NEW YORK, May 8, 2009 (GLOBE NEWSWIRE) -- thinkorswim Group Inc. (Nasdaq:SWIM), a leading provider of online brokerage and investor education services, today announced financial results and selected operating metrics for the first quarter ended March 31, 2009.
Consolidated financial results for the quarter (quarterly year-over-year comparisons):
* Revenues of $77.1 million, 61 percent of which were brokerage-based
* Pre-tax income of $8.2 million, 11 percent of revenues
* Net income of $4.8 million, or $0.07 per diluted share
* Non-GAAP Sales Transaction Volume ("STV") of $74.2 million, 63
percent of which was brokerage-based
* Non-GAAP Adjusted EBITDA (before certain items) of $20.0 million,
or 27 percent of STV
* New accounts opened of 32,675, an increase of 32 percent. Total
accounts of 265,675 at quarter end
* New funded accounts of 11,475 during the quarter, an increase of
9 percent. Total accounts of 108,000 at quarter end
* Average retail trades per day of approximately 69,000, an increase
of 52 percent
* Client assets of $3.2 billion, an increase of 19 percent
* Annualized brokerage revenue per funded account of $1,600
* Customer acquisition cost per new funded account of $340
* Record education graduates of 15,100, an increase of 45 percent
"thinkorswim's first quarter performance reflects continued strength in our brokerage business, as shown by our record retail DARTs, up 52 percent from the year-ago quarter to 69,000; new account openings of 32,675 sustaining recent record levels; and growth of customer assets to $3.2 billion from a total of 108,000 funded and 265,675 open accounts," said Lee K. Barba, Chairman and CEO of thinkorswim Group Inc. "The high level of brokerage activity underscores our customers' continuing preference for thinkorswim's advanced financial trading technology and cross-market transaction capabilities, which empower clients to execute derivative-based trading strategies in today's fast moving, volatile markets. At the same time, our education segment set a record of 15,100 graduates, demonstrating that our education value proposition continues to attract informed investors."
"We also are honored that thinkorswim was recently rated #1 by Barron's in its annual ranking of the best overall online brokers for 2008, and placed highest in the critical 'Best for Frequent Traders' and 'Best for Options Traders' categories. This is the third time in the last four years that thinkorswim has earned this coveted distinction, which reflects our ongoing commitment to leadership in products and services for active traders," said Mr. Barba.
Analysis of First Quarter 2009 Results
(All comparisons are to the corresponding year-ago period unless otherwise indicated)
For the first quarter, brokerage revenue increased 11% to $46.9 million, driven by a 31% increase in transaction revenues (commissions and payment for order flow) offset by a 78% decrease in interest revenue. The increase in transaction revenue was primarily due to the 61% increase year-over-year in retail funded accounts and 52% year-over-year increase in retail DARTs. The net interest revenue decline was primarily due to the dramatic decrease in the average federal funds rate, partly offset by the 19% increase in client assets to $3.2 billion at quarter end, of which $1.8 billion is held in cash.
Update Related to Legal Matters
With regard to the previously announced non-public inquiry by the SEC, the Company has agreed in principle to a settlement which the staff has indicated it will recommend to the Commission. In view of this development, the Company has accrued $2.5 million in the first quarter of 2009, for a total accrual of $3.0 million, in connection with this matter. There can be no assurance as to whether the offer will be accepted by the Commission, whether a definitive settlement of this inquiry will occur or, if a definitive settlement does occur, what the monetary and non-monetary consequences will be for the Company or its operations.
Proposed Acquisition by TD AMERITRADE
On January 8, 2009, thinkorswim Group Inc. and TD AMERITRADE (NASDAQ: AMTD) announced that they had entered into a definitive agreement for TD AMERITRADE to acquire thinkorswim in a cash and stock deal valued at that time at approximately $606 million.
About thinkorswim Group Inc. (Nasdaq:SWIM)
thinkorswim Group Inc. (www.thinkorswim.com) offers market-leading online brokerage, investor education and related financial products and services for self-directed investors and active traders. thinkorswim, Inc., our award-winning online brokerage division, provides a suite of trading platforms serving self-directed and institutional traders and money managers. thinkorswim platforms have easy-to-use interfaces, sophisticated analytical and research tools, and fast and efficient order execution for even the most complex trading strategies. thinkorswim customers trade a broad range of products including stock and stock options, index options, futures and futures options, forex, mutual funds and fixed income. Investools' Education Group, a subsidiary of thinkorswim Group Inc., offers a full range of investor education products and services that provide lifelong learning in a variety of interactive delivery formats. Investools' graduates can then apply what they've learned by trading with thinkorswim's online brokerage platforms. The products and services offered by thinkorswim have received numerous accolades from third parties, including Barron's ranking as its top rated software-based online broker in three of the past four years (March 6, 2006; March 5, 2007 and March 16, 2009). Barron's is a registered trademark of Dow Jones & Company(c) 2006, 2007, 2009.
The thinkorswim Group Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5555
Additional Information and Where to Find It
In connection with the proposed acquisition, TD AMERITRADE filed with the Securities and Exchange Commission (the "SEC"), a Registration Statement on Form S-4 that includes a proxy statement of thinkorswim, which also constitutes a prospectus of TD AMERITRADE. Thinkorswim will mail the proxy statement/prospectus to its stockholders after the foregoing registration statement is declared effective by the SEC. TD AMERITRADE and thinkorswim urge investors and security holders to read the proxy statement/prospectus regarding the proposed acquisition because it contains important information. You may obtain a free copy of the proxy statement/prospectus and other related documents filed by thinkorswim and TD AMERITRADE with the SEC at the SEC's website at www.sec.gov. The proxy statement/prospectus (when the registration statement in which it is included is declared effective) and the other documents may also be obtained for free by accessing thinkorswim's website at www.thinkorswim.com by clicking on the link for "Investors", then clicking on the link for "Financial Reports" and then clicking on the link for "SEC Filings" or by accessing TD AMERITRADE's website at www.amtd.com and clicking on the "Investor Relations" link and then clicking on the link for "SEC Filings".
Participants in this Transaction
thinkorswim, TD AMERITRADE and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from thinkorswim stockholders in favor of the acquisition. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of thinkorswim stockholders in connection with the proposed acquisition is set forth in the proxy statement/prospectus filed with the SEC by TD AMERITRADE. You can find information about thinkorswim's executive officers and directors in thinkorswim's definitive proxy statement filed with the SEC on April 29, 2008. You can find information about TD AMERITRADE's executive officers and directors in their definitive proxy statement filed with the SEC on January 6, 2009. You can obtain free copies of these documents from thinkorswim or TD AMERITRADE using the contact information above.
Safe Harbor
This press release may contain forward-looking statements. Such forward-looking statements may be identified by words such as "believe," "intend," "expect," "may," "could," "would," "will," "should," "plan," or similar statements. All forward-looking statements are based largely on current expectations, beliefs and assumptions concerning future events that are subject to substantial risks and uncertainties. These risks and uncertainties include, but are not limited to: general changes in economic conditions and changes in conditions affecting the financial services industry specifically, regulatory developments that affect the way we market or sell our products and services, our inability to protect our proprietary technology, our ability to sell existing products and services in both new and existing markets, and other factors which are more fully described in thinkorswim Group Inc.'s filings with the SEC. Should one or more of these risks or uncertainties materialize, actual results may vary in material aspects from those currently anticipated. The forward-looking statements made in this press release relate only to events as of the date of this release. We undertake no ongoing obligation to update these statements.
THINKORSWIM GROUP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
---------- ----------
Revenue
Commissions $ 35,674 $ 26,258
Interest & dividends 1,699 7,668
Payment for order flow 7,180 6,574
Other brokerage related revenue 2,386 1,966
---------- ----------
Total brokerage revenue 46,939 42,466
Education revenue 30,192 48,524
---------- ----------
Net revenues 77,131 90,990
---------- ----------
Costs and expenses
Compensation and benefits 20,646 22,057
Brokerage, clearing and execution costs 7,176 7,570
Marketing 7,121 13,359
Partner commissions 9,906 6,530
Events, travel and venue 2,571 6,268
Technology and telecommunications 6,725 6,246
Depreciation and amortization 6,194 5,908
Other 7,202 5,336
---------- ----------
Total costs and expenses 67,541 73,274
---------- ----------
Income from operations 9,590 17,716
Other income (expense)
Interest expense, net (1,443) (4,190)
Interest income 96 455
Other (33) 14
---------- ----------
Other expense (1,380) (3,721)
---------- ----------
Net income before income taxes 8,210 13,995
Income tax provision 3,462 2,468
---------- ----------
Net income $ 4,748 $ 11,527
========== ==========
Net income per common share:
Basic $ 0.07 $ 0.18
========== ==========
Diluted $ 0.07 $ 0.17
========== ==========
Weighted average common shares outstanding:
Basic 66,671 65,846
========== ==========
Diluted 68,766 68,860
========== ==========
THINKORSWIM GROUP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, Dec. 31,
2009 2008
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 74,138 $ 82,560
Accounts receivable, net of allowance
($150 and $150, respectively) 8,229 4,980
Receivable from clearing brokers 6,952 5,738
Income tax receivable 1,325 3,207
Deferred tax asset 18,472 19,106
Other current assets 8,568 9,179
---------- ----------
Total current assets 117,684 124,770
Long-term restricted cash 373 373
Goodwill 209,637 209,546
Intangible assets, net of accumulated
amortization ($36,114 and $32,278,
respectively) 113,803 117,639
Software development cost, net of
accumulated amortization ($9,821 and
$8,470, respectively) 26,099 26,198
Furniture and equipment, net of accumulated
depreciation ($13,308 and $12,931,
respectively) 5,412 6,259
Other long-term assets 24,663 25,557
---------- ----------
Total assets $ 497,671 $ 510,342
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of deferred revenue $ 76,461 $ 80,391
Other current liabilities 31,256 25,259
Accounts payable 4,912 4,196
Accrued payroll 6,850 9,463
Accrued tax liabilities 4,513 6,019
Current portion of capitalized lease
obligations 240 235
Current portion of notes payable 17,500 27,900
---------- ----------
Total current liabilities 141,732 153,463
Long-term portion of deferred revenue 31,363 30,392
Long-term portion of capitalized
lease obligations 42 104
Long-term portion of notes payable 56,500 66,500
Income tax payable 2,096 2,096
Deferred tax liabilities 31,615 30,555
Other long-term accrued liabilities 2,311 2,579
---------- ----------
Total liabilities 265,659 285,689
Stockholders' equity:
Common stock $0.01 par value (66,804 and
66,500 shares issued and outstanding,
respectively) 668 665
Additional paid-in capital 340,411 337,805
Accumulated other comprehensive income (145) (147)
Accumulated deficit (108,922) (113,670)
---------- ----------
Total stockholders' equity 232,012 224,653
---------- ----------
Total liabilities and
stockholders' equity $ 497,671 $ 510,342
========== ==========
THINKORSWIM GROUP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
---------- ----------
Cash flows from operating activities:
Net income $ 4,748 $ 11,527
Reconciling adjustments:
Depreciation and amortization 6,194 5,908
Deferred taxes 1,694 2,075
Stock compensation expense 2,351 2,108
Amortization of exclusivity rights 311 302
Contingent shares in connection with
exclusivity rights -- 299
Amortization of debt issue costs 440 374
Change in fair value of interest rate
swap, included in interest expense (269) 1,448
Provision for (recovery of) sales
return reserve (33) 381
Loss on sale of assets 1 --
Gain on marketable securities -- (7)
Changes in operating assets
and liabilities:
Accounts receivable (3,249) 2,996
Receivable from clearing brokers (1,214) (2,290)
Income tax receivable 1,882 --
Other assets 663 (268)
Accounts payable 1,064 1,974
Deferred revenue (2,959) (11,205)
Accrued payroll (2,613) (8,346)
Other liabilities 6,030 775
Accrued tax liabilities (1,506) (149)
---------- ----------
Net cash provided by
operating activities 13,535 7,902
---------- ----------
Cash flows from investing activities:
Proceeds from the sale or maturity of
marketable securities -- 1,501
Payments for capitalized software
development costs (1,088) (1,911)
Purchases of furniture and equipment (525) (540)
Cash released from escrow 91 831
Cash paid in business acquisitions (91) (831)
---------- ----------
Net cash used in investing activities (1,613) (950)
---------- ----------
Cash flows from financing activities:
Payments on capital leases (57) (51)
Payments on notes payable (20,400) (10,000)
Changes in restricted cash -- (2)
Minimum tax withholding on restricted
stock awards (224) (402)
Proceeds from exercise of stock options 335 189
---------- ----------
Net cash used in financing activities (20,346) (10,266)
---------- ----------
Effect of exchange rates on cash and
cash equivalents 2 (8)
---------- ----------
Decrease in cash and cash equivalents (8,422) (3,322)
Cash and cash equivalents:
Beginning of period 82,560 61,579
---------- ----------
End of period $ 74,138 $ 58,257
========== ==========
THINKORSWIM GROUP INC. AND SUBSIDIARIES
Financial Summary
(unaudited)
Reconciliation of Non-GAAP Information
The following table provides a reconciliation of GAAP Net Income
to non-GAAP Adjusted EBITDA for the periods presented. The
Company believes Adjusted EBITDA is an important measure of
operating performance given the impact of accounting for deferred
revenue and certain other costs.
Three Months Ended
in (millions) March 31,
------------------------
2009 2008
---------- ----------
Net income $ 4.8 $ 11.5
Depreciation and amortization 6.9 6.9
Stock compensation expense 2.4 2.1
Special charges, including deal related 4.1 0.4
Interest expense, net 1.3 3.7
Income tax provision 3.5 2.5
Net change in deferred revenue (3.0) (11.2)
---------- ----------
Adjusted EBITDA ($) 20.0 15.9
---------- ----------
Adjusted EBITDA (as a % of STV) 27.0% 19.9%
---------- ----------
The following table provides a breakout of Revenue on an
unaudited basis for all periods presented and a reconciliation of
non-GAAP Sales Transaction Volume ("STV") to GAAP Revenue. STV
represents sales in a particular period before the effects of
deferred revenue recognition from prior periods and the deferral
of current period sales. The Company believes STV is an important
measure of business volume in the Investor Education segment.
Three Months Ended
in (thousands) March 31,
------------------------
2009 2008
---------- ----------
Brokerage Services
Commissions $ 35,674 $ 26,258
Interest & dividends 1,699 7,668
Payment for order flow 7,180 6,574
Other revenue 2,386 1,966
---------- ----------
Total brokerage services revenue 46,939 42,466
---------- ----------
Investor Education
Sales transaction volume 27,233 37,319
---------- ----------
Total sales transaction volume 74,172 79,785
Change in deferred revenue 2,959 11,205
---------- ----------
Revenue $ 77,131 $ 90,990
========== ==========
Segment Information
The following table provides information on an unaudited basis
concerning thinkorswim Group Inc.'s operations by reportable
segment for the periods presented.
Three Months Ended
in (thousands) March 31,
------------------------
2009 2008
---------- ----------
Revenue
Brokerage Services $ 46,939 $ 42,466
Investor Education 30,192 48,524
---------- ----------
Revenue $ 77,131 $ 90,990
========== ==========
Income (Loss) from Operations
Brokerage Services $ 16,879 $ 17,623
Investor Education (7,289) 93
---------- ----------
Income from operations $ 9,590 $ 17,716
========== ==========
THINKORSWIM GROUP INC. AND SUBSIDIARIES
Operating Metrics thru March 31, 2009
(unaudited)
Three Months Ended
March 31, Change
----------------------- -----------------------
2009 2008 $ or # %
----------- ----------- ----------- -----------
thinkorswim Inc.
Trading Days 61.0 61.0
New Retail Accounts
Opened(1) 32,675 24,800 7,875 32
New Funded Retail
Accounts 11,475 10,550 925 9
Period-End Funded
Retail Accounts 108,000 66,950 41,050 61
Retail DARTs(2) 69,000 45,400 23,600 52
Active Trader
DARTs(3) 65,300 41,900 23,400 56
----------- -----------
Total DARTs 134,300 87,300 47,000 54
Total Trades 8,190,000 5,322,000 2,868,000 54
Ending Client
Assets ($MM) $ 3,190 $ 2,690 $ 500 19
Average Client
Equity/Retail
Account $ 29,500 $ 39,700 $ (10,200) (26)
Retail Commission
Per Trade $ 7.90 $ 8.55 $ (0.65) (8)
Investor Education
Group
Total Paid
Graduates(4) 15,100 10,430 4,670 45
Ending Cumulative
Graduates(5) 418,000 351,000 67,000 19
Ending Active
Subscribers(6) 95,500 106,400 (10,900) (10)
Upsell Rate (7) 27% 34% (7)% (21)%
----------- ----------- ----------- -----------
PHD program 9% 12% (3)% (25)%
Masters program 17% 16% 1% 6%
Associates program 27% 40% (13)% (33)%
Apprentice 34% 0% 34% 0%
Trading rooms 13% 32% (19)% (59)%
(1) Accounts opened are accounts that have initiated the application
process with the intent to fund.
(2) Retail DARTs are trades executed using the retail thinkorswim
platform.
(3) Active Trader DARTs are trades executed using an active trader
platform such as thinkpipes.
(4) Includes students who graduated from both the Foundation Course
and the Currency Trader Course.
(5) Cumulative graduates include graduates and their guest attendees
at workshops.
(6) Active Subscribers include subscribers to Investools Online,
prophet.net, and Investools FX.
(7) This table illustrates the workshop upsell rates during the
periods indicated. Workshop upsell rates are the sales that take
place at the workshops of advanced product sales. Upsell rates do
not include sales from the Company's other sales operations.