Bgc Group Inc

NASDAQ:BGC

Earnings Call Transcript 2021-Q1

[Operator]

Welcome to the BGC Partners, Inc. First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Chryssicas, Head of Investor Relations. Please go ahead.

[Jason Chryssicas, executive]

Good morning. We issued BGC's first quarter 2021 financial results press release and presentation summarizing these results earlier this morning. You can find these at ir.bgcpartners.com.

Please note, you can find additional details on our quarterly results in today's press release and investor presentation. Unless otherwise stated, the results provided on today's call compare only the first quarter of 2021 with the year earlier period. We will be referring to our results on this call only on an adjusted earnings basis unless otherwise stated.

We may also refer to adjusted EBITDA. We may refer to our liquidity, which we define as cash and cash equivalents plus marketable securities, that have not been financed, reverse repurchase agreements and securities owned, less securities loans and repurchase agreements. We define total capital as redeemable partnership interest, total stockholders' equity and noncontrolling interest in subsidiaries.

Please see today's press release for results under generally accepted accounting principles or GAAP. Please also see the relevant sections in the back of today's press release for the complete and updated definitions of any non-GAAP terms or reconciliations of these items to corresponding GAAP results, and how, when and why management uses such terms.

Additional information with respect to our GAAP and non-GAAP results mentioned on today's call is available on our website at ir.bgcpartners.com and in our investor presentation. We refer to the company's technology-driven businesses as Fenics. Fenics offerings includes Fenics markets, Fenics growth platform, Fenics integrated market data software and solutions and post-trade services.

Businesses are categories as Fenics integrated to utilize efficient levels of technology such that significant amount of their transaction can be or are executed without broker intervention and have pretax adjusted earnings margins of at least 25%.

I'd also remind you that the information regarding our business on today's call that are not historical or forward-looking statements. These include statements about the effects of the COVID-19 pandemic on the company's business results, financial position that could be an outlook. Any forward-looking statements involve risks and uncertainties, except as required by law. BGC undertakes no obligation to update any forward-looking statements.

Any outlook targets discussed on this call assume no material acquisitions, buybacks, extraordinary transactions or meaningful changes to the company stock price. For discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, BGC's SEC filings, including, but not limited to the risk factors and special note of forward-looking information set forth in these filings and any updates to such risk factors and special note on forward-looking information contained in the subsequent reports on Form 10-K, Form 10-Q and Form 8-K.

I'm now happy to turn the call over to Howard Lutnick, Chairman of the Board and CEO of BGC Partners.

[Howard W. Lutnick, executive]

Thank you, Jason. Good morning, and thank you for joining us for our first quarter 2021 conference call. Joining me for today's call are BGC's Chief Operating Officer, Sean Windeatt; and our Chief Financial Officer, Steve Bisgay.

BGC's margins improved across nearly all measures, driven by record Fenics and Corant revenues. Excluding the one-off, pandemic-driven volume and volatility that occurred toward the end of the first quarter last year, we estimate our overall revenues would have grown by approximately $8 million as compared to a year ago. Beginning this quarter, we will categorize our Fenics businesses as Fenics Markets and Fenics Growth Platforms. Fenics Market includes the fully electronic portions of BGC's brokerage business. Our data software and post-trade revenues that are unrelated to Fenics growth platforms as well as Fenics Integrated revenues. Our Fenics Growth Platforms include Fenics U.S. treasuries, Fenics GO, Lucera, Fenics FX and our other newer stand-alone platforms.

These platforms were designed to build volumes and market share, which we've accomplished over the last 2 years. We expect to leverage our strong market share gains to drive significant revenue growth from our Fenics Growth Platforms going forward. Fenics Markets and Fenics Growth Platforms compete with highly valued companies such as the CME, Tradeweb and MarketAxess.

Fenics overall generated its fourth consecutive record quarter of net revenues, which grew 40% to $105.6 million. Fenics Markets revenues grew by -- grew 36.5% this quarter to $95.1 million and had a pretax profit margin of 30.2%. Revenues from our Fenics Growth Platforms grew at $10.6 million, an increase of 82.1%. As we continue to grow our higher-margin businesses, we're well positioned for increased profitability.

With that, I'd like to turn the call over to Sean Windeatt. I think Sean's line just dropped off. So Steve Bisgay, you want to jump in now, and we'll bring Sean Windeatt back on as soon as he reconnects.

[Steven Bisgay, executive]

Sure, sure. As reported in today's earnings release, BGC recorded its second highest ever total revenues of $567.6 million, behind only the year ago period where the COVID-19 pandemic grew of market volatility and trading volumes to record levels. Excluding the impact of these pandemic-related events, BGC's first quarter 2021 revenues would have been an estimated $8 million higher than last year. By geography, we saw Europe, Middle East and Africa revenues decline by 5.2%, and the Americas were down 6.6%, while Asia Pacific revenues declined by 7.3%.

By asset class, insurance increased 16.8%, while rates, credit, energy and commodities, FX and equity derivatives and cash equities were down by 3.3%, 7.3%, 9.4%, 11.6% and 13.9%, respectively. We took steps last year to optimize our front office headcount. With a focus on reducing underperforming and less profitable brokers, which lowered revenues in the short term, but increased profitability during the quarter. These measures, along with increased contribution from Fenics, led to a 4.2% improvement in average productivity of our financial brokers and salespeople compared to last year.

Moving on to Fenics. This quarter, Fenics generated net revenues of $105.6 million as we converted voice/hybrid brokers to Fenics Markets, which drove revenue 40% higher and delivered its fourth consecutive quarter of record net revenue. This was driven by Fenics Markets revenues of $95.1 million, an increase of 36.5% with a pretax adjusted earnings margin of 30.2%. Fenics Growth Platforms revenues increased to $10.6 million up significantly from a year ago, reflecting a 82.1% improvement, driven by strong growth in Fenics UST, Lucera and Fenics GO.

Under the former reporting methodology, Fenics brokerage revenues increased by 49.2% to $83.7 million, while data, software and post-trade revenues increased 13.3% to $22 million. Corant achieved record quarterly brokerage revenues of $52.4 million, growing by 16.8% and generated second consecutive quarterly profit.

Moving on to expenses. Our compensation and employee benefit expense under GAAP and adjusted earnings decreased in the first quarter of 2021 due to lower commissionable revenues, lower headcount and cost reduction initiatives previously executed. Compensation expense under GAAP reflects $1.7 million and $22.7 million of charges related to cost savings initiatives for the first quarter 2021 and 2020, respectively. Our non-compensation expenses decreased due to non-interest tighter cost control, lower selling and promotion activities as a result of pandemic, reduced professional and consulting fees, and decreased commissions and floor brokerage expense.

Moving on to adjusted earnings. Our pretax income was $114.5 million, an increase of 2.1%. We achieved post-tax adjusted earnings of $101.6 million, a 135-basis point margin expansion and adjusted EBITDA of $147.5 million, an improvement of 24.1%.

Turning to share count. Our fully diluted weighted average share count increased by 0.6% sequentially to $557.1 million under adjusted earnings in the first quarter of 2021. As of March 31, 2021, our spot share count was $557 million, an increase of 0.7% sequentially. We anticipate our net issuance of shares to be significantly lower than prior periods as we expect to use relatively more cash with respect to compensation and acquisitions to minimize dilution, and to repurchase more shares and/or units.

With respect to our balance sheet, as of March 31, 2021, our liquidity was $634.2 million compared with $652.6 million as of year-end 2020. Cash and cash equivalents were $574.4 million versus $593.6 million as of December 31, 2020. Notes payable and other borrowings were $1,313.3 million compared with $1,315.9 million.

In the second quarter, we expect to repay our $255.8 million of 5.125% senior notes due May 27, 2021, which will reduce our cash and debt levels.

Total capital was $890.4 million compared with $828.9 million. Cash uses have historically been the greatest in the first quarter, which includes payments of annual bonuses, tax payments and timing differences between commissions earned in the seasonally busier first quarter and commissions collected from business generated in the seasonally slower fourth quarter.

The company continues to explore a possible conversion into a simpler corporate structure. When there's clarity on U.S. federal tax policies, we'll be able to make a decision with respect to a potential corporate structure.

And with that, I would like to turn it back over to Sean.

[Sean Windeatt, executive]

Thank you, Howard, and thank you, Steve. Good day, everyone. As Howard mentioned, both our Fenics and Corant businesses generated strong revenue growth and profitability improvement during the quarter. Profitability across our Fenics Growth Platforms and Corant businesses improved approximately $15 million from last year primarily driven by higher revenues, reflecting the operating leverage in these businesses. Fenics reported record net revenues this quarter, supported by 40% growth and represented over 20% of our total revenues, excluding insurance.

As Howard mentioned earlier, we have modified our presentation of Fenics this quarter to more clearly describe and categorize our Fenics revenues. These total revenues are equal to the combined revenues of our formerly reported Fenics brokerage and data software and post-trade line items. The businesses in Fenics Growth Platforms are newer, fully electronic and stand-alone from other parts of our business. These are the fastest-growing parts of our overall business and have the potential for 50% pretax profit margins at scale.

Revenue generated from data, software and post-trade attributable to Fenics Growth Platforms are included within their related businesses. Fenics Growth Platform's 82.1% increase in revenues were driven by strong growth in Fenics U.S. Treasuries, Lucera and Fenics GO. Fenics U.S. Treasuries achieved record market share across all U.S. Treasuries platforms, growing from 6% to over 9% in March 2021. And represented over 18% of CLOB market, up from 9% the same period a year ago. Fenics U.S. Treasury average daily volumes also grew by over 47% in the first quarter of this year, outperforming all other U.S. Treasury platforms including those at CME, Tradeweb, Bloomberg and MarketAxess. Fenics U.S. Treasuries tighter pricing continue to attract client volumes, with nearly 70% of all our CLOB trades in the first quarter being transacted at prices only offered on our platform. Lucera revenues increased approximately 73% year-over-year as it won new clients, expanded existing customer relationships and reflected the integration of Algomi, which was acquired in March 2020. During the first quarter, Lucera launched [loom alpha] a new product that combines the popular functionality of Algomi's Alpha aggregation with Lucera's Global Bank and buy side connectivity and rates and credit execution. Fenics GO total volumes increased by 300% and grew estimated block size front month market share in Euro Stoxx 50, Nikkei 225 index options by 490 and 1,290 basis points, respectively.

During the first quarter, we launched DAX Index Options, and we expect to launch KOSPI 200 Index Options during the second quarter. The key to this technology is our ability to add products with low marginal cost. Our existing success in front month market share supports our ability to quickly scale and gain market share across our newly launched products. Fenics GO is the only anonymous multilateral electronic platform for block size listed equity index options, which delivers a unique advantage providing traders best execution as well as benefits to compliance offices who need to validate these requirements. Current brokerage revenues grew 16.8% to $52.4 million, setting a new quarterly revenue record.

During the quarter, we saw increased production from newly hired insurance brokers, underpinned by hardening insurance pricing trends. Our voice/hybrid business, including other revenues and excluding insurance, generated revenues of $409.5 million, with a pretax adjusted earnings margin of approximately 22%. We saw strong growth across U.S. and European rates including inflation products, European government bonds, U.S. equity products and environmental products. This growth was offset by lower activity across sterling rates products, G10 FX options and emerging market FX products.

We remain well positioned to capitalize on accelerating electronic execution trends. BGC's sizable voice/hybrid revenue base leaves us uniquely positioned to convert significance amount of our revenue to higher-margin technology-driven Fenics Market businesses.

Turning to outlook. Our outlook for the second quarter of 2021 is as follows: BGC's revenues were approximately 9% lower for the first 18 trading days of the second quarter of 2021, when compared to the same period in 2020, which included continued higher volatility and trading volume-driven by pandemic related events during April of last year. Therefore, looking forward to the second quarter, we expect to generate total revenues of between $485 million and $535 million as compared to $519.1 million. We anticipate pretax adjusted earnings to be in the range of $88 million to $108 million versus $92.1 million. And we anticipate our full year 2021 adjusted earnings tax rate to be in the range of 10% to 12% versus 11% for full year 2020. And with that, I'll pass it over to Howard.

[Howard W. Lutnick, executive]

Thank you, Sean. As you've heard on today's call, we have made significant progress growing our highly valuable Fenics and Corant assets. This has helped drive margin expansion as compared to last year. We continue to believe the assets of BGC are demonstrably more valuable than its current market capitalization reflects. Our Fenics assets have market-leading growth and are capturing significant amounts of market share from much larger market cap competitors. Corant revenue growth also continues to outpace the overall industry. My management team and I are continually thinking about the most effective ways to express the value of the assets of this company. We are focused on maximizing shareholder value.

With that, operator, we'd like to open the call for questions.

[Operator]

[Operator Instructions]

The first question comes from Rich Repetto with Piper Sandler.

[Richard Repetto, analyst]

Howard and Sean and Steve. So Howard, you just said that your management team is focused on, like, I believe, monetized in Fenics. I guess the question is, and we've talked prior where you said it was a priority. So can you give us a status update on where that stands? Could you possibly review some different alternatives or what investors could expect. And maybe -- I don't know whether it's possible to have some sort of a timeline. Is this a near-term event or is this an event that is going to take a while?

[Howard W. Lutnick, executive]

Okay. So let's start with the 2 businesses. So we -- BGC believes that Fenics is the greatest opportunity in front of the company to drive significant and fundamental value improvement for this company. We think our Fenics businesses are wildly undervalued, and we are going to be focused on driving that. Right? We -- so in that conversation, we've had many conversations about our growing insurance business. We think our insurance business continues to grow, continues to improve, and we also think it is a significant value. And we are focused on what is the best way to do to express shareholder value. Things take time. That's just the way it works, things take time.

Now turning back to Fenics. We tried this quarter to show you the margin of Fenics Markets business. So by separating and showing you the margin of 30.2%. We are describing clearly how our technology-driven businesses are driving up our margins. You have seen our margin grow, and it is being driven by the fact that we are producing better economic results from our Fenics Market business, which drives the economics of the underlying company.

Also, we started to show you the Fenics Growth Platforms and those revenues, right? These are the businesses that in 2019, we lost $55 million as we invested in those business in building them. Then we invested $40 million in those businesses, right? And you have just seen the revenues grow 82% this quarter, and we have an expectation, as we have discussed with you, that these businesses have built that market share, have built their volumes, have built their value across these marketplaces, and we'll start to earn revenue at significant pace. We will continue to invest in them. But as these revenues grow, they're growing on a fixed cost base and therefore, you will start to see those revenues and those profits will continue to grow.

Those assets, for example, our U.S. Treasury business are highly sought after and are highly valuable. And our objective is going to be to figure out how to best monetize those things for the shareholders of our company. There are a variety of ways to do that. But I want to be clear, this is not going to be a long-term event. We expect -- and when I say my management is working on it, it does not mean our management is working on a '20 and '25 business plan, that's not our model. We are working on it now. We think these businesses have created tremendous value for the company now. And we expect in 2021 to be having really interesting conversations about what Fenics can achieve in the world out there. So how that will be? What it will be? I don't know, but we are going to have conversations because these assets are extraordinarily valuable. And they have nothing to do with the stock price of BGC that starts with a 5. I assure you that, in my opinion, I just think these assets are worth far, far more than the current market is valued.

[Richard Repetto, analyst]

Okay. Howard, just to follow up, I got a couple of follow-ups. But 1 is, given that there wasn't any, say, announced transaction or anything, but there wasn't any share buyback as well. So is that -- are the 2 related? Or we've talked about using excess cash in the past, of returning capital in some form to shareholders.

[Howard W. Lutnick, executive]

It's kind of funny, right? If it was something to do that I probably couldn't do stock buybacks. So these things sort of work. You can't -- obviously, I can't do stock buybacks before I announce my earnings, that's sort of obvious. So couldn't do something yesterday. That's inappropriate. So once earnings are done, then my counsel gels tells me what I'm allowed to do and not to. We expect, as Steve Bisgay said in his remarks that we expect to use more cash in terms of compensating people to have less shares. More cash to the extent we do with acquisition, and we expect to buy back shares to mitigate dilution.

We do expect to buy back shares and we are going to wait for when our counsel tells us it's okay to buy back shares. And we will decide when and if it is time -- when and if it is time to buy back shares and how much we'll buy. And we'll tell you how much we bought every quarter. I don't think we have an expectation of sort of defining a sort of a standardized, simple model, it's like an x amount per quarter, that kind of thing. I think we expect to buy back a material amount of shares this year. That is the company's expectation for us to use our free cash flow in material part to buy back shares.

[Richard Repetto, analyst]

Got it. And I guess my last question, and I'll get back in the queue. But there's a merit of things you could potentially do with FedEx, and you did reiterated stand-alone, the numbers -- the revenues that you broke out. But any -- the things that come to mind from my standpoint are, say, a private investment SPAC transactions and you do control through Cantor, I believe, SPAC. So all these on the table like what alternatives or what things could investors even potentially see -- I'm not saying you're going to execute immediately, but what are some of the alternatives that you're looking at?

[Howard W. Lutnick, executive]

Well, the simplest way to say it is everything is on the table. Okay? If you look back to 2013, when we sold eSpeed. No one on our phone calls, no matter how many times I said the value. No 1 believed that we would sell it and achieve the kind of economic benefit for the shareholders that we did. Because every time I said that the share was not correctly priced, stock would go up or down a penny, and then we sold a small division of the company to the market cap of the company. These assets are worth wildly more, in my opinion, in my opinion, than the current stock price. I think the sum of the parts is clear. Our Treasury business, right, went to 9% -- over 9% of all trading, all systems counting, Tradeweb, counting Bloomberg, counting MarketAxess, counting Nasdaq, adding them all together, went from 6% to over 9% of all of them in the last year. It went from 9% to 18% of just CLOB, counting Brokertec. Go look at the market share we've taken of Brokertec. Brokertec's start from like 85% market share to in the low 70s. Well who do you think picked up that market share, and it's going lower because our market share is growing. Our system is winning, okay?

And people are not focused on the value creation of going and creating a fundamentally important competitor to the Chicago market dollar exchange. And so I think these assets are of enormous value, and it is our job and my management team understands it is our job to figure out a way to best express it. And I want to be clear, there is nothing off the table. But there is no one in this market who does not understand how important Fenics UST is. And now they are all starting to learn when Fenics GO. I mean, the scale by which Fenics GO has grown its front end market share in options is so fundamentally impressive that when you call someone, they look at the numbers, they have pulverized by the scale, by how much we've grown them and we keep rolling out new products. These things matter, okay? And I know they are part of BGC, but they matter, and I think we are going to do very, very well.

[Operator]

[Operator Instructions]

The next question comes from Patrick O'Shaughnessy with Raymond James.

[Patrick O'Shaughnessy, analyst]

Hoping you can comment on kind of the broad competitive landscape at this point because, obviously, we hear what you're saying with Fenics UST and the share gains there are certainly impressive. But I think we listened to Tradeweb, and they talk about success they're having with dealer sweeps in credit and streaming quotes that they're having in rates. MarketAxess talks about some of its dealer success as well. So hoping that you can comment on the broad competitive landscape?

[Howard W. Lutnick, executive]

Okay. I think Tradeweb and MarketAxess and the Chicago Mercantile Exchange are world-class competitors and world-class players, okay? And that was true last year. And they are not any dumber, and they are not any more sophisticated and capable. And the success of sweeps and success of this and success of that, they were all true. What day weren't they true when Fenics UST went from 6% to 9% -- over 9% of market share of all of them, right? What part was not true when we went from 9% to 18%. So I think they are really, really good. And they are the vast, endless volume of transactions that still grow by voice and still go to dealers and still are done in the old way, vast and endless.

And they can all grow, right? But that will not stop, in my opinion, Fenics UST for making a fundamental dent in the size and scale of this business. We matter, everybody knows we matter. I didn't say they don't matter, right? These are great players, but the fact that we are not valued in the same hemisphere as them. I think it is our management job to teach everybody a lesson that, that is just not true.

[Patrick O'Shaughnessy, analyst]

All right. And digging into Fenics UST, how would you frame the competitive advantage of that platform? And how sustainable that is?

[Howard W. Lutnick, executive]

So here's an interesting example. So in the CME's system, everyone can trade with everybody. So it's sort of opening season. Okay? And what you have is a substantial percentage of their business is high-frequency trading firms trading with each other. These sophisticated electronic market makers who make prices sort of in hundreds of seconds. And they trade against each other, and they have a bad experience because these sophisticated players don't want to trade against each other because they sit there and pick off each other, and it's very unfortunate.

What these firms want to trade with is when someone is pricing a 5-year corporate bond and wants to hedge it, they want to provide that liquidity in vast scale. So what we do is our system allows these companies to not trade with each other. They can concierge and curate and select who the counterparties are, so they get a better experience. What happens when they get a better experience becomes so natural. They double the size they're willing to do because they're not afraid of getting picked off. And so what happens is the average size on our system relentlessly grows because it's a safer place to do your business, granted.

So think about it. We've grown from 9% to 18% market share not allowing with probably 40% to 50% of the CME's volume to occur, which means we won't let the big high-frequency firms trade with each other. We've actually foreclose that volume on our system. But what that's done is it's created a better value for everybody trading on the platform. So do I think that's sustainable? I absolutely think it's sustainable. And I think it's just a different business model. The other business model is a great business model for the CME, and ours is a great business model for us.

[Patrick O'Shaughnessy, analyst]

Got it. And then switching gears to the insurance brokerage business, Corant, how aggressively are you hiring into this business at this point? And I guess, maybe drilling down into your second quarter outlook. What would your expectations in terms of insurance brokerage revenue be for the second quarter?

[Howard W. Lutnick, executive]

Okay. So the insurance marketplace, it's described as a hardening marketplace, which means that the price is going up, right? So the price of insurance is going up. Insurance brokers get a percentage of the premium written. So when the premium goes up, the commissions go up. So that's just mathematically good to be in a business where the commissions arising. It allows you to be at default.

They are rising, and the reason they are rising is because there was a tsunami of bad things that happened in the pandemic, right? There were vast numbers of insurance companies that lost in a huge amount of money in event insurance, I mean just imagine the people who insured like the Tokyo Olympics. I mean, it's really just a pulverizing thought to think about the insurance companies who had that. So those insurance companies have gotten crushed with those economics. And that -- you put that on top of their investment experience through the whole thing, right, and credit and all these other things, they just took -- their balance sheet took a hit and their insurance still a hit.

And when the whole industry takes a hit, the whole industry can act in 1 particular way, which is, over time, they're going to make their money back. And the way they make their money back is they raise their rates. And so you've raising them raise the rates everywhere. So our business insurance has great baseline, raw material, fundamental economics, sort of like the rates business of fixed income, right?

When the President of the United States gets up and starts talking about trillions of dollars of new bond issuance, I can't see past the joy of what he's saying. There are bond deals. I just like bond deals. When someone says they're going to borrow $1.9 trillion. That's just a lot of bonds that are going to be issued. And who else is going to issue them, every major country in the world is going to do the same thing. And this is like the greatest raw material policy of insurance has rates going up and bonds have issuance sort of flying out the door, these are good raw material underlying factors for our business.

Now the constraining thing in insurance is you make money on everybody you hired last year because the way insurance works is the first year that you hire someone, they continue to -- the client stays at the old firm. And they do not move the clients over to the new firm for a year. That is sort of the law of the land or the effect of the way it works in the insurance business. So those you've hired a year ago, you win on today and those you hire today, you build your business for next year. So are we continuing to hire? Of course, we are. But what you're going to see is that big, big hiring spread that we won last year, right?

Before the pandemic began, obviously, those people will go in to start harvesting those numbers. So you are going to continue to see good numbers from our insurance business. You're going to continue to see good growth for our insurance business. But there's no action we can take today, is we hired like the world's greatest team today, what you'd see is we spent a significant amount of money to hire them. And the next year would be a drag, which you saw last year, right? You saw that in 2020, like drag, drag, drag.

And we were happy on these calls because we knew we were building our business for 2021, in 2020 a year ago, we lost money. We only lost money because we hired lots of great people, paid them, amortize their cost and their business didn't come with them until now. So the good part is we've turned profitable. We expect to remain profitable, and we expect to build those profits over time. And as we hire more brokers, that will constrain it. But as I said, I think we have built substantial asset value significantly in excess of what we've invested. And we are confident that with the scale of our business, eventually, we will find a transaction, whether that's a public transaction, a private transaction or otherwise, that expresses the value that we have created in Corant.

[Operator]

And we have a follow-up from Rich Repetto with Piper Sandler.

[Richard Repetto, analyst]

Yes, Howard. First question on the insurance business. I believe that broke even in 4Q. Could you talk about the margins? Maybe I'm missing it somewhere. But the margins in the insurance business in the first quarter?

[Howard W. Lutnick, executive]

Yes, it's small. Right? We just -- remember, we started -- we got to breakeven and now we're at small time, right? They're not -- they're in the black, but small. And it just will continue to grow over time. As more of our brokers are past their first year, as more of our brokers can bring on their accounts, which don't come on unlike it's just Monday, it takes time. It just takes time. And so they're going to continue to grow over the course of the year. And we said that we thought over a number of years, we would get to the industry standard, 15% margins. So those businesses grow to 15% margins. And we expected -- I think we put out -- Sean, do you remember the day we said?

[Sean Windeatt, executive]

Yes, I do. It was -- when we were -- we said we would double from the point in time when we were at approximately $150 million. So we were -- the inference was doubling from $150 million to getting to an industry margin of around 15%.

[Howard W. Lutnick, executive]

Right. So we expect that when our revenues get to $300 million, we would expect to have a 15% margin or make $45 million. Yes.

[Richard Repetto, analyst]

Got it. That's helpful. And then I believe if I'm just verifying some numbers, but I believe Steve said that the voice/hybrid was 422 -- was $422 million in revenue and 22% -- $402 million in revenue and 22% margin? Is that correct?

[Sean Windeatt, executive]

Yes, exactly he said $409 million and 22%.

[Richard Repetto, analyst]

Right. That was close. Okay. The next question is on the margin of Fenics. The Fenics, we call, markets. So it's 30.2% now. And -- but I thought you -- Howard, you said that, that has potential to go to 50% or margins at Fenics overall have the potential to go like a lot of other electronic firms to 50% at scale.

[Howard W. Lutnick, executive]

Rich, let me make sure you got the right. So the Fenics Growth Platforms can meet or exceed whenever other systems that anybody else has, okay? Meaning they are stand-alone fully electronic platforms. So I -- we said on the call that they could get to 50% margins. But if other people on scale gets at 62.8% it's nothing that constrains us from getting to 62.8%. Meaning these are fully electronic systems, with the scale possibility to get to whatever those kind of margins can get to.

But we have, as our first goal, let's get to 50% margins, okay? That's on the Growth Platform. On Fenics Markets, which is the electronification of our brokerage business, right, the technologically driven brokerage business, I don't think they would get to 50%. I said, we think they will get to -- in the range of the 35%, maybe with scale up to 40% range because we are going to have substantially more expensive salespeople, right? We are going to continue to employ our greatest brokers, who have the greatest relationships and have the greatest knowledge in this business. And therefore, they will remain on our payroll. And so I think the difference is Fenics Markets will have an upside of 35% to 40% margins, whereas Fenics GO, UST, Lucera, FX and all those businesses can -- the sky is the limit as consistent to the other best players in the world.

[Richard Repetto, analyst]

Got it. That makes sense. I get it now. It just goes back to one question is the stand-alone capability of like these salesman are selling the electronic product. I'm just -- and not just converting voice/hybrid to electronics or not.

[Howard W. Lutnick, executive]

Well, I'll give you an example. We have extraordinary market share in gilts, right, British government bonds. And that business is virtually entirely electronic. But it is not perfectly electronic but is virtually entirely electric because it was a move from our voice business, where we had excellent market share into an electronic business. And is the majority -- the vast majority of that business types and executed electronically by its clients, it is, right?

But our brokers manage it and make it work. And that is a great asset of Fenics Markets. So is that separable? Is it salable? Is it monetizable? Of course, it is. Right? But it came from Fenics Markets, right? It is a perfect example of what can happen when our brokers have the right tools and have the right incentives and drive and build it. And that's part of Fenics Markets, right?

And then now you have the concept of let's go build the market data because that market data is a tremendous value, and we're going to put that in Fenics Markets as well. So do we make substantial amounts of money on gilts data yet? We don't. We'll be? We will. Right? But that's -- this is part of the growth of our business. So we keep showing you the market data numbers so that I don't want to take something away from you and sort of mix it. But I want you to understand that, that -- the market data and the brokerage business and the electronics, they're all one, as far as we're concerned, we're going to try to maximize the value of that business.

[Richard Repetto, analyst]

Got it. Last question for me. But the Intercompany, the technology services at $21 million -- $20.7 million. Could you walk through what those revenues? And I know you haven't been -- they not included in Fenics Markets or Fenics Growth. But could you just talk about that $20.7 million in the first quarter?

[Howard W. Lutnick, executive]

Sure. Sean, do you want to start? Go ahead, feel free.

[Sean Windeatt, executive]

Yes, sure. Sure. So remember that business is the technology that is provided by the company, by BGC to our brokers. To the businesses, that technology, that is, if you like, that is the fee that is paid by those businesses for that technology. And as we've mentioned in previous quarters, Rich, what you would expect and what we hope is that as the business, we cut moves into Fenics Markets and therefore, has higher-margin because you're paying lower brokerage then we'd expect that business to move into the Fenics Market business as it becomes more technology dependent, and then there will be an offsetting -- a smaller offsetting decline in -- within our intercompany business. And you've seen that as our Fenics Markets has grown over the last 2 to 3 quarters, you've seen the intercompany come down. But what you've also seen is the expansion of the margin increase.

[Richard Repetto, analyst]

Would it be proper to view that revenue to $20.7 million is sort of a pipeline for the Fenics Markets and Fenics Growth revenues?

[Sean Windeatt, executive]

I think -- I mean, that's a really good way of thinking about it, actually. That's a very good way of thinking about it. But remember, not a pipeline is in $20 million of revenue to go, but actually, because it's just the percentage of the technology piece so you'd expect that as that goes -- as that number goes down, there's an exponential growth in the revenue that moves into FedEx markets.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Howard Lutnick for any closing remarks.

[Howard W. Lutnick, executive]

I appreciate you all spending the time with us today. The company, as I said, is focused on maximizing shareholder value. And I hope we've helped you understand those details. We try to separate the margins of Fenics Markets. We tried to show you the revenues, and we'll separate and show you the revenues of our Growth Platform going forward, which we obviously expect will grow materially.

And we will continue to try to make our company more transparent and make it clear how well we are doing in building our asset value. But our clear purpose right, is to understand that we have these assets, we have these value, and we need to express them to you to gain value for our shareholders, which we are focused on. So I appreciate your time today, and I look forward to updating you next quarter.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.