Marex Group plc

Good day and thank you for standing by. Welcome to the Marek Second Quarter 2025 Earnings Conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 and 1 on your telephone. You will then hear an automated message about when your hand is raised. To withdraw your question, please press star one and one again. Please note that today's conference is being recorded. I would now like to have the conference over to our speaker, Adam Strachan, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thanks for joining us today for the second quarter of 2025 earnings conference call. Speaking today are Ian Lowe, Group CEO, and Rob Irvin, Group CFO. After Ian and Rob have made their formal remarks, we will open the call up to questions. Before we begin, I would like to remind everyone that certain matters discussed in today's conference call are forwarded statements relating to future events, management plans, and objectives for the business and the future financial performance of the company that are subject to risks and uncertainties. Actual results differ materially from those anticipated in these forwarded statements. The risk factors that may affect results are referred to to Marek's express release issued today. The forward-looking statements made today are as of the date of this call, and Marek does not undertake any obligation to update their forward-looking statements. Finally, the speakers may refer to certain adjusted or non-IFRS financial measures on this call. A recommendation schedule of the non-IFRS financial measures to the most directly comparable IFRS measure is also available in Marek's earnings release issued today. A copy of today's release and presentation may be obtained by visiting the investor relations page of the website at marianx.com. I will now turn the call over to Ian.

Good morning and welcome to our second quarter 2025 earnings call. In the first six months of the year, we generated $967 million of revenue and $203 million of adjusted profit for tax, up 27% on the first half of last year. Our second quarter was yet another record. with adjusted profit before tax of $106 million, up 16% year-on-year, and up 10% sequentially on a record first quarter. These are terrific results, and I'm delighted with this performance, which reinforces our belief that we've built a platform that generates high-quality, diverse findings, and it's set up to build growth across a range of market environments. While the second quarter had, as I will discuss later in my remarks, some positive effects, the operating environment was more varied. So being able to outperform last year's very strong quarter is heartening. These results validate our strategy and the way we are executing. Those of you who have followed our own scores and our investments today will know I have cited the acquisition of Cowan Prime Brokerage as potentially the most significant acquisition we have made to date. I remain positive about the opportunity even when the business has a slow start in 2024. Prime is proving a huge success for us. This is a business which had $85 million of revenue at Cowen and now on the Merit platform is running well above $200 million of revenue on an H1 run rate basis. Our clearing business also continues to perform strongly as we grow our balance, adding new clients and increase activity with existing clients. Our success with larger more financials-oriented plans, continues to drive higher clearing volumes. We continue to execute on our growth strategy while realizing the benefits of previous full-time acquisitions. ARNA, which closed at the end of Q1, is running, as forecasted, at around 50% above pre-acquisition levels as the anticipated day-one synergies were captured. I'll be talking later in my remarks about the cumulative effect of all of our acquisitions, which is considerable now we are confident we will see more opportunities with an attractive mma pipeline in second half of the year we proactively managed our remaining close dialogue with our clients to periods of uncertainty and elevated volatility ensuring minimal losses in the quarter critically we strengthen our liquid positions through the quarter with a 500 million dollars senior notes issuance that we executed in early may as we continue to extend and diversify our funding sources. We held a record level of liquidity at the end of the quarter, with $2 billion of surplus versus the regulatory requirements. We also completed our second successful equity follow-on transaction in mid-April. The residual position held by our pre-IPO private equity shareholders is now just 17%, down from 64% at the IPO. Increasing our public float was an important strategic goal and we have been successful at this. On slide five, we have laid out some of the key metrics that we used to assess our performance. Second quarter revenues grew 18% to $500 million, delivering a adjusted PBT of $106 million. Revenue in the first six months of the year grew 23% to $967 million, while margins expanded to 21%. Revenues per front office FTE increased to $1.5 million, on an annualized basis reflecting the significant effort our businesses have made to improve our productivity at the desk level as we invest in growing each of our segments. I had hoped coming into this week to be able to focus my remarks entirely on the success the firm was enjoying as we have continued to execute our strategy. On Tuesday of last week, a short seller report was published. The allegations in the report, if true, were serious And out of respect to the market, I want to spend some time providing a response before we move on to the detailed financials in Rob's section. I've been a vocal advocate of the benefits of being a public company. On earnings calls, I shared how we see the listing as having improved our brand, raised awareness about our firm, enabling us to win more business. We provide the currency for acquisitions and compensation paid in stock aligns stock investors and individual stakeholders. Part of being a public company, though, is investors control your stock. And indeed, people can publish reports about your firm with no requirement to be accurate. As unpleasant as it is to be the focus of a short report, I accept that it is part of the way the market operates. And while it imposes a cost on good companies like Marex, it is part of the ecosystem which ensures markets function well. We've analyzed the report thoroughly and can report all of the allegations. While I won't go point by point through every rebuttal, I do want to address several of the allegations. It is simply untrue that the two Luxembourg entities cited in the report are off-balance sheets. There are no off-balance sheets at Merrick's, and all our activity is consolidated in our reporting. All activity, including that booked in the Luxembourg entity, are reviewed by our accountants to Lloyd.

The Luxembourg entity Ladies and gentlemen, please continue to stand by. Your conference will resume shortly. Thank you.