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FXCM announces record growth in client equity

FXCM Second Quarter 2012 Highlights: 
 
 -  Revenues of $91.7 million, down 11% versus the same period in 2011 
 -  Adjusted Pro Forma EBITDA of $21.0 million, down 26% versus the same period in 2011 
 -  Adjusted Pro Forma net income of $7.9 million, down 50% versus the same period in 2011 
 -  Adjusted Pro Forma fully diluted earnings per share of $0.11, down 48% versus the same period in 2011 
 -  US GAAP net income (loss) of $(1.4) million or $(0.06) per fully diluted share versus $3.3 million or $0.19 in the same period in 2011 – includes $15.8 million of one-time items in the quarter, including $11.1 million of non-cash, stock based compensation 
 -  Customer equity of $1,255 million, up 50% from same period in 2011 and up 20% from December 2011 
 -  Active accounts of 174,218, up 13% from the same period in 2011 and up 7% from December 2011 
 -  Completed acquisition of 50.1% of Lucid Markets Trading Ltd., a leading FX market maker in the institutional foreign exchange marketplace 
 
NEW YORK--(BUSINESS WIRE)--FXCM Inc. (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended June 30, 2012, revenues under US GAAP of $91.7 million, compared to $103.3 million for the quarter ended June 30, 2011, a decrease of 11%. Adjusted Pro Forma EBITDA for the second quarter 2012 was $21.0 million, compared to $28.5 million for the second quarter 2011, a decrease of 26%. Adjusted Pro Forma Net Income was $7.9 million for the second quarter 2012, compared to $15.6 million for the second quarter 2011, a decrease of 50%. Adjusted Pro Forma fully diluted earnings per share for the second quarter 2012 of $0.11 on a fully exchanged, fully diluted basis, compared to $0.21 per share for the second quarter 2011, a decrease of 48%. U.S. GAAP net income (loss) was $(1.4) million for the second quarter 2012, compared to $3.3 million for the second quarter 2011. U.S. GAAP earnings (loss) per share for the second quarter 2012 was $(0.06) per fully diluted Class A share, compared to $0.19 per fully diluted Class A share for the second quarter 2011. 
 
Second quarter 2012 results under U.S. GAAP included $15.8 million of one-time expenses, including $11.9 million relating to employee severance and the renegotiation of certain employment contracts in its institutional foreign exchange (“FX”) and retail businesses ($11.1 million of which was non-cash, stock based compensation), $2.3 million in regulatory costs in its Japanese business and $1.6 million in due diligence and other acquisition costs. The employee reductions and renegotiation of certain employment contracts in its institutional and retail businesses are expected to lower annual expenses by approximately $5.0 million going forward. 
 
Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC Units into FXCM Inc. Class A common stock, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity’s tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges, including in the second quarter 2012 the $15.8 million of one-time expenses discussed above, and certain equity based compensation expense granted at the time of FXCM’s initial public offering in December 2010. 
 
“FXCM has always been strong with larger retail clients as they are attracted to our brand, agency execution model and platform,” said Drew Niv, Chief Executive Officer. “You are seeing that in our very strong growth in client equity, which has increased 20% from just year-end 2011 to $1.3 billion and increased 50% from June 30, 2011. This positions us well for future volume increases.” 
 
“However, the macro environment for currency trading has been challenging with historically low FX volatility in the second quarter of this year,” continued Niv. “We have taken a number of steps which did not yet have a material impact in the quarter but should become more significant in the coming quarters.” 
 
“At the end of the June 2012, we completed the acquisition of a 50.1% stake in Lucid Markets Trading Ltd., one of the leading non-bank FX market makers globally, which greatly enhances our capabilities in the institutional marketplace,” said Niv. “In addition, we initiated FastMatch, a joint venture with Credit Suisse, to deploy their technology underpinning the world’s largest equities crossing system. We have re-tooled and tailored the technology to the needs of the global FX market and created a new Electronic Communication Network (ECN) for FX trading. We expect the final release of the FastMatch platform to be available in September 2012.” 
 
“Lastly, we are launching an offering with narrow spreads targeted to small retail customers, a segment that represents the majority of retail FX customers and where we have not been traditionally strong as our agency model has less of an impact. We believe this new offering, which will be offered on a principal execution model, can boost organic growth and capture market share among clients who value narrow spreads.” 
 
FXCM Inc. today announced certain key operating metrics for July 2012 for its retail and institutional foreign exchange businesses. Monthly activities included: 
 
July 2012 Operating Metrics 
 
Retail Trading Metrics 
 
Retail customer trading volume(1) of $287 billion in July 2012, 9% lower than June 2012 and 8% lower than July 2011. 
Average retail customer trading volume per day of $13.0 billion in July 2012, 13% lower than June 2012 and 12% lower than July 2011. 
An average of 356,255 retail client trades per day in July 2012, 14% lower than June 2012 and 3% lower than July 2011. 
Tradeable accounts(2) of 206,745 as of July 31, 2012, an increase of 1,634 or 1% from June 2012, and an increase of 34,439 or 19% from June 2011. 
Institutional Trading Metrics 
 
Institutional customer trading volume(1) of $60 billion in July 2012, 63% lower than June 2012 and flat with July 2011. 
Average institutional trading volume per day of $2.7 billion in July 2012, 64% lower than June 2012 and 4% lower than July 2011. 
An average of 6,272 institutional client trades per day in July 2012, 65% lower than June 2012 and flat with July 2011. 
“While retail volumes in July 2012 were lower than previous month, they were consistent with the second quarter 2012 average,” Niv added. “However, I am pleased to say that our retail revenue per million came in at the higher end of our recent $90-$100/million range due to a favorable mix of clients trading in the month.” 
 
More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company's corporate website, www.fxcm.com. 
 
This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website, www.fxcm.com. 
 
(1) Volume that FXCM customers traded in period is translated into US dollars. 
 
(2) A Tradeable Account is an account with sufficient funds to place a trade in accordance with FXCM trading policies.
 
 
 
Non-GAAP Financial Measures 
 
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per fully diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP. 
 
Declaration of Quarterly Dividend 
 
The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on October 1st, 2012 to Class A stockholders of record at the close of business on September 19th, 2012. 
 
Conference Call 
 
As previously announced, FXCM Inc. will host a conference call to discuss its results at 8:15 a.m. (EST) today. This conference call will be available to domestic participants by dialing 800.901.5218 and 617.786.4511 for international participants. The conference ID number is 91751549. 
 
A live, audio webcast, a copy of FXCM's earnings release, and a presentation and replay of this conference call will also be available at http://ir.fxcm.com/. 
 
Disclosure Regarding Forward-Looking Statements 
 
In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,”“expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s Annual Report on Form 10-K and other SEC filings, which are accessible on the SEC website at sec.gov. 
 
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. 
 
About FXCM Inc. 
 
FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide. 
 
At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference (“CFD”) products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com. 
 
TAGS: fxcm  results  2012  q2  forex broker 

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