BGC Partners, Inc. (NASDAQ: BGCP), a global brokerage company specializing in financial and real estate markets, has lowered its revenue forecast for the second quarter.
Despite strong gains in revenue and profit in the first quarter, the company sees turnover across rates and foreign exchange in the three month through June 2020 below forecasts and warns that revenue is likely to be slightly below the low-end of the range of its previously stated outlook.
BGC Partners, however, expects pre-tax adjusted earnings to be a touch higher than current estimates. Additionally, BGC’s margins benefited from its improved payout ratio related to its Fenics platform.
BGC’s FENICS solutions support all aspects of foreign exchange (FX) option activity from pricing, automated price distribution, trading, risk management, and post-trade processing (STP, trade reporting, etc.).
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BGC Partners shares have had a stellar run earlier this month, gaining 25 percent to print a 3-month high at $3.22 which made it one of the best performing stocks on the NASDAQ market. The stock however was unable to repeat the trick as quit markets after Corona-led volatility lost steam was impacting revenue growth.
The company pointed out in May that its guidance ranges for Q2 revenue were $525M-$575M and Q2 pretax adjusted earnings of $89M-$109M, which were unusually wide due to the uncertainty regarding the effects of the pandemic.
In the first quarter, the company’s adjusted earnings totaled $99.78 million or $0.19 per share for the period. This compares with $61.87 million, or $0.18 per share, in Q1 2019.
BGC Partners’ voice/hybrid and fully electronic brokerage businesses benefited from the unprecedented amounts of government and corporate debt issuance that were underway over March, April and May. But at some point in June the quantitative easing policies were bound to run out of momentum and the shares were thus punished.