StoneX Group Inc Stock

Good day, and thank you for standing by. Welcome to the StoneX Group, Inc. Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Dunaway, CFO. Please go ahead, Bill.

Good morning, and welcome to our earnings conference call for our quarter ended June 30, 2026, our third quarter of fiscal 2026. After the market closed yesterday, we issued a press release reporting our results for the quarter, and this press release is available on our website at www.stonex.com as well as a slide presentation, which we will refer to during this call. 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 considered 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'll now turn the call over to Philip Smith, the company's Chief Executive Officer, for a brief introduction.

Thank you, Bill. Good morning, everyone, and thank you for joining our third quarter earnings call for fiscal year 2026. Whilst there's been a moderation in volatility this quarter, I'm pleased to report our third quarter results. Total net operating revenues of $719.7 million were up 47% versus the prior year, alongside net income of $127.9 million, up 102% year-on-year. We also recorded a diluted EPS of $1 per share, an 85% increase versus the previous year, taking our year-to-date EPS to $3.49 per share, up 82% against prior year. This quarter was driven by strong performance across our Commercial and Institutional segments, which reported a 19% and 56% increase, respectively, in net operating revenue year-on-year, underscoring our increasing relevance to a diverse set of clients.

In the Commercial segment, strong performance in our global hedging business helped drive this quarter's results. And pleasingly, net operating revenue across all our products recorded double-digit growth, partly driven by the impact of the RJO and Benchmark acquisitions as well as organic growth. This included listed derivatives up 62% to $68.6 million, OTC derivatives, up 73% to $101.9 million and physical contracts, up 162% to $87.4 million. In the Institutional segment, we recorded our highest ever volumes in securities with average daily volume up 33% versus last year, driven by the exceptional performances in our equities market making business, a segment which we highlighted last quarter with growth in both ADRs as well as U.S. listed equities.

Also bolstering our Institutional segment, the acquired business of The Benchmark Company contributed $29.5 million in net operating revenues for the quarter, their best quarterly performance to date.

In the Payment segment, we reported a 12% increase in net operating revenue and a 20% increase in ADV year-on-year to a record $96 million. In addition, we recorded the highest number of transactions going through the platform this quarter, validating our continued investment in proprietary technology and reinforcing our belief that the platform can support significantly higher volumes without material increases to our expense base. This scalability positions us to support large financial institutions like Shinhan Bank, where we recently announced a strategic partnership with one of South Korea's oldest and systemically important banks to leverage our global network for complex cross-border payments.

Lastly, I wanted to give an update on the progress of R.J. O'Brien. The U.S. FCM consolidation work remains on track to be substantially completed later this fiscal year. We completed the vast majority of RJO's remaining U.S.-based client migration this quarter and as of the end of the quarter, hold nearly $13 billion in required client assets, further strengthening our position as the #1 nonbank FCM in United States.

More broadly and as anticipated, volatility moderated from the exceptional levels of the second quarter. Even so, client activity remains strong, supported by continued client engagement and pockets of elevated volatility, resulting in nearly all of our products delivering double-digit growth, reflecting the strength of our diversified business model, the investments we have made across our platform and the scale of the ecosystem we have built.

Now I will turn over to Bill for a more detailed discussion on our financials this quarter. Over to you, Bill.

Thank you, Philip. I'll start with Slide #5 in the deck. Just a reminder, in July, we completed a three-for-two split of our common stock, and our shares began to trade on a split-adjusted basis at the market open on July 20, 2026. Because the stock split was effective prior to our release of the Q3 financial statements, all per share metrics on this call will be on a split-adjusted basis. As Philip noted, we delivered strong third quarter results, generating net income of $127.9 million, an increase of 102% compared with the prior year. This performance translated into a return on equity of 18.4%, significantly above our 15% ROE target, despite a 77% increase in book value over the last two years.

On a tangible book value basis, we achieved a return on tangible equity of 25% for the quarter. While third quarter net income was 27% lower than the record earnings reported in the immediately preceding second quarter, our results continue to reflect the strength, scale and diversity of our business. We had operating revenues of approximately $1.47 billion, up 43% versus the prior year. As a reminder, our operating revenues include not only interest and fees earned on our client balances, but also carried interest that is related to our fixed income trading activities.

Net operating revenues, which nets off interest expense, including that which is associated with our fixed income trading activities as well as introducing broker commissions and clearing fees, were up $231.4 million or 47% versus a year ago, while down 13% versus the immediately preceding quarter. Total fixed compensation and other expenses were up $58.1 million or 22% versus the prior year quarter, with $48.5 million of this attributable to the acquisitions made over the last 12 months, most notably R.J. O'Brien and Benchmark. This increase was partially offset by an $18 million decrease in professional fees, largely due to the recovery of legal fees through insurance and reduced legal defense costs related to the BTIG matter.

Total fixed compensation and other expenses, excluding bad debt expense, were down 7% or $23.2 million versus the immediately preceding quarter. Fixed compensation and benefits were up 21% versus a year ago, primarily as a result of the acquisitions noted and include $4.2 million in severance and retention costs. Fixed compensation and benefits were down 6% or $8.9 million versus the immediately preceding quarter, driven by a $6.9 million decline in severance and retention costs, a decrease in back office and administrative salaries, along with a decrease in payroll taxes.

Moving on, I've mentioned the acquisitions over the last 12 months and wanted to touch on the revenue contribution for two of them, R.J. O'Brien and Benchmark. The acquisition of R.J. O'Brien contributed $78.8 million in net operating revenues for the quarter, net of unrealized negative mark-to-market adjustment on their investment portfolio and exchange common stock of $9.8 million, while Benchmark contributed $29.5 million for the third quarter, as Philip noted, their best performance to date.

Looking at it from a longer standpoint, our trailing 12 months results show operating revenues were up 48% to nearly $5.7 billion. Net income was a record $526.9 million, up 77%, with diluted earnings per share of $4.19 and an ROE of 20.8% for the trailing 12-month period. For the third quarter, our average client equity and FDIC sweep balances were $16.2 billion, up 108% versus the prior year and up 7% versus the immediately preceding quarter. Finally, we ended the third quarter of fiscal 2026 with a book value per share of $23.70.

Turning to Slide #6 in the earnings deck, which compares quarterly operating revenues by product as well as key operating metrics versus a year ago, we experienced operating revenue growth across all products versus the prior year with the exception of FX and CFDs down 19%. Transactional volumes were up across all of our product offerings with the exception of FX/CFDs, down 12%, and the spread and rate capture increased in listed derivatives securities, while OTC derivatives, payments and FX/CFDs declined.

Just touching on a few key highlights for the third quarter. We saw operating revenues derived from listed derivatives increase $157.9 million or 125% versus the prior year, primarily due to the acquisition of RJO, which contributed $132.3 million as well as a $10.4 million increase in base metals listed derivative revenues on LME markets versus the prior year. Listed derivative operating revenues decreased 11% versus the immediately preceding quarter.

Operating revenues derived from OTC derivatives increased 73% versus the prior year, driven by an 89% increase in OTC derivative contract volumes. This significant increase in client activity was most prevalent in agricultural, renewable fuel and soft commodity markets as well as continued increasing volumes associated with our automated trading platforms, which have allowed for more efficient processing and hedging of OTC transactions. OTC derivative operating revenues declined 15% versus the immediately preceding quarter, which has benefited from the widening of spreads in the immediately preceding quarter due to the onset of the U.S.-Iran conflict.

We had another strong performance in our physical business with operating revenues derived from physical contracts increasing 106% versus the prior year, primarily driven by a $40.5 million increase in precious metals operating revenues as well as an $18.7 million increase in physical supply and trading operating revenues.

Operating revenues derived from physical contracts declined 39% versus an immediately preceding record second quarter, which was highlighted by extremely strong performance in precious metals. Securities operating revenues were up 24% as average daily volumes increased 33% versus the prior year and the average rate per million increased 9%. The increase in ADV was driven by strong performance in equities, both in ADRs and U.S. listed markets, while the increase in rate per million was driven by improved spread capture in fixed income markets. Securities operating revenues were up 3% versus the immediately preceding quarter. Payment revenues increased 13% versus the prior year quarter due to a strong 20% increase in ADV, partially offset by lower RPM.

Payments revenues were up 6% versus the immediately preceding quarter. FX/CFD revenues were down 19% versus a strong prior year quarter, which had benefited from heightened client activity, most notably in FX markets following Liberation Day tariff announcements with ADV and rate per million declining 12% and 8%, respectively. FX/CFD revenues declined 9% versus the immediately preceding quarter.

Our interest and fee income earned on our aggregate client float, including both listed derivative client equity and money market and FDIC sweep balances increased $66.1 million or 64% versus the prior year, with the acquisition of RJO contributing $56.9 million. Average client equity increased 129% as RJO contributed $6.6 billion in average client equity for the quarter and the average money market FDIC sweep client balances declined 2%.

Moving on to Slide #7. I'll do a quick review of our segment performance. Our Commercial segment increased net operating revenue 90% versus the prior year, primarily resulting from the performance in our physical businesses, which increased $54.1 million and OTC derivatives, which added $43.1 million. In addition, as a result of the increase in legacy client activity as well as the acquisition of RJO, listed derivatives and net interest income increased $26.3 million and $31.7 million, respectively, versus the prior year. Segment income increased 119% versus the prior year, while on a sequential basis, net operating revenues were down 20% and segment income was down 26% off the record second quarter performance.

Our Institutional segment also saw strong growth in net operating revenues and segment income, up 56% and 49%, respectively. The growth in net operating revenues was principally driven by a $45 million increase in securities revenues. In addition, listed derivatives and interest and fee income increased $38 million and $6.2 million, respectively, primarily driven by the acquisition of RJO. Also, other net operating revenues increased $24.6 million with the acquisition of Benchmark contributing $29.5 million, which was partially offset by declines in legacy activities. On a sequential basis, net operating revenues declined 1%; however, segment income increased 7%.

In our Self-Directed Retail segment, net operating revenues decreased 17%, and segment income was down 36%. These decreases were driven by a 27% decrease in average daily volumes in FX/CFD contracts, which was partially offset by an 11% increase in rate per million captured. On a sequential basis, net operating revenues declined 11% and segment income decreased 18% in this segment.

Our Payments segment. Net operating revenues were up 12%, and segment income increased 22%. Average daily volume was up 20% versus the prior year, while rate per million was down 7% versus the immediately preceding quarter, payment net operating revenues increased 7% and segment income increased 8%.

Moving on to Slide #8. Looking at segment performance for the trailing 12 months, we saw strong growth in our Commercial and Institutional segments with net operating revenues up 74% and 68%, respectively, and segment income increasing 92% and 59%, respectively. Our Payments segment added 6% in net operating revenues and 17% in segment income. Our Self-Directed Retail segment reported a 20% decline in net operating revenues and a 39% decline in segment income.

Finally, moving on to Slide #9, which depicts our interest and fee 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. The interest and fee income, net of interest paid to clients and the effect of interest rate swaps increased $38 million to $111.9 million in the current period, with the acquisition of R.J. O'Brien contributing $30 million in net interest in the current quarter. On a sequential basis, interest and fee income, net of interest paid to clients and the effect of interest rate swaps increased $4.2 million as the average client equity and FDIC sweep client balances increased 7%.

During the third quarter of fiscal '26, we entered into an additional $750 million in fixed rate SOFR swaps to hedge our aggregate interest rate exposure, which brings our aggregate swap position to $2.55 billion with an average duration of approximately 1.5 years and an average rate of 3.51%. These swaps are reflected in the interest rate sensitivity table on this slide. As shown, we now estimate a 100 basis point change in short-term interest rates, either up or down, would result in a change to net income by $46.9 million or $0.38 per share on an annualized basis.

With that, I will hand you back to Philip for a product spotlight on our Global Prime Services business.

Thank you, Bill. As we do each quarter, and turning to Slide 11, we'd like to spotlight one of the business lines driving our growth. And this quarter, I'll turn to our Global Prime Services. Our Prime Services is a global, fully integrated prime brokerage platform, operating from London, Singapore, Atlanta, New York and Park City, Utah.

From essentially a standing start in 2018, we now serve more than 700 accounts globally with over $16 billion in client balances on the platform, generating nearly $140 million in net operating revenue in the last 12 months. Prime has become one of the strongest growth stories in the firm, having grown at a 60% plus CAGR over the last 7 years and is one of the clearest examples of our ecosystem at work. The thesis was straightforward and is the same thesis that runs through everything StoneX does. We serve mid-market clients, who need institutional-grade capabilities, but have been historically underserved by the large global banks and broker-dealers.

As bulge bracket firms impose return on capital and revenue minimums, we stepped in as the partner of choice, offering flexible, cost-effective and scalable solutions combined with the risk discipline and balance sheet strength that institutional clients expect.

Turning to the next slide, Slide 12. We have built a modular platform designed specifically around the mid-market segment, drawing on the core infrastructure StoneX has developed across execution, clearing, custody and finance and of course, backed by the StoneX balance sheet. Clients access the capabilities they need, supported by the scale and stability of the broader franchise. In the United States, our platform covers trading and financing across equities, fixed income and options through both fully self-clearing and introducing clearing models.

Our hedge fund segment has grown steadily with recent volatility driving increased engagement in options and futures strategies. Our investment in automation leaves us well positioned for the rapid expansion in the ETF space, and our multi-custodian, multi-asset capabilities have gained meaningful traction with both single and multifamily offices. Securities financing and lending are also central to our U.S. offering. We help clients finance and margin their positions and cover short sales, drawing on our own inventory and an extensive lending network to source hard-to-borrow securities.

Our matchbook securities lending activities earn a spread-based return on over $2 billion in balances, and we help clients earn incremental income via our securities lending desk. Outside the U.S., we have seen rapid growth since launching three years ago. For hedge funds, institutional managers and digital asset participants, we provide execution, custody, financing and hedging across both equities and fixed income. A key differentiator is in fixed income, where we offer repo financing at an individual security level rather than a blended portfolio rate that is underpinned by a U.K. custody solution that gives clients confidence, their assets are held securely within a fully regulated framework. For digital asset funds, we provide institutional grade execution and custody across both crypto and traditional assets, along with collateralized lending within the digital asset ecosystem.

Managers can hold fiat or fixed income collateral separately from their crypto exposure, while financing their traditional assets on the same platform. Today, in addition to the digital assets we custody, Prime holds nearly $1.5 billion in traditional assets on behalf of those clients.

Lastly, StoneX' existing relationships provide a natural cross-selling opportunity for Global Prime. This includes clients in our Commercial segment, whose treasury function can leverage Prime's custody capabilities and earn a return on excess cash balances.

On Slide 13, you can see the results of these efforts. Since 2019, client balances have grown from less than $1 billion to more than $16 billion today, generating nearly $140 million of net operating revenue on a trailing 12-month basis. The growth since inception has been rapid with much of the growth coming in the last three years, with client assets growing at a CAGR of over 65% since 2023. This growth has been broad-based across the clients we serve, including hedge funds, ETF and mutual fund providers and family offices. Despite this growth, our share of the addressable market remains relatively modest. We believe the combination of a large market opportunity, increasing demand for multi-asset prime service providers and our disciplined approach to execution provides a substantial runway for growth.

On the next slide, I will go through Prime's priorities and outlook. A core priority for StoneX is to remain relevant to our clients through the products we offer, the markets we operate in and the depth of relationships we build. For Global Prime, this means the following: First, we are extending our financing suite to include U.S. equity swaps, fixed income total return swaps and fixed income prime brokerage, capabilities we've always proven in EMEA and are now bringing to the United States. We're also investing in capabilities that span global markets. Our outsourced trading business where we provide clients with a fully embedded trading desk has recently expanded into Asia, where early momentum is being built.

Second, we are growing the client base organically, inorganically through M&A and by engaging funds earlier in their life cycle. Our prime consultancy business, which includes capital introduction, helps us build relationships with emerging managers as they launch and scale their funds, creating an early entry point into the relationship.

Lastly, as we finalize the integration of Benchmark and R.J. O'Brien, we expect significant cross-sell opportunities through clients who are beginning their relationship with StoneX.

Finally, we are focused on making the platform more valuable for clients who choose to do more business with StoneX. Through cross-product margining and collateral relief, integrated coverage teams and consolidated reporting, we are making it easier for clients to access the full breadth of the ecosystem through a single relationship. This is evidenced by clients engaging with us across multiple capabilities from the beginning. And in some cases, we have clients on board across 7 products simultaneously. We believe these initiatives will drive greater client engagement, strengthen retention and create a compounding opportunity to deepen relationships over time.

Turning to the last slide of the section, Slide 15. The most important point I want to leave with you is that Global Prime Services does not sit in isolation. It is the connective tissue of the StoneX ecosystem. Prime brings together custody, financing, execution, hedging capabilities that often form the foundation of a client relationship. From there, those same clients can access a broader range of products and capabilities across our ecosystem, whether through FX, payments, clearing, market making and other products and services. As clients engage more, relationships deepen, wallet share expands and the client becomes stickier. In that sense, Prime is not only a growing business in its own right, but also a driver of growth across the broader StoneX platform with the value of the ecosystem compounding as clients do more business with us over time.

Now to close, this was another strong quarter in spite of the moderation in volatility with net income of $127.9 million and diluted EPS of $1. Trailing 12 months net income was $526.9 million, up 77% versus the prior year. Our return on equity for the quarter was 18.4% and on the trailing 12 months, 20.8%, both well above our 15% target.

On a tangible book value basis, return on tangible equity was 25% for the third quarter and 28.7% on a trailing 12-month basis, with book value per share of $23.70, up $5.76 or 32% versus the prior year. Our performance to date reflects the power and scale of the ecosystem we have built at StoneX and the compounding effect of the investments we have made in technology, people and products. We continue to see a significant total addressable market ahead of us, and we remain excited about the growth prospects of the company and the continued expansion of that ecosystem.

With that, operator, would you kindly open the line for questions?

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

So I wanted to just follow up on the comments around just the physical market, which has been so strong for you year-to-date. Just wanted to get a little bit more color around the underlying activity, what's driving that. We've also read about Project Vault. If that is -- curious if that is something that -- which the government is doing is having an impact on, kind of, the growth of that business?

Yes, sure, Dan. So our physical business, as you know, separates between metals and nonmetals, and it's very much precious metals versus non-precious metals, more in the commodities, agricultural and as such. So we've seen over the last, I guess, two quarters where the the metals, the precious metals physical business has just outperformed and done incredibly well and exceeded expectations. And a lot of it was driven by just dislocations in various markets between location A and location B. And I think I went into that in quite a lot of detail in the last two earnings calls. With regards to domestic and non-metals business, that physical business continues to grow. We continue to build out market share and very much as we set out when we made certain acquisitions such as CDI, which put us into the physical cotton business and very much into the expansion into physical coffee and physical cocoa. These are areas where our financial business is very strong, and our client base is very deep. And when we look to expand into those areas, we do take a certain level of comfort in the fact that we are then extending the product offering, extending the ecosystem within that space, but from a very strong position within our financial space. And where we had continued success in building out those businesses is where we've been able to work very closely with our financial business, our financial-based clients and being able to offer them the additional level of service. That's been crucial in terms of our build-out of our physical business, which we continue to strive to add more and more products, more and more capabilities to. And it becomes more of a unique ecosystem for our clients, where some clients will be very eager to operate in the physical space. They want the hedging capability. We have the ability to embed optionality into physical contracts. That's a fairly unique product offering in this space because we have that strong financial business, the strong OTC business and an increasingly strong physical business. Bringing those together, I think, makes a very formidable product line for us and something we want to highlight in a couple of quarters' time, where we've brought together various parts of the business that we've acquired. We've built out organically, new initiatives. And we want to highlight that as a separate division, which is increasingly becoming part of more and more relevant business line for us.

Understood. That's helpful. And so then wanted to follow up on some of the comments around the RJO integration. I think the commentary, obviously, is that it's going well. Curious if you could put some numbers around where you are on the cost synergy side? And then at the time of the deal, you announced multiple, I think, or greater revenue synergy potential over time versus the expense synergies outlined. So curious if there's been any early attribution you could attribute to revenue synergies?

Sure. Thanks, Dan. I'll take the first one, and I'll let Philip handle the second one. So on the cost synergy side, as we -- as I mentioned on the last call, we, kind of, were exiting Q2 with about $32 million-ish run rate on an annualized basis of the cost savings. We expect to be -- or we're exiting Q3 here with something closer to $37 million, $38 million, still targeting, kind of, what we talked about last quarter by the end of the fiscal year, so end of next quarter to be mid-40s, $45 million, $46 million run rate and by probably end of first quarter to be at the $50 million we originally announced. So tracking well from where we were last quarter continuing to see that grow here in Q3.

And I think when we last spoke last quarter, we were saying this Q3 was a very important quarter with regards to the integration. This was when the large integration process of the U.S. FCM was going to happen. And that did happen. That has been completed. And we are now able to start looking at the business more holistically, looking at the clients, being able to really go deeper into the cross-selling capability. Now from the moment we announced the deal, even before closing, there was a lot of interaction between StoneX and R.J. O'Brien. That continued into closing. That continued into the integration. And there are early success stories of where increased capability that we can provide from StoneX to R.J. O'Brien clients, who are now StoneX clients, is -- we've seen the benefit of it, we've seen an increased level of momentum, and we are -- we continue to be very positive about the outcome. Now as I said in previous conversations, there are certain products that we can offer to customers on Day 1, increased capability, access to platforms, access to physical products, physical programs that will assist our clients immediately. And there are others where it does involve increased level of engagement in education and also awareness to make sure that products that we are now able to offer legacy R.J. O'Brien clients are correct and suitable for the clients. So it's an important process that we -- which is why we repeat, we never made any revenue synergies because we didn't want to be bound by time line expectations, ensuring that we didn't rush certain aspects of future revenue, which we feel and continue to feel very strongly about because of that suitability and ensuring that we're not doing -- we're not moving too quickly for the sake of achieving a time line that we set out to the market. But that momentum continues. And as the clients are now very much embedded in the StoneX system, we're able to leverage that at a greater rate. And we continue to mark lots of cards of wins along the way.

Understood. And then, Bill, just a follow-up on just the quarter's results, and if there were any onetime or where any, kind of, some of the -- in the income statement, like professional fees looked low, if there are any benefits or things that we think about from a normalized basis going forward, we should be aware of as we think about your fiscal fourth quarter?

Sure. And we tried to point that out a bit. There's about a $12.5 million recovery, insurance recovery in professional fees, net of some settlements, it's about $8.5 million, I would say, on a net basis for the quarter. So that would have been one. We did talk about the synergies. There were also about 4 -- a little over $4 million of severance and retention in the quarter. So, kind of, netting those out versus the synergies. I think those are probably the only two I would call out, Dan.

Our next question comes from Jeff Schmitt from William Blair.

On the revenue synergies, I know you spent a lot of time getting to know RJO's derivative capabilities and going through their client list. But what are some of the takeaways you have from going through their books? And I think you just started your cross-selling efforts, but for your OTC derivatives. So maybe if you can give us a sense on how long you think that could take?

That does seem to be the question everyone wants to know, isn't it? Look, we -- as I said, we've been able to achieve a lot of interaction between existing parts of R.J. O'Brien and StoneX even before the integration has been completed, very much increasing that awareness of what we have to offer. A lot of our -- and I would say, I want to reiterate what I said before is that we've had some very easy wins with regards to offering platforms and capabilities that perhaps in our physical business. Now those are already being utilized across legacy R.J. O'Brien clients because they see it as an opportunity. And some of them would have liked to have been able to do that in-house at R.J. O'Brien. They didn't have the capability. And in some cases, didn't know there was an alternative or didn't know there was a product of such that would help them. That's been crucial in just increasing the awareness. Now you must remember, R.J. O'Brien have 350 IBs, who themselves have underlying clients. So reaching out to the end client has been a process of integration, a process of awareness and a process in which we have tried as actively and as deeply as possible to engage with those underlying clients and really demonstrate all the capabilities that are on offer. Now equally, things, as we said quite early on, things like foreign exchange provision, things like OTC, access to our physical hedging capability, access to physical contracts, things like -- things that we sometimes take for granted, it does have to have a lead time of rollout. So we've not put any pressure on people to sell. This is -- we made this very clear. We don't want this to be seen as something that we are trying to force on people. It's all about increased awareness and education and highlighting all the capabilities. And I'm not saying that every single client of R.J. O'Brien, who traditionally traded futures to hedge their exposure, their risk mitigation in whatever product it might be, will automatically move to an OTC. But the beauty of an OTC product is that we're able to custom make a hedge for our clients. That's what our client base does benefit from. They enjoy the personal suitability and targeting of specifically their product, their exposure and themselves. And I think that's what makes a difference, but it takes time. And we've built out huge OTC businesses from scratch in parts of the world in EMEA and APAC, where I would say 5, 6 years ago, our OTC capability was almost minimal. That's now a big driving force of our expansion and our relevance to our clients. So we try to apply that same logic to all clients regardless of whether they are legacy R.J. O'Brien or not. So that's very much the direction we're going, very much a strategy, and the RJO client base is part of that. But just like every other client who touches StoneX in one way, we want to ensure there's more that we can offer. And I think that's why I went into the deep dive with our Prime business because that's an illustration, where we've brought all the capabilities within the ecosystem into a single product offering, which I think is a distinction between us and many other participants in the market.

And then a question on the payments business. I mean the RPM continues to decline there. It's fallen for a couple of years now. I think in the past, you talked about a client mix shift, having some impact, maybe moving into larger banks. But could you discuss what's driving that? And how much further do you think that can fall?

Well, if you go back to -- I'm trying to remember when we did the deep dive on payments, it coincided with the launch of our proprietary system, X-Pay. And the key there was all about capacity. And you must remember that up until that point, we were turning away business. We had many, many banks, payments companies wanting to move more business towards us, very much high-volume, low-value payments. And our system at the time did not have the capability. And so we were turning away business. Once we rolled out X-Pay, as said, we increased the capacity 15-fold and then allowed those banks, those FIs, those payments companies to use our payment channels, our rails to get into the country that they were lacking, but at a scale that they were not able to provide themselves. And prior to the rollout of X-Pay, we were not able to provide. So that was a key driver for the need to build out a new system and also a desire to take on that business that was -- the world was struggling with. And so we've seen that growth. We continue to see a lot of large companies -- large payment companies, increasing number of banks who have this flow and are now actively directing it to StoneX because we now have that capability and are able to provide that level of service as we do with the lower volume, higher value payments. So it increases that capability. And that's the reason why you're seeing the average -- the volume -- the average daily volume going up, but you're also seeing the revenue per trade going down. And we continue to expect that to be a trend for the foreseeable future.

That could be over the next few years. Go ahead.

No, I was going to say you can, kind of, see what Philip is talking about when you look at our first quarter of this fiscal year, that's when you really saw a big spike up in our volumes, and you did see a trend down a bit in the rate per million from a little over $10,000 to $9,400 per million. But then you've seen that actually trend up and the volumes have grown, which has been a nice trend during the fiscal year going up sequentially for three quarters. So it did, kind of, level set shift down, as Philip said, as that system got rolled out. But now we're seeing it. It trended up a little bit. I don't think it's necessarily going to get to where it was, but the volumes are growing quite fast, and it's nice to see rates per million are going up.

And it was just shy of a record quarter and which is -- the reason I say that is because historically, in our payments business, the Q1 has always been the high watermark in most years. And we were just shy of beating the Q1 high watermark from 2024. So I think that's pleasing to see. I am hoping to have a deep dive in payments for our Q1 '27 call because it should coincide with quite a few initiatives and exciting opportunities that we want to throw out and bring together and highlight the strategy, which will probably be about three years after we last did the deep dive.

Okay. Great. And then a question on client float. Obviously, up a lot from the RJO deal. But what do you think that can grow at after the deal, kind of, annualizes or lapses? And then any changes in your investment strategy there? Are you increasing duration, using more swaps, anything like that?

Yes. I mean I think that post the deal, I think you can certainly be growing that -- those balances, high single-digit percent, right? The industry continues to grow, and I think that we've got a compelling story being the largest nonbank U.S. FCM and continuing to grow, obviously, in the U.K. and Singapore as well. So definitely becoming more relevant there. And on the investment front, we're not really doing anything different than what we've, kind of, talked over the last 9 months. Post integration, we are continuing to put in some levels. As I said in my remarks today, we did do about another $0.75 billion of 2-year swaps and to, kind of, average in this quarter to, kind of, put a floor. So overall, we've got about $2.5 billion of swaps out there at a little over 350 basis points, which puts a nice, kind of, floor for us on the piece of it. And then we're -- there's a little bit of duration we're taking, but not a lot on the actual investment side. There's probably about $1.5 billion there as well that we've got a little bit out on the curve, but nothing more than two years. And so just trying to continue to maximize and make sure that we're earning a little bit of a premium over SOFR, 10 or 15 basis points is, kind of, what we're targeting.

Yes. Okay. And then just one last one. I think in the Q, it had mentioned greater adoption of your automated trading platform with regards to your OTC derivatives business. I don't know if that's a newer initiative or something you've been investing in. I was just curious why that was called out specifically?

No, it's nothing -- it's not new, but I think it's fair to say it's been accelerated and improved and the efficiencies achieved using our -- using AI to speed the upgrades and the increased capability and the increased efficiency from our platforms. That's something we are seeing across the board. And you're seeing it as a highlight in the OTC capability where our electronic swap matching platform has just been rolled out, and it has been rolled out over time, but the acceleration and the efficiency of the capability within the platform has really made a meaningful difference. And a lot of that relates back to my announcement in the last quarter where we went from an AI perspective from, sort of, early adoption, experimenting, sort of just playing around to rolling out an enterprise-wide capability, which is becoming increasingly core and central to our overall technology build-out. And that is a good example. Our swap platform is a good example where we're starting to see early wins on that. And we are similarly rolling out the capability to improve efficiency in reconciliations and investigations and LC management, settlement instruction corrections and technology platform and project acceleration. So a lot of that will be provided as a, sort of, post-6-month announcement in the next earnings call because I think we want to start demonstrating to our investors and the market what we've been able to achieve, whether it's cost savings, reduction in vendors, whether it's efficiency of technology, acceleration of rollout of new product capability, all the such. So that's the objective there in the next quarterly earnings.

And I would just add, Jeff, one of the other nice things that's come out is if you look back 6 -- 7 years ago and a lot of the structured products that were trading in OTC. That was -- those were phone conversations that were going on with our desk and the broker and the clients to kind of customize the solution and find out what it is. And now we have tools to where customers can just be looking at live pricing for structured products that fit the needs that they have. So it's a much quicker execution, much more customizable and gives them a great view. So those kind of things that are -- another thing that's kind of driving that -- those volume growth and revenues.

And it makes expansion geographically that much easier because you're not feeding through to people to pricing transactions, you're able to offer it to more and more parts of our global footprint and the clients that sit in throughout the globe.

Our next question comes from Dan Fannon from Jefferies.

So just wanted to get your updated thoughts on M&A here currently and maybe the dialogue or activity as you see in the kind of back half of the calendar year, if you see that picking up for yourselves?

I think I've been asked that before, and I think the response has been we are always looking at transactions. We are known as a consolidator. We're known as an acquirer in the market. And we have stuck to very strict principles of the logic for adding to the StoneX ecosystem, and whether it expands our geographical footprint, whether it expands our product offering or whether it brings us a book of clients that we didn't have before. And that doesn't stop. And we -- I think we said there's always half a dozen transactions that we're looking at. And I think I actually put it out there almost business as usual is for us to be acquiring companies sort of $10 million to $30 million, $10 million to $40 million in size that add to that increased capability. And I don't see that being anything other than almost business as usual now. I think a lot of companies are those small monoline business lines, maybe single -- sole proprietary -- sole proprietors who are looking for an exit strategy. We are seen as an opportunity for those to extract value and bring a capability that will be added and hugely supplement the sort of the product offering across our entire ecosystem and, at the same time, give the entire capability that sits within StoneX to their clients to enhance the relationship to make it look deeper and more meaningful. So those -- that will not change, and that hasn't changed. And we haven't seen any change of any sort from the beginning of the year to where we are today. And then we've obviously been able to demonstrate that even companies the size of R.J. O'Brien, which are the largest transaction we've ever completed, was able to be integrated as on time -- on the time lines within budget and achieving the objectives that we set out on Day 1. So I think we now have a dedicated team -- dedicated resources that continue to look at transactions to make the acquisitions, to complete the acquisitions and then most importantly, to complete the integration. And that's a key part of our business and DNA going forward. But we are not desperate. We don't go out trying to find gaps unless there's an obvious clearing gap in our ecosystem that we'd like to fill, we would actively keep an eye out. But on the whole, we look at many, many transactions. We're very disciplined in our approach, and what we like and what will add to our ecosystem, we will look to see if we can achieve that.

I am showing no further questions at this time. I would now like to turn it back to Philip for closing remarks.

Well, thank you, all, for your time. We're very pleased with our Q3 numbers. And once again, a huge shout-out to all StoneX employees who have helped make this happen by continuing to provide a standout level of service, professionalism and relevance to the market and our ever-increasing number of clients and customers and, of course, to each other. Thank you very much.

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

Good day, and thank you for standing by. Welcome to StoneX Group Q2 Fiscal Year '26 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Bill Dunaway, Chief Financial Officer. Please go ahead.

Good morning, and welcome to our earnings conference call for our quarter ended March 31, 2026, our second quarter of fiscal 2026. After the market closed yesterday, we issued a press release reporting our results for the quarter, and this press release is available on our website at www.stonex.com as well as the slide presentation, which we will refer to during this call. 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 considered 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'll now turn the call over to Philip Smith, the company's Chief Executive Officer, for a brief introduction.

Thank you, Bill. Good morning, everyone, and thank you for joining our second quarter earnings call for fiscal year 2026. I'm very pleased to report a consecutive record quarter, including record net operating revenues, net income and EPS. This was driven by strong performance across all 4 operating segments, highlighting our depth and breadth of product offering and capabilities within the unique StoneX ecosystem. It also reflects the continued progress of integrating R.J. O'Brien, which remains on track to be substantially completed later this fiscal year with no change to expected synergies and efficiencies, making StoneX the largest nonbank FCM in the United States.

Despite the geopolitical uncertainty, nearly all of our products reported a double-digit growth, driven by higher volatility and increased demand for our services. This has included delivering another record quarter for listed derivatives with volumes approaching 100 million contracts and average client equity approaching $14 billion, reflecting the expanded scale of the platform following the RJO acquisition.

Record OTC derivatives volume, transacting over 1.5 million contracts, a 68% increase year-on-year. As a reminder, we offer customizable OTC contracts to customers, giving them the benefit of a lookalike option or swap or structured product to more closely address their risk management needs, whilst we benefit from typically higher rate capture when compared to traditional listed derivatives. We reported record securities average day volume of over $12 billion, driven by strong performance across both our equities and fixed income franchises.

We will touch on our equities business later today, but we believe we have one of the most diverse equity market ecosystems covering execution, market making, custody and clearing, prime brokerage as well as equity capital markets and research offerings, which we acquired through the Benchmark acquisition last year. Alongside our securities and derivatives records, we also reported record operating revenues derived from physical contracts, which underscores our continuing global relevance in the physical space within the commodities market over consecutive quarters.

Turning to payments. We recorded our second highest ADV of $92 million, following the record set last quarter with year-on-year growth of 19%. This performance reflects continued engagement from institutional counterparties using our cross-border payment solution. Lastly, we saw FX CFD volumes grow by 3% year-on-year and the revenue capture of $103 per million, up by 6%, reflecting the higher market volatility seen in this quarter.

We continue to set records across our key metrics, but are mindful that the geopolitical landscape remains complex and disciplined risk management will remain at the heart of our business as we continue to service our clients' business needs and activities. As our company scales, processing ever higher volumes, growing our client base and improving our offering to clients, I wanted to spend a couple of moments touching on one of our strategic initiatives regarding the use of AI. We are seeing the deployment of AI evolving from isolated experimental use to now serving as an enterprise force multiplier that enhances operational efficiency across our organization.

What started out as a useful development tool for our programmers has now grown into utilizing AI agents across client support, internal operations and platform development. Within payments, we mentioned our X-Pay system in previous calls, which was a proprietary built platform. And within this, we have developed AI-assisted automation to help with the settlement instruction repair, validation and reconciliation designed to reduce manual intervention and improve our straight-through processing rates.

Alongside this, we are developing AI chatbots to aid client services with client queries, document translation and compliance-related tasks. We are also applying AI to further improve the productivity of our software developers through the design of support agents for agentic development. This should culminate in one, accelerated development, shortening the time from a proof of concept to a functioning prototype; two, enhanced agility and innovation, automating testing, delivery of iterative improvements, which should lead to innovation; and three, business solutions, ultimately leading to the delivery of working solutions for our commercial teams that are responsible to our clients' needs.

One such example of this was the development of the feature, which we estimated would have taken the team without AI, approximately 2 to 4x longer to design, test and launch. This is a sizable step change we hope to replicate across the organization, whilst ensuring we operate within a standardized framework and remain cognizant of local regulations, controls and governance. It is a promising start, and we see significant opportunities to leverage technology further to develop products and services faster, meet our clients' needs and optimize our resources to continue to deliver strong financial performance.

With that, I will now turn over to Bill, who will go through this quarter's financial results.

Thank you, Philip. I will begin with the financial overview for the quarter, and we'll be starting with Slide #5 in the slide deck. Just as a reminder that our Board of Directors approved a 3-for-2 split of our common stock, and our shares began to trade on a split-adjusted basis at the market opened on March 23, 2026. So all per share metrics on this call will be on a split-adjusted basis.

Second quarter net income came in at a record $174.3 million with diluted earnings per share of $2.07. This represented 143% growth in net income. However, earnings per share grew at 120% rate due to an additional shares outstanding as compared to the prior year, primarily related to the issuance of approximately 3.1 million shares related to the acquisition of R.J. O'Brien during the fourth quarter of fiscal '25.

Net income and diluted earnings per share were up 25% and 24%, respectively, versus our immediately preceding first quarter of fiscal '26. This represented a 26.5% return on equity despite a 75% increase in book value over the last 2 years. On a tangible book basis, this equates to a 37% return on tangible equity for the quarter.

We had operating revenues of approximately $1.6 billion, up 64% versus the prior year and up 9% versus the immediately preceding quarter. As a reminder, our operating revenues include not only interest and fees earned on our client balances, but also carried interest that is related to our fixed income trading activities.

Net operating revenues, which nets off interest expense, including that which is associated with our fixed income trading activities as well as introducing broker commissions and clearing fees were up 70% versus a year ago and 14% versus the immediately preceding quarter.

Total fixed compensation and other expenses were up 44% versus the prior year quarter with $56.9 million of this attributable to acquisitions made over the last 12 months, most notably RJO and Benchmark. Also contributing to this increase as compared to the prior year, bad debt expense increased $12.3 million, primarily within our Commercial segment, which despite this, had a second consecutive record quarter.

Total fixed compensation and other expenses, excluding bad debt expense, were up 5% or $16.4 million versus the immediately preceding quarter. Fixed compensation and benefits were up 32% versus a year ago and up 13% or $18.7 million versus the immediately preceding quarter. The increase versus the immediately preceding quarter included a $10 million increase in employee benefits, most notably payroll taxes, paid time-off benefit costs and retirement costs, which is typical as we start a new calendar year as well as $8.5 million in higher severance and retention costs, including costs associated to a formal collective redundancy consolidation process for U.K.-based employees following the integration of certain RJO entities as well as severance and retention costs for certain U.S.-based positions relating to ongoing integration activities. These increases were partially offset by higher participation on our employee elected deferred compensation plan, which is part of our restricted stock plan.

Professional fees increased $1.9 million versus the prior year, primarily as a result of higher legal fees related to our defense and various legal matters, net of recoveries. They were down $14.4 million versus the immediately preceding quarter, which included significant legal costs incurred related to the BTIG arbitration matter.

During the second quarter, we received the final arbitration award from the FINRA arbitration panel adjudicating the claims between us and BTIG. The panel awarded us $1 million in compensatory damages and awarded BTIG $2.9 million in damages. These amounts were offset, and we made a net payment of $1.9 million during the March of 2026.

On May 4, 2026, we made an immaterial payment to fully and finally resolve all differences with BTIG and no additional claims between the parties remain. The conclusion of the BTIG litigation, along with the resolution of the option sellers' arbitrations and settlement of the patent case inherited through the acquisition of GAIN Capital marked the end of the large-scale litigation matters that have resulted in heightened legal expenditures over the last 5 years, most notably the last 24 months.

Moving on, I had mentioned the acquisitions over the last 12 months and wanted to touch on the contribution of the most notable one, R.J. O'Brien. Excluding amortization of acquired intangibles and a $7.7 million negative mark-to-market adjustment on their investment portfolio, R.J. O'Brien contributed $35 million in pretax net income for the quarter, a nice improvement over the immediately preceding first quarter.

Looking at our results from a longer standpoint, our trailing 12 months results show operating revenues up 40%. Net income was a record $462.4 million, up 57% with diluted earnings per share of $5.60 and a return on equity of 19.8% for the trailing 12-month period, above our target of 15%.

For the second quarter, our average client equity and FDIC sweep balances were $15.2 billion, up 91% versus the prior year and up 4% versus the immediately preceding quarter. Finally, we ended the second quarter of fiscal '26 with a book value per share of $34.16.

Turning to Slide #6 in the earnings deck, which compares quarterly operating revenues by product as well as key operating metrics versus a year ago, we experienced operating revenue growth across all products versus the prior year. Transactional volumes were up across all of our product offerings and spread and rate capture increased in all products with the exception of securities down 3% and payments down 7%.

Just touching on a few highlights for the fourth quarter. We saw operating revenues derived from listed derivatives increased $189.4 million or 148% versus the prior year, primarily due to the acquisition of RJO, which contributed $151.7 million as well as strong growth in base metals activities in LME markets, which increased $20.2 million versus the prior year. Listed derivative operating revenues increased 18% versus the immediately preceding quarter.

Operating revenues derived from OTC derivatives increased 98% versus the prior year, driven by increased client activity and a widening of spreads, most prevalent in agricultural and energy markets, including renewable fuels, driven by heightened volatility as a result of the onset and continuation of the U.S.-Iran conflict. This also represented an 89% increase versus the immediately preceding quarter. We had strong performance in our physical business with operating revenues derived from physical contracts increasing 162% versus the prior year, primarily driven by $116.1 million increase in precious metals operating revenues.

Operating revenues derived from physical contracts were up 21% versus a record immediately preceding quarter. Securities operating revenues were up 38% as volumes were up 35%, partially offset by a 3% decline in the rate per million captured versus the prior year, with the improvement driven by growth in U.S. equity volumes as well as an increase in overall client activity driven by the onset and continuation of the U.S.-Iran conflict.

Payment revenues increased 14% versus the prior year quarter due to a strong 19% increase in average daily volume, partially offset by a lower rate per million. Payment revenues were down 2% versus the immediately preceding quarter.

FX CFD revenues were up 9% versus the prior year quarter, resulting from a 3% increase in average daily volume and a 6% increase in rate per million, each of which were primarily driven by improved performance in our self-directed business. FX and CFD revenues were up 13% versus the immediately preceding quarter.

Our interest and fee income earned on our aggregate client float, including both listed derivative client equity and money market FDIC sweep balances increased $54.8 million or 54% versus the prior year, with the acquisition of R.J. O'Brien contributing $53.9 million. Average client equity increased 110% as RJO contributed $6.4 billion in average client equity for the current quarter, while the average money market FDIC sweep client balances declined 7%.

Turning to Slide #7. This depicts a waterfall by product of net operating revenues from both the prior year quarter to the current one as well as the same for the trailing 12-month periods. Just a reminder, net operating revenues represents operating revenues less introducing broker commissions, transaction-based clearing expenses and interest expense. For the quarter, net operating revenues increased 70%, principally coming from listed derivatives and physical contracts, up $84.6 million and $116 million, respectively.

In addition, we had a very strong quarter in OTC derivatives, which nearly doubled, adding $58.8 million versus the prior year. Net operating revenues from securities also added $36.9 million. On a net basis, interest and fee income on client balances increased $33.2 million with RJO contributing $30.3 million.

Looking at the bottom graph for the trailing 12-month period, listed derivatives has the largest increase, up $187.7 million, primarily as a result of the acquisition of R.J. O'Brien as well as strong growth in LME base metal markets. Securities was up $180.6 million versus the prior year, driven by a 27% increase in average daily volume and 17% increase in rate per million.

Physical contracts net operating revenues added $162.1 million versus the prior fiscal year, primarily driven by strong performance in precious metals. OTC derivatives added $90.4 million off of strong performance in agricultural and energy markets, including renewable fuels. Interest and fee income increased $87.6 million, primarily as a result of the acquisition of R.J. O'Brien.

Moving on to Slide #8. I will do a quick review of our segment performance. Our Commercial segment saw record net operating revenues with an increase of 111%, primarily resulting from 52% and 98% increases in listed and OTC derivatives, respectively. In addition, physical contracts increased 239%, while net interest income and fee income increased 55%. The growth in listed derivative and interest income were primarily driven by the acquisition of RJO as well as in base metal markets on the LME. Segment income was another record, increasing 151% versus the prior year, while on a sequential basis, net operating revenues were up 30% and segment income was up 36%.

Our Institutional segment also saw strong growth in net operating revenues and segment income, up 65% and 40%, respectively. The growth in net operating revenues was principally driven by a $33.3 million increase in securities revenues. In addition, listed derivatives and interest and fee income increased $60.4 million and $14 million, respectively, primarily driven by the acquisition of RJO. On a sequential basis, net operating revenues and segment income declined 3% and 13%, respectively.

In our self-directed retail segment, net operating revenues increased 15% and segment income was up 40%, which demonstrates the strong operating leverage in this segment. This growth was driven by a 9% increase in rate per million captured in FX CFD contracts, along with a 3% increase in average daily volumes. On a sequential basis, net operating revenues were up 18% and segment income increased 65%.

Our Payments segment net operating revenues were up 10% and segment income increased 30%. Average daily volume was 19% up versus the prior year, while rate per million was down 7%. Versus the immediately preceding quarter, Payments net operating revenues decreased 3%, while segment income decreased 6%.

Moving on to Slide #9. Looking at segment performance for the trailing 12 months, we saw strong growth in Institutional segment with net operating revenues up 62% and segment income increasing 58%. Our Commercial and Payments segments added 48% and 11% in segment income, respectively. Our self-directed retail segment income decreased 23%.

Finally, moving on to Slide #10, 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. The interest and fee income net of interest paid to clients and the effective interest rate swaps increased $29.1 million to $103.6 million in the current period. And as noted, the acquisition of R.J. O'Brien contributed $30.3 million in net interest in the current quarter. On a sequential basis, interest and fee income, net of interest paid to clients and the effect of interest rate swaps, declined $7.8 million, primarily related to an $11.7 million mark-to-market adjustment on our investment portfolio.

During the second quarter of fiscal 2026, we entered into an additional $600 million in fixed rate SOFR swaps to hedge our aggregate interest rate exposure. which brings our aggregate swap position to $1.8 billion with an average duration of approximately 2 years and an average rate of 3.38%. These swaps are reflected in the interest rate sensitivity table on this slide. As shown, we now estimate a 100 basis point change in short-term interest rates, either up or down, would result in a change to net income by $47.6 million or $0.58 per share on an annualized basis.

With that, I will hand you back to Philip for a product spotlight on our global equities business.

Thank you. Now turning to Slide 12. I wanted to highlight another facet of our ecosystem and speak about our principal market-making business within our global equities business line. Our equities business operates as a global market intermediary built around agency execution, custody and clearing, market making, prime as well as capital market services.

We serve institutional clients offering access to exchanges, liquidity and clearing and custody infrastructure. We monetize client activity through commissions, spreads and financing. Through the Benchmark acquisition, we further enhanced our relevance to customers with deep equity research and ability to connect users through corporate access and capital market services. We have built an ecosystem that is designed to service clients across the full equities life cycle.

On our next slide, Slide 13, turning to equity market making specifically. It is important to recognize the scale and relevance of this business. We are a principal equities market maker, providing liquidity and execution across a wide range of global securities.

In 2025, StoneX ranked #1 in over-the-counter American depository receipts and foreign securities, a position we have held consistently since 2015, according to FINRA ORF data. We make markets in approximately 18,000 equities globally, and we rank #1 in over 1,500 individual securities. This is supported by more than 20 years of experience, 24-hour market coverage and access to 120 global markets. For institutional clients, this matters because it translates into reliable liquidity, pricing and execution, particularly in less liquid international or complex stocks.

While this part of the business may be less visible than the traditional listed securities, it plays a meaningful role in how institutional investors, asset managers and retail broker-dealers access global equity markets with StoneX.

Moving on to the next slide, Slide 14. What makes our market-making franchise different and succeed. Our entry into the highly competitive Reg NMS stock was built upon our leading OTC ADR franchise, market experience and deep institutional relationships developed over decades. This foundation has allowed us to scale into the listed space in a disciplined way. Second, market making at StoneX operates within a vertically integrated equities ecosystem. As already shown, it exists alongside clearing, custody, prime brokerage, research and capital markets. It is all connected. This integration improves capital efficiency and allows us to serve clients more comprehensively. Third, we benefit from the aggregation of trading flow across a globally diversified client base that is institutional as well as self-directed retail. This aggregated diverse flow allows us to provide deeper liquidity and more consistent pricing, supporting high-quality execution for our clients while managing risk and hedging more efficiently.

Finally, technology is the real enabler. Our proprietary electronic platforms are designed to support best execution and allow us to deliver tools focused on execution quality. The results of these factors are reflected in the growth you see here with our Reg NMS market making volumes growing at a compound annual rate of over 130% since 2022. We believe we are a fraction of the total addressable market, which is likely measured in trillions of dollars of notional volume.

Lastly, turning to the priorities on Slide 15 required to scale the Market Making platform. First, we're continuing to streamline our operations by consolidating platforms, automating middle office processes and simplifying reporting and post-trade workflows. This improves operating efficiency and supports our operating margins as volume grows. Second, we are deliberately deepening our market share, expanding our NMS wholesale market-making capabilities, growing outsourced trading relationships and increasing our presence in ETFs and global options where client demand is rising.

Third, we are strengthening our global reach and technology platform. This includes building a footprint in Asia Pacific, expanding sales coverage in the EMEA region and continuing to invest in the core architecture that underpins our market-making platform. Overall, we expect to process higher volumes, expand our global reach and continue to invest in a platform that is efficient and scalable and supportive of high operating leverage. Importantly, all of this is being done in a way that strengthens our broader equities ecosystem, making StoneX increasingly relevant to our clients across execution, liquidity, clearing and custody, prime services, research and capital markets.

Now to close out this presentation, this was a hugely pleasing quarter all around, highlighting record net income of $174.3 million, which is up 143% versus prior year, diluted EPS of $2.07, up 120% versus prior year and achieving an ROE for the quarter of 26.5% and 19.8% for the trailing 12 months ending March 31, 2026, and an ROE on tangible book value for the quarter of 37% and 25.9% for the trailing 12 months. Book value per share of $34.16, up $8.43 or 33% versus prior year. And results over the last 2 years have grown trailing 12-month net operating revenues by 56% or a 25% CAGR and trailing 12 months earnings by 91% or nearly 38% CAGR.

A more volatile economic backdrop has emerged, potentially surpassing levels of the past 2 years, but this environment plays into our strengths as volatility continues to be a key driver of our business. We have seen significant growth in our client assets, average client funds, securities clearing, prime brokerage and metals, which provide stable recurring income. We believe our unique ecosystem, which offers extensive depth and breadth of product at a widespread geographical reach, combined with a significant total addressable market, will continue to power growth in the years to come. We naturally remain very excited about our future growth and continued expansion of our ecosystem.

With that, operator, would you kindly open the line for questions?

[Operator Instructions] Our first question comes from the line of Dan Fannon from Jefferies.

The environment continues to be quite constructive as you highlighted. And I was hoping to just get a bit more context around the health of that. One of your peers highlighted a customer loss in, I think, January on the natural gas side. I was hoping you could talk about just kind of the good and bad volatility that you saw in the quarter. And then also give us an update here, given we're now in May of kind of what's happened as the quarters ended, and we've seen some of the exchange volumes also start to moderate, how that's translating across your business as well.

Sure. So as we said in the Q1 Q&A, there was surprisingly very little in terms of credit losses. And we did remind the market that continued heightened level of volatility, while positive from a revenue perspective, it obviously does increase the chance of some credit losses. Now we work very closely with our clients each and every day to help mitigate that because communication with our clients through these extreme volatile periods is -- whilst unusual, it is important that we maintain that level of communication and ensure that we help our clients to minimize their own exposure, their own liquidity risks.

And I think in light of the fact that if you look at the levels of volatility in the last 2 quarters, I think the level of credit losses we've provided for have been somewhat minimal. So I wouldn't say it was particularly unusual. I think it highlighted the quality of our clients. And I think probably more relevant, it highlights the interaction and engagement that we have with our clients. But as we said very openly many times, this level of increased volatility, there should be an expected increased risk in credit losses that come with that heightened revenue generation.

And then I guess just a follow-up on just the kind of current environment what we're seeing in April, particularly in certain of the markets where we know we can see volumes have moderated, whether that's metals or precious metals or other areas. Can you give us an update in terms of how that business looks here thus far to start fiscal third quarter?

Yes, certainly. I mean, Dan, we've had a tremendous activity in the first couple of quarters and last year, I guess, in the precious metal space. And then obviously, listed derivative, OTC, everything was really doing well with the volatility we saw here in the second quarter of fiscal year. But we do see -- we see that what you see is from the standpoint of some moderation coming into April as we start the third quarter just with a little bit -- I wouldn't -- it's certainly not normal, but off where you saw in Q2 from the standpoint of activity. But overall, a very good environment from the standpoint of interest rates and still an elevated volatility market.

Got it. Okay. That makes sense. And I guess I'm not used to being restricted by my number of questions on this call, but...

Go ahead, Dan.

I guess just, Bill, you mentioned some of the costs associated with R.J. O'Brien and severance and what we saw in the quarter. Can you update us on the synergies and just broadly at the highest level, how the integration is going? Clearly, the environment is good, but I'd like to get a little bit more detail around what you're doing under the hood and how that's going.

Well, if I maybe start, Dan, by just giving you an update in terms of what we set out from a time line from an integration program perspective, we are on track. And I think the last call, we highlighted the targeting of our non-U.S. businesses and the integration that go with those businesses was the priority and also a testing ground to ensure that the larger program of integration in the U.S. is able to run more smoothly based upon any observance or any issues that we -- that arose during the non-U.S. integration process. So those have begun.

This quarter we're currently and it is obviously an important quarter for us, and we've begun the process of the integration of our U.S. FCMs. And it's on a much more gradual basis, whereby we begin testing with some small group of clients. We then have a second group, which has already occurred, and then we have a gradual buildup to the entirety of the FCM consolidation at the end of this month. So it's an ongoing process. The time line hasn't changed from where we set out and how we set it out almost 2 quarters ago. And in terms of the costs and the efficiencies, those are also on track, but I'll let Bill highlight those in detail.

Sure. Thanks, Philip.

We touched on this a little bit last quarter, Dan. So within the quarter, we talked a little bit coming out of last quarter what the run rate is. For the quarter of -- second quarter, we had about 7 -- just shy of $7 million, $6.9 million worth of synergies that we saw in the numbers in Q2 and the exit run rate kind of coming out of Q2 of those same synergies is about a little over $8 million. So we're at about a $32 million run rate to reaffirm kind of where our target is. Our expectation is that we'll be $50 million by the end of the process. And we think that coming out of Q2, we're probably around $32 million on an annualized basis, and we expect by the end of fiscal year to be probably closer to $45 million, and then we'll have that kind of remaining piece dribble in, in '27. Does that answer your question?

Yes. No, that's super helpful. And then just lastly, Bill, on the context of the hedge that you talked and quantified, are -- do you think you're kind of -- do you expect to do more as the year goes on? Or is this kind of what -- you've talked about this previously, but is this the kind of right amount in terms of interest rate exposure you're looking to manage to?

Yes. We talked about this when we first did the RJO kind of integration in that first quarter, and Sean had touched on at the time that at that time, we had about $13 billion of the 2 kind of combined portfolios, and there's about roughly half of that, that is our balances that we keep virtually most of the income on those assets. So that's really the key one that we're trying to protect. So this puts us at around $1.8 billion of swap coverage, and we've got about $1.5 billion of kind of duration, right, that's going out to 20, 24 months of physical purchases of investments.

So we feel like we've got a good start, but I think we'll probably continue to look where applicable to still put in some floors there just to protect the downside on that where it's just kind of -- there's not sharing on those balances. So we want to make sure that we're comfortable with the levels we're setting. So still an active management program that we've got in place. Hopefully, that kind of gives you some guidelines of what we're looking to protect.

Your next question comes from the line of Jeff Schmitt from William Blair.

In the commercial hedging business, could you just give us a sense of the mix of that business? I mean, obviously, strength was widespread, but how much is agricultural versus energy or, I guess, renewables and RJO's interest rate business as well?

So within the majority -- just to level set it, the majority of the RJO institutional interest rate business is actually in the institutional segment because it's more institutional customers looking to -- the FIG group and others looking to manage their interest rate exposure. But if we're looking on the commercial side, of the listed derivative, it's probably going to be more heavily weighted towards the energy and the renewable fuel side. I mean a lot of it was soybean oil and other inputs into renewable fuels.

So it's -- you can call that agriculture, you can call that renewable, it's a little bit of both. It's the inputs on the agricultural side, the output on the energy side. But it's more so bad. I mean I think we're still seeing -- we had a bit of a slow start to Q2 and kind of, I would say, like the U.S. row crops, corn and soybean wheats, but then we saw nice activity in the back half of the quarter. But really, the OTC market was really where we saw was the real stand out with the best volume, best revenues we've seen historically on the OTC space.

And with that volatility, I think those customized solutions that we can provide to customers to really kind of help capture margin and mitigate their risk showed their -- showed the benefit in that quarter to clients, and we saw a lot of uptake in activity.

And I would only add that in Q1, maybe we were slightly overshadowed by the success of the metals business in relation to everything else. But in Q2, there was a consistent level of increased activity, increased revenue across the board, which we don't always expect and we shouldn't expect, but it was pleasing to see that that was evident. And as Bill said, obviously, energy was very much the story of the quarter, but there was consistent growth in other areas as a result of increased volatility, but also just increased activity from our clients and across the board, which good to see, very pleased.

Okay. That's helpful. And then maybe if you could do the same in the physical trading business. I mean, is that mainly precious metals and gold in particular? What portion of the mix is that? And then where are you in terms of cross-selling with RJO clients? I don't think they have that physical trading capabilities.

No, they don't. And I think that was raised last quarter. I think there was a level of confusion whether a lot of that came from RJO integration and cross-selling. The physical aspect is very much driven by our very successful precious metals business. but also our very successful non-metals business, which in areas of cocoa, in areas of coffee, we had continued expansion, continued growth across the board. But unfortunately, within the physical space, there is still an overshadowing by the physical metals business.

And we saw Q1 showing record levels of transaction volume and net income attached to that physical metals business. Unfortunately, Q2 overshadowed Q1. So that continued level of growth and client activity. But it was, as I said before, across multiple subproducts within our commercial business, there was a broad level of increased activity and increased revenue. And I would say with regards to our OTC business, where we are -- we highlighted a record level of OTC contracts, that is something that we look forward to greater participation from the RJO integration post full integration in the U.S., where we are able to more easily offer OTC contracts, OTC products and capabilities to the legacy RJO client base.

Until that integration happens, it's just slightly more cumbersome in terms of papering in different legal entities and so that make that life easier.

And Jeff, to your numerical question there for total $190 million worth of physical contact operating revenues in Q2, about $150 million of that was precious. The rest was -- the rest of the -- what we called physical agriculture and energy before, we're now calling StoneX Supply and Trading, but that's kind of more the agriculture and energy side of the business.

Okay. Okay. Very helpful. And then could you provide an update on the M&A environment and sort of what inning you think we're in for industry consolidation? Are opportunities up versus a year ago? How are valuation expectations trending?

I think I think generally, we will always continue to see a certain level of small to midsized interest and M&A activity. And I think I mentioned this previously is that the -- we are known in the market as a consolidator. We are known as an expander of our ecosystem. And I think that drives the interest in people wanting to bring their business who maybe either want an exit strategy or they want to take their business to the next level and be part of a broad, more capable, expansive ecosystem that they can operate within StoneX.

And I think we've mentioned previously that on the whole, most of the acquisitions we've done ended up within a relatively short period of time, growing in multiples of where they were prior to becoming part of StoneX. And a lot of that is the heavy cost of business, heavy cost of regulation, heavy cost of having monoline businesses in certain areas where you don't have that diversity of revenue, you don't have the ability to utilize and access the clients across multiple products.

And I think that's our benefit. So as a result, that is why we do get a constant level of interest in that sort of mid -- small to midsize sort of $10 million to $30 million range of businesses that we are very easily able to acquire, incorporate, tack on to the ecosystem and then start leveraging either the client capability, the geography expansion or the products that those acquisitions provide us.

And I think it's important that we talk about our ecosystem all the time, and that is a huge driver of much of the M&A activity. And I think it's something we probably don't talk enough about. because the way we operate our verticals and our products, we don't allow -- we don't want any silos within our businesses.

And over the last sort of 10, 15 years, I think we've done a very good job of integrating multiple new products, new entities, new capabilities that were previously on a stand-alone basis. Everything is becoming much more integrated and that allows us to truly leverage those capabilities and truly have multiple product initiatives like we've seen with our FIG initiative, where we're bringing together all aspects of the company and heading in the same direction. That drives interest in us from an M&A perspective, and it drives interest that we have in other areas where we would like to continue that level of ecosystem expansion. So I don't think the market has changed drastically.

We continue to have a lot of interest. And we do almost make small acquisitions on a very regular basis, which we probably don't promote as much because we're so used to that level of expansion. But always looking at transactions, always looking at potential expansion opportunities.

[Operator Instructions] This now concludes the question-and-answer session. I would now like to turn it back to Philip Smith for closing remarks.

Thank you. In closing, I would just like to say a huge thank you to all the employees of StoneX for their vital contribution in achieving this record quarter. Working tirelessly every day with our clients through such heightened volatility market conditions is what we do and StoneX employees do this incredibly well, a service for which I'm hugely proud of. And this quarter, I feel, is a testament to that dedication and that service to our clients. So a huge thank you to all of our employees and look forward to seeing what Q3 brings. Thank you very much.

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

Hello, and thank you for standing by. Welcome to StoneX Group, Inc. First Quarter Fiscal Year '26 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Bill Dunaway. Sir, you may begin.

Good morning, and welcome to our earnings conference call for our quarter ended December 31, 2025, our first quarter of fiscal 2026. After the market closed yesterday, we issued a press release reporting our results for the quarter, and this press release is available on our website at www.stonex.com as well as a slide presentation, which we will refer to on during this call. 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 considered 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 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 Philip Smith, the company's Chief Executive Officer, for a brief introduction.

Thank you, Bill. Good morning, everyone, and thank you for joining our first quarter earnings call for fiscal 2026. I'm very pleased to report a very strong start to our fiscal year, reporting record net operating revenues, net income and EPS, which showcases the power and the scale of the ecosystem we have built at StoneX and of which we are incredibly proud of.

We play a vital role in the global financial and physical markets by serving a wide and diverse range of clients. Our platform enables clients to access multiple markets, giving them the flexibility and choice they need to pursue opportunities and/or mitigate risk wherever they arise. This broad market access positions us with several avenues for growth as demonstrated by our performance this quarter.

When conditions shift from one market to another, we have the breadth of products and services to support our clients' needs wherever they arise. This diversification is a core strength of our business model.

Bill will go into more detail around our financials, but I would like to highlight a few areas that helped drive our record results.

Record listed derivatives volumes and average client equity, significantly enhanced by the acquisition of RJ O'Brien. Record commercial performance driven by an exceptional performance in global metals and in particular, in our precious metals business, which generated $75 million in segment income this quarter, which is $24 million more than it did in the entire financial year '25. This was an exceptional quarter, whereby our global footprint, the depth of our product vertical and our logistics expertise in being able to move physical metal globally in order to take full advantage of locational discounts and premiums being second to only the largest two global bullion banks allowed StoneX to record its best revenue quarter ever.

To remind you of the deep dive into metals we provided in our Q2 earnings call last year, our unique precious metals vertical includes the following:

StoneX is a leading OTC liquidity provider in all precious metals.

StoneX is uniquely positioned as the only nonbank participant in setting the gold, silver, platinum and palladium daily price benchmarks.

StoneX is the #1 nonbank FCM, providing access to futures contracts on exchange for all metals.

StoneX is a wholesale and retail service producer of small bars and coins direct to consumers under our StoneX Bullion platform or to third-party companies themselves servicing direct to consumers.

StoneX is one of the largest wholesale physical bullion businesses moving metal across jurisdictions efficiently to satisfy locational shortages and oversupply of material.

StoneX owns a recently CME accredited volt, which now has in excess of $1.2 billion worth of metal in custody after only a couple of quarters of operations, providing bolting, storage and custody services.

And of course, StoneX owns a London good delivery silver recycling and refining facility, providing investment-grade products into the bullion market from recycled material.

Together, these products and capabilities produce a truly unique ecosystem in the metals market. In addition, our Institutional segment reported a record quarter, which was enhanced by the addition of RJ O'Brien's institutional business as well as the investment banking, equity research and institutional sales and trading of Benchmark. This was in addition to record revenues reported in our legacy StoneX equities, fixed income and prime service business lines, underscoring the true value of our ecosystem. Finally, we also saw record payments average daily volume to start off the fiscal year. Bill will now cover our financials in more detail. So over to you, Bill.

Thank you, Philip. I will begin with a financial overview for the quarter, and we'll be starting on Slide #4 in the slide deck. First quarter net income came in at a record $139 million with diluted earnings per share of $2.50. This represented 63% growth in net income. However, earnings per share grew at a 48% rate due to the additional shares outstanding as compared to the prior year, primarily related to the issuance of approximately 3.1 million shares for the acquisition of RJ O'Brien during the immediately preceding quarter.

Net income and diluted earnings per share were up 62% and 59%, respectively, versus the immediately preceding fourth quarter of fiscal '25. This represented a 22.5% ROE despite a 70% increase in book value over the last 2 years.

We had operating revenues of just over $1.4 billion, up 52% versus the prior year and up 20% versus the immediately preceding quarter. As a reminder, our operating revenues include not only interest and fee income earned on our client balances, but also carried interest that is related to our fixed income trading activities.

Net operating revenues, which nets off interest expense, including that which is associated with our fixed income trading activities as well as introducing broker commissions and clearing fees were up 47% versus a year ago and 24% versus the immediately preceding quarter.

Total fixed compensation and other expenses were up $75.6 million or 31% versus the prior year quarter. $44.4 million of this is attributable to the acquisition of RJO and Benchmark during the fourth quarter of fiscal '25.

Total fixed compensation and other expenses were up 10% or $29.4 million versus the immediately preceding quarter, with $12 million of this change attributable to the acquisitions of RJO and Benchmark, each of which were only in the immediately preceding quarter for 2 months.

Fixed compensation and benefits was up 17% versus a year ago and up 2% or $2.4 million versus the immediately preceding quarter. The increase versus the immediately preceding quarter includes $5.3 million attributable to the acquisition of RJO and Benchmark, partially offset by lower [ PTO ] benefit costs and higher participation in our employee-elected deferred compensation plan, which is part of our restricted stock plan.

Professional fees increased $13.8 million versus the prior year, primarily as a result of higher legal fees related to our defense and various legal matters, including fees related to the BTIG matter associated with the commencement of the arbitration this quarter. They were up $5.9 million versus the immediately preceding quarter, which included $8 million of investment banking advisory fees paid out in connection with the acquisition of RJO. The acquisitions of RJ O'Brien and Benchmark contributed $28.5 million and $4.6 million in pretax net income, excluding acquired intangible amortization, respectively, for the quarter.

Looking at our results with a longer-term lens, our trailing 12-month results show operating revenues were up 28%. Net income was a record $359.8 million, up 30%, with diluted earnings per share of $6.70 and an ROE of 16.9% for the trailing 12-month period, above our target of 15%. We ended the first quarter of fiscal 2026 with a book value per share of $48.17.

Turning to Slide #5 in the earnings deck, which compares quarterly operating revenues by product as well as key operating metrics versus a year ago, we experienced growth across all products with the exception of FX CFDs and payments. Transactional volumes were up across all of our product offerings with the exception of FX CFDs and spread and rate capture increased in all of our products with the exception of payments, down 10% and FX CFDs, which declined 30%.

Just touching on a few key highlights for the fourth quarter. We saw operating revenues derived from listed contracts, increasing $157.3 million or 141% versus the prior year. Primarily due to the acquisition of RJO, which contributed $130.7 million as well as strong growth in base metals activity in LME markets, which increased $12.7 million versus the prior year.

Listed derivative operating revenues increased 30% versus the immediately preceding quarter. Operating revenues derived from OTC derivatives increased 72% versus the prior year, driven by increased client activity in Brazilian and European markets. This also represented an 8% increase versus the immediately preceding quarter.

As Philip noted earlier, we had a record performance in our physical business, with operating revenues derived from physical contracts increasing 69% versus the prior year, primarily driven by an $83.9 million increase in precious metals operating revenues. Partially offset by a $19.8 million decrease in physical agricultural and energy revenues.

Operating revenues derived from physical contracts were up 138% versus the immediately preceding quarter. Securities operating revenues were up 43% as volumes were up 22% and the rate per million increased 35% versus the prior year, with the improvement driven by strong growth in both equities and fixed income.

Payments revenues were down 4% versus the prior year quarter, but up 7% versus the immediately preceding quarter, primarily due to an increase in the average daily volume. FX CFD revenues were down 30% versus a near record prior year quarter, resulting from a 4% decline in average daily volume, primarily in institutional markets and a 30% decline in rate per million, primarily driven by lower spread retention in our self-directed business, particularly in non-FX markets. FX CFD revenues were up 24% versus the immediately preceding quarter.

Our interest and fee income earned on aggregate client float, including both listed derivative client equity and money market FDIC sweep balances increased $66.1 million or 61% versus the prior year, with the acquisition of RJO contributing $63.8 million. Average client equity and average money market FDIC sweep client balances increased 100% and 5%, respectively. For the current quarter, RJO contributed $5.8 billion in average client equity.

Turning to Slide #6. This depicts a waterfall by product of net operating revenues for both the prior year quarter to the current one as well as the same trailing 12-month period. Just a reminder, net operating revenues represent operating revenues less introducing broker commissions, transaction-based clearing expenses and interest expense.

For the quarter, net operating revenues increased 47%, principally coming from listed derivatives and physical contracts, up $68.4 million and $58.3 million, respectively. In addition, securities and OTC derivatives added $55.7 million and $26.5 million, respectively, versus the prior year.

On a net basis, interest and fee income on client balances increased $38.1 million with RJO contributing $37.3 million. As noted earlier, due to the -- primarily to the decline in rate per million, we saw FX CFD's net operating revenues declined $30.8 million versus the prior year.

Looking at the bottom graph for the trailing 12-month period, securities has the largest increase, up $175.9 million versus the prior year, driven by a 23% increase in average daily volumes and 23% increase in rate per million. In addition, listed derivatives and interest and fee income increased $115.2 million and $54.9 million, respectively, primarily as a result of the acquisition of RJ O'Brien as well as strong growth in LME base metals markets.

Physical contracts, net operating revenues added $57.9 million versus the prior fiscal year, while OTC derivatives also added $38.8 million off of strong growth in Brazilian and European markets. Finally, FX CFD's net operating revenues declined $60 million versus the prior year.

Moving on to Slide #7. I'll do a quick review of our segment performance. Our Commercial segment saw net operating revenues increased 65%, primarily resulting from 56% and 72% growth in listed and OTC derivatives, respectively.

In addition, physical contracts increased 75%, while net interest and fee income increased 50%. The growth in listed derivative and interest income were primarily driven by the acquisition of RJO as well as in the case of listed derivative volumes, base metal markets on the LME.

Segment income increased 72% versus the prior year, while on a sequential basis, net operating revenues were up 50% and segment income was up 61%. Our Institutional segment also saw record net operating revenues and segment income with growth of 86% and 78%, respectively. The growth in net operating revenues was principally driven by a $54.9 million increase in securities revenues. In addition, listed derivatives and interest and fee income increased $47.5 million and $21.5 million, respectively, primarily driven by the acquisition of RJO.

On a sequential basis, net operating revenues and segment income were up 11% and 4%, respectively. In our self-directed retail segment, net operating revenues declined 34% and segment income was down 67%, driven by the 41% decline in rate per million captured in FX CFD contracts, partially offset by the 13% increase in average daily volumes.

On a sequential basis, net operating revenues were up 25% and segment income increased 26% in this segment. In our Payments segment, net operating revenues were down 3% and segment income decreased 1%. Average daily volume was up 11% versus the prior year, while rate per million was down 10%. Versus the immediately preceding quarter, payments net operating revenues increased 10%, while segment income increased 13%.

Moving on to Slide #8. Looking at segment performance for the trailing 12 months, we saw strong growth in our Institutional segment with net operating revenues up 54% and segment income increasing 60%. Our Commercial Payments segments added 14% and 4% in segment income, respectively. Our self-directed retail segment income decreased 35%.

Finally, moving on to Slide #9, which depicts our interest and fee income 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. The interest and fee income net of interest paid to clients and the effect of interest rate swaps increased $38.1 million to $115.5 million in the current period. And as noted, the acquisition of RJ O'Brien contributed $37.3 million in net interest in the current quarter.

During the first quarter of fiscal 2026, we entered into $1.2 billion in fixed rate SOFR swaps to hedge our aggregate interest rate exposure. The swaps have a duration of 2 years and an average rate of 3.32%. These swaps as well as the additional average client assets from the RJO acquisition are reflected in the interest rate sensitivity table on this slide.

As shown, we now estimate a 100 basis point change in short-term interest rates, either up or down, would result in a change to net income by $43.2 million or $0.80 per share on an annualized basis.

On a final note, before I turn it back to Philip, on February 3, our Board of Directors approved a [ 3-for-2 ] stock split of its common stock. The stock split will be effective as a stock dividend entitling each stockholder of record to receive 1 additional share of common stock for every 2 shares owned. Additional shares issued as the result of the stock dividend will be distributed after the close of trading on March 20, 2026, to stockholders of record at the close of business on March 10, 2026. Cash will be distributed in lieu of fractional shares based on the opening price of a share of common stock on March 11, 2026. Trading is expected to begin on a stock split adjusted basis at the market open on March 23, 2026.

With that, I will hand you back to Philip for an update on the RJO integration as well as a product spotlight on our global hedging business.

Thank you, Bill. Moving to Slide 11. And as Bill mentioned, this is the first quarter of our combined and consolidated operations of StoneX and RJ O'Brien. On last quarter's call, we provided a detailed overview of the integration process and reiterated our confidence in achieving the synergies set out in our initial announcement.

The transaction has transformed StoneX into the leading nonbank player in this space. And now 5 months into the integration, we are seeing increased cross-sell opportunities due to our scale and breadth of offering, which I will touch on later. In terms of integration, this remains firmly on track and continues to follow the sequence we outlined last quarter.

As a reminder, this includes the consolidation of our non-U.S. entities. We stated this will be completed in quarter 2 2026. As an update, we have migrated the business and assets of the largest subset of these entities, the RJ O'Brien U.K. entity into the StoneX U.K. entity successfully in the first week of January. I expect the others to follow our execution and integration plan we set out previously. The U.K. consolidation has released $20 million in capital.

The consolidation of the U.S. entities, this remains on track and is targeted to be completed by the end of the fiscal year. We are working hard to ensure a smooth and seamless transition for clients as we have prioritized revenue protection and continuity for clients of RJ O'Brien.

All in all, the integration remains on track, and we remain confident in achieving the synergies we set out at announcement and are making strong progress in providing a holistic integrated offering to clients across StoneX and RJ O'Brien.

Now moving to Slide 13. As done in previous earnings calls, we think it's helpful to go a little deeper into a specific business area, and I wanted to spend some time going over our global hedging business, which forms part of our Commercial segment and was recently reorganized to globalize what was a more fragmented regional set of businesses. This is a business that is core to StoneX's history and legacy of working with commercial clients to hedge and mitigate their risk exposure going back nearly 50 years and represents approximately 60% of the segment income for the Commercial segment for the last 12 months.

We have built a deep presence in North America, Latin America, EMEA and are rapidly growing in Asia Pacific. We have always worked towards a North Star of connecting clients to markets, which help them manage the risks they face in their businesses with transparent access and risk management tools for our clients.

On this slide, you will see the breadth of our global hedging and risk management offering. We provide deep market access across more than 40 derivative exchanges worldwide, combined with an ability to deliver customized OTC and structured products, which means we can create tailored hedging solutions, which closely align with our clients' risk management needs.

Our leading market intelligence offering and digital platforms are core differentiators for us. They give clients market insight supported by teams with real boots on the ground experience across global markets. These combined efforts and capabilities allow us to serve a diverse range of clients and all parts of the supply chain shown on the right-hand side of the page, from farmers, producers and cooperatives to merchants, global traders, industrial end users as well as energy and resource extractors.

In short, by operating across all parts of the supply chain, StoneX becomes a critical partner connecting markets, clients and flows in a way a few others can.

On the next slide, being Slide 14, I wanted to expand on what I think makes us unique in this space. With the acquisition of RJ O'Brien, we became the largest nonbank FCM in the United States, and eighth overall, which gives us scale and flexibility that very few firms can match in clearing and execution of listed derivatives.

Furthermore, with our registered swap dealer, we can offer bespoke OTC solutions to address clients' needs through margin relief, financing and/or access to customized structured products. In addition, in collaboration with our physical businesses, our risk management consultants have the ability to embed hedging strategies within physical contracts in order to provide enhanced price risk mitigation to the clients.

Another key differentiator is our people and experience. We have hundreds of risk management consultants around the globe who work directly with clients, building hedging strategies that help manage exposure and optimize their financial results. Through this work, we've earned a long-standing reputation as a trusted partner, one that clients rely on to help them navigate uncertainty and make confident decisions during volatile market conditions.

We do this through the support of market-leading technology tailored to the commercial segment. This includes StoneX Hedge, automated order management, merchandising and origination platform integration into clients' ERP systems. Through this platform, clients have hedged in excess of 1 billion bushels, and we look forward to growing this further.

StoneX Plus, leading dairy market platform for the delivery of market intelligence, pricing and trade data, OTC trading, [indiscernible], web trading platform for customizable structured products and OTC trading across multiple commodities.

We also spend a great deal of time, effort and resources assisting and educating our clients and the market at large through hedge scores, professional programs, product seminars, market outlooks, expos, conferences and joint events with exchanges. Some examples of these activities just in the last quarter include our participation in the ADPI, the American Dairy Products Institute, co-hosted with the CME, the Dairy Purchasing and Risk Management seminar, Brazil's National Association of Cattle Exporters, the Global Cattle Connect webinar, online events bringing together experts from across the globe to discuss trends shaping the future of the cattle industry, representing StoneX Brazil, North America and Australia. We do hundreds of events like this every year, reinforcing our integral role within the industry and form a very important component of our global hedging business with dedicated resources and teams supporting this globally.

Our market intelligence platform is rooted in our employees' expertise, enabling us to deliver cutting-edge research based on data and insights from specialists on the ground. We have further broadened our reach by expanding our digital content through podcasts, videos and white papers, ensuring clients can access market insights whenever and wherever they need through our mobile app.

Turning to Slide 15. We outline how we continue to strengthen this business and deepen the value we deliver to clients. First, we continue to expand our ecosystem by growing the number of OTC products we offer and deepening the links between this financial hedging business and our existing physical sales and trading business. We have begun to enter new markets such as power and electricity in Australia, carbon in Europe and other environmental markets, which we believe will not only diversify our client base, but capture more wallet share.

Secondly, we continue to grow and diversify our client base. This includes extending our commercial introducing broker network, largely inherited from RJ O'Brien, expanding our geographical footprint with new locations in Madrid and Paris and extending our OTC offering further into the adjacent markets like meat and dairy, where our expertise can help unlock new client segments.

And thirdly, we are actively digitizing the business. This includes advancing our ERP integrations with clients to further embed StoneX into their operational workflow, expanding functionality with our farmer-focused mobile apps, such as Farm Advantage, et cetera, and utilizing AI to significantly increase broker capacity and automate tasks. These actions not only improve efficiency, but strengthen client engagement and reduce friction onto our platform.

Taken together, these pillars position StoneX to continue expanding market share, deepen client relationships and increase margins, all while building a more interconnected, more digital and more scalable global hedging franchise.

Moving on to the final slide, Slide 16. This was another consecutive record quarter, highlighting the strength of our diversified business. We achieved earnings of $139 million, a diluted EPS of $2.50 and an ROE of 22.5%, which represents a 32.4% return on tangible book equity. Our earnings and diluted EPS were up 63% and 48%, respectively. We remain well positioned to capitalize on current market volatility due to our diverse offerings, combined with our [ fortress ] balance sheet. Our assets under management and custody continue to grow as we are increasingly seen as the largest alternative to banks and an easily accessible ecosystem for banks as well.

Our unique ecosystem captures clients across multiple touch points, and we continue to dedicate ourselves to better serve our growing client footprint. The enormous total addressable market still available to StoneX will continue to power growth in the years to come. We are very proud of the StoneX team for their steadfast commitment to clients throughout challenging market conditions, and we remain focused on providing the industry's most robust and comprehensive financial ecosystem.

Operator, please open the lines for questions.

[Operator Instructions] Our first question comes from the line of Jeff Schmitt with William Blair.

In the physical trading business, obviously, a really strong quarter there due to precious metals. How much of that strength came from cross-selling RJO clients? Or was that really kind of mainly volatility driven? And then just curious how that business is trending here in January, February with now that gold is pulling back?

There was limited upside from the precious metals revenues and volumes from traditional RJ O'Brien client base. So I think a lot of it was primarily driven on the fact that we saw a heightened level of interest in this space, both in the wholesale and also at a retail level.

Now you'll recall, in 2019, we purchased a company called CoinInvest, which we subsequently rebranded as StoneX Bullion. That was our direct-to-consumer retail trading platform. That has exceeded our expectations. And I think it's fair to say that when it was purchased, it was making probably $1.5 million a year. They've achieved that in a single day recently. So I think that's been a transformational expansion of our ecosystem because it gives us that ability to go directly to consumers. And at the same time, the wholesale business is also supplying physical material and refined products, mint-produced coins and small bars to other B2C companies, which themselves have been benefiting from the recent uptick in interest from a retail level.

And at the same time, the disconnect that we often see in these markets and have seen for many years where there is a physical price disconnect between jurisdictional country A and country B. And because of our ability [indiscernible] around the world sufficiently [indiscernible] .There was a significant shortage of silver in India, [indiscernible]...

Okay. And then on the cost synergies, those appear to be on track or maybe you're realizing them even faster than expected. As you dig into the RJO business, I guess, are you seeing any potential upside to the $50 million? Or is it still kind of too early to tell?

Yes, Jeff, I mean, at this point, I think that we're still kind of just confirming the $50 million. I mean I think that it's coming along as we talked about last quarter. I think that we've seen some of the wins thus far. They'll continue to pick up throughout the rest of the fiscal year. The kind of milestones we have will be later this year. Over the summer, we will migrate the largest [ T ] combined. So kind of coming out of fiscal '26, I think we'll probably be in a pretty good spot of having about 40 of them kind of in the run rate. And then going forward, we'll capture the rest over fiscal '27. But I think we're still kind of affirming at this point that $50 million figure.

Okay. Great. And then just one quick one on the institutional segment. The securities business there had a great quarter. And you mentioned moving into U.S. stocks in the market maker business. I'm just curious how much of the mix that is? And maybe if you could talk about that. The rate per million there, I know you've talked about that inflecting up, but are we at a point where we're at a better run rate there? Or is there more upside to that?

Yes. I think that part of the business is still quite early stages in terms of its expansion. Most of the increase we've seen is very much across equities market making, fixed income and prime services.

So as a subcomponent, we continue to grow in that space. That space has probably the addressable market of all areas, but it is one small step at a time. We continue to see growth, but not at the level and not at the level of maturity that you will see, say, in our market-making business for our unlisted ADRs, where we continue to be ranked #1 and have been for the last 11 years. So we'd love to be in that situation for mainstream equities, but it's a big market, and we're not there yet, but we're very pleased with the progress made so far.

Great. And is that rate per million, I mean, do you expect that to inflect up more? Or are we at a point where maybe it's a good -- a better run rate?

Yes. I mean I think at this point, Jeff, it's probably kind of getting back to more of a run rate. I mean it kind of really dipped as we moved into some of those stocks. And as our institutional sales and trading business has picked up and some of the other the equity market making continue to perform. I think we've gotten -- this is obviously a high watermark, right? We're 320-ish. And we were a year ago, I'd say a year ago, we were kind of at the low inflection point. I think somewhere in this 300 -- a little over 300 range is probably a more normalized rate for us now going forward.

Our next question comes from the line of Dan Fannon with Jefferies.

Just wanted to follow up on the environment. And obviously, you've seen a lot of movement in the underlying, whether it's gold, silver, all this stuff. So I was just curious about the health of the customer kind of post quarter, if there's been any changes in losses or as you just think about activity levels still being good and just the environment being constructive versus maybe this point in time, we've seen bad volatility. And so I just want to understand if this is still a constructive environment for you guys environment for you guys.

Yes. And I think we've discussed this previously. I mean we obviously benefit from increased volatility in the markets across multitudes of products within the StoneX ecosystem. But when it reaches a point of extreme volatility, that stress can become heightened and more of a concern for our underlying clients. I think the closeness of the relationship helps us through that.

We obviously don't want our clients to get into a situation where such positions or such transactions put them in a hazardous situation. And I think identifying concerns and talking to our clients, speaking with them on a daily basis and just walking them through how they are hedging their positions, but at the same time, ensuring they have sufficient liquidity to stay at the table and to not be forced into taking off their hedges. So it's an engagement exercise.

We obviously like the volatility. We don't like extreme volatility because of that potential negative impact on our clients. But that's been the case for many years for us.

Understood. And then just on the RJ O'Brien deal in the context of what you see as the kind of most near-term kind of cross-sell opportunity in the context of some of -- there weren't numbers that were outlined when the deal was announced, but obviously, you've talked about multiples in size versus the expense synergies. So I just want to, again, if you could reprioritize kind of where you see those opportunities and what we should see as we think about the next couple of quarters.

Well, I mean, it's a sort of dual approach in terms of we have the integration process itself. And as we said, we've begun that with the U.K. entities. That's been completed. We're seeing the schedule of time lines for further integration and building up to the largest part of it in the U.S. That is a big part of the potential cross-sell.

Because don't forget that until such time as we can consolidate the entities, there's still the case of repapering with other legal entities within the StoneX Group. There's still an education process in many areas. So we talk about comparing and whilst we didn't specify the potential revenue expectations from cross-selling, we do anticipate based upon looking at our OTC, as an example, revenues versus our exchange-traded derivatives revenue and how that's morphed over the years and the revenue attributable to the OTC side of the product, we can then superimpose that onto a lot of the RJO revenue. It's not a guarantee, it's not a certainty. There's work to be done. There's education exercises to be done. We have to help all the RJO employees to sort of be confident enough and be able to engage with the clients and most importantly, make sure that it is the right thing for all the clients involved. We talk about some simple wins in that RJ O'Brien across the entire organization did not have the ability to offer foreign exchange. That's a relatively mainstream vanilla product for us within StoneX.

So things like that, we are gradually introducing more and more capability to across the organization. And even before the integration is completed, we're trying our best to ensure that we can get as much capability and products in front of our incoming RJ O'Brien clients as possible. But it's -- we've had a lot of small wins that have built up, and we continue to encourage that, and we look at it and we circulate internally some success stories. But we're not at the point to be able to say, here you go, we recognize this about so far. But we continue to be very optimistic about the potential there.

Understood. Okay. And then Bill, just in the context of the expenses and since we -- this is the full quarter with both the last couple of acquisitions in there. As we think about the run rate and the kind of go forward, anything to normalize based on integration or other things from an expense perspective or areas where you think the growth and/or movement of -- at a line item level might be most?

I mean I think we'll see, as you see every year, right, our Q2 is the start of the calendar year, right? So we'll see a tick-up in nonvariable compensation kind of related to the annual merit increases, kind of all the taxes and benefits and all those kind of things reset. So we'll see a tick-up from there.

But I don't see -- I don't think there's other line items, Dan, that we would expect to materially change other than as we see some of the synergies come through, we should see hopefully some downtrend on that nonvariable comp line as well as some of the tech spend and on the longer term is where you'll start to see some occupancy, et cetera. But most notably here at start of the calendar year will be -- kind of there will be a bit of a tick up on the nonvariable compensation line.

[Operator Instructions] our next question comes from the line of Lucas Yager with Liberty One Investment Management.

Okay. So long time listener, first-time caller. I have a question in regards to sort of the pre-existing business of StoneX not really focused on the RJ O'Brien and Benchmark acquisitions. This time last year, some of the discussion was within the securities business and sort of the sort of client group in the active ETF space sort of adding an additional piece of growth. And I guess I'm just sort of further looking for a discussion on some client groups that are going to come into the existing pre-existing [ SNEX ] client business that will kind of show sustained interest within sort of your risk management contracts and trading services?

Not quite clear in terms of the question. But from an institutional perspective, we do see a big sort of sizable shift in terms of the client space in the regional banks in the U.S., for example, where what we're seeing now is that if you turn up to one of the regional banks knocking on their door and saying, I'd like to talk to you about this particular product. They're not interested.

What they are becoming very interested with us is the multitude and the breadth and depth of our product offering. So we're suddenly seeing some dividends coming through with regards to our ecosystem, which we talk about on a near constant basis and very proud of. But it's now becoming a big distinction between us when talking to new and potential clients in the -- just in the regional community bank space in the United States. So that's where we're optimistic in terms of this could be another phenomenal uptick in terms of revenue that we're looking to benefit from, but also to be able to solidify the relationship we have with said banks because what we increasingly can see across all of our products is where we fit in, I guess, in the level of priority or relevance from their perspective to us.

We aspire to be a one-stop shop offering as much capability and product to as many clients as possible through a single avenue through to StoneX and our ecosystem. But it's starting to become a door opener in ways that perhaps we weren't necessarily expecting, just like we weren't expecting the growth in our build-out of our fixed income business in APAC to hit the ground so quickly and build so rapidly. Because we -- I don't think we fully understood the lack of alternatives, lack of service and lack of localized dealing desks in that region.

So there are a lot of areas where we're looking to expand our capability. But at the same time, sometimes it takes a while for us to really get the benefit of something perhaps we weren't necessarily expecting in the first place. And the intro into those regional banks has demonstrated that. So we will talk to household names in terms of regional community banks. But the fact that we're offering -- we're able to offer a multitude of fixed income products. We're able to offer them access to [ SWIFT ]. We're able to offer them payments. We're able to offer them equities, overseas equities, ADRs, things like that, which you previously would be expecting them to be using multiple providers for, they can now do it in a single avenue. So that's where we see some sizable momentum coming down.

Perfect I appreciate the additional color. And despite my poor phrasing, you look -- you answered my question very well.

Moving on to sort of the FX and sort of area of the business. I'm kind of just curious, so I saw that the rate per million is down around 30% compared to last year. And I was hoping to unpack sort of the reasons for that. My understanding would probably be that's largely because of some lower volatility. So I think the CVIX like average from this period compared to the last period is down around 15%. But I'm wondering if you could have further unpacked that rate per million figure just so that I can understand it.

Sure. I think I'll take that. So I mean, last year, just a reminder, we were -- that was probably the highest rate per million that we've seen out of the business since the acquisition of [ GAIN ] Capital back in -- or in 2020. So we did still kind of see -- I mean, the FX space, both as a reminder, in the FX CFD space, we do that both on the institutional side as well as obviously the bigger piece of it in the self-directed.

But overall, I think we continue to see kind of the FX volatility being somewhat muted and not the greatest environment for us. And obviously, it benefited tremendously in our physical space and the commodity space from the movements in gold, but it proved to be a bit more challenging in that space on the retail side with the markets moving around. So a combination of everything. And so I would say that it's not -- the rate per million that we're seeing now isn't out of line with expectations. I think it was more last year was just such a bang-out quarter for us on the retail side with really strong spreads.

So I would say that this is probably a bit more normalized environment, something in the -- if you look at the retail -- the self-directed retail, we were at 110. We've kind of averaged over the last 4 quarters around 116. And I would say -- so it's not out of the realm of what the expectation is. It's just last year's comparable period of 185 was very strong.

That makes complete sense. I mean that sort of falls with what the graphs on Bloomberg tell me so that I appreciate the additional color. Is there any particular currency pairings that sort of self-directed client group is interested in, just as a follow-up question.

No, I don't think we can step that into the mix. It's not as easy to sort of simply say, yes, this is the pair that we find more interesting than others. I think what you'll find is that the volume going through certain currency pairs and euro-dollar is one of probably the largest currency pair that we trade.

But it's market-driven. So our clients will -- our clients in the wholesale FX business will be looking to hedge, looking to hedge their exposure, looking to lock in forward rates. And our retail CFD business is much more of a looking to take advantage of market moves at a retail level. But it will vary. And it's not something we really publish, but it's -- you would expect currency pair and I include gold in those currency pairs because it trades like a currency where dollar-euro, dollar gold, dollar silver will be consistently high.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Philip for closing remarks.

Thank you, operator, and huge thank you to everyone [indiscernible]...

Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the StoneX Group Inc. Q4 FY 2025 earnings conference call. [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, sir.

Good morning, and welcome to our earnings conference call for our quarter ended September 30, 2025, our fourth fiscal quarter. After the market closed yesterday, we issued a press release reporting our results for the fourth quarter and the full fiscal year. This release is available on our website at www.stonex.com as well as a slide presentation, which we will refer to during this call.

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 considered in conjunction with the most recent financial statements and notes thereto as well as the Form 10-K to be 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 for 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'll begin with the financial overview for the quarter and we'll be starting with Slide #4 in the slide deck. Fourth quarter net income came in at a record $85.7 million with diluted earnings per share of $1.57. This represented a 12% growth in net income. However, EPS grew at 1% rate due to the additional shares outstanding as compared to the prior year, primarily related to the issuance of approximately 3.1 million shares related to the acquisition of R.J. O'Brien. It is of note, the current quarter includes pretax acquisition-related charges of approximately $9.3 million, including $1.3 million of bridge loan financing charges and $8 million of investment banking fees which equates to approximately $0.13 per diluted share.

Net income and diluted EPS were up 35% and 29%, respectively, versus our immediately preceding third quarter. This represented the 15.2% return on equity despite a 72% increase in book value over the last 2 years. We had operating revenues of just over $1.2 billion, up 31% versus the prior year and up 17% versus the immediately preceding quarter.

As a reminder, our operating revenues include not only interest and fees earned on in our client balances, but also carried interest that is related to our fixed income trading activities. Net operating revenues, which nets off interest expense, including that which is associated with our fixed income trading activities as well as introducing broker commissions and clearing fees were up 29% versus a year ago and 20% versus the immediately preceding quarter.

Fixed compensation and other expenses were up 24% versus the prior year quarter. This also represented a 14% or $36.3 million increase versus the immediately preceding quarter, with $32.4 million of this attributable to the acquisition of RGO and benchmark during the quarter.

Fixed compensation and related costs were up 23% versus a year ago and up 12% or $14.2 million versus the immediately preceding quarter. The increase versus the immediately preceding quarter was almost entirely as a result of the acquisitions I just noted. Professional fees increased $12.2 million versus the prior year, primarily as a result of the $8 million investment banking fee noted earlier. They were up $3 million versus the immediately preceding quarter with the investment bank fee just noted, partially offset by a $5.8 million decline in legal fees, primarily driven by an insurance recovery.

The acquisitions of RJO'Brien and Benchmark contributed $22.1 million and $2.4 million in pretax net income, excluding acquired intangible amortization, respectively, for the quarter. Looking at it from a longer standpoint, our full fiscal year results show operating revenues up 20%. Net income was a record $305.9 million, up 17% and with earnings per share of $5.89 and a return on equity of 15.6% for the fiscal year, above our 15% target. We ended the fourth quarter of fiscal '25 with book value per share of $45.56 per share.

Now turning to Slide #5 in the earnings deck, which compares quarterly operating revenues by product as well as key operating metrics versus a year ago, we experienced growth across all products with the exception of FX CFDs. Transactional volumes were up across all of our product offerings with the exception of FX CFDs and spread in rate capture increased in all products with the exception of payments down 4% and FX CFDs, which declined 32%.

Just touching on a few key highlights for the fourth quarter. We saw operating revenues drive from listed contracts increasing $89.4 million or 76% versus the prior year with the acquisition of RJO contributing $89.5 million. This also represented a 64% increase versus the immediately preceding quarter.

Operating revenues drive from OTC derivatives increased 27% versus the prior year, however, declined 1% versus the immediately preceding quarter. Operating revenues drive from physical contracts increased 24% versus the prior year, primarily driven by a $19.5 million increase in physical agricultural and energy revenues, which were partially offset by a $6.8 million decline in precious metals operating revenues.

Operating revenues drive from physical contracts were up 18% versus the immediately preceding third quarter. Securities operating revenues were up 26% as volumes were up 25% and the rate per million increased 23% versus the prior year, with the improvement driven by strong growth in both equities and fixed income.

Payments revenues were up 8% versus a year ago, but down 3% versus the immediately preceding quarter, primarily due to a decline in rate per million. FX CFD revenues were down 34% versus a year ago, resulting from a 7% decline in ADV and a 32% decline in rate per million, primarily driven by low volatility in FX markets. This also represents a 36% decline versus the immediately preceding quarter.

Our interest and fee income earned on our aggregate client vote, including both listed derivative client equity and money market FDIC sweep balances increased $52 million or 46% versus the prior year with the acquisition of RJO contributing $50 million. Average client equity and average money market FDIC sweep client balances increased 71% and 25%, respectively.

For the current quarter, the average client equity includes the effect of an incremental $5.6 billion per month from RJO for the 2 months post acquisition or an incremental $3.8 million increase to the quarterly average.

Turning to Slide #6. This depicts a waterfall by product of net operating revenues from both the prior year quarter to the current 1 as well as the same for the full fiscal year periods. Just a reminder, net operating revenues represents operating revenues less introducing broker commissions, clearing fees and interest expense. For the quarter, net operating revenues increased 29% and principally coming from securities and listed derivatives, up $48.7 million and $43.1 million, respectively.

On a net basis, interest and fee income on client balances increased $28.8 million with RJO contributing $32.5 million, which was partially offset by a modest decline in legacy StoneX. As noted earlier, due to the lower FX volatility, we saw FX CFDs net operating revenues declined $29.7 million versus the prior year.

Looking at the bottom graph for the full fiscal year period. Once again, it is securities with the largest increase, up $126.1 million versus the prior year, driven by a 27% increase in ADV and a 9% increase in rate per million. In addition, listed derivatives and interest and fee income increased $46.3 million and $31.2 million, respectively, primarily as a result of the acquisition of R.J. O'Brien. Finally, physical contract net operating revenues added $34.7 million versus the prior fiscal year.

Moving on to Slide #7. I'll do a quick review of our segment performance. Our Commercial segment net operating revenues increased 25% or $42.9 million, with $20 million of this being contributed by the RJO acquisition. Listed in OTC derivative contract volumes increased 32% and 27%, respectively. In addition, physical contracts increased 26%, while net interest and fee income increased 22%. The growth in listed derivatives and interest income were primarily driven by the acquisition of RJO.

Segment income increased 25% versus the prior year. While on a sequential basis, net operating revenues were up 23% and and segment income was up 35%. Our institutional segment saw record net operating revenues and segment income with growth of 67% and 73%, respectively. Versus the prior year, this represented growth of $117.5 million with the acquisition of RJO contributing $50.2 million. The growth in net operating revenues is principally driven by a $48.9 million increase in securities revenues. In addition, listed derivatives and interest and fee income increased $30.5 million and $20.7 million, respectively, primarily driven by the acquisition of RJO.

On a sequential basis, net operating revenues and segment income were up 46% and 53%, respectively. In our self-directed retail segment, net operating revenues declined 35% and segment income was down 51%, primarily driven by a 4% decline in average daily volumes and FX CFD contracts combined with a 31% decline in rate per million.

On a sequential basis, net operating revenues were down 37% and segment income declined 62% in this segment. In our Payments segment, net operating revenues were up 7% and segment income increased 21%. ADV was up 13% versus the prior year, while rate per million was down 4%, versus the immediately preceding quarter payments and net operating revenues declined 2%, while segment income increased 7%.

Now moving on to Slide #8. Looking at segment performance for the full fiscal year. We saw strong growth in our institutional segment with net operating revenues up 36% and segment income increasing 45%. In addition, our self-directed retail segment increased segment income 12%. Our commercial and Payments segment added 1% and 4% in segment income, respectively.

Finally, moving on to Slide #9, which defects our interest and fee income on client balances by quarter as well as the table showing the annualized interest rate sensitivity for a change in short-term interest rates -- the interest and fee income, net of interest paid to clients and the effect of interest rate swaps increased $28.8 million to $112.2 million in the current period, and as noted, the acquisition of RJO'Brien contributed $32.5 million in the net interest in the current quarter.

As noted in the table, with the addition of the $6.3 billion client assets from the RJO acquisition, we now estimate a 100 basis point change in short-term interest rates either up or down would result in a change to net income by $53.8 million or $1.02 per share on an annualized basis.

With that, I will turn you to Sean O'Connor, our Executive Vice Chairman.

Thanks, Bill, and good morning, everyone. It is very gratifying to see that we've achieved yet another record financial result in what is a long string of record performances. We have managed to exceed our ROE targets despite our stockholders' equity increasing by 72% over the last 2 years. It is no easy feat to continuously compound at a high rate when you're reinvesting 100% of your capital. something we have managed to do for decades now.

Turning to Slide 11 in the deck. As you are aware, over roughly the last 20 years, we've been active in the M&A market. especially following the financial crisis, having now completed over 30 acquisitions during this time. During the COVID pandemic and the years immediately following, our facility was notably limited on the M&A front, prevailing market conditions at that time were characterized by bubble-like valuations based on peak earnings for most companies active in our space as well.

We chose to focus on organic opportunities and to wait for valuation demands to become more rational. 2025 was our almost active year ever with us completing 6 transactions culminating in the acquisition of RJO'Brien, our largest ever and 1 we believe will be transformational for the organization. I thought it might be useful here to review our M&A approach, something that a lot of investors have asked me in calls over the last few years.

We are very opportunistic around acquisitions. As an old M&A banker, I'm acutely aware that most transactions don't succeed for the simple reason that buyers are often desperate, maybe for a growth strategy, maybe a new strategy overall, new talent. And as a result, they tend to overpay. We pride ourselves on being very disciplined and we can afford to be disciplined because we have such a strong growth track ahead of us given the market dynamics we have spoken about previously with banks withdrawing and smaller firms being consolidated.

When we evaluate a new opportunity, we always have to consider the risk and disruption that this may cause to our existing organic growth initiatives, and therefore, any opportunity needs to be compelling and accretive. We passed potential acquisitions through a number of screens. First, they need to be accretive to our ecosystem, adding either new products or capabilities or adding to our client footprint and increasing market share in existing or new markets.

We then need to clearly understand how we drive value for our shareholders. Most often, that is by selling these new products and capabilities to our existing client base to drive incremental revenue. or in the case of client acquisition by leveraging our ecosystem of products into these new clients. Then of course, culture is all important. We are a client first business, and we seek to establish long-term embedded relationships with our clients.

We also look at the requirement for resources and capital as well as cost structures and margins to make sure that these transactions can be quickly accretive to our bottom line and to our ROE. In many instances, we can achieve capital and cost synergies given our larger scale and global footprint. Then of course, we need to get to price. And given our desire to compound our capital, we tend to be on the conservative end of the value spectrum.

We need to see how the acquisition can be accretive to our ROE and also quickly earn back any goodwill that may be incurred typically inside 36 months. I also strongly believe that we should take the leading role in due diligence rather than rely too heavily on bankers and advisers. This forces our team to roll up their sleeves and take ownership for the business we are acquiring and leads to quicker integration and synergies being achieved.

Despite our strict criteria laid out above, we continue to find many good opportunities and I think our discipline and rigor on the front end have resulted in us having a very high success rate with acquisitions. Almost all have gone on to become multiples of the size they were at the time of acquisition.

Turning to Slide 12. In the last several years, we get approached on around 85 to 100 opportunities per year, many of which are sourced internally by our own teams. We typically engage with around 70% of those at some level and getting to initial due diligence on around 50% and full due diligence on around 25% of those opportunities. That ends up with our submitting bids at around 15%. As you probably realize, this entails a fair amount of work and focus, and we are very lucky to have an extremely capable albeit small corporate development team who, of course, can leverage the internal expertise we have when needed.

We are also likely to have an exceptional in-house legal team, which is involved in the process. We have received numerous complements over the years from our external bankers and lawyers on the exceptional corporate development and legal teams we have in-house here at StoneX.

With that background, let's turn to Slide 13, and take a look at how we did in 2025 fiscal year. As a reminder for this year, we made 5 acquisitions, and we made one strategic investment. Starting with RJO'Brien, which we continue to believe will be a transformational acquisition for us, RJO was one of the oldest independent FCMs in the U.S., transacting with over 45,000 clients and over 200 IBs.

This acquisition has made Stonex the largest nonbank Fc in the United States and a market leader in global derivatives, reinforcing our position as an integral part of the global financial market infrastructure. This acquisition has brought us new clients in the likes of regional banks, [ Tomago ] provides clearing and risk management and interest rate products, a large introducing broker network, which we believe we can leverage further, lmost become an extension of our own sales team as well as an agency execution capability where we can offer block training and futures options and customized solutions.

It was an acquisition, which we also believe provides significant opportunities to improve our efficiency. As stated in our announcement, we expect there to be $50 million of expense savings and at least $50 million in capital synergies as we consolidate regulated entities. Abby Perkins from our executive team will be on this call and shortly provide an update on our integration progress with. Coincidentally, we closed benchmark on the same day as RJO.

Benchmark is a midsized investment banking firm, offering a sales and trading platform, equity research and a highly experienced investment banking team. Benchmark brought us deep relationships in the hedge fund community, which were incremental to us as well as an investment banking capability. We are looking to leverage our broader trading and clearing capabilities into these new clients and, of course, offer investment banking capabilities to our StoneX lines. Additionally, Benchmark has been able to leverage our balance sheet to take larger roles in transactions than before.

Lastly, on capital synergies by leveraging the existing larger StoneX broker-dealer balance sheet, which already supports our FCM securities businesses, benchmark can reduce the capital requirement for its business. We acquired the assets of KBR, a leading U.K.-based silver recovery refiner at the beginning of our fiscal year, which allows us to produce our own silver London good delivery bars and further extended our physical capabilities in metals. This has proven to be -- to have been particularly valuable during the recent metals volatility and shortages experienced this year as we can now produce our own metal.

It has also expanded our customer base by adding numerous industrial clients who see StoneX as a better capitalized counterparty and who can offer a range of storage, refining and hedging services. In September, we announced the acquisition of Right Corporation, a physical me trading business in the U.S. RGO has a dominant position in the meter livestock industry in the U.S.

And with this acquisition, we now bring a downstream physical capability to our clients, much like the rationale behind the very successful acquisition of CDI back in 2022, which extended our cotton derivative experience into the physical. It adds a new relationship with meat suppliers and branches across beef, pork, poultry as well as buyers in the processor and distribution space.

In February, we completed the acquisition of OCTO Finances, a leading French fixed income broker, which provides credit research and expertise in the trading of European bonds and convertibles, -- we are now able to offer the European-based clients access to our broader product mix, enable Okta to participate in larger transactions and to add credit research and expertise in European bonds and convertibles to our suite of capabilities.

We have begun to cross-sell clients of OCTO new products and services as well as expanding their available credit products to include investment grade, high-yield and U.S. treasuries. Lastly, we made investments in Bamboo payments. which was accompanied with an option to acquire full ownership down the road. Bamboo brings deep expertise and a well-established in-country payment ecosystem in South America, which has extended our cross-border capabilities. Bamboo serves large regional marketplaces, ride-hailing services and HR platforms, which are new client types for Stone to interact with.

Turning now to Slide 14. I Alongside our inorganic M&A growth, we continue to interruptively improve our product and services offered organically. This has included several enhancements to our business, which extends our ecosystem and addresses additional client needs with the intent of capturing more of their business. Some of these enhancements this year include the following: the build-out of our metals belt in New York, which now has more than $1 billion of assets under custody and is a CME designated depository and custodians.

It has not only been a value-add to our wholesale precious metals business, but also has attracted the global banks who would like to diversify their holdings away from other competing banks. It is highly complementary to our overall metal strategy of providing a full service offering in the market. And we are a unique industry participant in that we're both a regulated FCM and an exchange approved depository.

Towards the end of the year, we entered into 2 agreements, bringing in the business of 2 LatAm focused wealth management firms, which have expanded our capability to service clients by providing brokerage and investment of revisery services. These 2 transactions bolstered our existing wealth management business further strengthens connection into Latin America and provide us with incremental clearing opportunities.

Late last year, we were approved to provide digital asset services to institutional clients in Europe. This will allow us to provide execution and custody services alongside our existing suite of global prime brokerage services and other complementary offerings, including equities, ETFs, futures and fixed income. We have also been improving our digital offering, which provides automation of management, merchandising and origination of grain products. This is done through our proprietary platform called StoneX Edge.

This platform form integrates with existing grain elevators enterprise systems and back-office systems, to automate and proactively manage the industry -- inventory, sorry. We announced last year that the platform has surpassed total volume of over 1 billion bushels of grain, which is a significant milestone for us.

Interestingly, RJO has a similar product offering, and we will be merging these 2 platforms to provide clients with the best of the 2 offerings. In prime brokerage, we offer a comprehensive custody and clearing platform across the globe aimed at financial institutions and funds. During the year, we have made several enhancements to our service offering which have included an expansion of our cap intra capabilities, improving consolidated reporting and margining for clients and addition of cross-currency products to the suite. These improvements have driven increased engagement particularly among large ETF issuers and mutual funds, resulting in strong momentum for this product in this business.

Lastly, regarding our OTC and structured product capabilities. As we have mentioned in previous discussions, we see OTC as a tremendous growth opportunity to help our commercial clients run more complex and intricate scenarios, determining the best products for their needs and to get quotes instantly. In the year, we have further expanded our OTC products focus on agriculture, which includes shell contracts and dairy derivatives.

We believe we have one of the most comprehensive OTC platforms in the market today. These are just a few examples of our recent organic rollout of products and services, and we will continue to grow our ecosystem by launching adjacent products and services to better serve our clients.

Moving back to RJO. We'd like to provide some time giving an update on the integration. As mentioned earlier, I would like to introduce a new 1 of our executives to you all, Abby Perkins who is a member of our Executive Committee. Earlier this year, we asked her to lead our M&A integration efforts, in particular, the RJO integration, given its importance and its financial impact to our company. She will be providing a more detailed update on our integration plans, actions taken and key milestones ahead. Abby, over to you.

Thank you, Sean. For those I haven't met, I'm Abbie Perkins. I've been with StoneX for 9 years and in finance for over 2 decades. For the past 5 years, I've served on the Executive Committee and until recently, I was the Chief Information Officer overseeing infrastructure, IT services, procurement and cybersecurity. As Sean mentioned, I stepped into a new role leading our M&A integration efforts with the primary focus on the RJ O'Brien initiative. This is where I'm spending the majority of my time and energy today.

So to get started, please turn to Slide 16. We remain very excited by the potential value creation for StoneX from the RJ O'Brien transaction our most transformative acquisition of 2025 and the largest 1 we have done in terms of deal size. As we noted in the announcement, the acquisition rationale rests on 4 pillars. First is the transformational nature of the acquisition and the significant scale we have added as a result. With this combination, we are now the largest non-bank U.S. SCM by client assets and 1 of the largest FCNs globally.

We are seeing a positive trend in growth in balances with RJO's average client equity increasing from $5.5 billion to $5.8 billion since close principally due to inflows from ID and institutional clients. This increase has helped drive our combined client equity balances to the highest ever at $13.7 billion at the end of September.

In addition, during the trailing 12 months ended September 30, 2025, RJO cleared 156 million derivative contracts, which will now be consolidated on a single combined infrastructure, so truly achieving substantial scale. And ultimately, we know that the long-term transformative value will rest on the quality of the RJO clients and its people and both have exceeded Stonex leadership's expectations.

Our second pillar was the strong opportunity to expand both our products and capabilities across the combined basis of both organizations and to reach new markets. We are seeing numerous opportunities to offer new products and services to the legacy RJO and StoneX clients alike. These include offering new OTC and physical products to existing listed derivative clients, interest rate derivatives and relative value trading strategies to fixed income clients and new hedging products and strategies to agricultural and other commercial clients.

We are also quickly moving to leverage RJO's footprint in new markets with the regulated presence in the Dubai International Financial Center, becoming a key focus. StoneX has had a long-standing and successful presence in Dubai, offering precious metals trading in the Emirate metal zone, and operating a branch office to retail products in the Dubai Mainland zone.

The addition of RJOs business in the DISC, the Emirate Financial Institution Hub has provided a valuable complement to our efforts in this key growth market through the opportunity to compete with other financial brokerage firms by offering the full complement of StoneXproducts, which is an important enhancement to RJOs offering there.

Lastly, we are able to achieve a combined and optimized technical ecosystem, taking the best from our world. The benefit of the StoneX complex of the combined technical offering will be significant.

Our third pillar focused on the achievement of significant cost synergies. Our work since the closing of the transaction has strongly validated our cost synergy estimates, and we are working actively to achieve these cost savings. We've established a robust governance framework with a dedicated cross-functional team leading the numerous integration work streams.

I will touch base more on the time lines of these cost synergies as well as an update on capital synergies on the next slide. But before we get there, on more pillar to cover.

The fourth pillar is that the acquisition will be accretive to both EPS and ROE. I want to say that, first, across the board, our top priority is delivering a powerful combination that strengthens outcomes for our clients and supports both our internal and external brokers. And in line with that focus, the integration planning and progress we've achieved so far underscores our confidence that RJO will be accretive to both EPS and ROE over both the near and long term, creating lasting value for our shareholders.

Moving to the next slide, we summarize our integration objectives and results. I'll be starting with our cost synergies. At the time of the transaction, we estimated $50 million of annual run rate and potential cost synergies. We now have a detailed plan with over 100 people involved in the process with over 50 defined work streams and are in full execution mode.

We are first prioritizing the savings that are more readily achievable through the combination of the overlapping non-U.S. entities in U.K., Hong Kong, France and Singapore. This can be achieved relatively quickly as the RJO activities and business in these jurisdictions is well understood and more modest and [ stern ] activities in these regions. We are also prioritizing combining our U.S. broker-dealer footprint as it is a relatively easy process as well as RJO's activities encapsulate just 1 pillar of the activities we have in our diverse U.S. broker-dealer offering.

These 2 initiatives can happen relatively swiftly, and we anticipate completing them in Q2 of fiscal '26, accounting for roughly 25% of the aggregate synergy target. Our focus then turns to the integration of our 2 U.S. SEMs, the most complex of the entity combinations, which is currently being planned and will follow the non-U.S. integrations.

Combination is set for around Q4 2026, while we both operate in the same system of record and the underlying products are identical, RJO has built customer tools with migration of which we need to make sure is as seamless as possible from a client perspective to ensure no revenues lost as a result. We will err on the side of caution here, and may delay we feel it's warranted. We estimate that the merging of the 2 USSVNs will account for roughly 40% to 50% of the synergy target. The remaining 25% to 35% results from the runoff of contracts and space, and as such, may take a further 6 to 12 months to fully realize.

Based on our work to date, we are confident that we will achieve our targets of $50 million in run rate cost synergies within 24 months of deal close. Indeed, just 4 months from the closing of the transaction, we have realized approximately $20 million in annualized cost savings. We believe that the remainder of the cost synergies are well defined and achievable.

We will move on now to capital synergies. These synergies will be achieved as we collapse the operations that we set out before. We anticipate a $20 million to $30 million release of excess capital following the first set of business integrations of the U.K. business and the broker-dealer business, which is to be realized in approximately Q2 26. The remaining capital synergies will be realized from the merger of the U.S. SEMs in the approximate fourth quarter of 2026. We anticipate this to be north of $30 million.

Lastly, and in addition to this, while technically not a capital synergy, we recently executed a $42 million dividend of excess cash from the RJO parent entity, providing additional liquidity to the StoneX Group of companies. In terms of [indiscernible] synergies, we did not disclose a specific target because these synergies are both hard to realize in the short term, it's very hard to track when they happen as revenue gets flipped between teams, et cetera.

Despite this, we continue to have a high conviction around the revenue synergies opportunity over time. A first significant driver is that StoneX's equity and balance sheet is around 5x larger than RJOs, which should enable us to win more wallet share from the larger RGO clients. Alongside this is our position as a public company eases onboarding activities. Both of these were constraints experienced by RJO.

To this end, we have already held and continue to hold numerous teaches and cross desk meetings. On the fixed income side, we have seen extremely strong cross-group collaboration already resulting in the deepening of relationships and placement of new trays in from clients of both firms.

On the IB side, where go has a major presence, we've introduced many of these [indiscernible].

Operator. Did we lose Abbie operator?

It looks like we lost her,, but she still connected, sir.

Okay. Let's give it a second and see if she reconnects. Otherwise, I can finish up comments. All right. Operator, I'll carry on. Okay.

All right. Sir, go ahead.

Okay. So I think Abbie was talking about where we are with the -- so I will just follow on from there. So we've introduced many of our brokers and end clients, our OTC and physical capabilities. Many of them have asked for the necessary paperwork are going through the paperwork and many of them have signed up with our swap dealer and our physical entity. So very encouraging signs there.

People don't do the paperwork if they don't see an opportunity. On the metal side, we see clients expanding the business they have with us into new products. On the negative side, there was always a risk of some revenue attrition, either due to revenue producers leaving or due to the fact that there was client duplication. At the time of evaluating the deal. This was a key consideration for us. And our view was that the client overlap was limited and thus the risk of revenue attrition was not material. We're happy to report at this stage, the overall attrition is limited.

So overall, we're tracking very well against all of the metrics related to the integration of RJO. In summary, we continue to believe as a management team that the RJO transaction will prove to be transformational for StoneX and this expanded group of clients as the integration of our collective client focus, the ability to leverage our combined scale and the complementary product expertise positions us as the leading franchise around the globe.

We are highly encouraged by the early results and are pleased with and grateful to our teams affecting this work. We remain focused on executing with discipline and precision that have become the hallmarks of StoneX.

In the end, the common thread across all our acquisitions is the exceptional collaboration between company leadership teams and the exceptional work being performed by a talented and dedicated employees. We are pleased with the value these transactions provide to StoneX and remain optimistic about our long-term growth.

So with that, let's move to Slide 18, a closing summary. This quarter was a record for us to close out what was, in fact, a record 2025, the quarter included 2 months of the RJO results as well as some of the one-off acquisition and related costs, which reduced diluted EPS by approximately $0.13 per share.

The quarter saw strong results across most of our segments, especially equities, prime brokerage and fixed income and improved results in physical commodities. We recorded $85.7 million net earnings or $1.57 in EPS with an ROE of 15.2% on book value and just over an ROE of 20% on tangible book value.

We achieved another record quarter for the year with operating revenues of just over $4 billion and net earnings of $305.9 million, giving us an EPS for the year of $5.89 and an ROE of 15.6% on book value and 17.9% on tangible book value. In addition, RJO and benchmark and our other acquisitions should be strongly accretive. And together with strong organic growth should drive our results for 2026.

There has been a notable growth in our client assets that we custody where the segregated funds on the exchange or through clearing and prime brokerage and storage of crushes metals. This has significantly grown our recurring income stream providing a stable and predictable underpinning to our financial results.

Our unique and best-in-class ecosystem underpinned by a fortress balance sheet, diverse offerings and exceptional client service enables us to deliver innovative solutions that provide clients with market access and create long-term value. I'm very proud of the StoneX team, who continued to propel us to new heights, and we'd like to thank them for the exceptional work during 2025.

I would like to thank our bankers for their support and our Board for both their support and guidance and an amazing are around StoneX team.

So with that, operator, let's see if we have any questions.

[Operator Instructions]. Our first question from the line of [indiscernible] .

Our early cross-selling efforts with RJO clients going? I know it's pretty early innings, but anything that's kind of standing out there -- and then when can we expect your estimate, I guess, on -- for revenue synergies overall.

So on the revenue synergies, I think it's going about as well as we expected. Obviously, this takes a lot of education. I think it takes time for people to understand the products. make sure that the products are suitable for their clients. They obviously -- people are always -- and we've gone through the 30 times. So we now have those works, right? So oftentimes, the relationship people are reluctant to open up a relationship to new people to products, they're not certain of. So this just takes a lot of education.

I think there's been a tremendous amount of interest from RGO in learning about all the new products we have. So they're being engaged. And I think in certain parts of Arjo, there's been tremendous uptick. I mean we already have people -- on the fixed income side, going together to meetings, pitching products together, the actual transactions happening that are generating revenue.

I think, as I said with IBs, we have a ton of IBs who asked for documentation. A bunch of them have signed the documentation. I think a couple of trades have happened. So all of those things are all very encouraging, and I think sort of validate our thought that this is going to provide us with a big boost.

In terms of putting out a hard estimate, as Abbie said in her comments, it's really, really hard to do that because this stuff becomes really hard to track. If someone does more treasury business with us because they sort of like the fact we can do something with them on the RJO side. How do we measure that if they are really a customer, right? So it becomes pretty arbitrary to sort of measure this, so we can report back on the target. And that's our reticence in doing that is it just becomes very hard to audit and provide sort of a detailed feedback.

The revenue often gets split between groups and it's hard to track that as well. So I'm not sure we are going to give you a target just because I don't think we can accurately report back on that. What I think we will see though is just a revenue uptick generally, and I think that's what we should be watching for. I don't know, Bill, if you think differently, but I think that's sort of where we stand on it. But I think our view is very happy about it.

I think if anything, there's been sort of quicker uptick and better interest from any -- from everyone in sort of taking our new products. And as I said, we are already seeing tangible signs across various desks of new clients trading with us, existing clients doing more with us. And then the other thing with RJO is I do think the fact that all those clients know now, particularly they're sort of larger clients, we have a much bigger balance sheet.

So if there was ever a sort of a constraint around RJO size, maybe they really liked the RJO, but we're limiting what they did just because of the size of RJO. That's got, right? Because we like 5 exercise, onboarding is very hard when you're a private company in the world today. You have to do all your KYC, you have to get verification of the owners of the company are. And it's just very hard. A lot of people just don't want to do it. But if you're a U.S. public company, it's the easiest possible route to onboard. So I think we've made things very easy. And I think that's going to just of itself is going to drive some additional revenue. So I'll stop there and see if there is anything to add.

I think you summarized it, Sean very well, and we'll -- I think we'll continue to just try to point out kind of the overall growth from RJO here over these next couple of quarters and we'll be able to demonstrate some of that growth that Sean is talking about.

Yes. Okay. That makes sense. And then it looks like there was still some weakness in precious metals trading in the quarter. Did that improve after gold was officially exempted from tariffs in September? And maybe how did you see that trend in October and November?

Yes. So we had a lot of people -- well, the people we normally speak to shareholders and you guys asking us sort of last quarter, what happened on the commercial side because, obviously, it was a reasonably big delta. And it was really affected by 3 things, right you had just low volatility in the ag space generally, which has sort of continued into this quarter. Metals, notwithstanding.

But if you look at the ag side, it's been pretty muted general tariffs have sort of disrupted the underlying commercial flows. So people don't know or I'm sure whether they should export what the prices should they hold on to their product. So those kind of disruptions just lead to sort of lack of hedging.

And then on the margin, one of the biggest factors was our Precious Metals business because of the dislocation in the CME metals price, we started to impute a value for tariffs. Now obviously, everyone around the world, including us, used to use the CME derivative contract as the most liquid contract is the best way to hedge your precious metals. But if you were delivering precious metals to someone in Europe, you now had an ineffective hedge because the hedge was imputing a percentage of tariffs being imposed. And if you completed that transaction, you would have to close your hedge out at a loss. So that created a lot of dislocation in the market.

Our way of handling that was to deliver our metal into the CME and in that way, we had an effective hedge effectively because you can deliver metal into a contract. But what it meant is a lot of additional costs for us because we had to hold on to that metal for a good number of days.

We had to ship that metal, that cost money. And all of that significantly eroded the profitability of that business. Now it was better than what we would have taken as a loss on the hedge, so it was economic to do that. That has led to the precious metals business being close to breakeven, right, when it's generally a pretty profitable business for us. That carried on into this quarter.

Obviously, the business sort of adjusted. So the impact was not as great as it was in Q3, and we are now not using the CME hedge. So we now have the flexibility. And in fact, it's now given us an opportunity to take advantage of those dislocations. So what was a negative is starting now to turn into a positive. So that's the story behind the metals. So it was sort of much worse in Q3. It was better in Q4 and I think you'll see in Q1 that it's actually turned into a pretty positive environment for us. So I think that's sort of gone full circle for us. Does that help?

Yes. Perfect. And if I could just slip in 1 quick 1 on the institutional -- on the institutional business that the RPC for listed derivatives jumped quite a bit. I'm just curious what drove that or how sustainable that is.

You want to say that Bill.

Sure. I'll take that. That would be the introduction, Jeff, of the RJO business. So when they came in, there's they were incrementally higher than what we were doing. So that's really kind of what's driving it up. I think they were incrementally about $1 higher on average on their institutional rate per contract than we were, so the combination of the 2 drilled that up.

Sure. So it's kind of a business mix issue, I guess, between us and RJO.

Correct.

Right. Right.

Our next question comes from the line of Dan Fannon with Jefferies.

Great. So I guess just sticking with the institutional business. So the other question is just on the security side. The rate per million also went up pretty significantly quarter-over-quarter. Just curious about the sustainability of that.

Bill, do you want to handle that?

Sure. I think we've seen -- Dan, I think we've kind of talked about this a bit last year, right, with some of the conditions that we saw in equity markets with some of the lower volatility and also kind of us expanding into into more U.S. stocks that we kind of -- we expected to see a bit of a trough there and continue to increase from there. And we have seen that, right? The conditions have improved.

And then the fixed income space as well, right, with that becoming a bit more volatile with the rates moving around, defend actions, I think we've started to see where last year, we kind of dipped as well when it came to the addition of more and more U.S. treasury activity. Now we're seeing spreads widen a bit in those markets. So we've seen a nice uptick both on the equity side as well as the fixed income and then also really nice contribution from our overall prime brokerage business on the security side contributing more and more revenue there, which is helpful.

I would say, Dan, one thing, and if you remember back over the last 2 years, we spoke about this a lot, as both the equities and the fixed income teams, and this started probably 3 years ago, expanded into sort of lower margin, but higher volume products. We saw a continual erosion of the rate per million, but an increase in revenue, right? Because we're doing lower margin business, a lot of it making money, but it was really affecting those numbers. And as that business ramped up, it continually sort of dragged down the higher margin that we saw previously.

I think we've now got to I'm sort of -- I could be wrong here, but I think you've sort of got to a point where that business is now large enough that it sort of averaged out, so I think that sort of ongoing sort of slide as we built the business up, we've now sort of troughed out. And I think what's now going to affect it is sort of market conditions, right? So I think the sort of business mix argument as that adjusted over the last 3 years, I think, is sort of kind of close to the bottom and at the end now.

And now, hopefully, that number reflects sort of a more keen view of the underlying market conditions available in the business. if that makes sense?

Yes. No, that's helpful. Just another question on the integration. I just want to make sure what I heard in the road map. So I think you said roughly $20 million has been realized in terms of the expense synergies and then, I guess, middle of Q2 of this year with the U.K., we should get I think another -- I just want to make sure what the next wave of and then you have the FCMs in the U.S. So can you just kind of walk through the amounts that kind of -- if you've already got 20 that maybe only 30 left or you're using the amount of synergies.

Yes, go ahead, Abby, you back with us.

I am -- thank you for your patience. The -- so we have achieved synergies from sort of natural movement and the ability to do some streamlining inside the organization. Right now, that annualized run rate is about $20 million going forward. We will then see the next uptick really in the spring time, a bit more that we expect from the U.K. combinations. We'll get capital synergies at that point as well.

And then the dominance will come post the U.S. integrations, which are late Q4 2026. So you're talking sort of June, July, August time frame. Does that help, Dan?

Yes, but no change in the aggregate amount. Like I guess as you guys have gone in, do you think that $50 million is conservative? Do you think there will be more in the context of what you'll be able to save as a result of the combination.

No, go ahead, Abby. Sorry.

We're pretty comfortable with the $50 million. We are very focused on ensuring that we do client support with added flow. There is a big chunk of the organization that is not impacted within StoneX on this. So we're pretty comfortable with the $50 million right now.

Okay. Cool. And then just a follow-up for you, Bill. Just looking at the balances now from an interest rate sensitivity perspective, they're higher. And as you look into next year, obviously, you've got some rate cuts. Any thoughts on the hedging strategy or other things to do to limit the impact or fluctuation from rates and the movements there?

Yes. I mean we'll continue to be active, Dan, like we have in the past, that's kind of looking out and trying to lock some of that in. We're taking a bit of a view right, that we may want to lock some in around that kind of 2-year window-ish. And this isn't anything new. We've kind of done this a couple of different times over the last 10 years. We've kind of viewed that 2-year 2-, 3-year window is kind of a good space for us. And so we will continue to kind of monitor that market and potentially go out on the curve a little bit with swaps, kind of almost like an insurance policy on this new group of assets that we've brought in. in order to kind of put a floor there.

And then what we're excited about is just kind of bringing in the capabilities of RJO that's been more active on managing the portfolio and have seen to where they've been able to typically exceed kind of the 1-month treasury rate, which has kind of been our benchmark. So the combination of the 2, trying to lock some in to keep a floor for us and incrementally increase kind of over that 1-month target, I think, is what we expect to do on a go-forward basis.

We never will be hedging all of it or never be locking in all of it, but we will look to be active to try to put roll into some floors there that kind of protect us to the downside.

Got it. But you're not doing that currently that's perspective.

That we've been -- look, we've been active in doing that since the integration, right? So there's -- we didn't have anything, any activity on it in the September quarter, but we have been starting to do some of that since then, modest amounts at this point. Just reflective in the sensitivity that we put out there.

I think they're not to be repetitive, but maybe just to sort of clarify Bill's comments, I guess, there are 2 ways to think about this, right? The one is all of our contractual arrangements with our clients in terms of how we pay interest are referenced off the 1 month of the 3-month T-bill rate. So that's the sort of benchmark rate. And typically, what we did is we invested that float in the one month or 3-month T-bill rate, right? What RJO was very good at and we're sort of a market leader is they were more actively managing that money, and they were earning a spread to the 1 month and 3 months T-bill by going into floaters and things like that. So to the extent you can do that, 100% of that excess basis comes to us. So that can be quite impactful.

And that's not a huge amount of money. You're never going to make 75 basis points extra. But I think the target is somewhere around sort of 20 basis points potentially on some of that float. But on a $13 billion float, if we can add 15, 20 basis points on top of that base rate, which we get to keep 100% of, I mean, that can be quite meaningful.

And then secondly is, do we try to protect ourselves by taking out swaps and taking some duration, protect ourselves against possible downside in the short-term rates. And when we took on RJO they had done that with -- I can't remember the amount, but it was sort of $1 billion or something of their float that had actually locked in to the 2-, 3-year range that we've taken that position on.

And as Bill said, we are now starting to add to that position opportunistically when we see rates that we like. So I would like to think that at some point, if the world stayed where it is today, we would probably like to maybe sort of hedge out something like 30%, 40% of our underlying float to sort of the 2-year rate.

But obviously, the world doesn't stay as we still have to sort of keep looking at that as rates change. But that feels to be to sort of be prudent. Maybe you earn less because the negative yield curve environment, you're paying a bit of a price for that, but it does give you certainty over that period as to what that underlying revenue sources.

And as I said in my comments, what's quite notable now at StoneX and something that over time, we would not probably try give you more clarity on is we are growing as a custodian of client assets in everywhere. [ San ] funds in OTC products, clients are leaving more money with us -- we are actually now a custodian for gold, and we charge just like we do on [ safunds, ] we earn interest on the gold deposits we have. We have prime brokerage, we have equity clearing everywhere you look we are growing our underlying asset pool.

And those assets kick off now a really large number, which gives us a fantastic underpinning to our business, right? So all the sort of transactional revenue, which is affected by sort of volatility and so on, is sort of the gravy on the top here for us. So if we can get to a point where as a custodian, we've sort of got the costs covered. We've got a stable underlying flow of revenue and then the sort of more volatile forms of revenue, which, again, we've diversified pretty broadly but those tend to be the incremental revenues. And I think we're getting to an interesting sort of situation where it's starting to look like that. So something to watch and something we're working on to do.

Great. That's very helpful. And just yes, it does. So lastly, just on the retail business, I know that volatility has been pretty subdued. But obviously, the fee per million or rate per million came in a lot. Anything else of note outside of just Val within that segment to think about on a kind of go-forward basis?

Well, I think this has come up a few times over the last maybe 2 years, I would say. -- that we generally sort of budget and the way we look at the vol in this business, and I'm talking about the self-directed retail business is we look at a sort of a long-term average, right? Because the revenue capture number there can move around pretty materially. I mean, Bill, correct me if I'm wrong, but I think we are up at sort of 130 in recent quarters as the high, right?

No, we actually have been as high as 185 back in December, but that was December. That was an exceptional quarter. But if you go back a couple of years, we were $82.95 range back in '22.

So the long-term average range for us is sort of in the '80s, right? And I think over time, we've lifted that from, I think, in the game days, they were more like 75 is what they use. And I think we've lifted that into the mid- because of all the things we've chatted about, right? We're combining flow better, there's more internalization.

All of that stuff is helping. But I don't think this is necessarily a bad revenue capture number. I think what's happening previously is we were outperforming a little bit on the revenue capture. So obviously, we'd like it to be a little bit higher than it is now, but this is sort of the long-term average. And so I don't think you should look at this and say, "Oh my god, what happened? I think this is sort of the business as it sort of has performed over the long period. maybe slightly under trend. But I think we were significantly over trend when we were sort of reporting numbers 120 and higher. I think that's sort of unsustainable. I don't know if that helps, but I [indiscernible] thought on it.

Any more questions?

I'm showing no further questions, and I would like to hand the conference back over to Sean O'Connor for closing remarks.

All right. Well, thanks, everyone. Thanks for your time. We appreciate it. We're very happy with the results that we have managed to deliver to all of you in 2025. And as you gather, I think we're all pretty excited about what's coming in 2026. We've had a busy year, a lot of great acquisitions Obviously, RJO, very significant. I think Abbie and her team have really got their arms around that. We feel really good with the way that's tracking up, but benchmark is also doing great and some of these other acquisitions are are all sort of kicking in. So we're very excited about the prospects for 2026. Looking forward to that.

And with that, all I can say is to those who celebrate and are in the states happy Thanksgiving and happy holidays to everyone. I guess, next time we speak to you will be in the new year. So thanks again.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.