StoneX reports “strongest core operating performance in our history”

Rick Steves

StoneX’s effort to build a diversified global franchise with growth in income across all operating segments has proven fruitful. The acquisition of GAIN Capital in 2020 for $236 million in equity value provided the much-needed access to the retail FX/CFD brokerage business.

StoneX Group has reported its financial results for Q2 2021, where it highlighted record quarterly operating revenues of $471.4 million (up 29%), quarterly net income of $55.3 million (up 41%), and quarterly diluted EPS of $2.73 per share (ROE of 26.7%).

Operating revenues from FX/CFD contracts increased $65.8 million, to $74.7 million in the three months ended March 31, 2021, as a result of an incremental $71.2 million in retail FX/CFD contracts operating revenues resulting from the acquisition of Gain Capital which was partially offset by lower FX operating revenues in the firm’s legacy FX prime brokerage business.

Sean M. O’Connor, CEO of StoneX Group Inc., commented: “I believe this quarter represents the strongest core operating performance in our history, with record operating revenues, a 41% increase in net income versus the prior year, and a 26.7% ROE on stated book value.

“This quarter demonstrates our efforts to build a diversified global franchise with growth in operating revenues and income across all of our operating segments. We continue to increase both our number of clients and their underlying volumes, which we feel positions us for success in the future.”

The global brokerage and financial services firm providing execution, risk management, and advisory services, market intelligence, and clearing services is the new parent company of GAIN Capital after having completed the $236 million (in equity value) acquisition in July 2020.

The deal represented a 70% premium to the closing share price of GAIN’s shares on February 26, 2020 and a 60% premium to the volume-weighted average price of GAIN’s stock in the 30 trading days ending on February 26, 2020.

From that moment on, StoneX became a leader in the retail FX brokerage business. All earnings results reported by StoneX have shown a massive jump in revenue when compared to pre-GAIN Capital reports.

Still, there has been revenue growth in between quarters since the retail FX/CFD brokerage business was acquired. The operating revenues in the three months ending on 31 December 2020 were $59.8 million against $74.7 million in the three months ended March 31, 2021. This is a respectable 25% growth.

In order to make the best out of its acquisition, StoneX appointed Nick Saunders from Trading 212, where he was Chief Executive Officer of the UK business for six years. He was responsible for the broker’s launch of deliverable equities with zero commission.

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