StoneX Group Inc. (NASDAQ:SNEX) Q4 2022 Earnings Call Transcript

Sean O’Connor: Yes, Dan, I don’t know if you picked up, I think we chatted about it in the last call but I didn’t chat about it now. But the strong dollar has been a net benefit for us and our cost base, right. Almost all of our revenues are in dollars. So we don’t have any impact on the revenue side with a strong dollar. And all our bonuses are linked to the dollar. But our fixed costs in places like London and Europe and Poland and so on have all got cheaper, right? So we’ve seen some benefit on the cost structure to that. And indeed, we’ve put on FX hedges to try and lock that in. And we sort of have a rolling to sort of hedge in place to try hold on to that benefit for as long as we can. So about 20% of those costs are down, that’s been the movement in Sterling and zÅ‚oty and in euros. So also something to bear in mind, we’ve had a little bit of help on the cost side, Dan.

Dan Fannon: Makes sense. And then as you think of — obviously, we’re — I know you are focused more longer term, but we’re halfway through the quarter. Your environment as you look past over the last 12 months has been very strong in terms of client engagement activity levels, all the things you guys highlighted in terms of your results. As you look forward and what you’ve seen thus far, is there any — from a customer or market perspective, geography anything really changing or is it still relatively constructive based on kind of how you exited the quarter and where things sit now?

Sean O’Connor: Honestly, I don’t want to curse us here but if you just look at our set of results, I think it’s just a fantastic result across the board. Every one of our products is up double digits, every one of our segments. We’re really firing on all cylinders here. So nothing stays the same way forever. But I can’t really see anything sort of in the immediate future that is going to materially change what we see now. So we just wanted to continue as long as possible, I guess, which we know it won’t. But so — no, there’s nothing really I can speak to. I think Q4 was a pretty straightforward sort of vanilla quarter. There wasn’t any sort of exceptional items or exceptionally crazy market conditions. It was just sort of business as usual I think. Bill, do you agree?

Bill Dunaway: Yes, I’d agree.

Dan Fannon: All right. And then just in terms of the current backdrop for M&A, you announced is kind of a recent smaller acquisition, as you said, but would be immediately accretive. And then the context of the backdrop given valuations have come in, markets are maybe good for some businesses, maybe not for others. Is there more opportunity today for you to deploy capital inorganically, or similar to — or no real change?

Sean O’Connor: Well, firstly, we’re pretty excited about the organic trajectory that we are in. If you just look at that graph of sort of new clients and changes, our client base is up 50%, 100% over the last two years and that run rate seems to be continuing, and that will take capital, right. So our base case is we sort of pretty happy with the organic track we’re on. In terms of acquisition opportunities, I think we now are starting to see sort of early days of opportunity starting to come to the table. There are a couple of things we’ve had a look at, a couple of things we’re looking at, nothing that I think is close to the premises point. But it’s definitely a change from what’s happened in the last two years. A small change, but a change nonetheless.