BEDMINSTER, N.J., Oct. 24, 2019 /PRNewswire/ -- GAIN Capital
Holdings, Inc. ("GAIN") (NYSE: GCAP), a leading global provider of
online trading services, announced financial results for the third
quarter of 2019.
Key Financial Results for the Third Quarter 2019 (all amounts
reflect continuing operations)
- GAAP net loss of $2.1 million, or
loss of $0.06 per share
- GAAP net revenue of $66.7
million
- Adjusted net loss of $2.8
million, or loss of $0.07 per
share
- Adjusted EBITDA of $6.0
million
Operating Highlights
- Retail trailing 3-month direct active accounts increased for a
third consecutive quarter
- Marketing investment drove new direct account growth of 97%
year-over-year and 32% quarter-over-quarter
- Pockets of volatility in US equity markets helped grow Futures
average daily contracts 24% over the prior year
A summary of GAIN's financial results is included in the chart
below (all amounts are from continuing operations).
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
(Loss)/Income
|
$
|
(2.1)
|
|
|
$
|
10.0
|
|
|
$
|
(29.5)
|
|
|
$
|
28.7
|
|
Adjusted Net
(Loss)/Income(1)
|
$
|
(2.8)
|
|
|
$
|
13.8
|
|
|
$
|
(28.7)
|
|
|
$
|
31.7
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
$
|
66.7
|
|
|
$
|
95.5
|
|
|
$
|
180.6
|
|
|
$
|
278.1
|
|
Operating
Expenses(2)
|
(60.7)
|
|
|
(65.0)
|
|
|
(185.1)
|
|
|
(196.8)
|
|
Adjusted
EBITDA(1)
|
$
|
6.0
|
|
|
$
|
30.5
|
|
|
$
|
(4.4)
|
|
|
$
|
81.3
|
|
|
|
|
|
|
|
|
|
Diluted GAAP
EPS
|
$
|
(0.06)
|
|
|
$
|
0.22
|
|
|
$
|
(0.79)
|
|
|
$
|
0.60
|
|
Adjusted
EPS(1)
|
$
|
(0.07)
|
|
|
$
|
0.31
|
|
|
$
|
(0.77)
|
|
|
$
|
0.70
|
|
___________________________________
|
Note: Dollars
in millions, except per share amounts and where noted
otherwise. Columns may not add due to rounding.
|
1See below
for reconciliation of non-GAAP financial measures.
|
2Operating
Expenses excludes Depreciation and Amortization, Purchased
Intangible Amortization, and certain one-off costs
|
"The third quarter continued to show positive signs of client
engagement as our Retail trailing 3-month direct active accounts
increased for a third consecutive quarter, providing evidence that
our marketing efforts are helping to grow active accounts, even
amid the unusually low volatility environment," stated Glenn
Stevens, CEO of GAIN Capital. "In addition, we delivered
direct new account growth, which was up 97% over Q3 2018 and 32%
sequentially, further evidencing the effectiveness of our
marketing. In Futures, average daily contracts increased 24% as we
saw pockets of volatility in the US equity markets. With growing
interest and activity from our new customers, we feel well
positioned to benefit from a return to more normalized market
conditions."
Quarterly Operating Metrics
|
Q3
19
|
|
Q3
18
|
|
Year-over-
year Change
|
Retail
Segment
|
|
|
|
|
|
OTC Trading Volume
(1) (2)
|
$
|
463.1
|
|
|
$
|
506.5
|
|
|
(8.6)
|
%
|
OTC Average Daily
Volume
|
$
|
7.0
|
|
|
$
|
7.8
|
|
|
(10.3)
|
%
|
12 Month Trailing
Active OTC Accounts (3)
|
118,751
|
|
|
129,182
|
|
|
(8.1)
|
%
|
3 Month Trailing
Active OTC Accounts (3)
|
72,909
|
|
|
71,597
|
|
|
1.8
|
%
|
|
|
|
|
|
|
Futures
Segment
|
|
|
|
|
|
Number of Futures
Contracts
|
2,041,253
|
|
|
1,622,114
|
|
|
25.8
|
%
|
Futures Average Daily
Contracts
|
31,895
|
|
|
25,748
|
|
|
23.9
|
%
|
12 Month Trailing
Active Futures Accounts (3)
|
7,406
|
|
|
7,550
|
|
|
(1.9)
|
%
|
_______________________________________
|
All retail volume
figures reported in billions.
|
1 US
dollar equivalent of notional amounts traded.
|
2 For
the quarter, indirect volume represented 21% of total retail OTC
trading volume.
|
3 Accounts that executed a
transaction during the relevant period.
|
Capital Return and Dividend
In the third quarter, GAIN
focused on returning capital to shareholders through dividends,
which amounted to approximately $2.2
million.
GAIN's Board of Directors declared a quarterly cash dividend of
$0.06 per share of the Company's
common stock. The dividend is payable on December 17,
2019 to shareholders of record as of the close of business on
December 10, 2019.
Conference Call
GAIN will host a conference call on
October 24, 2019 at 4:30 p.m.
ET. Participants may access the live call by dialing
+1.888.349.0112 (US Domestic), or +1.412.317.6001 (International).
Please tell the operator you would like to join the GAIN Capital
call.
A live audio webcast of the call, as well as a PDF copy of the
earnings presentation, will be available on the Investor Relations
section of the GAIN Capital website
(http://ir.gaincapital.com).
An audio replay will be made available for one month starting
approximately one hour after the call by
dialing +1.877.344.7529 from the U.S. or +1.412.317.0088 from
abroad, and entering the passcode 10135721#.
For more corporate information or to sign up for alerts, please
visit: http://ir.gaincapital.com.
About GAIN
GAIN Capital Holdings, Inc. provides
innovative trading technology and execution services to retail and
institutional investors worldwide, with multiple access points to
OTC markets and global exchanges across a wide range of asset
classes, including foreign exchange, commodities, and global
equities. GAIN Capital is headquartered
in Bedminster, New Jersey,
with a global presence across North America, Europe and
the Asia Pacific regions. For further company
information, visit www.gaincapital.com.
Condensed
Consolidated Statements of Operations
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
REVENUE:
|
|
|
|
|
|
|
|
Retail
revenue
|
$
|
52.8
|
|
|
$
|
82.9
|
|
|
$
|
137.5
|
|
|
$
|
239.1
|
|
Futures
revenue
|
9.4
|
|
|
8.7
|
|
|
27.6
|
|
|
30.4
|
|
Other
revenue
|
0.8
|
|
|
1.2
|
|
|
4.3
|
|
|
1.7
|
|
Total non-interest
revenue
|
62.9
|
|
|
92.8
|
|
|
169.4
|
|
|
271.2
|
|
Interest
revenue
|
4.3
|
|
|
3.3
|
|
|
13.1
|
|
|
8.2
|
|
Interest
expense
|
0.6
|
|
|
0.5
|
|
|
1.8
|
|
|
1.3
|
|
Total net interest
revenue
|
3.8
|
|
|
2.8
|
|
|
11.3
|
|
|
6.9
|
|
Net
revenue
|
$
|
66.7
|
|
|
$
|
95.5
|
|
|
$
|
180.6
|
|
|
$
|
278.1
|
|
EXPENSES:
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
$
|
19.3
|
|
|
$
|
22.9
|
|
|
$
|
62.2
|
|
|
$
|
69.7
|
|
Selling and
marketing
|
10.4
|
|
|
10.2
|
|
|
30.7
|
|
|
23.0
|
|
Referral
fees
|
7.6
|
|
|
8.1
|
|
|
22.2
|
|
|
30.0
|
|
Trading
expenses
|
5.2
|
|
|
5.8
|
|
|
16.1
|
|
|
17.1
|
|
General and
administrative
|
13.3
|
|
|
12.2
|
|
|
37.8
|
|
|
38.9
|
|
Depreciation and
amortization
|
4.1
|
|
|
4.7
|
|
|
12.8
|
|
|
15.4
|
|
Purchased intangible
amortization
|
1.8
|
|
|
3.5
|
|
|
7.0
|
|
|
10.8
|
|
Communications and
technology
|
4.4
|
|
|
5.5
|
|
|
14.9
|
|
|
16.4
|
|
Bad debt
provision
|
0.5
|
|
|
0.3
|
|
|
1.4
|
|
|
1.7
|
|
Contingent
provision
|
0.0
|
|
|
5.0
|
|
|
0.0
|
|
|
5.0
|
|
Impairment of
investment
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
(0.1)
|
|
Total operating
expense
|
$
|
66.6
|
|
|
$
|
78.2
|
|
|
$
|
205.0
|
|
|
$
|
227.9
|
|
OPERATING
PROFIT/(LOSS)
|
0.1
|
|
|
17.3
|
|
|
(24.4)
|
|
|
50.2
|
|
Interest expense on
long term borrowings
|
3.4
|
|
|
3.4
|
|
|
10.1
|
|
|
10.1
|
|
(LOSS)/INCOME BEFORE
INCOME TAX
|
(3.3)
|
|
|
13.9
|
|
|
(34.5)
|
|
|
40.1
|
|
Income tax
(benefit)/expense
|
(1.2)
|
|
|
4.0
|
|
|
(5.0)
|
|
|
11.4
|
|
NET (LOSS)/INCOME
FROM CONTINUING
OPERATIONS
|
(2.1)
|
|
|
10.0
|
|
|
(29.5)
|
|
|
28.7
|
|
Income from
discontinued operations
|
0.0
|
|
|
2.3
|
|
|
0.0
|
|
|
67.3
|
|
NET
(LOSS)/INCOME
|
(2.1)
|
|
|
12.3
|
|
|
(29.5)
|
|
|
96.0
|
|
Less income
attributable to non-controlling interest
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.6
|
|
NET (LOSS)/INCOME
APPLICABLE TO
GAIN CAPITAL HOLDINGS, INC.
|
$
|
(2.1)
|
|
|
$
|
12.2
|
|
|
$
|
(29.5)
|
|
|
$
|
95.4
|
|
_________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not add due
to rounding.
|
Condensed
Consolidated Balance Sheet
|
(unaudited)
|
|
|
September
30,
|
|
December
31,
|
|
2019
|
|
2018
|
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
200.7
|
|
|
$
|
278.9
|
|
Cash and securities
held for customers
|
849.8
|
|
|
842.5
|
|
Receivables from
brokers
|
107.7
|
|
|
84.3
|
|
Property
and equipment, net
|
28.8
|
|
|
30.6
|
|
Intangible assets, net
|
24.5
|
|
|
32.2
|
|
Goodwill
|
27.5
|
|
|
27.8
|
|
Other assets
|
49.0
|
|
|
36.4
|
|
Total assets
|
$
|
1,288.0
|
|
|
$
|
1,332.5
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY:
|
|
|
|
Payables to
customers
|
$
|
849.8
|
|
|
$
|
842.5
|
|
Payables to
brokers
|
2.5
|
|
|
1.6
|
|
Accrued compensation
and benefits
|
5.4
|
|
|
11.2
|
|
Accrued expenses and
other liabilities
|
37.6
|
|
|
41.6
|
|
Income tax
payable
|
2.7
|
|
|
5.8
|
|
Convertible senior
notes
|
136.9
|
|
|
132.1
|
|
Total liabilities
|
$
|
1,035.0
|
|
|
$
|
1,034.8
|
|
Shareholders'
equity
|
253.0
|
|
|
297.8
|
|
Total liabilities and shareholders' equity
|
$
|
1,288.0
|
|
|
$
|
1,332.5
|
|
_________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not add due
to rounding.
|
Income Statement
of Discontinued Operations
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
REVENUE:
|
|
|
|
|
|
|
|
Institutional
revenue
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
16.4
|
|
Total non-interest
revenue
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
16.4
|
|
Interest
revenue
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
Total net interest
revenue
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
0.1
|
|
Net
revenue
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
16.5
|
|
EXPENSES:
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
$
|
0.0
|
|
|
$
|
0.1
|
|
|
$
|
0.0
|
|
|
$
|
6.0
|
|
Trading
expenses
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
5.4
|
|
Other
expenses
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
4.0
|
|
Total operating
expense
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
15.4
|
|
OPERATING
(LOSS)/PROFIT
|
0.0
|
|
|
(0.1)
|
|
|
0.0
|
|
|
1.1
|
|
(Loss)/gain on sale
of discontinued operations
|
0.0
|
|
|
(0.1)
|
|
|
0.0
|
|
|
69.4
|
|
(LOSS)/INCOME
BEFORE INCOME
TAX BENEFIT
|
0.0
|
|
|
(0.3)
|
|
|
0.0
|
|
|
70.6
|
|
Income tax
(benefit)/expense
|
0.0
|
|
|
(2.6)
|
|
|
0.0
|
|
|
3.2
|
|
NET INCOME FROM
DISCONTINUED
OPERATIONS
|
$
|
0.0
|
|
|
$
|
2.3
|
|
|
$
|
0.0
|
|
|
$
|
67.3
|
|
_________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
Reconciliation of GAAP Net Income to Adjusted Net Income,
Adjusted EPS and Adjusted Income Tax
Adjusted net (loss)/income is a non-GAAP financial measure and
represents our net (loss)/income excluding certain one-time costs
and benefits. Adjusted EPS is calculated using adjusted net
(loss)/income. These non-GAAP financial measures have certain
limitations, including not having standardized meanings and,
therefore, our definitions may be different from similar non-GAAP
financial measures used by other companies and/or analysts. Thus,
it may be more difficult to compare our financial performance to
that of other companies. We believe our reporting of these measures
assists investors in evaluating our operating performance. However,
because they are not a measure of financial performance or income
tax expense calculated in accordance with GAAP, such measures
should be considered in addition to, not as a substitute for, other
measures reported in accordance with GAAP.
Net (Loss)/Income
to Adjusted Net (Loss)/Income and Adjusted EPS
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net (loss)/income
from continuing operations
|
$
|
(2.1)
|
|
|
$
|
10.0
|
|
|
$
|
(29.5)
|
|
|
$
|
28.7
|
|
Income tax
(benefit)/expense
|
(1.2)
|
|
|
4.0
|
|
|
(5.0)
|
|
|
11.4
|
|
Pre-tax
(loss)/income
|
$
|
(3.3)
|
|
|
$
|
13.9
|
|
|
$
|
(34.5)
|
|
|
$
|
40.1
|
|
Adjustments:
|
|
|
|
|
|
|
|
Contingent
provision2
|
0.0
|
|
|
5.0
|
|
|
0.2
|
|
|
5.0
|
|
Impairment of
investment
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
(0.1)
|
|
Adjusted pre-tax
(loss)/income
|
$
|
(3.3)
|
|
|
$
|
18.9
|
|
|
$
|
(34.3)
|
|
|
$
|
45.0
|
|
Adjusted income
tax benefit/(expense)1
|
0.5
|
|
|
(5.0)
|
|
|
5.6
|
|
|
(12.6)
|
|
Income
attributable to non-controlling interest
|
0.0
|
|
|
(0.1)
|
|
|
0.0
|
|
|
(0.6)
|
|
Adjusted net
(loss)/income
|
$
|
(2.8)
|
|
|
$
|
13.8
|
|
|
$
|
(28.7)
|
|
|
$
|
31.7
|
|
|
|
|
|
|
|
|
|
Adjusted
(loss)/earnings per common share
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.07)
|
|
|
$
|
0.31
|
|
|
$
|
(0.77)
|
|
|
$
|
0.71
|
|
Diluted
|
$
|
(0.07)
|
|
|
$
|
0.31
|
|
|
$
|
(0.77)
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding used in
computing (loss)/earnings per common share
|
|
|
|
|
|
|
|
Basic
|
37,404,223
|
|
|
44,553,903
|
|
|
37,371,676
|
|
|
44,787,875
|
|
Diluted
|
37,404,223
|
|
|
44,984,721
|
|
|
37,371,676
|
|
|
45,270,797
|
|
_____________________________
|
1Adjusted
income tax benefit/(expense) reflects the Company's GAAP income tax
benefit/(expense) adjusted for (a) taxable or deductible items
affecting income tax benefit/(expense) that are unrelated to
pre-tax (loss)/income in the period and (b) the tax effect of other
taxable adjustments made to the Company's pre-tax income. The tax
effect of the adjustments to pre-tax (loss)/income are calculated
using the tax rate applicable for the jurisdiction within which
each of the adjustments arose. The Company believes that this
non-GAAP financial measure provides investors with a more
consistent and stable basis for determining the impact of taxes on
the Company's core continuing operations.
|
2Q319 YTD
represents a contingency related to a legacy US regulatory matter.
Q318 and Q318 YTD represent a prior year contractual dispute with a
service provider.
|
Note: Dollars
in millions, except per share data and where noted otherwise.
Columns may not add due to rounding.
|
Adjusted Income
Tax Reconciliation
|
(unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
GAAP pre-tax
(loss)/income
|
$
|
(3.3)
|
|
|
$
|
13.9
|
|
|
$
|
(34.5)
|
|
|
$
|
40.1
|
|
GAAP tax
rate
|
14.5
|
%
|
|
28.4
|
%
|
|
14.5
|
%
|
|
28.4
|
%
|
Initial adjusted
tax benefit/(expense)(1)
|
0.5
|
|
|
(4.0)
|
|
|
5.0
|
|
|
(11.4)
|
|
|
|
|
|
|
|
|
|
Uncertain tax
position(3)
|
0.0
|
|
|
0.0
|
|
|
0.2
|
|
|
(0.2)
|
|
One off
adjustments(4)
|
0.0
|
|
|
(1.0)
|
|
|
(0.1)
|
|
|
(1.0)
|
|
Basis
adjustment(5)
|
0.0
|
|
|
0.0
|
|
|
0.5
|
|
|
0.0
|
|
Adjusted tax
benefit/(expense)
|
$
|
0.5
|
|
|
$
|
(5.0)
|
|
|
$
|
5.6
|
|
|
$
|
(12.6)
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
(loss)/income
|
$
|
(3.3)
|
|
|
$
|
18.9
|
|
|
$
|
(34.3)
|
|
|
$
|
45.0
|
|
Adjusted tax
rate(2)
|
14.5
|
%
|
|
26.4
|
%
|
|
16.4
|
%
|
|
28.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1Initial
adjusted tax benefit/(expense) calculated as GAAP pre-tax
(loss)/income multiplied by the YTD GAAP Tax Rate
|
2Adjusted
tax rate calculated as adjusted tax benefit/(expense) divided by
adjusted pre tax (loss)/income
|
3Q319 YTD
represents an adjustment of $0.2 million caused by a prior year's
tax audit; Q318 YTD adjustment caused by a favorable tax ruling of
$(0.2) million relating to a prior year, both included within
Initial adjusted tax benefit/(expense)
|
4Represents the tax effect of the
adjustments to pre-tax (loss)/income, calculated using the tax rate
applicable for the jurisdiction within which each of the
adjustments arose
|
5Represents a basis adjustment to deferred
taxes of $0.5 million relating to a prior year
|
Reconciliation of GAAP Net Income to Adjusted EBITDA and
Adjusted EBITDA Margin
Adjusted EBITDA is a non-GAAP financial measure that represents
our (loss)/earnings before interest, taxes, depreciation and
amortization, purchased intangible amortization, convertible note
interest, non-controlling interest, and certain one-time costs and
benefits. This non-GAAP financial measure has certain limitations,
including not having a standardized meaning and, therefore, our
definition may be different from similar non-GAAP financial
measures used by other companies and/or analysts. Thus, it may be
more difficult to compare our financial performance to other
companies'. We believe our reporting of adjusted EBITDA assists
investors in evaluating our operating performance. However, because
adjusted EBITDA is not a measure of financial performance
calculated in accordance with GAAP, such measure should be
considered in addition to, not as a substitute for, other measures
of our financial performance reported in accordance with GAAP, such
as net (loss)/income.
Reconciliation of
GAAP Net (Loss)/Income to Adjusted EBITDA and Adjusted EBITDA
Margin
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
revenue
|
$
|
66.7
|
|
|
$
|
95.5
|
|
|
$
|
180.6
|
|
|
$
|
278.1
|
|
Net (loss)/income
from continuing operations
|
(2.1)
|
|
|
10.0
|
|
|
(29.5)
|
|
|
28.7
|
|
Net (loss)/income
margin %
|
(3)
|
%
|
|
10
|
%
|
|
(16)
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
Net (loss)/income
from continuing operations
|
$
|
(2.1)
|
|
|
$
|
10.0
|
|
|
$
|
(29.5)
|
|
|
$
|
28.7
|
|
Depreciation and
amortization
|
4.1
|
|
|
4.7
|
|
|
12.8
|
|
|
15.4
|
|
Purchased intangible
amortization
|
1.8
|
|
|
3.5
|
|
|
7.0
|
|
|
10.8
|
|
Interest expense on
long term borrowings
|
3.4
|
|
|
3.4
|
|
|
10.1
|
|
|
10.1
|
|
Income tax
(benefit)/expense
|
(1.2)
|
|
|
4.0
|
|
|
(5.0)
|
|
|
11.4
|
|
Contingent
provision
|
0.0
|
|
|
5.0
|
|
|
0.2
|
|
|
5.0
|
|
Impairment of
investment
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
(0.1)
|
|
Adjusted
EBITDA
|
$
|
6.0
|
|
|
$
|
30.5
|
|
|
$
|
(4.4)
|
|
|
$
|
81.3
|
|
Adjusted EBITDA
Margin(1)
|
9
|
%
|
|
32
|
%
|
|
(2)
|
%
|
|
29
|
%
|
_________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
1 Adjusted EBITDA margin is
calculated as adjusted EBITDA divided by net revenue.
|
Segment Information:
ASC 280, Disclosures about Segments of an Enterprise and
Related Information, establishes standards for reporting
information about operating segments. Operating segments are
defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by
the chief operating decision-maker, or decision making group, in
deciding how to allocate resources and in assessing performance.
Reportable segments are defined as an operating segment that either
(a) exceeds 10% of revenue, or (b) reported profit or
loss in absolute amount exceeds 10% of profit of all operating
segments that did not report a loss or (c) exceeds 10% of the
combined assets of all operating segments. Based on the Company's
management strategies, and common production, marketing,
development and client coverage teams, the Company has concluded
that it operates in two operating segments: Retail and Futures.
Retail
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Trading
revenue
|
$
|
52.8
|
|
|
$
|
82.9
|
|
|
$
|
137.5
|
|
|
$
|
239.1
|
|
Other retail
revenue
|
4.2
|
|
|
2.9
|
|
|
12.4
|
|
|
7.0
|
|
Total
revenue
|
$
|
57.0
|
|
|
$
|
85.9
|
|
|
$
|
149.9
|
|
|
$
|
246.1
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits
|
12.5
|
|
|
14.4
|
|
|
39.0
|
|
|
43.4
|
|
Selling and
marketing
|
10.2
|
|
|
10.0
|
|
|
30.0
|
|
|
22.1
|
|
Referral
fees
|
4.6
|
|
|
5.3
|
|
|
13.4
|
|
|
20.0
|
|
Other operating
expenses
|
17.3
|
|
|
17.2
|
|
|
51.7
|
|
|
53.2
|
|
Segment
Profit
|
$
|
12.4
|
|
|
$
|
39.0
|
|
|
$
|
15.9
|
|
|
$
|
107.3
|
|
Segment Profit
Margin %
|
22
|
%
|
|
45
|
%
|
|
11
|
%
|
|
44
|
%
|
_________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
Futures
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Trading
revenue
|
$
|
9.4
|
|
|
$
|
8.7
|
|
|
$
|
27.6
|
|
|
$
|
30.4
|
|
Other futures
revenue
|
1.2
|
|
|
1.1
|
|
|
4.1
|
|
|
2.9
|
|
Total
revenue
|
$
|
10.6
|
|
|
$
|
9.7
|
|
|
$
|
31.7
|
|
|
$
|
33.3
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits
|
2.5
|
|
|
2.4
|
|
|
7.5
|
|
|
7.8
|
|
Selling and
marketing
|
0.2
|
|
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
Referral
fees
|
3.0
|
|
|
2.8
|
|
|
8.8
|
|
|
10.0
|
|
Other operating
expenses
|
3.3
|
|
|
3.0
|
|
|
9.9
|
|
|
10.4
|
|
Segment
Profit
|
$
|
1.7
|
|
|
$
|
1.3
|
|
|
$
|
4.8
|
|
|
$
|
4.5
|
|
Segment Profit
Margin %
|
16
|
%
|
|
13
|
%
|
|
15
|
%
|
|
14
|
%
|
____________________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
Corporate and
Other
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Other loss
|
$
|
(0.9)
|
|
|
$
|
(0.1)
|
|
|
$
|
(0.9)
|
|
|
$
|
(1.3)
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits
|
4.3
|
|
|
6.1
|
|
|
15.7
|
|
|
18.4
|
|
Selling and
marketing
|
0.0
|
|
|
0.1
|
|
|
0.0
|
|
|
0.2
|
|
Other operating
expenses
|
2.8
|
|
|
3.6
|
|
|
8.6
|
|
|
10.6
|
|
Loss
|
$
|
(8.1)
|
|
|
$
|
(9.8)
|
|
|
$
|
(25.3)
|
|
|
$
|
(30.5)
|
|
____________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
Reconciliation of
Segment (Loss)/Profit to (Loss)/Income Before Income Tax
(Benefit)/Expense
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Retail
segment
|
$
|
12.4
|
|
|
$
|
39.0
|
|
|
$
|
15.9
|
|
|
$
|
107.3
|
|
Futures
segment
|
1.7
|
|
|
1.3
|
|
|
4.8
|
|
|
4.5
|
|
Corporate and
other
|
(8.1)
|
|
|
(9.8)
|
|
|
(25.3)
|
|
|
(30.5)
|
|
Segment
Profit/(Loss)
|
6.0
|
|
|
30.5
|
|
|
(4.6)
|
|
|
81.3
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
4.1
|
|
|
4.7
|
|
|
12.8
|
|
|
15.4
|
|
Purchased intangible
amortization
|
1.8
|
|
|
3.5
|
|
|
7.0
|
|
|
10.8
|
|
Contingent
provision
|
0.0
|
|
|
5.0
|
|
|
0.0
|
|
|
5.0
|
|
Impairment of
investment
|
0.0
|
|
|
0.0
|
|
|
0.0
|
|
|
(0.1)
|
|
Operating
profit/(loss)
|
$
|
0.1
|
|
|
$
|
17.3
|
|
|
$
|
(24.4)
|
|
|
$
|
50.2
|
|
Interest expense on
long term borrowings
|
3.4
|
|
|
3.4
|
|
|
10.1
|
|
|
10.1
|
|
(Loss)/Income
before income tax (benefit)/expense
|
$
|
(3.3)
|
|
|
$
|
13.9
|
|
|
$
|
(34.5)
|
|
|
$
|
40.1
|
|
____________________
|
Note: Dollars
in millions, except where noted otherwise. Columns may not
add due to rounding.
|
Forward-Looking Statements:
In addition to
historical information, this earnings release contains
"forward-looking" statements that reflect management's expectations
for the future. A variety of important factors could cause results
to differ materially from such statements. These factors are
noted throughout GAIN Capital's annual report on Form 10-K for the
year ended December 31, 2018, as filed with the Securities and
Exchange Commission on March 11, 2019, and include, but are
not limited to, the actions of both current and potential new
competitors, fluctuations in market trading volumes, financial
market volatility, evolving industry regulations, errors or
malfunctions in GAIN Capital's systems or technology, rapid changes
in technology, effects of inflation, customer trading patterns, the
success of our products and service offerings, our ability to
continue to innovate and meet the demands of our customers for new
or enhanced products, our ability to successfully integrate assets
and companies we have acquired, our ability to effectively compete,
changes in tax policy or accounting rules, fluctuations in foreign
exchange rates and commodity prices, adverse changes or volatility
in interest rates, as well as general economic, business, credit
and financial market conditions, internationally or nationally, and
our ability to continue paying a quarterly dividend in light of
future financial performance and financing needs. The
forward-looking statements included herein represent GAIN Capital's
views as of the date of this release. GAIN Capital undertakes no
obligation to revise or update publicly any forward-looking
statement for any reason unless required by law.
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SOURCE GAIN Capital Holdings, Inc.