GAIN Capital (GCAP 8.11, -0.15) is lower by 1.8% in pre-market, after reporting a slight fourth quarter miss.
The online trading service, which caters to individuals and institutions who trade currencies, futures, and contracts for difference (CFD), reported below-consensus fourth quarter earnings of $0.42 per share on a 12.6% year-over-year increase in revenue to $115.80 million, which was just below expectations.
After the end of the fourth quarter, GAIN acquired the U.S. accounts of foreign exchange broker FXCM, who was ordered to exit the U.S. market after misrepresenting its organizational structure to clients. As a result, more than 47,000 FXCM accounts were sold to GAIN. The account transfer occurred at the end of February. With FXCM's exit, GAIN and privately-held OANDA are left as the two largest retail foreign exchange brokers who service clients in the United States.
Looking at the segment breakdown, fourth quarter Retail segment revenue grew 17.8% to $97.50 million with segment profit margin jumping to 42.0% from 30.0% one year ago. For the full year, segment profit margin was 34.0%, up from 27.0% in 2015.
In the Institutional segment, net revenue grew 17.6% year-over-year to $8.70 million while segment profit margin fell to 16.0% for 28.0% one year ago. For the full year, segment profit margin declined to 18.0% from 29.0% in 2015.
Futures net revenue declined 3.7% year-over-year to $10.50 million, but segment profit margin showed no year-over-year change, remaining at 6.0%. For the full year, segment profit margin ticked up to 10.0% from 9.0% in 2015.
In addition to reporting earnings, GAIN announced its February operating metrics. The Retail segment showed a 35.6% year-over-year decrease in OTC average daily volume to $8.50 billion. Active OTC accounts were down 7.4% year-over-year.
In the Institutional segment, ECN average daily volume increased 33.7% year-over-year to $11.10 billion while Swap Dealer average daily volume grew 3.3% year-over-year to $3.10 billion.
Average daily contracts in the Futures segment declined 16.1% year-over-year to 31,028 with active futures accounts decreasing 6.8% year-over-year to 8,221.