Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 25, 2019
Date of Report (Date of earliest event reported)
GAIN CAPITAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-35008
 
20-4568600
(State of Incorporation)
 
(Commission File No.)
 
(IRS Employer Identification No.)
Bedminster One
135 Route 202/206
Bedminster, New Jersey 07921
(Address of Principal Executive Offices)
(908) 731-0700
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
p
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
p
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
p
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
p
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.00001
GCAP
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
p
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. p







Item 2.02 Results of Operations and Financial Condition.

On October 24, 2019, GAIN Capital Holdings, Inc., a Delaware corporation (the “Company”), issued a press release to report the Company’s financial results for the quarter ended September 30, 2019. The full text of the press release is attached to this current report on Form 8-K as Exhibit 99.1.*

Item 7.01 Regulation FD Disclosure.
On October 24, 2019, beginning at 4:30 p.m., eastern time, the Company will host a conference call concerning the Company’s financial results for the quarter ended September 30, 2019. In connection with this conference call, the Company has made available for review on its website (ir.gaincapital.com) a copy of its corporate presentation. A copy of the corporate presentation is also attached hereto as Exhibit 99.2.*
Item 8.01 Other Events.
On October 24, 2019, the Company announced that its Board of Directors has declared a dividend of $0.06 per share of the Company’s common stock. The dividend will be paid on December 17, 2019 to shareholders of record at the close of business on December 10, 2019.
Item 9.01. Financial Statements and Exhibits
 
 
 
Exhibit
No.
 
Description
 
 
99.1
 
Press Release of GAIN Capital Holdings, Inc., dated October 24, 2019, reporting its financial results.
99.2
 
Corporate Presentation

*
The information furnished in Items 2.02, 7.01 and 9.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 25, 2019
 
 
 
GAIN CAPITAL HOLDINGS, INC.
 
 
By:
 
/s/ Nigel Rose
Name:
 
Nigel Rose
Title:
 
Chief Financial Officer







Exhibit Index
Exhibit
No.
 
Description
 
 
99.1
 
99.2
 



Exhibit


https://cdn.kscope.io/e867bd33e52b849058e72cee319f39da-logoa14.jpg

GAIN Capital Reports Third Quarter 2019 Results

BEDMINSTER, N.J., October 24, 2019 /PRNewswire/ -- GAIN Capital Holdings, Inc. ("GAIN") (NYSE: GCAP), a leading global provider of online trading services, announced financial results for the third quarter of 2019.


Key Financial Results for the Third Quarter 2019 (all amounts reflect continuing operations)
GAAP net loss of $2.1 million, or loss of $0.06 per share
GAAP net revenue of $66.7 million
Adjusted net loss of $2.8 million, or loss of $0.07 per share
Adjusted EBITDA of $6.0 million

Operating Highlights
Retail trailing 3-month direct active accounts increased for a third consecutive quarter
Marketing investment drove new direct account growth of 97% year-over-year and 32% quarter-over-quarter
Pockets of volatility in US equity markets helped grow Futures average daily contracts 24% over the prior year

A summary of GAIN’s financial results is included in the chart below (all amounts are from continuing operations).
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net (Loss)/Income
$
(2.1
)
 
$
10.0

 
$
(29.5
)
 
$
28.7

Adjusted Net (Loss)/Income(1)
$
(2.8
)
 
$
13.8

 
$
(28.7
)
 
$
31.7

 
 
 
 
 
 
 
 
Net Revenue
$
66.7

 
$
95.5

 
$
180.6

 
$
278.1

Operating Expenses(2)
(60.7
)
 
(65.0
)
 
(185.1
)
 
(196.8
)
Adjusted EBITDA(1)
$
6.0

 
$
30.5

 
$
(4.4
)
 
$
81.3

 
 
 
 
 
 
 
 
Diluted GAAP EPS
$
(0.06
)
 
$
0.22

 
$
(0.79
)
 
$
0.60

Adjusted EPS(1)
$
(0.07
)
 
$
0.31

 
$
(0.77
)
 
$
0.70

___________________________________
Note: Dollars in millions, except per share amounts and where noted otherwise. Columns may not add due to rounding.
1See below for reconciliation of non-GAAP financial measures.
2Operating Expenses excludes Depreciation and Amortization, Purchased Intangible Amortization, and certain one-off costs


"The third quarter continued to show positive signs of client engagement as our Retail trailing 3-month direct active accounts increased for a third consecutive quarter, providing evidence that our marketing efforts are helping to grow active accounts, even amid the unusually low volatility environment," stated Glenn Stevens, CEO of GAIN Capital. "In addition, we delivered direct new account growth, which was up 97% over Q3 2018 and 32% sequentially, further evidencing the effectiveness of our marketing. In Futures, average daily contracts increased 24% as we saw pockets of volatility in the US equity markets. With




growing interest and activity from our new customers, we feel well positioned to benefit from a return to more normalized market conditions."

Quarterly Operating Metrics
 
Q3 19
 
Q3 18
 
Year-over-year Change
Retail Segment
 
 
 
 
 
OTC Trading Volume (1) (2)
$
463.1

 
$
506.5

 
(8.6
)%
OTC Average Daily Volume
$
7.0

 
$
7.8

 
(10.3
)%
12 Month Trailing Active OTC Accounts (3)
118,751

 
129,182

 
(8.1
)%
3 Month Trailing Active OTC Accounts (3)
72,909

 
71,597

 
1.8
 %
 
 
 
 
 
 
Futures Segment
 
 
 
 
 
Number of Futures Contracts
2,041,253

 
1,622,114

 
25.8
 %
Futures Average Daily Contracts
31,895

 
25,748

 
23.9
 %
12 Month Trailing Active Futures Accounts (3)
7,406

 
7,550

 
(1.9
)%
_______________________________________
All retail volume figures reported in billions.
1 US dollar equivalent of notional amounts traded.
2 For the quarter, indirect volume represented 21% of total retail OTC trading volume.
3 Accounts that executed a transaction during the relevant period.


Capital Return and Dividend
In the third quarter, GAIN focused on returning capital to shareholders through dividends, which amounted to approximately $2.2 million.

GAIN’s Board of Directors declared a quarterly cash dividend of $0.06 per share of the Company’s common stock. The dividend is payable on December 17, 2019 to shareholders of record as of the close of business on December 10, 2019.

 
 
 
 
 
 
 
 
 
 
Conference Call
GAIN will host a conference call on October 24, 2019 at 4:30 p.m. ET. Participants may access the live call by dialing +1.888.349.0112 (US Domestic), or +1.412.317.6001 (International). Please tell the operator you would like to join the GAIN Capital call.

A live audio webcast of the call, as well as a PDF copy of the earnings presentation, will be available on the Investor Relations section of the GAIN Capital website (http://ir.gaincapital.com).

An audio replay will be made available for one month starting approximately one hour after the call by dialing +1.877.344.7529 from the U.S. or +1.412.317.0088 from abroad, and entering the passcode 10135721#.

For more corporate information or to sign up for alerts, please visit: http://ir.gaincapital.com.





About GAIN
GAIN Capital Holdings, Inc. provides innovative trading technology and execution services to retail and institutional investors worldwide, with multiple access points to OTC markets and global exchanges across a wide range of asset classes, including foreign exchange, commodities, and global equities.  GAIN Capital is headquartered in Bedminster, New Jersey, with a global presence across North America, Europe and the Asia Pacific regions.  For further company information, visit www.gaincapital.com.

Investor Relations Contact
Lauren Tarola Scott, Edelman for GAIN Capital
+1 908.731.0737
ir@gaincapital.com

Media Contact
Nicole Briguet, Edelman for GAIN Capital
+1 212.704.8164
pr@gaincapital.com




Condensed Consolidated Statements of Operations
(unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019

2018
 
2019
 
2018
REVENUE:
 
 
 
 
 
 
 
Retail revenue
$
52.8

 
$
82.9

 
$
137.5

 
$
239.1

Futures revenue
9.4

 
8.7

 
27.6

 
30.4

Other revenue
0.8

 
1.2

 
4.3

 
1.7

Total non-interest revenue
62.9

 
92.8

 
169.4

 
271.2

Interest revenue
4.3

 
3.3

 
13.1

 
8.2

Interest expense
0.6

 
0.5

 
1.8

 
1.3

Total net interest revenue
3.8

 
2.8

 
11.3

 
6.9

Net revenue
$
66.7

 
$
95.5

 
$
180.6


$
278.1

EXPENSES:
 
 
 
 
 
 
 
Employee compensation and benefits
$
19.3

 
$
22.9

 
$
62.2

 
$
69.7

Selling and marketing
10.4

 
10.2

 
30.7

 
23.0

Referral fees
7.6

 
8.1

 
22.2

 
30.0

Trading expenses
5.2

 
5.8

 
16.1

 
17.1

General and administrative
13.3

 
12.2

 
37.8

 
38.9

Depreciation and amortization
4.1

 
4.7

 
12.8


15.4

Purchased intangible amortization
1.8

 
3.5

 
7.0


10.8

Communications and technology
4.4

 
5.5

 
14.9

 
16.4

Bad debt provision
0.5

 
0.3

 
1.4

 
1.7

Contingent provision
0.0

 
5.0

 
0.0

 
5.0

Impairment of investment
0.0

 
0.0

 
0.0

 
(0.1
)
Total operating expense
$
66.6

 
$
78.2

 
$
205.0

 
$
227.9

OPERATING PROFIT/(LOSS)
0.1

 
17.3

 
(24.4
)
 
50.2

Interest expense on long term borrowings
3.4

 
3.4

 
10.1


10.1

(LOSS)/INCOME BEFORE INCOME TAX
(3.3
)
 
13.9

 
(34.5
)
 
40.1

Income tax (benefit)/expense
(1.2
)
 
4.0

 
(5.0
)

11.4

NET (LOSS)/INCOME FROM CONTINUING OPERATIONS
(2.1
)
 
10.0

 
(29.5
)
 
28.7

Income from discontinued operations
0.0

 
2.3

 
0.0

 
67.3

NET (LOSS)/INCOME
(2.1
)
 
12.3

 
(29.5
)
 
96.0

Less income attributable to non-controlling interest
0.0

 
0.1

 
0.0


0.6

NET (LOSS)/INCOME APPLICABLE TO GAIN CAPITAL HOLDINGS, INC.
$
(2.1
)
 
$
12.2

 
$
(29.5
)
 
$
95.4

_________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.








Condensed Consolidated Balance Sheet
(unaudited)
 
September 30,
 
December 31,
 
2019
 
2018
ASSETS:
 
 
 
Cash and cash equivalents
$
200.7

 
$
278.9

Cash and securities held for customers
849.8

 
842.5

Receivables from brokers
107.7

 
84.3

Property and equipment, net
28.8

 
30.6

Intangible assets, net
24.5

 
32.2

Goodwill
27.5

 
27.8

Other assets
49.0

 
36.4

          Total assets
$
1,288.0

 
$
1,332.5

LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Payables to customers
$
849.8

 
$
842.5

Payables to brokers
2.5

 
1.6

Accrued compensation and benefits
5.4

 
11.2

Accrued expenses and other liabilities
37.6

 
41.6

Income tax payable
2.7

 
5.8

Convertible senior notes
136.9

 
132.1

          Total liabilities
$
1,035.0

 
$
1,034.8

Shareholders' equity
253.0

 
297.8

          Total liabilities and shareholders' equity
$
1,288.0

 
$
1,332.5

_________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.






Income Statement of Discontinued Operations
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
REVENUE:
 
 
 
 
 
 
 
Institutional revenue
$
0.0

 
$
0.0

 
$
0.0

 
$
16.4

Total non-interest revenue
0.0

 
0.0

 
0.0

 
16.4

Interest revenue
0.0

 
0.0

 
0.0

 
0.1

Total net interest revenue
0.0

 
0.0

 
0.0

 
0.1

Net revenue
$
0.0

 
$
0.0

 
$
0.0

 
$
16.5

EXPENSES:
 
 
 
 
 
 
 
Employee compensation and benefits
$
0.0

 
$
0.1

 
$
0.0

 
$
6.0

Trading expenses
0.0

 
0.0

 
0.0

 
5.4

Other expenses
0.0

 
0.0

 
0.0

 
4.0

Total operating expense
0.0

 
0.1

 
0.0

 
15.4

OPERATING (LOSS)/PROFIT
0.0

 
(0.1
)
 
0.0

 
1.1

(Loss)/gain on sale of discontinued operations
0.0

 
(0.1
)
 
0.0

 
69.4

(LOSS)/INCOME BEFORE INCOME TAX BENEFIT
0.0

 
(0.3
)
 
0.0

 
70.6

Income tax (benefit)/expense
0.0

 
(2.6
)
 
0.0

 
3.2

NET INCOME FROM DISCONTINUED OPERATIONS
$
0.0

 
$
2.3

 
$
0.0

 
$
67.3

_________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.

Reconciliation of GAAP Net Income to Adjusted Net Income, Adjusted EPS and Adjusted Income Tax
Adjusted net (loss)/income is a non-GAAP financial measure and represents our net (loss)/income excluding certain one-time costs and benefits. Adjusted EPS is calculated using adjusted net (loss)/income. These non-GAAP financial measures have certain limitations, including not having standardized meanings and, therefore, our definitions may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of these measures assists investors in evaluating our operating performance. However, because they are not a measure of financial performance or income tax expense calculated in accordance with GAAP, such measures should be considered in addition to, not as a substitute for, other measures reported in accordance with GAAP.





Net (Loss)/Income to Adjusted Net (Loss)/Income and Adjusted EPS
(unaudited)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Net (loss)/income from continuing operations
$
(2.1
)
 
$
10.0

 
$
(29.5
)
 
$
28.7

Income tax (benefit)/expense
(1.2
)
 
4.0

 
(5.0
)
 
11.4

Pre-tax (loss)/income
$
(3.3
)
 
$
13.9

 
$
(34.5
)
 
$
40.1

Adjustments:
 
 
 
 
 
 
 
Contingent provision2
0.0

 
5.0

 
0.2

 
5.0

Impairment of investment
0.0

 
0.0

 
0.0

 
(0.1
)
Adjusted pre-tax (loss)/income
$
(3.3
)
 
$
18.9

 
$
(34.3
)
 
$
45.0

 Adjusted income tax benefit/(expense)1
0.5

 
(5.0
)
 
5.6

 
(12.6
)
 Income attributable to non-controlling interest
0.0

 
(0.1
)
 
0.0

 
(0.6
)
Adjusted net (loss)/income
$
(2.8
)
 
$
13.8

 
$
(28.7
)
 
$
31.7

 
 
 
 
 
 
 
 
Adjusted (loss)/earnings per common share
 
 
 
 
 
 
 
Basic
$
(0.07
)
 
$
0.31

 
$
(0.77
)
 
$
0.71

Diluted
$
(0.07
)
 
$
0.31

 
$
(0.77
)
 
$
0.70

 
 
 
 
 
 
 
 
Weighted average common shares outstanding used in computing (loss)/earnings per common share
 
 
 
 
 
 
 
Basic
37,404,223

 
44,553,903

 
37,371,676

 
44,787,875

Diluted
37,404,223

 
44,984,721

 
37,371,676

 
45,270,797

_____________________________
1Adjusted income tax benefit/(expense) reflects the Company's GAAP income tax benefit/(expense) adjusted for (a) taxable or deductible items affecting income tax benefit/(expense) that are unrelated to pre-tax (loss)/income in the period and (b) the tax effect of other taxable adjustments made to the Company's pre-tax income. The tax effect of the adjustments to pre-tax (loss)/income are calculated using the tax rate applicable for the jurisdiction within which each of the adjustments arose. The Company believes that this non-GAAP financial measure provides investors with a more consistent and stable basis for determining the impact of taxes on the Company's core continuing operations.
2Q319 YTD represents a contingency related to a legacy US regulatory matter. Q318 and Q318 YTD represent a prior year contractual dispute with a service provider.
Note: Dollars in millions, except per share data and where noted otherwise. Columns may not add due to rounding.






Adjusted Income Tax Reconciliation
(unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
GAAP pre-tax (loss)/income
$
(3.3
)
 
$
13.9

 
$
(34.5
)
 
$
40.1

GAAP tax rate
14.5
%
 
28.4
%
 
14.5
%
 
28.4
%
Initial adjusted tax benefit/(expense)(1)
0.5

 
(4.0
)
 
5.0

 
(11.4
)
 
 
 
 
 
 
 
 
Uncertain tax position(3)
0.0

 
0.0

 
0.2

 
(0.2
)
One off adjustments(4)
0.0

 
(1.0
)
 
(0.1
)
 
(1.0
)
Basis adjustment(5)
0.0

 
0.0

 
0.5

 
0.0

Adjusted tax benefit/(expense)
$
0.5

 
$
(5.0
)
 
$
5.6

 
$
(12.6
)
 
 
 
 
 
 
 
 
Adjusted pre-tax (loss)/income
$
(3.3
)
 
$
18.9

 
$
(34.3
)
 
$
45.0

Adjusted tax rate(2)
14.5
%
 
26.4
%
 
16.4
%
 
28.1
%

1Initial adjusted tax benefit/(expense) calculated as GAAP pre-tax (loss)/income multiplied by the YTD GAAP Tax Rate
2Adjusted tax rate calculated as adjusted tax benefit/(expense) divided by adjusted pre tax (loss)/income
3Q319 YTD represents an adjustment of $0.2 million caused by a prior year’s tax audit; Q318 YTD adjustment caused by a favorable tax ruling of $(0.2) million relating to a prior year, both included within Initial adjusted tax benefit/(expense)
4Represents the tax effect of the adjustments to pre-tax (loss)/income, calculated using the tax rate applicable for the jurisdiction within which each of the adjustments arose
5Represents a basis adjustment to deferred taxes of $0.5 million relating to a prior year





Reconciliation of GAAP Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is a non-GAAP financial measure that represents our (loss)/earnings before interest, taxes, depreciation and amortization, purchased intangible amortization, convertible note interest, non-controlling interest, and certain one-time costs and benefits. This non-GAAP financial measure has certain limitations, including not having a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to other companies'. We believe our reporting of adjusted EBITDA assists investors in evaluating our operating performance. However, because adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net (loss)/income.

Reconciliation of GAAP Net (Loss)/Income to Adjusted EBITDA and Adjusted EBITDA Margin
(unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Net revenue
$
66.7

 
$
95.5

 
$
180.6

 
$
278.1

Net (loss)/income from continuing operations
(2.1
)
 
10.0

 
(29.5
)
 
28.7

Net (loss)/income margin %
(3
)%
 
10
%
 
(16
)%
 
10
%
 
 
 
 
 
 
 
 
Net (loss)/income from continuing operations
$
(2.1
)
 
$
10.0

 
$
(29.5
)
 
$
28.7

Depreciation and amortization
4.1

 
4.7

 
12.8

 
15.4

Purchased intangible amortization
1.8

 
3.5

 
7.0

 
10.8

Interest expense on long term borrowings
3.4

 
3.4

 
10.1

 
10.1

Income tax (benefit)/expense
(1.2
)
 
4.0

 
(5.0
)
 
11.4

Contingent provision
0.0

 
5.0

 
0.2

 
5.0

Impairment of investment
0.0

 
0.0

 
0.0

 
(0.1
)
Adjusted EBITDA
$
6.0

 
$
30.5

 
$
(4.4
)
 
$
81.3

Adjusted EBITDA Margin(1)
9
 %
 
32
%
 
(2
)%
 
29
%
_________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.
1 Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenue.






Segment Information:
ASC 280, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and in assessing performance. Reportable segments are defined as an operating segment that either (a) exceeds 10% of revenue, or (b) reported profit or loss in absolute amount exceeds 10% of profit of all operating segments that did not report a loss or (c) exceeds 10% of the combined assets of all operating segments. Based on the Company’s management strategies, and common production, marketing, development and client coverage teams, the Company has concluded that it operates in two operating segments: Retail and Futures.

Retail
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Trading revenue
$
52.8

 
$
82.9

 
$
137.5

 
$
239.1

Other retail revenue
4.2

 
2.9

 
12.4

 
7.0

Total revenue
$
57.0

 
$
85.9

 
$
149.9

 
$
246.1

 
 
 
 
 
 
 
 
 Employee compensation and benefits
12.5

 
14.4

 
39.0

 
43.4

Selling and marketing
10.2

 
10.0

 
30.0

 
22.1

Referral fees
4.6

 
5.3

 
13.4

 
20.0

Other operating expenses
17.3

 
17.2

 
51.7

 
53.2

Segment Profit
$
12.4

 
$
39.0

 
$
15.9

 
$
107.3

 Segment Profit Margin %
22
%
 
45
%
 
11
%
 
44
%
_________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.

Futures
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Trading revenue
$
9.4

 
$
8.7

 
$
27.6

 
$
30.4

Other futures revenue
1.2

 
1.1

 
4.1

 
2.9

Total revenue
$
10.6

 
$
9.7

 
$
31.7

 
$
33.3

 
 
 
 
 
 
 
 
 Employee compensation and benefits
2.5

 
2.4

 
7.5

 
7.8

Selling and marketing
0.2

 
0.2

 
0.6

 
0.6

Referral fees
3.0

 
2.8

 
8.8

 
10.0

Other operating expenses
3.3

 
3.0

 
9.9

 
10.4

Segment Profit
$
1.7

 
$
1.3

 
$
4.8

 
$
4.5

Segment Profit Margin %
16
%
 
13
%
 
15
%
 
14
%
____________________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.







Corporate and Other
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Other loss
$
(0.9
)
 
$
(0.1
)
 
$
(0.9
)
 
$
(1.3
)
 
 
 
 
 
 
 
 
Employee compensation and benefits
4.3

 
6.1

 
15.7

 
18.4

Selling and marketing
0.0

 
0.1

 
0.0

 
0.2

Other operating expenses
2.8

 
3.6

 
8.6

 
10.6

Loss
$
(8.1
)
 
$
(9.8
)
 
$
(25.3
)
 
$
(30.5
)
____________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.






Reconciliation of Segment (Loss)/Profit to (Loss)/Income Before Income Tax (Benefit)/Expense
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Retail segment
$
12.4

 
$
39.0

 
$
15.9

 
$
107.3

Futures segment
1.7

 
1.3

 
4.8

 
4.5

Corporate and other
(8.1
)
 
(9.8
)
 
(25.3
)
 
(30.5
)
Segment Profit/(Loss)
6.0

 
30.5

 
(4.6
)
 
81.3

 
 
 
 
 
 
 
 
Depreciation and amortization
4.1

 
4.7

 
12.8

 
15.4

Purchased intangible amortization
1.8

 
3.5

 
7.0

 
10.8

Contingent provision
0.0

 
5.0

 
0.0

 
5.0

Impairment of investment
0.0

 
0.0

 
0.0

 
(0.1
)
Operating profit/(loss)
$
0.1

 
$
17.3

 
$
(24.4
)
 
$
50.2

Interest expense on long term borrowings
3.4

 
3.4

 
10.1

 
10.1

(Loss)/Income before income tax (benefit)/expense
$
(3.3
)
 
$
13.9

 
$
(34.5
)
 
$
40.1

____________________
Note: Dollars in millions, except where noted otherwise. Columns may not add due to rounding.





Forward-Looking Statements:
In addition to historical information, this earnings release 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. These factors are noted throughout GAIN Capital's annual report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 11, 2019, and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, evolving industry regulations, errors or malfunctions in GAIN Capital’s systems or technology, rapid changes in technology, effects of inflation, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate assets and companies we have acquired, our ability to effectively compete, changes in tax policy or accounting rules, fluctuations in foreign exchange rates and commodity prices, adverse changes or volatility in interest rates, as well as general economic, business, credit and financial market conditions, internationally or nationally, and our ability to continue paying a quarterly dividend in light of future financial performance and financing needs. The forward-looking statements included herein represent GAIN Capital’s views as of the date of this release. GAIN Capital undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.


gcapq32019earningspresen
Q3and Nine Months 2019 Results  October 2019 1


 
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. These factors are noted throughout GAIN Capital's annual report on Form 10‐K for the year ended December 31, 2018, as filed with the Securities and Exchange  Commission on March 11, 2019, and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, evolving industry  regulations, errors or malfunctions in GAIN Capital’s systems or technology, rapid changes in technology, effects of inflation, customer trading patterns, the success of our products and service offerings, our  ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate assets and companies we have acquired, our ability to effectively  compete, changes in tax policy or accounting rules, fluctuations in foreign exchange rates and commodity prices, adverse changes or volatility in interest rates, as well as general economic, business, credit and  financial market conditions, internationally or nationally, and our ability to continue paying a quarterly dividend in light of future financial performance and financing needs.  The forward‐looking statements  included herein represent GAIN Capital’s views as of the date of this release. GAIN Capital undertakes no obligation to revise or update publicly any forward‐looking statement for any reason unless required by  law. Non‐GAAP Financial Measures This presentation contains various non‐GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted EPS. These non‐GAAP financial measures have certain limitations, including that  they do not have a standardized meaning and, therefore, our definitions may be different from similar non‐GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to  compare our financial performance to that of other companies. We believe our reporting of these non‐GAAP financial measures assists investors in evaluating our historical and expected operating performance.  However, because these are not measures of financial performance calculated in accordance with GAAP, such measures should be considered in addition to, but not as a substitute for, other measures of our  financial performance reported in accordance with GAAP, such as net income. See the Appendix for a reconciliation of the non‐GAAP financial measures used herein to the most directly comparable GAAP  measure. 2


 
THIRD QUARTER 2019 REVIEW • Q3 2019 net revenue of $66.7 million, compared to $95.5 million in Q3 2018 • Q3 2019 net loss of $2.1 million, compared to net income of $10.0 million in Q3 2018 • Q3 2019 adjusted EBITDA of $6.0 million, compared to $30.5 million in Q3 2018 • Retail trailing 3‐month direct active accounts increased for a third consecutive quarter  • Marketing investment drove new direct account growth of 97% year‐over‐year and 32% quarter‐over‐quarter, positioning us  well for the return of normal market conditions • Pockets of volatility in US equity markets helped our Futures average daily contracts increase 24% over the prior year 3


 
OPERATING METRICS SHOWING POSITIVE SIGNS  FOR FUTURE ORGANIC GROWTH  New Direct Accounts1 Direct Volume per Active2 Increased 97% y/y and increased 32% q/q Decreased (6)% y/y and (5)% q/q •Upweighted marketing  investment in key markets  delivering direct new account  growth • Trailing 3‐month active  accounts improved 5% q/q 2 Trailing 3‐Month Active Accounts Volume Direct volume decreased (4)% y/y and flat q/q 1. New direct accounts are defined as organically acquired clients that opened an account during the corresponding period. By definition this figure will exclude the FXCM clients that were inorganically acquired in February 2017. 2. GVIX, GAIN’s volatility indicator, is a metric calculated daily by volume weighting the 5‐Day % average true ranges (ATR) of 6 of our major products (Dax, EUR/USD, GBP/USD, USD/JPY, Dow and Gold). The volume weights are based on the relative monthly volumes across these 6 markets. 4


 
ORGANIC GROWTH INITATIVES DRIVING ACTIVE ACCOUNT GROWTH  1 • Trailing 3‐month direct active accounts have improved  for three consecutive quarters • Q3'19 trailing 3‐month direct actives are now above  Q2'18 pre‐ESMA levels •Marketing efforts are helping to grow direct active  accounts despite the unusually low volatility  environment 1.Excludes acquired FXCM US accounts as these accounts are not impacted by increased marketing spend and are only expected to decrease. 5


 
BENEFITS FROM INCREASED MARKETING INVESTMENT Cost Efficient Acquisition  ROI Timeline on Track IRR Long Tail of Revenue After four quarters of  Expected payback period on  Three‐year IRR at current  49% of revenues from loyal clients  increased marketing spend, we  the new cohorts also well  marketing investment levels  with tenure of >3 years supported by  continue to track below our  within acceptable range at  continue to exceed  new client cohorts that are building  target cost per new account the higher investment levels expectations successfully and are expected to  while tracking well against new  deliver long tail revenue in the future client acquisition targets 2019 marketing spend trending close to ~$41 M, up approximately 16% year over year as we continue to  optimize our spend and take into account market conditions 1. 49% of total client transaction revenue for the first nine months of 2019 6


 
AI‐DRIVEN HEDGING MODEL PERFORMANCE Standard Deviation Comparison 0% •New hedging model continues to outperform our past  ‐5% approach to hedging activities as the result of our focus on  ‐10% leveraging data to drive more effective pricing and improved  ‐15% risk management ‐20% ‐25% • Standard deviation of daily revenue is more than 25% lower  ‐30% under the new model Sharpe Ratio1 Comparison 1 •Sharpe ratio is almost 50% higher compared to the old model 50% •Long‐term revenue capture expected to trend in line with  40% previous guidance of $106 RPM 30% 20% 10% 0% Q118 Q218 Q318 Q418 Q119 Q219 Q319 1. The Sharpe ratio is a measure of risk versus return, the higher the ratio the better the return per unit of risk. Calculated as daily revenue / standard deviation of revenue. 7


 
LONG‐TERM STRATEGIC PRIORITIES TO ACCELERATE ORGANIC GROWTH Data‐Driven Customization Increase  Leverage  Innovate the  Focus on  Marketing  Powerful Brand  Trading  Premium Clients Investment Assets Experience Supported by conversion  Target two distinct  Deliver best‐in‐class trading  Executed through our brand  optimization efforts to further  customer segments with  platforms, decision support  strategy & the development of  increase ROI on marketing  our global brands tools, and innovative new ways  product and services tailored to  spend to trade  experienced traders 8


 
Financial Review 9


 
KEY FINANCIAL RESULTS & OPERATING METRICS 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, $ Change 2019 2018 2019 2018 3 Months 9 Months Net revenue from continuing operations $ 66.7 $ 95.5 $ 180.6 $ 278.1 $ (28.8) $ (97.5) Operating expenses(3) (60.7) (65.0) (185.1) (196.8) 4.3 11.7 Adjusted EBITDA(1) from continuing operations $ 6.0 $ 30.5 $ (4.4) $ 81.3 $ (24.5) $ (85.7) Adjusted EBITDA margin % 9% 32% (2)% 29% (23%) (31%) Net (loss)/income from continuing operations $ (2.1) $ 10.0 $ (29.5) $ 28.7 $ (12.1) $ (58.2) Adjusted net (loss)/income(1) $ (2.8) $ 13.8 $ (28.7) $ 31.7 $ (16.6) $ (60.4) GAAP diluted EPS from continuing operations $ (0.06) $ 0.22 $ (0.79) $ 0.60 $ (0.28) $ (1.39) Adjusted diluted EPS(1) from continuing operations $ (0.07) $ 0.31 $ (0.77) $ 0.70 $ (0.38) $ (1.47) Operating Metrics(2) Retail OTC ADV (bns) $ 7.0 $ 7.8 $ 7.3 $ 10.3 $ (0.8) $ (3.0) Retail RPM $ 114 $ 164 $ 97 $ 121 $ (50) $ (24) Avg. daily futures contracts 31,895 25,748 30,720 31,149 6,147 (429) Futures RPC $ 4.59 $ 5.34 $ 4.78 $ 5.19 $ (0.75) $ (0.41) Note: Dollars in millions, except per share data. Columns may not add due to rounding. (1) This is a non‐GAAP financial measure. Please see the appendix to this presentation for a reconciliation to the corresponding GAAP financial measure. (2) Definitions for operating metrics are available in the appendix to this presentation. 10 (3) Operating Expenses excludes Depreciation and Amortization, Purchased Intangible Amortization, and certain one‐off costs.


 
OPERATING SEGMENT RESULTS: RETAIL Retail Financial & Operating Results •Market conditions saw quarterly ADV  3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 TTM 9/30/19 decrease 10% year‐over‐year to $7.0 billion  Trading revenue $ 52.8 $ 82.9 $ 137.5 $ 239.1 $ 198.6 •RPM of $114 for the quarter, slightly above  Other retail revenue 4.2 2.9 12.4 7.0 16.2 Total revenue $ 57.0 $ 85.9 $ 149.9 $ 246.1 $ 214.8 our long‐term expectation, and below Q3'18  RPM of $164 Employee compensation and benefits 12.5 14.4 39.0 43.4 51.0 Selling and marketing 10.2 10.0 30.0 22.1 43.2 • Combined impact of ADV and RPM saw Q3'19  Referral fees 4.6 5.3 13.4 20.0 20.2 total retail revenue 34% lower year‐over‐year Other operating expenses 17.3 17.2 51.7 53.2 71.2 Segment Profit $ 12.4 $ 39.0 $ 15.9 $ 107.3 $ 29.1 •Marketing investment up 36% for the first  Margin % 22% 45% 11% 44% 14% nine months of 2019 as compared to prior  year period Operating Metrics ADV (bns) $ 7.0 $ 7.8 $ 7.3 $ 10.3 $ 7.9 •Overheads1 for the quarter and YTD were both  12 month trailing active OTC accounts 118,751 129,182 118,751 129,182 118,751 down 6% compared to prior year Client assets $ 633.0 $ 663.8 $ 633.0 $ 663.8 $ 633.0 RPM $ 114 $ 164 $ 97 $ 121 $ 97 1. Overheads defined as employee compensation and benefits plus other operating expenses.  Note:  Dollars in millions, except where noted otherwise.  Columns may not add due to rounding. 11


 
OPERATING SEGMENT RESULTS: FUTURES Futures Financial & Operating Results • Futures average daily contracts were up 24%  3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 TTM 9/30/19 to 31,895 during Q3'19 Trading revenue $ 9.4 $ 8.7 $ 27.6 $ 30.4 $ 36.9 Other futures revenue 1.2 1.1 4.1 2.9 5.4 • Revenue per contract decreased to $4.59 due  Total revenue $ 10.6 $ 9.7 $ 31.7 $ 33.3 $ 42.3 to a shift in product mix Employee compensation and benefits 2.5 2.4 7.5 7.8 9.5 Selling and marketing 0.2 0.2 0.6 0.6 0.8 1  Referral fees 3.0 2.8 8.8 10.0 12.0 •Overheadsfor YTD were 4% lower over the  Other operating expenses 3.3 3.0 9.9 10.4 13.5 prior year period Segment Profit $ 1.7 $ 1.3 $ 4.8 $ 4.5 $ 6.5 Margin % 16% 13% 15% 14% 15% • YTD profit margin improved slightly to 15%  Operating Metrics and Q3'19 profit margin improved to 16%  Avg. daily contracts 31,895 25,748 30,720 31,149 31,289 12 month trailing active futures accounts 7,406 7,550 7,406 7,550 7,406 Client assets $ 216.8 $ 223.5 $ 216.8 $ 223.5 $ 216.8 Revenue/contract $ 4.59 $ 5.34 $ 4.78 $ 5.19 $ 4.68 1. Overheads defined as employee compensation and benefits plus other operating expenses.  Note:  Dollars in millions, except where noted otherwise.  Columns may not add due to rounding. 12


 
STRONG LIQUIDITY POSITION Cash and cash equivalents of $200.7 million1 at the end of Q3 2019 Liquidity Broker receivables increased to $107.7 million in Q3 2019 from $57.5 million  in Q3 2018  Quarterly dividend of $0.06 per share approved ▪ Record date: December 10, 2019 Quarterly Dividends ▪ Payment date: December 17, 2019 Liquidity: $200.7 million1 While GAIN did not repurchase shares during Q3 2019, we remain  Buyback Program committed to actively returning capital to shareholders Approximately $41 million authorized and remaining for additional  repurchases as of September 30, 2019 Eleven transactions since IPO in 2010  Corporate  Well positioned to pursue selective transactions that provide geographic  Development or product expansion 1. Cash and cash equivalents as presented on the Balance Sheet and Liquidity pages in the appendix. 13


 
POSITIONED TO DELIVER LONG‐TERM VALUE Proven Leader in a Large, Attractive and Growing Market Diverse and Scalable Business Model Multiple Levers to Drive Growth and  Operational Efficiency Risk Management Controls Limit  Market Volatility Headwinds Strong Financial and Credit Profile 14


 
Appendix 15


 
2021 OPERATING AND FINANCIAL TARGETS FY 2018 Performance FY 2021 Outlook Operational New Direct Accounts 87.6K 38% to 42% growth Retail Volume $2.6 trillion 30% to 35% growth Financial Revenue1 $358 million $420 to $460 million Overhead Costs $190 million $190 to $200 million EBITDA Margin 24% 30% to 35% EPS $0.60 $2.15 to $2.40 1. Assumes long‐term average RPM of $106 16


 
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 REVENUE Retail revenue $ 52.8 $ 82.9 $ 137.5 $ 239.1 Futures revenue 9.4 8.7 27.6 30.4 Other revenue 0.8 1.2 4.3 1.7 Total non‐interest revenue 62.9 92.8 169.4 271.2 Interest revenue 4.3 3.3 13.1 8.2 Interest expense 0.6 0.5 1.8 1.3 Total net interest revenue 3.8 2.8 11.3 6.9 Net revenue $ 66.7 $ 95.5 $ 180.6 $ 278.1 EXPENSES Employee compensation and benefits 19.3 22.9 62.2 69.7 Selling and marketing 10.4 10.2 30.7 23.0 Referral fees 7.6 8.1 22.2 30.0 Trading expenses 5.2 5.8 16.1 17.1 General and administrative 13.3 12.2 37.8 38.9 Depreciation and amortization 4.1 4.7 12.8 15.4 Purchased intangible amortization 1.8 3.5 7.0 10.8 Communications and technology 4.4 5.5 14.9 16.4 Bad debt provision 0.5 0.3 1.4 1.7 Contingent provision 0.0 5.0 0.0 5.0 Impairment of investment 0.0 0.0 0.0 (0.1) Total operating expenses 66.6 78.2 205.0 227.9 OPERATING PROFIT/(LOSS) $ 0.1 $ 17.3 $ (24.4) $ 50.2 Interest expense on long term borrowings 3.4 3.4 10.1 10.1 (LOSS)/INCOME BEFORE INCOME TAX  $ (3.3) $ 13.9 $ (34.5) $ 40.1 Income tax (benefit)/expense (1.2) 4.0 (5.0) 11.4 NET (LOSS)/INCOME FROM CONTINUING OPERATIONS $ (2.1) $ 10.0 $ (29.5) $ 28.7 Income from discontinued operations 0.0 2.3 0.0 67.3 NET (LOSS)/INCOME $ (2.1) $ 12.3 $ (29.5) $ 96.0 Net income attributable to non‐controlling interests 0.0 0.1 0.0 0.6 NET (LOSS)/INCOME APPLICABLE TO GAIN CAPITAL HOLDINGS, INC. $ (2.1) $ 12.2 $ (29.5) $ 95.4 Note: Dollars in millions, except share and per share data. Columns may not add due to rounding. (1) Total shares outstanding at September 30, 2019 was 37,419,981  17


 
CONDENSED CONSOLIDATED BALANCE SHEET As of 9/30/2019 12/31/2018 ASSETS: Cash and cash equivalents $ 200.7 $ 278.9 Cash and securities held for customers 849.8 842.5 Receivables from brokers 107.7 84.3 Property and equipment, net 28.8 30.6 Intangible assets, net 24.5 32.2 Goodwill 27.5 27.8 Other assets 49.0 36.4 Total assets $ 1,288.0 $ 1,332.5 LIABILITIES AND SHAREHOLDERS' EQUITY: Payables to customers $ 849.8 $ 842.5 Payables to brokers 2.5 1.6 Accrued compensation and benefits 5.4 11.2 Accrued expenses and other liabilities 37.6 41.6 Income tax payable 2.7 5.8 Convertible senior notes 136.9 132.1 Total liabilities $ 1,035.0 $ 1,034.8 Shareholders' Equity 253.0 297.8 Total liabilities and shareholders' equity $ 1,288.0 $ 1,332.5 Note: Dollars in millions. Columns may not add due to rounding. 18


 
LIQUIDITY $m Q3 19 Q2 19 Q1 19 Q4 18 TTM Cash & Equivalents Prior Period $ 208.5 $ 218.0 $ 278.9 $ 362.3 $ 362.3 EBITDA $ 6.0 $ 13.0 $ (23.5) $ 5.2 $ 0.7 Capital expenditures (4.8) (4.0) (3.1) (3.3) $ (15.2) Tax and convertible interest (4.3) (2.5) (7.8) (1.4) $ (16.0) Dividends, buybacks and convertibles (2.2) (5.0) (6.5) (10.6) $ (24.3) Corporate activity 0.0 0.0 (2.4) (50.0) $ (52.4) Receivable from brokers 3.2 (12.2) (14.4) (26.8) $ (50.2) Working capital (5.7) 1.2 (3.2) 3.4 $ (4.3) Total Cash (Outflow)/Inflow $ (7.8) $ (9.5) $ (60.9) $ (83.5) $ (161.7) Cash & Equivalents Current Period $ 200.7 $ 208.5 $ 218.0 $ 278.9 $ 200.7 Note: Dollars in millions. Columns may not add due to rounding. 19


 
GROUP ADJUSTED EBITDA & ADJUSTED NET INCOME Continuing Operations 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 Net revenue $ 66.7 $ 95.5 $ 180.6 $ 278.1 Operating expenses: Employee compensation and benefits $ 19.3 $ 22.9 $ 62.2 $ 69.7 Selling and marketing 10.4 10.2 30.7 23.0 Referral fees 7.6 8.1 22.2 30.0 Trading expenses 5.2 5.8 16.1 17.1 General and administrative(1) 13.3 12.2 37.6 38.9 Communication and technology 4.4 5.5 14.9 16.4 Bad debt provision 0.5 0.3 1.4 1.7 Total operating expenses 60.7 65.0 185.1 196.8 Adjusted EBITDA 6.0 30.5 (4.4) 81.3 Margin % 9% 32% (2)% 29% Depreciation and amortization $ 4.1 $ 4.7 $ 12.8 $ 15.4 Purchased intangible amortization 1.8 3.5 7.0 10.8 Interest expense on long term borrowings 3.4 3.4 10.1 10.1 Adjusted Pre‐Tax (Loss)/Income (3.3) 18.9 (34.3) 45.0 Adjusted income tax benefit/(expense) 0.5 (5.0) 5.6 (12.6) Non‐controlling interest 0.0 (0.1) 0.0 (0.6) Adjusted Net (Loss)/Income $ (2.8) $ 13.8 $ (28.7) $ 31.7 Note: Dollars in millions. Columns may not add due to rounding. (1) Excludes a contingent provision of $0.2 million for the nine months 2019, which is a one‐off cost to arrive at adjusted EBITDA. 20


 
ADJUSTED EBITDA & MARGIN RECONCILIATION  Continuing Operations 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 Net Revenue $ 66.7 $ 95.5 $ 180.6 $ 278.1 Net (Loss)/Income (2.1) 10.0 (29.5) 28.7 Net (Loss)/Income Margin %(3)%10%(16)%10% Net (Loss)/Income $ (2.1) $ 10.0 $ (29.5) $ 28.7 Depreciation and amortization 4.1 4.7 12.8 15.4 Purchase intangible amortization 1.8 3.5 7.0 10.8 Interest expense on long term borrowings 3.4 3.4 10.1 10.1 Income tax (benefit)/expense (1.2) 4.0 (5.0) 11.4 Contingent provision 0.0 5.0 0.2 5.0 Impairment of investment 0.0 0.0 0.0 (0.1) Adjusted EBITDA $ 6.0 $ 30.5 $ (4.4) $ 81.3 Adjusted EBITDA Margin %(1) 9% 32% (2)%29% Note: Dollars in millions. Columns may not add due to rounding. (1) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenue. 21


 
ADJUSTED NET INCOME AND EPS RECONCILIATION Continuing Operations 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 Net (loss)/income $ (2.1) $ 10.0 $ (29.5) $ 28.7 Income tax (benefit)/expense (1.2) 4.0 (5.0) 11.4 Pre‐tax (loss)/income $ (3.3) $ 13.9 $ (34.5) $ 40.1 Adjustments: Contingent provision 0.0 5.0 0.2 5.0 Impairment of investment 0.0 0.0 0.0 (0.1) Adjusted pre‐tax (loss)/income $ (3.3) $ 18.9 $ (34.3) $ 45.0 Adjusted income tax (1) 0.5 (5.0) 5.6 (12.6) Non‐controlling interest 0.0 (0.1) 0.0 (0.6) Adjusted net (loss)/income $ (2.8) $ 13.8 $ (28.7) $ 31.7 Adjusted (loss)/earnings per Common Share: Basic $ (0.07) $ 0.31 $ (0.77) $ 0.71 Diluted $ (0.07) $ 0.31 $ (0.77) $ 0.70 Weighted average common shares outstanding used in  computing adjusted (loss)/earnings per common share: Basic 37,404,223 44,553,903 37,371,676 44,787,875 Diluted 37,404,223 44,984,721 37,371,676 45,270,797 Note: Dollars in millions, except per share and share data. Columns may not add due to rounding. (1) The company’s forecast tax rate reconciliation is included in this presentation. 22


 
ADJUSTED INCOME TAX BENEFIT/(EXPENSE) RECONCILIATION 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 GAAP pre‐tax (loss)/income $ (3.3) $ 13.9 $ (34.5) $ 40.1 GAAP tax rate 14.5% 28.4% 14.5% 28.4% Initial adjusted tax benefit/(expense) 0.5 (4.0) 5.0 (11.4) Uncertain tax position 0.0 0.0 0.2 (0.2) One off adjustments 0.0 (1.0) (0.1) (1.0) Basis adjustment 0.0 0.0 0.5 0.0 Adjusted tax benefit/(expense) $ 0.5 $ (5.0) $ 5.6 $ (12.6) Adjusted pre‐tax (loss)/income $(3.3) $ 18.9 $ (34.3) $ 45.0 Adjusted tax rate 14.5% 26.4% 16.4% 28.1% Note: Dollars in millions, except per share and share data. Columns may not add due to rounding. 23


 
EPS COMPUTATION 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 Net (loss)/income from continuing operations $ (2.1) $ 10.0 $ (29.5) $ 28.7 Less income attributable to non‐controlling interests 0.0 0.1 0.0 0.6 Net (loss)/income from continuing operations $ (2.1) $ 9.8 $ (29.5) $ 28.1 Adjustment(1) 0.0 0.0 0.0 (0.9) Net (loss)/income available to GAIN common shareholders from continuing operations $ (2.1) $ 9.8 $ (29.5) $ 27.2 (Loss)/Earnings per common share Basic (loss)/earnings from continuing operations $ (0.06) $ 0.22 $ (0.79) $ 0.61 Diluted (loss)/earnings from continuing operations $ (0.06) $ 0.22 $ (0.79) $ 0.60 Weighted average common shares outstanding used in computing (loss)/earnings per common  share: Basic 37,404,223 44,553,903 37,371,676 44,787,875 Diluted 37,404,223 44,984,721 37,371,676 45,270,797 Note: Dollars in millions, except per share and share data. Columns may not add due to rounding. (1) The adjustment relates to the Company's redeemable non‐controlling interests. An increase to the carrying value reduces earnings available to the Company's shareholders. A decrease to the carrying value increases earnings available to the Company's shareholders. 24


 
RECONCILIATION OF SEGMENT PROFIT TO INCOME BEFORE INCOME TAX EXPENSE 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 Retail segment $ 12.4 $ 39.0 $ 15.9 $ 107.3 Futures segment 1.7 1.3 4.8 4.5 Corporate and other (8.1) (9.8) (25.3) (30.5) Segment profit/(loss) $ 6.0 $ 30.5 $ (4.6) $ 81.3 Depreciation and amortization $ 4.1 $ 4.7 $ 12.8 $ 15.4 Purchased intangible amortization 1.8 3.5 7.0 10.8 Contingent provision 0.0 5.0 0.0 5.0 Impairment of investment 0.0 0.0 0.0 (0.1) Operating profit/(loss) $ 0.1 $ 17.3 $ (24.4) $ 50.2 Interest expense on long term borrowings 3.4 3.4 10.1 10.1 (Loss)/Income before income tax (benefit)/expense $ (3.3) $ 13.9 $ (34.5) $ 40.1 Note: Dollars in millions. Columns may not add due to rounding. 25


 
PRO FORMA RECONCILIATION Q1 2018 Q2 2018 Q3 2018 GAIN Inst Cont Ops GAIN Inst Cont Ops GAIN Inst Cont Ops REVENUE: Retail revenue $ 84.1 $ 0.0 $ 84.1 $ 72.0 $ 0.0 $ 72.0 $ 82.9 $ 0.0 $ 82.9 Institutional revenue 8.5 8.5 0.0 7.9 7.9 0.0 0.0 0.0 0.0 Futures revenue 10.6 0.0 10.6 11.1 0.0 11.1 8.7 0.0 8.7 Interest and other revenue 3.6 0.0 3.6 1.1 0.1 1.0 4.0 0.0 4.0 Net revenue $ 106.9 $ 8.5 $ 98.5 $ 92.2 $ 8.0 $ 84.2 $ 95.5 $ 0.0 $ 95.5 EXPENSES: Employee compensation and benefits 27.8 3.4 24.3 24.9 2.5 22.5 22.9 0.1 22.8 Selling and marketing 6.0 0.1 6.0 6.8 0.0 6.8 10.2 0.0 10.2 Referral fees 11.9 0.5 11.4 11.0 0.5 10.5 8.1 0.0 8.1 Trading expenses 8.5 2.7 5.8 8.3 2.8 5.5 5.8 0.0 5.8 General and administrative 13.0 0.5 12.5 14.8 0.5 14.2 12.2 0.0 12.2 Depreciation and amortization 5.7 0.3 5.4 5.4 0.1 5.3 4.7 0.0 4.7 Purchased intangible amortization 4.2 0.5 3.7 4.0 0.4 3.6 3.5 0.0 3.5 Communications and technology 5.5 0.1 5.4 5.6 0.1 5.5 5.5 0.0 5.5 Bad debt provision 1.1 0.0 1.1 0.3 0.0 0.3 0.3 0.0 0.3 Restructuring expenses 0.0 0.0 0.0 0.2 0.2 0.0 0.0 0.0 0.0 Contingent provision 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 5.0 Impairment of investment (0.1) 0.0 (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 Total expenses 83.6 8.1 75.4 81.3 7.1 74.2 78.2 0.1 78.1 OPERATING PROFIT/(LOSS) $ 23.3 $ 0.4 $ 22.9 $ 10.9 $ 0.9 $ 10.0 $ 17.3 $ (0.1) $ 17.4 Interest expense on long term borrowings 3.3 0.0 3.3 3.4 0.0 3.4 3.4 0.0 3.4 INCOME/(LOSS) BEFORE INCOME TAX $ 20.0 $ 0.4 $ 19.6 $ 7.5 $ 0.9 $ 6.6 $ 13.9 $ (0.1) $ 13.9 Note: Dollars in millions. Columns may not add due to rounding. Q3 2019 not presented as there are no discontinued operations. 26


 
DISCONTINUED OPERATIONS 3 Months Ended Sept.30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 REVENUE: Institutional revenue $ 0.0 $ 0.0 $ 0.0 $ 16.4 Total non‐interest revenue 0.0 0.0 0.0 16.4 Interest revenue 0.0 0.0 0.0 0.1 Total net interest revenue  0.0 0.0 0.0 0.1 Net revenue $ 0.0 $ 0.0 $ 0.0 $ 16.5 EXPENSES: Employee compensation and benefits $ 0.0 $ 0.1 $ 0.0 $ 6.0 Trading expenses  0.0 0.0 0.0 5.4 Other expenses 0.0 0.0 0.0 4.0 Total operating expense  0.0 0.1 0.0 15.4 OPERATING (LOSS)/PROFIT 0.0 (0.1) 0.0 1.1 Gain on sale of discontinued operations 0.0 (0.1) 0.0 69.4 (LOSS)/INCOME BEFORE INCOME TAX BENEFIT 0.0 (0.3) 0.0 70.6 Income tax (benefit)/expense 0.0 (2.6) 0.0 3.2 NET INCOME FROM DISCONTINUED OPERATIONS $ 0.0 $ 2.3 $ 0.0 $ 67.3 Note: Dollars in millions. Columns may not add due to rounding. 27


 
RETAIL REVENUE PER MILLION 28


 
OPERATING SEGMENT RESULTS: CORPORATE & OTHER Corporate & Other Financial & Operating Results 3 Months Ended Sept. 30, 9 Months Ended Sept. 30, 2019 2018 2019 2018 TTM 9/30/19 Other loss $ (0.9) $ (0.1) $ (0.9) $ (1.3) $ (2.0) Employee compensation and benefits 4.3 6.1 15.7 18.4 21.0 Selling and marketing 0.0 0.1 0.0 0.2 0.1 Other operating expenses 2.8 3.6 8.6 10.6 11.9 Loss $ (8.1) $ (9.8) $ (25.3) $ (30.5) $ (35.0) Note:  Dollars in millions, except where noted otherwise.  Columns may not add due to rounding. 29


 
QUARTERLY OPERATING METRICS Three Months Ended, Sep‐18 Dec‐18 Mar‐19 Jun‐19 Sep‐19 Retail Segment OTC Trading Volume (1)(2) $ 506.5 $ 631.0 $ 487.3 $ 464.3 $ 463.1 OTC Average Daily Volume $ 7.8 $ 9.7 $ 7.7 $ 7.1 $ 7.0 12 Month Trailing Active OTC Accounts (3) 129,182 123,171 120,641 118,320 118,751 3 Month Trailing Active OTC Accounts (3) 71,597 68,696 70,051 69,556 72,909 Futures Segment Number of Futures Contracts 1,622,114 2,109,516 1,755,873 1,978,251 2,041,253 Futures Average Daily Contracts 25,748 32,961 28,785 31,401 31,895 12 Month Trailing Active Futures Accounts (3) 7,550 7,717 7,387 7,406 7,406 1 US dollar equivalent of notional amounts traded.  2 For the quarter, indirect volume represented 21% of total retail OTC trading volume. 3 Accounts that executed a transaction during the relevant period. Note: Retail volumes in billions. Definitions for all operating metrics are available elsewhere in this presentation. 30


 
OPERATING METRICS 31


 
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 from open positions 32