FXCM Announces Third Quarter 2011 Results and October Operating Metrics – Revenues are up

FXCM's Q3 2011 numbers are out and show outstanding growth in revenues. October retail forex volumes are down 8% but

Update: Apparently Wall Street didn’t agree with me – FXCM’s stock price tumbled by more than 13% today. Good thing I’m not a trader.

FXCM’s Q3 2011 numbers are out and show outstanding growth in revenues. October retail forex volumes are down 8% but institutional ones are up by 35%. For the first time FXCM also shows average number of institutional trades a day – which is 90% higher in October comparing to September. All in all solid results that might help FXCM’s stock, which suffered from several downgrades lately, to rebound.

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Highlights:

  • Third quarter 2011 revenues of $109.1 million, up 5% from second quarter 2011 and 20% versus the same period in 2010
  • Adjusted Pro Forma EBITDA of $31.4 million, up 10% from second quarter 2011 and up 13% versus the same period in 2010
  • Pro Forma net income of $17.1 million, or $0.23 per fully diluted share
  • US GAAP net income of $3.4 million, or $0.21 per fully diluted share
  • Closed acquisition of Foreland Forex of Japan post-quarter end – will increase FXCM client equity to over $1 billion and significantly increase FXCM’s presence in Japan
  • Declared a quarterly dividend of $0.06 per share of Class A common stock

FXCM Inc. (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended September 30, 2011, revenues increased to $109.1 million, compared to $103.4 million for the second quarter 2011 and $90.5 million for the third quarter 2010, an increase of 5% and 20% respectively. Adjusted Pro Forma EBITDA for the third quarter 2011 was $31.4 million compared to $28.5 million for the second quarter 2011 and $27.9 million for the third quarter 2010, an increase of 10% and an increase of 13%, respectively. Adjusted Pro Forma Net Income was $17.1 million, or $0.23 per share on a fully exchanged, fully diluted basis, compared to $15.6 million, or $0.21 per share for the second quarter 2011 and $16.4 million, or $0.22 per share, for the third quarter 2010, an increase of 10% and 4% of Adjusted Pro Forma Net Income, respectively. U.S. GAAP net income for the third quarter 2011 was $3.4 million, or $0.21 cents per fully diluted Class A share.

Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC units into FXCM Inc. Class A shares, 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 equity based compensation expense.

For the nine months ended September 30, 2011 revenues increased 16% to $307.1 million, compared to $264.2 million for the corresponding period in 2010. Adjusted Pro Forma EBITDA for the year was $85.5 million, compared to $88.2 million, for the corresponding prior year period, a decrease of 3%. Adjusted Pro Forma Net Income was $46.5 million, or $0.62 per share on a fully exchanged, fully diluted basis, compared to $52.2 million, or $0.69 per share, for the corresponding prior year period, a decrease of 11%. U.S. GAAP net income for the nine months ended September 30, 2011 was $9.5 million, or $0.56 cents per fully diluted Class A share.

“FXCM delivered solid results in the third quarter. Our retail client volume of $1,042 billion was a quarterly record,” said Drew Niv, Chief Executive Officer of FXCM Inc. “We are particularly pleased that our US operations turned in a particularly solid performance with 38% sequential growth in volume from the second quarter 2011.”

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“In addition, on October 7th we closed our acquisition of Foreland Forex in Japan which more than doubles our presence in Japan, the world’s largest retail FX market, and will increase our customer equity in excess of $1 billion,” he continued.

In addition, FXCM Inc. today announced certain key operating metrics for October 2011 for its retail and institutional foreign exchange business. Monthly activities included:

October Monthly Metrics:

Retail Trading Metrics

  • Retail customer trading volume(1) of $339 billion in October 2011, 8% lower than September 2011 and 24% higher than October 2010.
  • Average retail customer trading volume(1) per day of $16.2 billion in October 2011, 4% lower than September 2011 and 24% higher than October 2010.
  • An average of 462,882 retail client trades per day in October 2011, 4% lower than September 2011 and 39% higher than October 2010.
  • Active accounts(2) of 161,991 as of October 31, 2011, an increase of 5,938, or 4% from September 2011, and an increase of 27,352, or 20%, from October 2010.

Institutional Trading Metrics

  • Institutional customer trading volume(1) of $174 billion in October 2011, 35% higher than September 2011 and 159% higher than October 2010.
  • Average institutional trading volume(1) per day of $8.3 billion in October 2011, 42% higher than September 2011 and 159% higher than October 2010.
  • An average of 43,213 institutional client trades per day in October 2011, 90% higher than September 2011 and 969% higher than October 2010.

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.fxcm.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.fxcm.com.

  1. Volume that FXCM customers traded in period translated into US dollars.
  2. An account that has traded at least once in the previous twelve months.
FXCM is crowned as world’s largest broker in the latest Forex Magnates Retail Forex Industry Report and is covered there extensively.
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