FXCM 1Q Adjusted Profit Slips 7.1% On Lower Average Trades

FXCM Inc. (FXCM) posted a profit in its first quarter, its second as a publicly traded company, though adjusted earnings fell 7.1% on lower average daily trades.

The foreign-exchange brokerage has benefited of late from higher volatility in currency markets. FXCM collects fees and commissions from the markups it adds to the final price of a transaction and makes the bulk of its revenue from individuals who use its software to buy and sell currencies online.

Unlike some other online brokerages, FXCM makes fixed commissions based on the dollar volume--rather than the number--of trades that go through.

FXCM has been competing with rival Gain Capital Holdings Inc. (GAIN) for market share in the fast-growing retail foreign-exchange business. Both companies went public on the New York Stock Exchange in December.

Gain recently won out with its bid to purchase the retail foreign-exchange trading unit of Deutsche Bank AG (DB, DBK.XE), the world's largest foreign-exchange bank, for an undisclosed sum. FXCM had provided the trading platform behind the trading platform since its launch. When Deutsche Bank began shopping the unit, FXCM made an offer, but Gain trumped it.

FXCM posted a first-quarter profit of $2.8 million, or 16 cents a share, while all the profit in the prior year period was attributable to noncontrolling interests. Assuming the conversion of the company's former units into Class A shares and excluding compensation charges related to the initial public offering, per-share earnings were 18 cents, down from 20 cents a year earlier. Adjusted earnings slipped to $13.7 million from $14.7 million.

Revenue rose 23% to $94.6 million.

Analysts polled by Thomson Reuters had expected a 20-cent per-share profit and revenue of $74 million.

Trading volume grew 11% to $822 billion, while daily average trades slipped 1.4%. There were 158,002 active accounts as of April 30, a 28% increase. Customer equity doubled over last year to $775 million.

Shares closed Friday at $11.96 and were inactive premarket and are down 9.7% so far this year.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; [e-mail]

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