TradeStation Group, Inc. (TRAD) Q2 2010 Earnings Call July 22, 2010, 11:00 am ET Executives Salomon Sredni - President, Chief Executive Officer, Director David Fleischman - Chief Financial Officer, Vice President of Finance, Treasurer Analysts Rich Repetto - Sandler O'Neill Patrick O'Shaughnessy - Raymond James & Associates Mike Vinciquerra - BMO Capital Markets Niamh Alexander - Keefe, Bruyette & Woods Chris Ross - Macquarie John Rowan - Sidoti and Company Matt Snowling - FBR Capital Markets Presentation Operator At this time I would like to welcome everyone to the TradeStation Group second quarter 2010 earnings conference call. (Operator instructions) I’d now like to turn the call over to Mr. David Fleischmann, Chief Financial Officer. You may begin your conference. David Fleischmann Thank you, Christopher. Good morning and welcome to the TradeStation Group second quarter 2010 conference call.
Previous Statements by TRAD
» TradeStation Group, Inc. Q1 2010 Earnings Call Transcript
» TradeStation Group, Inc. Q3 2008 Earnings Call Transcript
» TradeStation Group, Inc. Q2 2008 Earnings Call Transcript
Factors that may cause or contribute to such differences include those set forth in today’s earnings release, other press releases recently issued and in the company’s filings with the Securities and Exchange Commission. Please note that the company undertakes no obligation to update any information presented in this conference call.With that said, it is my pleasure to hand over the call to Salomon Sredni. Salomon Sredni Thank you David and good morning everyone. The 2010 second quarter, again showed a positive correlation in our business between increased market volatility and higher client trade volume. Compared with the 2010 first quarter, when market volatility was lower, our brokerage commissions and fees increased 13% and our DARTs increased 16%. Despite a continuing tough environment, we also generated a 5% increase in our brokerage accounts base year-over-year and have client assets of over $2.1 billion now. Let me share with you some of the metrics underlying in our second quarter results. DARTs in the 2010 second quarter were nearly 93,000 indicating a robust level of activity during what is obviously a charging environment for the individual trader market. Please keep in perspective that our DARTs were produced by roughly an average of 47,000 accounts, a powerful indicator of the leverage of our active trader business model. That is obviously a small fraction of the number of accounts our larger competitors require to produce that many trades. We attribute our strong DART results to increase market volatility, strength the diversity of our service offering across various asset classes and the robustness of our business model. Now that market volatility is again lower, our July DARTs through yesterday were 80,000. We have also continued to grow our account base. We grew to over 47,300 accounts in the 2010 second quarter, a record total and a 5% increase in the size of our customer base year over year.
Since we released the TradeStation brokerage platform in the third quarter of 2001, we have increased our TradeStation customer account base every quarter, 35 consecutive quarters of record total TradeStation brokerage accounts.Despite this accomplishment, our sequential account growth during the second quarter was lower than we want it to be, and lower than what we have achieved in previous quarters. So, we continue to focus on lower approaches to generate higher account add in the coming months. These approaches include returning to more focused TV advertising. During the second quarter, we experimented with not doing general TV ads. This quarter we will be returning to TV advertising, but with a much more focused approach. We also continue to sharpen our web marketing campaigns and lead generation in general. The third quarter is typically is high for our current attrition and we expect somewhat higher attrition in this quarter as well, but are hopeful that we will see improved net account growth results by the 2010 fourth quarter. Our brokerage account metrics are once again among the very best in the industry. During the 2010 second quarter, on an annualized basis, our average accounts rated nearly 500 times and produced nearly $2,900 in revenues, both substantially higher than the results produced by the majority of our competitors. Again, the value of the resiliency and resiliency of accounts over our active trader client base was clearly demonstrated. At this point, I would like to return the call back to David who will review our second quarter 2010 performance from a financial perspective, as well as our 2010 third quarter and revise full year business outlook and then I will come back to review some recently completed or pending initiatives that we believe will generate high revenues for our business. David. Read the rest of this transcript for free on seekingalpha.com