Greetings and welcome to the BGC Partners' First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host Jason Chryssicas, Head of Investor Relations for BGC Partners. Thank you. You may begin.

Good morning. We issued BGC's first quarter 2023 financial results press release and the presentation summarizing these results this morning prior to market open. You can find me at ir.bgcpartners.com. Please that you can find additional details on our quarterly results in today's press release and investor presentation. Unless otherwise stated any historical results provided on today's call compare only the first quarter of 2023 with the prior year period. Certain revenue figures provided for the current period as indicated. We will be referring to our results on this call only on an adjusted earnings basis unless otherwise stated you may also refer to adjusted EBITDA. We may refer to our liquidity which we define as cash and cash equivalents, plus marketable securities that have not been financed, reverse repurchase agreements and securities owned, securities loan and repurchase agreements. We define total capital as reviewable partnership interest total stockholders' equity and non-controlling interest in subsidiaries. BGC generated a significant amount of its revenues in non-US dollar denominated currencies, particularly the euro and pound sterling. BGC presents revenue comparisons on a constant currency basis in order to present a better comparison of the company's revenues during the period, which exhibited volatile foreign exchange movements. BGC's constant currency movements assume foreign exchange rates used to terminate company's prior period revenues applied to the current period revenues. Please see today's press release for results under generally accepted accounting principles. Please also see the relevant section of the back of today's press release for the complete and updated definitions of any non-GAAP terms, reconciliations of these items to corresponding GAAP results, and how, when, and why management uses such terms. Additional information with respect to our GAAP and non-GAAP results mentioned on today's call is available on our website at ir.bgcpartners.com. We refer to the company's technology-driven businesses as Fenics. Fenics offerings include FedEx markets and Fenics growth platforms. I'd also remind you that the information regarding our business on today's call that are not historical are forward-looking statements. These include statements about the affection of COVID pandemic, results financial position liquidity, and outlook. Any forward-looking statements about risks and uncertainties except as required by law, we undertake no obligation to update any forward-looking statements. Any outlook and targets discussed on this call assume no material acquisitions buybacks extraordinary transactions or meaningful changes to the company's stock price. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's SEC filings including but limited to the risk factors and special note on forward-looking information set forth in these filings and any updates to such risk factors and special note on forward-looking information contained in the subsequent reports on Form 10-K, 10-Q, and Form 8-K. I now have to turn the call over to Howard Lutnick Chairman of the Board and CEO of BGC Partners.

Thanks Jason. Good morning and thank you for joining us for our first quarter 2023 conference call. With me today are BGC's Chief Operating Officer, Sean Windeatt; and our Chief Financial Officer, Jason Hauf. As we expected long-term growth for BGC has begun. The first quarter saw growth across each of our business lines. Our quarterly revenue grew by over 5% or 7% in constant currency, with growth accelerating so far in the second quarter with revenue up 9% through the first 19 trading days. We expect BGC's revenue to continue to grow as a relationship between trading volumes and the enormous increase in buy issuance returns following the end of zero interest rates. Fenics had a record quarter with market-leading revenue growth of 12% or over 14% in constant currency, representing over 26% of our total revenue in the first quarter. We expect to complete our corporate conversion on June 30 and trade under our new ticker BGC at the beginning of July. With respect to FMX progress continues with the CFTC on the final approval of our Futures Exchange and we intend to announce our strategic partners prior to the launch. With that, I'll turn the call over to Sean.

Thanks, and good day, everyone. Our revenue grew by 5.2% to $532.9 million in the first quarter of 2023, as our trading volumes increased following the end of zero interest rates. This represents our second highest ever quarterly revenue, excluding insurance of course second only to the first quarter of 2020 when the onset of the COVID-19 pandemic drove trading volumes to record levels. Both our voice hybrid and Fenics businesses saw solid growth with revenue up across all asset classes. Fenics grew by 12% or 14.4% in constant currency generating a record $140.4 million in the first quarter representing 26.3% of BGC's total revenue. This growth was driven by higher trading volumes across all our asset classes. The combination of meaningful interest rates and improving trading conditions led to higher client activity across rates and credit, driven by shorter-dated interest rate products and strong credit volumes. Additionally, our renewable energy and ship chartering business saw strong double-digit growth driving our Energy and Commodities business higher. Data software and post-trading revenues improved by 12.4% driven by Fenics Market Data and Lucera. We expect the growth of these recurring revenue businesses to continue to outperform the industry. Our growth has accelerated in the second quarter, with overall revenue up 9% through the first 19 trading days of the quarter. Higher revenue and record front-office productivity which increased 9.2% versus last year drove profitability higher across our business. Turning to Fenics. Fenics industry-leading growth of 12% or 14.4% in constant currency was led by our growth platforms, which improved by 33.1%. This strong improvement in Fenics growth platforms was driven by Fenics UST's portfolio match and Fenics GO. Our Fenics markets revenues increased 9.5% or 12.2% in constant currency. This growth reflects the strength of our comprehensive Fenics offerings and conversion of our voice hybrid volumes to our higher-margin technology-driven Fenics businesses. We saw stronger trading volumes across our electronic fixed income products, particularly credit. With that, I'm pleased to provide the following outlook for the second quarter of 2023. We expect to generate total revenue of between $450 million and $500 million as compared to $435.8 million last year. We anticipate pre-tax adjusted earnings to be in the range of $90 million to $110 million versus $90.2 million. And we anticipate our pre-corporate conversion adjusted earnings tax rate to be in the range of 5% to 8% versus 7.3% for full year 2022. With that, I'd like to turn the call over to Jason.

Thank you, Sean, and hello, everyone. BGC generated total revenue of $532.9 million, an increase of 5.2% as compared to last year. On a constant currency basis, our revenue was up 7% versus a year ago. By asset class, rates increased by 3.7% and 6.6% in constant currency. FX increased by 0.2% and 1% in constant currency. Credit increased by 6.7% and 9% in constant currency. Energy and commodities increased by 8.8% and 9.5% in constant currency and equities increased by 1.5% and by 3.5% in constant currency. By geography, Americas revenue increased by 14% and Europe, Middle East and Africa revenues increased by 3.4%, while Asia Pacific revenues decreased by 7.4%. Moving on to expenses. Our compensation and employee benefits under both GAAP and adjusted earnings increased by 3.9%. Our non-compensation expenses under GAAP and adjusted earnings increased by 2.1% and 4.2% respectively. Moving on to our adjusted earnings. Our pre-tax income was $124.6 million, a 10.2% improvement with a 105 basis point margin expansion to 23.4%. We recorded post-tax adjusted earnings of $115.6 million, a 12.1% increase from last year. Adjusted EBITDA of $151.1 million was 7% higher. Turning to share count. Our weighted average share count increased 1.7% sequentially, but decreased 0.4% year-over-year to 501.1 million shares. Our fully diluted spot share count as of March 31 increased by 2.3% sequentially to 505.2 million shares. The first quarter generally has greater share issuance due to annual broker bonuses. In April 2023, we repurchased approximately 3 million shares. We expect the majority of our share repurchases to take place in the second half of the year. As of March 30, our liquidity was $534.8 million compared with $524.3 million as of year-end 2022. On April 6, 2023, BGC Group Inc. filed a registration statement on Form S-4 with the SEC in connection with its previously announced corporate conversion. Following receipt of regulatory approvals and subject to other customer closing conditions, including shareholder approval, all of which are expected to be satisfied, we currently expect to close the corporate conversion effectively immediately after closing of BGC's second quarter on June 30, 2023. The company will be named BGC Group Inc. and its shares of Class A common stock will trade on NASDAQ under our new ticker BGC. We will provide additional information with respect to our expected tax rate going forward as soon as practical, following the close of the corporate conversion. With that I'd like to turn to Howard for closing remarks.

Thank you, Jason. As you can see from today's results, it is an exciting time to be part of BGC. Our business is continuing to improve with our growth accelerating through the first 19 trading days in the second quarter. Our corporate conversion will be complete at the end of this quarter and the two most recent examples of company conversions from an Up-C to a Full C-Corp saw average daily trading volumes increased by 40% and institutional ownership doubled the year following conversion. Recent updates to S&P's index policies mean that dual share class companies like us are now eligible for inclusion. A recent research note estimated that if BGC's included in the S&P 600 alone this could translate into 40 million shares of pass demand. So with that operator, we'd be happy to open the call for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Rich Repetto with Piper Sandler. Please proceed with your question.

Yeah. Good morning, Howard and team, and congrats on the strong quarter. I guess first question is Howard, I know you -- the -- first the -- what do you call it second quarter to date is still up -- the guidance is up 9% for the second quarter. But I guess the question is that volumes have slowed down compared to a robust first quarter, you're very positive optimistic outlook for fixed income. Is that -- is this just a momentary pause to pull back? Again, I acknowledge the year-over-year numbers the guidance you put out is strong. But when we look at volumes, CME volumes are down pretty strongly compared to the first quarter?

Well, look we are seeing the healing process of the relationship between issuance and trading volume broadly around the world. We've got meaningful interest rates around the world and we've been expecting that healing process meaning volumes are starting to be more head towards more consistency to issuance. So we were up 9% for the month of April and our expectation is we will remain with that pace through the balance of this quarter. So we're not seeing a pullback. We know that certain areas have less volumes certainly more volume. There's very idiosyncratic issues in the banking system in America. But globally, we're feeling pretty confident that things feel good at BGC volumes are growing issuance is up big. We expect issuance to be up big for the rest of probably the rest of my life and that's our expectation.

And at least issuance is up I guess over the longer term, but don't you expect that there has been a little bit due to the debt ceiling a little bit delay of issuance. And do you think that the back half -- this will all come back in the back half? And how would that impact BGCP I guess?

I do. I think that the debt ceiling has created constraints in the short end of the treasury market issuance has been idiosyncratically modified by movements of the treasury to try to stay within balance of the US's particular issues with respect to the debt ceiling which we assume will be resolved one way or the other in the relative near term. I don't see that impacting BGC and its global business, not even in the near term. I mean, I think if it resolves itself it will be beneficial for BGC. If it becomes chaotic, it will be beneficial to BGC. And if it's just sorted ordinarily, I think the scale of issuance of the US deficit is so large that volumes were at interest rates and then around 5% are just going to continue to improve. So I think we're in a good spot pretty much either way. I mean, we're just -- volumes have been constrained for so many years that as they heal whether they heal fast or they heal slow, they're getting better every day. And I think you saw that the first quarter was up 5.2%. We started the second quarter up 9%. Our expectation is we'll keep that pace going and we feel pretty good.

Got it. I guess, one other Howard. You talked about the corporate conversion and I come and be completed after June 30th or on June 30th. And just trying to understand -- I know you talked about the tax rate and you'll tell us then where that's going. But what about cost synergies, any more clearer view on what type of cost savings that will come out of this?

I think we'd rather give a holistic view of both our tax rate will go up. Our cost savings will mitigate that somewhat. And as we've said, it won't mitigate it entirely but it will mitigate it somewhat. So our overall effective cost will rise, but it will be a much simpler company and hopefully able to attract a broader institutional holding, and therefore, have a stronger shareholder base. So that is our expectation. I think we -- the process that we're in is we are hustling to get this done at the end of the quarter, and while the voting process is taking place that does constrain the things that we will say. So our expectation is as soon as the voting process is complete, we will come out with a complete model but it is we are constrained while this process is taking place. We are confident or maybe even beyond confident that the votes will be achieved since we've spoken to those who are planning to vote positive and that is sufficient to carry the day. So this is just process now. Lots of work as you know to complete things like this, but we will come out with a robust model. But as I said, rate higher, costs lower, mitigating but not completely mitigating therefore, higher overall cost not significant but certainly higher.

Got it. If I could sneak one more in here. I guess on FMX, Howard, I know you -- I believe you got all the submissions in for the regulatory approval, I guess since you last talked it's gotten plenty of publicity. And any incremental update on -- is it the same players that were -- that are potential investors and partners? Is it the same, as what you had lined up prior? And any incremental update on I guess the talks with I guess customers, and so forth as we get closer to the launch.

Sure. So I become -- as we get closer and closer I feel our popularity is rising. I think the desire to participate with us, to be part of FMX either as partners or as clients and users, continues to rise. And I've yet, to have the meeting where someone said, no, I'm not really interested in participating in the competitor to the CME's monopoly in America. I haven't had that meeting, yet. It's always a possibility. But so far, I haven't attended that, yet. So my sense is that, there will be more partners not less. My sense is that the CME, which is an extraordinarily important and powerful enterprise in America, will maybe have backroom conversations with CFTC and asking to go a little slower. So, I'm not expecting things to go swiftly necessarily, as they might otherwise because that's a possibility. I don't know it, but that's certainly a possibility. And so, we await the CFTC's approval whenever that process runs its course. And so our expectation would be, as follows. We will receive -- we know no reason, why we won't receive CFTC approval -- and we will work through that process over the coming months. We will receive CFTC approval. We will then have a, what we'll call our soft launch, which means once approved, we will be ready and available to do business as an exchange. We will then start onboarding clients. And remember, we are trying to launch one of the US rate futures, which is one of the great marketplaces of the world and we are going to try to have a broad base of onboarding clients. That process we will begin straight away upon CFTC approval. We'll call that our soft launch. And when we have sufficient clients onboarded to have a broad-based opening, we will then say we are having our official launch. But the soft launch is just the beginning of onboarding as many clients as we possibly can. Do we have a long line of them? We do. Do we expect to be successful in this process? We do. Is it just work? Yes. Is it more than just work? It is not. And so we are going to work hard at it and we are going to stand up an extraordinary competitor to strike a more compound exchange and we do not think anyone has ever seen anything quite like this.

And the announcement of the strategic partners or investors that would not occur prior to the soft launch?

I think that's a discussion with them, whether it's certainly before the full launch maybe before the soft launch or it may be somewhere after the soft launch but well before the full launch. So that's just a discussion of future.

Okay. Got it. Thanks for all the info Howard. Thank you.

[Operator Instructions]

Hi, operator?

Yes.

Are there any more questions, or I'll just wrap up. Is that right?

Yes, I'm sorry, there are no further questions at this time.

Okay. Thanks, everyone. Thank you for joining us this morning. The process of BGC's growth as we head towards trading volumes growing more in line with really incredibly large fixed income issuance will continue to underpin BGC's growth going forward. We feel good and we look forward to speaking to you and updating you as we finish the corporate conversion going forward. Thanks, everybody. We look forward to speaking to you soon.