GAIN Capital Holdings (NYSE:GCAP) has just released its final third-quarter results ending September 30, 2014, including considerable trading volume metrics improvements. The broker also reported very strong net revenue growth reaching $103.7 million during the quarter, up 49% from Q2 2014 and 71% from Q3 2013.
In the third quarter of 2014, GAIN's retail OTC trading business generated revenue of $64.0 million, up 26% from $50.9 million in the third quarter of 2013, predominantly due to the improvement in Forex and equity Volatility during the quarter.
GAIN closed on its acquisition of Galvan Research during the quarter, which will be leveraged to provide additional products and services to retail OTC clients. Galvan generated revenue of $2.3 million in the third quarter of 2014, which is classified under commission revenue.
Retail OTC trading volume was $605.4 billion, up 53% from $394.8 billion in the third quarter of 2013 and 16% from $522.2 billion in Q2 2014. Efforts to expand trading of non-FX products continued, with 27% of retail OTC trading volume in the quarter coming from non-FX, primarily CFDs in equities, indices and commodities, up from 13% in the same quarter a year ago. Retail OTC funded accounts and assets grew 2% and 15% from the year-ago quarter to 120,778 and $641.3 million, respectively.
In the third quarter of 2014, GAIN's institutional businesses generated total revenue of $22.7 million, up 224% from $7.0 million in the third quarter of 2013. Total institutional trading volume was $1.2 trillion, up 31% from $901.3 billion a year earlier. Trading volume on the GTX platform was $1.1 trillion, up 22% from $889.7 billion a year earlier.
"Results for the third quarter highlight our ability to execute on our strategy to grow the firm through organic efforts and acquisitions. During the quarter, we continued to expand our retail OTC business across products and geographies, while also significantly growing our commission-based businesses, which together allowed us to more than double our net income and adjusted EBITDA when compared with the year-ago quarter. I am particularly pleased that our commission-based businesses delivered revenue of $35.0 million, which almost tripled from a year ago, and represented 34% of the total net revenue for the quarter, compared with 21% in the third quarter of 2013," said Mr. Stevens, CEO of GAIN Capital. "This growth in revenue combined with our focus on reducing fixed expenses through the continued achievement of GFT expense synergies and additional expense-reduction initiatives, allowed us to significantly expand our operating margins for the quarter," continued Mr. Stevens.
"Looking ahead, we believe we are in an excellent position to continue to grow our business and compete effectively in our industry. In particular, our growing global client base, the rich diversity of products we offer and our demonstrated expertise in executing and successfully integrating targeted acquisitions provide an attractive platform to consolidate our strong market position," Mr. Stevens concluded.
Third Quarter Results Summary Compared to Q3 2013:
- Net revenue of $103.7 million, up 71% from $60.8 million
- Net income of $15.3 million, or $0.33 per diluted share, compared to net income of $5.6 million, or $0.14 per diluted share
- Adjusted EBITDA of $27.5 million, compared to adjusted EBITDA of $12.1 million
- Retail OTC trading volume of $605.4 billion, up 53% from $394.8 billion
- Institutional trading volume of $1.2 trillion, up 31% from $0.9 trillion
- Average Daily Futures Contracts of 26,736, up 39% from 19,204
- Total retail client assets of $849.7 million, up 24% from $684.1 million
