Aug 6, 2026 earnings call — R.J. O'Brien integration and Prime growth
Total net operating revenues were $719.7 million, up 47% year-on-year, with net income of $127.9 million.
Revenue $1.5B (est $1.3B) · EPS $1.00 (est $0.86)
Key quotes
"So on the cost synergy side, as we -- as I mentioned on the last call, we, kind of, were exiting Q2 with about $32 million-ish run rate on an annualized basis of the cost savings."
"From essentially a standing start in 2018, we now serve more than 700 accounts globally with over $16 billion in client balances on the platform, generating nearly $140 million in net operating revenue in the last 12 months."
"In the Payment segment, we reported a 12% increase in net operating revenue and a 20% increase in ADV year-on-year to a record $96 million."
Analyst Q&A 3
Why physical grew; integration savings
Q (Daniel Fannon · Jefferies): Asked what is driving the strong physical business year-to-date and whether Project Vault or government activity helps growth. Also asked for numbers on RJO integration cost synergies and any early revenue synergies, and whether there were one-time items in the quarter to note.
A: Management said precious metals outperformance was driven by market dislocations and that they are expanding physical non-metals (cotton, coffee, cocoa) after acquisitions like CDI and by linking physical and financial services to offer unique products. On RJO cost synergies, they reported exiting Q2 at about $32 million-ish run rate, expect closer to $37 million, $38 million exiting Q3, target mid-40s ($45 million, $46 million) by fiscal year end and $50 million by end of first quarter. They said there are early revenue synergy wins but no committed timeline because some products need client education and suitability work; on one-timers they noted about a $12.5 million insurance recovery (net about $8.5 million) and a little over $4 million of severance and retention.
"So on the cost synergy side, as we -- as I mentioned on the last call, we, kind of, were exiting Q2 with about $32 million-ish run rate on an annualized basis of the cost savings." — William Dunaway (CFO)
RJO cross-selling, payments, float and swaps
Q (Jeffrey Schmitt · William Blair): Asked what the review of RJO's books showed and how long cross-selling OTC derivatives could take. Also asked why payments revenue per million (RPM) is falling and how far, how client float may grow after RJO annualizes and whether investment strategy changed, and why the automated trading platform was highlighted.
A: They said there have been early cross-selling wins by offering platforms and physical/OTC capabilities, but reaching R.J. O'Brien's 350 IBs and end clients takes time and education. For payments, the rollout of X-Pay increased capacity dramatically, bringing large volume, low-value flows so average daily volume rose while revenue per trade fell, and they expect that trend to continue for the foreseeable future. On client float, they see room to grow high single-digit percent after the deal annualizes; on investments they added about another $0.75 billion of 2-year swaps this quarter and overall have about $2.5 billion of swaps at a little over 350 basis points, with modest duration (nothing more than two years) and a target premium of 10 or 15 basis points over SOFR; the automated swap matching platform has been accelerated with AI and shows early efficiency wins.
"Overall, we've got about $2.5 billion of swaps out there at a little over 350 basis points, which puts a nice, kind of, floor for us on the piece of it." — William Dunaway (CFO)
M&A activity and target sizes
Q (Daniel Fannon · Jefferies): Asked for updated thoughts on M&A and whether deal activity will pick up in the back half of the calendar year.
A: They said they are always looking at transactions and are known as a consolidator, sticking to strict criteria: expand geography, product offering, or bring new clients. They said it's business as usual to pursue many smaller deals (typically $10 million to $30 million, $10 million to $40 million in size), they have a dedicated team for deals and integration, and they are disciplined and not desperate.
"I think I actually put it out there almost business as usual is for us to be acquiring companies sort of $10 million to $30 million, $10 million to $40 million in size that add to that increased capability." — Philip Smith (CEO)