FX Alliance Q2 2012: Revenues up 7%, Net Income flat, volume up 6.5%

Comparing to Q1 2012 FXAll’s volume rose 6.5% and Revenues increase by 4.7% while Net Income was up as much

Comparing to Q1 2012 FXAll’s volume rose 6.5% and Revenues increase by 4.7% while Net Income was up as much as 35%.

FX Alliance Inc. (“FXall”) (NYSE: FX), the leading independent global provider of electronic foreign exchange trading solutions, today reported financial results for the second quarter of 2012.

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For the second quarter of 2012, revenues increased 7% to $31.4 million from $29.4 million in the second quarter of 2011. Adjusted Net Income decreased 3% to $6.9 million, or $0.23 per share, from $7.1 million or $0.25 per share for the same period last year. Net Income of $6.2 million was consistent with the same period last year. For the six months ended June 30, 2012, revenues increased 8% to $61.4 million from $56.8 million in the same period in 2011. Adjusted Net Income decreased 7% to $12.0 million for the six months ended June 30, 2012, compared to $13.0 million in the same period last year. Net Income for the six months ended June 30, 2012 decreased 5% to $10.8 million from $11.4 million in the same period last year. A full reconciliation of GAAP to non-GAAP financial measures is included with this release.

Total average daily volume (counting one side of each trade) was $92.4 billion, an increase of 8% from the second quarter of 2011, driven by growth across both Relationship and Active trading. Average daily volume for Relationship Trading was $71.5 billion, 5% higher than the second quarter of 2011, while average daily volume for Active Trading increased 18% from the second quarter of 2011 to $20.8 billion. The average transaction fee per million in the second quarter of 2012 was $4.06, reflecting $3.51 for Relationship Trading and $5.94 for Active Trading.

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Operating expenses were $20.9 million, 13% higher than Q2 2011. Adjusted EBITDA was $14.2 million, down from $14.8 million in Q2 2011. The Adjusted EBITDA margin was 45% compared to 50% in the second quarter of 2011.

The effective tax rate for the second quarter was 39.8% compared to 42.8% in the second quarter of 2011.

Capital expenditures for the quarter ended June 30, 2012 were $3.9 million, consistent with the same period in 2011.

At June 30, 2012, cash, cash equivalents and investments available-for-sale were $68.8 million.

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Three Months Ended June 30 Six Months Ended June 30 
     
 2012201120122011
Revenues    
Transaction fees$23,987$22,821$46,792$43,336
User, settlement, and license fees7,4096,60814,62513,477
     Total revenues31,39629,429 61,41756,813
Operating Expenses    
Salaries and benefits12,70312,46026,81424,590
Technology1,9401,4483,8383,032
General and administrative1,9891,5234,1002,992
Marketing355356696789
Professional fees1,2953512,640778
Depreciation and amortization2,6572,4345,2274,866
     Total operating expenses20,93918,57243,31537,047
Operating income10,45710,85718,10219,766
Interest and other income (expense), net (122)51 (80)141
Income before income taxes10,33510,90818,02219,907
Provision for income taxes4,1164,6737,1798,527
Net income6,2196,23510,84311,380
Accretion and allocated earnings of preferred stock–  2,9541,2765,604
Net income allocated to common stockholders$6,219$3,281$9,567 $5,776
     
Earnings per common share:    
     Basic$0.22$0.16$0.36$0.27
     Diluted$0.21$0.15$0.35$0.27
     
Weighted-average common shares outstanding:    
     Basic28,336,56621,043,89926,769,95821,043,899
     Diluted29,433,79721,582,98927,712,67821,517,390
     
Net Income per common share including    
conversion of preferred at beginning of period:    
     Basic[1]$0.22$0.22$0.38$0.40
     Diluted[1]$0.21$0.22$0.37$0.40
     
Adjusted Net Income per common share    
including conversion of preferred at beginning of period:    
     Basic[1]$0.24$0.25$0.43 $0.46
     Diluted[1]$0.23$0.25$0.41 $0.45
     
Adjusted Weighted-average common shares outstanding    
including conversion of preferred at beginning of period:    
     Basic[1]28,336,56628,284,63728,321,54528,284,637
     Diluted[1]29,433,79728,823,72729,264,26528,758,128
[1] Figures reflect non-GAAP financial measures   
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