What data did the Q 1earnings contain?
At a headline level, quarterly revenues rose by +19.0% to $450.50 million whilst net income on the quarter jumped by +18.0% to $41.70 million.
Which, in turn, generated EPS of $2.04 and a return on equity or ROE of 18.00% when calculated against the firm’s book value.
Though that figure pushes up to 20%, if, we use the tangible book value of the business instead.
Things get even more interesting if we dig down to product level, where we find that OTC derivatives trading revenues grew by +93.0% year over year to $46.70 million.
And that the volumes of OTC contracts traded rose by +54.0% to 763,000 which generated average revenue of $61.11 per trade.
A figure that was itself +27% higher than in the corresponding period last year.
UK versus US growth
Given that US retail traders and private clients are largely excluded from trading in OTC derivatives, it seems reasonable to assume that much of the growth in OTC trading and revenues comes from City Index.
Indeed Stonex attributes revenues of $96.40 million over the quarter, to its retail operations.
$72.2 million of which came from its FX and CFD trading businesses, City Index is the largest part of that division.
FX and CFD trading revenues grew by +21.0% year over year.
Average daily volumes or notional values of FX and CFD contracts traded, came in at $12.79 billion, up from $10.69 billion in the same quarter of 2020.
Not everything in the figures was rosy however and Stonex’s costs grew by +14.0% overall in the quarter.
Underlying that rise was a +25.0% increase in marketing costs, a 28.0% rise in professional fees payable and a +190.0% rise in travel and business development costs.
Though that number is comped against a period in 2020 when much of the US, the UK and Europe were under Covid lockdowns or restrictions.
Compensation and benefits grew by +19.0% in the quarter, year over year. Though notably, the commissions paid to introducing brokers or IBs fell by -11.0% to $6.30 million.
Stonex shares gapped higher on the open on Tuesday after the results, jumping from $67.29 to open at $70.00, trading up to $75.19 before closing at $73.68. They traded higher again on Thursday rising to a fresh all-time high of $75.60.