FXCM Group Provides Financial Information for Third Quarter 2017

NEW YORK, Nov. 14, 2017 (GLOBE NEWSWIRE) — FXCM Group, LLC (“FXCM Group” or “FXCM”), a leading international provider of online foreign exchange trading, CFD trading, spread betting and related services, today provided selected financial information regarding its third quarter 2017 results.

“Despite multi-year low volatility in the currency markets in the third quarter, we were able to generate Adjusted EBITDA of $3.8 million, including a $1.2 million charge for severance expense as we continue to improve our cost structure,” said Brendan Callan, CEO of FXCM. “Additionally, we repaid $55.8 million of our loan with Leucadia and now have $67.6 million of principal outstanding on our original $300.0 million loan.”

FXCM Group, LLC (US Millions) (unaudited)

Selected Income Statement Data

  Three Months Ended
September 30, 2017
  Nine Months Ended
September 30, 2017
Total Net Revenues $ 44.0     $ 139.2  
Operating Expenses(1) $ 40.1     $ 118.6  
Loss from Continuing Operations $ (5.8 )   $ (18.1 )
Net Income $ 47.6     $ 17.0  
Adjusted EBITDA — Continuing Operations(2) $ 3.8     $ 21.7  
               

(1) Excludes depreciation and amortization of $4.8 million and $14.9 million for the three and nine months ended September 30, 2017, respectively.

(2) See reconciliation following

Selected Balance Sheet Data

  As of
September 30, 2017
Cash and Cash Equivalents $ 121.2  
Cash and cash equivalents, held for customers $ 331.4  
Total Assets $ 554.1  
Credit Agreement to Leucadia (net)(3) $ 64.3  
Total Members’ Capital $ 66.6  
       

(3) Net of $3.3 million of unamortized discount.

Selected Customer Trading Metrics for Continuing Operations

  Three Months Ended
September 30, 2017
  Nine Months Ended
September 30, 2017
Tradeable accounts 104,356     104,356  
Active accounts 122,806     122,806  
Daily average trades 332,076     366,350  
Daily average trades per active account 2.7     3.0  
Total trading volume (billions) $ 616     $ 1,908  
Trading revenue per million traded $ 69     $ 72  
Average customer trading volume per day (billions) $ 9.5     $ 9.8  
Trading days 65     194  
           
           

Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA(4) Continuing Operations
(US Millions) (unaudited)

  Three Months Ended
September 30, 2017
  Nine Months Ended
September 30, 2017
Net Income $ 47.6     $ 17.0  
Adjustments:      
Net loss attributable to non-controlling interests(5) (11.0 )   (21.4 )
Income from discontinued operations, net of tax(6) (42.4 )   (13.6 )
Income tax provision 0.4     1.2  
Interest on borrowings 9.2     29.0  
Gain on derivative liability — Leucadia financing(7) (4.7 )   (6.2 )
General and administrative(8), (9) (0.1 )   1.0  
Depreciation and amortization 4.8     14.9  
Gain on sale of equity method investment(10)     (0.2 )
Total Adjustments (43.8 )   4.7  
Adjusted EBITDA(4) Continuing Operations $ 3.8     $ 21.7  
               

(4) Adjusted EBITDA from Continuing Operations is a Non-GAAP measure that is not prepared under any comprehensive set of accounting rules or principles and does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with U.S. GAAP.

(5) Represents the elimination of the share of net loss allocated among the non-controlling interests to calculate total consolidated net income (loss) from the Company’s operations.

(6) Represents the elimination of the income or loss attributable to discontinued operations, net of tax, in order to calculate income attributable to continuing operations only.

(7) Represents the elimination of the gain or loss attributable to the derivative liability embedded in the Company’s financing agreement with Leucadia, as it is a non-operating, non-cash gain or loss.

(8) For the three months ended September 30, 2017, represents an adjustment to the charges to reserve for restitution related to trade execution practices prior to August 2010.

(9) For the nine months ended September 30, 2017, represents the elimination of charges to reserve for restitution related to trade execution practices prior to August 2010 and client adjustments related to various trading platform issues.

(10) Represents the elimination of a gain on sale of an equity method investment which was impaired in 2016.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. GAAP, we have provided Adjusted EBITDA, a Non- GAAP financial measure. We believe this Non-GAAP measure, when presented in conjunction with the comparable U.S. GAAP measure, is useful to investors in better understanding our current financial performance as seen through the eyes of management and facilitates comparisons of our historical operating trends across several periods. We believe that investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in our industry that present similar measures, although the methods used by other companies in calculating Adjusted EBITDA may differ from our method, even if similar terms are used to identify such measure.

Adjusted EBITDA provides us with an understanding of the results from the primary operations of our business by excluding the effects of certain gains, losses or other charges that do not reflect the normal earnings of our core operations or that may not be indicative of our future outlook and prospects. Internally, Adjusted EBITDA is used by management for various purposes, including to evaluate our operating performance and operational strategies, and as a basis for strategic planning, forecasting and for compensation purposes.

Adjusted EBITDA does not represent and should not be considered as a substitute for net income or net income attributable to FXCM Group, LLC., each as determined in accordance with U.S. GAAP. Adjusted EBITDA reflects the following adjustments to net income:

Regulatory and Legal Costs. Adjustments have been made to eliminate certain costs or recoveries (including client reimbursements, regulatory fines and settlements from lawsuits) associated with certain regulatory and legal matters. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and we believe it is useful to show the effects of eliminating these expenses.

Gain on sale of equity method investment. An adjustment has been made to eliminate the gain on the sale of an equity method investment which had previously been impaired in December 2016. Given the nature of this gain, it is not viewed by management as income in the ordinary course of business and we believe it is useful to show the effects of eliminating this gain.

About FXCM Group, LLC

FXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, spread betting and related services. The company’s mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides trading tools proprietary data and premium resources. FXCM Pro provides retail brokers, small hedge funds and emerging market banks access to wholesale execution and liquidity, while providing high and medium frequency funds access to prime brokerage services via FXCM Prime.

Trading foreign exchange and CFDs on margin carries a high level of risk, which may result in losses that could exceed your deposits, therefore may not be suitable for all investors. Read full disclaimer.

FXCM Group is a holding company of Forex Capital Markets Limited, inclusive of all EU branches (FXCM UK), FXCM Australia Pty. Limited (FXCM AU), and all affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively “FXCM”].

Jaclyn Sales, 646-432-2463
Vice-President, Corporate Communications
jsales@fxcm.com 

 
FXCM Group, LLC and Subsidiaries
 
Consolidated Statement of Financial Condition
 
As of September 30, 2017
(In thousands, unaudited)
 
Assets  
Current assets:  
Cash and cash equivalents $ 121,232  
Cash and cash equivalents, held for customers 331,447  
Due from brokers 33  
Accounts receivable, net 16,255  
Tax receivable 221  
Assets held for sale 40,649  
Total current assets 509,837  
   
Deferred tax asset 887  
Office, communication and computer equipment, net 27,921  
Other intangible assets, net 1,475  
Other assets 14,029  
Total assets $ 554,149  
   
Liabilities and members’ capital  
   
Current liabilities:  
Customer account liabilities $ 331,447  
Accounts payable and accrued expenses 27,169  
Due to related party 2,483  
Due to brokers 1,948  
Credit Agreement – Related Party 64,329  
Other liabilities 400  
Liabilities held for sale 2,976  
Total current liabilities 430,752  
   
Deferred tax liability 282  
Other liabilities 7,034  
Total liabilities 438,068  
   
Redeemable non-controlling interest (Leucadia) 49,454  
   
Members’ capital:  
Members’ capital – Global Brokerage Holdings, LLC 49,454  
Non-controlling interests 17,173  
Total members’ capital 66,627  
Total liabilities, Redeemable non-controlling interest (Leucadia) and Members’ capital $ 554,149  
       

 
FXCM Group, LLC and Subsidiaries
 
Consolidated Statements of Operations
 
For the Three and Nine Months Ended September 30, 2017
(In thousands, unaudited)
 
  For the Three
Months Ended
September 30, 2017
  Year to Date
Period Ended
September 30, 2017
       
Revenues:      
Trading revenue $ 42,785     $ 136,664  
Net interest revenue 382     870  
Other income 804     1,682  
Total net revenues 43,971     139,216  
       
Operating Expenses:      
Compensation and benefits 14,762     40,316  
Referring broker fees 5,443     18,710  
Advertising and marketing 4,017     11,644  
Communication and technology 5,494     17,027  
Trading costs, prime brokerage and clearing fees 996     2,511  
General and administrative 8,542     25,680  
Management fee 848     2,662  
Depreciation and amortization 4,770     14,908  
Total operating expenses 44,872     133,458  
       
Operating (loss) income (901 )   5,758  
       
Other Expense      
Gain on derivative liability – Credit Agreement (4,668 )   (6,172 )
Gain on equity method investments, net     (170 )
Interest on borrowings 9,169     28,981  
Loss from continuing operations before income taxes (5,402 )   (16,881 )
       
Income tax provision 383     1,171  
       
Loss from continuing operations (5,785 )   (18,052 )
       
Income from discontinued operations, net of tax 42,364     13,613  
       
Net income (loss) 36,579     (4,439 )
       
Net loss attributable to non-controlling interests (11,028 )   (21,407 )
       
Net income attributable to FXCM Group, LLC $ 47,607     $ 16,968