FXCM Sees Red in Q3 2013 Results, Stock Went Down 4%, Despite Strong October Volumes

During the quarter, the broker reported a US GAAP net loss of $5.1 million on revenues of $113.2 million, which

FXCM_120x60FXCM, the NYSE listed forex broker, announced today results for the third quarter of 2013, as well as its October trading metrics. During the quarter, the broker reported a US GAAP net loss of $5.1 million on revenues of $113.2 million, which were 19.2% below Q2 2013. However, retail volumes in October rose 11% from September to $315 billion.

After today’s trading at the NYSE started, FXCM’s stock price went down by as much as 4% as of 9:42 AM New York time.

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Adjusted Pro Forma EBITDA for the third quarter of 2013, was just $33 million, a decrease of 39.45% compared to $54.5 million for the second quarter of 2013. Adjusted Pro Forma Net Income was $9.7 million or $0.13 per share for Q3 2013, compared to $23.3 million or $0.31 per fully diluted, fully exchanged share Q2 2013, a very considerable decrease of 58.37% and 58.06% respectively.

US GAAP net loss attributable to FXCM Inc. was $5.1 million for the Q3 2013 or ($0.15) per fully diluted share, a net decrease of $15.2 million, compared to net income of $10.1 million or $0.32 per fully diluted share for the Q2 2013. The Q3 FXCM results include a $15 million reserve established for regulatory matters.

Third Quarter 2013 Key Results:

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  • Revenues of $113.2 million, a decrease of 1% versus third quarter 2012
  • Adjusted Pro Forma EBITDA of $33.0 million, a decrease of 11% versus third quarter 2012
  • Adjusted Pro Forma net income of $9.7 million or $0.13 per fully diluted share, a decrease of 22% and 24% respectively versus third quarter 2012
  • US GAAP net loss attributable to FXCM Inc. of $5.1 million or $0.15 per diluted share – includes a $15.0 million reserve established for certain regulatory matters — versus net income of $4.5 million or $0.17 per diluted share in the third quarter 2012

Commenting on the weak quarter, FXCM’s CEO Drew Niv focused on the bright side saying that despite a muted trading environment, the business is still generating strong cash flow: “Volatility declined throughout the quarter, resulting in lower trading activity, but our business is built to withstand these headwinds.”

October 2013 Retail Trading Operating Metrics

  • Retail customer trading volume of $315 billion in October 2013, 11% higher than September 2013, and 3% lower than October 2012.
  • Average retail customer trading volume per day of $13.7 billion in October 2013, 1% higher than September 2013, and 3% lower than October 2012.
  • An average of 379,280 retail client trades per day in October 2013, 1% lower than September 2013, and 11% higher than October 2012.
  • Tradable accounts of 188,814 as of October 31, 2013, a decrease of 174, or flat from September 2013, and a decrease of 14,900 or 7%, from October 2012.

October 2013 Institutional Trading Operating Metrics

  • Institutional customer trading volume of $176 billion in October 2013, 3% lower than September 2013, and 232% higher than October 2012.
  • Average institutional trading volume per day of $7.7 billion in October 2013, 10% lower than September 2013, and 235% higher than October 2012.
  • An average of 29,063 institutional client trades per day in October 2013, 24% lower than September 2013, and 397% higher than October 2012.

Mr. Niv further reminded investors that FXCM has more than enough liquidity to pursue acquisitions and return capital to shareholders if that will be needed: “When such market conditions occur, diversity and scale are critical. With $422 million of cash and all of our $155 million credit facility available.”

 

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