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EX-99.1 - EXHIBIT 99.1 - GAIN Capital Holdings, Inc. | ex9919-30x17earningsrelease.htm |
8-K - 8-K - GAIN Capital Holdings, Inc. | form8-kq32017earnings.htm |
Third Quarter and Nine
Months 2017 Results
1
October 2017
SAFE HARBOR STATEMENT
2
Forward Looking Statements
In addition to historical information, this earnings presentation 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, 2016, as filed with the Securities and Exchange Commission on March 15, 2017, 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.
Non-GAAP Financial Measures
This presentation contains various non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted EPS. These non-GAAP financial measures
have certain limitations, including that they do not have a standardized meaning 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 non-GAAP financial measures assists investors in evaluating our historical and expected operating performance. However, because these are not measures of
financial performance calculated in accordance with GAAP, such measures should be considered in addition to, but not as a substitute for, other measures of our financial
performance reported in accordance with GAAP, such as net income/loss.
THIRD QUARTER AND YEAR-TO-DATE REVIEW
3
• Q3 2017 net revenue increased 13% year-over-year to $81.3 million, compared to $72.2 million in Q3 2016
• Q3 2017 GAAP net loss of $2.6 million; Q3 2017 adjusted net income of $2.1 million
• Adjusted for a non-cash charge related to convertible debt refinancing
• GAAP EPS of ($0.04), compared to ($0.11) in Q3 2016
• Adjusted EPS of $0.05, compared to ($0.12) in Q3 2016
• Q3 2017 adjusted EBITDA of $14.7 million compared to $3.3 million in Q3 2016
• Reflects increase in year-over-year revenue and positive impact of cost management initiatives
• Executed a $92 million convertible debt offering
• Paid down nearly all of the 2018 convertible note
• Repurchased $14.5 million shares in connection with the transaction
• Strong liquidity position bolstered by $50 million revolving credit facility
PATH TO VALUE CREATION
4
Strategic M&A
• Expand product set and
distribution channels
• Increase geographic reach
and scale
• Unlock additional value in
Futures and GTX
Organic Growth
Investment
• Grow share in new and
existing markets
• Introduce new products and
services
• Focus on customer
experience
Cost Initiatives
• Continue to drive additional
cost savings
• Grow margins
• Generate additional free
cash flow
Expansion into Digital
Advisory
PATH TO VALUE CREATION:
EXECUTING ON KEY ORGANIC GROWTH INITIATIVES
5
Enhanced Trading
Experience
Automated and
Streamlined Account
Opening
Global, Cross-Brand
Affiliate Marketing
Program
New Accounts
Active Accounts
Client Retention
Client Assets
Revenue per Account
1
2
3
4
Investing in Retail Product
Enhancements to Drive Increased:
Expansion into Digital
Advisory
• Introducing innovative
mobile-only trade signals
app in Q4 (beta)
PATH TO VALUE CREATION:
ORGANIC GROWTH INITIATIVES PROGRESS
6
Investing in product enhancements and marketing to drive increased client retention and acquisition
Enhanced Trading
Experience
• Introducing new features
on mobile trading apps
• Limited risk accounts for
less-experienced traders
• Launching Bitcoin trading
in Q4
Automated and
Streamlined Account
Opening
• Implemented new mobile
automated ID
authentication
• Developing a simplified
application form with in-
line verification and
automated KYC checks
(Q4 delivery)
Global, Cross-Brand
Affiliate Marketing
Program
• Planning a global roll out
for City Index in Q4
• Piloting a FOREX.com
launch in UK/Europe in Q4
• Targeting global
FOREX.com rollout in Q1
2018
33%
30% 31%
35%
32%
36%
45%
49%
43%
50%
54%
51%
54%
58%
54%
25%
35%
45%
55%
65%
75%
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Breakdown of GAIN’s Global Retail Platform Trading Volumes
Desktop Mobile
PATH TO VALUE CREATION:
GROWTH OF MOBILE TRADING
Mobile increasing as a percent of retail trading volumes transacted over GAIN’s proprietary trading platforms
7
Mobile volumes
surpass desktop
in August 2016
PATH TO VALUE CREATION:
MULTI-PLATFORM CLIENTS DELIVER 4X VALUE
8
Mobile
Only
1.5x
Desktop
Only
1x
Desktop
& Mobile
4x
Source: UK client data
• Despite growth in mobile volumes,
multi-platform engagement remains
an important driver of value
• Mobile-only clients generate 50%
more revenue than desktop-only
clients
• Clients trading on both platforms
generate 4x more revenue than
desktop-only clients
PATH TO VALUE CREATION:
EXPANDING INTO DIGITAL ADVISORY W/ MOBILE-ONLY TRADING SIGNALS APP
9
• Innovative mobile-only signals app offers a new point of
engagement with our customers
• Expands addressable audience beyond self-directed traders
• Proprietary algorithm analyses >1MM data points/hour to
produce trading signals with highly consistent historic
outcomes
• Generates approximately 10 signals/hour across 40+
markets incl. FX, indices and gold
• Automated and intelligent trade entry and exit offers
significant upside and protected downside
• Initial launch for iPhone users in the UK market in Q4
Complement Our
Existing Products and
Services
• Adding new business lines
that are complementary
to our core offerings
• “Acqui-hire” transactions
to add talent
PATH TO VALUE CREATION:
STRATEGIC ACQUISITIONS TO ACCELERATE GROWTH
10
We have a strong pipeline of M&A opportunities that are being reviewed, focused on achieving the following objectives
Expand Our
Product Set
• Adding new products
within existing business
lines by partnering with
start-ups or other fintech
companies to leverage
their innovation
Provide Additional
Distribution Channels
• Accessing new platforms
or other technologies
favored by different
customer groups
Expand Our
Geographic Reach and
Scale
• Accessing markets where
we do not have expertise,
personnel or required
regulatory permissions
• Acquiring strong local
brands
$157.8
$145.0
$120
$125
$130
$135
$140
$145
$150
$155
$160
Q3 16 YTD Q3 17 YTD
Fixed Op. Expenses
PATH TO VALUE CREATION:
STRATEGIC FIXED EXPENSE MANAGEMENT
11
Note: Dollars in millions.
1. Excludes bad debt & other variable expenses, referral fees and marketing expense. Details available in appendix to this presentation.
(1)
Remain on target for $15 million in fixed cost savings in 2017, having secured $12.8 million by the end of Q3
Financial Review
12
KEY FINANCIAL RESULTS & OPERATING METRICS
13
Note: Dollars in millions, except per share data. Columns may not add due to rounding.
(1) Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation, amortization and other one-time items. A reconciliation of net income/(loss) to adjusted EBITDA is available in the appendix to this presentation.
(2) Adjusted net income/(loss) is a non-GAAP financial measure that represents net income/(loss) excluding the impact of one-time items. A reconciliation of GAAP net income/(loss) to adjusted net income/(loss) is available in the appendix to this presentation.
(3) Adjusted EPS is a non-GAAP financial measure that represents net income/(loss) per share excluding the impact of one-time items. A reconciliation of GAAP EPS to adjusted EPS is available in the appendix to this presentation.
(4) Definitions for operating metrics are available in the appendix to this presentation.
3 Months Ended Sept. 30, 9 Months Ended Sept. 30, $ Change
2017 2016 2017 2016 3 Months 9 Months
As Reported
Net Revenue $81.3 $72.2 $238.9 $296.1 9.1$ (57.2)$
Operating Expenses (66.6) (68.9) (211.1) (233.4) 2.3 22.3
Adjusted EBITDA(1) $14.7 $3.3 $27.8 $62.7 11.4$ (34.9)$
Adjusted EBITDA Margin % 18% 5% 12% 21% 13 pts (9 pts)
Net Income/(Loss) ($2.6) ($4.7) ($7.5) $14.5 $2.1 ($22.0)
Adjusted Net Income/(Loss)(2) $2.1 ($5.8) ($4.9) $24.1 $7.9 ($29.0)
GAAP Diluted EPS ($0.04) ($0.11) ($0.12) $0.25 $0.07 ($0.37)
Adjusted Diluted EPS (3) $0.05 ($0.12) ($0.09) $0.49 $0.17 ($0.58)
Operating Metrics( 4 )
Retail OTC ADV (bns) $9.9 $9.3 $9.8 $11.2 $0.6 ($1.4)
Institutional ADV (bns) $14.8 $10.6 $14.4 $10.9 $4.2 $3.5
ECN 11.8 7.7 11.5 8.0 4.1 3.5
Swap Dealer 3.0 2.9 2.9 2.9 0.1 -
Avg. Daily Futures Contracts 24,102 29,878 27,842 34,233 (5,776) (6,391)
OPERATING SEGMENT RESULTS: RETAIL
14 Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.
• Q3 2017 profit margin of 26%, up from 12% in Q3
2016 due to higher revenue
• Client assets increased 16% year-over-year, helped in
part by the integration of FXCM accounts
• Q3 2017 revenue per million of $96, up from $84 in
Q3 2016
• TTM revenue per million of $108
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016 TTM 9/30/17
Trading Revenue $62.1 $51.5 $180.2 $234.3 $276.6
Other Retail Revenue 1.8 1.2 4.5 4.5 5.6
Total Revenue $63.9 $52.7 $184.6 $238.8 $282.2
Employee Comp & Ben 14.9 14.4 46.9 48.0 61.3
Marketing 6.3 5.0 22.4 17.8 32.3
Referral Fees 9.8 11.2 31.9 41.5 45.5
Other Operating Exp. 16.4 15.6 46.8 57.2 65.1
Segment Profit $16.6 $6.5 $36.5 $74.3 $78.0
% Margin 26% 12% 20% 31% 28%
Operating Metrics
ADV (bns) $9.9 $9.3 $9.8 $11.2 $9.7
Active Accounts 133,813 129,921 133,813 129,921 133,813
Client Assets $738.5 $635.3 $738.5 $635.3 $738.5
PnL/mm $96 $84 $94 $107 $108
Retail Financial & Operating Results
OPERATING SEGMENT RESULTS: INSTITUTIONAL & FUTURES
15 Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.
• Q3 ECN average daily volume of $11.8 billion increased 53%
year-over-year and outpaced the TTM average of $10.3 billion
• Continuation of shift in business mix toward high frequency
trading
• Swap dealer volume remains stable
• VIX at a 27-year low of below 10
• Despite extremely low volatility, our Futures business
remains profitable, with improved margins
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016 TTM 9/30/17
ECN $5.6 $4.7 $17.9 $14.8 $23.7
Swap Dealer 2.1 2.2 6.2 6.7 9.1
Total Revenue $7.7 $6.9 $24.1 $21.5 $32.8
Employee Comp & Ben 3.5 3.5 11.1 10.1 15.4
Marketing - - 0.1 0.1 -
Other Operating Exp. 3.1 2.4 9.2 7.4 12.2
Segment Profit $1.2 $1.0 $3.7 $4.0 $5.2
% Margin 16% 16% 15% 18% 16%
Operating Metrics
ECN ADV (bns) $11.8 $7.7 $11.5 $8.0 $10.3
Swap Dealer ADV (bns) 3.0 $2.9 2.9 2.9 3.0
Insitutional Financial & Operating Results
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016 TTM 9/30/17
Revenue $9.8 $12.5 $30.8 $37.6 $41.3
Employee Comp & Ben 2.3 3.3 7.4 9.4 10.0
Marketing 0.1 0.2 0.6 0.7 0.9
Referral Fees 3.1 4.0 10.7 11.9 14.5
Oth r Operating Exp 2.9 3.7 9.9 11.5 13.2
Segment Profit $1.3 $1.4 $2.2 $4.1 $2.7
% Margin 13% 11% 7% 1% 7%
Operating Metrics
Avg. Daily Contracts 24,102 29,878 27,842 34,233 28,510
Active Accounts 8,056 8,594 8,056 8,594 8,056
Client Assets $221.1 $419.3 221.1 $419.3 $221.1
Revenue/Contract 6.45 $6.55 $5.88 $5.82 $5.84
Futures Financial & Operating Results
COST INITIATIVES TO DRIVE MARGIN ENHANCEMENT
16
• Remain on target for $15 million in fixed cost savings in 2017 and $20 million run rate for 2018
• Continue to identify areas for savings as we seek to further lower our operating expenses and
grow margins
• Targeting 25% pre-tax margin and 35% adjusted EBITDA margin
• Targeting capital expenditures of $3 - $4 million per quarter
STRONG LIQUIDITY POSITION
17
Required Liquidity
Reserves
Strategic
Acquisitions
Quarterly
Dividends
Buyback Program
Conservatively retain excess capital over regulatory requirements
Obtained $50 million revolving credit facility, expandable of up to $75
million, in August
Successfully integrated 10 acquisitions over the last 5 years
Well positioned for future opportunities
Quarterly dividend of $0.06 per share approved
Record date: December 11, 2017
Payment date: December 21, 2017
Excluding buyback in conjunction with debt offering, repurchased
279,612 shares at an average share price of $6.61 in Q3 2017
Including buyback in conjunction with debt offering, repurchased a
total of 2,402,598 shares at an average share price of $6.80 in Q3 2017
1. Liquidity table available in appendix to this presentation.
CONVERTIBLE DEBT OFFERING
18
• Issued $92 million of convertible senior notes in August
• Due in 2022 with a 5.00% coupon
• Capital allocated toward the repurchase of $71.8 million of the 2018 maturity
• In 2016, repurchased approximately $1.8 million
• Total residual balance as of September 30, 2017 is $6.4 million
• Interest expense will increase approximately $0.3 million per quarter
• In connection with offering, repurchased $14.5 million common stock at an average share price of
$6.83 from purchasers of the notes
• There remains a Board-approved $13.3 million available for share repurchases as of September 30
POSITIONED TO DELIVER LONG-TERM VALUE
19
Proven Leader in a Large, Attractive and Growing Market
Optimized Capital Allocation to Drive Shareholder Value
Future Growth Driven by Balanced Focus on Customer-
Facing Technology Enhancements and Strategic M&A
Highly Diverse and Scalable Business Model
$
Appendix
20
CONSOLIDATED STATEMENT OF OPERATIONS
21 Note: Dollars in millions, except share and per share data. Columns may not add due to rounding. (1) Earnings per share includes an adjustment for the redemption value of the NCI put option.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenue
Retail revenue 62.1$ 51.5$ 180.2$ 234.6$
Institutional revenue 7.5 6.6 23.3 20.6
Futures revenue 9.0 12.4 29.2 37.2
Interest & Other revenue 2.6 1.8 6.3 3.8
Net revenue 81.3$ 72.2$ 238.9$ 296.1$
Expenses
Employee compensation and benefits 23.8 23.8 74.3 76.8
Selling and marketing 6.4 5.3 23.2 18.5
Referral Fees 12.9 15.2 42.7 53.4
Trading expenses 7.2 6.9 22.4 23.1
General and administrative 16.3 17.8 48.5 61.6
Depreciation and amortization 8.7 7.1 25.0 21.6
One-Time Expenses - 0.7 - 12.8
Total expenses 75.3 76.8 236.1 267.8
Operating profit/(loss) 6.0$ (4.5)$ 2.9$ 28.3$
Interest expense on long term borrowings 3.0 2.6 8.3 7.8
Loss on Extinguishment of Debt 4.9 - 4.9 -
Income/(loss) before income tax expense/(benefit) (1.9)$ (7.2)$ (10.4)$ 20.5$
Income tax expense/(benefit) 0.4 (3.2) (3.5) 4.2
Equity in net loss of affiliate - - (0.1) (0.1)
Net income/(loss) (2.4)$ (4.0)$ (7.0)$ 16.3$
Net income attributable to non-controlling interests 0.2 0.7 0.5 1.8
Net income/(loss) applicable to Gain Capital Holdings Inc. (2.6)$ (4.7)$ (7.5)$ 14.5$
Earnings/(loss) per common share(1)
Basic ($0.04) ($0.11) ($0.12) $0.25
Diluted ($0.04) ($0.11) ($0.12) $0.25
Weighted average common shares outstanding used
in computing earnings/(loss) per common share:
Basic 46,323,038 48,651,212 47,295,843 48,606,923
Diluted 46,323,038 48,651,212 47,295,843 48,883,258
CONSOLIDATED BALANCE SHEET
22 Note: Dollars in millions. Columns may not add due to rounding.
As of
9/30/2017 12/31/2016
ASSETS:
Cash and cash equivalents 225.6$ 234.8$
Cash and securities held for customers 959.6 945.5
Receivables from brokers 56.0 61.1
Property and equipment - net of accumulated depreciation 41.6 36.5
Intangible assets, net 65.8 67.4
Goodwill 32.9 32.1
Other assets 47.3 52.8
Total assets 1,428.8$ 1,430.1$
LIABILITIES AND SHAREHOLDERS' EQUITY:
Payables to customers 959.6$ 945.5$
Accrued compensation & benefits 10.6 13.6
Accrued expenses and other liabilities 33.6 41.5
Income tax payable 1.5 4.0
Convertible senior notes 130.6 124.8
Total liabilities 1,135.8$ 1,129.3$
Non-controlling interest 4.4$ 6.6$
Shareholders' Equity 288.6 294.2
Total liabilities and shareholders' equity 1,428.8$ 1,430.1$
LIQUIDITY
23
Note: Dollars in millions. Columns may not add due to rounding.
(1) Reflects cash that would be received from brokers following the close-out of all open positions.
(2) Relates to regulatory capital requirements or capital charges, depending upon regulatory jurisdiction.
9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Cash and cash equivalents $225.6 $193.1 $183.7 $234.8 $235.7
Receivable from brokers (1) $56.0 80.7 75.9 61.1 52.3
Less: Regulatory capital requirements/charges (2) (127.5) (138.0) (124.6) (113.0) (117.0)
Liquidity $154.1 $135.8 $134.9 $182.9 $171.0
Revolving credit facility $50.0 0.00 0.00 0.00 0.00
Total Liquidity 204.1$ 135.8$ 134.9$ 182.9$ 171.0$
Regulatory Capital Requirements/Charges
US $37.1 $36.2 $36.1 $28.7 $29.4
UK 85.4 97.2 83.0 78.9 79.9
Other jurisdictions 5.0 4.6 5.5 5.4 7.7
Total Regulatory Capital Requirements/Charges(2) $127.5 $138.0 $124.6 $113.0 $117.0
As of
ADJUSTED EBITDA & MARGIN RECONCILIATION
24
Note: Dollars in millions. Columns may not add due to rounding.
(1) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenue.
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016
Net Revenue 81.3$ 72.2$ 238.9$ 296.1$
Net Income/(Loss) (2.6)$ (4.7) (7.5)$ 14.5
Net Income/(Loss) Margin % (3%) (7%) (3%) 5%
Net (Loss)/Income (2.6)$ (4.7)$ (7.5)$ 14.5$
Depreciation & amortization 4.6$ 3.5 13.0$ 10.2
Purchase intangible amortization 4.1$ 3.6 12.0$ 11.4
Interest expense on long term borrowings 3.0$ 2.6 8.3$ 7.8
Loss on extinguishment of debt 4.9$ - 4.9$ -
Income tax (benefit)/expense 0.4$ (3.2) (3.5)$ 4.2
Restructuring -$ 0.3 -$ 1.1
Integration costs -$ 0.6 -$ 2.5
Legal settlement -$ (0.2) -$ 9.2
Equity in net loss of affiliate 0.0$ - 0.1$ 0.1
Net income attributable to non-controlling interest 0.2$ 0.7 0.5$ 1.8
Adjusted EBITDA 14.7$ 3.3$ 27.8$ 62.7$
Adjusted EBITDA Margin % (1) 18% 5% 12% 21%
ADJUSTED NET INCOME AND EPS RECONCILIATION
25
Note: Dollars in millions, except per share and share data. Columns may not add due to rounding.
(1) Assumes 21% tax rate following reduction in corporation tax rates in the UK from April 6 2017.
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016
Net Income/(Loss) ($2.6) ($4.7) ($7.5) $14.5
Income Tax Expense/(Benefit) $0.4 (3.2) ($3.5) 4.2
Equity in Net Loss of Affilate $0.0 - $0.1 0.1
Non-Controlling Interest $0.2 0.7 $0.5 1.8
Pre-Tax Income/(Loss) ($1.9) ($7.2) ($10.4) $20.5
Plus: Adjustments $4.9 0.7 $4.9 12.8
Adjusted Pre-Tax Income/(Loss) $3.0 ($6.5) ($5.5) $33.3
Normalized Income Tax(1) ($0.6) 1.4 $1.2 (7.3)
Equity in Net Loss of Affilate ($0.0) - ($0.1) (0.1)
Non-Controlling Interest ($0.2) (0.7) ($0.5) (1.8)
Adjusted Net Income/(Loss) $2.1 ($5.8) ($4.9) $24.1
Adjusted Earnings/(Loss) per Common Share:
Basic 0.05$ ($0.12) ($0.09) $0.50
Diluted 0.05$ ($0.12) ($0.09) $0.49
Weighted average common shares outstanding used
in computing earnings/(loss) per common share:
Basic 46,323,038 48,651,212 47,295,843 48,606,923
Diluted 46,530,002 48,651,212 47,295,843 48,883,258
EPS COMPUTATION
26
Note: Dollars in millions, except per share and share data. Columns may not add due to rounding.
(1) The Company's redeemable non-controlling interests were less than its redemption value. The adjustment to increase carrying value reduces earnings available to the Company's shareholders.
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016
Net income/(loss) applicable to GAIN Capital Holdings Inc. (2.6)$ (4.7)$ (7.5)$ 14.5$
Adjustment(1) 0.7 (0.7) 1.7 (2.3)
Net income/(loss) available to GAIN common shareholders (1.9)$ (5.5)$ (5.8)$ 12.1$
Earnings/(loss) per common share
Basic ($0.04) ($0.11) ($0.12) $0.25
Diluted ($0.04) ($0.11) ($0.12) $0.25
Weighted average common shares outstanding used
in computing earnings/(loss) per common share:
Basic 46,323,038 48,651,212 47,295,843 48,606,923
Diluted 46,323,038 48,651,212 47,295,843 48,883,258
RECONCILIATION OF SEGMENT PROFIT TO INCOME BEFORE INCOME TAX EXPENSE
27 Note: Dollars in millions. Columns may not add due to rounding.
Reconciliation of operating segment profit to Income before income tax expense
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016
Retail segment $16.6 $6.5 $36.5 $74.3
Institutional segment 1.2 1.0 3.7 4.0
Futures segment 1.3 1.4 2.2 4.1
Corporate and other (4.4) (5.6) (14.5) (19.7)
Segment profit $14.7 $3.3 $27.8 $62.7
Depreciation and amortization $4.6 $3.5 $13.0 $10.2
Purchased intangible amortization 4.1 3.6 12.0 11.4
Restructuring expenses - 0.3 - 1.1
Integration expenses - 0.6 - 2.5
Legal settlement - (0.2) - 9.2
Operating profit/(loss) $6.0 ($4.5) 2.9 28.3
Interest expense on long term borrowings 3.0 2.6 8.3 7.8
Loss on extinguishment of debt 4.9 - 4.9 -
Income/(loss) before income tax expense/(benefit) ($1.9) ($7.2) ($10.4) $20.5
OPERATING EXPENSES
28
Note: Dollars in millions. Columns may not add due to rounding.
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Total Op. Expenses 83.9$ 80.7$ 68.9$ 78.9$ 73.0$ 71.6$ 66.6$
Bad Debt and other variable 1.8 1.7 0.2 2.2 0.1 (0.1) 0.3
Referral Fees 20.7 17.6 15.2 17.3 16.4 13.3 12.9
Marketing 6.4 6.8 5.3 10.2 9.3 7.5 6.4
Fixed Op. Expenses 55.0$ 54.6$ 48.2$ 49.1$ 47.2$ 50.8$ 47.0$
2016 2017
RETAIL REVENUE PER MILLION
29
$95
$84
$96
$88
$105 $108
$0
$20
$40
$60
$80
$100
$120
$140
$160
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
Quarterly Trailing 12 Months Trailing 12 Months - Pro Forma
OPERATING SEGMENT RESULTS: CORPORATE & OTHER
30 Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.
3 Months Ended Sept. 30, 9 Months Ended Sept. 30,
2017 2016 2017 2016 TTM 9/30/17
Revenue ($0.1) $0.1 ($0.5) ($1.8) ($1.5)
Employee Comp & Ben 2.5 2.6 9.0 9.3 12.8
Marketing - - 0.1 - 0.1
Other Operating Exp. 1.7 3.0 4.9 8.6 6.5
Loss ($4.4) ($5.6) ($14.5) ($19.7) ($20.9)
Corporate & Other Financial & Operating Results
QUARTERLY OPERATING METRICS
31
Note: Volumes in billions; assets in millions. Definitions for all operating metrics are available on page 33.
(1) GAIN has updated its historical active account disclosures to reflect a change in definition for certain accounts.
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Retail
OTC Trading Volume $710.9 $612.4 $637.0 $619.3 $646.4 $644.8
OTC Average Daily Volume $10.9 $9.3 $9.8 $9.5 $9.9 $9.9
Active OTC Accounts (1) 135,369 129,921 126,528 136,829 134,120 133,813
Institutional
ECN Volume $526.9 $509.9 $612.2 $759.6 $715.7 $770.1
ECN Average Daily Volume $8.1 $7.7 $9.4 $11.7 $11.0 $11.8
Swap Dealer Volume $186.2 $190.0 $216.6 $225.5 $141.5 $197.7
Swap Dealer Average Daily Volume $2.9 $2.9 $3.3 $3.5 $2.2 $3.0
Futures
Futures Contracts 2,223,501 1,912,174 1,834,393 2,060,631 1,655,166 1,518,417
Futures Average Daily Contracts 34,742 29,878 29,117 33,236 26,272 24,102
Active Futures Accounts 8,822 8,594 8,368 8,201 7,885 8,056
Three Months Ended,
OCTOBER 2017 OPERATING METRICS
32
$9.1
$11.7
$8.6
$9.5
$8.5
$10.4
$9.3 $9.5
$11.0
$9.7
$10.3
$9.6
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
OTC Average Daily Volume ($ bns)
128.4 128.4 126.5 124.9
131.2
136.8 135.9 135.1 134.1 132.4 134.0 133.8
-
20.0
40.0
60.0
80.0
100.0
120.0
40.0
160.0
Active OTC Accounts (000s)
28.3
32.9
26.2
32.2
31.0
36.0
28.7
24.0
26.5
23.6 24.7 23.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Futures Average Daily Contracts (000s)
$8.7
$10.3
$9.2
$12.1
$11.1
$11.8 $11.5
$10.7 $10.8
$10.1
$12.2
$13.3
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
ECN Average Daily Volume ($ bns)
$2.8
$4.0
$3.2
$4.4
$3.1
$2.9
$2.5 $2.6
$1.5
$2.7
$3.4
$3.0
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.
$4.5
$5.0
Swap Dealer Av rage Daily Volume ($ bns)
8.5 8.5 8.4 8.3 8.2 8.2 8.1 8.0 7.9 8.0 8.1 8.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Active Futures Accounts (000s)
DEFINITION OF METRICS
33
• Active Accounts: Accounts who executed a transaction within the last 12 months
• Trading Volume: Represents the U.S. dollar equivalent of notional amounts traded
• Customer Assets: Represents amounts due to clients, including customer deposits and unrealized
gains or losses arising from open positions