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) recently held its earnings call for the third quarter of 2025, providing detailed insights into the company's performance and strategic direction. The call highlighted significant developments, including the successful closure of two major acquisitions—R.J. O'Brien (RJO) and Benchmark—and a focus on expanding digital asset capabilities.

CEO Insights: Strategic Acquisitions and Growth

CEO Sean Michael O'Connor emphasized the significance of the RJO acquisition, calling it "the largest and most consequential transaction we have ever undertaken." He described it as a "transformational transaction that positions StoneX as a market leader in global derivatives." O'Connor noted that the deal is expected to be "materially accretive to earnings and EPS" while enhancing margins and integration. The addition of nearly $6 billion in client float and the issuance of approximately 3.1 million shares as part of the purchase price are anticipated to immediately boost EPS and return on equity.

The Benchmark acquisition was also highlighted as a strategic move, bringing a robust sales and trading platform, award-winning research, and a highly experienced investment banking team. O'Connor stated that this transaction would be "accretive to both our ecosystem and bottom line earnings."

Custody and Clearing Platform Expansion

President Charles Martin Lyon focused on the importance of StoneX’s custody and clearing platform, which plays a critical role in enabling clients’ trading, financing, and investment strategies. Lyon reported a 27% year-over-year increase in correspondent clearing balances, reaching over $24 billion, and a 15% increase in FCM servicing average client equity balances to $6.8 billion.

Lyon also announced plans to expand digital asset custody capabilities in Q4 2025, including regulated custody for cryptocurrencies, tokenized securities, stablecoins, and real-world assets.

Financial Performance Overview

CFO William John Dunaway provided an overview of the financial results, stating that net income for the third quarter came in at $63.4 million with diluted earnings per share of $1.22. This represents a 2% growth in net income but a 2% decline in diluted EPS compared to the prior year quarter due to additional shares outstanding.

Net operating revenues were up 4% year-over-year but flat compared to the previous quarter. Segment performance varied, with the Institutional segment reporting record net operating revenues and segment income, growing by 27% and 41%, respectively. In contrast, the Commercial segment saw a 24% decline in net operating revenues and a 36% drop in segment income.

Securities operating revenues increased by 30% year-over-year, while FX CFD revenues rose 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 professional fees related to acquisition activity.

Outlook and Integration Plans

O'Connor reiterated the expectation that the RJO transaction will be "materially accretive to earnings and EPS," enhancing margins and integration. Lyon added 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 a trailing 12-month ROE of 16.6%. The integration of the international components of RJO is expected to be completed within the next 3 to 6 months, with U.S. integration likely taking 9 to 12 months.

Analyst Questions and Sentiment Analysis

Analysts raised concerns about the weakness in the Commercial segment and trading volumes, citing tariff uncertainty and reduced volatility as key factors. O'Connor acknowledged these challenges, noting that the impact of tariffs is expected to persist for some time.

During the Q&A session, O'Connor explained that revenue synergies from the RJO acquisition are expected to be "multiples of the cost synergies" over time. He also discussed the ongoing infrastructure rebuilding in the retail segment, with completion expected by the end of the fiscal Q2.

Analysts expressed concerns about the pace of revenue realization from integrations and the potential impact of tariffs on future performance. While management remained confident in the company's strategic direction, there was a more cautious tone when addressing operational challenges.

Risks and Concerns

Management identified "tariff uncertainty" and "diminished volatility" as key risks affecting the Commercial segment. Additional interest expenses from moving metals globally were also cited as contributors 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, particularly regarding digital assets.

Final Takeaway

StoneX closed two transformative acquisitions—RJO and Benchmark—that are expected to drive EPS and margin growth. The Institutional and retail segments delivered strong results in Q3, while the custody and clearing business expanded significantly. New digital asset solutions are set to launch in Q4 2025. 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.