GAIN Capital Announces First Quarter 2011 Results – Volume is up, dbFX details inside

Gain Capital, just like FXCM, has just issued its report for the first quarter of 2011. Just like FXCM Gain

Gain Capital, just like FXCM, has just issued its report for the first quarter of 2011. Just like FXCM Gain too has experienced spike in traded volumes – it now averages $170 Billion/month in the first quarter, 30% up the 2010 averages although this number includes both retail and the institutional business. Retail forex trading volume of Gain Capital was left almost unchanged – averaging $134 Billion in the first quarter of 2011 while what really increased is its institutional volume – over Gain GTX platform.

We also here now finally have some interesting figures regarding the acquisition of dBFX’s client base – Gain managed to add $55 million in assets through 1650 clients. This means that average dbFX client transferred to Gain had an average of $33,300 deposit which is more than three times Gain’s average account size. This is a simply huge addition to Gain’s existing client assets of $283 million – increasing them by almost 20%.

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GAIN Capital Holdings, Inc. (NYSE: GCAP), a global provider of online trading services, announced today its results for the quarter ended March 31, 2011, a share repurchase plan and provided information regarding the closing of its acquisition of dbFX, Deutsche Bank’s retail foreign exchange trading business.

Highlights: For the quarter ended March 31, 2011:

  • Record quarterly trading volume of $512.5 billion
  • Significant growth in traded retail accounts, funded retail accounts and client assets, up 18%, 32% and 34% respectively, compared to the prior year period
  • Closed dbFX acquisition on May 13, 2011 and, based on preliminary figures, added approximately $55 million in client assets and approximately 1,650 clients.
  • Approved a $10 million share repurchase plan

First Quarter Financial and Operating Results: (Note: Percentage changes are referenced to the first quarter, 2010)

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  • Net revenue of $40.4 million, versus $42.0 million in first quarter 2010
  • Net income of $1.4 million and adjusted net income(*) of $2.5 million, versus $66.0 million and $6.5 million in first quarter 2010, respectively
  • Retail trading volume of $402.5 billion and institutional trading volume of $110.1 billion, an increase of 38% and 355%, respectively
  • Traded retail accounts for the three months ended March 31, 2011 of 36,570, an increase of 18%
  • Funded retail accountsof 85,698 and client assets of $283.0 million as of March 31, 2011, an increase of 32% and 34%, respectively

Glenn Stevens, chief executive officer, commented, “As a result of the continued investment in our business, including product and service enhancements, in the first quarter 2011 we saw robust retail trading volume, reaching $402.5 billion, a 38% increase over first quarter 2010, and a very strong increase in institutional trading volume of 355% compared to the first quarter 2010. In addition, there were significant increases in traded retail accounts, funded retail accounts and client assets, up 18%, 32% and 34%, respectively, in a challenging market environment. We were also pleased that we were able to successfully complete the dbFX acquisition and look forward to providing the former dbFX customers our world-class customer service and trading experience.”

Mr. Stevens added, “Low market volatility in the first two months of the year and changes in the mix of retail trading volume hampered our first quarter 2011 revenue capture efforts. However, in March we began to see market conditions change significantly due to the turmoil in the Middle East and Japan, the worsening of the debt crises in Europe, and the continued weakening of the US dollar. This trend has continued into the second quarter and our year-to-date revenue capture has returned to historical levels.”

Closing of dbFX Acquisition

On May 13, 2011, GAIN Capital closed its acquisition of assets of dbFX, Deutsche Bank’s retail foreign exchange trading business. As of such date, based on preliminary figures, a total of approximately $55 million of former dbFX client assets, and approximately 1,650 client accounts, transferred to GAIN Capital’s retail division, FOREX.com. The acquisition agreement also provides for the referral of retail forex clients from Deutsche Bank to GAIN Capital over the two-year period following the closing of the transaction.

“The dbFX acquisition is one example of how we look to effectively invest our capital to enhance shareholder value,” said Henry Lyons, chief financial officer. “We’ll continue to pursue attractive acquisition opportunities in keeping with our consolidation strategy, as well as invest in driving organic growth. We are committed to investigating all opportunities that will put our capital to good use.”

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