BGC Group has reported a 16% increase in its third-quarter revenue for 2023, driven significantly by its technology-oriented business, Fenics. The company projects a steady revenue growth above 10% for the following year, with the fourth quarter of 2023 expected to generate between $450 million and $500 million. These details were revealed during the company's recent earnings call, where CEO Howard Lutnick also discussed potential divestitures and capital return strategies.
Key takeaways from the call:
- BGC Group's Fenics business saw a 19% revenue growth, with its U.S. treasury platform, Fenics UST, achieving a record 25% market share of volume traded on U.S. Treasury exchange marketplaces.
- The company anticipates fourth-quarter revenues of between $450 million and $500 million, with pre-tax adjusted earnings ranging from $88 million to $108 million.
- CEO Howard Lutnick highlighted potential divestitures of non-core electronic businesses and share buybacks as part of the company's capital return strategy.
- Lutnick also mentioned the upcoming announcement of strategic partners and transaction details for FMX, the company's futures market platform, within the quarter.
- The company is confident of obtaining Commodity Futures Trading Commission (CFTC) approval and has outlined a three-year strategy to increase market share in the futures market.
The earnings call revealed BGC Group's (NASDAQ: BGCP) positive growth trajectory, with its technology-driven business, Fenics, contributing significantly to this uptick. Fenics UST, the electronic U.S. treasury platform, achieved a record 25% market share of volume traded on U.S. Treasury exchange marketplaces during the quarter.
CEO Howard Lutnick expressed confidence in the company's growth prospects, projecting steady revenue growth above 10% for the next year. He also discussed potential divestitures of non-core electronic businesses and using the proceeds for share buybacks, stating that the company is open to such transactions if they can be done at higher revenue multiples than the company's current trading multiple.
In addition, Lutnick revealed plans to announce strategic partners and transaction details for FMX, the company's futures market platform, within the quarter. He expressed confidence in obtaining approval from the Commodity Futures Trading Commission (CFTC) and outlined a strategy for market share growth, focusing on breadth in the first year, followed by depth and significant competition in subsequent years.
The call concluded with the CEO expressing gratitude and optimism for the future, highlighting the company's infrastructure and connectivity to global capital markets as a valuable asset. The company also sees a significant growth opportunity in the futures market and plans to double its revenues in the long term from its market data business.
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