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Forex - Brokers

GAIN Capital released Q1 2017 results; Net revenue down in relation of Q1 2016 results 

05 May 2017 by OneStopBrokers
gain-capital

Key Results and Highlights for the First Quarter

  • Reported GAAP net loss of $18.9 million, or $0.39 per share
  • Completed acquisition and integration of FXCM U.S. client assets, resulting in the transfer of over $140 million in client assets to the FOREX.com platform and nearly 13,000 active accounts in the quarter
  • Grew retail client assets by 18% year-over-year
  • Increased institutional average daily volume by approximately 36% year-over-year
  • Repurchased 612,423 shares for a gross value of $4.7 million

GAIN Capital Holdings, Inc. (“GAIN”) (NYSE: GCAP), a leading global provider of online trading services, announced financial results for the first quarter of 2017.

Net revenue for the quarter was $59.6 million, down from $115.6 million in the first quarter of 2016. GAAP Net Loss of $18.9 million for the quarter compared to $8.4 million of net income in the first quarter of 2016.  Adjusted EBITDA for the quarter was $(13.4) million, down from $31.7 million in the first quarter of 2016. GAIN’s financial highlights are included in the chart below.

Three Months Ended March 31,
2017 2016
Net Revenue $ 59.6 $ 115.6
Operating Expenses (73.0) (83.9)
Adjusted EBITDA(1) $ (13.4) $ 31.7
Net (Loss)/Income $ (18.9) $ 8.4
Adjusted Net (Loss)/Income(1) $ (18.6) $ 16.9
Diluted GAAP EPS $ (0.39) $ 0.17
Adjusted EPS(1) $ (0.39) $ 0.35
Note:  Dollars in millions, except per share amounts and where noted otherwise.  Columns may not add due to rounding.
1See below for reconciliation of non-GAAP financial measures.

“Although the first two months of the year presented challenging market fundamentals for our business, characterized by low volatility and narrow average trading ranges, we remain optimistic about the growth prospects for the company,” commented Glenn Stevens, CEO of GAIN Capital. “Market conditions improved in March and have continued to improve in April, with revenue capture returning to a normalized level consistent with our trailing twelve month average of $107 per million. Strong Q1 retail operating metrics, highlighted by 18 percent growth in client assets, reflect the opportunity for market share gains as we optimize our position as the #1 provider of retail FX in the U.S.  As we look at ways to reduce costs and more efficiently allocate capital, we continue to focus on our organic growth strategy, investing in product enhancements and customer acquisition and retention initiatives to drive increased engagement and expand our global reach.”

Quarterly Operating Metrics

Q1 17 Q1 16 Year-over-year
Change
Retail Segment
OTC Trading Volume (1) $ 619.3 $ 861.7 (28.1) %
OTC Average Daily Volume $ 9.5 $ 13.5 (29.6) %
Active OTC Accounts (2)(3) 136,829 132,452 3.3 %
Institutional Segment
ECN Volume (1) $ 759.6 $ 531.6 42.9 %
ECN Average Daily Volume $ 11.7 $ 8.3 41.0 %
Swap Dealer Volume (1) $ 225.5 $ 186.6 20.8 %
Swap Dealer Average Daily Volume $ 3.5 $ 2.9 20.7 %
Futures Segment
Number of Futures Contracts 2,060,631 2,334,308 (11.7) %
Futures Average Daily Contracts 33,236 38,267 (13.1) %
Active Futures Accounts (2) 8,201 8,890 (7.8) %

 

All volume figures reported in billions.
1 US dollar equivalent of notional amounts traded.  For the quarter, indirect volume represented 39.8% of total retail OTC trading volume.
2 Accounts that executed a transaction during the 12 months ended March 31, 2017.
3 GAIN has updated its historical active account disclosures to reflect a change in definition for certain accounts.

 

Monthly Operating Metrics

Apr-17 Mar-17 Sequential
Change		 Apr-16 Year-over-
year Change
Retail Segment
OTC Trading Volume (1) $ 185.0 $ 239.2 (22.7)% $ 255.8 (27.7) %
OTC Average Daily Volume $ 9.3 $ 10.4 (10.6)% $ 12.2 (23.8) %
Active OTC Accounts (2)(3) 135,918 136,829 (0.7)% 136,336 (0.3) %
Institutional Segment
ECN Volume (1) $ 230.5 $ 271.7 (15.2)% $ 163.2 41.2 %
ECN Average Daily Volume $ 11.5 $ 11.8 (2.5)% $ 7.8 47.4 %
Swap Dealer Volume (1) $ 50.1 $ 67.4 (25.7)% $ 69.7 (28.1) %
Swap Dealer Average Daily Volume $ 2.5 $ 2.9 (13.8)% $ 3.3 (24.2) %
Futures Segment
Number of Futures Contracts 544,369 827,296 (34.2)% 766,254 (29.0) %
Futures Average Daily Contracts 28,651 35,969 (20.3)% 36,488 (21.5) %
Active Futures Accounts (2) 8,075 8,201 (1.5)% 8,931 (9.6) %

 

All volume figures reported in billions.
1 US dollar equivalent of notional amounts traded.  For the quarter, indirect volume represented 39.8% of total retail OTC trading volume.
2 Accounts that executed a transaction during the last 12 months.
3 GAIN has updated its historical active account disclosures to reflect a change in definition for certain accounts.

 

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 $140 million in client assets were successfully migrated to GAIN’s FOREX.com (www.forex.com), with nearly 13,000 accounts actively trading during the first quarter. In the quarter, GAIN paid $5.1 million to FXCM per the terms of the acquisition agreement.

Capital Return and Dividend
In the first quarter, GAIN focused on returning capital to shareholders through buybacks and dividends, which amounted to a combined total of approximately $7.6 million.

In the first quarter, GAIN repurchased 612,423 shares of stock at an average price of $7.59.

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 June 20, 2017 to shareholders of record as of the close of business June 13, 2017.

Source: GAIN Capital

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