StoneX Boosts EPS and Margins Through RJO and Benchmark Acquisitions as Custody Growth Surges

Key Highlights from StoneX Group Inc.'s Q3 2025 Earnings Call

StoneX Group Inc. (SNEX) provided detailed insights during its third-quarter earnings call, highlighting significant progress in its strategic initiatives and financial performance. The company's leadership emphasized the successful closure of two major acquisitions—R.J. O'Brien (RJO) and Benchmark—which are expected to have a transformative impact on the organization.

CEO Sean Michael O'Connor described the RJO acquisition as "the largest and most consequential transaction we have ever undertaken" and noted that it is a "transformational transaction that positions StoneX as a market leader in global derivatives." He added that the deal is anticipated to be "materially accretive to earnings and to EPS as well as enhancing our margins and fully integrated."

The RJO acquisition brought in nearly $6 billion in client float, with the purchase price involving approximately 3.1 million shares. This move is expected to immediately enhance EPS and return on equity. O'Connor also highlighted that the Benchmark acquisition adds a robust sales and trading platform, award-winning research, and an experienced investment banking team, further strengthening the company's ecosystem.

President Charles Martin Lyon discussed the importance of StoneX’s custody and clearing platform, which serves as a critical enabler for clients' trading, financing, and investment strategies. He reported a 27% year-over-year increase in correspondent clearing balances, reaching over $24 billion, and a 15% rise in FCM servicing average client equity balances to $6.8 billion. Lyon also announced plans to expand digital asset custody capabilities in Q4, including regulated custody for cryptocurrencies, tokenized securities, stablecoins, and real-world assets.

CFO William John Dunaway shared that the third quarter net income was $63.4 million, with diluted earnings per share of $1.22. This represents a 2% net income growth but a 2% decline in diluted EPS compared to the prior year quarter due to additional shares outstanding.

Outlook and Strategic Focus

O'Connor reiterated the expectation that the RJO transaction will be materially accretive to earnings and EPS, while also enhancing margins and ensuring full integration. Lyon mentioned that in Q4 2025, the company will launch lending and collateral management tools for digital assets, addressing growing institutional demand.

Management continues to target a return on equity above 15%, with trailing 12-month ROE at 16.6%. The integration of RJO’s international components is expected to be completed in the next 3 to 6 months, while the U.S. integration may take 9 to 12 months.

Financial Performance Overview

Net operating revenues increased by 4% compared to the same period last year but remained flat when compared to the previous quarter. The Institutional segment saw record net operating revenues and segment income, growing by 27% and 41%, respectively. In contrast, the Commercial segment experienced a 24% decline in net operating revenues and a 36% drop in segment income.

Securities operating revenues rose 30% year-over-year, and FX CFD revenues increased by 14%. Payments revenues grew by 5% year-over-year and 6% sequentially. However, operating revenues from physical contracts fell by 17% year-over-year and 23% sequentially, primarily due to tariff-related uncertainties.

Interest and fee income on client balances decreased by 11% year-over-year but was modestly higher than the previous quarter. Compensation and other expenses rose by 5% year-over-year and 3% sequentially, driven by increased professional fees related to acquisition activity.

Q&A and Analyst Concerns

During the Q&A session, analysts raised concerns about the weakness in the Commercial segment and the impact of tariff uncertainty on trading volumes. O'Connor attributed the decline to "tariff uncertainty" and noted that OTC business revenue capture was affected by a lack of volatility.

Analysts also inquired about RJO revenue synergies, with O'Connor stating that these could be multiples of the cost synergies over time. Regarding the retail segment, O'Connor and Lyon discussed ongoing infrastructure rebuilding and a timeline for product expansion, noting that the infrastructural work is expected to be completed by the end of the fiscal Q2.

Concerns were also raised about the scale and impact of the Benchmark acquisition, with CFO Dunaway clarifying that it is a single-digit million type of business but one the company is excited to grow.

Sentiment and Market Conditions

Analysts expressed slightly negative to neutral sentiment, particularly regarding segment volatility and uncertainty. Management maintained a confident tone in prepared remarks, emphasizing the "transformational" nature of the acquisitions and robust growth in several segments. However, during Q&A, responses were more cautious, acknowledging ongoing uncertainties around tariffs and revenue realization.

Compared to the previous quarter, analyst sentiment shifted from neutral to slightly negative, focusing more on volatility, integration execution, and commercial weaknesses. Despite this, management's confidence in the company's strategic direction remained steady, though tempered when addressing specific operational challenges.

Risks and Challenges

Key risks cited by management include "tariff uncertainty" and "diminished volatility," both of which have impacted the Commercial segment. Additional interest expense from moving metals globally was also noted as a contributing factor to weaker results. O'Connor described the macro environment as "very volatile" and "bumpy," with unpredictable policy changes influencing client behavior and segment activity.

Lyon highlighted regulatory and operational risks in custody and clearing, emphasizing ongoing investments in security and compliance, including digital asset regulation. Analysts expressed concern about the pace and certainty of revenue realization from integrations and the potential impact of tariffs on future performance.

Final Takeaway

StoneX closed two transformative acquisitions—RJO and Benchmark—expected to drive EPS and margin growth. The Institutional and retail segments delivered robust results in Q3, while the custody and clearing business expanded significantly. New digital asset solutions are set to launch in Q4. However, the Commercial segment faced headwinds from tariff uncertainty and low volatility, and integration synergies for RJO will unfold over the next year. Management remains confident in the company's trajectory, emphasizing its strengthened position as a global counterparty across asset classes and its commitment to operational excellence and innovation.