StoneX’s Cost Synergy Delays Clash With RJO Integration Acceleration in Q3 2026 Earnings Call

Date of Call: Aug 6, 2026

Financials Results

• Revenue: Net operating revenues of $719.7M, up 47% YOY. Operating revenues of approximately $1.47B, up 43% YOY.
• EPS: Diluted EPS of $1 per share, an 85% increase YOY. Year-to-date EPS of $3.49 per share, up 82% YOY.

Business Commentary:

Revenue and Earnings Growth:

• StoneX Group reported total net operating revenues of $719.7 million for Q3 FY26, up 47% year-on-year, alongside net income of $127.9 million, up 102% year-on-year.
• The growth was driven by strong performance across commercial and institutional segments, with the commercial segment up 90% and institutional up 56% in net operating revenue.

Segment Performance:

• The commercial segment's net operating revenue increased 90% year-on-year, driven by strong performance in global hedging, with significant contributions from listed derivatives, OTC derivatives, and physical contracts.
• The institutional segment saw its highest-ever volumes in securities, with average daily volume up 33% due to exceptional performance in equities market-making.

Impact of Acquisitions:

• The acquisition of R.J. O'Brien contributed $78.8 million in net operating revenues for the quarter, and Benchmark contributed $29.5 million, marking their best quarterly performance.
• These acquisitions have bolstered StoneX's position in the market and expanded its product offerings.

Payments Segment Growth:

• The payment segment reported a 12% increase in net operating revenue and a 20% increase in ADV year-on-year, reaching a record $96 million.
• This growth is attributed to the company's investment in proprietary technology and strategic partnerships, enhancing platform capacity.

Interest and Fee Income:

• Interest and fee income, net of interest paid to clients, increased by $38 million to $111.9 million, with R.J. O'Brien contributing $30 million.
• The increase is supported by higher average client equity and FDIC sweep client balances.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated, 'I'm pleased to report our third quarter results.' CFO noted, 'We delivered strong third quarter results.' They highlighted record net income and EPS growth, strong segment performance, and expressed excitement about 'the growth prospects of the company and the continued expansion of that ecosystem.'

Q&A:

• Question from Dan Fannin (Jefferies): Follow-up on the physical market strength, underlying activity drivers, and impact of Project Vault.
  Response: Physical business strength driven by precious metals dislocations and expansion into non-precious metals (e.g., cotton, coffee, cocoa) via financial client synergies. Project Vault impact not discussed.

• Question from Dan Fannin (Jefferies): Progress on RJO integration cost synergies and early revenue synergy attribution.
  Response: Cost synergies progressing well, run rate ~$37-38M annualized exiting Q3, targeting mid-$40s by fiscal year-end. No revenue synergies quantified to avoid rushing; cross-selling momentum is positive.

• Question from Dan Fannin (Jefferies): One-time items affecting professional fees and normalized outlook for Q4.
  Response: Professional fees benefited by ~$12.5M insurance recovery and ~$8.5M net settlements. Severance/retention costs were ~$4M. These items are noted for normalization.

• Question from Jeff Schmidt (William Blair): Takeaways from RJO's books and timeline for cross-selling OTC derivatives.
  Response: Early cross-selling wins achieved by offering platforms/capabilities; deeper integration and education required for all clients. No forced sales; strategy is gradual awareness and suitability, similar to OTC build-outs in other regions.

• Question from Jeff Schmidt (William Blair): Drivers of declining RPM in payments business and future outlook.
  Response: RPM decline due to proprietary XPAY system rollout enabling high-volume, low-value payments previously turned away. Volumes grew 20% YOY; RPM may continue to decline but is now near prior highs.

• Question from Jeff Schmidt (William Blair): Growth potential for client float post-RJO and investment strategy changes.
  Response: Client float expected to grow high single-digits annually. Investment strategy unchanged: using swaps (~$2.5B at ~3.51%) to floor rates, targeting 10-15 bps premium over SOFR, with limited duration extension.

• Question from Jeff Schmidt (William Blair): Adoption of automated trading platforms in OTC derivatives and benefits.
  Response: Automated/AI platforms accelerated, improving efficiency in OTC derivatives (e.g., electronic swap matching). Early wins in cost savings, vendor reduction, and faster product rollout to be highlighted next call.

• Question from Dan Fannin (Jefferies): Updated thoughts on M&A activity and expectations for H2.
  Response: M&A remains business-as-usual; actively evaluating 10-40M$ transactions that expand geography, product, or client books. Disciplined and integrated approach, as demonstrated by RJO.

Contradiction Point 1

Cost Synergy Target Timeline

Inconsistent guidance on when cost synergies will reach their peak.

Dan Fannin (Jefferies) - Dan Fannin (Jefferies)

2026Q3: Cost synergies are tracking well: ~$32M at the end of Q2, ~$37-38M exiting Q3, targeting mid-$40s by end of FY26 (Q4) and ~$50M by end of Q1 FY27. - Bill Dunaway(CFO)

What updates can you share on RJO integration's cost synergies and early revenue synergy progress? - Dan Fannin (Jefferies)

2026Q3: Cost synergies: Run rate is increasing: ~$32M in Q2, ~$37–38M in Q3, targeting $45–46M by FY-end (next quarter), and $50M by Q1 FY27. - Bill Dunaway(CFO)

Contradiction Point 2

Payments Business RPM Trajectory

Conflicting statements on whether RPM has bottomed or will continue to decline.

"What were the key drivers of the company's earnings results this quarter?" - Jeff Schmidt (William Blair)

2026Q3: The trend of lower RPM while volumes grow is expected to continue. - Philip Smith(CEO)

What factors are causing the decline in payments RPM, and what is the potential for further decline? - Jeff Schmitt (William Blair)

2026Q3: [A recent quarter (Q3) saw rates per million increase slightly after the initial post-rollout decline]. - Philip Smith(CEO) & Bill Dunaway(CFO)

Contradiction Point 3

RJO Integration Timeline and USFCM Consolidation

Timeline for completing U.S. FCM integration accelerated significantly.

Dan Fannin (Jefferies) - Dan Fannin (Jefferies)

2026Q3: The USFCM consolidation (a major integration step) is complete. - Philip Smith(CEO)

Can you update us on the RJO integration's cost synergies and early revenue synergy progress? - Daniel Fannon (Jefferies)

2026Q2: Non-U.S. business integration is the priority, with U.S. FCM integration starting gradually this quarter, testing with small client groups before full consolidation by end of this month. - Philip Smith(CEO)

Contradiction Point 4

Timeline for RJO Cross-Selling and OTC Derivatives Rollout

Expected time for client rollout and product adoption shifted from immediate to a gradual, multi-phase process.

What are your key insights on the recent earnings? - Jeff Schmidt (William Blair)

2026Q3: The strategy is similar to building out OTC businesses in other regions—gradual, client-focused expansion without pressure, leveraging the ecosystem's full range of products. - Philip Smith(CEO)

What are the key insights from reviewing RJO's financials, and how long might cross-selling OTC derivatives take? - Jeff Schmitt (William Blair)

2026Q2: RJO clients will gain easier access to OTC products post-full U.S. integration. - Philip Smith(CEO)

Contradiction Point 5

Cross-Selling and RJO Integration Timeline

Timeline for cross-selling and client integration appears to have shifted.

Jeff Schmidt (William Blair) - Jeff Schmidt (William Blair)

2026Q3: Early success stories exist where StoneX capabilities are being utilized by RJO clients. The strategy is similar to building out OTC businesses in other regions—**gradual, client-focused expansion** without pressure. - Philip Smith(CEO)

What are the key insights from reviewing RJO's financials and the expected timeline for cross-selling OTC derivatives? - Daniel Fannon (Jefferies LLC)

2026Q1: The integration timeline will allow for more comprehensive cross-selling as **entities are consolidated**. - Philip Smith(CEO)