GAIN Capital has posted its third quarter results and has announced a $30 million buy back program coupled with a 20 percent increase in dividends to 6 cents. The changes were aimed at reassuring investors in the long term value of holding the company’s shares. As a result, the company’s stock traded about 10 percent higher in the aftermath of the announcement.
Mobile trading at GAIN Capital accounts for between 45 and 60 percent of volumes
The company is introducing a new charting tool next moth, and will be delivering to its clients new web and native mobile trading platforms that are going to be deployed in 2017. The rollout will start with City Index and will continue globally later during the year. Mobile trading at GAIN Capital accounts for between 45 and 60 percent of volumes.
The company has also announced that it is going to open a new affiliates program which will open a new acquisition channel fro GAIN Capital’s brands.
Revenues Per Million Drop to $84
The firm faced changing trading conditions in the third quarter of 2016, which has proven to be materially less volatile than last year’s. GAIN Capital’s management also reported a decline in average revenues per million in its retail segment to below the company’s target range of $95 to $105 to about $84 during the third quarter. That said, for the first 9 months of the year, the RPM figure remained within the target range at $95.
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GAIN Capital’s net revenues for the quarter declined by over 43 percent year-on-year to $72.2 million. The company’s operating expenses also dropped substantially by about 30 percent to a low of $68.9 million.
The company posted an adjusted net loss of $5.8 million when compared to last year’s $15.3 million profit. During the earnings call, the company’s management elaborated that the quarterly loss was due to lower volatility amid lower volumes and lower revenue capture, especially in foreign exchange.
Cost Cutting Continues
GAIN Capital continued its cost cutting efforts and CEO Glenn Stevens expressed views that volatility appears to be returning to more normal levels. Reinforcing this view is the upcoming U.S. election result, where rapid moves across the stock markets and currencies are very likely to boost revenue capture from indices and from FX.
Since the beginning of the year the company has increased its retail business margins from 26 percent during the first 9 months of 2015 to about 31 percent for the same period this year. As a result the company has registered a 7 percent increase in revenues from the retail segment to $74.3 million, while revenues declined by 11 percent.
Institutional margins have ticked lower from 18 percent for the first 9 months of 2015 to 16 percent for the same period this year. Quarterly revenues have declined 20 percent to $6.9 million, compared to $8.7 million for the same quarter last year. For the first 9 months of 2016 the decline was 22 percent to $21.5 million.