Greetings. Welcome to the BGC Group Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to hand the call over to Jason Chryssicas, Head of Investor Relations. Thank you. You may begin.

Thank you, and good morning. We issued BGC's third quarter 2023 financial results press release and the presentation summarizing these results this morning prior to the market opening. You can find these at ir.bgcg.com. Please note, 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 to the third quarter of 2023 with the prior year period. Certain revenue figures are 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. We 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 financial instruments owned at fair value, less securities loaned and repurchase agreements. We define total capital as redeemable partnership interest, total stockholders' equity and noncontrolling interest in subsidiaries. Please see today's press release for the results under generally accepted accounting principles, or GAAP. Please also see the relevant sections in the back of today's press release for complete and updated definitions of any non-GAAP terms, reconciliations of these items to the 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.bgcg.com and in our investor presentation. We refer to the company's technology-driven businesses as Fenics. Fenics offerings include Fenics Markets and Fenics Growth Platforms. I 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 company's business results, financial position, liquidity and outlook. Any forward-looking statements involve risks and uncertainties. Except as required by law, BGC undertakes 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 not 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 known and forward-looking information contained in the subsequent reports on Form 10-K, Form 10-Q or Form 8-K. I am now happy to turn the call over to Howard Lutnick, Chairman of the Board and CEO of BGC Group.

Thank you, Jason. Good morning, and welcome to our third quarter 2023 conference call. With me today are our Chief Operating Officer, Sean Windeatt; and our Chief Financial Officer, Jason Hauf. We had another outstanding quarter, generating revenue growth of 16%, reflecting increased volumes across each and every one of our asset classes. BGC is extraordinarily well positioned to benefit from the return of interest rates, which we expect to drive our trading volumes, revenues and profitability higher for the foreseeable future. Fenics revenues improved 19%, outperforming both its electronic trading platform and exchange peers. This was led by another record quarter for Fenics Growth Platforms, which grew by over 45%. Fenics UST, our electronic U.S. treasury platform, reached a record 25% market share of volume traded on U.S. Treasury exchange marketplaces during the third quarter. With that, I'll turn the call over to Sean.

Thanks, and good day, everyone. Our revenue grew $66.1 million or 15.9% to $482.7 million in the third quarter of 2023, growing across every geography. Total brokerage revenues grew by 14.8%, driven by strong growth across all of our asset classes. Our fixed income brokerage volumes were significantly higher during the period as interest rates and wider credit spreads continue to provide favorable macro trading conditions across rates, credit and FX. Rates and Credit revenues improved by 12.1% and 9.6%, respectively, while FX revenues were 8.6% higher. Energy and Commodities revenue grew by 35%, driven by strong double-digit growth across our energy complex and our environmental products. Excluding our Trident acquisition, organic energy and commodities growth would have been 23%, outperforming the overall market. Our Equities business increased by 8.8%, reflecting higher volumes across equity derivatives and European cash equities. We generated strong double-digit growth across all earnings metrics during the quarter, driven by higher revenues across Fenics and Voice / Hybrid along with record front office productivity. Turning to Fenics. Fenics generated industry-leading revenue growth of 18.7% compared to last year. These higher-margin technology-driven businesses generated total revenues of $125.4 million in the third quarter and represented approximately 26% of BGC's total revenue. Fenics revenue growth was led by electronic Rates and Credit products as well as data, network and post-trade businesses. Fenics Growth Platforms had another record quarter, generating revenue of $18.4 million, a 45.4% improvement versus last year. Fenics Markets had strong revenue growth of 15.1%. Fenics UST revenue increased by over 55% on 26% higher average daily volumes, and our market share increased to over 25% for the third quarter, up from 23% in the second quarter of 2023 and 18% a year ago. Fenics UST is the second largest and fastest-growing treasury marketplace globally. Portfolio…

Thank you, Shaun, and hello, everyone. BGC generated total revenue of $482.7 million, an increase of 15.9% as compared to last year. By geography, Americas revenue increased by 19%. Europe, Middle East and Africa revenues increased by 16.9% and Asia Pacific revenues increased by 5.9%. Turning to expenses. Our compensation and employee benefits under adjusted earnings increased by 16.6%. Non-compensation expenses under adjusted earnings increased by 10.8%, primarily driven by higher interest expense of $6.3 million. As anticipated, interest income also increased by a similar amount, offsetting this expense. Moving on to adjusted earnings. Our pre-tax income was $101.9 million, a 23.1% improvement with a 125 basis point margin expansion to 21.1%, our 12th consecutive quarter of year-over-year margin expansion. Our post-tax adjusted earnings increased by 21.4% to $94.1 million or $0.19 per share, an 18.8% improvement. Our adjusted EBITDA was $135.9 million, a 27% improvement. Turning to share count. Our fully diluted weighted average share count decreased by 15.4 million shares, a 3% sequentially to 490 million shares. This significant share reduction was primarily driven by our corporate conversion and the related unit redemptions as well as share repurchases during the quarter. As of September 30, our liquidity was $605 million compared with $524.3 million as of year-end 2022. With that, I'd like to turn to Howard for closing remarks.

Thank you, Jason. It is obviously an exciting time to be part of BGC. Our top line and bottom line growth clearly demonstrate the extraordinarily positive position we have built in the global capital markets. We continue to make significant progress with FMX. And as we've said, we look forward to communicating additional updates and details during this quarter. With that, operator, we're happy to turn the call over for questions.

[Operator Instructions]. Our first questions come from the line of Patrick Moley with Piper Sandler.

Congrats on the strong quarter. So I'll start with a question on the macro before getting into the quarter. But Howard, there's been a number of reports out there that are projecting a massive wave of sovereign debt issuance next year. Some are saying we could see upwards of 50% year-over-year growth in issuance in the U.S., 20% to 30% in the U.K. and Europe. So just wondering if you could maybe share your thoughts on what that means for BGC's business, particularly rates revenues going forward?

So the historical relationship between issuance and secondary market trading volume, before the '08 to 2022 zero interest rate period, was a 60% correlation. So for example, if you had a 50% increase in issuance next year, you'd have a 30% increase in secondary market trading. You just take 0.6 and multiply it to it. So I think that those relationships are healing, meaning they are coming back. Now you have so much issuance since '08 when we began this process that I think these markets have just growth for the foreseeable future, for the long foreseeable future. But that kind of issuance growth, I think should bode very, very well for those markets having 30% growth rates. I mean that's what happens, I think you're going to see it roll through the markets and that will bode well for everyone in these marketplaces as a macro.

That's good color. So I guess my next question is just on the guidance ranges for 4Q. I think at the midpoint, it implies revenue growth should slow down slightly from 16% this past quarter to 9% this quarter. So still obviously strong year-over-year growth against what appears to be a tougher comp in 4Q '22. But just as we think about the growth algorithm for the business going forward, I was hoping to get your thoughts on what you view as an appropriate kind of run rate for growth in both revenues and adjusted pretax earnings.

Well, overall, I don't think we see any slowdown. So in fact, we would expect next year, as we sit here today, to be north of 10% top line revenue growth. Last year, in the fourth quarter, began the broad-based growth and you could see that last year because our fourth quarter revenues were higher than our third quarter revenues, which, as you remember, we are seasonally the strongest the first quarter, then a little slow in the second quarter, a little slow in the third quarter, a little slower in the fourth quarter. And the third and fourth quarter are the summer and you have Christmas and Thanksgiving, those kind of things. So the fact is, when you outgrow it in the fourth quarter, you're showing that something exogenous happened. And so that was the beginning of our growth. So I don't think we see it, any deacceleration of our growth. I think our growth rate will remain steady. I'm sure it will bounce around a couple of points as the markets bounce around. But the fact is we're a plus 10% growing company going forward as far as we can see.

Okay. And then just also on growth. Market data growth has been strong. I think you're tracking towards 15% to 20% growth this year. Do you think that's kind of like a good run rate to use going forward for growth there? And then over the long term, I think that the market data has been around 5% to 6% of total revenue. So just wondering what you think that can get to, I guess, over the next few years in terms of as a percentage of revenue?

I think that growth rate is consistent with our expectations. And along with that, I think it should outgrow even our growth rates, so it should be about -- it should be an accelerator to our growth rate. And I think it's got hundreds of basis points of growth as compared to our overall revenue. So I think it's got a long trajectory. We see a path to doubling those revenues. And so I don't see it end anywhere near off. I think we have a long way to go. Our data sets are getting better, broader and deeper, and that will only bode well for the gross level of that and its percentage in the company.

All right. Great. And then one on Fenics. Another record quarter there. I know you have some ancillary businesses within Fenics that you've said in the past you could potentially look to sell at some point later on down the line. So just how do you think about the opportunity there to potentially divest some of those non-core electronic businesses and potentially use the proceeds to buy back shares. And I guess just building -- or in addition to that, just maybe if you could update us on your capital return plans going forward?

I wouldn't use the term non-core. These are all deeply -- these are businesses that are deeply consistent with our business model across the capital markets. They are -- I think the term that people like to understand is they are completely separable. It means we have numerous products that it's an exchange or electronic peer marketplace, which to acquire from us, they would be easily separable and able to be sold. So I think we are open minded to it. We cannot understand why that company trades at the multiple it trades at, but we understand that. And so therefore, if there were assets that the company had that would trade at the kind of revenue multiples and profit multiples that some of the electronic trading platforms and exchanges trade at, I think we would be open-minded to such a transaction. And as you correctly said, selling things at double-digit multiples of revenue and buying back a company at mid-single-digit multiples of earnings sounds like a smart thing for management to do, especially since we are the biggest owners of this company's shares and we really like that idea. So we understand it. You spoke to us about it, some of our shareholders spoke to us about it. We understand it and we heard you, and we're open minded. But those things happen. If and when they happen, we are not making any promises, but that would be our thinking of a return policy. We historically have paid dividends. We're now buying back shares. We like that model of buying back shares. We have had the opportunity to buy other companies incredibly accretively to what we think our long-term prospects are, and we're going to continue to do that. So acquisitions, of course, if correctly priced, we're open-minded to, and we're generating cash, buying back shares. And if we, of course, were able to do a transaction, then we would just be much more aggressive in buying back those shares.

Okay. And then on FMX, I've got to ask it, but -- so just to clarify, you are planning to still announce the strategic partners and financial details before the end of the year. Did I hear that right? And then just going -- once the CFTC approval comes, if you could maybe just talk a little bit about your expectations for market share growth and volumes there? And maybe just what you view as some of the competitive advantages that FMX will offer its customers compared to your biggest competition there in CME?

So our current plans are -- it's sort of one of two things. We'll either at least -- it is the company's desire and expectation to at least this quarter announce our strategic partners. We may, in discussions with those strategic partners, be able to lay out all of the transaction details, but that we are still in discussions with those strategic partners now. So it will be either at least the names, that's our objective, but also transaction details. We just need to work that out with all the partners. CFTC, we are -- again, we work closely with the CFTC going through the process of getting our exchange approved. We are very confident -- we remain very confident that, that will just come in its due course of time, and we are working through that. That is not a stress point for us internally. It's just work. Lastly, your question about market share. So the futures market is a gigantic opportunity for us, and it has a wide breadth across the capital markets. So I would suggest our first year that we are open is going to be a year which we would call breadth, opening every account that we possibly can across the capital markets, having all the FCMs, all the trading firms, getting everybody on the network. Now as you know, because our treasury platform has been growing at 7 points market share over the last year, we have broad-based users, right? But the futures market is much, much, much broader. And as you bring on this much broader number of users, of course, that will grow our treasury business dramatically as well. That's why we look at these things together. So first year, let's call it breadth, second year then begins depth. And once those 2 years are completed, then you're going to see bare-knuckled competition. So that's what I would say it's sort of a one, two, three. First year, you're going to see us defining breadth; second year is making sure we have depth, meaning every customer, every area of every customer, every portion of every customer, how much are they doing, how much can we get them done, get them on the network, get them using and get the network effect going. And then year 3 will be significant, significant competition. And this is an opportunity for this company that is at a scale that is far, far different than the value of this company today. I think people undervalue our U.S. treasury platform wildly. I think they have no idea of the incredible value that the infrastructure and connectivity this company has to the world's capital markets players and that opportunity in futures. You have the CMEs worth between $70 billion and $80 billion and we hover around $3 billion. That is just illogical. I think that illogic will come over time as we go pounding forward. And we are very, very excited about our prospects for FMX.

All right. That's great, guys. I think that's it for me, but congrats on the strong quarter.

Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Chairman and Chief Executive Officer, Mr. Lutnick, for any closing comments.

Thank you all for joining us today. We look forward to reporting and meeting with you next quarter and where we will have, again, we look forward to a very positive call. Thank you. We'll see you then.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.