Marex Group plc

Draken, Head of Investor Relations at Merix. Please go ahead.

Good morning, everyone, and thanks for joining us today for Merix's third quarter 2025 earnings conference call. Speaking today are Ian Lowett, Group CEO, and Rob Irvin, Group CFO. After Ian and Rob have made their formal remarks, we will open the call for questions. Paolo Tenucci, Chief Strategist and CEO of Capital Markets, will join us as usual for Q&A. Before we begin, I would like to remind everyone that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in Marek's press 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 reconciliation schedule of the non-IFRS financial measures to the most directly comparable IFRS measures is also available in Marex's earnings release issued today. A copy of today's release and investor presentation may be obtained by visiting the investor relations page of the website at Marex.com. I'll now turn the call over to Ian.

Good morning and welcome to our third quarter 2025 earnings call. I am pleased to announce another very strong quarter with our performance at the top end of the preliminary range we published on October 8th. As you will see, we have continued to outperform and in today's remarks, I will look to explain how we have evolved the firm to generate this growth and how we've increased our earnings resilience. In the first nine months of the year, we generated an adjusted profit before tax of $303 million, up 26% compared to the same period last year. This included $101 million in the third quarter, up 25% year on year. We have maintained our momentum from the first half of the year, despite the more challenging operating environment for some of our businesses. Given the slowdown in exchange volumes since April, some typical summer seasonality, as well as the distraction and disruption caused by the SALT report, we are extremely pleased to have delivered such a strong quarter, our second highest on record. We are grateful for the engagement we've had with our clients and investors and for their support during what has been a challenging period, one we are pleased to have put behind us as reflected in our performance. our clearing segment continued to perform very strongly. Average clearing client balances have increased every quarter since Q1 2024 and grew again this quarter up 4% from Q2, notwithstanding some modest impact from the short report, which has since normalized. We experienced one of our highest ever client onboarding quarters, converting several new large clients during the summer from the strong pipeline we previously highlighted. This reflected in increased commissions and higher clearing net interest income as growth-inclined balances offset the impact of lower rates. Our balances will, of course, fluctuate to some extent with asset prices and exchange margin rates, but we aim to deliver continued growth in balances to offset further anticipated rate cuts. Our prime services business continued to be a standout success and a driver of growth and margin improvement for our agency and execution segment. As a reminder, this is a business that had $85 million of revenue when we bought it from TD Cowan in December 2023. On the Marex platform, it has generated $171 million of revenue in the first nine months of the year. As the Prime business grows across each of its three components, outsourced trading, Prime of Prime, and on-balance sheet Prime, we remain attentive to the associated risks. The primary risk is client leverage, which we manage carefully and keep at a relatively low level. The on-balance sheet business is very diverse, both by client and the portfolio of positions. Our hedging and investment solutions business delivered a strong performance as market conditions became more supportive after challenging Q2. We also continue to expand our product capabilities and geographic reach to access more clients. All of this more than offset a weaker quarter for market making in what was a challenging market environment. We continue to see opportunities for growth through disciplined M&A and have an attractive M&A pipeline for the remainder of the year and into 2026. We recently announced the acquisition of Winterflood, which we expect will provide us with an opportunity to transform our existing UK equity market-making business. The ARNA and Hamilton Cord acquisitions are performing well, while AgriInvest is providing opportunities to expand our business more broadly in Brazil. These M&A opportunities, along with our organic initiatives, are contributing to our geographic diversification as our international investments are starting to bear fruit, particularly in the Middle East, APAC, and Brazil. Rob will provide more details on our segmental numbers shortly. We believe this quarter's strong results validate our strategy. On slide five, we have laid out some of the key metrics that we use to assess our performance. Third quarter revenues grew 24% to $485 million, delivering an adjusted PBT of $101 million, up 25% year on year. Revenues in the first nine months of the year grew by 23% to 1.45 billion, while margins expanded to 20.9%. Revenue per front office FTE increased to $1.31 million on an annualized basis. Our growth is driven by the addition of new producers, as well as our improvements in producer productivity. For the first nine months of 2025, productivity improvements accounted for around half of our growth. Looking now at the operating environment in more detail on slide 6. As I mentioned earlier, we are pleased that we've been able to maintain our momentum from the first half of the year, even in a more challenging market environment in Q3. In Q3, exchange volumes were down 8% year on year and 14% lower than in the second quarter. while volatility also declined to its lowest level in the past year. On the positive side, equity valuations were buoyant, with markets at all-time highs, which is supportive of our prime business and, to a lesser extent, our solutions business. With this backdrop, our third quarter profits were up 25% year-on-year and down just 5% compared to our record second quarter, which included record volumes in April. We aim to set up the firm to deliver growth through a variety of market environments, and our third quarter performance is evidence of our success. This is partly due to the evolution of our business mix, as I'll describe on the next slide. Over the past two years, we have looked to strengthen our earnings resilience through product and geographic expansion. Our evolving business mix is now more diverse than it was at the time of our IPO. In 2023, around 70% of our profitability came from clearing and agency and execution energy, both of which are strongly correlated with exchange volumes. An additional 10% came from agency and execution insecurities, which was also somewhat correlated with exchange volumes. While every area of the firm has grown since then, the share of profit that is strongly linked to exchange volumes is now around 54% today. As we've described in previous quarters, the most significant incremental contribution has come from prime services, which now accounts for nearly a quarter of our total profits. Prime profits are like clearing, recurring and dependable, and based on client balances. They are high-quality, durable earnings that generate high returns. Within agency and execution in securities, we have grown businesses such as FX, which provide trading revenues that are not captured in exchange volume metrics. These efforts to diversify our firm are not accidental, but rather a deliberate strategy to grow in a way that enhances our earnings resilience. It's also worth noting, as Rob will discuss in more detail, that within clearing, NII has remained essentially flat in the $50 million to $60 million range, despite rates being down 100 basis points from the peak in Q3 2024. Our ability to grow balances has offset those rate reductions, and commissions have increased with client balances. This helps explain our strong performance in Q3 and how we've been able to outperform during a period of somewhat lower exchange volumes. With that, I'll hand it over to Rob, who will take you through the financials in more detail.