FX Alliance Inc. ( ) reported second quarter earnings of 23 cents per share, beating the Zacks Consensus Estimate of 21 cents, but falling short of 25 cents earned in the year-ago quarter. Earnings of $6.9 million in the reported quarter were lower by 3.2% than $7.1 million recorded in the second quarter of 2011.

Including a stock-based compensation expense of $0.65 million, the company reported net income of $6.2 million or 21 cents per share, compared to $3.3 million or 15 cents in the prior-year quarter.

Operational Update

During the quarter under review, total revenue of FX Alliance grossed $31.4 million, climbing 6.7% from $29.4 million in the year-ago quarter and a tad higher than the Zacks Consensus Estimate of $31 million. A 5.1% increase in transaction fees and 12.1% increase in user, settlement and license fees led to the overall increase.

Total operating expenses for the second quarter amounted to $20.9 million, increasing 12.7% from the prior-year quarter primarily due to a 34% increase in expenses related to technology, 30.6% general and administrative costs and professional fees that increased nearly four times year on year.

The magnitude of increase in total operating expense was higher than the magnitude of total revenue increase, inducing the operating income to decrease 3.7% year over year to $10.5 million.

Adjusted EBITDA during the reported quarter dropped 4.3% year on year to $14.2 million.

FX Alliance’s total trading volume for the second quarter increased 7.7% to $5,911.9 billion from $5,487.2 billion in 2011. This increase was almost equally contributed by an increase in both relationship trading and active trading.

Financial Position

FX Alliance exited the second quarter with cash and cash equivalents of $61.5 million versus $127.7 million as on December 31, 2011. Total assets as on June 30 amounted to $150.9 million, falling from $212.5 million in 2011-end with a stockholder equity of $132.7 million compared to $79.5 million as on December 31, 2011.

Capital expenditures in the quarter under review amounted to $3.9 million, in line with the year-ago quarter.

Peer Take

The company’s peers, CME Group Inc. ( CME - Analyst Report ) and NYSE Euronext Inc. ( NYX - Analyst Report ) , also reported second quarter results recently. CME Group reported operating earnings per share of 89 cents, surpassing the Zacks Consensus Estimate of 82 cents and the year-ago quarter’s earnings of 88 cents. The earnings per share also included the effect of a 5-for-1 common stock split on July 20, 2012.

The operating earnings of NYSE Euronext were a penny higher than the Zacks Consensus Estimate of 50 cents but were lower than 61 cents recorded in the year-ago quarter.

Zacks Rank

FX Alliance currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.