StoneX Group Inc. (SNEX) Q1 2024 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the StoneX Group First Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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, CFO. Please go ahead.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our first quarter ended December 31, 2023. After the market closed yesterday, we issued a press release reporting our results for the first fiscal quarter of 2024. This release is available on our website at www.stonex.com as well as a slide presentation which we will refer to on this call in our discussions of our quarterly 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 are 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 thereto 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. Although 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 that 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 any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to Sean O’Connor, the company's CEO. Sean O’Connor: Thanks, Bill. Good morning, everyone and thanks for joining our fiscal 2024, First quarter earnings call. The first quarter of fiscal '24 was a strong result for us with earnings up 30% and EPS up 28% when excluding the one-off acquisition gain we realized in the prior period. This represents a 20.5% ROE on tangible book and a 19.3% ROE on stated book. Both measures continue to be well ahead of our long-term 15% target. We are pleased to see that our business continues to generate superior long-term returns for our shareholders despite moderating market volatility. Turning to Slide 3 in the earnings deck which compares quarterly operating revenues by product versus a year ago. In aggregate, operating revenues were up 20%, with all products showing strong gains in revenues, except physical contracts which was down 14%. We experienced robust volume growth in listed and OTC derivatives as well as securities. Payments volumes were flat with the prior year, while FX and CFD volumes declined. On the revenue capture side, it was more of a mixed picture, reflecting a more normalized volatility environment. The standout was our FX CFD rate per million which was up 73% due to a combination of strong results this quarter and a difficult trading environment a year ago. Securities-related operating revenues were up 35%, although this number is somewhat distorted due to much higher interest rates in our fixed income business. Carried interest on our fixed income position is reflected in operating revenues while the offsetting interest expense to finance these positions is not. The rate per million numbers have been adjusted to reflect these offsetting expenses. Securities continued a trend of strong increases in volumes and a decrease in revenue capture as we continue to see strong growth in lower-margin products. Our aggregate client floats, including both listed derivative client equity and our FDIC sweep balances declined 26% versus record levels experienced in the prior year. Despite this, interest and fee income on the client balances increased 14% to $98.4 million due to us capturing higher interest rates in the current period. Turning now to Slide 4 and looking at the same data over the trailing 12 months. We again see strong double-digit growth across most of our products with the exception of listed derivatives which was essentially unchanged. And FX/CFD Revenues which were down 9% versus the prior year. Again, securities-related revenues were up significantly but part of that is due to the carried interest components I just mentioned. Volumes which were up across the board, except for FX and CFDs are typically the most important indicator for us when it comes to measuring client engagement and market penetration. Revenue capture is largely a function of market conditions. And here again, we can see a mixed picture as market volatility retrace generally to lower levels as compared to the prior year in addition to a change in the product mix to lower margin products on the security side which I just mentioned. Turning to Slide 5 and a summary of our first quarter and our trailing 12-month results. We recorded operating revenues of $784.2 million, up 20% versus the prior year. Our operating revenues are boosted by interest on our client float and also the interest that is embedded in fixed income trading that I mentioned earlier. Net operating revenues which nets off interest expense as well as introducing broker commissions and clearing costs was up 10% versus a year ago and up 4% versus the immediately prior quarter. Total compensation and other expenses were up 5% for the quarter, with variable compensation up 3% which is below the net operating revenue growth rate of 10%. Fixed compensation and related costs increased 20% versus a year ago but were down 2% compared to the immediately prior quarter. Adjusted net income which excludes both the gain on acquisition I mentioned earlier as well as amortization expense of intangibles acquired was $70 million for the current period, up 27% over last year and up 34% on the immediately preceding Q4. We realized diluted EPS of $2.13 and an ROE of 19.3% on stated book and our book has increased 56% over the last 2 years. On a trailing 12-month basis, our operating revenues were up 32% versus the prior 12-month period and adjusted net income was $237.7 million, up 5% during the prior 12-month period. We ended the quarter with book value of $47.08, up 24% from a year ago. Turning to Slide 6, our segment summary and just to touch on the highlights before Bill gets into more details. For the quarter, segment operating revenues were up 20% and segment income was up 25%, with good growth across all of our client segments. Our commercial client segment was up 5% in segment income off the back of a 9% increase in operating revenues. On a sequential basis, operating revenues were down 4% and segment income was down 1%. Our Institutional segment realized a 27% increase in operating revenues which translated into a 5% increase in segment income. On a sequential basis, operating revenues were up 2% and segment income was up 19%. Retail was really the standout this quarter, with operating revenues up 31% driven by much improved revenue capture you saw earlier. This growth in operating revenues combined with declines in fixed expenses, led to $28.7 million in segment income for the current period versus a $4.2 million segment loss a year ago. On a sequential basis, operating revenues were relatively unchanged and segment income increased 2%. In our Payments segment, operating revenues were up 9% and segment income was up 8%. On a sequential basis, revenues were up 12% and segment income was up 8%. On a trailing 12-month basis, we had good operating revenue gains for our Commercial, Institutional and Payments segments, while the Retail segment operating revenues declined 11%. A similar result for segment income with Commercial segment being a standout up 29% versus the prior year trailing 12-month period. Turning to Slide 7 which sets out our trailing 12-month financial performance over the last 9 quarters. These numbers have been adjusted for the accounting treatment related to the gain in CDI acquisitions as disclosed in our prior filings and which appear in the reconciliation provided in the appendix of this earnings day. On the left-hand side, the bars represent our trailing 12-month operating revenue over the last 9 quarters. As you can see, this has been a smooth and strongly upward trend as we have steadily expanded our footprint and capabilities. Our operating revenues are up 75% over this period for a 32% compound average growth rate. Our adjusted pre-tax likewise has grown significantly and represents a 34% CAGR. On the right side, you can see our adjusted net income in the bars which is up 68% over the last 2 years for a 29% CAGR. The dotted line represents our ROE which has remained well above our 15% target, even though our capital has grown by 56% over this period. With that, I'll now hand you back to Bill Dunaway for a discussion of the financial results. Bill?

Thank you, Sean. I'll be starting with Slide number 8 which summarizes our consolidated income statement for the first quarter of fiscal 2024. Sean covered many of the consolidated highlights for the quarter, so I will just cover a few other points and then move on to a segment discussion. Transaction-based clearing expenses increased 10% to $74.3 million in the first quarter of fiscal 2024 as a result of the increase in listed derivatives and securities volumes as compared to the prior year. Introducing broker commissions increased 6% to $39.1 million in the current period, principally due to increased activity in our commercial segment, both in listed derivatives as well as a result of the CDI acquisition which was effective October 31, 2022. Interest expense increased $81.7 million versus the prior year, primarily as a result of the $75.8 million increase in interest expense related to our institutional fixed income business as well as a $6.7 million increase in interest expense related to securities lending activities, both of which were due to significant increase in short-term interest rates. And in addition, in the case of the fixed income business, increased volumes. Despite the increase in short-term rates, interest paid declines on deposits, declined $200,000 as compared to the prior year due to declines in average client flow [ph]. In addition, interest expense on corporate funding declined $1.2 million versus the prior year as a result of lower average borrowings, partially offset by higher interest rates. Variable compensation increased $3.4 million versus the prior year and represented 29% of net operating revenues in the current period compared to 31% of the net operating revenues in the prior year period. This decline in variable compensation as a percentage of net operating revenues as a result of the increase in net interest and fee income earned on client balances as compared to the prior year. This revenue is generally not included in variable compensation payouts as well as the increase in net operating revenues in our Retail segment which has an incrementally lower level of variable compensation associated with it. Fixed compensation increased $15.7 million versus the prior year due to a 13% increase in head count resulting from an expansion of our capabilities among our business lines as well as in support areas to facilitate this business growth and a $2 million increase in share-based compensation as compared to the prior year. Fixed compensation declined 2% versus the immediately preceding quarter. Other fixed expenses declined $2.1 million as compared to the prior year and $5.1 million versus the immediately preceding quarter. As compared to the prior year, selling and marketing and occupancy and equipment rental each decreased $1.2 million. In addition, depreciation and amortization declined $1.5 million as compared to the prior year as certain intangible assets acquired have become fully amortized. These declines were partially offset by a $2.1 million increase in nontrading technology and support. We had favorable variances in bad debt net of recoveries of $1 million and $6.8 million versus the prior year and immediately preceding quarters, respectively. The decline versus the prior year was principally related to recoveries in our Institutional segment, while the decline versus the immediately preceding quarter was a reduction in bad debt expense in our Physical Ag and Energy business. Net income for the first quarter of fiscal 2024 was $69.1 million which represents a 10% decline versus the prior year. However Sean noted, the prior year included a $23.5 million nontaxable gain on the acquisition. Net income increased 36% versus the immediately preceding quarter. Moving on to Slide number 9. I'll provide some more information on our operating segment. Our Commercial segment added $16 million in operating revenues versus the prior year. However, it declined $9.1 million when compared to the immediately preceding quarter. The increase over the prior year was principally driven by $11.1 million increase in interest earned on client balances as a result of the increase in short-term interest rates which is partially offset by a 20% decline in average client equity as compared to the prior year as a result of a decline in margin requirements driven by lower volatility. In addition, operating revenue from listed and OTC derivatives increased $5.6 million and $2 million, respectively, as compared to the prior year, driven by higher client -- higher client contract volumes. These increases were partially offset by a $3.1 million decline in operating revenues from physical transactions, primarily in our Physical Ag and Energy business. Fixed compensation and benefits increased $1.8 million versus the prior year and $400,000 versus the immediately preceding quarter. Other fixed expenses increased $5.1 million versus the prior year and $3.3 million versus the immediately preceding quarter. As compared to the prior year, we had increases in travel and business development professional fees, selling and marketing and depreciation and amortization. We had a positive variance in bad debts net of recoveries of $600,000 as compared to the prior year and $7.9 million as compared to the immediately preceding quarter with both of these variances driven by declines in bad debts in our Physical Ag and Energy business. Segment income was $87.2 million for the period, an increase of 5% over the prior year, however, a 1% decline versus the immediately preceding quarter. For the first time this quarter, we have started to allocate a portion of our corporate expenses to our 4 operating segments, including costs associated with compliance, technology, credit and risk, human resources and occupancy. We have provided this allocation in each of our segments for the current period and will continue to do so prospectively. However, we have not calculated similar allocations from previously reported periods. For the current period, this allocation of corporate costs for our Commercial segment was $8.8 million. Moving on to Slide number 10. Operating revenues in our Institutional segment increased $92.2 million versus the prior year, primarily driven by an $80.6 million increase in securities operating revenues compared to the prior year as a result of a 47% increase in the average daily volume of security transactions as well as an increase in interest rates. The increase in securities ADV was driven by an increase 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 $1.2 million versus the prior year, as a result of the increase in short-term interest rates which is partially offset by 27% and 31% decline in average client equity and average money market and FDIC client sweep balances, respectively, versus the prior year. Interest and fee income on client balances down $4 million versus the immediately preceding quarter. The rise in short-term interest rates drove an $81.81 million increase in interest expense versus the prior year. Interest expense related to fixed income trading and securities lending activities increased $75.8 million and $6.7 million, respectively, as compared to the prior year, while interest paid declines decreased $1.4 million due to the decline in client balances. Segment income increased 5% to $65.2 million in the current period as a result of the $5.4 million increase in net operating revenues, a $1 million decline in other fixed expenses primarily lower professional fees in nontrading technology and support as well as a favorable variance in bad debt expense of $300,000 versus the prior year quarter. This was partially offset by a $3.7 million increase in fixed compensation and benefits. Segment income increased $10.2 million versus the immediately preceding quarter. For the current period, the allocation of corporate costs for our institutional segment was $12.8 million. Moving on to the next slide. Operating revenues in our Retail segment increased $22 million versus the prior year, driven by a $27 million increase in FX and CFD revenues as a result of an 84% increase in rate per million as compared to the prior year. Operating revenues were relatively flat with the immediately preceding quarter. Segment income was $28.7 million in the current period compared to a segment loss of $4.2 million in the prior year period. This was a result of a 31% increase in operating revenues as well as a $2.9 million decline in fixed compensation and benefits as well as a $6.4 million decline in other fixed expenses as compared to the prior year. The decline in fixed compensation was partially driven by FX hedge gains on positions we established the hedge compensation expense in some of our foreign jurisdictions. The decline in other fixed expenses was driven by a $2.3 million decline in selling and marketing as well as a $2.7 million decline in depreciation and amortization. Segment income increased $700,000 versus the immediately preceding quarter. For the current period, the allocation of corporate costs for our retail segment was $11.5 million. Closing out the segment discussion on the next slide. Operating revenues in our Payments segment increased $5.2 million versus the prior year, driven by a 10% increase in the rate per million as compared to the prior year. Segment income increased 8% to $35 million in the current period as a result of the growth in operating revenues which was partially offset by a $1.8 million increase in fixed compensation and a $900,000 increase in other fixed expenses as compared to the prior year. Segment income increased $2.7 million or 8% versus the immediately preceding quarter. For the current period, the allocation of corporate costs for our Payments segment was $5.1 million. Moving on to Slide number 13 which represents the bridge between operating revenues for the first quarter of last year to the current period across our operating segment. Overall operating revenues were $784.2 million in the current period, up $129.4 million or 20% over the prior year. This variance is primarily covered in our segment discussion I just walked through. So I'll move on to the next Slide, number 14 which represents a bridge from our 2023 first quarter pre-tax income of $95.6 million to pre-tax income of $95.7 million in the current period. The negative variance in corporate of $19.6 million was primarily driven by a $10.7 million increase in fixed compensation and benefits as well as a $3.9 million increase in variable compensation. The increase in fixed compensation and benefits was primarily driven by a build-out of our compliance, IT and other functional areas to support our continued business growth. Finally, moving on to Slide number 15 which depicts our interest and fees earned on client balances by quarter as well as a table which shows the annualized interest rate sensitivity for a change in short-term interest rates. Interest and fee income, net of interest paid to clients and the effective interest rate swaps increased $12.4 million to $62.1 million in the current period as compared to $49.7 million in the prior year. As noted in the table, we estimate the 100 basis point change in short-term interest rates either up or down, would result in a change to net income by $15.3 million or $0.49 per share on an annualized basis. With that, I would like to turn it back over to Sean. Sean O’Connor: Thanks, Bill. Let's move to the final Slide, number 16. We achieved very strong results in fiscal first quarter 2024, delivering good growth across all of our segments and nearly all of our products despite moderating market volatility. We delivered operating revenue of $784.2 million, up 20%, earnings of $69.1 million and value to the EPS of $2.13, up 30% and 28%, respectively, when excluding the one-off acquisition gain we realized in the prior period. This represents a 20.5% ROE on tangible book and 19.3% on stated book, both well ahead of our long-term 15% target. We are pleased to see that our business continues to generate long-term superior returns for our shareholders despite moderating volatility which demonstrates the multiple drivers of our results and the diversification of our business. When our performance is viewed through a slightly longer-term lens such as trailing 12 months over the last 2 years which evens out quarterly anomalies, our results continue to show a strong upward trajectory, growing our operating revenues at a 32% CAGR and our adjusted earnings at a 29% CAGR. We continue to see strong growth in client trading volumes across most of our products and all client segments which speaks to growth in our underlying client base and client engagement. While we consider ourselves to be a 22-year old start-up, we have the privilege of being custodians of legacy businesses that were leaders and innovators in our industry. Their legacy, we aim to continue and enhance. As we begin our 2024 fiscal year, we celebrate the 100-year anniversary of our namesake legacy company, Saul Stone & Company. It is remarkable that what started as a door-to-door ad wholesaler has since grown into a global financial franchise spanning over 80 offices across all continents. This milestone is a powerful reflection of our unwavering commitment to our clients, our disciplined approach to risk management, capital allocation and acquisitions and our perpetual focus on sustainable business growth. Our longstanding track record sets a standard which we believe is largely unmatched in our industry. Yet we recognize we are still far from realizing the full scope of opportunities and market share available to us. I would like to emphasize that the greatest asset of StoneX is our people. We have an extremely talented team that continues to deliver phenomenal value to our shareholders. Above all, we embody a customer-first mentality that permeates our business globally. Operator, let's open the line for questions.

[Operator Instructions] Our first question comes from Daniel Fannon with Jefferies.

To start, I was hoping we could -- the retail FX business, the fee per million there or RPM was record. So can you just talk about what's happening in that business and as level is probably not sustainable but what's a reasonable outlook for that number? Sean O’Connor: Well, the way we look at it internally is we have a rate per million and revenue capture target that we believe is somewhat sustainable through the cycles. It depends, obviously, on 2 things. It depends, firstly, on sort of market volatility. And it also depends a little bit on the business mix. Obviously, foreign exchange is a pretty big part of that business but we also trade indices, we trade commodities, we trade gold, we trade lots of things. And they obviously have very -- there's a decently wide disparity between the rate per million all of those products. That said, I mean, we shoot for something around $85, $90 in terms of rate per million through the cycle. And from memory, I don't hold me to this but I think we've been down as low as sort of in the low 50s and we've been as high as sort of $140. So there is quite a wide range. And we knew that when we looked at the gained business what was that almost 4 years ago now, that there was some inherent volatility in how their business worked and the revenue capture that came out of that. But I think the portfolio within our sort of broad and more diversified business, you don't feel that volatility quite as much as gained business as well as a stand-alone business but there is some inherent volatility in that. Bill, I don't know if you have any data points there, I just don't have it in front of me.

Yes. No. I mean it's -- obviously, we've been averaging well north of that here the last 3 quarters. It's just been very good performance. We think here over that time period. And obviously, comparing to what was the low point post the acquisition again in the prior year quarter. We've seen that steadily creep up and been good here in the last 3 quarters. Sean O’Connor: Yes. I would say, Dan, though, that I think we all realize we are sort of trading at the top of the range here. I don't think that, that is sustainable long term. I think this business does tend to even out over periods. I mean it's great that we've had 2 or 3 quarters in a row where we've been sort of at the upper end but it's likely to settle. It's going to be reversion to the mean graph [ph] we anticipate.

Understood. Okay. And then just following up on just the interest income and kind of thinking about the -- understanding the chart and about the sensitivity of rates. But I believe you have swaps that are rolling off as well, Bill. So could you talk about just kind of the dynamics as we think about the rest of this year and what some of the positives and negatives associated with your interest income and what that could look like?

Sure. Yes. Thanks, Dan. I would say we did have some swaps that rolled off here in December. And I would anticipate that will probably give us somewhere in the neighborhood of 40 to 50 basis points in total of kind of increase if you're looking at the overall portfolio going forward, irrespective of what happens to the Fed decisions, obviously, would be -- we'll change that. But kind of those rolling off, we should see an uptick there based upon current level of interest rates. But obviously, it remains to be seen what happens with the Fed.

Right. Okay. And then just as we think about the securities business and fixed income area that you guys have been growing and having success in. Is there -- are you still hiring there? Should we think about this just what's been happening just a continuation of what you started in that business just scaling? Or when you think about investment, is there more people infrastructure, other things that are happening within that business as we think about this year? Sean O’Connor: I think there are probably two things happening in our fixed income business but in securities generally for us is, one, we continue to grow into sort of adjacent products. And I think fixed income has exemplified that probably over the last 2 years as we've expanded that product set. And Yes, I think we are looking to continue to expand and some of those areas are sort of beachheads at this moment and we want to expand them more fully. So we continue to hire people. I would say the other thing that's sort of exercising our minds is our securities businesses, both fixed income and equity are largely U.S. businesses. Trading products in the U.S. with U.S. clients. And what we're starting to do now is leverage that capability globally. And I think that's an enormous opportunity for us. I mean everyone across the world, trades the products we trade, they trade treasury, they trade mortgages, they trade high yield, they trade U.S. equities. And that for us is still pretty new territory. So we started to hire people. We have a team that we brought on about -- I think about 9 months ago, if I'm not mistaken. In Singapore, they've got off to a great start. I mean, it's still a very small business for us but we're starting to see that there is appetite, there is opportunity. We have a small team in London that we're starting to grow and same thing on the equity side. So I think it's a combination of growing -- leveraging our capabilities internationally and continuing to grow into sort of product adjacencies as we see opportunities to fill off our product offerings. I would say on the fixed income side, the other thing that is notable is we seem to be doing, I would say, significantly better than a lot of our peers are doing at the moment. Not really sure why that is but -- and we're starting to see a lot of inbounds from people who are interested in coming to work for us. I mean, I think their view has been, you guys have grown more than most people over the last 3, 4 years. You guys seem to be doing something right and you guys seem to be the team, I would like to join. So that's giving us lots of opportunities as well, right? When talent wants to join you, that gives you lots of choice and lots of opportunities. So I guess that's how we think about it.

Okay. That's helpful. And then, I guess, building upon that a little bit in terms of future growth. And can you talk about the inorganic backdrop now for M&A and maybe how big of a -- I know you have a lot of organic growth that you're looking to build and been focused on but how do you think about complementing that with M&A as you think about the next kind of 1 to 2 years? Sean O’Connor: Yes. I think this comes up regularly on our earnings calls. And I think just some historical perspective, we seem to have done a couple of decent-sized M&A deals almost every year or so, with the exception of the COVID period. I mean, certainly, we did our largest acquisition being gained right at the start of COVID. But during COVID, pricing just became crazy to sort of peak earnings and peak multiples and that's not a good time to be a buyer of the business. So things -- we honestly didn't see anything that interested us. I would say the market is starting to normalize a bit now. We are seeing more opportunities but I'm not sure it's yet a very conducive environment for us. I mean we tend to be very disciplined around price. How we can add value to the acquisition. I mean buying a business at a fair price and not being able to do anything to change that business has done absolutely nothing for our shareholders. So we have to make sure we can acquire a business at attractive pricing that we can transform that business in some shape or form. And we just -- I think we're looking at more things now and I think there are more things coming through. But -- and some of them look a little bit interesting. But I think we are still a ways away from the environment where we might see ourselves doing something. But you never know. I mean, things can changed pretty rapidly. I would also make the point that we tend to report discrete acquisitions because you sort of have to do that. But we acquired talent too. Just like what I was talking about with the fixed income business. And when we acquire experienced people or teams of people, they tend to bring business with them. They tend to bring relationships with them, revenue and so on. And those are ways that we can grow sort of inorganically in a way, right, because we're bringing in new books of business, new capabilities, new product expertise. And we're doing a lot of that. So that certainly is a much lower risk way for us to grow our business. It's oftentimes much more impactful in the short term. It just happens to be sort of bite-size or much smaller bite size chunks, right? So we are doing that. And I think the aggregate results of the sort of talent acquisition has been material over the last 3, 4, 5 years. And we continue to do that. So anyway, hopefully, that's helpful.

Yes. No, no, that is. And I guess just lastly for me, you have been operating above your long-term target of 15% ROE for some time. As the business scales and grows and diversifies, I mean do we think you're at a level where we can take that goal should be something above that given the business and how it looks today? Sean O’Connor: I remember about 10 or 15 years ago, probably, when we had a couple of years in a row when we were below 15% and I got asked the exact same question is, should you lower your long-term target because it doesn't look realistic. I would say to achieve a 15% ROE in our marketplace and in our sort of environment which is quite competitive over a long period of time, I think, is a compelling and a robust target to try and achieve. I think we've also said that there could be long stretches of time where we operate below that target and when we operate above that target because market environment can cause that to happen for periods of time. And I don't think it's helpful if we continually change our long-term target, either bringing it down when times are tough, or sort of putting it up when we sort of in a positive environment. So honestly, I prefer not to do that. I think we've embedded in our business and throughout our compensation structures and so on, there's mentality around, we have to do better than 15%. And I think it's a challenging target. I think our business is operating above trend a little bit at the moment. Interest rates, obviously, are constructive at the moment. I would say volatility is not anymore, it was. But to your point, there might be, at some point, sort of scale benefits compounded with technology that may cause us to think about raising that level at some point, if we think the sort of entire structure and the cost structure of the business has materially changed. But I'm not sure we want to do that anytime soon but it's something we should think about, I think.

[Operator Instructions] I'm showing no further questions at this time. I would like to turn the call back to Sean O’Connor for closing remarks. Sean O’Connor: Thank you. And thanks everyone for joining our first quarter conference call. We look forward to speaking to you in the next 3 months. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.