GAIN Capital Reports Record Fourth-Quarter Earnings

As the analysts' earnings per share estimates have increased from 37 cents a share, 30 days ago, to 46 cents

GAIN CapitalGAIN Capital Holdings (NYSE:GCAP) has just released its fourth-quarter earnings, announcing a record quarter in terms of revenues, which shot higher by 37% year-on-year to $114.7 million, while net income has tripled from a year ago to $17.6 million.

For the full 2014, net revenue was up 38% to $369.5 million as retail trading volume went up 35% to $2.4 trillion and institutional trading marked a 29% increase to $5.1 trillion.

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The positive results have by-and-large been expected by the market, with the average analyst estimates surpassing the numbers released today. While GAIN Capital reported earnings per diluted share of $0.41, which is higher by 273% when compared to a year ago, the average consensus estimates centered around $0.44.

The company’s CEO Glenn Stevens commented in the announcement, “We ended 2014 with an exceptionally strong quarter, as we capitalized on improved market conditions to increase customer engagement across our businesses, boost trading volumes and attract new customers.”

“Retail OTC trading volume and revenue both grew by more than 35%, and we ended the year with record funded accounts. Our focus on growing our commission-based businesses also continues to deliver results, with commission-based revenue up by 30% from a year ago,” he added.

Retail OTC metrics

According to the announcement made by GAIN Capital Holdings, during the fourth quarter of 2014 the firm’s retail OTC trading business generated revenue of $85.1 million, higher by 39% when compared to the final quarter of 2013. Retail OTC trading volumes amounted to $730.6 billion, up 42% from $513 billion in the fourth quarter of 2013.

The retail OTC revenue for the full year was $236.7 million, which is higher by 15% from $205.1 million in 2013. Total retail trading volume constituted $2.4 trillion, higher by 35% from $1.8 trillion in 2013.

Institutional metrics

On the institutional front, GAIN Capital Holdings (NYSE:GAIN) reported that business through the company’s GTX platform and the Sales Trader unit generated revenue totalling $19.8 million, which is mildly higher when compared to last year’s $17.7 million in the fourth quarter of 2013.

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Total institutional trading volume grew 9% to $1.2 trillion from last year’s $1.1 trillion in the final quarter of 2013.

GAIN Capital’s institutional businesses generated total revenue of $89.2 million throughout 2014. This is materially higher when compared to last year, when the firm reported $38.6 million in revenues. Total institutional trading volume amounted to $5.1 trillion, compared with $4 trillion in 2013.

Futures trading

The exchange-traded futures business has picked up steam, generating revenue of $7.3 million in the fourth quarter of 2014, which is about 37% higher when compared to the $5.3 million reported in the fourth quarter of 2013.

Average daily futures contracts reached 30,446, up 41% from 21,575 in the fourth quarter of 2013.

In 2014, the exchange-traded futures business generated total revenue of $32.7 million, compared with $22.1 million in 2013. Average daily futures contracts were 27,131 for 2014, compared with 20,717 in 2013.

City Index acquisition details

GAIN Capital mentioned in its earnings release that the acquisition of City Index is to be approved at a meeting of stockholders on the 12th of March 2015. Pending the stockholder approval, and due diligence, GAIN Capital expects the acquisition to conclude in early Q2, while reiterating a synergy target totalling between $45 – $55 million in the two years following the closing.

The preliminary results of City Index for the fourth quarter of 2014, under UK GAAP, include net revenue of $43.3 million, which is higher by 22% from $35.4 million in the fourth quarter of 2013 and adjusted EBITDA of $12.7 million, which is up by 74% from $7.3 million in the fourth quarter of 2013.

Trading volumes totalled $270.9 billion, up 27% from $213.0 billion in the fourth quarter of 2013.

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