Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the StoneX Group Inc. First Quarter Fiscal Year 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker host today, Mr. Bill Dunaway, Chief Financial Officer. Please go ahead, sir.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our first quarter ended December 31, 2022. After the market closed yesterday, we issued a press release reporting our results for the first fiscal quarter of 2023. This release is available on our website at www.stonex.com as well as a slide presentation, which we'll refer to on this call in our discussions of our quarterly results. You will need to sign on to the live webcast in order to view the presentation. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we are required to advise you, and all participants should note, the following discussion should be taken in conjunction with the most recent financial statements and notes thereto, as well as the Form 10-Q filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company's actual results will not differ materially from any results expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I'll now turn the call over to Sean O'Connor, the company's CEO.

Thanks, Bill. Good morning, everyone, and thank you for joining our fiscal 2023 first quarter earnings call. The first quarter was influenced by ongoing inflationary pressures and significant short-term interest rate hikes. Volatility persisted in financial and physical markets, but at a reduced level compared to much of fiscal 2022, especially towards the end of the quarter. Turning to slide three, which compares quarterly operating revenues by product year-over-year, listed derivative revenues remained mostly unchanged as increased volumes were countered by lower revenue capture. Revenue from over-the-counter derivatives fell by 9% due to decreased volumes and slightly tighter spreads. Physical revenues saw a robust increase of 46%, driven by the acquisition of CDI and strong performance in precious metals. This occurred despite a $4.2 million mark-to-market loss on derivatives associated with inventories, which is expected to reverse in the next quarter. Securities operating revenues surged by 91%, fueled by significantly higher volumes and interest rates. While higher interest rates contributed to the rise in securities operating revenue, we also encountered a notable increase in interest expense related to our fixed income trading. During bond trading, we earn interest on our holdings but also incur interest expenses on financing these securities, impacting our income statement. We have revised our calculation method for securities rate per million revenue capture for this quarter and the previous year to consider this, now deducting the associated interest expenses. With this adjustment, the securities rate per million fell by 20% to $422 in the first quarter, compared to $529 a year ago. Securities net operating revenues, accounting for interest expenses and related costs, rose by 29% from the previous year due to increased volumes. Global Payments achieved record results with revenues up 31% and volumes up 23%, alongside a 7% increase in revenue capture. Conversely, our FX and CFD revenue decreased by 32% mainly due to challenging market conditions that resulted in a 27% drop in revenue capture compared to last year. Interest and fee income from client balances was $86.2 million, up over 900% as we began to feel the benefits of cumulative interest rate increases alongside a 56% rise in our total client float, which reached $9.8 billion. Moving to slide four, which details the same data for the trailing 12 months, we saw strong double-digit revenue growth across all products except listed derivatives, which saw a 9% increase. Generally, we observed increases in both volumes and revenue capture during this period, except for securities and listed derivatives, which showed declines in revenue capture. Transitioning to slide five, which summarizes our first-quarter and trailing 12-month results, we reported operating revenues of $654.8 million, a 45% increase from the prior year. Operating revenues benefitted from interest on our client float and interest embedded in our fixed income trading. Net operating revenues, which account for interest expenses and broker commissions, increased by 22%. Total compensation and other expenses rose by 19% for the quarter, with variable compensation up 18%, slightly below the net operating revenue growth rate. Fixed compensation and related costs increased by 8% compared to a year ago, aligning with the previous quarter. During the quarter, we acquired CDI, a global cotton trader based in Switzerland, with clients and producers in Brazil and West Africa, as well as buyers in the APAC region. This acquisition led to a gain of $23.5 million, before and after tax. Excluding this acquisition gain and the intangible amortizations recorded, our adjusted net income reached $55.3 million, a 27% increase from last year and up 2% from the previous quarter. On the same basis, we achieved an adjusted return on equity of 19.7%. Including the gain from the acquisition, our reported earnings were $76.6 million, resulting in an ROE of 27.3%. We achieved record operating revenues for both our Institutional and Global Payments segments. For the trailing 12 months, operating revenues reached a record $2.3 billion, a 33% increase from the prior year. Net income was a record $242 million, an increase of 75%; when excluding the acquisition gain and related intangible amortization, it totaled $226.6 million, an increase of 60%. Our diluted earnings per share for the trailing 12 months was $11.59, reflecting a 70% increase. Our return on equity was 23%, even with a 47% increase in equity over two years. Our financial results were enhanced by heightened interest and fee income from our client float, as we began to see the benefits of accumulated interest rate hikes. Our interest-earning assets typically take about 45 days to adjust to new rates. Our average gross yield on client float was 303 basis points for the quarter, compared to 193 basis points in the fourth quarter. Our net interest and fee income, after accounting for financing costs, increased by $36.3 million from the same quarter last year. We concluded the quarter with a book value of $57.17, up 21% from a year ago. Now turning to slide six, which summarizes our segment performance. Highlighting some key points before Bill elaborates further, segment operating revenue rose by 44%, while segment net income was up 19%, demonstrating strong performances across nearly all client segments. Our Commercial client segment saw a 26% increase in segment income driven by a 20% rise in operating revenues, thanks to strong results from our physical business post-CDI acquisition and the impact of higher interest rates. The Institutional segment experienced a 113% revenue increase, translating into a 94% increase in segment income, primarily due to a strong recovery in our securities business and particularly in equity market-making compared to a softer quarter a year ago, alongside increased interest and fee income. The Retail segment encountered a challenging quarter, with lower revenue capture than the more favorable environment last year, leading to a 27% decline in operating revenue and a segment loss of $4.2 million, showcasing the high operational leverage of our digital platform. Global Payments revenue rose by 31%, with segment income increasing by 32%, stemming from solid growth in both volumes and revenue capture. For the trailing 12 months, we recorded double-digit growth in segment operating revenue and segment income across the board. While these quarterly results are strong, we emphasize our long-term perspective on managing the company and expanding our franchise. Therefore, it is important to assess our results and progress based on longer-term performance, like the trailing 12 months, rather than looking at individual quarters in isolation. Now, turning to slide seven, which outlines our trailing 12-month financial performance over the last nine quarters. These figures have been adjusted for accounting related to the CDI acquisition gain as detailed in our previous filings, appearing in the reconciliation in the appendix of this earnings deck. On the left, the bars represent our trailing operating revenue over the last nine quarters, demonstrating a smooth and strong upward trajectory as we continue to grow our footprint and capabilities. Our operating revenues have increased by 64% over this period, reflecting a 28% compound annual growth rate. Our adjusted pretax income has also grown considerably, with a 40% compound annual growth rate. On the right, our adjusted net income bars show a 107% increase over two years, equating to a 44% compound annual growth rate. The dotted line indicates our return on equity, which has consistently stayed above our 15% target, even as our capital has increased by 47% in this period. Now, I'll turn it over to Bill Dunaway to discuss the financial results further. Bill?

Thank you, Sean. I will be starting with slide number eight, which shows our consolidated income statement for the first quarter of fiscal 2023. Sean covered many of the consolidated highlights for the quarter, so I'll highlight a few more and then move on to a segment discussion. Transaction-based clearing expenses declined 5% to $67.3 million in the current period, primarily due to lower fees and equity products and the decline in FX/CFD contracts average daily volume. Introducing broker commissions declined 4% to $36.8 million in the current period principally due to declines in our independent wealth management and retail FX/CFD business, which was partially offset by incremental expense from the CDI acquisition. Interest expense increased $138.6 million versus the prior year, primarily as a result of the $93.3 million increase in interest expense related to our institutional fixed-income business, which Sean noted earlier, as well as a $36.1 million increase in interest paid to clients on their deposits as a result of the significant increase in short-term interest rates. Interest expense on corporate funding increased $2.6 million versus the prior year, also as a result of the increase in short-term interest rates, as well as an increase in average borrowings. Variable compensation increased $18.1 million versus the prior year due to the increase in net operating revenues and represented 31% of net operating revenues in the current period compared to 32% of net operating revenues in the prior year period. Fixed compensation increased $5.9 million versus the prior year with the growth principally related to salary and benefit costs of increased headcount, which increased 13% compared to the prior year, which was partially offset by an increase in deferred compensation. Other expenses increased $23.7 million as compared to the prior year to $110.2 million, which also represented a $3.8 million increase over the immediately preceding quarter. As compared to the prior year, trading systems and market information increased $1.6 million, primarily in our securities business. In addition, professional fees increased $4 million versus the prior year principally due to higher legal, accounting, and other consulting fees. Non-trading technology and support increased $1.8 million due to non-trading software implementations, and selling and marketing expenses increased $1.9 million principally due to increased campaigns in our retail FX/CFD business, as well as additional hosted conferences and marketing expenses across our businesses. We continue to see an uptick in business development, increasing $2.8 million as compared to the prior year. Finally, depreciation and amortization increased $3.6 million as compared to the prior year due to incremental depreciation related to internally developed software, as well as higher average leasehold improvements and intangibles acquired. We had bad debt expense net of recoveries of $700,000 for the quarter versus a $200,000 recovery in the prior year period. Net income for the first quarter of fiscal 2023 was $76.6 million and represented an 84% increase over the prior year and a 46% increase versus the immediately preceding quarter. As Sean noted, net income includes a non-taxable gain on the acquisition of CDI in the current period. Moving on to slide number nine. I'll provide some more information on our operating segments. Our Commercial segment added $29.8 million in operating revenues versus the prior year, however declined $2.8 million when compared to the immediately preceding quarter. This increase was driven by a $20.7 million increase in interest earned on client balances versus the prior year as a result of a 25% increase in average client equity, as well as a significant increase in short-term interest rates. In addition, operating revenues from physical transactions increased $16.3 million, compared to the prior year principally due to the acquisition of CDI, as well as an increase in precious metals activities. These increases were partially offset by $3.9 million and $4.2 million declines in operating revenues from listed and OTC derivatives, respectively. Segment income was $82.8 million for the period, an increase over the prior year and preceding quarter of 26% and 3%, respectively. Moving on to slide number 10. Operating revenues in our Institutional segment increased $182.2 million versus the prior year primarily driven by $115.5 million increase in securities operating revenues, compared to the prior year as a result of a 56% increase in the average daily volume of securities transactions, as well as the increase in interest rates. The increase in securities ADV was primarily driven by an increase in volumes in both equity and fixed income markets as a result of continued volatility and increased market share. As Sean mentioned earlier, the increase in interest rates also led to a significant increase in securities related interest expense for the period, which I will touch on momentarily. Operating revenues increased $3.1 million and $3.9 million in the listed derivative and FX products, respectively, driven by growth in both listed derivatives and FX contract volumes. Finally, interest and fee income earned on client balances increased $56.7 million versus the prior year as a result of the increase in short-term rates, as well as a 106% increase in average client equity. The rise in short-term interest rates drove an increase in interest expense for the period with interest expense increasing $132.9 million versus the prior year. Interest expense related to fixed income trading and securities lending activities increased $93.3 million and $2.2 million, respectively, as compared to the prior year, while interest paid to clients increased $33.1 million. Segment income increased 94% to $62 million in the current period as a result of the $50.3 million increase in net operating revenues. Variable compensation increased 37% or $13.1 million as a result of the growth in net operating revenues. Fixed compensation and benefits increased $1.7 million versus the prior year as we build out our product offering, while other fixed expenses increased $5.6 million, including a $1.7 million increase in professional fees and a $1.5 million increase in trading systems and market information. Segment income increased $17 million versus the immediately preceding quarter. Moving to the next slide. Operating revenues in our Retail segment declined $25.9 million versus the prior year, which was primarily driven by a $27.3 million decrease in FX and CFD revenues as a result of the 29% decline in RPM, as well as a 10% decline in FX/CFD average daily volume as compared to the prior year. Operating revenues from securities transactions declined $4.1 million, while operating revenues from physical contracts added $2.5 million, as compared to the prior year period. Operating revenues in the Retail segment declined $31.3 million versus the immediately preceding quarter. We recorded a $4.2 million segment loss in the current period versus segment income of $23.4 million in the prior year primarily as a result of the decline in operating revenues. Other fixed expenses increased $6.5 million, compared to the prior year driven by a $1.1 million increase in selling and marketing, a $1.8 million increase in depreciation and amortization, a $600,000 increase in non-technology and support costs, and a $300,000 increase in travel and business development. Closing out the segment discussion on the next slide, operating revenues in Global Payments increased $13 million versus the prior year driven by a 23% increase in the average daily volume and a 7% increase in the rate per million as compared to the prior year. Non-variable expenses increased $2.4 million and are primarily related to the expansion of our payment offerings. Segment income was $32.3 million in the current period and represents a 32% increase over both the prior year and immediately preceding quarter. Moving on to slide number 13, which represents a bridge between operating revenues for the first quarter of last year to the current period across our operating segments. Overall operating revenues were $654.8 million in the current period, up $204.3 million or 45% over the prior year. I have covered the changes in operating revenues for our segments. However, the $5.2 million positive variance in revenues in unallocated overhead is primarily related to an increase in unallocated interest income net of an FX hedge-related loss as compared to the prior year period. So the next slide number 14 represents a bridge from 2022 first quarter pretax income of $52.5 million to pretax income of $95.6 million in the current period. The positive variance in unallocated overhead of $15.5 million was driven by the $5.2 million positive variance in revenues I just mentioned, as well as a $23.5 million gain on acquisition, which was partially offset by a $4.1 million increase in variable compensation as a result of improved performance, a $2.3 million increase in professional fees, a $700,000 increase in depreciation and amortization, a $900,000 increase in trade systems and market information, and a $1 million increase in travel and business development. Finally, moving on to slide 15, which depicts our interest and fees earned on client balances by quarter, as well as a table which shows the annualized interest rate sensitivity for a change in short-term rates. Interest and fee income net of interest paid to clients and the effect of interest rate swaps increased $36.3 million to $44.3 million in the current period as compared to $8 million in the prior year. As noted in the table, we estimate a 100-basis point change in short-term interest rates either up or down would result in a change to net income by $28.8 million, or $1.40 per share on an annualized basis. With that, I would like to turn it back to Sean.

Thanks, Bill. Let's move on to the final slide, 16. We achieved very strong results in the fiscal first quarter 2023, delivering double-digit increases in operating revenues and net income, which resulted in diluted EPS of $3.62 and an ROE of over 27% for the quarter. These results included a $23.5 million non-taxable gain on the acquisition of CDI, which contributed $1.11 of earnings per diluted share and a significant increase in interest income, reflecting the growth in our client assets and higher interest rate environment. While trading conditions moderated towards the end of the first quarter, the multiple drivers of our business, including our disciplined approach to acquisitions, the strong growth in client assets and our core operating performance, exemplify the diversity in our operating model. We believe that these multiple drivers and our ongoing investments position us to continue to empower our clients and drive our growth and deliver shareholder value. When our performance is viewed through a slightly longer-term lens, such as trailing 12 months over the last two years, which evens our quarterly anomalies, our results continue to show a strong upward trajectory, growing our revenues at a 28% CAGR and our adjusted earnings at a 44% CAGR. We continue to see strong growth in client trading volumes and client assets across all products and all client segments, which speaks to growth in our underlying client engagements. We continue to invest in our financial ecosystem, expanding our products, capabilities, and talent. We have a unique and comprehensive financial ecosystem with a very large addressable market in front of us. I would just like to note that this week represents the 20th anniversary of the investment into what would become StoneX. Twenty years ago, the stock price was $0.64, and the market value of the company was $1.5 million, and the annual operating revenues were well less than $10 million. Over the past 20 years, we have compounded operating revenues at 32% per annum and shareholder equity at 29% per annum. And by harnessing the power of compounding, we have increased the market value of the company over 130 times. Our commitment to our clients, our discipline around risk and acquisitions, and our long-term owner-based approach to investing in and growing our business have all been key underpinnings of the success. While we are proud of our track record and believe that it is largely unmatched by our peers, we also believe that we are still in the early stages of the opportunity that is available and in front of us. I have no doubt that the next 10 years are likely to be much more exciting for StoneX than the last 20 were. Operator, let's open for questions.

Thank you. I'm showing we have a question coming from the line of Daniel Fannon with Jefferies.

Hi, thanks for taking my question. This is actually June on behalf of Dan. So maybe we can just start off with a quick discussion on the current environment and maybe just on 2023, how has that started versus what was the backdrop of 2022.

Sure. Things can change rapidly in our business, so these general remarks might shift quickly. Reflecting on our year-end discussion, I anticipated that we would experience somewhat increased volatility, which is a crucial factor for our business. This volatility is expected to be higher than it was before the pandemic, but perhaps slightly lower than in the last two years. That perspective still holds. We saw a slowdown last quarter during the Christmas period, possibly due to the timing of the holidays or the impact of a challenging previous quarter that led many to close down early in December. In January, we've noticed a return to a more typical pattern. I believe we will face a moderately favorable environment concerning volatility, not as strong as during the pandemic but better than before it, and this trend should persist for a while. On the interest rate front, we are beginning to feel the significant effects of the rate hikes that have occurred swiftly. We really started to see their impact on our financial results during the fourth quarter, and we're now witnessing the full effect take shape. I expect that we will see interest rates hover around the 4% mark for some time. While it's unlikely they will stabilize at 5%, I also don’t foresee a return to a 2% environment soon. This is fairly advantageous for us, representing a better scenario than we’ve experienced over the last four years, particularly better than last year when we saw minimal benefits from interest rates. Combining these two factors, I think we have a promising environment ahead. The impact from interest rates is significant, and we are still operating in a decent volatility climate. Overall, I believe this will be a favorable environment for us for at least the next 12 to 18 months. Beyond that, it's uncertain how low interest rates might drop, but I don’t see them falling below 2%. For our business, anything above 2.5% is considered a very appealing environment. Does that address your question, June?

Yes, that was very helpful. Since you mentioned interest rates, it seems like the markets are pricing in a decrease sometime this year or next. As they decline, will your earnings sensitivity to rates be similar on the way down as it is on the way up, or is there a different dynamic at play?

Yes, it will be the same. I mean, the assets sort of might take a little quicker to reprice from the way down. But the dynamic will be the same. I mean, obviously, our incremental take of interest as it goes up reduces because we pay more weight to clients. And on the way down, the same thing happens. We take more of the interest rate on the way down. So it's a little bit muted each way as you get sort of above 3%. But it should be symmetrical.

In terms of margin balance and client balances, do you observe any relationship between those and changes in interest rates?

Yes. We have seen some small changes here and there. I mean, I think they're largely immaterial. But certainly, in our equity clearing business, we've seen some retail clients take money or full deposits. I don't know if that's because they could find higher interest rates elsewhere or people were starting to buy into the market rather than having money on the sidelines. But we've seen that go down 1% or something. And then on the other side of our business, it obviously depends on the volatility in the markets because that somewhat drives how much margin people have to leave with us. So if volatility moderates a little bit, we may see a little bit of a pullback on our aggregate client balances. The top sort of, I guess, 10% or 15% of our client balances tends to be more volatile. But there's a core level of client balances there, which sort of just underpins our client footprint, right? And as long as markets are reasonably active, that's probably going to be reasonably stable. But it could move around on the margin just a little bit for those reasons.

Got it. Got it. And just specifically on the Retail business. You mentioned capture rate decline was mostly due to diminishing market volatility. So going forward, what would you describe as a normalized rate? And maybe you can go a little bit more in-depth on the dynamics of just market volatility and the rate that we're seeing here.

Yes. So we have data around sort of revenue capture in that business over a long period of time. And it's generally stable over a period of time. What we do see is, in the short-term, weekly, monthly, even quarterly, there can be quite a lot of volatility in that revenue capture. So I would say something around $90, $95 in terms of revenue capture on the CFDs is sort of about where we think the long-term average is. I mean, that obviously also differs with product mix because we make a lot less on FX than we do say on indices. So something in that region is probably where we'd like to see it. Now we are at 82 this quarter. So we were significantly below the sort of $95 type level that we see as the long-term average. But if you look at the prior quarter a year ago, we were at 115. And in the immediately preceding quarter, we had 140. So I would say we're sort of massively overachieved in those quarters. We should see a couple of quarters where we're going to underperform to bring that average back in line with the sort of $95, $100 type levels that we think is sort of the long-term average.

Understood. Thank you. And maybe, Bill, just a quick one for you. I understand that the business is doing well, but how are you thinking about fixed expenses for 2023?

Well, certainly, it's something that we look to try to continue to control, right? And the increase was relatively modest from Q4 into Q1 here. We're cognizant that, obviously, we're riding the tailwind a bit of higher interest rates and slightly elevated volatility. So I think that the growth that we kind of saw over Q4 to Q1 is probably more indicative of what we would expect going forward versus when you looked at Q1 versus last year Q1 with a relatively sizable increase in fixed expenses, kind of, due to what Sean's talked about on previous calls, us trying to digitize the business and expand our offerings. But our expectation is that would moderate here on a go-forward basis like it did from Q4 to Q1.

Got it. Got it. And then just lastly on M&A. Do you think you're still sort of digesting the CDI acquisition or you are kind of looking for more opportunities at this point?

I can address that, Bill, if you prefer. The CDI acquisition is relatively modest for us, but it has had a significant effect on our financial statements due to the accounting methods involved. We anticipate that this deal will be assimilated smoothly and swiftly, so it doesn't hinder our ability to pursue other opportunities right now. We are consistently exploring the market for new possibilities. As I have mentioned in earlier calls, we have observed financial businesses reaching peak earnings, with owners expecting high multiples based on these peaks, which hasn't interested us. We believe it was wise not to engage in any acquisitions under that premise. Currently, as you may have read in the news, the environment has shifted dramatically. Many businesses are not performing as well, realizing that their previous success was likely due to a temporary lift from COVID. Additionally, funding has diminished for many startups, which are now midway through developing their capabilities. This has led to an influx of opportunities. While we do start various businesses ourselves, we don't view ourselves as venture capitalists. We will evaluate these businesses, and if we see genuine potential and opportunity with a reasonable amount of additional investment, we can enhance our capabilities and grow our ecosystem, which is appealing. We are entering a more compelling and rational M&A landscape. However, it may take another six to twelve months for prices to stabilize. That doesn't necessarily mean we will make acquisitions, as we have broadened our presence and filled many gaps; our needs are now fewer. Our primary focus remains on organic growth, which we believe adds the most value for shareholders. When we acquire a company, we must significantly improve it, or we won’t add value. Thus, our priority is our ecosystem. Currently, we are enjoying strong momentum and seem to be gaining market share across various areas. The narrative around us is positive, and we believe clients and talent are noticing us. Therefore, we intend to continue focusing on what we excel at, which is organic growth. If a well-priced, accretive acquisition arises that allows us to accelerate our growth, we will certainly consider it.

Okay, that was super helpful. Thanks again for taking all my questions.

Of course. Thank you. Operator, do we have any other questions?

Thank you. Yes, sir. And our next question coming from the line of Paul Dwyer with Punch & Associates Investment.

Hi, good morning, guys.

Hey, Paul. How are you doing?

Thanks for taking my questions.

Good morning.

Good. Maybe just to follow up on CDI. Can you talk about what drove this gain on the acquisition, which I believe is a $40 million deal?

Certainly. This acquisition was a sole proprietorship, and we previously mentioned it when we announced the deal last quarter. One of our key employees in Brazil, who joined our company around five or six years ago, was seen as a potential leader for us. We were disappointed to lose him as he was a strong competitor in the cotton sector. When the owner decided to sell, he immediately thought of us, believing it was a good fit for StoneX, and we entered into a deal without a lengthy negotiation process. The owner sought to extract his capital from the business, benefiting from a significant tax advantage since selling the company would provide him with tax-free proceeds compared to withdrawing funds. The agreed price was approximately $30 million, reflecting the tangible book value. We also arranged for a few additional payments based on the company’s cash performance through December. Crucially, the owner accounted for his business on a cash basis in line with Swiss GAAP, whereas we are required to use a mark-to-market approach. A substantial portion of their revenue for the upcoming year was already contracted, which we adjusted accordingly, contributing to the gains we recognized. Furthermore, we must engage in an independent valuation when acquiring businesses, which includes a third-party assessment of various factors, including supplier relationships. This results in an intangible write-up reflecting the value of contracts and suppliers. Ideally, I believe, and Bill concurs, that we would prefer not to write up intangibles since they often need to be adjusted down later, and we see them as lacking true cash value. Thus, while the gain from this relatively small acquisition was unexpected, that's the underlying reason for it.

Yes. Okay. Sounds like a nice deal. On Global Payments, it seems like it's continuing to accelerate in its growth. Can you just spend a little more time talking about what the drivers have been to get the acceleration and just the general landscape for that segment?

Yes, we definitely feel that the business has gained renewed energy, and we're beginning to invest in new areas that we weren't focusing on much three to five years ago because our core business was stable. It's always frustrating to see businesses that are doing well stop investing just because they're busy making money. We need to do both: take advantage of current success while also investing in future growth. Market conditions can support profitability, but without investing, long-term sustainability is at risk. A few years ago, we encouraged the payments business to rethink their strategies for reinvestment and growth. We're currently making significant investments in that area, although not all of it is reflected in the profits yet. This has energized the team, especially with the addition of younger, technology-focused talent. I'm optimistic about the overall direction of the business and believe our local payments capability will be very impactful for us. As for the business's improved performance, it notably did not benefit from the COVID-19 tailwind that many industries did. Investments from corporations, which are crucial for our profitability, slowed during COVID but are now picking up again. Overall, I would say the takeaway is that while COVID created challenges for this business, we're returning to a more normal environment, which contrasts with some of our other areas.

Okay, great. Yes, that's perfect. And then really nice operating leverage again this quarter. Just big picture, how do you think about continuing to be able to drive, I guess, segment income relative to unallocated costs, particularly if the interest rate benefits are now starting to be more accurately reflected in the business?

When we talk about better operating leverage, my response is that it's about time. We've been investing heavily to improve our infrastructure for efficiency and scalability, but in the short term, these efforts add to our costs. We hope to eventually see the benefits of this scalability and operational leverage. It feels like we've waited a long time for this. I am optimistic that we may reach a point where our overall unallocated costs begin to stabilize. If we can keep increasing our volumes and revenues, we should see significant operating leverage moving forward. This is a challenge because while we are digitizing our business and improving technology, we also face ongoing cost pressures from regulators and the operating environment. Regulators continually introduce more costs and processes, which can be a mixed bag; some are beneficial, but others might be excessive. We need to navigate this complex landscape. Additionally, as we digitize, we must confront the rising costs associated with cybersecurity, which are increasing even faster than current inflation. Despite this, we believe we are nearing a peak in our investment phase, and after a decade of major investments, we are beginning to see some returns. This looks even better when we have growing interest revenue since that means our revenues can outpace costs. It's important to remember that without interest, we incur no operational costs at all, so the operational leverage from interest is substantial. This aspect can distort the overall financial picture. Did I answer your question, Paul?

Yes. No, that's great. That's perfect. And then just last for me, in terms of just being able to continue to grow the core business, it sounds like you're having no issues with market share gains, but any color you can add just the current competitive landscape and the ability to keep taking market share?

Yes. I mean we seem to be organically, sort of, growing our market share in line with what's happened over the last five to 10 years, which is 10% to 15% incremental growth in customers and activity. And we're giving you guys some of the data now on revenue capture. I mean, there was always the argument that you tend to face revenue capture pressure. But if you look at it over sort of five or 10 years, we haven't seen any material decline in our margins on the revenue capture side. That may happen at some point, and it's happened in some of our activities. But generally speaking, we managed to maintain our pricing. And we've managed to increase our market share in our client base. And I don't see any reason why that won't continue. I mean, I do think maybe the environment has given us a boost because volatility was high and revenue capture was higher. So it sort of looked a bit better than it was. But underlying that trend has been a pretty steady kind of organic growth in customers. And that's the core long-term driver for us. And I think we feel good. That's in fact and in some ways, relative to the comments I made at the end, I think the next 10 years is going to be much more exciting than the last 20. And the reason I say that is I think we're getting to sort of a tipping point in scale, in acceptability from counterparties. People know who we are. People want to come and work here. Clients see the value in our offering. I mean five or 10 years ago, we were a tiny little business that no one had heard of. And if I think back 10 years ago where we were sitting and how we managed to grow, I'm sort of like it's incredible we managed to pull that off, right? And I think this does become a little bit easier as you get a little bit of scale and as you grow your ecosystem. So not that I'm saying it's easy, but I think there's an opportunity for us to continue that trend and feel confident about it. So anyway, we'll see, but that would be my view.

Okay, great. That’s it from me. Thank you for the time.

Yes, of course. Operator, is there anyone else?

I'm not showing any further questions at this time.

Okay. Well, thanks, everyone, for attending. I appreciate your support, and we will be speaking to you in three months' time. Thanks very much. Bye-bye.

Ladies and gentlemen, that does conclude the conference for today. Thank you for your participation. You may now disconnect.