Marex (MRX) Q2 2026 Earnings Call Transcript

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DATE

Wednesday, Aug. 12, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• Head of Investor Relations - Adam Strachan
• Group Chief Executive Officer - Ian Lowitt
• Group Chief Financial Officer - Crispin Robert Irvin

TAKEAWAYS

• Revenue -- $696 million, up 39% year over year driven by growth across all four business segments.
• Adjusted Profit Before Tax -- $166 million, a 56% increase from the prior-year period reflecting the increasing contribution from higher-margin infrastructure-intensive businesses.
• Adjusted Profit Before Tax Margin -- 23.8%, up from 21.3% last year due to infrastructure-intensive revenue streams and organic growth.
• Adjusted Basic Earnings Per Share -- $1.72, representing 59% growth versus last year while excluding a one-time gain from a business unit sale.
• Return on Equity -- 37.5%, which management attributed to the firm’s efficient use of its capital base following the IPO.
• Total Client Cohort -- 77 clients generated more than $5 million in annual revenue, up from 36 in 2024, driven by existing clients expanding their platform usage.
• Organic Profit Contribution -- Approximately 80% of year-over-year profit growth, as recent acquisitions currently focus on integration and synergy capture rather than immediate earnings contribution.
• Clearing Revenue -- $161 million, up 16% year over year as record average client balances offset lower market interest rates.
• Average Clearing Balances -- $19.1 billion, growing 36% from $14 billion in the fourth quarter of 2025 due to new client wins and higher exchange margin requirements.
• Agency and Execution Revenue -- $351 million, increasing 35% year over year led by strong momentum in prime services and foreign exchange.
• Prime Services Revenue -- $120 million, reaching a record high through deeper institutional relationships and demand for securities-based swaps.
• Securities Revenue -- $283 million, up 68% year over year reflecting record performance in the prime business and the Hamilton Court acquisition.
• Market Making Revenue -- $118 million, growing 106% year over year driven by favorable trading opportunities in metals following developments in the Middle East.
• Solutions Revenue -- $71 million, up 74% year over year supported by a technology replatforming that increased straight-through processing capacity.
• Net Interest Income -- $30 million, declining from $35 million in the prior-year period as interest expenses from senior debt issuances offset increased interest income.
• Total Assets -- $42.1 billion, up from $32.7 billion at the end of 2025 reflecting franchise growth and prime business expansion.
• Liquidity Headroom -- $1.8 billion, a figure management views as a ‘sensible insurance cost’ to support clients and future growth.
• Risk-Adjusted Capital Ratio -- 12%, remaining above the 10% benchmark for maintaining an investment-grade credit rating.
• Capital and Debt Issuance -- $500 million in hybrid capital and $500 million in senior unsecured notes, extending the maturity profile of firm funding.
• M&A Efficiency -- Three 2025 acquisitions generated $60 million in annualized profit after tax, a nearly fourfold increase from their $16 million combined profit at acquisition.
• Average Revenue Per Client -- Increased 34% year over year, demonstrating that customers are making broader use of the global platform.
• Profitability Consistency -- Adjusted profit before tax grew year over year in 19 of the past 20 quarters, spanning varied volatility and interest rate environments.
• Exchange Volume -- Down 17% compared with the first quarter of 2026, which management offset with growth in diversified infrastructure services.
• Metals Market Making -- Outperformed exchange volumes as favorable spreads in base and precious metals drove revenue higher.
• Growth Targets -- Management expressed confidence in achieving the top end of its 10% to 20% annual growth range based on the strong first-half performance.

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RISKS

• CFO Irvin noted that the first half of the year included ‘the impact of the isolated client default in January,’ which negatively affected Clearing segment profitability.
• CEO Lowitt reported that ‘volumes on our key exchanges reduced meaningfully, down 17% compared with the first quarter,’ representing a moderation from exceptionally high activity levels.

SUMMARY

Management reported record first-half profitability driven by structural growth that outweighed cyclical market headwinds, including reduced exchange activity and lower interest rates. The company highlighted the diversification of its earnings streams into infrastructure-intensive businesses like clearing and prime services, which now provide greater earnings resilience. Strategic initiatives focused on market structure innovation, such as digital asset collateralization and US Treasury cross-margining, were identified as key drivers for deepening institutional relationships. The group expanded its global footprint through several acquisitions aimed at scaling product capabilities and geographic reach in Asia and Europe.

• CEO Lowitt characterized the right-tail profit distribution as becoming ‘materially thicker,’ noting that 25% of trading days over the last 12 months generated daily profits exceeding $3 million.
• Management reported being the ‘first and thus far, only firm’ to solve operational complexities for offering cross-margining on US Treasury futures cleared on CME and cash US Treasuries clearing via FICC with DTC.
• The company enabled clients to use USDC stablecoins as initial margin under a CFTC pilot program and executed an on-chain repo transaction utilizing tokenized US Treasuries.
• CFO Irvin stated that despite flat interest rates and a 70 basis point reduction in the average Fed funds rate, clearing net interest income grew 31% due to balance expansion.
• CEO Lowitt attributed growth in the Solutions segment to the ‘replatforming of the business’ which created capacity for higher volumes through straight-through processing.
• Management indicated that the BrightPoint acquisition will enhance access to China through a local management team and institutional relationships that would be ‘difficult to replicate organically.’
• CFO Irvin reported that net new client balances added approximately $1 billion through the beginning of August, with a healthy pipeline remaining for the second half of the year.

INDUSTRY GLOSSARY

• FCM: A Futures Commission Merchant, which is an entity that solicits or accepts orders for futures or options on futures and accepts money or assets to support those orders.
• Cross-margining: A practice that allows a market participant to offset margin requirements for related positions across different markets or clearing houses, improving capital efficiency.
• FICC: The Fixed Income Clearing Corporation, which provides clearing and settlement services for US government securities and mortgage-backed securities.
• Canton Network: A blockchain network designed for institutional use to facilitate the tokenization and transfer of financial assets.
• USDC: A digital stablecoin that is pegged to the value of the US dollar.
• Hybrid Capital: A financial instrument that combines characteristics of both debt and equity, such as perpetual subordinated notes.

Full Conference Call Transcript

Operator: Thank you for joining us, and welcome to the Marex Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Adam Strachan, Head of Investor Relations. Please go ahead.

Adam Strachan: Good morning, everyone, and thanks for joining us today for Marex's 2Q 2026 Earnings Call. Speaking today are Ian Lowitt, Group CEO; and Rob Irvin, Group CFO. After their formal remarks, as usual, we will open the call to questions. Before we begin, I would like to remind everyone that certain matters discussed in today's call are forward-looking statements relating to future events, management's plans and objectives for the business and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in Marex's press release issued today.

The forward-looking statements made today are as of the date of this call, and Marex does not undertake any obligation to update them. Finally, the speakers may refer to certain adjusted or non-IFRS financial measures on this call. A reconciliation schedule of the non-IFRS financial measures to the most directly comparable IFRS measures is also available in today's earnings release. A copy of the release and investor presentation are available on the Investor Relations page of the Marex website @max.com.

Ian Lowitt: Good morning, everyone, and thank you for joining us. Q2 2026 was another record profit quarter for Marex, our sixth record quarter since we went public just 2 years ago in April 2024. Second quarter revenues increased 39% year-on-year to $696 million, and adjusted profit before tax increased 56% to $166 million. Adjusted profit before tax margin expanded to 24%, reflecting the increasing contribution from our higher-margin infrastructure-intensive businesses. Basic earnings per share increased to $2.09, and return on equity was 37.5%. Excluding nonoperating items such as the $35 million gain on the sale of the Winterflood custody business as well as some costs relating to our Bermuda redomicile in the second quarter, adjusted earnings per share were $1.72.

Looking at the first half as a whole, adjusted profit before tax was $319 million, equivalent to the group's total annual profit in 2024. Adjusted EPS for the first half was $3.29, while reported EPS was $3.61. On a trailing 12-month basis, reported EPS was $5.72. We believe these results demonstrate the increased earnings power of the Marex franchise and validate the strategy we've been executing. We've worked hard to build a business that is diversified across products, business lines and geographies to support sustainable growth. While market conditions remain important to individual businesses, at the group level, our portfolio of businesses has increasing earnings resilience. This is evident in the second quarter.

Volumes on our key exchanges reduced meaningfully, down 17% compared with the first quarter, while market volatility also declined and interest rates were flat, although commodity prices remained elevated. Notwithstanding that market backdrop, second quarter adjusted profit before tax increased 9% versus the first quarter. Since the IPO, we have clearly diversified in ways which make our earnings less dependent on exchange volumes. One of the questions we get asked repeatedly is how much of our performance is driven by the operating environment and how much by structural growth. When we came to market at IPO, we described our objective to invest in sufficient structural growth to offset the inevitable cyclical impact of our markets on our results.

As we talked about on the previous slide, that doesn't mean the operating environment no longer matters. Of course, it does. But we have now built a platform where the combination of diversified earnings streams and structural growth outweighs the cyclical elements over time. The evidence of this is apparent in our track record. We've increased profitability sequentially every year over the past 12 years. Looking at performance at the quarterly rather than annual level. Over the past 5 years, we've delivered year-over-year adjusted profit growth in 19 of the past 20 quarters. This is a remarkable record of sustainable growth. This includes periods of elevated volatility, lower volatility, increasing and decreasing interest rates, and varying levels of exchange activity.

Since our IPO in the second quarter of 2024, quarterly adjusted PBT has grown at an average rate of 48% year-on-year, with the upper quintile averaging 72% and the lower quintile averaging 21%. While this is obviously a wide range, it gives us a high degree of confidence in our ability to grow at least in line with the top end of our 10% to 20% growth target range. On the previous slide, we showed how our business has grown on a quarterly basis. On the left of this slide, you can see the steady increase in monthly profitability over time. The lower Sharpe ratio for 2026 reflects the exceptional volatility and unusually strong profit month we experienced in Q1.

On the right-hand side, you can see the distribution of daily profitability. Over time, that distribution has continued to shift to the right as profitability has increased. During the first half of 2026, the right-hand tail has become materially thicker, reflecting the exceptional market conditions, particularly in March. Importantly, those right-tail returns weren't driven by taking more risk or by a single business. They reflected the breadth of the platform with a growing number of businesses, all capable of generating significant returns on any given day when the market opportunity arose. You can see that in the increasing number of $3 million-plus profit days, which increased to 58 over the last 12 months, representing 25% of trading days.

At the same time, the number of loss-making days remained relatively low at just 11 or 4% of trading days, consistent with what we have seen historically. So the left tail is consistent and skinny, and the right tail is now quite thick. I expect that as we move past the exceptional conditions of Q1, the distribution will become more typically bell-shaped with the center of the distribution further to the right, reflecting our growth. We're already seeing that in June and July. An alternative lens on our growth and the increasing breadth and strength of our platform is the evolution of our client relationships.

As the platform has expanded, we've been able to deepen relationships with larger and more sophisticated clients. In 2026, we have 77 clients generating more than $5 million of annual revenue on a run-rate basis, up from 49 in 2025 and 36 in 2024. Revenue from this cohort of clients has increased 59% since 2025, reflecting continued expansion of our largest client relationships. This growth isn't being driven by onboarding new $5 million clients. It's being driven by existing clients expanding the breadth of their relationship with Marex and doing more business with the firm as we continue to broaden our products, capabilities and geographic reach. The effect is not just with our largest clients.

We are seeing clients expand their relationships with us across the board, with average revenue per client up by 34%, demonstrating that clients are making broader use of the Marex platform. That's exactly the outcome we've been trying to achieve. As clients deepen their relationships with Marex and use more of the platform over time, they become an increasingly important driver of our structural growth. This is a steady, ongoing and reliable source of growth, which also demonstrates our underlying competitiveness. Disciplined M&A is a core part of our growth strategy, helping us broaden our capabilities, extend our geographic reach and accelerate growth. That said, most of our growth remains organic.

Around 80% of our year-on-year profit growth in the second quarter, for example, was organic. That's because our approach is not about buying earnings. The initial contribution from acquisitions is typically modest. The real value comes from integration, capturing synergies and leveraging the power of the broader Marex platform for growth. Our recent acquisitions demonstrate this clearly. If we look at our larger 2025 acquisitions, we paid a premium of around $60 million for a combination of Arna, Hamilton Court and Winterflood. At acquisition, based on their prior year's earnings, they generated around $16 million of profit after tax. In Q2, the 3 acquisitions generated an annualized run rate of around $60 million of PAT, around 3.5x the pre-acquisition earnings.

So the annualized returns from these businesses are already equivalent to the premium we paid to acquire them. That demonstrates our ability to integrate acquisitions successfully and deliver revenue and cost synergies and grow earnings materially over time. Importantly, we see further upside, particularly at Winterflood, where a number of the integration benefits and synergies have yet to be fully realized. We focus on the premium paid and return of premium because much of the book equity we acquire in the transaction consists of cash or cash equivalents or very liquid assets. So while we're attentive to total consideration, our focus is on the recovery of premium. Turning to 2026.

We expect BrightPoint, which we announced last month, to follow a similar pattern. Strategically, it significantly strengthens our global clearing franchise through a larger presence in Asia, adds high-quality infrastructure-intensive earnings, and enhances our access to China through an experienced local management team and long-standing institutional client relationships that would be difficult to replicate organically. Importantly, we also see opportunities to create additional value once the business is integrated into Marex, including internalizing clearing activity, increasing client balances and cross-selling our broader product offering across the combined client base. We expect the transaction to complete in late 2026 or early next year.

While BrightPoint is a somewhat larger acquisition, it remains consistent with our financial discipline at an attractive low single-digit multiple of premium paid, reducing further once identified synergies are taken into account. LEvMed and Web Traders are further examples of our approach. LEvMed enhances our market-making capabilities while adding physical commodities and a strong, experienced management team that we know well. Web Traders similarly adds capabilities in equity derivatives market-making and will allow us to internalize hedging activity within our structured products business, which we expect to support further margin expansion. As I said at Investor Day, we're increasingly the acquirer of choice based on the successful acquisitions we have enjoyed as part of Marex.

Our M&A pipeline remains strong, allowing us to be highly selective and to focus on opportunities where we have a high degree of confidence in the outcome. It's a disciplined and repeatable playbook: acquire strategically relevant businesses at attractive valuations, integrate them onto the Marex platform and grow their earnings over time. Finally, turning now to the role we are playing in the evolution of financial market infrastructure. These are exciting times with innovation proceeding at pace. This is a great time for us as it plays to our strengths as an adaptable and nimble market participant with the ability to get things done effectively for clients.

On this slide, there are 4 examples, which demonstrate how clients are increasingly looking to Marex to help them engage with these market changes. We are the first and thus far, only firm to have solved the operational complexity of offering cross-margining on U.S. Treasury futures cleared on CME and cash U.S. Treasuries clearing via FIC with DTC. This helps clients improve capital efficiency across their cash and futures positions. We are live with 3 clients and have more than 10 in the pipeline. In the quarter, we enabled clients to use USDC stablecoins as initial margin under a CFTC pilot program. This assists clients with collateral flexibility.

We also set up and executed an on-chain repo transaction for a key client, utilizing tokenized U.S. treasuries over the Canton network. This capability facilitates the tokenization of a broad range of securities, not just U.S. treasuries. These are essential building blocks for a robust digital asset prime offering, which we are developing. We are also working to support clients looking for access via an FCM to prediction markets and expect to be clearing on [indiscernible] in the third quarter. We already have a strong pipeline of clients for this service. These initiatives demonstrate the trust clients place in us and our ability to solve problems to support real-world demand.

These investments are also opening doors to new client relationships and ensure Marex remains at the forefront of market structure innovation. I'll now hand over to Rob to go through the financials.

Crispin Robert Irvin: Thanks, Ian. Good morning, everyone. As Ian said, we're very pleased with the strength of our performance in the first half of the year, with $1.39 billion of revenue and $319 million of adjusted profit before tax in the first half. These results reflect the strength and scale of the business. The second quarter was another record for us with revenues of $696 million, up 39% on last year, with each of our segments growing year-on-year. Total expenses increased by 35%, reflecting higher performance-related compensation on strong revenues, together with continued investment across the platform and the impact of acquisitions. Importantly, we continue to expand margins with adjusted profit before tax margin increasing to 23.8%.

Adjusted profit before tax increased 56% to $166 million and was 9% above Q1 this year, our previous record. Adjusted return on equity remained very strong at 37.8%, while adjusted basic EPS increased 59% to $1.72 per share. Turning to reported results. Profit after tax was $155 million, which included $28 million of nonoperating items, including a $35 million gain recognized on the sale of the Winterflood custody business. As the custody business was classified within discontinued operations, the gain is excluded from our adjusted results. However, it increases our profit after tax and therefore our shareholders' equity and is available to be deployed to support future growth.

I'll now take you through the performance of each business segment, starting with Clearing. Clearing delivered another strong quarter with revenue increasing 16% year-on-year to $161 million. Average clearing client balances grew to $19.1 billion in Q2, significantly up from $14 billion in Q4 and the Q1 average of $16 billion. This drove a 31% increase in clearing net interest income as balance growth more than offset lower rates year-on-year. As we discussed on our last earnings call, the first half has been an unusual market environment that included increased activity from some of our larger trading clients as well as higher exchange margin requirements.

We have seen structural growth in balances from expanding relationships with existing clients and strong balance growth from new clients. The latter added around $1 billion of net new balances through to the start of August, and we remain confident in our pipeline for the remainder of the year. Net commission income remained stable despite a reduction in contracts cleared compared to the second quarter of 2025, which had elevated volumes as a result of heightened activity following April tariff announcements. In Q2 2026, as expected, client activity moderated somewhat from the exceptionally strong levels seen in the first quarter.

Adjusted profit before tax increased 12% in the quarter, with margins at 49%, demonstrating the underlying profitability of the Clearing franchise. For the first half, revenue increased 16% to $299 million and adjusted profit before tax increased 8%. This includes the impact of the isolated client default in January. Turning now to Agency and Execution. Agency and Execution had another outstanding performance with revenue increasing to $351 million, up 35% compared to the second quarter last year. Securities revenue increased 68% to $283 million, led by strong growth in prime, FX and equities. Prime revenue increased to a record $120 million, driven by strong client demand and deeper institutional relationships.

FX also delivered an outstanding quarter, benefiting from an expanding European client base and the continued success of Hamilton Port, while equities continued its strong momentum, particularly in derivatives. These performances more than offset lower energy revenues following an exceptionally strong prior year comparator and lower market-wide exchange volumes compared to the highs of the first quarter this year. Overall, these results demonstrate the benefits of the investments we've made over a number of years. Prime Services has become an increasingly important contributor to the group, supporting both revenue growth and a higher-margin business mix. As a result, adjusted PBT increased 69% to $117 million in the quarter, with margin expanding to 33%.

Market Making also delivered another excellent quarter with revenue increasing 106% year-on-year to $118 million. Performance was once again broad-based with particularly strong contribution from Metals and Securities. Metals strength reflected continued client activity across both precious and base metals as developments in the Middle East created favorable trading opportunities. Securities also continued to benefit from the successful integration of Winterflood, which is performing strongly while creating new opportunities across the broader Marex platform. Energy benefited from higher client demand for hedging and favorable trading conditions compared to the prior year, albeit down from elevated first quarter levels. As a result, adjusted profit before tax increased to $45 million in the quarter, with the margin expanding to 38%.

Finally, Solutions, which delivered another strong quarter. Revenue increased 74% in the quarter, reflecting continued growth across hedging solutions and financial products, supported by favorable market conditions, while the prior year period was affected by lower client activity following the April 2025 tariff announcement. Hedging Solutions continued to benefit from strong client demand across commodities and FX, while financial products reflected continued strong demand from clients in structured products and the investments we've made in our technology platform. As a result, adjusted profit before tax increased almost fourfold to $25 million in the quarter, with margin increasing to 35%. Turning now to net interest income at the group level.

In the second quarter, NII was $30 million compared to $35 million in 2Q '25 as higher interest expense more than offset the growth in interest income. Interest income grew by $24 million, reflecting $6.8 billion of higher average balances, which more than offset a 70 basis point reduction in the average Fed funds rate. However, higher interest expense related to the group's 2 $500 million senior debt issuances completed in May 2025 and April 2026 and structured note issuance in solutions reduced net interest income overall. As we've said previously, we continue to hold significant liquidity headroom.

While this creates a modest near-term headwind to group NII, it is a deliberate choice that we view as a sensible insurance cost, positioning us to support clients and pursue future growth opportunities. NII decreased by $11 million compared with the first quarter, primarily reflecting the strategic deployment of excess liquidity into our market-related businesses. While much of this activity can be self-financing, our strong liquidity position enabled us to deploy house cash to support a portion of this growth. Although this can create some quarter-to-quarter variability in reported group NII, the economics remain highly attractive, with the benefits of this liquidity deployment reflected in our strong trading revenues.

Importantly, our focus remains on growing sustainable, client-driven NII as demonstrated by the continued strength and growth of clearing NII. Turning to the balance sheet. Approximately 80% of our assets continue to be directly driven by client activity, which is highly liquid and largely self-funding in nature. Total assets increased to $42.1 billion at the 30th of June, reflecting continued growth across the franchise, particularly within our prime business. After netting client assets and liabilities, the residual balance sheet is primarily comprised of corporate cash and other assets funded by group liabilities, including our structured notes and senior debt issuances.

To support the continued expansion of our client franchise while maintaining leverage metrics consistent with an investment-grade profile, we issued $500 million of hybrid capital during the quarter. The hybrid strengthened our capital base and provided additional balance sheet capacity to support client growth. We continue to take a disciplined and prudent approach to capital and liquidity management. Following our Bermuda redomicile, while we are no longer subject to consolidated FCA capital and liquidity requirements, our philosophy remains unchanged, and we intend to continue to internally manage the business to similarly conservative standards. Turning first to capital. We continue to hold significant excess capital relative to our previous regulatory minimum.

However, as you know, our key benchmark for capital allocation remains maintaining sufficient capital to support our investment-grade credit ratings with both S&P and Fitch. On that basis, our RAC ratio, or risk-adjusted capital ratio, at the end of June was approximately 12%, comfortably above the 10% level S&P defines as strongly capitalized and supportive of our investment-grade credit rating. Given our strong M&A pipeline and organic growth opportunities, we're comfortable with this headroom. On liquidity, we finished the quarter with $8.1 billion of funding sources, up from $6.2 billion at year-end. Liquidity headroom increased to $1.8 billion, providing substantial capacity above our internally assessed liquidity required and reinforcing the resilience of our funding profile.

We also successfully issued $500 million of senior unsecured notes during the quarter, extending the maturity profile of our funding. Both the hybrid and senior debt issuances were significantly oversubscribed, attracting new investors to the Marex story, and were executed at materially tighter spreads than our previous issuances, demonstrating the continued strength of market demand for our credit. Taken together, these actions further strengthen our capital, liquidity and funding position, leave us exceptionally well positioned to support our clients, capitalize on growth opportunities and continue executing our strategy from a position of financial strength. Finally, closing with risk management.

Average daily VAR increased to $5.8 million in the first half, reflecting the increased scale of the business and the exceptional market environment and opportunities. Importantly, 87% of trading days were profitable, with every week and every month generating positive revenue. On credit risk, we again had no realized credit losses in the quarter. Now I'll hand you back to Ian.

Ian Lowitt: Thanks, Rob. As you've heard, we continue to build a broader and more diversified business with significant structural growth and a growing contribution from higher-margin infrastructure-intensive activities. This is increasing the earnings power of the firm, supporting margin expansion and making our profits more resilient. We're deepening relationships with our largest clients, expanding our capabilities through disciplined acquisitions and investing in technology and market structure innovation. In the second quarter, we have also positioned ourselves to support future growth and client activity with additional equity and more liquidity through the issuance of $500 million of hybrid capital and $500 million of senior unsecured notes.

Our track record demonstrates the effectiveness of our strategy with year-on-year profit growth in 19 of the last 20 quarters through a wide range of market environments. We are very pleased with the progress we've made, see considerable opportunities to continue growing from here, and remain very confident about our future prospects. With that, we'd be happy to take your questions.

Operator: [Operator Instructions] Your first question comes from the line of Bill Katz with TD Cowen.

William Katz: Just maybe a big picture question for you. When you guided to feel comfortable at the high end of the 10% to 20% range, what kind of M&A contribution are you anticipating? And then secondarily, your margins came in quite strong quarter-on-quarter, year-on-year. Maybe update us on your thinking on where the long-term trajectory might sit.

Ian Lowitt: Thanks, Bill. So I think in terms of the growth, I think that we're not anticipating any kind of shift in how relevant that is in the sense that it's around 20% of our growth in the second quarter. While there's probably going to be some variability, we wouldn't anticipate any real change there. So we have a really robust pipeline. We have some really attractive companies that we're looking at. We're actually really excited about the M&A that we're closing in 2026. So I wouldn't expect anything different, and it's broadly in line. In terms of the margin, I think we're at the 24% range. That's higher than we've been operating at, as you know.

The things that are driving that, I feel like they are still in place. So I think all the things that we've talked about in the remarks will play through going forward. So I think that what we're seeing in terms of mix, in terms of where the business is operating, the progress we're making with some of our investments, the way in which the investments are starting to generate returns. None of that, I think, is changing. So I think that we're comfortable with where the margins are now. And over time, I could see those potentially continuing to increase.

But if it is going to increase from these levels, in all likelihood, it will be slow and steady rather than something that's dramatic.

William Katz: Just as a follow-up, I have a question. One thing you mentioned that the skew of your adjusted profit before tax continues to move to the right, and you expect more of a bell curve, including into July, if I heard you correctly. So I was just wondering if you might be able to give us an update of how third quarter trends are unfolding relative to maybe pacing coming out of the second quarter.

Ian Lowitt: Sure. I mean, essentially, what we're seeing in July and into the short portion of August is just a continuation of what we saw in the first half. So it's just a maintenance of exactly what we've experienced. And while there's obviously some potential for things to change, based on what we see at the moment, we see the firm continuing to operate at the levels we operated in the first half.

Operator: Your next question comes from the line of Alex Blostein with Goldman Sachs.

Alexander Blostein: I wanted to go back to Slide 8 with some of that incremental client-level disclosure, which is definitely very helpful. Ian, could you maybe expand on sort of sources of growth in the larger client bucket? So when you talk about 57% growth in those clients that are generating over $5 million of revenues, can you just provide a little more granularity in like the types of clients, the category of clients where you're seeing the most traction? That's the question that probably comes up the most with investors.

Ian Lowitt: Yes. Thanks, Alex. Well, look, I mean, I think that the 59% includes the fact that there are more clients that are doing more than $5 million with us. So it's about the cohort that is delivering more revenue for us. So some of it is just the fact that more clients are in that cohort than were there previously, and that's a big part of what's driving it. The average is actually very consistent. So essentially, what's driving it is more clients operating in that bucket.

The range of clients in the bucket, though, is very heartening to see because it ranges and includes commodity producers, commodity consumers, and then a large number of financial players, whether those be other banks that are looking for access to market liquidity, whether those are asset managers, whether those are some of the hedge funds, whether those are some of the real money long-only funds. So there's actually a very broad range of clients that are all seeing essentially the same thing, which is an opportunity to engage with the firm to a greater extent as we expand out into more products, more geographies, and we deepen the relationship. We establish increased credibility.

So what we're seeing is the most established clients are actually increasing their business with us, and they're doing that in part because they're seeing such great service from us. And then there's a new group of people that are coming into the $5 million-plus bucket. They're almost naturally at the low end of that because they've just come in. And those are ones that we also look to grow over time.

Alexander Blostein: My second question is around your prime brokerage business. It's been an incredibly solid environment for PE businesses really across the street. You've seen spreads and funding spreads and equities widen out quite substantially. And there are clearly concerns or questions around perhaps just capacity- balance sheet capacity with some of the larger banks. So to what extent does that give you guys an opportunity to see more structural growth in PB as capacity perhaps becomes more limited with some of the larger players? And then secondly to that, I would love to get just a little more granularity on the composition of the PB revenues and how much is coming from the levered ETF community.

Ian Lowitt: Sure. So I think that I mean what we're seeing in this business is maintenance of what we've seen in the third quarter as continuation of the second. So we're not seeing a drop-off in balances. We're seeing maintenance of balances, and we're seeing maintenance of the spreads. As a business over that time period, it's probably double where it was a year ago. So we are seeing substantial growth. That growth is coming by broadening the number of players we have participating in the business as well as increases in balances. But it's not just because we're getting bigger with a few players.

It's actually that there's a broader group of people that now see us as an extremely credible player in the space and are coming on to the platform. I'm not quite sure what the drivers are here, whether it's lack of capacity at some of the big banks or whether it's the very specific capabilities we bring here. But I think that to the thrust of your question, I don't really see anything in the short or medium term that's going to cause us to not be able to continue to grow this in a sensible and prudent way. So I think that there are tailwinds rather than headwinds with regard to this particular business.

But obviously, we are cautious, or not cautious. We're careful in how we look to grow that out. I think actually, Alex, you did ask a little about additional components of it. I think what's really important to understand is it's not just one thing either. I mean, we have an outsourced trading business. We have a prime or prime business, and then we have an on-balance sheet prime business. And all 3 of those are growing and expanding. And that's our intention: to build a broad capability that can service clients in a lot of different ways.

Operator: Your next question comes from the line of Chris Allen with KBW.

Christopher Allen: I wanted to ask a little bit about the clearing balance growth. You noted driven by new client wins, increased client balances, and higher margin requirements. Just trying to think about the run rate going forward. I think Rob might have talked about $1 billion from new client wins. Can you just confirm that? And then we think about margin requirements; they've been up, but they tend to normalize over time. So maybe you could help us think about the impact there and just your pipeline for continued growth from here.

Ian Lowitt: Yes. All right. So I think that in terms of the client balances, we would say what drives the margin requirement is actually more price than volatility. So while volatility might normalize if prices remain in and around the levels that they are currently, then I think margin balances will stay, or margin requirements at the exchanges will stay broadly where they are at the moment. I mean, what we see at play in terms of these balances is the factors that you described. So as prices are moving up and margin requirements are going up, that's certainly a driver of what the clients have to post to the exchange to support their existing business.

Clearly, business is growing, and that's making a big difference for our existing clients. And then there are new clients. I think as Rob said, we've added about $1 billion this year, and we see a healthy pipeline for the rest of the year. I think there probably are some unusual levels of trading activity from some of our clients in the first half of the year that potentially come off some amount, but we would hope that the other factors could offset what will essentially be a more normalizing set of environmental factors. So we've seen a lot of growth. I think we think that these are reasonable levels to maintain and potentially grow.

What would you add to that, Rob?

Crispin Robert Irvin: I'd say the only other thing I'd add, Ian, is that the majority of the growth in the second quarter came from outside of the U.S., which is very positive to see and underlines the strength of our franchise.

Christopher Allen: And then just as a follow-up, I wanted to ask about compute futures, which both CME and ICE are launching. Wondering if your clients are focused on it and how you think about the potential opportunity there?

Ian Lowitt: I mean, I'm not that familiar with compute futures, but I mean, as a general matter, I think that what we see is clients having genuine interest in having access through an FCM to alternative venues. And whether those are prediction markets or those are other venues that they can participate in, there does seem to be genuine interest. And that's partly the market-making firms that want to have access to those. Then there's a decent amount of hedge fund and other institutional interest. And so these don't feel like flash-in-the-pan kind of things. These feel like, so long as they have support from the regulators, these will be real markets that will have a lot of interest in them.

Does that address your question?

Operator: Your next question comes from the line of Ben Budish with Barclays.

Benjamin Budish: Maybe first, perhaps you could talk a little bit about the metals market-making business. It looks like your revenues pretty meaningfully outperformed both CME volumes and LME volumes. So I know there's always a function of volumes; it has to do with spreads, but maybe talk about what you saw in the quarter in that line item.

Ian Lowitt: No, I mean we're obviously extremely pleased with metals market making and market making more generally under Simon's leadership. I mean, I think part of the insight there, and I'd rather go into slightly dangerous territory with this based on how people felt about these terms when I showed in Q1. I mean, extraordinarily high levels of volatility are not necessarily the best environment to be operating in, particularly in market making. So in many ways, the second quarter, which had high levels of volatility, but didn't have quite the same extremes, may actually be a better environment for market making. And exactly to your point, it's not just about volumes.

It's also about what the spread is and the success that you have supporting your clients around their trading, and what it is they're looking to do that determines where you come out.

Benjamin Budish: And then maybe on the Solutions business, you called out some pretty robust growth in the first half of the year. I mean, it looks like things have really structurally stepped up. You alluded to a pickup in client activity, but you've also, in the past, talked about expanding distribution in Latin America and some other geographies. So maybe similarly, if you could unpack what you're seeing there? Are we at the right run rate? And how much is maybe new geographies, new distribution partners versus just heightened levels of activity?

Ian Lowitt: Yes. I mean, I think that what we see in solutions is the output of a variety of factors. And again, I think it all speaks to our confidence in future growth for that business. So I think that it's some of the factors that you've asked about, which is we are expanding. We're adding headcount. We're adding capabilities in different geographies. We're adding product capabilities. But what you also have over time is just an acceptance of the name, and the calling efforts often just take a while to generate initial interest.

And then once you've sort of done the first trade, you really are in a position where you can establish a relationship and sell additional products to that relationship. So some of this is just a natural evolution of a business that has to establish itself in a geography or in a particular product. I mean, the other thing that I would say about solutions is we did invest in essentially completely replatforming the business. That was a distraction for a period of time in the sense that management needed to spend a lot of time making sure that went well. But what that has also done is created a lot of capacity and capability.

And so we're supporting much higher volumes. And when you couple that capability, the emphasis in the business on creating straight-through processing and the opportunity for clients to essentially structure things themselves and then execute on our platform, that's supporting a lot of additional volume that doesn't require a lot of intervention from any of the folks in the solutions business. So the combination of all those things- the investment, the expansion, the ongoing acceptance of the Marex name, the progress that the team has made with clients as well as the investments we've made in technology and making that technology available to our clients. That, in combination, is what's driven the growth, and I don't see that stopping.

We see that continuing.

Operator: Your next question comes from the line of Alex Kramm with UBS.

Alex Kramm: Just wanted to come back to the slides with some of the new initiatives. And I know you just addressed this a little bit when Chris asked this question, but a couple of things here. One, on the treasury clearing, good to see that you're a frontrunner there. So any early reads of what is happening there? I mean, are you actually monetizing this? I know it's early days, but are people putting more balances to you? Are they trading more because they are having savings? So just a little bit more color: what exactly is happening on the treasury clearing side?

And then broadly on that slide, which one of those do you think can actually scale the most of those opportunities from a revenue and earnings perspective? What are you most excited about, I guess, on those 4?

Ian Lowitt: Yes. All right. So look, I mean, with regard to the cross margining, I mean, I actually think that the biggest impact of that will be just the credibility that we build in the marketplace with sophisticated players. I mean, CME and FICC have been trying to have this cross margining available to clients. And we were the ones who figured that out for our clients. I think that, that just positions us differently in the eyes of clients and that in and of itself is the thing that's going to probably be the most consequential outcome of this.

What we are seeing, though, to your specific question, is we are seeing larger shares of people's business in this particular space, and it does monetize effectively. It's not going to be an enormous mover of revenue and profitability, but it's attractive, and it's good business. And most importantly, it establishes us with some of those clients. I think as I described at Investor Day, the whole set of digital asset prime brokerage capabilities is one that I believe is important for us to participate in. In the sense that there's an ecosystem out there and a set of people who sort of play in this particular space.

And by providing this set of services to them, you can actually generate a really nice business. If it turns out that this actually is the beginning of, I don't know, rewiring the financial infrastructure, and it's all going to go tokenized, then we'll be extremely well positioned. So we're not doing this because we're evangelists on this, and we have a clear view that's going to happen. I mean, it might happen, it might not happen, I don't know. I do have a very high degree of confidence that we will make good money for those people who clearly do believe that this is what their business is and what they want to do.

And so it makes sense for us to do that, and it will be a profitable business, I think a highly profitable business probably. That's really the basis on which we are making that investment. Prediction markets are interesting to me in the sense that, of all of these things, I think that depending on how different parts of this play out, this potentially could be very large. I think it could represent a change in where liquidity resides. Now from our perspective, if we're providing the layer that connects people to essentially exchanges, we're largely indifferent between where that volume actually resides. I mean, I do think that it will reside on regulated exchanges rather than the offshore venues.

I mean, there will be demand for offshore venues in the sense that there will be some retail players for whom that will be fine. But I think for most institutional players, they're looking for rules around [indiscernible] and protections and visibility and all that kind of stuff. So I think the whole institutional market will remain with exchange-line venues. But whether there's a multiplicity of exchange venues over time, I can't say. But broadly, however that evolves, I think Marex is going to be in a very good place. Depending on how much prediction markets capture or are responsive to real demand that exists for hedging products and other things, this could actually be quite large.

And so we're excited about being able to start to clear some of the protection markets in the third quarter, and we have a lot of interest from clients to gain access to that. They don't want direct access. They want to go through an FCM. And again, that is helpful from our point of view.

Alex Kramm: And just a very quick follow-up, maybe a little nitpicky, but obviously, good traction on the margins, but I think the one soft spot is in the clearing segment. I think those margins have actually trended lower on a trailing 12-month basis. Maybe just tell us what's happening there? Are there more investments? Are you bringing on new teams that are maybe not profitable yet? So yes, just what's going on? And is this something that could still scale higher?

Ian Lowitt: Yes. I mean, the real answer to that, Alex, is just we had an idiosyncratic loss in the first quarter, and that dropped margins in the first quarter. And so if you look at our margins around the other quarters, it's actually 49%, 50-ish over the entire period. So I mean, there's really nothing that I would draw attention to, to say we think that the underlying margin in the business is declining. It feels like it's 50-ish, and that's a really healthy margin for that business.

Operator: Your next question comes from the line of Dan Fannon with Jefferies.

Daniel Fannon: I was hoping to discuss a little bit more about the Prime business. Obviously, a lot of growth. You talked about some of the durability. I was hoping to maybe unpack that a bit in terms of the type of customer and firm that you're having most success with and where you have the right to win. And ultimately, just trying to get a little bit more context around the durability of these balances as you think about the diversity in other areas.

Ian Lowitt: Well, I think that in terms of durability, I think that what we're seeing is share gains. And I don't think that I think that in almost all environments that I can envisage, I see the share gains persisting. We're not competing for the largest prime mandates, which I think end up with the large banks. We are taking share with funds and with hedge funds that are in that $500 million to $2 billion range, where we're providing them with the products that they're looking for, and we're also providing them with very high-quality service. And I think that as more and more people are aware that we're extremely skilled in the space. We know what we're doing.

We're reliable. We build more records with more clients. I think that's going to drive ongoing share gains. So it's now an extremely diversified business. I mean, it's covering an enormous number of stocks, lots of different providers. And so I think that it feels like the durability is there. I mean, obviously, what we saw in the second quarter was balances increased and then dropped a bit as a result of adjustments in pricing in some of the more volatile stocks. But on average, this thing is double where it was, and we don't see anything that's going to cause that to really change in any obvious way.

Daniel Fannon: And then within AGC and Execution, you had another really strong quarter. FX was a bit of a standout. Anything in particular that you could point to that drove that in the quarter?

Ian Lowitt: Yes. I mean, you saw it on that M&A slide; Hamilton Court has really turned into a real gem for the firm. I think it shows the power of taking what's a good business, but one that's struggling because it's just not that big and how effective it can be when you put it inside Marex, and it gets the benefit of our risk frameworks, our way of operating, the discipline that we have as a firm, the fact that they don't have to focus as much on those things as a business and they can focus more of their attention on winning clients and doing more business with them.

So what you're seeing in the FX is partly what we've seen in Hamilton Court, which is just a great success and a very substantial growth in earnings.

Operator: Your next question comes from the line of Patrick Moley with Piper Sandler.

Patrick Moley: A lot of great questions asked here. Maybe just one on the M&A pipeline. Curious how much of the focus going forward is going to be on adding capabilities to deepen wallet share with existing clients versus expanding the funnel and opening yourselves up to new client verticals that are somewhat untapped. And then maybe if you could just also talk about which new verticals, asset classes you're most focused on today?

Ian Lowitt: So I think it's hard to take what's like a whole portfolio of M&A opportunities that we're evaluating and say how much is in increasing the funnel versus positioning ourselves to deepen. I think most of what we would be doing, though, is in the increasing the funnel, whether that's a geographic expansion, which I think of as predominantly about adding new clients or some of the things that we're considering, which at their heart is about getting us into new activity that we're not in or we're in very small scale and what it does is it adds clients. So I'd say probably some genuine skew towards increasing the funnel rather than putting us in a position to deepen.

I think that in terms of some of the things that we're focused on, I think as we look across the platform, particularly in the capital markets area, some asset classes where building it out organically is slow and hard work. If we could accelerate some of that with acquisitions, then those are things that, if you can get the right firm at the right price and the culture is a match in the right way, that's probably where, if you could only do one thing, you do that thing rather than something else.

Patrick Moley: And then you made another interesting comment talking about prediction markets and some of the new market structure initiatives and said that the new client relationship that it's opening you up to. I'm just curious about maybe prediction markets in general and those clients wanting access to an FCM that can get them access to the liquidity pool. How much of that is coming from customers that might not typically be in your core customer base of commodity producers and consumers, asset managers, market makers? How much of it is from a more diversified set of corporates where this is maybe just a totally new greenfield opportunity?

Ian Lowitt: Yes. I mean, interestingly, when I was making that comment, I was thinking more about the digital asset stuff. So when you're thinking about some of the very sophisticated hedge funds that you don't have a natural in with at this point, the capabilities around digital assets are often the thing that is intriguing to them. The fact that we're offering that is often the door opener for us to other broader business. That's probably more true than what I would say around prediction markets. Again, our engagement with prediction markets at the moment is quite limited. So in terms of the pipeline for prediction markets, some of it is our existing clients. In a few cases, it's new clients.

But in there, it's financial players we would have wanted to have as clients more broadly, but the entree for us is that they're looking for access to a prediction market.

Operator: There are no further questions at this time. I will now turn the call back to Ian Lowitt, CEO, for closing remarks.

Ian Lowitt: Well, thanks, everybody. Thanks for all the questions. I mean, as I'm sure you've appreciated, we're very pleased with how we did in the second quarter. We're obviously very pleased with how we did in the first half. We drew attention to elements in our track record, which, again, we have a lot of pride in the 19 out of 20 quarters being up year-on-year. And hopefully, what you've gathered from the answers to the questions is we're excited about the second half and then where we're able to take the firm. We see a lot of momentum.

We see a lot of positivity, and we're in a virtuous circle of making progress with clients that creates more opportunity, and then that in and of itself sort of creates more growth and creates a basis for additional investment. So we're very pleased with where we've got to and extremely excited about our future. So thank you all.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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