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Gain Capital Holdings Inc (NYSE:GCAP) has announced financial results for the fourth quarter and full year 2014.
“We ended 2014 with an exceptionally strong quarter, as we capitalized on improved market conditions to increase customer engagement across our businesses, boost trading volumes and attract new customers. Retail OTC trading volume and revenue both grew by more than 35%, and we ended the year with record funded accounts. Our focus on growing our commission-based businesses also continues to deliver results, with commission-based revenue up by 30% from a year ago,” said Glenn Stevens, CEO of GAIN Capital.
“This positive growth, combined with our disciplined management of fixed operating expenses allowed us to deliver record quarterly revenue and net income of $114.7 million and $17.6 million, respectively,” continued Mr. Stevens.
“Throughout 2014, we continued to execute on our strategy of growing our business both organically and through M&A and diversifying our revenues across products, customer types and geographies. We delivered record net revenue of $369.5 million, which was up 38% for the year; I am especially proud that due to their continued successful development, our commission-based businesses comprised 34% of our annual net revenue, up from 23% in 2013 and 14% in 2012,” Mr. Stevens continued.
“On the M&A side, in October we announced the acquisition of London-based City Index, our second large-scale acquisition in two years, following our successful acquisition and integration of GFT. City Index will continue the process of diversifying our retail OTC volume, giving us further exposure to non-fx asset classes such as equity, energy and precious metals via CFDs. These transactions demonstrate our position as an industry consolidator and our expertise in realizing substantial operating expense synergies, while also providing a platform to continue to grow and diversify our businesses,” Mr. Stevens added.
With regard to the acquisition of City Index, it is important to note that these figures do not represent any aspect of the transaction or resulting business from it, as the deal has not closed yet, there’s a shareholders meeting to approve on March 12, as detailed below.
“We enter 2015 with solid momentum, with robust client engagement and trading volumes continuing in the initial weeks of the first quarter,” Mr. Stevens continued.
“As a result of our strong risk management capabilities, we successfully navigated the Swiss franc event on January 15, 2015 and since then we’ve seen a strong increase in new accounts, up significantly in January versus our monthly average in the fourth quarter. With strong momentum in organic growth coupled with our acquisition of City Index, which we expect to close in early Q2, we believe we are well-positioned to deliver growth and value for our stakeholders in 2015 and beyond,” Mr. Stevens concluded.
Fourth Quarter Highlights
Comparisons below are referenced to the three months ending December 31, 2013)
Net revenue of $114.7 million, up 37%
Net income of $17.6 million, up 309%
Earnings per diluted share of $0.41, up 273%
Adjusted EBITDA* of $35.9 million, up 164%
Retail OTC trading volume of $730.6 billion, up 42%
Institutional trading volume of $1.2 trillion, up 11%
Average Daily Futures Contracts of 30,446, up 41%
Full Year Highlights
(Comparisons below are referenced to the twelve months ending December 31, 2013)
Net revenue of $369.5 million, up 38%
Net income of $31.6 million, up slightly from 2013
Earnings per diluted share of $0.71, down 10%
Adjusted EBITDA* of $74.6 million, up 23%
Retail OTC trading volume of $2.4 trillion, up 35%
Institutional trading volume of $5.1 trillion, up 29%
Average Daily Futures Contracts of 27,131, up 31%
Retail OTC Business
In the fourth quarter of 2014, GAIN’s retail OTC trading business generated revenue of $85.1 million, up 39% from $61.4 million in the fourth quarter of 2013. Retail OTC trading volume was $730.6 billion, up 42% from $513.0 billion in the fourth quarter of 2013.
Full year retail OTC revenue was $236.7 million, up 15% from $205.1 million in 2013. Total retail trading volume was $2.4 trillion, up 35% from $1.8 trillion in 2013.
In the fourth quarter of 2014, GAIN’s institutional business, which includes the GTX platform and the Sales Trader business, generated total revenue of $19.8 million, compared with $17.7 million in the fourth quarter of 2013. Total institutional trading volume was $1.2 trillion, compared with $1.1 trillion in the fourth quarter of 2013.
In 2014, GAIN’s institutional businesses generated total revenue of $89.2 million, compared with $38.6 million in 2013. Total institutional trading volume was $5.1 trillion, compared with $4.0 trillion in 2013.
The exchange-traded futures business generated revenue of $7.3 million in the fourth quarter of 2014, compared with $5.3 million in the fourth quarter of 2013. Average daily futures contracts reached 30,446, up 41% from 21,575 in the fourth quarter of 2013.
In 2014, the exchange-traded futures business generated total revenue of $32.7 million, compared with $22.1 million in 2013. Average daily futures contracts were 27,131 for 2014, compared with 20,717 in 2013.
A special meeting of stockholders has been convened for March 12, 2015 to approve the firm’s acquisition of City Index and certain other matters. Assuming the transaction is approved by stockholders and other required approvals are obtained, the company expects to close the acquisition in early Q2 and reiterate our previously disclosed synergy target of $45 – $55 million in the two years following the closing.
City Index’s preliminary results for the fourth quarter of 2014, under U.K. GAAP, include net revenue of $43.3 million, up 22% from $35.4 million in the fourth quarter of 2013 and Adjusted EBITDA of $12.7 million, up 74% from $7.3 million in the fourth quarter of 2013. Trading volume was $270.9 billion, up 27% from $213.0 billion in the fourth quarter of 2013.
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 23, 2015 to shareholders of record as of the close of business on March 13, 2015.
For the official announcement from GAIN Capital, click here.