Greetings, and welcome to the BGC Group, Inc. Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Chryssicas, Head of Investor Relations. Thank you. You may begin.

Hello, everyone. This morning, we issued BGC's fourth quarter and full-year 2024 financial results, which can be found at ir.bgcg.com. Any historical results provided on today's call compare only the fourth quarter of 2024 with the prior year period unless otherwise specified. We will be referring to our results on a non-GAAP basis, which includes the terms adjusted earnings and adjusted EBITDA. Please refer to today's investor materials on our website for additional details on our financial results and for complete and updated definitions of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results, and how, when, and why management uses them. The outlook discussed today assumes no material acquisitions or dispositions. Our expectations are subject to change based on various macroeconomic, social, political, and other factors. Information on this call contains forward-looking statements including, without limitation, statements about our economic outlook and business. These statements are subject to risks and uncertainties, which could cause our actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward-looking statements. For information on factors that could cause actual results to differ from forward-looking statements and a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings included, but not limited to the risk factors and disclosures within these SEC documents. And with that, I'm happy to turn the call over to Sean Windeatt, Chief Operating Officer of BGC Group.

Thank you, Jason. Good morning, and welcome to our fourth quarter and full-year 2024 conference call. With me today are my fellow Co-Global Heads of Brokerage, John Abularrage and JP Aubin; and our Chief Financial Officer, Jason Hauf. I'd like to start by congratulating our Chairman and CEO, Howard Lutnick, on his nomination as the 41st United States Secretary of Commerce. For decades, Howard has provided transformational leadership, delivering billions of dollars of value for shareholders through pioneering electronic trading and strategic corporate transactions. As a resilient and visionary leader, he built BGC into the world's most valuable wholesale broker with more than 4,000 employees, generating over $2.2 billion of annual revenue. We are confident that upon confirmation, he will bring the same level of dedication and financial acumen to his new role serving the American people as he has at BGC. Turning to our fourth quarter and full-year results. BGC delivered record fourth quarter and full-year revenues, growing by 11% and 12%, respectively. Our strong revenue growth was driven by our ECS, rates, and foreign exchange businesses, which continue to outperform the market. This momentum is carried forward into 2025, with trading volumes currently outpacing Q1 2024's record. At the beginning of the fourth quarter, we closed our acquisition of Sage Energy Partners and expect to close OTC Holdings around the end of the first quarter. We expect these acquisitions will contribute more than $450 million of annual revenues, be instantly accretive, and make BGC the largest ECS broker in the world. Looking at our fourth quarter results in more detail. Total revenues grew by 10.8% to $572.3 million, representing record fourth quarter revenues and reflecting strong growth across every region and our largest asset classes. Brokerage revenues grew by 11.8% to $516.1 million. Rates revenues increased by 8.8% to $169.6 million, reflecting higher volumes across interest rate derivatives, listed rates products, and U.S. treasuries. ECS revenues grew by 28% to $134.1 million, driven by strong growth across the energy complex, power, and our leading environmental business, as well as the acquisition of Sage Energy Partners. Foreign exchange revenues were up 21.3% to $93.6 million, primarily driven by higher options and emerging market foreign exchange volumes. Credit revenues decreased by 4.9% to $62.4 million due to lower CDS and emerging market credit volumes, partially offset by record volumes in PortfolioMatch. Equities revenues declined 3.5% to $56.3 million, primarily due to the lower Asian equity derivative volumes, partially offset by higher European and U.S. volumes. Data, network, and post-trade revenues improved by 10.3% to $32.6 million. This was primarily driven by strong subscription-based revenue growth across Fenics Market Data and Lucera, offset by lower post-trade revenues due to the sale of Capitalab in the fourth quarter. Revenues for data, network, and post-trade excluding the impact of Capitalab grew by more than 20% year-over-year. Turning to Fenics, in the fourth quarter, Fenics revenues improved by 8.6% to $142.1 million. Fenics Markets reported revenues of $116.7 million, an increase of 6.4%. This growth was driven by higher electronic volumes across rates and foreign exchange as well as higher market data revenues, partially offset by lower credit volumes. Fenics Growth Platforms generated revenues of $25.5 million, a 20.2% increase, primarily driven by FMX, PortfolioMatch, and Lucera, partially offset by the sale of Capitalab in the fourth quarter. Excluding the impact of this sale, Fenics Growth Platforms would have grown by approximately 37%. FMX UST generated average daily volumes of over $52 billion for the fourth quarter, up 28% compared to last year. This translated to over 30% market share for the fourth quarter, up from 29% last quarter and 26% a year ago. FMX FX volumes improved by approximately 80% compared to last year on record ADV of more than $11 billion. FMX FX continues to expand its market share in the enormous global foreign exchange market. FMX Futures Exchange continues to connect the world's largest FCMs, recently onboarding FMX's partners, Bank of America, Barclays, and Citi. FMX expects to have more than 10 FCMs connected before the launch of U.S. Treasury futures around the end of the first quarter of 2025. SOFR volumes continue to grow on FMX Futures Exchange and its market share exceeds what we experienced at the same point in time following the launch of our U.S. Treasury business. As a reminder, FMX UST now holds over 30% market share. PortfolioMatch ADV increased by more than 150% due to strong growth across both U.S. and European credit volumes. Lucera, Fenics network business that provides critical real-time trading infrastructure to the capital markets, grew its revenue by over 33% and continues to expand its revenue pipeline.

Thank you, Sean, and hello, everyone. BGC generated fourth quarter revenue of $572.3 million, reflecting growth across all geographies. Americas revenues increased by 17.1%, Asia Pacific revenues increased by 10.2%, and Europe, Middle East, and Africa revenues increased by 6.5%. Turning to expenses. Compensation and employee benefits under GAAP and for adjusted earnings increased by 16.3% and 14%, respectively, primarily due to higher commissionable revenues during the period. Non-compensation expenses under GAAP were flat and for adjusted earnings, decreased by 0.3%. Moving on to earnings. Our pretax adjusted earnings grew by 16.9% to $129.5 million. Post-tax adjusted earnings increased by 21.9% to $123.5 million. And post-tax adjusted earnings per share improved by 19% to $0.25 per share. Adjusted EBITDA was $192 million, a 26.7% improvement. Turning to share count. BGC's fully diluted weighted average share count for adjusted earnings was 495.5 million during the quarter, a 0.1% increase compared to the third quarter of 2024 and a 1% increase compared to the fourth quarter of 2023. As of December 31, our liquidity was $897.8 million compared with $701.4 million as of year-end 2023. With that, I'd like to turn the call back to Sean to go over our first quarter outlook.

Thank you, Jason. I'm pleased to provide the following guidance for the first quarter of 2025. We expect to generate total revenues of between $610 million and $660 million, compared to $578.6 million in the first quarter of 2024, which at the midpoint of our guidance would represent approximately 10% revenue growth. We anticipate pretax adjusted earnings to be in the range of $145 million to $161 million versus $135.4 million last year, which at the midpoint of guidance would represent 13% earnings growth. So with that, operator, we'd like to open the call for questions.

Thank you. We will now be conducting a question-and-answer session. And our first question comes from the line of Patrick Moley with Piper Sandler. Please proceed with your question.

Good morning. How are you guys doing?

Yes. Good. Thank you, Patrick.

Great. So first off, I want to congratulate Sean, John, and JP on the appointments as co-CEOs. And if Howard is listening in, I want to wish him the best of luck on his next journey as well. So first question, like you said in your prepared remarks by all accounts, it seems like Howard is on his way to being confirmed as the next Commerce Secretary. Can you just take a minute to kind of walk us through your expectations around the timeline of the executive leadership transition? And is there any incremental detail you can share on the planned sale of Howard's BGC shares, both those that are owned directly by him and as well as owned indirectly through Cantor? Thanks.

No problem. Thanks. So I think let's deal with the last piece. So as we have previously said, Patrick, Howard will comply with all of the Senate Ethics Committee standards, including divesting his holdings within 90 days of Senate confirmation. There will be public SEC filings, obviously, that will be required when he divests his holding. And we've previously said, we don't expect any sales on the open market and, in addition, that we don't expect any change to the corporate structure, and that remains the case. In terms of myself, John, and JP, who are sitting next to me and opposite me, we're obviously tremendously excited. With the three of us, we've worked side by side over the past three years, managing the day-to-day business. I think, hopefully, over the last year, and particularly say that's been the last few years, has been highly successful. If you think even last year, we did with revenue growth that we've just shown of 11.7%, some acquisitions, and huge growth in our ECS business and creating shareholder value in the sale of our Capitalab business that we did during Q4. I think we described it as business as usual, and we're very excited to carry on the growth of this company.

Okay. Great. So maybe just diving into the financials, revenues were up 11% in the fourth quarter and the midpoint of the first quarter guidance implies 10% year-over-year growth. So maybe a little bit of a two-part question here. One, I apologize if I missed it in the prepared remarks, but how many percentage points of growth did the Sage acquisition contribute in 4Q? And how much are you expecting it to contribute in the first quarter? And then secondly, as far as expectations for organic revenue growth go, Howard historically kind of targeted that 10% topline growth. Do you think that's still a reasonable target for revenue growth in the core business?

So actually, I didn't mention it in the prepared remarks, so you definitely didn't miss anything. However, Sage added between 1 and 2 percentage points of our 11.7% growth in the fourth quarter. And I would expect that to be exactly the same in the first quarter of 2025.

Okay. And then on the pretax adjusted earnings guidance, the first quarter implies a pretty nice expansion of the margin there. So can you just – just curious, what's driving that? If you can maybe talk about some of the levers you have there?

Yes. Look, I think as you've seen over the last year, when gearing is perfect, right? When our revenue is growing, we have a pretty decent cost base that of course does not grow in line with revenue. And so our gearing has been great throughout 2024 and continues that way in 2025. Now when we do these small acquisitions, which we've done a number of, they plug and play into our platform. We generate economies of scale, and therefore, that's what you see dropping to the bottom line. Also, the movement of business into electronic, as you know, comes with its higher margins and hence, the fact that you're seeing that flow through with our results in 2024 and exactly as implied in our guidance in Q1 2025.

Okay. Great. And then just one on FMX. It sounds like you're making a lot of progress there, and you're still expecting to launch U.S. Treasury futures in the first quarter. Howard had previously kind of laid out expectations about year one being about getting all the FCMs onboarded. Year two was kind of about getting the customers or the clients connected. And then year three would be when you really make a concerted effort at maybe taking market share there. So is that still the goal? Is that still the timeline we should kind of use? And in terms of the launch, I mean, are we – when you say around the end of the first quarter, we're probably arguing balls and strikes here, but is it – are you expecting it to be before the end of the first quarter? Or is it going to maybe spill into the second quarter? Thanks.

No problem. Look, so going to the first part of the question that we remain absolutely on track. And you're absolutely right. We've said year one is about connectivity. We said when we opened, we expected to have 5 FCMs, which we did. We said by the end of Q1 2025, we would expect to have 10 FCMs, which we do and we currently have 8. I think we even pointed out last time that even our FMX partners, it’s just work. And as I said in my prepared remarks, we added Bank of America, Barclays, and Citi since our last call. So no change at all and very happy with the progress. I think we sort of pointed out that if you look to the progress we have today compared to where we did when we're launching treasuries, we're ahead of where we were. So very, very happy. Year one is about bank connectivity. Year two is about deepening that client connectivity and increasing volumes. And quite right, year three is full-on competition. I think you described it exactly right.

Okay. And then a little bit of – just for the sake of our models. With the close of the OTC acquisition at the end of the first quarter, in the deck, it said the two energy acquisitions were going to add $450 million. I think by my estimation, given the growth contribution you mentioned, it seems like Sage – or OTC is around $400 million annual revenues. In the last call, I think you said that the margins were maybe a little bit lower or they'd be a little bit lower off the bat relative to BGC's core business. So is it safe to kind of build in $400 million annual revenues from OTC at a 15% to 20% margins? And I mean, any color there you can give to kind of help us with that would be great.

Yes, sure, sure. By the way, I think your math is definitely pretty good. I think around $400 million for OTC sounds good. And as I suggested, with a large acquisition like OTC, I'd expect the margin to be lower than our current margin. So I think at the beginning, where you're thinking around the 15% level is perfectly good to think about at the very beginning. What you've seen from us in the past is even with the larger acquisitions that we did, it just takes a little bit longer to get those economies out. But as I pointed out, I think on the last earnings call as well, it will be highly accretive to us from day one. So very excited.

Okay. Great. And then one last question. With the FMX launch and the solid trends that you guys are seeing in the business over the last year or so, there's – you got a lot more attention on the stock, a lot more eyes on the stock. One question that I get a lot from investors relates to your usage and treatment of stock-based compensation. So I was hoping you could maybe just add some clarity there for investors as to why you think adjusting stock-based compensation out of your earnings is the most appropriate way to present it? And then going forward, with the change in management, are there any future plans to maybe try and bring that GAAP EPS number in line with the adjusted figure?

Okay. I think as you have seen that the company, we feel that paying our producers and key personnel in stock-based compensation is a tremendous way for good retention. We think it has been a significant reason for both retention and growth. And I think it's proved to be successful over the past years, and there'll be no change. We continue to do that. What you have seen, though, over the last few years is the overall level of stock-based compensation has come down a little bit. And that's something we'll always continue to monitor. But we believe that it's incredibly important for the longevity and retention of our staff, and it is how we continue to outpace the industry, growing our company.

All right. Great. That's it for me, but congrats again, guys. Looking forward to working with you.

Thank you very much. Thanks, Patrick.

Thank you. There are no further questions at this time. Therefore, I would like to turn the floor back over to Mr. Windeatt for closing remarks.

Just to say, thank you very much all for joining us on the call today, and I look forward to talking to you next quarter with more updates. Thanks very much.

And ladies and gentlemen, this does conclude today's conference, and you may disconnect your lines at this time. Thank you for your participation.