GAIN Capital registers 14.6% QoQ jump in revenues in Q3 2015


Nice comeback for retail forex broker Gain Capital / Forex.com in Q3, after a dismal Q2.

Gain Capital Holdings Inc (NYSE:GCAP) has just published its financial metrics for the third quarter of 2015, with net revenues staging a decent rise in both annual and quarterly terms, with the retail business fueling the strong results.

Worth noting is that the company managed to register solid net income in the three months to September 30, 2015, after a challenging second quarter of 2015, when GAIN reported a net loss of $8.8 million, blaming it on adverse trading conditions.

Net revenue for the third quarter of 2015 amounted to $127.9 million, up 14.6% from $111.6 million registered in the second quarter of 2015. The result for the third quarter of 2015 was 23% higher than in the third quarter of 2014.

Net income for the third quarter of 2015 was $7.8 million, compared with a loss of $8.8 million incurred in the second quarter of 2015.

The result was, however, way below the record net income of $17.6 million in Q4-1014 and $15.3 million seen in the third quarter of 2014. Gain Capital is clearly not yet seeing the ‘cost synergies’ it has been touting from its acquisition earlier this year of UK online trading firm City Index, with revenues increases yet to really hit the bottom line. Gain did state that the integration of City Index is on track to achieve $40-$45 million in run-rate cost synergies by Q4 2016, so we guess we’ll just have to be patient and see how it actually plays out.

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Retail Business

In the third quarter of 2015, GAIN’s retail business generated net revenue of $118.8 million, up from $90.4 million in the third quarter of 2014 (down 5% on a pro forma basis).

The retail OTC business contributed $100.9 million of net revenue, up 55% from $64.9 million in the third quarter 2014 (up 3% on a pro forma basis).

For the quarter, GAIN’s futures business brought $12.5 million of net revenue.

Other retail revenue was $5.4 million in the quarter.

Average daily retail OTC trading volume was $15.6 billion, up 70% from $9.2 billion in the third quarter of 2014 (up 25% on a pro forma basis).

Average daily futures contracts were 34,429, up 29% from 26,736 in the third quarter of 2014.

Institutional Business

In the third quarter of 2015, net revenue from the GTX business was $8.3 million, compared to $8.5 million in the prior year quarter. Average daily volume for GTX was $16.7 billion in the quarter, an increase of 1% from the prior year quarter.

Dividend

GAIN’s Board of Directors declared a quarterly cash dividend of $0.05 per share of the Company’s common stock. The dividend will be payable on December 22, 2015 to shareholders of record as of the close of business December 11, 2015.

Management Comments

“This quarter reflects GAIN’s continued success in executing its strategy, particularly relating to the scaling and diversification of our retail business,” commented Glenn Stevens, CEO of GAIN Capital.

“Reflecting the increased diversification of our retail revenue, four product groups contributed significantly to our total retail revenue for the quarter, with each achieving in excess of $10 million in revenue,” continued Mr. Stevens. “Non-FX products represented 50% of retail revenue year-to-date, which further illustrates GAIN’s progress on its diversification strategy. Third quarter average daily OTC volume of $15.6 billion represents an increase of 30% over the same period last year and reflects the impact of GAIN’s acquisition of City Index, as well as its ability to grow active accounts,” continued Mr. Stevens.

“The integration of City Index is on track to achieve $40-$45 million in run-rate cost synergies by Q4 2016, with several significant milestones achieved during the quarter. We believe achievement of the targeted synergies and continued cost rationalization provide GAIN with a significant opportunity to continue to expand our margins,” continued Mr. Stevens.

To view the full announcement from GAIN Capital, click here.

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GAIN Capital registers 14.6% QoQ jump in revenues in Q3 2015

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