optionsXpress Agrees to Acquire Optionetics

Chicago-based optionsXpress Holdings has agreed to acquire Optionetics Inc. in an all cash transaction for approximately $20 million, in addition to other cash considerations based on future performance, the online brokerage company announced today.

Based in Redwood City, Calif., and in Sydney Australia, Optionetics is a provider of investment education services, including live seminars, proprietary software analytics, online and offline educational products and individual coaching to over 40,000 potential investors annually in 12 countries, according to today’s release. On a standalone basis, optionsXpress expects Optionetics to generate about $45 to $55 million in revenue and between a pretax loss of $2 million and pretax income of $2 million.

Today, optionsXpress, an online retail brokerage firm specializing in equity options and futures trading, reported net revenues for the first quarter of 2009 ending March 31 of $49.3 million, a decline of 19 percent year-over-year, and were down 14 percent as compared to the fourth quarter of 2008. Net income was $13.6 million, declining 43 percent from the $23.8 million reported in the first quarter of 2008. First quarter results included approximately $500,000 in severance expenses related to the previously announced departure of an executive officer in February, the release stated.

Daily average revenue trades or DARTs rose 23 percent year-over-year to 46,800 from 38,000 during the first quarter of 2008, and decreased 9 percent from 51,400 for the fourth quarter of 2008. Institutional DARTs were 15,100 during the first quarter of 2009. Trader per account on an annualized basis were 35, up slightly from 34 in the first quarter of 2008 and down from 42 in the fourth quarter of 2008.

“Our 330,000 retail customers, who comprise the core of our business, exhibited continued resiliency as trading activity stabilized. In addition, we added almost 10,000 new net accounts and customer assets increased during the quarter while each of the major indices declined,” commented David Fisher, CEO of opitionsXpress in the release. In the statement, Fisher said he was excited by the acquisition of Optionetics, noting that it gives a “tremendous platform to provide education to our existing customers and tens of thousands of potential optionsXpress customers.” Fisher

In the release, CFO Adam DeWitt noted that while the economic backdrop weighed on new account growth in the first quarter, the firm’s investor education efforts were successful in attracting new investors to the platform. “Using more sophisticated and more conservative strategies like complex spreads and puts more often than they did a year ago, our customers have been able to reengage in the markets while limiting risk, as evidenced by the stable asset level,” stated DeWitt.

Despite near-term market conditions, Fisher said he was confident in the brokerage’s ability to drive long-term growth as customers search out options Xpress for its expertise in options and futures products. As market conditions improved, he predicted improved activity levels, higher spreads on customer assets and increasing operating margins.

optionsXpress is holding a conference cal today at 10:00am Central Time (11:00 am ET) at https://www.optionsxpress.com/investor

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio