GAIN Capital posts 52.7% YoY increase in net income in Q1 2016


Gain Capital Holdings Inc (NYSE:GCAP) has lately been quite active when it comes to financial metrics, especially when it comes to restating them. Following the publication of restated numbers for the first three quarters of 2015 and full year 2015, the online trading services provider today posted some key financials for the first three months of 2016.

Net revenue for the first quarter was $115.6 million, up 24.3% from $93.0 million (that is a restated number) in the first quarter of 2015, and adjusted EBITDA was $31.7 million, up from $19.8 million in the first quarter of 2015.

Net income rose 52.7% year on year to $8.4 million.

Glenn Stevens, CEO of GAIN Capital, says,

“Our performance this quarter reflects the strength of GAIN’s business and operating model and demonstrates the earnings power of the company. For the trailing twelve months ended March 31, 2016, GAIN delivered over $92 million of adjusted EBITDA. The first quarter of 2016 represents the third consecutive quarter that GAIN has delivered more than $20 million of adjusted EBITDA.

Our financial results highlight our ability to capture synergies from acquisitions and reduce our overall costs. Operating margins should continue to improve as we deliver approximately $45 million in run-rate cost synergies by Q4 2016 from the City Index integration and focus on overall cost reductions.”

gain_revenues_profits_chart

Highlights for Q1 2016:

gain_inside_q1_2016Retail Segment

  • In the first quarter of 2016, GAIN’s retail segment generated net revenue of $96.7 million and adjusted EBITDA of $36.3 million, reflecting a margin of 38%.
  • Average daily retail trading volume was $13.5 billion in the first quarter of 2016, marking a drop of 5% from $14.2 billion in the first quarter of 2015.

Institutional Segment

  • In the first quarter of 2016, GAIN’s institutional segment generated net revenue of $7.1 million and adjusted EBITDA of $1.5 million, reflecting a margin of 21%.
  • Average daily trading volume on the ECN and for the Swap Dealer was $8.3 billion and $2.9 billion, respectively, in the first quarter of 2016.

Futures Segment

  • In the first quarter of 2016, GAIN’s futures segment generated net revenue of $12.2 million and adjusted EBITDA of $1.0 million, reflecting a margin of 8%.
  • Average daily futures contracts were 38,275 in the first quarter of 2016.

Capital Return and Dividend

In the first quarter, GAIN repurchased approximately 500,000 shares at an average price of $7.05. This represents the third consecutive quarter of increased share repurchases. GAIN also repurchased $1.85 million of principal amount of its 4.125% convertible note due December 2018.

GAIN’s Board of Directors declared a quarterly cash dividend of $0.05 per share of the Company’s common stock. The dividend is payable on June 20, 2016 to shareholders of record as of the close of business June 13, 2016.

Talking of shareholders, let’s recall that in April this year GAIN’s Board of Directors extended the “poison pill” defense – a stockholder rights plan aiming to defend the company against hostile takeovers by three years, wih the expiration date now pushed to April 9, 2019. Also, under the amendment, the purchase price for the exercise of the rights has been raised from $17.00 to $27.50.

For the Q1 2016 report from GAIN, click here.

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GAIN Capital posts 52.7% YoY increase in net income in Q1 2016

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