BGC — Q2 2026 Financial Report Analysis

BGC Group is an inter-dealer broker: a middleman that matches big banks, hedge funds and trading firms who want to trade bonds, interest-rate swaps, currencies, energy, shipping freight and equity derivatives with each other, and takes a commission on each trade. It does this partly through human voice brokers and partly through its electronic platforms, grouped under the name Fenics (which includes the FMX Treasury and futures venues). In the second quarter of 2026 (April to June), revenue rose 7.8% to $845.5 million, a second-quarter record, and GAAP net income available to common stockholders rose 26.0% to $72.5 million. This is the first quarter where the comparison is like-for-like: BGC bought energy broker OTC Global on April 1, 2025, so the year-ago quarter already included it. That makes the 7.8% a much cleaner read on underlying growth than the 24% first-half figure management also highlighted.

At a glance

• Revenue +7.8% (+7.6% at constant currency, i.e. stripping out exchange-rate moves). Every one of the five brokerage asset classes grew, so this was not one hot desk carrying the quarter.
• Fenics electronic revenue +17.6% excluding kACE, a unit sold in December 2025. Electronic trading is now 22% of revenue and growing at roughly twice the rate of the company overall.
• GAAP diluted EPS $0.15 vs $0.11; the company's preferred "post-tax Adjusted Earnings" per share $0.35 vs $0.31 (+12.9%). The adjusted figure is more than double GAAP mainly because it leaves out $75.6 million of stock-based pay.

Results vs. a year ago (GAAP unless labelled)

A note on the operating margin line: BGC does not report an "operating income" subtotal. The figure above is total revenues minus total expenses, and BGC's total expenses include $32.8 million of interest expense. It excludes "other income", which this quarter included a $20.0 million one-off gain (see below), so it sits below the pre-tax margin.

Where the growth came from

Brokerage revenue, the commissions and trading spreads that make up 91% of the total, grew 7.2%:

ECS is BGC's largest business since the OTC Global deal, and it grew the slowest of the big three. The same conflict also moved activity on FMX: volumes in SOFR futures (contracts that bet on short-term U.S. interest rates) "rebounded strongly in June, following reduced Iran-driven volatility", reaching a monthly record of more than 59,000 contracts a day.

The electronic side is where the story is. FMX's share of the electronic order book for cash U.S. Treasuries rose to 42% from 35% a year earlier, with average daily volume of $79.4 billion (+17%). The FMX futures exchange, which competes with CME in Treasury and SOFR futures, averaged about 54,000 contracts a day, more than 16 times a year ago, and open interest (contracts still outstanding at quarter-end) was over 140,000 versus about 22,000. PortfolioMatch, a platform for trading baskets of corporate bonds, grew average daily volume 82% to $431 million. Fenics Growth Platforms, the newest of these businesses, grew revenue 22.9% to $33.4 million.

What the headline numbers hide

1. GAAP profit growth of 26% is flattered by a one-off gain that happens to cancel out a one-off charge. GAAP pre-tax income includes a $20.0 million gain from contingent payments earned on the December 2025 sale of kACE, and a $24.5 million reserve for a U.K. tax dispute (point 2). The two roughly net out, so the quarter's GAAP pre-tax income is not badly distorted overall, but neither item will repeat on a schedule. Strip both out and GAAP pre-tax income would have been about $103.4 million.

2. The U.K. tax matter is an open-ended liability. HMRC, the U.K. tax authority, argues that profit BGC's U.K. partnership paid its members should have been taxed as employee salary, with income tax and national insurance withheld at source. After a July 2026 U.K. Supreme Court ruling in another taxpayer's case, BGC raised its total accrual to $40.6 million, covering tax years up to 2025. The 10-Q says it is "reasonably possible" that losses will exceed this and that it "is unable at this time to estimate the amount or range". BGC intends to contest. The $24.5 million is the main reason GAAP non-compensation expenses rose 17.4% while the adjusted version rose only 5.2%.

3. The GAAP vs. adjusted gap is mostly stock pay. Pre-tax Adjusted Earnings ($192.9 million) are nearly double GAAP pre-tax income ($98.9 million). The $93.9 million difference is $82.2 million of compensation adjustments (almost all the $75.6 million of equity-based compensation, about 8.9% of revenue), $38.5 million of non-compensation items (mainly the U.K. reserve plus $10.0 million of acquisition intangible amortization), minus $26.8 million of gains taken out (chiefly the kACE gain). Stock pay is a real cost to shareholders even though no cash leaves the company: in the first half, BGC issued 5.9 million shares for vested restricted stock units while buying back 10.5 million.

4. Buybacks helped per-share growth, but only modestly. BGC spent $112.4 million in the quarter repurchasing 10.2 million shares at about $11.01 each. Even so, the fully diluted share count used for adjusted EPS fell only 1.0% year on year, because new share issuance to employees absorbs much of the buyback. Post-tax Adjusted Earnings rose 11.2% and adjusted EPS 12.9%, so the shrinking share count added roughly 1.5 points.

5. A higher GAAP tax rate cut the other way. The GAAP tax rate rose to about 30.4% of pre-tax income from 25.3%, which held net income growth (+26.0%) below pre-tax growth (+31.4%).

6. Some revenue growth came from dividend income, not trading. "Interest and dividend income" jumped to $26.7 million from $15.3 million, which the release attributes to higher dividend income. Excluding that line, fees and other revenue, brokerage plus data revenue grew 7.0%.

7. Cash conversion is adequate but needs care to read. First-half operating cash flow was $181.8 million against consolidated net income of $152.3 million. Two things sit underneath: $159.0 million of non-cash stock compensation added back, and $102.5 million of new forgivable loans to employees, which are upfront cash paid to brokers to retain them and expensed gradually through compensation ($45.3 million of loan amortization was added back). The balance sheet swelled from $4.4 billion to $5.8 billion, but that is mostly matched receivables and payables from trades waiting to settle with clearing houses (each up about $1.2 billion), not new risk-taking. Liquidity (cash plus financial instruments owned) fell to $861.4 million from $979.1 million at year-end, after the buybacks.

What was clean: costs that move with revenue behaved. Adjusted compensation, mostly broker commissions and bonuses, was 52.4% of revenue versus 52.5% a year earlier, and adjusted non-compensation costs grew 5.2%, slower than revenue. That is why the adjusted pre-tax margin widened to 22.8% from 22.1%.

Takeaway: On the first like-for-like comparison since the OTC Global deal, BGC grew about 8% (7.6% in constant currency), with every asset class up and electronic Fenics revenue up 17.6% excluding the sold kACE unit. The GAAP profit jump is less meaningful than it looks, since a $20 million sale gain and a $24.5 million U.K. tax reserve roughly cancel. The number to watch is the U.K. tax accrual, which management says could rise by an amount it cannot yet estimate.

Against management's own guidance

This is our first BGC report, so there is no earlier read of ours to check. The nearest equivalent is the guidance BGC gave in May with its first-quarter results: Q2 revenue of $785–845 million and pre-tax Adjusted Earnings of $178–196 million. The actual $845.5 million landed at the top of the revenue range and $192.9 million in the upper half of the earnings range.

Outlook

For the third quarter of 2026 management guided to:

The revenue midpoint ($805 million) is below Q2's $845.5 million. That matches last year's pattern, when revenue fell from $784.0 million in Q2 2025 to $736.8 million in Q3 2025, so it reflects seasonality, not a guided slowdown. The earnings guidance implies more margin gain than revenue growth, so management expects cost discipline to continue. A $2.4 million cost-reduction charge appeared in Q2's compensation adjustments.

Two developments after the quarter matter. First, FMX planned to list Treasury futures across the full maturity curve on August 3, 2026, beyond the 2- and 5-year contracts it had; that is the next test of whether it can take futures share from CME. Second, BGC announced a partnership with Fanatics on July 27, 2026 to build a prediction-market data business, and sold Fanatics its legacy CFTC-registered exchange and clearing house (separate from FMX's exchange, which BGC keeps). No financial terms or revenue expectations were given in the release, so it is too early to put a number on it.

Our read: the core business looks like a high-single-digit grower with a steadily rising electronic share, and adjusted margins are inching up. The main risks to that are a quiet stretch in rates and FX volatility, which drives broker volumes, and the U.K. tax case. The dividend stays at $0.02 a quarter, so buybacks remain the main way BGC returns cash to shareholders.