GAIN Capital Holdings, (NYSE: GCAP) has reported its financial metrics for Q3 2015, which showed a general rebound across the board, snapping a lackluster Q2 earnings release.
In terms of the Q3 2015 figures, GAIN Capital’s net revenue yielded $127.9 million, which correlates to a markedly higher performance to the tune of 14.6% QoQ from just $111.6 million in the Q2 2015. Moreover, GAIN’s adjusted earnings per share rose to $0.31 during Q3 2015, soaring from $0.01 per share in Q2 2015.
Retail Business Outperforms
GAIN Capital notched a strong performance from its retail business in Q3, with the sector showing a net revenue of $118.8 million – this represents an uptick of 6.5% QoQ from just $111.6 million Q2 2015. Additionally, GAIN’s retail over-the-counter (OTC) business during Q3 2015 also helped bolster these figures with $100.9 million of net revenue, edging higher by 3.7% QoQ from $97.1 million in Q2 2015. By extension, the broker’s futures business contributed $12.5 million of net revenue during Q3 2015, up 14.7% QoQ from $10.9 million in Q2 2015.
The group’s performance across its average daily retail OTC trading volumes were not as strong, having yielded $15.6 billion per day during Q3 2015, down -4.9% QoQ from $16.4 billion observed in Q2 2015. The weakness did not seem to extend to its futures business however, with average daily futures contracts coming in at 34,429 in Q3 2015, up 5.5% QoQ from 32,633 contracts per day in Q2 2015.
Institutional Business Slips
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In terms of GAIN’s institutional arm of its operations, the net revenue from its GTX business came in at $8.3 million in Q3 2015, which tepidly fell -1.2% QoQ from $8.4 million in Q2 2015. Furthermore, the broker’s ADV across its GTX business showed $16.7 billion in Q3 2015, justifying a decrease of -8.7% QoQ from $18.3 billion in Q2 2015.
According to Glenn Stevens, Chief Executive Officer (CEO) of GAIN Capital in a recent statement on the Q3 metrics, “This quarter reflects GAIN’s continued success in executing its strategy, particularly relating to the scaling and diversification of our retail business. Reflecting the increased diversification of our retail revenue, four product groups contributed significantly to our total retail revenue for the quarter, with each achieving in excess of $10 million in revenue.”
Additionally, “Non-FX products represented 50% of retail revenue year-to-date, which further illustrates GAIN’s progress on its diversification strategy. Third quarter average daily OTC volume of $15.6 billion represents an increase of 30% over the same period last year and reflects the impact of GAIN’s acquisition of City Index, as well as its ability to grow active accounts.”
“The integration of City Index is on track to achieve $40-$45 million in run-rate cost synergies by Q4 2016, with several significant milestones achieved during the quarter. We believe achievement of the targeted synergies and continued cost rationalization provide GAIN with a significant opportunity to continue to expand our margins,” he added.
GAIN’s financial highlights for the three and nine months ended September 30, 2015 are included in the chart below.