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-- Revenues of $62.3 million, a 7% decrease year-over-year
-- Net income of $16.3 million, or $0.28 per diluted share
-- Daily average revenue trades (DARTs) of 42,000, a 12% decrease year-over-year
-- Net new account growth of 6,600 during the quarter, resulting in 343,900 customer accounts, a 13% increase year-over-year
"Our customers and our business model continued to display their resilience in the third quarter despite the difficult economic environment," remarked David Fisher, Chief Executive Officer of optionsXpress. "Trading activity in options improved relative to equities and we ended the quarter with record customer assets, both testaments to the quality of our platform and the value self-directed investors place on being able to use derivatives as part of a balanced long-term investment strategy."
For the third quarter, total DARTs were 42,000, down 12% from 47,800 during the third quarter of 2008, and down 7% from 45,100 for the second quarter of 2009. Institutional DARTs were 11,400 during the third quarter of 2009, down 3% from 11,800 during the third quarter of 2008, and down 4% from 11,900 during the second quarter of 2009. Trades per account on an annualized basis were 32, down from 41 in the third quarter of 2008 and down from 34 in the second quarter of 2009.
Total net revenues decreased 7% over the third quarter of 2008 but were up 1% when compared to the second quarter of 2009. Resulting net income was $16.3 million, or $0.28 per diluted share, a 32% decrease from the $24.0 million reported in the third quarter of 2008.
"Our financial results remained stable in the third quarter despite continued headwinds from low interest rates and lower than historic trading levels," commented Adam DeWitt, Chief Financial Officer of optionsXpress. "We were also able to deliver net new account growth despite the difficult account acquisition environment while lowering our cost per net new account through more efficient spending. Additionally, our strong financial position and clean balance sheet allow us the flexibility to pursue a wide variety of value-creating initiatives."
Outlook
Mr. Fisher concluded, "Over the last twelve months we have demonstrated that our business can weather challenging markets and feel confident in our opportunity for future growth and profitability. As the leading self-directed brokerage focused on derivatives, we are well-positioned as consumer confidence improves and potential customers broaden their investment strategies to include derivatives, as an increasing number already have. In the meantime, we are intensely focused on enhancing our platform and providing the best overall experience for self-directed investors."
Conference Call
A conference call will be broadcast live on Tuesday, October 20, 2009, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) at www.optionsxpress.com/investor. An online replay will be available approximately two hours after the call and can be accessed in the Investor Relations' Calendar of Events portion of the website.
About optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc., a pioneer in equity options and futures trading, offers an innovative suite of online brokerage services for investor education, strategy evaluation and trade execution. optionsXpress Holdings subsidiaries include optionsXpress, Inc., a retail online brokerage specializing in options and futures, brokersXpress, LLC, an online trading and reporting platform for independent investment professionals, Open E Cry, LLC, an innovative futures broker offering direct access futures trading for high volume commodities and futures traders through its proprietary software platform, and Optionetics, Inc, a leading provider of investment education services, including live seminars, proprietary software analytics, online and offline educational products and individual coaching.
More information can be found in the Investor Relations section of optionsXpress' website at http://www.optionsxpress.com/investor.
Safe Harbor
This press release may contain forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks. We urge you to carefully consider these risks in evaluating the information in this press release, including risks related to general economic conditions, regulatory developments, the competitive landscape, the volume of securities trading generally or by our customers specifically and other risks described in our filings with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "feel," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. 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.
optionsXpress Holdings, Inc.
Consolidated Statements of Operations
In thousands, except per share data
(Unaudited)
Three Months Ended
September September Change
30, 2009 30, 2008 $ %
Revenues:
Commissions $40,501 $45,093 ($4,592) (10%)
Other brokerage related revenue 7,357 8,743 (1,386) (16%)
Interest revenue and fees 4,241 12,784 (8,543) (67%)
Interest expense (55) (476) 421 (88%)
Net interest revenue and fees 4,186 12,308 (8,122) (66%)
Education revenues 9,156 - 9,156 n/a
Other income 1,087 708 379 54%
Net revenues $62,287 $66,852 ($4,565) (7%)
Expenses:
Compensation and benefits $11,885 $7,959 $3,926 49%
Brokerage, clearing and other related expenses 7,795 8,950 (1,155) (13%)
Brokerage advertising 3,207 4,945 (1,738) (35%)
Education marketing and fulfillment 6,006 - 6,006 n/a
Depreciation and amortization 2,350 1,996 354 18%
Other general and administrative 5,769 5,285 484 9%
Total expenses $37,012 $29,135 $7,877 27%
Income before income taxes 25,275 37,717 (12,442) (33%)
Income taxes 9,007 13,723 (4,716) (34%)
Net income $16,268 $23,994 ($7,726) (32%)
Basic earnings per share $0.28 $0.40 ($0.12) (30%)
Diluted earnings per share $0.28 $0.40 ($0.12) (30%)
Weighted average shares
outstanding - basic 57,743 60,022 (2,279) (4%)
Weighted average shares
outstanding - diluted 57,936 60,177 (2,241) (4%)
Nine Months Ended
September September Change
30, 2009 30, 2008 $ %
Revenues:
Commissions $120,598 $124,981 ($4,383) (4%)
Other brokerage related revenue 20,762 24,435 (3,673) (15%)
Interest revenue and fees 13,110 39,062 (25,952) (66%)
Interest expense (178) (1,642) 1,464 (89%)
Net interest revenue and fees 12,932 37,420 (24,488) (65%)
Education revenues 16,390 - 16,390 n/a
Other income 2,614 2,405 209 9%
Net revenues $173,296 $189,241 ($15,945) (8%)
Expenses:
Compensation and benefits $30,693 $21,691 $9,002 42%
Brokerage, clearing and other related expenses 23,032 19,653 3,379 17%
Brokerage advertising 14,001 14,850 (849) (6%)
Education marketing and fulfillment 10,798 - 10,798 n/a
Depreciation and amortization 6,640 5,441 1,199 22%
Other general and administrative 16,424 15,388 1,036 7%
Total expenses $101,588 $77,023 $24,565 32%
Income before income taxes 71,708 112,218 (40,510) (36%)
Income taxes 25,811 41,087 (15,276) (37%)
Net income $45,897 $71,131 ($25,234) (35%)
Basic earnings per share $0.79 $1.17 ($0.38) (32%)
Diluted earnings per share $0.79 $1.17 ($0.38) (32%)
Weighted average shares
outstanding - basic 58,011 60,873 (2,862) (5%)
Weighted average shares
outstanding - diluted 58,154 61,043 (2,889) (5%)
optionsXpress Holdings, Inc.
Consolidated Balance Sheets
In thousands
(Unaudited)
Period Ended
September 30, December 31, Change
2009 2008 $ %
Assets:
Cash and cash equivalents $100,817 $114,450 $(13,633) (12%)
Cash and investments segregated
in compliance with federal regulations 798,489 427,669 370,820 87%
Receivables from brokerage customers, net 132,658 137,502 (4,844) (4%)
Receivables from brokers, dealers and
clearing organizations 62,657 15,621 47,036 301%
Investments in securities 80,554 89,937 (9,383) (10%)
Deposits with clearing organizations 132,635 108,409 24,226 22%
Fixed assets, net 13,191 12,979 212 2%
Goodwill 81,660 44,234 37,426 85%
Other intangible assets, net 8,102 4,569 3,533 77%
Other assets 20,725 16,963 3,762 22%
Total assets $1,431,488 $972,333 $459,155 47%
Liabilities and stockholders' equity:
Liabilities
Payables to brokerage customers $1,080,185 $675,872 $404,313 60%
Payables to brokers, dealers and clearing
organizations 817 293 524 179%
Accounts payable and accrued liabilities 44,216 27,848 16,368 59%
Deferred revenue 8,090 - 8,090 n/a
Current and deferred income taxes - 25 (25) (100%)
Total liabilities 1,133,308 704,038 429,270 61%
Stockholders' equity 298,180 268,295 29,885 11%
Total liabilities and stockholders'
equity $1,431,488 $972,333 $459,155 47%
optionsXpress Holdings, Inc.
Statistical Operating Data
Three Months Ended
September 30, September 30, Change
2009 2008 $ or # %
Number of customer accounts
(at period end)(1) 343,900 305,200 38,700 13%
Daily average revenue trades ('DARTs') (2)
Retail DARTs 30,600 36,000 (5,400) (15%)
Institutional DARTs (3) 11,400 11,800 (400) (3%)
Total DARTs 42,000 47,800 (5,800) (12%)
Customer trades per account (4) 32 41 (9) (22%)
Average commission per trade $15.07 $14.87 $0.20 1%
Option trades as a % of total trades 43% 48% (5%)
Brokerage advertising expense per net new
customer account (5) $486 $454 $32 7%
Total client assets (000s) $6,349,342 $5,297,285 $1,052,057 20%
Client margin balances (000s) $130,283 $200,471 ($70,188) (35%)
Nine Months Ended
September 30, September 30, Change
2009 2008 $ or # %
Number of customer accounts
(at period end)(1) 343,900 305,200 38,700 13%
Daily average revenue trades ('DARTs') (2)
Retail DARTs 31,800 37,000 (5,200) (14%)
Institutional DARTs (3) 12,800 4,000 8,800 220%
Total DARTs 44,600 41,000 3,600 9%
Customer trades per account (4) 34 36 (2) (6%)
Average commission per trade $14.38 $16.17 ($1.79) (11%)
Option trades as a % of total trades 41% 59% (18%)
Brokerage advertising expense per net new
customer account (5) $553 $371 $182 49%
Total client assets (000s) $6,349,342 $5,297,285 $1,052,057 20%
Client margin balances (000s) $130,283 $200,471 ($70,188) (35%)
(1) Customer accounts are open, numbered accounts.
(2) DARTs are total revenue-generating trades for a period divided
by the number of trading days in that period.
(3) Includes all OEC and other institutional revenue-generating
trades beginning in July 2008.
(4) Customer trades per account are total trades divided by the
average number of total customer accounts during the period.
Customer trades are annualized.
(5) Calculated based on total net new customer accounts opened
during the period.
optionsXpress Holdings, Inc.
Segment Information
In thousands
(Unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
Revenue
Brokerage Services $53,138 $66,852 $156,909 $189,241
Education 9,640 - 16,944 -
Eliminations (491) - (557) -
Revenue $62,287 $66,852 $173,296 $189,241
Income/(loss) before income taxes
Brokerage Services $26,292 $37,717 $73,001 $112,218
Education (1,017) - (1,293) -
Income before income taxes $25,275 $37,717 $71,708 $112,218
SOURCE: optionsXpress Holdings, Inc.
Investor Inquiries: Jim Polson FD (312) 553-6730 or Media Inquiries: Patrick Van De Wille FD (312) 553-6704
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