It appears that the bad news for Global Brokerage Inc. (NASDAQ:GLBR), formerly known as FXCM Inc., have no end.
After the dramatic exit of the company from the US market in February and NASDAQ’s warning that it might delist it, the Q1 2017 results are very disappointing as well. It should be kept in mind that due to the exit from the US forex brokerage market, the results for the United States operations have been reclassified to discontinued operations for both the current and prior year.
Unlike the first quarter of 2016 when the company had a comfortable net profit of $49.7 million, in Q1 2017 it garnered a net loss of $29.9 million. At the same time, the total net revenues in Q1 2017 stood at nearly $45.7 million, down 24% from the same period of last year. According to the company statement, the net loss was mainly to a goodwill write-off in connection to the debt to Leucadia National Corporation.
The most concerning part of Global Brokerage’s statement is regarding the possible delisting from the NASDAQ Global Select Market in case the company does not increase its market cap value by October 30, 2017. “This could lead to an event of default under the terms of our debt arrangements and accordingly we believe that the potential delisting raises substantial doubt about our ability to continue as a going concern”, the company said. “We are working with financial and legal advisers to explore refinancing alternatives.”
At the same time, the trading metrics of the continuing operations for the first quarter of 2017 are also disappointing. Despite the same number of trading days – 64 – the total trading volume dropped by nearly 26%, to $679 billion. The number of daily average trades decreased by 23.3% and stood at 427 436. At the same time, the number of active accounts decreased by just 1902, to 130 832.
Global Brokerage Inc. is a majority stakeholder in FXCM Group. The remaining 49.9% in the group are in the hands of Leucadia. The bank has said it would receive up to 65% of future FXCM cash distributions after principal and interest are fully repaid.