GAIN Capital registers fivefold Q/Q jump in income in Q4 2015, but revenues slide


Gain Capital Holdings Inc (NYSE:GCAP), one of the major investment services providers in the United States, has reported its financial metrics for the fourth quarter and full year 2015.

The final three months of the year brought a steep rise in profits, accompanied by a double-digit decrease in revenues. Regarding the full year, it is worth noting that the loss registered in the second quarter weighed on full year profits. Moreover, after making some corrections to its estimates, GAIN said the loss for the second quarter of 2015 was bigger than initially stated and was indeed $12.9 million.

Let’s examine the particular metrics (after restatement).

Fourth Quarter 2015

  • Net revenues for the period amounted to $102.8 million, down 19.8% from the result registered in the third quarter of 2015. In annual terms, the drop was 10.8%.
  • Net income for the period was $15.5 million, which is five times higher than in the preceding quarter but 31% lower than in the final quarter of 2014.
  • Adjusted EBITDA for the period reached $21.5 million, whereas earnings per diluted share were $0.32.

gain_revenues_profits_chart

(Important note – GAIN Capital has submitted a separate SEC filing today adjusting its financial data for 2014 and 2015. The chart reflects the changes.)

Full Year 2015

  • Net revenue was $435.4 million in the twelve months to December 31, 2015, up 17.9% from 2014 levels.
  • Net income amounted to $10.2 million, down 59% from the result of $24.9 million recorded in 2014.
  • Adjusted EBITDA reached $80.5 million, whereas earnings per diluted share were $0.22.

Glenn Stevens, CEO of GAIN Capital, comments,

“This year reflects GAIN’s continued success in executing its strategy, particularly relating to the scaling and diversification of our retail business, while also growing our other business segments. We successfully closed on the acquisition of City Index in Q2 and are seeing the benefits of the cost synergies reflected in our financial results. Our achievement of approximately $45 million in run-rate cost synergies by Q4 2016 will drive continued expansion in our operating margins.

This marks the first earnings release that GAIN has disclosed segment reporting which provides a comprehensive picture of the results and profitability of each of GAIN’s business lines and, as a result, greater transparency regarding the value of the enterprise”.

Retail Segment

  • In the fourth quarter of 2015, GAIN’s retail segment generated net revenue of $82.8 million and adjusted EBITDA of $24.8 million, reflecting a margin of 30%.
  • For the fiscal year ended December 31, 2015, the retail segment generated net revenue of $351.5 million and adjusted EBITDA of $94.3 million, reflecting a margin of 27%.
  • Average daily retail trading volume was $12.5 billion in the fourth quarter of 2015, down 1% from $12.6 billion in the fourth quarter of 2014 and $15.4 billion in fiscal year 2015, up 39% from $11.1 billion in the previous year.

Institutional Segment

  • In the fourth quarter of 2015, GAIN’s institutional segment generated net revenue of $7.4 million and adjusted EBITDA of $2.1 million, reflecting a margin of 28%.
  • For the fiscal year ended December 31, 2015, the institutional segment generated net revenue of $35.1 million and adjusted EBITDA of $10.1 million, reflecting a margin of 29%.
  • Average daily trading volume on the ECN and for the Swap Dealer was $6.4 billion and $2.8 billion, respectively, in the fourth quarter of 2015 and $7.2 billion and $3.1 billion, respectively, in fiscal year 2015.

Dividend

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 March 29, 2016 to shareholders of record as of the close of business March 25, 2016.

You can view the full report by clicking here.

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GAIN Capital registers fivefold Q/Q jump in income in Q4 2015, but revenues slide

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