Company Update (NYSE:FXCM): FXCM Inc Announces Second Quarter 2015 Results


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, 2015, U.S. GAAP trading revenue from continuing operations of$59.2 million, compared to $74.4 million for the quarter ended June 30, 2014, a decrease of 20%. U.S. GAAP net loss attributable toFXCM Inc. from continuing operations was $98.9 million for the second quarter 2015 or $2.03 per fully diluted share, compared to U.S. GAAP net loss attributable to FXCM Inc. from continuing operations of $2.6 million or $0.07 per fully diluted share for the second quarter 2014.

For the six months ended June 30, 2015, U.S. GAAP trading revenue from continuing operations of $128.4 million, compared to $156.6 million for the six months ended June 30, 2014, a decrease of 18%. U.S. GAAP net loss attributable to FXCM Inc. from continuing operations was $492.2 million for the six months ended June 30, 2015 or $10.28 per fully diluted share, compared to U.S. GAAP net loss attributable to FXCM Inc. from continuing operations of $3.4 million or $0.09 per fully diluted share for the six months ended June 30, 2014.

Results from operations for the quarter and the six months ended June 30, 2015 included a loss on derivative liability of $99.9 millionand $392.3 million, respectively, a non-cash item relating to the increase in value of the Leucadia Letter Agreement. The Letter Agreement is a component of the financing package provided by Leucadia National Corp. (“Leucadia”). As previously mentioned, onJanuary 16, 2015, FXCM entered into a financing agreement with Leucadia that permitted FXCM’s regulated subsidiaries to meet their regulatory capital requirements and continue normal operations after significant losses were incurred resulting from the events ofJanuary 15, 2015. On January 15, 2015, FXCM’s customers suffered negative equity balances due to the unprecedented move in the Swiss Franc after the Swiss National Bank (“SNB”) discontinued its peg of the Swiss Franc to the Euro.

U.S. GAAP trading revenue from discontinued operations for the quarter ended June 30, 2015 was $20.5 million, compared to $21.1 million for the quarter ended June 30, 2014, a decrease of 3%. U.S. GAAP net income attributable to FXCM Inc. from discontinued operations was $3.1 million for the second quarter 2015, which includes a $2.0 million gain on the sale of FXCM Japan, or $0.06 per fully diluted share, compared to U.S. GAAP net loss attributable to FXCM Inc. from discontinued operations of $0.5 million or $0.01 per fully diluted share for the second quarter 2014.

U.S. GAAP trading revenue from discontinued operations for the six months ended June 30, 2015 was $46.8 million, compared to $47.7 million for the six months ended June 30, 2014, a decrease of 2%. U.S. GAAP net loss attributable to FXCM Inc. from discontinued operations was $30.4 million for the second quarter 2015 or $0.63 per fully diluted share, compared to U.S. GAAP net income attributable to FXCM Inc. from discontinued operations of $2.4 million or $0.06 per fully diluted share for the six months ended June 30, 2014.

Adjusted EBITDA is a Non-GAAP financial measure. This measure does 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 U.S. GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Non-GAAP Financial Measures” beginning on A-3 of this release for additional information regarding these Non-GAAP financial measures and for reconciliations of such measures to the most directly comparable measures calculated in accordance with U.S. GAAP.

FXCM Inc. today announced certain key customer trading metrics for July 2015. Monthly activities included:

July 2015 Customer Trading Metrics from Continuing Operations (1)

Retail Customer Trading Metrics

  • Retail customer trading volume(2) of $317 billion in July 2015, 13% lower than June 2015 and 33% higher than July 2014.
  • Average retail customer trading volume(2) per day of $13.8 billion in July 2015, 16% lower than June 2015 and 33% higher thanJuly 2014.
  • An average of 533,078 retail client trades per day in July 2015, 5% lower than June 2015 and 66% higher than July 2014.
  • Active accounts(3) of 179,577 as of July 31, 2015, an increase of 2,272, or 1%, from June 2015, and an increase of 27,295, or 18%, from July 2014.
  • Tradeable accounts(4) of 158,887 as of July 31, 2015, a decrease of 29,482, or 16%, from June 2015, and a decrease of 1,066, or 1%, from July 2014. During July 2015, the Company charged a dormancy fee to clients resulting in a number of accounts no longer qualifying as tradeable.

Institutional Customer Trading Metrics

  • Institutional customer trading volume(2) of $205 billion in July 2015, 10% lower than June 2015 and 22% lower than July 2014.
  • Average institutional trading volume(2) per day of $8.9 billion in July 2015, 14% lower than June 2015 and 22% lower than July 2014.
  • An average of 48,666 institutional client trades per day in July 2015, 43% higher than June 2015 and 8% higher than July 2014. (Original Source)

Following the earnings release, shares of FXCM are trading $1.02, down $0.01 or 0.97% in after-hours. FXCM has a 1-year high of $17.44 and a 1-year low of $1.01. The stock’s 50-day moving average is $1.33 and its 200-day moving average is $1.83.

On the ratings front, Barclays analyst Kenneth Hill maintained a Hold rating on FXCM, with a price target of $1, in a report issued on May 12. The current price target represents a slight downside potential from current levels. According to TipRanks.com, Hill has a total average return of 6.6%, a 75.9% success rate, and is ranked #1189 out of 3727 analysts.

FXCM Inc is an online provider of foreign exchange trading and related services to retail and institutional customers. It offers its customers the ability to trade contract for differences, spread betting, equities and equity options.