FXCM Second Quarter Results Show Revenues down 30% YoY

Listed FX and CFD brokerage firm, FXCM, has seen a sharp decline in trading revenues in the second quarter of

Leading multi-asset broker dealer, FXCM, has reported its second quarter earnings for 2014. The listed firm saw a number of significant events impacting its business. Overall, the financial services firm saw revenues drop considerably, both on a quarterly and annual basis. For the quarter ended June 30, the firm’s (U.S. GAAP) revenues were $97.9 million, 30% lower YoY where the firm saw revenues reach $140.1 million.

The firm also reported that its adjusted Pro Forma EBITDA for the second quarter 2014 was $13.4 million, this was compared to $54.5 million for the second quarter 2013, a decrease of 75%. With similar metrics seen with the adjusted Pro Forma EBITDA for the six months ended June 30, which was $38.0 million, as compared to $98.3 million, a 61% decrease YoY.

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The troublesome trading environment continues to impact trader behaviour as participants stay on the sidelines, triggered by the record low volatility. Speaking about the firm’s results, Chief Executive Officer of FXCM, Drew Niv stated: “In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years.”

The broker has also seen a negative spillover in its institutional market-making unit, Lucid markets. The firm saw disappointing results since the acquisition twenty-five months ago. Lucid‘s revenues and EBITDA were at $11.8m and $6.8m respectively, the firm stating that Lucid and V3 have both been affected by the tough operating conditions with low market volatility.

On the upside, FXCM is rolling out new instruments as it further diversifies its product offering. The US-based broker has gradually been rolling out its new CFD trading portal, according to sources close to the matter, the platform was co-developed by FXCM and Digital Look.

The multi-asset broker has seen a gradual increase in its CFD business, in the latest findings CFDs represented 26% of the firm’s volumes, a 5% increase from figures reported a quarter earlier. The firm also plans to roll out its equity derivatives offering with single stock CFD instruments.

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Drew Niv, CEO FXCM
Drew Niv, CEO FXCM

The firm also saw growth in client deposits, total assets were $1.31 billion, up 10% year to date and a 5% increase from figures reported in March 2014.

“Despite the difficult trading conditions, we continue to gain market share and had another strong quarter of growth in customer equity, in part reflecting our strong brand and competitive position. Since year-end 2013, we have grown customer equity by $121 million or 10% and believe we are well positioned for when market conditions improve,” Mr. Niv added

FXCM has made a number of acquisitions as it enhances its portfolio as a global broking giant, the firm stated that it is exploring multiple M&A opportunities as part of its growth strategy, and it “remains committed to a disciplined acquisition approach.”

However, as several participants in the foreign exchange markets are experiencing some of the toughest trading conditions since the collapse of Lehman Brothers in 2008, FXCM also stated: “If environment persists & M&A does not materialize then meaningful cost reductions will be initiated.”

UK-based multi-asset broker, IG, released its annual earnings last month, although the firm published positive results for FY 2014, growth was in the single digits. The firm reported a 2.4% increase in its net trading revenue which was at $621 million.

 

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