GAIN Capital prepares to report second quarter results – will M&A activity pay off?

Evergreen US retail FX company GAIN Capital (NYSE:GCAP) has today announced that its second quarter results and July operating metrics will be published on Monday, August 11, 2014, after the market closes. A conference call to discuss GAIN Capital’s financial and operating results will be held that day at 5.00 pm ET.

During the last few months, GAIN Capital has continued to expand its operations by creating economies of scale, most recently with the completion of its acquisition of British Contract for Difference (CFD) advisory business Galvan Research.

GAIN Capital had previously announced that it had agreed to acquire 100% interest in Galvan Research but had not disclosed the terms at the time. It will be interesting to note whether the company will disclose the transaction details during the publication of its second quarter results, or whether this information will make its first appearance within GAIN Capital’s annual report.

Another significant factor which may influence future revenues for Gain Capital’s global business is the recent purchase of software and other associated intellectual property from Valaquenta and Forexster currently utilized to operate the electronic trading platform offered to customers in the Company’s GTX business. GAIN Capital’s outlay associated with this purchase amounted to $12.4 million in cash to Valaquenta along with 861,935 shares of common stock to Forexster as consideration for acquired assets.

Whilst the firm had utilized services from both providers for some time, its ownership may facilitate streamlining over a long period of time.

During the initial part of this year, along with many of its peers, GAIN Capital experienced a less buoyant business environment than the same time last year, resulting in the company’s shares having dropped by 15% after the announcement of its operating metrics and financial statistics for the first quarter of this year.

Whether the second quarter’s results, along with July’s metrics, will provide a clearer picture of market recovery in the second half of this year will most certainly be interesting in order to signal an end to what CEO of rival North American FX giant FXCM Drew Niv has recently described as “Volatility in the currency markets being currently at lows only seen twice in the past 20 years.”

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