BGC Partners posts slight drop in revenues in Q3 2022
BGC Partners, Inc. (NASDAQ:BGCP), a leading global brokerage and financial technology company, today reported its financial results for the quarter ended September 30, 2022.
BGC generated total revenue of $416.6 million during the third quarter of 2022, which declined 1.3 percent versus last year (up 4.1 percent on a Constant Currency basis).
During the quarter, the U.S. dollar continued to appreciate against the euro and pound sterling, both of which were approximately 15 percent lower. BGC’s total revenue would have been $23 million higher on a Constant Currency basis.
The overall macro trading environment improved during the quarter. This improvement continued to be uneven across products and geographies. Excluding the impact of the stronger U.S. dollar, BGC saw areas of strength across Rates, Credit and Foreign Exchange. This was partially offset by lower Energy & Commodities and Equities volumes. Throughout 2023, the Company expects sustained levels of increased secondary market trading volumes in Rates, Credit and Foreign Exchange, where BGC is a market leader.
Fenics, BGC’s higher margin, technology-driven business, represented 25.4 percent of total revenue and grew 10.8 percent (17.7 percent on a Constant Currency basis). Automation has been key to driving BGC’s margins higher. Adjusted Earnings margins and average front office productivity both improved year-over-year for the eighth consecutive quarter.
On November 1, 2022, BGC Partners’ Board of Directors declared a quarterly qualified cash dividend of $0.01 per share payable on December 6, 2022 to Class A and Class B common stockholders of record as of November 22, 2022. The ex-dividend date will be November 21, 2022.
The Joint Committee of BGC Partners’ independent Directors of the Board has agreed to pursue and move forward with a conversion of the Company’s corporate structure from an Umbrella Partnership/C-Corporation (“Up-C”) to a “Full C-Corporation.” The conversion would occur pursuant to definitive agreements which the Company expects to execute prior to the end of the year.
The conversion to a simpler, more transparent corporate structure aims to improve operational efficiencies and provide investors with an easier to understand organizational structure.
Howard W. Lutnick, Chairman and CEO of BGC Partners, commented:
“Our pre-tax earnings margin expanded by over 800 basis points and our pre-tax Adjusted Earnings margin expanded by over 300 basis points. This represents the eighth consecutive quarter of Adjusted Earnings margin improvement, driven by our high margin, electronic Fenics business, which now represents over a quarter of our total revenue.
For more than a decade, BGC and the entire financial service industry’s trading volumes have been constrained by low interest rates and quantitative easing. Throughout this period, we’ve worked to automate our business and improve our margins. With our strong margins firmly in place, we welcome the return of interest rates, increasing trading volumes and wider spreads, which we expect to drive our revenue growth for the foreseeable future and produce record levels of profitability for BGC.
With respect to our corporate conversion, I am happy to report that we expect to execute definitive agreements prior to the end of the year.”