Marex Group Plc Q4 FY2024 earnings call

• Marex presented first annual results since IPO in April 2024, with share price up ~64% and top quartile U.S. IPO performance in 2024.
• 2024 revenues grew 28% to $1.6 billion, adjusted operating pretax margin 20%, adjusted profit before tax up 40% to $321 million.
• Q4 net interest income $63 million, broadly in line with Q3; full year net interest income $227 million.
• Diversified funding sources via $600 million senior unsecured notes issuance; free float increased to 52% post-IPO sell-down.
• Announced quarterly dividend of $0.14 per share.
• Diversified revenue base in EMEA (56% of revenue, 34% CAGR), Americas (36% of revenue, 58% CAGR), APAC (8% of revenue, 69% CAGR) with acquisitions in EMEA (Hamilton Court Group, Aarna Capital) and Americas (TD Cowen integration).
• Active clients increased to over 5,000, with more than 270 clients generating over $1 million in revenue and ~620 clients generating $250k-$1 million.
• Planning Investor Day on April 2 in New York.

Clearing: Q4 revenue grew 48% to $125 million, driven by net interest income and higher average balances; contracts cleared increased by 27% vs market volume growth of 7%. Agency and Execution: Revenue grew 22% to $192 million, with Securities up 25% (due to TD Cowen acquisition and organic growth) and Energy up 17%; adjusted profit before tax margin improved to 19%. Market Making: Revenue grew 19% to $45 million, with strong growth in agriculture, securities, and energy offsetting weaker metals. Hedging and Investment Solutions: Revenue grew 20% to $40 million,受益于销售团队增长和新客户加入. Financials now make up around 40% of revenues across segments.

• Strong start to 2025 with positive momentum in first two months of the quarter.
• Expect to close acquisitions mentioned (Hamilton Court Group, Aarna Capital) over next few months.
• Organic initiatives in Clearing (onboarding new clients, expanding asset classes like crypto futures), Agency and Execution (growing securities presence, prime services), Market Making (renewables/environmentals offerings), and Hedging (expanding technology and product coverage).

• Market Making business carries small inventory to source client demand, with average daily VaR increasing slightly to $3.2 million in 2024 but remaining low.
• Proactive credit risk management with release of $1.7 million from historical provisions due to partial recoveries.

Q: Ben Budish from Barclays asked about Q4 results, specifically collateral balances, securities revenues.

A: Ian Lowitt and Paolo Tonucci discussed collateral balances as a function of new clients and margin rate increases, and securities revenues growth due to TD Cowen acquisition integration and client mandate wins.

Q: Patrick Moley from Piper Sandler asked about market share gains and Market Making segment.

A: Ian Lowitt and Rob Irvin talked about market share gains from larger clients, and Market Making's weak fourth quarter due to lower market volatility and fair value adjustments.

Q: Kyle Voigt from KBW asked about margin profile and operating leverage.

A: Ian Lowitt discussed ongoing investments in support/control infrastructure, expected slow margin expansion, and margin expansion in Agency and Execution.

Q: Unidentified Analyst asked about M&A strategy and fixed investments.

A: Ian Lowitt and Paolo Tonucci mentioned active M&A pipeline across segments, and Rob Irvin discussed fixed investments repriced higher with tailwind from higher yields now realized.

Q: Anthony from Goldman Sachs asked about market environment, M&A pace, tax rate.

A: Ian Lowitt discussed favorable market environment for Marex, ongoing M&A with mix of bolt-ons and transformative opportunities, and Rob Irvin mentioned tax rate expected to be between 25% and 26% in 2025