $ 299,430 $ 367,016 $ 965,636 $ 1,192,004 Principal transa
Slide 19: Appendix
MN BGC PARTNERS, INC. + bgc (5 SF! Fenics
Slide 20: BGC's Fully Diluted Share Count Summary as of 9/30/2022
BGC’S FULLY DILUTED SHARE COUNT SUMMARY AS OF 9/30/2022 20 BGC Partners, Inc. Fully Diluted Share count Summary Fully-Diluted Shares FULLY DILUTED SPOT SHARE COUNT (millions) Ownership (%) (as of September 30, 2022) (millions) 557 PUBLIC 303.0 61% Class A owned by Public 303.0 61% 517 503 EMPLOYEES
Slide 21: Strongly Capitalized; Investment Grade Credit Profile
STRONGLY CAPITALIZED; INVESTMENT GRADE CREDIT PROFILE 21 21 BGC Partners, Inc. As of 9/30/2022 INVESTMENT GRADE CREDIT RATING Total Liquidity1 $510,777 Investment Grade Credit Rated: Collateralized Borrowings (Maturity: April 8, 2023 & April 19, 2023) $4,863 • Fitch: BBB- (Outlook: Stable) 5.375%
Slide 22: Fenics Ecosystem
FENICS ECOSYSTEM 22 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 23: BGC Revenue Correlation & Industry Volumes
BGC REVENUE CORRELATION & INDUSTRY VOLUMES 23 3Q22 VS 3Q21 REVENUE CORRELATION BY ASSET CLASS CORRELATION1 INDUSTRY METRIC VOLUME CHANGE RATES Eurex Interest Rate Derivatives (Total Contracts Traded) 0.72 30% BGC’s revenues across each asset class are generally correlated over time to relevant indus
Slide 24: Shareholder Value Creation
SHAREHOLDER VALUE CREATION 24 BGC HAS A STRONG HISTORY OF CREATING VALUE FOR SHAREHOLDERS 24 BGC Insurance Working with strategic Brokerage investors to launch a U.S. Interest Rates futures Newmark Sold to The Ardonagh exchange5 Group4 Trayport Successfully completed tax-free spin-off of Newmark3 eS
Slide 25: Non-GAAP Definitions and Reconciliation Tables
BGC PARTNERS, INC. NON-GAAP DEFINITIONS AND RECONCILIATION TABLES
Slide 26: 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 26 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) GAAP income (loss) from operations before income taxes $ Q3 2022 19,038 $ Q3 2021 (20,633) 26 Pre-tax a
Slide 27: 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 27 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (1) The components of equity-based compensation and allocations of net income to limited partnership un
Slide 28: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA (IN THOUSANDS) 28 (UNAUDITED) Q3 2022 Q3 2021 GAAP net income (loss) available to common stockholders $ 5,762 $ (11,402) Add back: Provision (benefit) for income taxes 10,813 (6,692) Net income (loss) attrib
Slide 29: 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) 29 (UNAUDITED) 29 FULLY DILUTED WEIGHTED AVERAGE SHARE COUNT LIQUIDITY ANALYSIS Q3 2022 Q3 2021 S eptember 30, 2022 December 31, 2021 Common stock outstanding 371,108 387,121 Limited p
Slide 30: Differences Between Non-GAAP and GAAP Consolidated Results
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 30 NON-GAAP FINANCIAL MEASURES 30 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 31: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 31 (CONTINUED) CERTAIN OTHER COMPENSATION-RELATED ADJUSTMENTS FOR ADJUSTED EARNINGS 31 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 32: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 32 (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 33: Differences Between Non-GAAP and GAAP Consolidated Results (continued)
DIFFERENCES BETWEEN NON-GAAP AND GAAP CONSOLIDATED RESULTS 33 (CONTINUED) 33 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 34: Media and Investor Contacts
34 34 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