GAIN Capital Reports Q2 2017, July Volumes Broadly Weak

CEO Glenn Stevens: "I am pleased to report strong results for the second quarter."

GAIN Capital Holdings, Inc. (NYSE: GCAP), the largest provider of retail FX in the United States, has just released its financial results for the second quarter ending June 30, 2017, as well as its July 2017 metrics.

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GAIN’s net revenues under the US GAAP for Q2 2017 came in at $98.1 million, constituting a drop of 9.4 percent when compared with $108.3 million in the same quarter a year ago. Furthermore, the half-year period ending June 30, 2017 netted a revenue drop of 29.6% year-on-year, having declined to $157.6 million from $223.8 million reported back in the same period of 2016.

Adjusted EBITDA however was flat across a yearly timetable, dropping 4.0 percent year-on-year after revealing a figure of $26.5 million, vs. only $27.6 million in the three months through June 30, 2016. In addition, the H1 2017’s figures also reflected a more downbeat performance after yielding only $13.1 million, down 77.9 percent relative to $59.4 million a year ago.

In terms of Gain Capital’s net income, quarterly GAAP net income achieved $13.9 million, up 28.7% year-over-year from $10.8 million in Q2 2016.

The CEO of GAIN Capital Glenn Stevens commented in a statement on the results: “I am pleased to report strong results for the second quarter, largely driven by increased customer engagement. The year-over-year growth in our bottom line and stable adjusted EBITDA margin of 27% underscore the impact of our fixed cost savings initiative, which remains on target for a total cost reduction of $15 million in 2017 and run rate savings of $20 million in 2018.”

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“We believe that this initiative, coupled with increased client retention and acquisition through investments in customer-focused technology and opportunistic acquisitions, will ultimately enable us to grow margins, generate additional free cash and drive value for our shareholders,” he added.

July 2017 Metrics

Coupled with a full breakdown of its Q2 financial results was the release of GAIN Capital’s July 2017 institutional and retail trading metrics, which mostly took a dive on a monthly and yearly basis in what has become an industry-wide trend.

In particular, GAIN Capital’s retail OTC trading volume was reported at $204.5 billion, incurring a fall of 15.4 percent month-on-month compared to June 2017. Across a yearly timeframe, the figure showed a similar picture, dripping by 3.9 percent year-on-year from July 2016.

Furthermore, the average daily retail OTC trading volume during July 2017 came in at $9.7 billion, falling 11.8 percent month-on-month from $11.0 billion in the prior month, coupled with a 4.0 percent decline year-on-year from $10.1 billion in July 2016. Additionally, the metrics of active retail OTC accounts were flat, having numbered at 132,436 as of July 31, 2017, inching lower by a factor of 2.3 percent from a year ago, also down 1.3 percent relative to June 2017.

In terms of its institutional metrics, ECN average daily institutional volume at GTX came in at $10.1 billion during July 2017, reflective of a decline of 6.5 percent from June 2017 but an increase of 21.7 percent from $8.1 billion in July 2016.

Finally, GAIN’s futures average daily contracts were reported at 23,607 during July 2017, down 10.9 percent month-on-month from June 2017 and retreating by 20.3 percent from the year prior. In a slightly different narrative, active futures accounts rose to 7,996 during the previous month, up 1.4 percent from June 2017 but again down 8.3 percent from July 2016.

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