GAIN Capital — Q2 2020 Earnings Presentation
24 slides from GAIN Capital's earnings presentation, Jul 23, 2020
Slide 1: Q2 and First Half 2020 Results
Q2 and First Half 2020 Results July 2020 1
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT 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
Slide 3: Second Quarter 2020 Review
SECOND QUARTER 2020 REVIEW • Q2 2020 net revenue of $101.0 million, compared to $75.5 million in Q2 2019 • Q2 2020 net income of $14.3 million, compared to net income of $0.9 million in Q2 2019 • Q2 2020 adjusted EBITDA of $28.9 million, compared to $13.0 million in Q2 2019 • Half year diluted EPS o
Slide 4: Organic Efforts Are Showing Results
ORGANIC EFFORTS ARE SHOWING RESULTS 1 100,000 New Direct Accounts Direct Volume per Active Increased 168% y/y and 67% q/q 90,000 Decreased 2% y/y and 24% q/q 10 2.50% • Strong growth in New 80,000 Accounts driven by 70,000 8 2.00% 60,000 increased market demand 50,000 6 1.50% and continued optimizat
Slide 5: Organic Growth Initiatives
ORGANIC GROWTH INITIATIVES 80,000 Trailing 3-Month Direct Active Accounts excl FXCM New Direct Accounts and Marketing Spend New Direct actives up 67% q/q, Marketing spend up 13% q/q Direct actives up 49% vs Q4’18 100,000 $14m 75,000 90,000 70,000 $12m 80,000 65,000 70,000 $10m 60,000 60,000 $8m 50,0
Slide 6: Financial Review
= GAIN | CAPITAL Financial Review
Slide 7: Key Financial Results & Operating Metrics
KEY FINANCIAL RESULTS & OPERATING METRICS Three Months Ended June 30, Six Months Ended June 30, $ Change 2020 2019 2020 2019 3 Months 6 Months • Market conditions continued to have a significant impact upon financial performance Net revenue $ 101.0 $ 75.5 $ 286.7 $ 113.9 $ 25.5 $ 172.8 in the quarte
Slide 8: Operating Segment Results: Retail
OPERATING SEGMENT RESULTS: RETAIL Retail Financial & Operating Results Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 TTM 6/30/20 Trading revenue $ 88.5 $ 60.4 $ 261.6 $ 84.7 $ 354.6 • Market conditions saw quarterly ADV increase 28% year- Other retail revenue 2.7 4.3 5.9
Slide 9: Operating Segment Results: Futures
OPERATING SEGMENT RESULTS: FUTURES Futures Financial & Operating Results Three Months Ended June 30, Six Months Ended June 30, • Futures average daily contracts were down 14% to 27,157 2020 2019 2020 2019 TTM 6/30/20 during Q2'20 Trading revenue $ 8.3 $ 10.2 $ 17.7 $ 18.2 $ 34.3 Other futures revenu
Slide 10: Appendix
= GAIN | CAPITAL Appendix |
Slide 11: Condensed Consolidated Statement of Operations
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 REVENUE Retail revenue $ 88.5 $ 60.4 $ 261.6 $ 84.7 Futures revenue 8.3 10.2 17.7 18.2 Other revenue 3.6 1.0 4.6 3.5 Total non-interest revenue 100.5 71.7 283.9 106.4 Interest rev
Slide 12: Condensed Consolidated Balance Sheet
CONDENSED CONSOLIDATED BALANCE SHEET As of 6/30/2020 12/31/2019 ASSETS: Cash and cash equivalents $ 283.1 $ 190.1 Cash and securities held for customers 859.8 929.3 Receivables from brokers 90.1 112.3 Property and equipment, net 28.2 30.6 Intangible assets, net 19.4 24.2 Other assets 43.0 64.0 Total
Slide 13: Liquidity
LIQUIDITY Q2 2020 Q1 2020 Q4 2019 Q3 2019 TTM Cash and Cash Equivalents Prior Period $ 293.3 $ 190.1 $ 200.7 $ 208.5 $ 208.5 Adjusted EBITDA $ 28.9 $ 114.4 $ (0.2) $ 6.0 $ 149.1 Capital expenditures (3.6) (4.2) (4.4) (4.8) (17.0) Tax and convertible interest (3.6) (4.1) (1.8) (4.3) (13.8) Dividends,
Slide 14: Group Adjusted EBITDA & Adjusted Net Income
GROUP ADJUSTED EBITDA & ADJUSTED NET INCOME Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net revenue $ 101.0$ 75.5$ 286.7$ 113.9 Operating expenses: Employee compensation and benefits $ 28.6 $ 22.6 $ 52.7 $ 42.9 Selling and marketing 7.9 10.1 15.0 20.3 Referral fees 9.5
Slide 15: Adjusted EBITDA & Margin Reconciliation
ADJUSTED EBITDA & MARGIN RECONCILIATION Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net revenue $ 101.0$ 75.5$ 286.7$ 113.9 Net income/(loss) 14.3 0.9 91.6 (27.4) Net income/(loss) Margin % 14% 1% 32% (24)% Net income/(loss) $ 14.3 $ 0.9 $ 91.6 $ (27.4) Depreciation and
Slide 16: Adjusted Net Income and EPS Reconciliation
ADJUSTED NET INCOME AND EPS RECONCILIATION Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income/(loss) $ 14.3 $ 0.9 $ 91.6 $ (27.4) Income tax expense/(benefit) 4.2 2.2 29.2 (3.8) Pre-tax income/(loss) $ 18.4$ 3.1$ 120.8$ (31.3) Adjustments: Restructuring expenses 0.0
Slide 17: Adjusted Income Tax (Expense)/Benefit Reconciliation
ADJUSTED INCOME TAX (EXPENSE)/BENEFIT RECONCILIATION Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 GAAP pre-tax income/(loss) $ 18.4$ 3.1$ 120.8$ (31.3) GAAP tax rate 24.2% 12.1% 24.2% 12.1% Initial adjusted tax expense/(benefit) 4.5 0.4 29.2 (3.8) Tax law changes 0.0 0.0
Slide 18: EPS Computation
EPS COMPUTATION Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income/(loss) $ 14.3 $ 0.9 $ 91.6 $ (27.4) Earnings/(loss) per common share Basic earnings/(loss) $ 0.38 $ 0.02 $ 2.43 $ (0.73) Diluted earnings/(loss) $ 0.37 $ 0.02 $ 2.42 $ (0.73) Weighted average common
Slide 19: Reconciliation of Segment Profit to Income Before Income Tax Expense
RECONCILIATION OF SEGMENT PROFIT TO INCOME BEFORE INCOME TAX EXPENSE Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Retail segment $ 37.7 $ 20.9 $ 161.1 $ 3.6 Futures segment 0.3 2.1 1.2 3.1 Corporate and other (9.1) (10.1) (19.0) (17.4) Segment profit/(loss) $ 28.9$ 12.8$
Slide 20: Retail Revenue Per Million
RETAIL REVENUE PER MILLION 20
Slide 21: Operating Segment Results: Corporate & Other
OPERATING SEGMENT RESULTS: CORPORATE & OTHER Corporate & Other Financial & Operating Results Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 TTM 6/30/20 Revenue/(loss) $ 1.2 $ (0.9) $ 0.4 $ 0.0 $ 0.4 Employee compensation and benefits 8.2 6.3 15.1 11.5 22.6 Other operating
Slide 22: Quarterly Operating Metrics
QUARTERLY OPERATING METRICS Three Months Ended, Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Retail Segment OTC Trading Volume (1)(2) $ 464.3 $ 463.1 $ 428.3 $ 748.7 $ 589.7 OTC Average Daily Volume $ 7.1 $ 7.0 $ 6.6 $ 11.7 $ 9.1 12 Month Trailing Active OTC Accounts (3) 118,320 118,751 122,532 132,841 149,43
Slide 23: Operating Metrics
= GAIN | CAPITAL OPERATING METRICS OTC Average Daily Volume ($ bns) TTM Active OTC Accounts (000s) S177 a tae 43.0 ae sare 117.4 118.8 120.8 121.8 1225 1234 125.9 ve 9 B27 5 6.0 56.2573 $8.5 z liliil| i = ee POPP Os PP gf a ee eRe See SCE EK CLS Futures Average Daily Contracts (000s) TTM Active Futu
Slide 24: Definition of Metrics
DEFINITION OF METRICS • Active Accounts: Accounts that executed a transaction during the period • 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
GAIN Capital Holdings — Q2 2020 Earnings Presentation on 6ix