25 Oct Jon Cartu Decides BGC Partners (BGCP) Q3 2019 Earnings Call Transcript
BGC Partners (NASDAQ:BGCP)
Q3 2019 Earnings Call
Oct 24, 2019, 10:00 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Ladies and gentlemen, thank you for standing by, and welcome to BGC Partners third-quarter 2019 earnings call. [Operator instructions] Please be advised that today’s conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today, Vice President of Investor Relations Ujjal Basu Roy. Please go ahead, sir.
Ujjal Basu Roy — Vice President of Investor Relations
Good morning. We issued BGC’s third-quarter 2019 financial results press release and the presentation summarizing these results earlier this morning. You can find these at ir.bgcpartners.com. BGC spun-off all the shares of its former subsidiary, Newmark, held by BGC to the stockholders of BGC on November 30, 2018.
Because BGC did not own any shares of Newmark as of the year-end 2018, Newmark’s results are presented as discontinued operations within BGC’s consolidated results for all periods through the November 30, 2018 spin-off date. Newmark’s results are not included in BGC’s consolidated results presented after the spin-off. Unless otherwise stated, all financial results and outlook discussed in today’s call reflect only continuing operations of BGC, and therefore, will not match the results and tables in the company’s press release for the third quarter of 2018 dated October 25, 2018. Unless otherwise stated, the results provided on today’s call compare to only the third quarter of 2019 with the year-earlier period.
We will be referring to our results on this call only on adjusted earnings basis unless otherwise stated. We may also refer to adjusted EBITDA. We may refer to our liquidity, which we define as cash and cash equivalents plus marketable securities that have not been financed to reverse repurchase agreements and securities owned, less securities loaned and repurchase agreements. We define total capital as redeemable partnership interest, total stockholder’s equity and noncontrolling interest in subsidiaries.
All non-GAAP results discussed herein are comparable to and reconciled with the most directly comparable GAAP figures from BGC’s continuing operations. Please see today’s press release for results under Generally Accepted Accounting Principles or GAAP. Please also see the relevant section in the back of today’s press release for the complete and updated definitions of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results and how, when and why management uses such terms. Additional information with respect to our GAAP and non-GAAP results mentioned in today’s call is available on our website at ir.bgcpartners.com and in our investor presentation.
And we refer to the company’s fully electronic businesses as Fenics. These offerings include our fully electronic brokerage products, as well as the sale of market data, software solutions and post-trade services. I also remind you that the information regarding our business on today’s call that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Such statements involve risks and uncertainties.
Except as required by law, BGC undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC’s SEC filings, including, but not limited to, the Risk Factors and the special note on forward-looking information set forth in these filings and any update on such risk factors and special note on forward-looking information contained in subsequent reports of the Form 10-K, Form 10-Q or Form 8-Ks. I’m now happy to turn the call over to Howard Lutnick, chairman and CEO of BGC Partners.
Howard Lutnick — Chairman and Chief Executive Officer
Thank you, Ujjal. Good morning, and thank you for joining us for our third-quarter 2019 conference call. With me today are BGC’s president, Shaun Lynn; our chief operating officer and interim chief financial officer, Sean Windeatt; and our chief accounting officer, Sean Galvin. Our revenues improved by over 14% driven by strong growth generated across several of our businesses despite the $9 million foreign exchange headwind with respect to the strengthening U.S.
dollar. I’m pleased to report that the company’s board of directors has declared a qualified dividend of $0.14 per share. This translates into a 9.8% dividend yield based on yesterday’s closing stock price. We continue to study restructuring our partnership into corporation, which would simplify BGC’s organization.
We will provide an update on this analysis before the end of the year, although any action we may take will not occur until next year. Lastly, we continue our search for a permanent chief financial officer, and I hope to update you by the end of the year. With that, I’ll turn the call over to Shaun Lynn.
Shaun Lynn — Chief Operating Officer and Interim Chief Financial Officer
Thank you, Howard, and good morning, everyone. Our rates revenues grew by 29%, which reflected strong growth from both Fenics, as well as voice/hybrid business. BGC’s energy and commodities business improved its top line by 25%, led by the acquisitions of Poten and Ginga Petroleum, as well as organic growth, partially offset by the sale of CSC Commodities. Revenues from equities, insurance and other asset classes increased 19%, led by the acquisition of Ed Broking.
Turning now to Fenics, our fully electronic brokerage revenues increased by 12%, while our high-margin data, software and post-trade business was up by 11%. Fenics net and total revenues improved by 12% and 16%, respectively, for the quarter. During the quarter, around 20 of our voice/hybrid desks across multiple asset classes globally achieved significant year-on-year electronic revenue growth. We expect to have continued success converting voice/hybrid desks over time as we roll out our enhanced Fenics platform across more products and geographies.
We are making excellent progress with our new Fenics stand-alone fully electronic offerings, which currently include Lucera, which is our software-defined network, offering the trading community direct connectivity to each other. Fenics GO, our electronic trading platform for the arrangement and execution of exchange-listed equity futures and options in partnership with three of the large electronic liquidity providers. Capitalab, Nikkei 225 options compression service,…