Gain Capital reports strong fourth quarter performance; Q4 and 2016 Results 

Highlights

• Quarterly GAAP net income of $20.8 million increased 91% year-over-year, while full year 2016 GAAP net income of $35.3 million increased 243%
• Achieved approximately $100 million in adjusted EBITDA(1) for the full year, driven by a strong fourth quarter performance, with quarterly adjusted EBITDA(1) of $36.9 million
• Reported GAAP diluted EPS of $0.42 and $0.67, for the fourth quarter and full year 2016, respectively
• Adjusted diluted EPS(1) of $0.43 and $0.92, for the fourth quarter and full year 2016, respectively
• Returned over $20 million to investors via buybacks and dividends during full year 2016
• Completed the migration of over 47,000 former customers of FXCM’s U.S. business to FOREX.com on February 24, 2017

GAIN Capital Holdings, Inc. (“GAIN”) (NYSE: GCAP), a leading global provider of online trading services, announced financial results for the fourth quarter and a full year ended December 31, 2016.

Net revenue for fiscal year 2016 was $411.8 million, down from $435.4 million in fiscal year 2015. GAAP Net Income of $35.3 million for fiscal year 2016 represented a 243% increase from $10.3 million in fiscal year 2015. Adjusted EBITDA for the year was $99.6 million, up from $80.6 million in 2015. GAIN’s financial highlights are included in the chart below.

“GAIN Capital closed out a milestone year with a strong fourth quarter performance, as increased trading volatility and continued progress scaling and diversifying our business helped drive record quarterly adjusted EBITDA,” commented Glenn Stevens, CEO of GAIN Capital. “We are pleased that we have completed a successful integration of the City Index business, exceeding our $45 million cost synergy targets, while optimizing the combined business to realize meaningful margin expansion. Looking forward, with our solid balance sheet, strong brands and global reach, we are well positioned to grow the business both organically and inorganically and further our long-term objective of growing market share leadership in our retail, institutional and futures businesses.”

Retail Segment

In the fourth quarter of 2016, GAIN’s retail segment generated net revenue of $97.5 million and segment profit of $40.8 million, reflecting a margin of 42%.

For the year ended December 31, 2016, the retail segment generated net revenue of $336.3 million and segment profit of $115.7 million, reflecting a margin of 34%.

Institutional Segment

In the fourth quarter of 2016, GAIN’s institutional segment generated net revenue of $8.7 million and segment profit of $1.4 million, reflecting a margin of 16%.

For the year ended December 31, 2016, the institutional segment generated net revenue of $30.2 million and segment profit of $5.4 million, reflecting a margin of 18%.

Futures Segment

In the fourth quarter of 2016, GAIN’s futures segment generated net revenue of $10.5 million and segment profit of $0.6 million, reflecting a margin of 6%.

For the year ended December 31, 2016, the futures segment generated net revenue of $48.1 million and segment profit of $4.7 million, reflecting a margin of 10%.

Acquisition of FXCM U.S. Client Base

On February 24, 2017, GAIN completed the acquisition of the client base of FXCM’s U.S. operations. Over 47,000 accounts with total assets of approximately $142 million were successfully migrated to GAIN’s FOREX.com (www.forex.com). FOREX.com is now the largest provider of retail FX in the United States, with over 70,000 customer accounts.

“Following the first week of trading post-transaction, we are very pleased with the response to our FOREX.com offering and the trading activity of the transferred accounts,” commented Glenn Stevens, CEO. “The acquisition of FXCM’s U.S. client base is a prime example of GAIN Capital’s ability to successfully consummate M&A opportunities within a consolidating industry.”

Capital Return and Dividend

In 2016, GAIN focused on returning capital to shareholders through buybacks and dividends, which amounted to a combined total of approximately $20 million.

In the fourth quarter, GAIN repurchased 541,445 shares of stock at an average price of $6.46. For the year, GAIN repurchased 1,317,369 shares at an average price of $6.73.

GAIN’s Board of Directors declared a quarterly cash dividend of $0.06 per share of the Company’s common stock. The dividend is payable on March 31, 2017 to shareholders of record as of the close of business March 28, 2017.

February Operating Metrics

Retail Segment Metrics

• OTC average daily volume1 of $8.5 billion, a decrease of 10.5% from January 2017 and 35.6% from February 2016.
• OTC trading volume1 of $170.2 billion, a decrease of 19.0% from January 2017 and 38.4% from February 2016.
• Active OTC accounts2 of 133,027, an increase of 4.6% from January 2017 and a decrease of 7.4% from February 2016.

Institutional Segment Metrics

• ECN average daily volume1 of $11.1 billion, a decrease of 8.3% from January 2017 and an increase of 33.7% from February 2016.
• ECN volume1 of $221.6 billion, a decrease of 16.8% from January 2017 and an increase of 27.4% from February 2016.
• Swap Dealer average daily volume1 of $3.1 billion, a decrease of 29.5% from January 2017 and an increase of 3.3% from February 2016.
• Swap Dealer volume1 of $61.5 billion, a decrease of 36.3% from January 2017 and 3.9% from February 2016.

Futures Segment Metrics

• Futures average daily contracts of 31,028 a decrease of 3.6% from January 2017 and 16.1% from February 2016.
• Futures contracts of 589,538, a decrease of 8.4% from January 2017 and 20.3% from February 2016.
• Active futures accounts2 of 8,221, a decrease of 1.0% from January 2017 and 6.8% from February 2016.

1US dollar equivalent of notional amounts traded.
2Accounts that executed a transaction during the last 12 months.

Source: GAIN Capital

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