Good day. And thank you for standing by. Welcome to the StoneX Group Inc. Q3 Fiscal Year '23 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Dunaway. Please go ahead.

Good morning. My name is Bill Dunaway. Welcome to the earnings conference call for our third quarter ended June 30, 2023. After the market closed yesterday, we issued a press release reporting our results for the third fiscal quarter of 2023. This release is available on our website as well as a slide presentation, which we'll refer to on this call in our discussions of our quarterly and year-to-date results. The presentation and an archive of the webcast will also be available on our website after the call's conclusion. Before getting underway, we're required to advise you, and all participants should note, that the following discussion should be taken in conjunction with the most recent financial statements and notes there too, 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. All 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 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 forward-looking statements are not guarantees of future performance. With that, I'll now turn it over to Sean O'Connor, the company's CEO.

Thanks, Bill. Good morning, everyone, and thanks for joining our earnings call. In the third quarter of fiscal 2023, we saw solid transactional volumes as well as revenue growth across almost all of our products, despite volatility generally moderating versus the prior period. Interest earnings on our client float increased significantly due to our capturing higher market rates that prevailed during this period. In aggregate, these results produced our strongest financial results ever, with a $3.25 diluted EPS and a 23.1% ROE on tangible equity. We believe that our results for the quarter and indeed for the year-to-date are significant positive outliers in our industry, as they have been for some years now. Turning to slide three in the earnings deck, which compares quarterly operating revenues by product versus the year ago; operating revenues were up a strong 47% in aggregate for the quarter and up 40% for the year-to-date, despite the generally more subdued market conditions. Aggregate revenues were up 10% versus the immediately preceding quarter. Listed derivatives revenue was up slightly by 1% despite a decrease in volumes of 5% while revenue capture was up 9%. Revenues were down 3% versus the preceding Q2. OTC derivative revenue was up 43% versus the year ago and up 24% versus the immediately preceding quarter with volume surging 46% and revenue capture down slightly. Physical commodities revenues were up a strong 59% versus a year ago and up 50% versus the Q2 due to better results in agriculture and energy as well as the addition of CDI which was acquired in Q1 of this year. Securities revenues were up 76%, although this is inflated due to the growth of much higher interest revenue in our fixed income business as a result of the Fed rate increases. As was the case last quarter, this was a tough quarter for the equities business with lower volatility. But on the other hand, the fixed income group turned in another strong result. Overall, ADV across the securities business was up 33% although revenue capture declined 43%, reflecting both tougher market conditions in equities as well as a continued push into lower-margin products. Global payments had another strong quarter with revenues up 23% versus the year ago and up 9% versus Q2. Volumes were down 2%, but revenue capture was up 21%. Our FX and CFD revenue was down 17%, largely due to tougher market conditions versus the exceptionally positive conditions in the prior year quarter, which resulted in volumes being down 20%. Revenue capture was up 5% versus the prior year and represented a 49% increase over the immediately preceding quarter. This resulted in a 17% increase in FX, CFD revenues versus the immediately preceding quarter. Interest and fee income on client balances was $92.2 million, up 329% from a year ago, as we realized the impact of cumulative interest rate increases. Although the aggregate client float reduced 3% and now stands at an aggregate $7.7 billion. The production and client float was realized on the FDIC sweep balances as larger retail securities clients moved into higher-yielding deposits. Versus the immediately preceding quarter, our interest earnings on our client float were down 11% and the aggregate client balances declined by 10%. Moving on to slide four, which shows the same data for the trailing 12 months; over this longer period, and despite more challenging comparisons, we realized strong revenue growth across all products except listed derivatives, which was flat, and FX, CFDs, which were down 16%. We have generally seen increasing volumes across the board, while revenue capture has been more challenging with generally lower volatility. Turning to slide five, we recorded operating revenues of $776.9 million, up 47% versus the prior year, and up 10% from the preceding quarter. Our operating revenues were boosted by interest both on our client float and also interest that is embedded in our fixed income trading. Net operating revenue, which nets off interest expense as well as introducing growth in commission and clearing costs, was up 17% versus a year ago. Total compensation and other expenses were up 13% for the quarter, with variable compensation up 5% and fixed compensation up 23%. Versus the immediately preceding quarter fixed compensation, excluding the retirement and reorganization charges recognized in the immediately preceding quarter, was unchanged at $96.1 million. We reported $69.5 million in net income and $3.25 in diluted EPS for the quarter, while adjusted net income, which excludes acquisition-related items, was a record $71.8 million for the quarter. Our ROE is 21.6% on stated book value and 23.1 on tangible book value. Our average gross yield on our client float was 397 basis points for the quarter, versus 379 basis points for the immediately prior quarter. Book value per share closed the quarter at $64.09, up 24% versus a year ago, and increased $3.77 during the quarter, again, this quarter larger than our EPS due to positive changes in other comprehensive income. Looking at the summary for the trailing 12 months, our operating revenues were a record of $2.7 billion, up 42% over the prior trailing 12-month period. Net income was $240.1 million, up 48%. Our diluted EPS was $11.31 for the trailing 12 months, up 44%. ROE was 20.2% despite our equity increasing 48% over the last two years. Turning now to slide six, our segment summary, just to touch on the highlights before Bill gets into more detail. For the quarter, segment operating revenue was up 46%, and segment income was up 22%. Our commercial segment was up 61% in segment income, off the back of a 48% increase in operating revenues, with strong performance on the OTC products and physical commodity side. Versus the immediately preceding quarter, segment revenues were up 15%, and segment income was up 14%. It is interesting to note that in the commercial segment, OTC derivative and physical revenues both now exceed listed derivatives, which was by far the primary revenue driver in the segment 10 years ago. Our institutional segments saw an 82% increase in revenues, but about a 5% reduction in segment income. The disparity between these two numbers is caused by the revenue increase being driven by the interest carried on the fixed income side as well as higher interest paid on the client float. As mentioned earlier, the equities business had a tough quarter while fixed income had another good result as did our institutional FX. The listed derivative business and securities clearing were boosted by interest and fee income. Versus the preceding quarter, segment revenue was up 5% and segment income was down 19%. Retail was much improved from Q2 but with continued market conditions, especially compared to the exceptional results a year ago. Operating revenue was down 16% versus a year ago but up 16% versus the preceding quarter. Global payments revenue was up 20% and segment income was up 16% versus the prior quarter. For the trailing 12 months, we had double-digit growth in segment operating revenue and segment income with the exception of retail which was down. As we have said repeatedly, we take a long-term view in how we manage the company and how we grow our franchise. As such, we believe that the best way to gauge our results and progress is to look at longer-term performance such as trailing 12 months rather than specific quarters taken in isolation. Turning now to slide seven which sets out our trailing 12-month performance over the last nine quarters, these numbers have been adjusted for the accounting treatment related to the gain and CDI acquisition as disclosed in our prior filings and which appear in the reconciliation provided in the appendix of this earnings deck. On the left-hand side, the bars represent our trailing 12-month operating revenue over the last nine quarters. As you can see, this has been a smooth and strongly upward trend as we have steadily expanded the footprint and capabilities. Our trailing 12-month operating revenues are up $1.1 billion over this period for a 29% CAGR. Our adjusted pre-tax income likewise has grown significantly as of 33% compound annual growth rate. On the right-hand side, you can see our adjusted net income in the bars which is up $104 million over the two years for a 37% CAGR. The dotted line on the right-hand side represents our ROE which has remained above our 50% target even though our capital has grown by 48% over this period.

Thanks, Sean. I'll be starting on slide number eight which summarizes our consolidated income statement for the third quarter of fiscal '23. Sean covered many of the consolidated highlights for the quarter, so I'll just highlight a few and then move on to a segment discussion. On the expense side, transaction-based clearing expenses declined 11% to $66.7 million in the current period, principally due to lower fees in the equity ADR space and global payments as well as a decline in FX, CFD, and listed derivative volumes. Introducing broker commissions increased 5% to $43.4 million in the current period, principally due to increased activity in our commercial segment and both listed derivatives as well as the result of the CDI acquisition which was effective October 31, 2022. Interest expense increased to $187.9 million versus the prior year, principally as a result of a $144.9 million increase in interest expense related to our institutional fixed income business and a $31.6 million increase in interest paid on client balances. Both of these were the results of significant increases in short-term interest rates. Interest expense on corporate funding increased $4.2 million versus the prior year, also as a result of an increase in short-term interest rates as well as an increase in average borrowings. Variable compensation increased $6.6 million versus the prior year due to the increase in net operating revenues and represented 30% of net operating revenue in the current period, compared to 33% in the prior year period. Fixed compensation increased $17.8 million versus the prior year due to a 14% increase in headcount resulting from the expansion of our capabilities among our business lines as well as in support areas to facilitate this business growth. The effect of the annual merit increases and a $1.9 million increase in share-based compensation as compared to the prior year. Other fixed expenses increased $6.8 million as compared to the prior year and $2.1 million versus the immediately preceding quarter. As compared to the prior year, trading systems and market information increased by $3.4 million, travel and business development increased by $1.3 million, and depreciation and amortization increased by $2.1 million due to incremental depreciation related to internally developed software, as well as higher amortization of intangibles that we acquired. Bad debt expense, net of recovery, has increased to $6.3 million in the current period versus the $700,000 recovery in the prior year period. This increase was principally related to an increase in bad debt expense in our physical agriculture and energy, retail FX and CFD, and financial agriculture and energy businesses. Net income for the third quarter of fiscal 2023 was $69.5 million, which represents a 42% increase versus $49.1 million in the prior year, and is a 67% increase versus the immediately preceding quarter. Moving on to slide number nine, I'll provide some information on our operating segments. Our commercial segment added $82.5 million in operating revenues versus the prior year and $32.6 million when compared to the immediately preceding quarter. The increase over the prior year was driven by a $30.9 million increase in operating revenues from physical transactions, due to increased activity in biodiesel feedstocks and the acquisition of CDI, as well as a $21.7 million increase in OTC derivative operating revenues, most notably in Brazilian markets. In addition, interest earned on client balances increased by $23.6 million as a result of a significant increase in short-term interest rates. Average client equity declined 30% versus the prior year, as the prior year period experienced elevated margin requirements, following the Russian invasion of Ukraine. Fixed compensation and benefits increased by $3 million versus the prior year, and other fixed expenses increased by $2.1 million, including increases in non-trading technology and support, travel, business development, and depreciation and amortization. Bad debt expense increased by $5.4 million as compared to the prior year period. Segment income was $117 million for the period, demonstrating an increase over the prior year period and preceding quarter of 61% and 14% respectively. Moving on to slide number 10, operating revenues in our institutional segment increased by $172 million versus the prior year, primarily driven by a $117.9 million increase in securities operating revenues compared to the prior year as a result of a 33% increase in the average daily volume of security transactions, as well as the increase in interest rates. The increase in securities ADV was driven by a rise in client volumes in both equity and fixed income markets. 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'll touch on momentarily. Interest and fee income earned on client balances increased by $47.1 million versus the prior year as a result of an increase in short-term rates as well as a 30% increase in average client equity. This was partially offset by a 32% decline in average money market and FDIC sweep client balances versus the prior year. Interest and fee income on client balances was down $2.7 million versus the immediately preceding quarter as the decline in average client equity and money market FDIC client balances more than offset the increase in short-term rates. The rise in short-term interest rates drove a $182.9 million increase in interest expense compared to the prior year. Interest expense related to fixed income trading and securities lending activities increased by $144.9 million and $5.7 million respectively. Interest paid to clients increased by $28.1 million. Segment income declined by 5% to $45.1 million in the current period as a result of the $6.1 million decrease in net operating revenues as well as a $9.6 million increase in non-variable expenses, including a $2.4 million increase in fixed compensation and benefits, a $1.7 million increase in professional fees, an $800,000 increase in trade systems and market information, and a half a million-dollar increase in travel and business development. These negative variances were partially offset by a $13.1 million decline in variable compensation as compared to the prior year. Segment income declined by $10.7 million versus the immediately preceding quarter. Moving to the next slide, operating revenues in our retail segment declined by $17 million versus the prior year which is primarily driven by a $16.3 million decrease in FX and CFD revenues. This was primarily the result of a 25% decline in FX, CFD, average daily volumes which was partially offset by a 7% increase in the rate per million as compared to the prior year. The current period, however, showed a nice improvement over the immediately preceding quarter with retail segment operating revenues increasing by $12.9 million. Segment income declined by 35% to $17.2 million in the current period primarily as a result of the decline in operating revenues which was partially offset by a $2.3 million decline in non-variable direct expenses. Segment income increased by $12.4 million versus the immediately preceding quarter. Closing out the segment discussion, operating revenues in global payments increased by $8.9 million versus the prior year, driven by a 21% increase in the rate per million compared to the prior year. Segment income increased by 16% to $28.6 in the current period as a result of the growth in operating revenues which was partially offset by a $3.3 million increase in fixed compensation as we continue to build out our payment capabilities. The segment income increased by $12.7 million or 80% versus the immediately preceding quarter as the preceding quarter included $10 million in reorganization and retirement costs. Moving on to slide 13, which represents the bridge between operating revenues to the third quarter of the last year to the current period across our operating segments. Overall, operating revenues were $776.9 million in the current period, up $248.1 million or 47% over the prior year. This variance is primarily covered in the segment discussion I just walked through. So, I'll move on to the next slide number 14 which represents the bridge from 2022 third quarter pre-tax income of $70.9 million to pre-tax income of $94.5 million in the current period. The negative variance in unallocated overhead of $13.2 million was primarily driven by a $9.4 million increase in fixed compensation and benefits as a result of the build-out of our compliance and IT functions to support our continued business growth, as well as incremental costs associated with the acquisition of CDI. In addition, variable compensation increased by $3.2 million as a result of increased, improved company performance and additional headcount. Finally, moving on to slide number 15 which depicts our interest and fee income earned on client balances by quarter as well as the 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 effective interest rate swap increased by $24.6 million to $43.9 million in the current period as compared to $19.3 million in the prior year. This represents a $10.7 million decline from the immediately preceding quarter primarily driven by declines in average client equity and money market FDIC sweep balances. As noted in the table, we estimate a hundred basis point change in the short-term interest rates either up or down would result in a change to net income by $17 million or $0.82 per share on an annualized basis. With that, I'd like to pass it back over to Sean.

Thanks, Bill. Let's move on to the final slide number 16. We achieved another set of excellent core operating results. Despite moderating volatility, our transactional revenue was up as was interest on our client float, validating our business model which continues to deliver best-in-class returns. For the quarter, we recorded a diluted EPS of $3.25, an ROE on stated book value of 21.6% and an ROE on tangible book value of 23.1%. For the trailing 12 months, we have recorded net income of $240.1 million or $11.31 in EPS, equating to a 20.2% ROE on stated book. Our book value per share now stands at $64.9, up 24% versus a year ago. When our performance is viewed through a slightly longer-term lens such as trailing 12 months over the last two years, which evens out quarterly anomalies, our results continue to show strong upward trajectory, growing our revenues at a 29% compound annual growth rate and our adjusted earnings at a 37% compound annual growth rate. While trading conditions moderated with generally lower volatility, we believe that our growing and diverse business and multiple earning drivers will continue to drive growth and to deliver shareholder value. We continue to see growth in client trading volumes and new client acquisitions across our products and across our client segments, which again validates our business model and our growing relevance in our markets. We continue to invest in our financial ecosystem, expanding our products, our capabilities and our talent. We have a unique and broad financial ecosystem with a very large addressable market in front of us. Operator, let's open the line and see if we have any questions at this point.

Thank you. We will now conduct the question-and-answer session. Our first question comes from Yehuda Weil of Blackbird Financial.

Hi, great quarter. I just have two questions. The first is, can you give us a picture of how much you're spending on growing StoneX One in marketing and infrastructure? And two, do you feel any pressure to pay higher interest rates on client float or risk them leaving to a competitor? Thank you.

Okay. Well, thanks for the questions. I appreciate it. So, dealing with the interest rate question first. I guess over the last two or three quarters as interest rates sort of rest at above 3%-3.5%, we started to hear from most of our clients that they wanted to see some of that interest moved over to them. So, that has happened gradually. I don't think we've seen any greater push in the last quarters than we did in the previous quarter. At the moment, I think we're paying out on average about across a variety of client bases and different payouts. But on balance, I think it's about a 40% bonus of the normal interest rate we pay off. So, I think that's pretty much stabilized. On our FDIC sweep, we haven't really changed our interest rates there, which is we still capture the vast majority of the interest on that sweep. We have lost some of the larger clients who had large cash balances and moved into treasuries. But the bulk or the majority of the remainder of the clients and our FDIC sweep have relatively small balances and find it difficult to go by treasuries or move the money around because the balances are relatively small. So, that's the biggest impact we've seen is on the FDIC sweep, and that started happening probably six or nine months ago. On StoneX One, we continue to develop StoneX One. It has been launched. It is out there. We are not spending material amounts of money marketing at this point. I think we're ramping that up slowly, so it's not a significant number. And I think, as I've said before, with all these digital initiatives of ours, you should see them as slow incremental moves, not things where we're going to flip the switch and you'll see the needle move immediately. I believe over time though, that will be critically important for our growth. And we're very optimistic and have high hopes for all these digital initiatives, including StoneX One. So, it's rolling out slowly. We're starting to see adoption. We are adding features to that. And you should see that start to ramp up at a moderate rate over time is how we think about it. Does that answer your questions?

Yes, thank you.

Okay. Thank you.

Thank you. One moment for our next question. Okay. Our next question comes from Daniel Fannin of Jefferies, LLC.

Thanks. Good morning, Sean and Bill. Hope you're well.

Good morning.

Hey, Dan, how are you doing?

Good, thank you. So, I wanted just to chat about the environment because volumes and activity, frankly, your revenues have been strong for an extended period of time. And so, as you look at the health of your markets, the health of your customers, I know it's very hard to predict volumes. But just want to get a sense of how you're thinking about sustainability and maybe factors like inflation that we haven't seen historically are ultimately going to make this more of a sustained kind of backdrop, just curious about your thoughts around that backdrop.

Yes. I mean, I don't want to get too far into the realm of prognostication on the financial markets because there are so many crosscurrents and unknowns at the moment. But what I would say is I think what our financial results are showing is there has definitely been a moderation in the heightened volatility we saw during the two years over COVID. That's definitely flattening out. I think you've seen that being reflected in the industry broadly. I think you've seen it being reflected in our numbers, particularly in the revenue capture numbers. We're starting to see for the first time in two years some of those revenue captures being down slightly or not growing. If you go back to the last eight quarters, every one of those charts, our revenue capture was higher and our volume was higher. So, I definitely think we're seeing more subdued volatility, showing up with tougher revenue capture numbers. On the other side, we are still seeing broadly growth in volumes. And I think that's us really gaining market share continuously. I do think there is probably, generically, volume in the industry is probably starting to flatten as well just with tougher market conditions and all the excitement of COVID and all that dislocation in the rear-view mirror now. I think it's become a more stable market that's probably not showing the same kind of industry growth you've seen before. But despite that, we are putting up numbers that show growth. So, if you put those two things together, I would say I think we still feel good about our transactional revenue growing. You know, I don't think we're going to grow like we did in the two years during COVID, where every number was up 40%. But I think there's a lot of market share up there for us to get. And we continue to see banks pushing clients out. There's the next wave of additional capital requirements that the banks are going to have to deal with. We've just seen this movie now for 15 years that banks are continuously recalibrating which of the clients on the trading side they want to keep. And the capital requirements for our kind of businesses are not very friendly for banks. You know, the Basel III requirements are great if you're holding collateral. I think banks are now having to put even more capital up. I think all of that bodes well for us in gaining market share. So, I think we feel pretty good about that environment on the transactional side. You know, clearly not going to be like COVID, but I think there's going to be a place for us to still continue to grow our transactional revenue. Now, all of that can change very quickly if you have a bump in volatility. And there are a number of things that you could throw out there that would argue for that. You've got an election coming up. You've got unbelievable political divisiveness going on which could go badly. You've got an unprecedented level of debt issuance by the U.S. government, and the Fitch downgrade. I mean, all of these things could inject some volatility in the market. And if that happens you're going to see above-claimed growth because that, of course, will boost revenue capture. That'll boost volumes. But absent anything else, I think we see a steady path for us to grow our volumes at the industry level and then check on some market share gains. And then, outside of the transactional side, then you've got to take a view on inflation because interest is a big component of our bottom line. So, take a view on where you think interest rates may settle. I think the market has generally, as far as I can see, got it wrong. They have continuously underestimated the Fed's results here. And the Fed has just pushed through and has got rates to a level that I don't think anyone thought there would be 12, 18 months ago. And I think there's now starting to be a growing consensus that it may be higher for longer. You know, if you go back 12, 18 months ago, everyone thought there would be rate cuts by now. And that doesn't seem to be happening. So, obviously, these things are open to your views and how you see things panning out. But it feels to me that we're still in a pretty good environment here for a time. So, anyway, I hope I answered your question. Lots of rambling, but there you got.

Yes. No, no. That's helpful. I appreciate the color.

The other thing I would just like to add, just looking at our quarter there. I mean, in a funny way, I mean, we have this exceptional quarter. But when I look at it, our business really wasn't firing on all cylinders. We had a really good result on the commercial side, largely driven by OTC trading, that largely driven in Brazil, physical business on the renewable side. Our retail business is struggling versus a year ago but improved versus the quarter before. Our payments business has a steady upward trajectory, so that's good. But our institutional business is really challenged. If I look at that, we still have only got two of our four segments that were doing well. And the other two were not doing so well, yet we still produced record results. Maybe we're never going to see every cylinder in our business firing at all one time, but we certainly didn't see either exceptional market conditions. We didn't see every one of our businesses firing at the same time. What we did see is a very good interest rate environment, obviously. I still think there's upside for us if we can get some of these other businesses doing what we think they can do.

Okay. Just on the interest rates side, looking at slide 15, balance is coming down. Is that just the lower margin requirements at some of the clearinghouses? And then, as you think about, I guess, if rates keep rising, and it was asked this briefly, I think, in that other question, but we shouldn't - the sensitivity table here implies both rates going up and down and what that means for EPS. But are you assuming the same kind of pass-through or are you assuming changes in pass-through as the rate dynamic shifts?

Well, Bill can tell you what his assumptions are on that. Let me answer the first part of your question. So, in terms of the interest rate numbers there and declines and so on, I think the aggregate decline in our client floats. The biggest and most impactful portion of that was the FDIC sweep. We had to think about the calculus, do we up our payouts to all our clients to the level where we keep the marginal clients? Or do we keep it where it is and maybe lose some of those larger marginal clients who have the flexibility to buy treasuries? Our calculus was unless you're going to push the rates all the way pretty close to the T-bill rate, that's what it's going to take to keep that marginal client. So, we're probably better off letting some of those marginal clients trade out of the FDIC sweep. So, we lost about $300 million of the FDIC sweep, which is a very lucrative part of our client float. The remainder of our FDIC, the vast majority of it are a collection of very small individual balances. So, the propensity or the ability for those clients to move that cash out is probably pretty limited and it's not impactful to each of them individually, but obviously impactful for us in the aggregate. On the other side, on the derivatives collateral side, I think we had a small number of very large funds that had big balances with us who were trading particular strategies, who were withdrawn from those strategies. Those funds weren't very impactful for us because we had very high payouts to those clients because the funds were in the hundreds of millions of dollars individually and there was a lot of trading volume. So, we were able to pay back a lot of those funds and still get our desired return. So, those funds have left, but on the margin weren't as impactful on our interest retention. I think that's really what's happened.

Sure, yes. And just to echo Sean's point, certainly on that commercial side, we saw earlier in the quarter, that particularly the ag markets, the margin requirements fall off. But with volatility coming into harvest, we did see them start to pick back up later in the quarter of June, but the big delta that Sean pointed out is the institutional and the FDIC side. Assumptions on the sensitivity, yes, we adjust those, we tweak those on a quarter-by-quarter basis. But not sizably, but it's pretty much right down there as far as retention, right around what we're retaining right now as far as clients, paying out to clients and how much we're retaining. And we wouldn't anticipate, at this point, that we will be paying out much more than we currently are. I think we're pretty close to the high-water mark on what we would pay to clients. And we'd actually potentially see that improve a little bit. As we've talked in the past, we have some interest rate swaps on that we legged into early in the cycle of these uptick and interest rates that some of those are going to start to roll off, some of those are lower rates than the obviously current market environment is. So, we would actually anticipate probably having a little bit more incremental margin on a go-forward basis. But right now, they're kind of level-set at what we're seeing currently.

Okay. No, that's helpful. And just on the expenses and the outlook with revenue growth, there's obviously always growth in the variable component. But as you look at the - for you guys kind of next year, fiscally or just the broader investment spend, is there any trajectory that's different than what we've been seeing as you think about your planning and or projects that might be coming online or otherwise rolling off that maybe there's a little bit of benefit?

Good question, Dan. As we're heading into our budget and planning cycle here as we speak. So, we've obviously seen our costs ramp up significantly during the COVID years. And part of that was just this massive increase in volumes, we saw significant increases in our client's footprints, market share, all of those things. And there was a pretty big lift in our spend. So, if you look backward at the trajectory, it was at the same ratio as our revenue was going up. I think we had some deficits that we had to catch up in certain areas, certain other support areas. I think we feel we have backfilled that now. And I think we could take on a fair amount of future growth without any significant investment in certain areas. And we are pushing hard now to try and get our costs curve refactored down. I think we've spent a lot of money, we've put in a lot of infrastructure, we've invested in a lot of stuff. And if anything, I would like to see that trajectory flatten. And I think there's some scope for us to reprioritize, maybe think about reallocating spend rather than just adding. So, that's the view for our management at the moment is we need to push harder at the moment and make sure we set ourselves up. I think we've made all the investments we need.

And I guess I would just add there, Dan. I mean, that being said, right, we're taking the steps necessary to try to control that. But I mean, inflationary pressures are still there, right? I mean, we've seen increases in market information, medical benefit costs have been going up. So, we're not a unique case here. I mean we're subject to the same kind of market events that everyone else is. So, we're going to do everything we can. But I mean, there's still that inflationary pressure that will make some of the third-party costs difficult to maintain. But just we have to up our game about adherence to who we're paying and what we're paying and make sure it's the right number.

Did that answer your question, Dan?

Sorry. Lastly, just on M&A and the environment and valuations maybe we're coming in, maybe not so much now, or just curious about the dialogue and or prospects as you think about capital deployment and potential inorganic opportunities today?

I would say we're seeing a little bit more activity and we're engaging more with potential opportunities. I think you've asked this question prior. I would say 18 months ago we weren't looking at much at all. So, I would definitely say that the cadence has increased. Our hit rate is extremely low because we like to be very disciplined around this. But it's good to see that there are more opportunities and the opportunities are generally speaking at more reasonable prices. They may not be the prices we like, but I would say they're more reasonable. So, I think it's certainly getting into an environment where there may be an opportunity down the line here to find some small bolt-on type acquisitions if we like. So, definitely looking a little bit more favorable, but I wouldn't bank on anything, frankly. I think our hit rate is very low. We're very disciplined. And frankly, we have a lot going on internally, which is occupying a lot of our time and energy. So, the opportunities have to be very compelling to compete with what we already have on the table. On a separate but related matter, I think what we are seeing is a lot of talent acquisition. And I would say that I guess our brand and our credibility and our reputation in the market has certainly been significantly enhanced over the last three years. We are now entertaining conversations with impressive people, teams of people from larger competitors who are interested in potentially moving over here. And we've acquired some of those small teams. Some of those teams can be as impactful as a small acquisition in terms of the revenue they bring. So, I wouldn't discount the talent acquisition as a way to drive revenue. And in certain areas, we are bringing in some really nice people, not significant numbers, but I think teams and individuals that will make a difference. So, I think that's part of what we do as business as usual. But I think that environment has become more positive for us as we become better known in the market. And some of these people are telling us that, "I noticed StoneX. I'm unhappy I'm at a big bank, I don't like it there. I was thinking about joining you guys and I spoke to all my investors. And I've got incredible reviews on how great StoneX was. And I had no idea. So now, I really want to come work with you guys." So, it's great when you hear that and we started to hear that a lot from people.

Well, that's helpful. So, I think that's it for me. Thanks for taking all my questions.

Thanks, Dan.

Of course. Well, thank you, Dan. Operator, do we have any other questions lined up?

I'm showing no further questions at this time. So, I'll go ahead and turn the conference back to you for closing comments.

Okay. Well, thanks, everyone. Thanks for your attention. I wish everyone a great rest of the summer and also just a shout out to the very talented and amazing team at StoneX who continues to deliver phenomenal results for all our shareholders. So, well done team; great performance. And thanks, everyone. We'll see you in the fall. Cheers.

Thanks, everyone.

Okay. This concludes today's conference call. Thank you for participating. You may now disconnect.