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Wednesday July 25, 7:30 am Eastern Time
Press Release
TradeStation Group Announces Quarterly Results
MIAMI--(BUSINESS WIRE)--July 25, 2001--TradeStation Group, Inc.
(Nasdaq:TRAD - news) today reported results for the second quarter
ended June 30, 2001. The quarter ended with the launch by the company
of the new TradeStation® Platform, a trading platform that for the
first time combines strategy testing, automated trading and
intelligent direct-access order execution. Even though just launched,
TradeStation has already been ranked the no. 1 Direct-Access Broker
by Barron's, ahead of competitors including Instinet's ProTrader
(Nasdaq:INET - news), Charles Schwab's StreetSmart Pro (NYSE:SCH -
news), E*Trade's WebStreet Direct (NYSE:ET - news), Ameritrade's
TradeCast Elite (Nasdaq:AMTD - news), and seven other direct-access
brokers.
Financial Results Compare Favorably to Business Outlook for Second
Quarter and First Half of 2001 Year
The company announced that its results from operations for the 2001
second quarter was a loss of $1.9 million, or 4 cents per share, as
compared to a loss of $1.0 million, or 2 cents per share, for the
2000 second quarter. For the first six months of 2001, results from
operations was a loss of $2.3 million, or 5 cents per share, as
compared to a loss of $3.7 million, or 8 cents per share, for the
same six-month period a year ago. Results from operations excludes
amortization of goodwill and intangible assets, which consists mainly
of amortization from the company's 1999 acquisition of Window On
WallStreet. Amortization of goodwill and intangible assets was $1.5
million for the 2001 second quarter and $3.1 million for the first
six months of 2001.
Net loss for the 2001 second quarter was $3.3 million, or 7 cents per
share, as compared to net loss of $2.5 million, or 6 cents per share,
for the second quarter a year ago. This compares favorably to the
company's second quarter 2001 projected net loss of $3.4 million, or
8 cents per share. For the first six months of 2001, net loss was
$4.9 million, or 11 cents per share, compared to net loss of $6.6
million, or 15 cents per share, for the same six-month period a year
ago. This compares favorably to the company's six-month projected net
loss of $5.2 million, or 12 cents per share.
For the 2001 second quarter, revenues were $10.6 million, compared to
$13.9 million for the second quarter one year ago. For the first six
months of 2001, revenues were $22.7 million, compared to $26.8
million for the same period one year ago.
``This past quarter marks the completion of our transformation from a
software developer to a brokerage firm that targets institutional and
active traders,'' said Bill Cruz, Co-Chairman of the Board and
Co-CEO. ``It has been the most significant quarter in the 19-year
history of our company. We believe our selection by Barron's as the
top-ranked direct-access brokerage firm only days after our launch is
an early indication of the great success this company will achieve in
2002 and beyond.''
Business Outlook For Third and Fourth Quarter 2001
The company reported that early experience with customers who have
begun to use the new TradeStation Platform have produced results of
trading frequency that are exceeding the company's previous
expectations. David Fleischman, the company's Chief Financial
Officer, said, ``Given that we launched the controlled release of the
TradeStation Platform only three days prior to the end of the second
quarter, it is too early to begin publishing any account or trading
statistics. We plan to begin to do this with our release of third
quarter results.''
The company currently intends to commence its direct marketing
campaign to its existing customer base in August, and a media
marketing campaign through CNBC and financial periodicals after Labor
Day. Taking these and various other factors into account, the company
has prepared a Business Outlook for the third and fourth quarters of
2001.
The company's third quarter Business Outlook reflects the anticipated
continuing decline of the company's legacy software and subscription
business, which is expected to be partially offset by growth in
brokerage fee revenues. In addition, the company expects to begin to
incur increased marketing costs in the third quarter, most of the
benefits of which are not expected to be recognized until the fourth
quarter.
The following statements regarding the third and fourth quarters of
the 2001 fiscal year are based on current expectations and beliefs
with respect to the remainder of the 2001 fiscal year. These
statements with respect to 2001 are forward-looking, and actual
results may differ materially, as suggested by the risk factors for
forward-looking statements set forth below.
Q3 2001 Q4 2001
------- -------
TOTAL REVENUES (000's) $ 9,700 $ 16,400
Key Components:
Brokerage fees $ 4,500 $ 11,700
Subscription fees $ 2,200 $ 2,000
Net licensing fees $ 400 $ 200
Other revenues $ 2,600 $ 2,500
TOTAL OPERATING EXPENSES $ 14,600 $ 17,900
NET LOSS $ (4,800) $ (1,400)
NET LOSS PER SHARE $ (0.11) $ (0.03)
EBITDA (1) $ (2,600) $ 700
(1) Earnings before interest expense, taxes, depreciation and
amortization
Changes to Management Team and Board of Directors
Steve zum Tobel, Vice President of Brokerage Operations and Director,
Farshid Tafazzoli, Vice President of Brokerage Technology and
Director, and Lothar Mayer, Director, have resigned to pursue other
interests. Joe Nikolson, who was promoted to Chief Operating Officer
of TradeStation Securities in January 2001, will continue as head of
the operating team at TradeStation Securities.
Conference Call
At 11:00, a.m., eastern time, today, the management of TradeStation
Group will conduct an analyst conference call to discuss the
company's second quarter results. The telephone conference will be
broadcast live via the Internet at www.TradeStation.com and at
www.StreetFusion.com. A rebroadcast of the call will be accessible
from both Web sites for approximately 90 days.
Forward-looking Statements
<snip>
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2001 2000 2001 2000
---- ---- ---- ----
REVENUES:
Brokerage fees $3,792,804 $3,848,376 $8,545,355 $8,013,646
Subscription fees 2,644,750 2,007,791 5,398,557 2,910,625
Net licensing fees 1,563,700 5,001,534 3,516,881 10,848,530
Other 2,592,225 2,999,542 5,239,838 4,992,801
---------- ---------- ---------- ----------
Total revenues 10,593,479 13,857,243 22,700,631 26,765,602
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Clearing and other
transaction costs 1,346,384 1,084,773 2,936,195 2,308,059
Data delivery and
related costs 1,311,068 1,031,703 2,675,681 1,571,079
Inventory and
handling costs 33,735 333,657 115,921 1,053,905
Technology
development 3,386,789 2,096,362 5,828,683 4,131,317
Sales and
marketing 3,268,821 7,321,874 6,224,701 15,879,527
General and
administrative 3,154,302 2,972,214 7,189,867 5,543,118
Amortization of
goodwill and
intangibles 1,541,963 1,491,808 3,060,175 2,983,616
---------- ---------- ---------- ----------
Total operating
expenses 14,043,062 16,332,391 28,031,223 33,470,621
---------- ---------- ---------- ----------
Loss from
operations (3,449,583) (2,475,148) (5,330,592) (6,705,019)
OTHER INCOME, net 179,607 318,270 401,241 692,716
---------- ---------- ---------- ----------
Loss before
income taxes (3,269,976) (2,156,878) (4,929,351) (6,012,303)
INCOME TAX PROVISION 4,896 302,931 16,642 578,748
---------- ---------- ---------- ----------
Net loss $(3,274,872) $(2,459,809) $(4,945,993) $(6,591,051)
========== ========== ========== ==========
LOSS PER SHARE:
Basic and diluted $(0.07) $(0.06) $(0.11) $(0.15)
========== ========== ========== ==========
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
---- ----
(Unaudited)
ASSETS:
Cash and cash equivalents $19,357,519 $18,394,996
Securities owned, at market value 1,593,146 249,423
Accounts receivable, net 856,767 644,200
Other receivables 3,085,254 1,028,920
Income tax receivable - 8,542,413
Deferred income taxes 4,805,651 4,805,651
Property and equipment, net 3,602,187 2,651,057
Goodwill, net 952,584 1,156,709
Intangible assets, net 9,119,098 11,850,148
Other assets 2,008,763 1,030,631
----------- -----------
Total assets $45,380,969 $50,354,148
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Accounts payable $1,755,953 $3,579,962
Accrued expenses 6,913,361 5,686,792
Income taxes payable 134,205 1,003,912
Deferred revenue 887,275 821,593
Securities sold, but not yet
purchased - 22,750
Capital lease obligations 1,466,824 214,069
----------- -----------
Total liabilities 11,157,618 11,329,078
----------- -----------
SHAREHOLDERS' EQUITY 34,223,351 39,025,070
----------- -----------
Total liabilities and
shareholders' equity $45,380,969 $50,354,148
=========== ===========
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