TradeStation Group Announces Net Profit of $.01 Per Share for Second Quarter 2002.Business Editors Quarterly Results $.08 Per Share Better Than Business Outlook -- Company Revises Business Outlook Upward For Q3 And Q4 TradeStation TradeStation is a Windows-based application, designed, sold and distributed by TradeStation Securities. It is technical analysis software that is used for analysing and trading the financial markets. It uses a built-in proprietary programming language named EasyLanguage. Group, Inc. (Nasdaq:TRAD) today reported 2002 second quarter net profit of one cent per share, a result eight cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than previously estimated (the company had earlier this year estimated a seven cent per share loss). As a result, TradeStation Group has updated its 2002 Business Outlook for the third and fourth quarters to estimate more favorable results than previously presented for the 2002 year. TradeStation Group is the parent company of the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" TradeStation Securities direct-access brokerage (Member NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). , SIPC (Simply Interactive PC) An earlier umbrella term from Microsoft and Intel for a PC that works like a home appliance. For example, it has a sealed case, uses external connectors for expansion and boots in just a couple of seconds. and NFA NFA - Finite State Machine ), and TradeStation Technologies, the award-winning software development and subscription company. Company Posts Record Brokerage Revenues For Second Consecutive Quarter - An Increase Of 138% Over Second Quarter 2001 And An Increase of 43% Over Prior Quarter Brokerage revenues for the 2002 second quarter were $9.8 million, a 138% increase from 2001 second quarter brokerage revenues of $4.1 million, and a 43% increase from 2002 first quarter brokerage revenues of $6.8 million. The company's total revenues of $12.2 million for the 2002 second quarter were a 15% increase from 2001 second quarter total revenues of $10.6 million, and a 26% increase from 2002 first quarter revenues of $9.7 million. TradeStation Group's 2002 second quarter net profit per share of one cent marks a dramatic improvement from the company's 2001 second quarter net loss per share of seven cents and its 2002 first quarter net loss per share of five cents. TradeStation Group's net profit results for the 2002 second quarter were eight cents per share more favorable than had been estimated in the company's previously-published Business Outlook. Approximately $288,000 of 2002 second quarter net income related to the sale of legacy brokerage accounts Brokerage Account An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. . TradeStation Group had cash and cash equivalents of $19.4 million at June June: see month. 30, 2002 ($3.5 million of which was restricted), as compared to $18.0 million at March 31, 2002 ($3.6 million of which was restricted). The company has no borrowings other than $1.9 million of capital lease obligations. "These 2002 second quarter financial results show that the company's brokerage operations continue to grow robustly, even in the most challenging market conditions," said David Fleischman, Chief Financial Officer of the company. TradeStation 6 Brokerage Account Base Has Grown 140% Since Beginning Of The Year TradeStation Securities reported 5,104 equities and futures TradeStation 6 brokerage accounts at the end of the 2002 second quarter, a 140% increase from December December: see month. 31, 2001 and a 37% increase from March 31, 2002. "We added 1,367 accounts during the 2002 second quarter and went from a five cent per share loss to a one cent per share profit," said Bill Cruz Cruz , Juana Inés de la 1648?-1695. Mexican nun and poet noted for her love lyrics, courtly tributes, satires, and plays as well as theological writings on the role of women in the Roman Catholic church. , Co-Chairman and Co-CEO. "These results make a powerful statement about the leverage of our active trader business model, one that is dramatically emphasized when reviewing our financial results in today's market conditions - the worst in a generation. While virtually every major online brokerage firm has experienced a decline or flatness in their average daily trades in 2002, and trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. is down from a year ago, TradeStation has achieved record brokerage revenues for the second consecutive quarter, and 140% account growth since the year started," said Cruz. "We believe the features and benefits offered by the TradeStation 6 platform along with our commitment to providing outstanding service are the main reasons active traders Traders Individuals who take positions in securities and their derivatives with the objective of making profits. Traders can make markets by trading the flow. When they do this, their objective is to earn the bid/ask spread. are choosing our brokerage services over those offered by our competitors. Our company's performance in these economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or gives us great confidence about what we can expect when market conditions improve." TradeStation Brokerage Client Trading Activity Soars 86% Over Prior Quarter The company experienced the following daily trading results with respect to TradeStation 6 platform equities and futures accounts in the 2002 second quarter:
Equities Account Statistics Q2 02 Q1 02 % Increase
--------------------------- ----- ----- ----------
Average daily revenue trades 7,122 3,824 86%
Average daily share volume 6,649,000 4,452,000 49%
Futures Account Statistics Q2 02 Q1 02 % Increase
-------------------------- ----- ----- ----------
Average daily revenue trades
(a "trade" includes both the
initiating and closing trades) 1,929 953 102%
TradeStation Securities' Online Brokerage Clients Trade 554 Times
Per Year - Account Metrics Among The Best In The Industry
Stock brokerage clients using the TradeStation 6 platform
generated the following client account metrics in the 2002 second
quarter:
Client Account Metrics
----------------------
Annualized average revenue per account $7,196
Annualized trades per account 554
Average assets per account $88,760
"The metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. on client accounts for equities clients using TradeStation 6 are among the best in the industry," said Cruz. "Our average TradeStation 6 brokerage client traded nearly 140 times in the 2002 second quarter, more than 550 trades on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. And I must emphasize that TradeStation Securities does not engage in proprietary trading Proprietary Trading When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than commissions from processing trades. - all of those trades were made by our online brokerage clients using their own funds. We are emerging as a unique and major player in the online brokerage industry." Business Outlook For Third And Fourth Quarter 2002 Revised To More Favorable Estimates "In light of the company's strong performance during the 2002 second quarter, TradeStation Group has revised its Business Outlook for the third and fourth quarters of 2002," said Fleischman. "Our new Business Outlook has been revised upward by approximately four cents and one cent per share for the third quarter and fourth quarter of 2002, respectively. That being said, it is clear that we are now in the worst market conditions in recent memory -- the brokerage industry continues to suffer greatly and the summer months, which are notoriously no·to·ri·ous adj. Known widely and usually unfavorably; infamous: a notorious gangster; a district notorious for vice. slow, will impact the third quarter. As a result, we are being appropriately conservative in revising our Business Outlook upward for the balance of this year." The following statements regarding the third and fourth quarters of the 2002 fiscal year are based on current expectations and beliefs with respect to the remainder of the 2002 fiscal year. These statements with respect to 2002 are forward-looking, and actual results may differ materially, as suggested by the risk factors for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. set forth below.
Q3 2002 Q4 2002
------- -------
TOTAL REVENUES $12,800,000 $14,600,000
Brokerage revenues $10,550,000 $12,500,000
Subscription revenues $ 1,650,000 $ 1,700,000
Other revenues $ 600,000 $ 400,000
TOTAL OPERATING EXPENSES $12,700,000 $14,300,000
NET INCOME $ 100,000 $ 300,000
BASIC AND DILUTED
EARNINGS PER SHARE $ .00 $ .01
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 2002 second quarter results. The telephone conference will be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.TradeStation.com. A rebroadcast of the call will be accessible for approximately 90 days. About TradeStation Group, Inc. TradeStation Group, Inc. (Nasdaq:TRAD), through its operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , TradeStation Securities, Inc., offers TradeStation 6 to institutional, professional and serious, active individual traders -- an electronic trading  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. platform that enables clients to design, test and monitor their own custom trading strategies In finance, a trading strategy (see also trading system) is a predefined set of rules to apply. Usually, this refers to a means used to replicate an option in order to give it an arbitrage free value in the sense that the cost of buying some financial assets to give the same and then automate To turn a set of manual steps into an operation that goes by itself. See automation. them with direct-access order execution. The trading platform currently offers streaming real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. equities, options, futures and futures options Futures option An option on a futures contract. Related: Options on physicals. futures option A put or call option on a futures contract. market data. Equities and options transactions are cleared through Bear, Stearns Securities Corp. (NYSE NYSE See: New York Stock Exchange :BSC (Binary Synchronous Communications) See bisync. ) and futures and futures options transactions are cleared through Refco, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . The company's other operating subsidiary, TradeStation Technologies, Inc., develops and offers strategy trading software tools and subscription services, and owns and operates the TradeStationWorld.com strategy trading and development community. Forward-looking Statements This press release and the conference call being broadcast today contain and/or will contain statements that are forward-looking and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. When used in this press release or the conference call the words "believes," "plans," "estimates," "expects," "intends," "designed," "anticipates," "may," "will," "should," "could," "become," "upcoming," "potential," "pending" 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 suggested herein or on the conference call. Factors that may cause or contribute to the various potential differences include, but are not limited to, the effect the company's new commission pricing structure (which was implemented in the 2002 second quarter), and any ongoing modifications to that pricing structure, will have on brokerage revenue and profitability; market pressure to lower substantially or eliminate pricing on brokerage and subscription services as a result of such services being provided at lower or no additional costs by brokerages, financial institutions and other financial companies to their customers, or for other market reasons; the company's ability to continue to effectuate ef·fec·tu·ate tr.v. ef·fec·tu·at·ed, ef·fec·tu·at·ing, ef·fec·tu·ates To bring about; effect. [Medieval Latin effectu its Internet brokerage strategy and to successfully market in a timely fashion the company's principal product and service offering (TradeStation 6, f/k/a the TradeStation Platform) and the costs associated therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. ; the acceptance of the company's new products and services in the marketplace, including the company's ability (or lack thereof) to achieve significant net increases in brokerage accounts quarter over quarter; the company's customer and active prospect base containing a substantially lower number of interested brokerage clients than the company anticipates; the date(s) on which the company's planned additions and enhancements to its direct-access trading platform are launched being materially later than the expected date(s) due to changes in marketing decisions, results of ongoing quality assurance testing, insufficient product development resources, other decisions to modify certain features, regulatory pronouncements, or other reasons; technical difficulties or errors in the products and/or services; the appeal of the company's products and services to the institutional market (given the company's limited experience selling to that market); the company's brokerage client base trading with an average frequency and/or volume lower than the company anticipates; potential NASD or other broker-dealer Broker-Dealer A person or firm in the business of buying and selling securities operating as both a broker and dealer depending on the transaction. Notes: Technically, a broker is only an agent who executes orders on behalf of clients, whereas a dealer acts as a principal regulatory issues relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc brokerage businesses that focus on active traders; variations in patterns of customer revenues due to holidays or major news events; the company's future participation in any merger or strategic alliance; unfavorable (or the absence of favorable) reviews regarding the company's products and services; the level of market demand for real-time decision support tools, real-time data Real-time data denotes information that is delivered immediately after collection. There is no delay in the timeliness of the information provided. Some uses of this term confuse it with the term dynamic data. and/or online brokerage services and/or Web site services generally; the scalability, possible performance failures and reliability of the company's server farm/data network; the entrance of new competitors or competitive products or services into the market; the timing and significance of additional new product and service introductions by the company and its competitors; general economic and market factors, including changes in securities and financial markets; the possibility of "cyberterrorism See cyberwar and information warfare. " and the effect that would have on people's willingness to use Internet-based services, particularly for significant financial transactions; variations from the company's budgeted expectations with respect to hiring and maintenance of personnel, sales and marketing expenditures, and expected brokerage revenue growth and subscription fee revenue; the ability to collect ongoing royalty fee receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed expected from MoneyLine Network, Inc.; the amount of unexpected legal, consultation and professional fees, and other items, events and unpredictable costs or revenue impact that may occur; the adequacy of working capital, cash flows and available financing to fund the growth of the company's online brokerage business and sustain unexpected operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. ; and other 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001, as well as other SEC filings and company press releases.
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUES:
Brokerage revenues $ 9,797,580 $ 4,110,868 $16,645,846 $ 9,192,834
Subscription fees 1,533,129 2,644,750 3,193,271 5,398,557
Other 892,081 3,837,861 2,062,861 8,109,240
----------- ----------- ----------- -----------
Total revenues 12,222,790 10,593,479 21,901,978 22,700,631
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Clearing and execution
costs 2,429,539 1,346,384 4,369,435 2,936,195
Data center costs 1,211,031 1,311,068 2,423,196 2,675,681
Technology
development 2,340,642 3,386,789 4,687,761 5,828,683
Sales and marketing 3,506,203 3,302,556 6,745,710 6,340,622
General and
administrative 2,496,303 3,154,302 5,420,051 7,189,867
Amortization of
intangibles 258,548 1,541,963 514,320 3,060,175
----------- ----------- ----------- -----------
Total operating
expenses 12,242,266 14,043,062 24,160,473 28,031,223
----------- ----------- ----------- -----------
Loss from operations (19,476) (3,449,583) (2,258,495) (5,330,592)
OTHER INCOME, net 361,080 179,607 348,297 401,241
----------- ----------- ----------- -----------
Income (loss)
before income
taxes 341,604 (3,269,976) (1,910,198) (4,929,351)
INCOME TAX PROVISION 326 4,896 326 16,642
----------- ----------- ----------- -----------
Net income (loss) $ 341,278 $(3,274,872) $(1,910,524) $(4,945,993)
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.01 $ (0.07) $ (0.04) $ (0.11)
=========== =========== =========== ===========
Diluted $ 0.01 $ (0.07) $ (0.04) $ (0.11)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 44,547,816 44,485,540 44,547,816 44,396,283
=========== ============ =========== ===========
Diluted 44,600,584 44,485,540 44,547,816 44,396,283
=========== ============ =========== ===========
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2002 2001
---------- ------------
(Unaudited)
ASSETS:
Cash and cash equivalents $19,368,941 $19,981,591
Receivables from clearing firms 1,418,404 255,146
Securities owned, at market value 104,370 415,928
Accounts receivable 204,475 330,300
Property and equipment, net 3,516,631 3,224,518
Intangible assets, net 621,276 1,748,096
Other assets 1,176,856 865,424
----------- -----------
Total assets $26,410,953 $26,821,003
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Accounts payable $ 2,020,018 $ 1,596,244
Accrued expenses 6,655,667 6,013,038
Capital lease obligations 1,908,010 1,406,872
Deferred revenue 220,717 347,336
----------- -----------
Total liabilities 10,804,412 9,363,490
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 15,606,541 17,457,513
----------- -----------
Total liabilities and
shareholders' equity $26,410,953 $26,821,003
=========== ===========
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