FXCM : Announces Second Quarter 2014 Results

FXCM Inc. (NYSE:FXCM), a leading online provider of foreign exchange, or FX, trading and related services, today announced for the quarter ended June 30, 2014, U.S. GAAP revenues of $97.9 million, compared to $140.1 million for the quarter ended June 30, 2013, a decrease of 30%. U.S. GAAP net loss attributable to FXCM Inc. was $3.1 million for the Second Quarter 2014 or $(0.08) per diluted share, compared to U.S. GAAP net income of $10.1 million or $0.32 per diluted share for the Second Quarter 2013, a decrease of 130% and 125% respectively.

For the six months ended June 30, 2014, U.S. GAAP revenues were $212.9 million, compared to $263.0 million for the six months ended June 30, 2013, a decrease of 19%. U.S. GAAP net loss attributable to FXCM Inc. was $1.0 million for the six months ended June 30, 2014 or $(0.03) per diluted share, compared to U.S. GAAP net income of $17.0 million or $0.55 per diluted share for the six months ended June 30, 2013, a decrease of 106% and 105% respectively.

“In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years,” said Drew Niv, Chief Executive Officer. “However, despite the difficult trading conditions, we continue to gain market share and had another strong quarter of growth in customer equity, in part reflecting our strong brand and competitive position. Since year-end 2013, we have grown customer equity by $121 million or 10% and believe we are well positioned for when market conditions improve.”

Adjusted Pro Forma EBITDA for the Second Quarter 2014 was $13.4 million, compared to $54.5 million for the Second Quarter 2013, a decrease of 75%. Adjusted Pro Forma Net Loss was $1.5 million or $(0.02) per share for the Second Quarter 2014, compared to Adjusted Pro Forma Net Income of $23.3 million or $0.31 per diluted, fully exchanged share for the Second Quarter 2013, a decrease of 107% and 106% respectively.

Adjusted Pro Forma EBITDA for the six months ended June 30, 2014 was $38.0 million, compared to $98.3 million for the six months ended June 30, 2013, a decrease of 61%. Adjusted Pro Forma Net Income was $3.7 million or $0.05 per share for the six months ended June 30, 2014, compared to $40.8 million or $0.54 per diluted, fully exchanged share for the six months ended June 30, 2013, a decrease of 91% and 91% respectively.

Adjusted Pro Forma results assume the conversion and exchange of all FXCM Holdings, LLC Units into FXCM Inc. Class A common stock, resulting in the elimination of the non-controlling interest and the corresponding adjustment to the entity's tax provision. In addition, Adjusted Pro Forma results eliminate certain non-recurring charges and certain equity based compensation expense granted at the time of FXCM's initial public offering in December 2010.

FXCM Inc. today announced certain key operating metrics for July 2014 for its retail and institutional foreign exchange businesses. Monthly activities included:

July 2014 Operating Metrics

Retail Trading Metrics

• Retail customer trading volume(1) of $263 billion in July 2014, 4% higher than June 2014 and 32% lower than July 2013.
• Average retail customer trading volume(1) per day of $11.4 billion in July 2014, 6% lower than June 2014 and 33% lower than July 2013.
• An average of 345,589 retail client trades per day in July 2014, 1% lower than June 2014 and 24% lower than July 2013.
• Tradeable accounts(2) of 201,794 as of July 30, 2014, an decrease of 6,571, or 3%, from June 2014, and an increase of 7,275,or 4%, from July 2013.

Institutional Trading Metrics

• Institutional customer trading volume⁽¹⁾ of $262 billion in July 2014, 16% higher than June 2014 and 42% higher than July 2013.
• Average institutional trading volume⁽¹⁾ per day of $11.4 billion in July 2014, 6% higher than June 2014 and 43% higher than July 2013.
• An average of 45,223 institutional client trades per day in July 2014, 17% lower than June 2014 and 2% higher than July 2013.

More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company's corporate website www.fxcm.com.

This operating data is preliminary and subject to revision and should not be taken as an indication of the financial performance of FXCM Inc. FXCM undertakes no obligation to publicly update or review previously reported operating data. Any updates to previously reported operating data will be reflected in the historical operating data that can be found on the Investor Relations page of the Company’s corporate website www.fxcm.com.

⁽¹⁾ Volume that FXCM customers traded in period is translated into US dollars.

⁽²⁾ A Tradeable Account is an account with sufficient funds to place a trade in accordance with FXCM trading policies.

Non-GAAP Financial Measures

Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per diluted share are non-GAAP financial measures. These measures do not represent and should not be considered as a substitute for net income, net income attributable to FXCM Inc. or net income per Class A share or as a substitute for cash flow from operating activities, each as determined in accordance with GAAP, and our calculations of these measures may not be comparable to similarly entitled measures reported by other companies. See “Adjusted Pro Forma Results” beginning on A-3 of this release for additional information regarding these non-GAAP financial measures and for reconciliations of such measure to the most directly comparable measures calculated in accordance with GAAP.

Declaration of Quarterly Dividend

The company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on October 1, 2014 to Class A stockholders of record at the close of business on September 5, 2014.

Conference Call

As previously announced, the Company will host a conference call to discuss the results at 4:45 p.m. (EDT). This conference call will be available to domestic participants by dialing 877.445.4603 and 443.295.9270 for international participants. The conference ID number is 78733735.

A live audio webcast, a copy of FXCM's earnings release, and presentation slides for this conference call will be available at http://ir.fxcm.com/.

Disclosure Regarding Forward-Looking Statements

In addition to historical information, this earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect FXCM Inc.’s current views with respect to, among other things, its operations and financial performance for the future. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. FXCM Inc. believes these factors include but are not limited to evolving legal and regulatory requirements of the FX industry, the limited operating history of the FX industry, risks related to the protection of its proprietary technology, risks related to its dependence on FX market makers, market conditions and those other risks described under “Risk Factors” in FXCM Inc.’s Annual Report on Form 10-K and other SEC filings, which are accessible on the SEC website at sec.gov.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Visit www.fxcm.com and follow us on Twitter @FXCM, Facebook FXCM, Google+ FXCM or YouTube FXCM.

About FXCM Inc.

FXCM Inc. (NYSE:FXCM) is a leading online provider of foreign exchange, or FX, trading and related services to retail and institutional customers world-wide.

At the heart of FXCM's client offering is No Dealing Desk FX trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, offers Contract for Difference (“CFD”) products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with FX on one platform. In addition, FXCM offers educational courses on FX trading and provides free news and market research through DailyFX.com.

Trading foreign exchange and CFDs on margin carries a high level of risk, and may not be suitable for all. Read full disclaimer.

ANNEX I

Adjusted Pro Forma Results

Throughout the discussion of FXCM Inc.’s results, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), adjusted to exclude certain items and reflects the conversion of all units of FXCM Holdings, LLC for shares of Class A common stock of FXCM Inc. FXCM believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare FXCM’s results across several periods and facilitate an understanding of FXCM’s operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:

1. Assumed Exchange of Units of FXCM Holdings, LLC for FXCM Inc. Class A Shares. As a result of the exchange of FXCM Holdings units, the non-controlling interest related to these units is converted to controlling interest. The Company's management believes that it is useful to provide the per-share effect associated with the assumed exchange of all FXCM Holdings units.
2. Compensation Expense. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate expense relating to stock based compensation relating to the Company's initial public offering as well as costs associated with the acquisition of V3 Markets, LLC. Given the nature of these expenses, they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses.
3. Lucid Minority Interest/Compensation Expense. Our reported U.S. GAAP results reflect the portion of the 49.9% of Lucid earnings allocated among the non-controlling members of Lucid based on services provided as a component of compensation expense under "Allocation of Net Income to Lucid Members for Services Provided." Adjustments have been made to the Adjusted Pro Forma Earnings to reclassify this allocation of Lucid's earnings attributable to non-controlling members to "Net income (loss) attributable to other non-controlling interests." The Company's management believes that this reclassification provides a more meaningful view of the Company's operating expenses and the Company's economic arrangement with Lucid's non-controlling members. This adjustment has no impact on net income as reported by FXCM Inc.
4. Acquisition Costs/Income. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain acquisition related costs/income. Given the nature of these items, they are not viewed by management as expenses/income incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these items.
5. Regulatory Costs. Adjustments have been made to the Adjusted Pro Forma Earnings to eliminate certain costs (including client reimbursements) associated with ongoing discussions and settling certain regulatory matters. Given the nature of these expenses they are not viewed by management as expenses incurred in the ordinary course of business and management believes it is useful to provide the effects of eliminating these expenses.
6. Income Taxes. Prior to the initial public offering FXCM was organized as a series of limited liability companies and foreign corporations, and even following the initial public offering not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted Pro Forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C corporation in the U.S. at the prevailing corporate rates. This assumption is consistent with the assumption that all of FXCM Holdings' units are exchanged for shares of FXCM Inc. Class A common stock, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company. In addition, the Adjusted Pro Forma income tax provision reflects the tax effect of any adjusted pro forma adjustments.

A-3

⁽¹⁾ Represents the elimination of a $3.7 million benefit recorded to reduce the contingent consideration related to the Faros acquisition.

⁽²⁾ Represents the elimination of IPO stock-based compensation.

⁽³⁾ Represents the elimination of $4.1 million of IPO stock-based compensation and $0.3 million of compensation cost related to the V3 Markets, LLC ("V3") acquisition.

⁽⁴⁾ Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes to Net (loss) income attributable to other non-controlling interests.

⁽⁵⁾ Represents the elimination of V3 acquisition costs.

⁽⁶⁾ Represents $0.2 million to eliminate costs associated with regulatory settlements and a $1.3 million charge related to a put option payment for Online Courses.

⁽⁷⁾ Represents the elimination of $0.7 million of V3 acquisition costs, $2.7 million to eliminate costs associated with regulatory settlements and a $1.3 million charge related to a put option payment for Online Courses.

⁽⁸⁾ Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 25.8% and 23.0% for the three months ended June 30, 2014 and 2013, respectively, and 23.6% and 26.4% for the six months ended June 30, 2014 and June 30, 2013, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC ("Holdings") units for shares of Class A common stock of the Company and reflects the tax effect of any proforma adjustments.

⁽⁹⁾ Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽¹⁰⁾ Represents the reclassification of the 49.9% of Lucid’s earnings allocated among the non-controlling interests recorded as compensation for U.S. GAAP purposes to Net (loss) income attributable to other non-controlling interests and the impact of other proforma adjustments impacting non-controlling interests.

⁽¹¹⁾ Diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

A-4

⁽¹⁾ Represents the elimination of a $3.7 million benefit recorded to reduce the contingent consideration related to the Faros acquisition.

⁽²⁾ Represents the elimination of stock-based compensation associated with the IPO.

⁽³⁾ Represents the elimination of V3 acquisition costs.

⁽⁴⁾ Represents the net expense relating to pre-August 2010 trade execution practices and other regulatory fees and fines.

⁽⁵⁾ Represents an adjustment to reflect the assumed effective corporate tax rate of approximately 25.8% and 23.0% for the three months ended June 30, 2014 and 2013, respectively, and 23.6% and 26.4% for the six months ended June 30, 2014 and June 30, 2013, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. The adjustment assumes full exchange of existing unitholders FXCM Holdings, LLC ("Holdings") units for shares of Class A common stock of the Company and reflects the tax effect of any proforma adjustments.

⁽⁶⁾ Represents the elimination of the non-controlling interest associated with the ownership by existing unitholders of Holdings (excluding FXCM, Inc.), as if the unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽⁷⁾ Diluted shares assuming all unitholders had fully exchanged their Holdings units for shares of Class A common stock of the Company.

⁽⁸⁾ Represents $1.3 million charge related to a put option payment for Online Courses.

A-5