DARTs Increase 42% Year over Year While Net Income Increases 49%
and Revenues Increase 31% PLANTATION, Fla., Oct. 19
/PRNewswire-FirstCall/ -- TradeStation Group, Inc. (NASDAQ GS:
TRAD) today reported record quarterly net income of $7.8 million
and record total brokerage accounts of over 30,000. TradeStation
Group's 2006 third quarter net income of $7.8 million, or 17 cents
per share (diluted), was a 49% increase from 2005 third quarter net
income of $5.3 million, or 12 cents per share (diluted). Income
before income taxes was $12.3 million in the 2006 third quarter, a
39% increase from 2005 third quarter income before income taxes of
$8.9 million. The company's 2006 third quarter net revenues of
$32.2 million were a 31% increase over 2005 third quarter net
revenues of $24.5 million. TradeStation Reports Record Total
Brokerage Accounts, and DARTs Increase 42% Year over Year For the
2006 third quarter, TradeStation experienced the following year-
over-year daily trading growth results with respect to equities,
futures and forex accounts: Q3 06 Q3 05 %Increase
--------------------------------- Daily Average Revenue Trades
58,457 41,206 42% "We attribute our growth in DARTs to the
diversity of our service offering, consistent account growth, and
the robustness of our high-end client base," said David Fleischman,
TradeStation Group's Chief Financial Officer. The company also
published today, in a separate announcement, its DARTs and Total
Client Assets for the month of September 2006. TradeStation added,
net, nearly 1,600 brokerage accounts during the 2006 third quarter,
reaching a record 30,265 brokerage accounts as of September 30,
2006. TradeStation's Average Client Trades 500 Times per Year and
Has an Average Account Balance of $81,000 for Equities and $17,500
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 2006 third
quarter: Client Trading Activity ----------------------- Annualized
average revenue per account $4,000 Annualized trades per account
500 Client Account Assets --------------------- Average assets per
account (Equities) $81,000 Average assets per account (Futures)
$17,500 While, on an annualized basis during the 2006 third
quarter, the average TradeStation account traded 500 times, or
nearly 42 times per month, the average TD Ameritrade and E-Trade
account traded about 8 to 10 times, or less than once per month.
Also, TradeStation's average assets per equities account of $81,000
was nearly double the amount of the average assets per account of
TD Ameritrade and E-Trade. Company Provides Business Outlook for
2006 Fourth Quarter The company's fourth quarter 2006 Business
Outlook estimated ranges are as follows: FOURTH QUARTER 2006
BUSINESS OUTLOOK (In Millions, Except Per Share Data) Fourth
Quarter 2006 ---------------- REVENUES $33.0 to $35.0 INCOME BEFORE
INCOME TAXES $12.5 to $13.5 EARNINGS PER SHARE (Diluted) $0.17 to
$0.18 The company's fourth quarter 2006 Business Outlook estimated
ranges are based on numerous assumptions, including: basing the
midpoints of the ranges, in part, on recent trading activity levels
and market conditions, as well as trading activity levels and
market conditions during the first nine months of 2006; anticipated
growth and trading activity of active trader equities and futures
accounts; interest rates (and the extent to which they will or will
not increase or decrease for the remainder of 2006); the cost of
ongoing litigation and disputes and the amount of any judgments,
awards, settlements or regulatory fines or sanctions; 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. 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 2006 third quarter results and its fourth
quarter 2006 Business Outlook. All company shareholders and the
public are invited to listen. The telephone conference will be
broadcast live via the Internet at http://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 GS: 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. In 2006, TradeStation was named, for
the second year in a row, Best Futures Brokerage and, for the
fourth year in a row, Best Direct-Access Stock Broker, Best
Direct-Access Futures Broker, Best Professional Platform and Best
Institutional Platform, in "Technical Analysis of Stocks and
Commodities" magazine. TradeStation Securities, Inc. (Member NASD,
NYSE, 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, Archipelago Exchange,
Boston Options Exchange, Chicago Board Options Exchange,
International Securities Exchange, Pacific Exchange and
Philadelphia Stock Exchange. The company's other operating
subsidiary, TradeStation Technologies, Inc., develops and offers
strategy trading software tools and subscription services.
Forward-Looking Statements -- Issues, Uncertainties and Risk
Factors This press release, including the fourth quarter 2006
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 financial markets,
including, but not limited to, changes in the combined average
share volume of the major exchanges and in market volatility; * the
company's ability (or lack thereof) to achieve significant net
increases in DARTs, brokerage accounts and brokerage revenues
sequentially or quarter over quarter (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 in
subsequent periods as a result of negative market conditions or
other factors); * the timing, cost and success of marketing
decisions and campaigns generally, and the entrance of new
competitors or competitive products, services or product/service
upgrades into the market; * market pressure to continue to lower,
substantially, pricing on brokerage and subscription services as a
result of such services being provided at lower or minimal costs by
brokerages, financial institutions and other financial companies to
their customers, or for other market reasons; * pending NASD
inquiries concerning OATS reporting violations, violations of NASD
Conduct Rule 3370 ("Prompt Receipt and Delivery of Securities")
concerning certain customer short sale orders in 2004, and failure
to transmit short sale position reports since the conversion to
self-clearing operations, each of which could result in fines,
sanctions and/or other negative consequences; * adverse results in
pending or possible future litigation against the company
(including three pending lawsuits, all of which the company
considers baseless, filed by the co-founders of onlinetrading.com,
a brokerage acquired by the company in 2000, which together seek in
the aggregate tens of millions of dollars in damages or rescissions
of transactions that would create similar negative financial
consequences for the company) that are significantly different than
is currently estimated or expected (currently zero dollars are
reserved for these pending claims); * technical difficulties,
errors and/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; * the company not maintaining a
seamless, redundant back-up system to its order execution systems,
which could materially intensify the negative consequences
described in the previous risk factor; * the timing, implementation
and costs associated with planned hardware and software upgrades
for back-office and internal systems, and other capital
expenditures, planned for later in the year and 2007; * the effect
of unanticipated increased infrastructure costs that may be
incurred as the company grows its brokerage firm operations, adds
accounts and introduces and expands existing and new product and
service offerings, or acquires other businesses; * 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 and
futures, its forex business (including the date by which
TradeStation Securities is able to offer a seamlessly-integrated
forex trading platform to customers and prospects and the success
of that upgraded forex offering), and its institutional and non-US
trader market businesses (as the company has no significant prior
experience with forex, institutional and non-US 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 amount of unexpected legal,
consultation and professional fees (including those expenses as
they relate to the onlinetrading.com co-founder lawsuits against
the company, other lawsuits or proceedings against the company or
potential business combinations); * change or lack of change in the
federal funds rate of interest that is different than what the
company anticipates; * 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 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,
2005, and other company SEC filings and company press releases.
Contact -- David H. Fleischman Chief Financial Officer TradeStation
Group, Inc. 954-652-7000 TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three
Months Ended Nine Months Ended September 30, September 30,
--------------------- --------------------- 2006 2005 2006 2005
------ ------ ------ ------ REVENUES: Brokerage commissions and
fees $19,215,783 $16,220,671 $57,856,073 $48,562,068 Interest
income 11,655,041 6,834,596 32,320,907 16,218,743 Brokerage
interest expense 1,202,442 1,024,330 3,420,400 2,471,820 Net
interest income 10,452,599 5,810,266 28,900,507 13,746,923
Subscription fees and other 2,547,636 2,508,794 7,294,936 7,417,068
Net revenues 32,216,018 24,539,731 94,051,516 69,726,059 EXPENSES:
Employee compensation and benefits 7,544,662 5,744,139 21,741,925
17,016,578 Clearing and execution 6,425,480 4,806,222 19,109,600
14,691,434 Data centers and communications 1,626,680 1,311,782
4,775,860 4,360,797 Advertising 1,121,833 946,939 3,180,225
2,916,565 Professional services 842,725 645,325 2,279,433 2,352,901
Occupancy and equipment 646,987 622,605 1,902,681 1,827,132
Depreciation and amortization 674,867 435,752 1,722,460 1,330,390
Other 1,036,448 1,150,678 2,982,438 2,969,261 Total expenses
19,919,682 15,663,442 57,694,622 47,465,058 Income before income
taxes 12,296,336 8,876,289 36,356,894 22,261,001 INCOME TAX
PROVISION 4,460,194 3,606,086 13,925,305 8,535,094 Net income
$7,836,142 $5,270,203 $22,431,589 $13,725,907 EARNINGS PER SHARE:
Basic $0.18 $0.12 $0.50 $0.32 Diluted $0.17 $0.12 $0.49 $0.31
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 44,716,983 43,147,365
44,535,515 42,396,269 Diluted 45,993,658 44,481,956 45,944,210
43,870,783 TRADESTATION GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS September 30, December 31, 2006 2005
------------ ------------ (Unaudited) ASSETS: Cash and cash
equivalents, including restricted cash of $1,433,569 at September
30, 2006 and $1,672,497 at December 31, 2005* $69,728,099
$75,101,842 Cash segregated in compliance with federal regulations
437,403,906 426,061,999 Securities, at market value 9,341,497 -
Receivables from brokers, dealers, clearing organizations and
clearing agents 39,386,940 36,033,229 Receivables from brokerage
customers, net 63,686,079 58,132,743 Property and equipment, net
8,007,892 3,212,019 Deferred income taxes 2,040,469 2,150,218
Deposits with clearing organizations and clearing agents 13,218,304
11,243,184 Other assets 5,250,761 3,198,711 Total assets
$648,063,947 $615,133,945 LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES: Payables to brokers, dealers and clearing
organizations $181,508 $789,824 Payables to brokerage customers
527,624,205 523,895,972 Accounts payable 2,142,054 2,416,272
Accrued expenses 7,309,610 5,511,153 Total liabilities 537,257,377
532,613,221 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY
110,806,570 82,520,724 Total liabilities and shareholders' equity
$648,063,947 $615,133,945 * September 30, 2006 Cash and cash
equivalents excludes $11.6 million that was transferred on October
3, 2006 from Cash segregated in compliance with federal
regulations. December 31, 2005 Cash and cash equivalents includes
$9.5 million that was transferred on January 4, 2006 to Cash
segregated in compliance with federal regulations. DATASOURCE:
TradeStation Group, Inc. CONTACT: David H. Fleischman, Chief
Financial Officer of TradeStation Group, Inc., +1-954-652-7000 Web
site: http://www.tradestation.com/
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