FXCM Inc. (NYSE:FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended March 31, 2014, US GAAP revenues of $115.0 million, compared to $122.9 million for the quarter ended March 31, 2013, a decrease of 6%. U.S. GAAP net income attributable to FXCM Inc. was $2.1 million for the First Quarter 2014 or $0.05 per diluted share, compared to $6.9 million or $0.23 per diluted share for the First Quarter 2013, a decrease of 70% and 79% respectively.
Adjusted Pro Forma EBITDA for the First Quarter 2014 was $24.6 million, compared to $43.8 million for the First Quarter 2013, a decrease of 44%. Adjusted Pro Forma Net Income was $5.2 million or $0.07 per share for the First Quarter 2014, compared to $17.5 million or $0.23 per diluted, fully exchanged share for the First Quarter 2013, a decrease of 70% and 70% respectively.
“Volatility in the currency markets is currently at lows only seen twice in the past 20 years,” said Drew Niv, Chief Executive Officer. “However, having grown our business so significantly in the past few years, we believe we have the scale to continue to weather the difficult trading conditions relative to our competition and use them to expand our market share for when conditions improve.”
Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC Units into FXCM Inc. Class A common stock, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity´s tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges and certain equity based compensation expense granted at the time of FXCM´s initial public offering in December 2010.
FXCM Inc. today announced certain key operating metrics for April 2014 for its retail and institutional foreign exchange businesses. Monthly activities included:
April 2014 Operating Metrics
Retail Trading Metrics
| 1. | Retail customer trading volume(1) of $250 billion in April 2014, 14% lower than March 2014 and 32% lower than April 2013. | ||
| 2. | Average retail customer trading volume(1) per day of $11.4 billion in April 2014, 17% lower than March 2014 and 32% lower than April 2013. | ||
| 3. | An average of 351,138 retail client trades per day in April 2014, 18% lower than March 2014 and 30% lower than April 2013. | ||
| 4. | Tradeable accounts(2) of 192,605 as of April 30, 2014, an increase of 3,342, or 2%, from March 2014, and a decrease of 3,569,or 2%, from April 2013. | ||
Institutional Trading Metrics
- Institutional customer trading volume(1) of $185 billion in April 2014, 8% lower than March 2014 and 1% higher than April 2013.
- Average institutional trading volume(1) per day of $8.4 billion in April 2014, 12% lower than March 2014 and 1% higher than April 2013.
- An average of 42,876 institutional client trades per day in April 2014, 14% higher than March 2014 and 88% higher than April 2013.
More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company´s corporate website www.fxcmespanol.com.
This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website www.fxcmespanol.com.
(1) Volume that FXCM customers traded in period is translated into US dollars.
(2) A Tradeable Account is an account with sufficient funds to place a trade in accordance with FXCM trading policies.
Condensed Consolidated U.S. GAAP and Adjusted Pro Forma Results
| Unaudited | |||||||||||
| U.S. GAAP (thousands, except per share amounts) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2014 | 2013 | % Change | |||||||||
| Total net revenues | $ | 115,008 | $ | 122,864 |
| -6 | % | ||||
| Compensation and benefits | 29,890 | 23,533 | 27 | % | |||||||
| Allocation of net income to Lucid members for services provided | 2,973 | - | 100 | % | |||||||
| Total compensation and benefits | 32,863 | 23,533 | 40 | % | |||||||
| Referring broker fees | 19,122 | 21,350 | -10 | % | |||||||
| Other expenses | 42,990 | 36,115 | 19 | % | |||||||
| Loss on equity method investments, net | 310 | 148 | 109 | % | |||||||
| Depreciation and amortization | 12,630 | 11,974 | 5 | % | |||||||
| Interest on borrowings | 2,997 | 817 | 267 | % | |||||||
| Income before income taxes | 4,096 | 28,927 | -86 | % | |||||||
| Income tax provision | 1,251 | 7,959 | -84 | % | |||||||
| Net Income | 2,845 | 20,968 | -86 | % | |||||||
| Net income attributable to non-controlling interest in FXCM Holdings, LLC | 2,427 | 10,230 | -76 | % | |||||||
| Net income (loss) attributable to other non-controlling interests | (1,659 | ) | 3,878 | -143 | % | ||||||
| Net Income Attributable to FXCM Inc. | $ | 2,077 | $ | 6,860 | -70 | % | |||||
| Weighted average Class A shares outstanding - Basic | 39,077 | 28,472 | 37 | % | |||||||
| Weighted average Class A shares outstanding - Diluted | 43,152 | 29,678 | 45 | % | |||||||
| Net Income per Class A Share | |||||||||||
| Basic | $ | 0.05 | $ | 0.24 | -78 | % | |||||
| Net Income per Class A Share | |||||||||||
| Diluted | $ | 0.05 | $ | 0.23 | -79 | % | |||||
| Unaudited | |||||||||||
| Adjusted Pro Forma (thousands, except per share amounts) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2014 | 2013 | % Change | |||||||||
| Total Revenues | $ | 111,336 |
| $ | 122,864 |
| -9 | % | |||
| Compensation and benefits | 27,716 | 21,471 | 29 | % | |||||||
| Allocation of net income to Lucid members for services provided | - | - | - | ||||||||
| Total compensation and benefits | 27,716 | 21,471 | 29 | % | |||||||
| Referring broker fees | 19,122 | 21,350 | -10 | % | |||||||
| Loss on equity method investments, net | 310 | 148 | 109 | % | |||||||
| Other expenses | 39,584 | 36,115 | 10 | % | |||||||
| EBITDA | 24,604 | 43,780 | -44 | % | |||||||
| Depreciation and amortization | 12,630 | 11,974 | 5 | % | |||||||
| Interest on borrowings | 2,997 | 817 | 267 | % | |||||||
| Income before income taxes | 8,977 | 30,989 | -71 | % | |||||||
| Income tax provision | 2,179 | 9,596 | -77 | % | |||||||
| Net Income | 6,798 | 21,393 | -68 | % | |||||||
| Net income attributable to non-controlling interest in FXCM Holdings, LLC | - | - | - | ||||||||
| Net income attributable to other non-controlling interests | 1,604 | 3,878 | -59 | % | |||||||
| Net Income Attributable to FXCM Inc. | $ | 5,194 | $ | 17,515 | -70 | % | |||||
| Pro forma fully exchanged, fully diluted weighted average shares outstanding | 79,766 | 75,785 | 5 | % | |||||||
| Earnings Per Share | $ | 0.07 | $ | 0.23 | -70 | % | |||||
| Selected Operating Metrics | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2014 | 2013 | % Change | |||||||||
| Total retail trading volume ($ in billions) | $ | 936 |
| $ | 1,041 |
| -10 | % | |||
| Total institutional trading volume ($ in billions) | $ | 546 | $ | 373 | 46 | % | |||||
| Total active accounts | 181,156 | 173,265 | 5 | % | |||||||
| Trading days in period | 63 | 63 | 0 | % | |||||||
| Daily average trades | 413,912 | 437,813 | -5 | % | |||||||
| Daily average trades per active account | 2.3 | 2.5 | -8 | % | |||||||
| Retail trading revenue per million traded | $ | 88 | $ | 88 | 0 | % | |||||
| Total customer equity ($ in millions) | $ | 1,245.3 | $ | 1,190.4 | 5 | % | |||||
Non-GAAP Financial Measures
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP.
Declaration of Quarterly Dividend
The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on July 1, 2014 to Class A stockholders of record at the close of business on June 6, 2014.
Conference Call
As previously announced, the Company will host a conference call to discuss the results at 8:15 a.m. (EDT). This conference call will be available to domestic participants by dialing 877.445.4603 and 443.295.9270 for international participants. The conference ID number is 37161819.
A live audio webcast, a copy of FXCM´s earnings release, and presentation slides for this conference call will be available at http://ir.fxcm.com/.
Disclosure Regarding Forward-Looking Statements
In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s Annual Report on Form 10-K and other SEC filings, which are accessible on the SEC website at sec.gov.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Visit www.fxcmespanol.com and follow us on Twitter @FXCM, Facebook FXCM, Google+ FXCM or YouTube FXCM.
About FXCM Inc.
FXCM Inc. (NYSE:FXCM) is a global online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide.
At the heart of FXCM´s client offering is No Dealing Desk FX trading. Clients benefit from FXCM´s large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM´s U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference (“CFD”) products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.
Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.
ANNEX I
| Schedule | Page Number | ||
| U.S. GAAP Results | |||
| Unaudited U.S. GAAP Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013 | A-1 | ||
| Unaudited U.S. GAAP Condensed Consolidated Statements of Financial Condition As of March 31, 2014 and December 31, 2013 | A-2 | ||
| Adjusted Pro Forma Results | A-3 | ||
| Unaudited Adjusted Pro Forma and U.S. GAAP Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013 | A-4 | ||
| Reconciliation of non-GAAP Measures to nearest U.S. GAAP Results | A-5 | ||
| Reconciliation of EBITDA to U.S. GAAP Net Income | A-6 | ||
| FXCM Inc. | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Revenues | ||||||||
| Retail trading revenue | $ | 82,660 | $ | 91,254 | ||||
| Institutional trading revenue | 26,150 | 27,556 | ||||||
| Trading revenue | 108,810 | 118,810 | ||||||
| Interest income | 563 | 679 | ||||||
| Brokerage interest expense | (96 | ) | (55 | ) | ||||
| Net interest income | 467 | 624 | ||||||
| Other income | 5,731 | 3,430 | ||||||
| Total net revenues | 115,008 | 122,864 | ||||||
| Operating Expenses | ||||||||
| Compensation and benefits | 29,890 | 23,533 | ||||||
| Allocation of net income to Lucid members for services provided | 2,973 | - | ||||||
| Total compensation and benefits | 32,863 | 23,533 | ||||||
| Referring broker fees | 19,122 | 21,350 | ||||||
| Advertising and marketing | 6,497 | 7,351 | ||||||
| Communication and technology | 12,219 | 8,355 | ||||||
| Trading costs, prime brokerage and clearing fees | 8,206 | 7,938 | ||||||
| General and administrative | 16,068 | 12,471 | ||||||
| Depreciation and amortization | 12,630 | 11,974 | ||||||
| Total operating expenses | 107,605 | 92,972 | ||||||
| Total operating income | 7,403 | 29,892 | ||||||
| Other Expense | ||||||||
| Loss on equity method investments, net | 310 | 148 | ||||||
| Interest on borrowings | 2,997 | 817 | ||||||
| Income before income taxes | 4,096 | 28,927 | ||||||
| Income tax provision | 1,251 | 7,959 | ||||||
| Net income | 2,845 | 20,968 | ||||||
| Net income attributable to non-controlling interest in FXCM Holdings, LLC | 2,427 | 10,230 | ||||||
| Net (loss) income attributable to other non-controlling interests | (1,659 | ) | 3,878 | |||||
| Net income attributable to FXCM Inc. | $ | 2,077 | $ | 6,860 | ||||
| Weighted average Class A shares outstanding - Basic | 39,077 | 28,472 | ||||||
| Weighted average Class A shares outstanding - Diluted | 43,152 | 29,678 | ||||||
| Net Income per Class A Share | ||||||||
| Basic | $ | 0.05 | $ | 0.24 | ||||
| Diluted | $ | 0.05 |
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