PLANTATION, Fla., Feb. 19, 2008 (PRIME NEWSWIRE) -- TradeStation Group, Inc. (Nasdaq:TRAD) today reported, for the year ended December 31, 2007, record annual net revenues of $151.6 million, an 18% year-over-year increase, record net income of $35.4 million, a 14% year-over-year increase, and record earnings per share (diluted) of 78 cents, a 16% year-over-year increase, as compared to annual net revenues of $128.5 million, net income of $31.0 million and earnings per share (diluted) of 67 cents for the year ended December 31, 2006.
For the 2007 fourth quarter, the Company reported net revenues of $40.2 million, net income of $9.3 million and earnings per share (diluted) of 21 cents, as compared to net revenues of $34.5 million, net income of $8.6 million and earnings per share (diluted) of 19 cents for the 2006 fourth quarter. The company also reported record brokerage commissions and fees of $27.6 million and record daily average revenue trades (DARTs) of 90,224 for the fourth quarter of 2007, as compared to brokerage commissions and fees of $21.0 million and DARTs of 62,821 for the fourth quarter of 2006, a 32% and 44% year-over-year increase, respectively.
"2007 was an important year for the company," said Salomon Sredni, Chief Executive Officer of TradeStation Group. "We further enhanced what we believe to be the best electronic trading platform offered to the active trader market by adding seamless automated strategy trading of the spot forex markets, and added fundamental data to the vast historical market database we provide to all TradeStation customers. We now offer our cutting-edge trading platform for stocks, ETFs, equity and index options, electronic futures contracts and forex. We believe the appeal of rule-based trading, which is at the core of our unique offering to investors, has huge potential and will continue to grow."
TradeStation Reports Record DARTs and Total Accounts
For the 2007 fourth quarter, TradeStation experienced the following year-over-year daily trading growth results with respect to equities, futures and forex accounts:
Q4 07 Q4 06 % Increase
------ ------ ----------
Daily Average Revenue Trades 90,224 62,821 44%
The company also published today, in a separate announcement, its DARTs, Total Client Assets, Average Equities Client Credit Balances and Average Equities Client Margin Balances for the month of January 2008.
TradeStation had 36,736 brokerage accounts at December 31, 2007, a 17% increase from December 31, 2006.
TradeStation's Average Client Trades 632 Times per Year and Has an Average Account Balance of $79,000 for Equities and $19,000 for Futures
TradeStation's brokerage client account metrics are among the very best in the industry. TradeStation brokerage clients generated the following client account metrics in the 2007 fourth quarter:
Client Trading Activity -------------------------------------- Annualized average revenue per account $4,154 Annualized trades per account 632 Client Account Assets ------------------------------------- Average assets per account (Equities) $79,000 Average assets per account (Futures) $19,000
While, on an annualized basis during the 2007 fourth quarter, the average TradeStation account traded 632 times per year, or 53 times per month, the average TD Ameritrade and E-Trade account traded about 12 to 15 times per year, or slightly more than 1 time per month. Also, TradeStation's average assets per equities account were substantially higher than the average assets per account of TD Ameritrade and E-Trade.
Company Purchases 303,000 Shares under Stock Buy Back Plan
In the 2007 fourth quarter, the company purchased 303,000 shares of its common stock pursuant to its stock buy back plan for a total purchase price of $3.7 million. Since buying under the plan began November 13, 2006, through December 31, 2007 the company has purchased 1,376,465 shares for a total purchase price of $17.0 million.
Under the stock buy back plan, the company is authorized, over a 4-year period, to purchase up to $60 million of its common stock using available and unrestricted cash in the open market or through privately-negotiated transactions pursuant to one or more Rule 10b5-1 plans or programs. Pursuant to the plan, $1,250,000 of company cash per month during each month of the 4-year period (i.e., $15 million per 12-month period and $60 million for the 4-year period) has been authorized to be used to purchase company shares at prevailing prices, subject to compliance with applicable securities laws, rules and regulations, including Rules 10b5-1 and 10b-18. The buy back plan does not obligate the company to acquire any specific number of shares in any period, and may be modified, suspended, extended or discontinued at any time without prior notice.
Company Provides 2008 Business Outlook
TradeStation today also published its 2008 Business Outlook.
"We continue to be optimistic about customer account growth and increasing brokerage commissions and fees," said David Fleischman, Chief Financial Officer of TradeStation Group. "However, given the substantial decrease in the federal funds target rate of interest in January 2008, and the possibility that more decreases will follow later this year, many in the brokerage industry, including TradeStation, which derive a sizeable portion of revenues from interest income on customer balances and borrowings, face a challenge. The revenue impact from decreases in the federal funds target rate of interest is expected to be substantial in 2008 (as compared to 2007). So far, this impact has been partially offset by net account growth and higher trade volume from our customer account base."
The company's first quarter and full-year 2008 Business Outlook estimated ranges are as follows:
2008 BUSINESS OUTLOOK
(In Millions, Except Per Share Data)
First Quarter 2008 Full-year 2008
------------------ ------------------
REVENUES $39.0 to $42.0 $158.0 to $177.0
EARNINGS
PER SHARE (Diluted) $0.16 to $0.19 $0.69 to $0.86
The company's 2008 first quarter and full-year estimated ranges are based on numerous assumptions, including: basing the midpoints of the ranges, in part, on average daily revenue per account for each asset class (equities, futures, forex) over the 4-month period ended January 31, 2008 (after reducing January 2008 equities revenue per account by 10%), such four-month period being one of higher market volatility as measured by the CBOE Volatility Index (the period used and the formula and criteria applied often vary with each Business Outlook based upon management's judgment each period concerning the best assumptions to use); another reduction in the federal funds target rate of interest of 25 basis points in March 2008, another 25-basis-point reduction in June 2008, and no further reductions, or increases, for the remainder of 2008; the rate of growth and impact of new forex accounts and trading activity; anticipated growth and trading activity of active trader equities and futures accounts; the timing of expenses relating to company growth initiatives as compared to the timing of anticipated benefits from those initiatives; and numerous other assumptions concerning the company's business and industry, market conditions, and various decisions, acts or failures to act both within and outside of the company's control. All assumptions, expectations and beliefs relating to the Business Outlook are forward-looking in nature and actual results may differ materially from those estimated, including, but not limited to, as a result of, or as indicated by, the issues, uncertainties and risk factors set forth and referenced above and below. In particular, to the extent market volatility moves to significantly higher or lower levels, net account growth increases or decreases, and/or the federal funds target rate of interest is higher or lower than what has been assumed, the results estimated in the Business Outlook will likely be materially different than actual results.
Conference Call/Webcast
At 11:00 a.m. Eastern Time today, the senior management of TradeStation Group will conduct an analyst conference call to discuss the company's 2007 fourth quarter and year-end results and its 2008 Business Outlook. All company shareholders and the public are invited to listen. The telephone conference will be broadcast live via the Internet at www.TradeStation.com. The live webcast will be accompanied by slides of graphs and charts. A rebroadcast of the call will be accessible for approximately 90 days.
About TradeStation Group, Inc.
TradeStation Group, Inc. (Nasdaq:TRAD), through its principal operating subsidiary, TradeStation Securities, Inc., offers the TradeStation platform to the active trader and certain institutional trader markets. TradeStation is an electronic trading platform that offers state-of-the-art "direct market access" (DMA) or "direct-access" order execution and enables clients to design, test, optimize, monitor and automate their own custom Equities, Options, Futures and Forex trading strategies.
TradeStation Securities, Inc. (Member NYSE, FINRA, SIPC, NSCC, DTC, OCC & NFA) is a licensed securities broker-dealer and a registered futures commission merchant, and also a member of the American Stock Exchange, Boston Options Exchange, Chicago Board Options Exchange, Chicago Stock Exchange, International Securities Exchange, NYSE ARCA and Philadelphia Stock Exchange. The company's technology subsidiary, TradeStation Technologies, Inc., develops and offers strategy trading software tools and subscription services. Its London-based subsidiary, TradeStation Europe Limited, an FSA-authorized brokerage firm, introduces UK and other European accounts to TradeStation Securities.
Forward-Looking Statements -- Issues, Uncertainties and Risk Factors
This press release, including the 2008 first quarter and full year Business Outlook estimated ranges contained in this press release, and today's earnings conference call, contain statements and estimates that are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this press release, or the conference call, the words "anticipate(s)," "anticipated," "anticipation," "assume(s)," "assumption(s)," "become(s)," "belief(s)," "believe(s)," "believed," "could," "designed," "estimate," "estimates," "estimated," "expect(s)," "expected," "expectation(s)," "going forward," "future," "hopeful," "hope(s)," "intend(s)," "intended," "look forward," "may," "might," "opportunity," "opportunities," "outlook(s)," "pending," "plan(s)," "planned," "potential," "scheduled," "shall," "should," "think(s)," "to be," "upcoming," "well-positioned," "will," "wish," "would," and similar expressions, if and to the extent used, are intended to identify forward-looking statements. All forward-looking statements are based largely on current expectations and beliefs concerning future events that are subject to substantial risks and uncertainties. Actual results may differ materially from the results herein suggested or suggested in the conference call. Factors that may cause or contribute to the various potential differences include, but are not limited to, the following:
-- changes in the condition of the securities and futures markets,
including, but not limited to, changes in the combined average
volume of the major U.S. equities and futures exchanges and in
market volatility, which tend to significantly affect customer
trading volume at TradeStation (for example, increased market
volatility in the second half of 2007 helped generate a
significant increase in client trading volume), or recession,
which, if it is occurring or occurs, may result in lower customer
trading volume;
-- further changes in the federal funds target rate of interest that
are inconsistent with, or different from, the company's
assumptions (the federal funds target rate of interest determines
the amount of interest income received on customer account
balances and affects the rates charged for account borrowings);
-- the company's ability (or lack thereof), based upon market
conditions, the level of success of its marketing and product
development and enhancement efforts, product and service quality
and reliability, competition (including both price and quality-of-
offering competition, which are intense) and other factors, to
achieve significant, or any, net increases in DARTs, brokerage
accounts and brokerage revenues sequentially or year over year
(for example, TradeStation's DARTs decreased sequentially from
second to third quarter in 2004 and in 2006, and net revenues
decreased sequentially from second to third quarter 2006, and
these items may decrease sequentially or year over year in
subsequent periods);
-- with respect to net new customer accounts, the company's ability
(or lack thereof) to maintain or increase the rate of quarterly
gross account additions and to continue to reduce the rate of
quarterly account attrition (which has risen in recent quarters
but then declined in the 2007 fourth quarter), which may not be
successful despite the company's recent and planned efforts to
improve sales, marketing and customer service and retention
methods and practices, and despite the reduction in attrition in
the 2007 fourth quarter as compared to the 2007 third quarter and
the company's expectations that attrition will continue to
decrease in first and second quarter of 2008;
-- the level of success of the company's upgrade of its forex trading
offering launched in July 2007, and whether customer forex trading
will increase to become a material part of the Company's business
and revenues;
-- the effect of changes in product mix (how much of customer trading
volume is stocks versus equity options versus futures versus
forex, etc.), which can affect our revenues, net income and
margins, even if overall volume remains the same;
-- rule-based trading not growing in appeal to the extent the Company
believes it will;
-- unanticipated infrastructure, capital or other large expenses, and
unforeseen or unexpected liabilities and claims, the company may
face as it seeks to grow its U.S. active trader market share in
equities, futures and forex business, and its institutional and
non-U.S. trader market businesses (the company has no significant
prior experience with forex, institutional and non-U.S. trader
marketing, sales or product development operations), including
potential acquisition or business combination risks, costs and
expenses (such as professional fees and, in the case of an
acquisition, amortization expense) incurred in the event the
company acquires or combines with other businesses;
-- the effect of unanticipated increased infrastructure costs that
may be incurred as the company seeks to increase its product
development headcount and resources (which it intends to do as
quickly as possible in 2008) and grows its brokerage firm
operations, adds accounts and introduces and expands existing and
new product and service offerings, or acquires other businesses;
-- technical difficulties, outages, errors or failures in the
company's electronic and software products, services and systems
relating to market data, order execution and trade processing and
reporting, and other software or system errors and failures, some
of which have occurred as recently as December 2007 and January
2008 (also, the company does not maintain a seamless, redundant
back-up system to its order execution systems, which could
materially intensify the negative consequences of any such
difficulties, outages, errors or failures);
-- unauthorized intrusion and criminal activity in customer accounts
by persons who unlawfully access customer accounts and then place
orders or other transactions in those accounts (the company has
recently experienced these types of occurrences, and has taken
measures and is in the process of completing measures to limit or
prevent future occurrences, but no assurance can be made that any
such measures taken by the company will be successful or that
future occurrences will not result in substantial account losses
that will ultimately be borne by the company);
-- a pending NASD matter concerning failure to transmit short sale
position reports for several months after the conversion to self-
clearing operations in 2004, which could result in fines,
sanctions and/or other negative consequences;
-- the amount of unexpected legal, consultation and professional fees
(including pending and future regulatory matters, lawsuits or
other proceedings against the company, or potential business
combinations or strategic relationships);
-- the frequency and size of, and ability to collect, unsecured
client account debits as a result of volatile market movements in
concentrated positions held in client accounts or as a result of
other high-risk positions or circumstances;
-- the company's estimated earnings per share (diluted) being based
on assumptions of a certain number of outstanding shares and an
average stock price for particular time periods that turn out to
be inaccurate (if the number of outstanding shares and/or the
average stock price is actually higher than what has been assumed,
there will be more dilution and the actual earnings per share
would be lower);
-- the general variability and unpredictability of operating results
forecast on a quarterly or annual basis; and
-- other items, events and unpredictable costs or revenue impact
items or events that may occur, and other issues, risks and
uncertainties indicated from time to time in the company's filings
with the Securities and Exchange Commission, including, but not
limited to, the company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2006, Quarterly Reports on Form
10-Q during 2007, and other company SEC filings and company press
releases, conference calls and other public presentations or
statements.
CONTACT: David H. Fleischman
Chief Financial Officer
TradeStation Group, Inc.
954-652-7000
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(Unaudited)
REVENUES:
Brokerage
commissions
and fees $27,604,198 $20,972,667 $99,944,836 $78,828,740
Interest income 11,713,011 12,265,813 47,924,682 44,586,720
Brokerage
interest expense 1,402,089 1,214,546 5,120,479 4,634,946
----------- ----------- ----------- -----------
Net interest
income 10,310,922 11,051,267 42,804,203 39,951,774
Subscription fees 1,973,573 2,120,946 7,948,132 8,583,761
Other 281,330 348,809 858,087 1,180,930
----------- ----------- ----------- -----------
Net revenues 40,170,023 34,493,689 151,555,258 128,545,205
----------- ----------- ----------- -----------
EXPENSES:
Employee
compensation
and benefits 8,304,679 7,637,284 34,179,022 29,379,209
Clearing
and execution 8,492,415 6,997,769 32,261,964 26,107,369
Data centers and
communications 2,818,940 1,677,137 8,186,036 6,452,997
Advertising 1,431,135 1,134,466 5,586,787 4,314,691
Professional
services 1,040,279 1,131,455 3,270,664 3,410,888
Occupancy
and equipment 716,812 645,894 2,802,375 2,548,575
Depreciation
and amortization 1,010,889 785,456 4,008,676 2,507,916
Other 1,535,547 871,527 5,160,946 3,853,965
----------- ----------- ----------- -----------
Total
expenses 25,350,696 20,880,988 95,456,470 78,575,610
----------- ----------- ----------- -----------
Income before
income taxes 14,819,327 13,612,701 56,098,788 49,969,595
INCOME TAX
PROVISION 5,500,275 5,025,414 20,728,118 18,950,719
----------- ----------- ----------- -----------
Net income $ 9,319,052 $ 8,587,287 $35,370,670 $31,018,876
=========== =========== =========== ===========
EARNINGS
PER SHARE:
Basic $ 0.21 $ 0.19 $ 0.80 $ 0.70
=========== =========== =========== ===========
Diluted $ 0.21 $ 0.19 $ 0.78 $ 0.67
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES
OUTSTANDING:
Basic 43,888,675 44,759,201 44,245,875 44,591,437
=========== =========== =========== ===========
Diluted 44,797,586 46,054,285 45,220,843 45,971,729
=========== =========== =========== ===========
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2007 2006
------------ ------------
ASSETS:
------
Cash and cash equivalents, including
restricted cash of $1,194,641 at
December 31, 2007 and $1,433,569 at
December 31, 2006* $103,698,700 $ 74,539,256
Cash segregated in compliance with
federal regulations 475,968,659 417,501,417
Marketable securities 8,882,297 9,322,297
Receivables from brokers, dealers,
clearing organizations and
clearing agents 23,426,192 34,866,825
Receivables from brokerage customers 93,932,498 77,021,893
Property and equipment, net 7,009,526 8,734,890
Deferred income taxes 2,539,807 1,970,047
Deposits with clearing organizations 23,964,136 20,180,361
Other assets 5,265,357 4,950,427
------------ ------------
Total assets $744,687,172 $649,087,413
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
-------------------------------------
LIABILITIES:
Payables to brokers, dealers and
clearing organizations $ 811,084 $ 4,444,956
Payables to brokerage customers 589,654,425 516,355,890
Accounts payable 2,412,353 2,846,669
Accrued expenses 7,851,329 7,235,023
------------ ------------
Total liabilities 600,729,191 530,882,538
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 143,957,981 118,204,875
------------ ------------
Total liabilities and
shareholders' equity $744,687,172 $649,087,413
============ ============
* December 31, 2007 Cash and cash equivalents includes $7.0 million
that was transferred on January 2, 2008 to Cash segregated in
compliance with federal regulations. December 31, 2006 Cash and
cash equivalents excludes $7.6 million that was transferred on
January 3, 2007 from Cash segregated in compliance with
federal regulations.