GAIN Capital Reports Strong Q3-2018 Revenue and Profit Despite Volume Slowdown

Forex.comThe US-based online Fx trading services provider, GAIN Capital Holdings Inc (NYSE: GCAP) has reported Q3-2018 financial results. The company registered a healthy growth of revenues and profitability during the period, despite the drop in trading volume and sale of its institutional business.

Revenue during the quarter came in at $95.5 million which is 13 per cent higher than Q2’s $84.2 million. The net profit came in at $10 million against $6.5 million in the previous quarter. The reported revenue contributed by retail forex brands and UK-focused City Index, despite trading volumes had fallen to a multi-year low.

Gain Capital has recently announced the $50 million share buy-back plan at a 5-15% premium. The buyback will use a part of cash from the sale of GAIN Capital’s institutional business to Deutsche Boerse’s 360T.

Glenn Stevens, Chief Executive Officer of GAIN Capital commented:

Glenn Stevens, Chief Executive Officer of GAIN Capital
Glenn Stevens, Chief Executive Officer of GAIN Capital

“While overall low market volatility continued to weigh on retail trading volumes during the quarter, our diverse product offering enabled strong revenue growth. Volatility in emerging markets, along with trade tensions, prompted high trading activity in emerging market currencies, as well as certain metals and index products, which helped to generate overall revenue capture of $164 per million for the quarter. In addition, our continued focus on organic, direct account growth and marketing initiatives helped deliver strong operating results in Q3, with new direct accounts up 28% year-over-year. As reiterated through our recently announced $50 million tender offer, we are firmly committed to executing a balanced capital allocation strategy to enhance shareholder value.”

Significant Drop in Trading Volume in Q3-2018

The total trading volume in Q3-2018 came in at $506 billion, which is 21.4 per cent lower from $645 billion in Q3. 2017. The group’s ADV came in at $7.8 billion during the period, down by 21 per cent from $9.9 billion per day in Q3-2017.

Total active accounts during the quarter decreased 3 per cent to 129,182 from 133,813 accounts in the previous year. The futures trading increased to 1,622,114 contracts in the last quarter compared to 1,518,417 contracts in the previous year, signifying a growth of 6.8 per cent.