TradeStation registers drop in revenues in FY22
Online brokerage TradeStation Group, Inc today announced financial results and certain key metrics for the three months and fiscal year ended March 31, 2022.
TradeStation had total net revenues of $52.6 million for the three months ended March 31, 2022, a 19.1% decline when compared to the three months ended March 31, 2021, as a result of year-over-year decreases in trading-related revenue, net interest income, and subscription and other revenue.
For the fiscal year ended March 31, 2022, TradeStation had total net revenues of $209.6 million, 4.1% lower than the prior fiscal year, as result of lower trading-related revenue and subscription and other revenue, partially offset by higher net interest income.
For the three months ended March 31, 2022, trading-related revenue was $44.1 million, a decline of 14.8% from the prior-year period, due principally to lower equities and cryptocurrency trading volume when compared to the elevated prior-year period trading levels, partially offset by an increase in futures and options trading for the period. For the fiscal year ended March 31, 2022, trading-related revenue was $165.4 million, a 2.7% decrease from $170.0 million in the fiscal year ended March 31, 2021.
Net interest income for the three months ended March 31, 2022, was $10.1 million, a 7.9% decrease when compared to $10.9 million for the prior-year period. The decrease in the fourth quarter of fiscal 2022 from the prior-year period was due to lower net stablecoin and cryptocurrency lending and margin lending revenue, and lower interest earned on customer cash due primarily to a reduced interest rate, partially offset by increased securities lending revenue.
For the fiscal year ended March 31, 2022, net interest income was $41.3 million, a 3.8% increase from $39.8 million in the fiscal year ended March 31, 2021, due primarily to higher margin lending and securities lending revenue, partially offset by lower interest earned on customer cash due to the interest rate reduction and lower net stablecoin and cryptocurrency lending revenue.
At March 31, 2022, TradeStation had 226,506 Total Customer Accounts, an increase of 55.3% from March 31, 2021. Total Customer Accounts at March 31, 2022 included 42,916 customer crypto accounts opened and funded through a marketing promotion that began December 20, 2021.
TradeStation added 62,787 Gross New Accounts during the three months ended March 31, 2022, 38,619 of which were Crypto Funding Program accounts that had no further customer account activity as of March 31, 2022, as compared to 27,261 Gross New Accounts added during the three months ended March 31, 2021, a 130% increase when including the 38,619 Crypto Funding Program accounts in the total and an 11.3% decrease when excluding them from the total.
For the three months ended March 31, 2022, Daily Average Revenue Trades (DARTs) were 237,694, a decrease of 14.2% from the three months ended March 31, 2021. For the fiscal year ended March 31, 2022, DARTs were 217,405, down 5.4% from the prior fiscal year.
Total Customer Assets were $12.0 billion at March 31, 2022, an increase of 16.4% from March 31, 2021. Total Customer Assets included Total Customer Cash of $2.9 billion at March 31, 2022, a 4.0% increase from March 31, 2021.
TradeStation’s total expenses were $68.7 million for the three-month period ended March 31, 2022, and $248.7 million for the fiscal year ended March 31, 2022, which compares to $38.6 million and $186.0 million for the three-months and fiscal year, respectively, ended March 31, 2021. The increase in total expenses is due primarily to increased marketing and headcount spending to implement TradeStation’s revenue growth strategy.
Marketing expense for the three months ended March 31, 2022 was $18.1 million, which compares to $5.4 million for the three months ended March 31, 2021. For the fiscal year ended March 31, 2022, marketing expense was $57.7 million, which compares to $17.4 million for the prior fiscal year.
TradeStation’s total headcount increased by 224 during the fiscal year ended March 31, 2022, from 525 full-time employees at March 31, 2021 to 749 at March 31, 2022. Growth in headcount was primarily in product development and operations and, together with increased compensation company-wide to recruit and retain employees in an increasingly competitive wage market, resulted in higher employee compensation and benefits expense of $23.0 million for the three months ended March 31, 2022, as compared to $21.2 million during the prior-year period.
For the fiscal year ended March 31, 2022, employee compensation and benefits expense was $91.7 million, compared to $74.3 million for the prior fiscal year.
For the three months ended March 31, 2022, TradeStation had a net loss of $14.8 million, a loss before income taxes of $16.1 million, and negative Adjusted EBITDA of $12.0 million, as compared to net income of $19.3 million and income before income taxes of $26.4 million, in each case inclusive of $13.3 million in gains on unhedged cryptocurrency assets, and Adjusted EBITDA of $18.7 million for the three months ended March 31, 2021.
For the fiscal year ended March 31, 2022, the company had a net loss of $31.7 million, a loss before income taxes of $39.1 million, and negative Adjusted EBITDA of $26.2 million, as compared to net income of $23.8 million and income before income taxes of $32.6 million, in each case inclusive of $2.9 million in gains on unhedged cryptocurrency assets, and Adjusted EBITDA of $53.6 million for the fiscal year ended March 31, 2021.