This document summarizes an earnings call presentation by optionsXpress regarding their acquisition of Optionetics, an investor education company. The presentation outlines the rationale for the acquisition, including increasing demand for education in volatile markets and Optionetics' complementary focus on derivatives education. Key details of the acquisition are provided, including a $20 million cash payment and potential earnouts up to $7 million per year. Financial projections estimate the acquisition could add over $8 million in annual revenue and lower optionsXpress' cost per new account. Integration plans aim to convert Optionetics customers to optionsXpress brokerage accounts within the first year.

1. First Quarter 2009 Earnings Call
April 28, 2009
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2. Acquisition of Optionetics, Inc.
April 28, 2009
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3. Forward-looking statements
This presentation may contain forward-looking statements. These statements
relate to future events or our future financial performance and involve known and
unknown risks. We urge you to carefully consider these risks in evaluating the
information in this presentation, including risks related to general economic
conditions, regulatory developments, the competitive landscape, the volume of
securities trading generally or by our customers specifically and other risks
described in our filings with the Securities and Exchange Commission. In some
cases, you can identify forward- looking statements by terminology such as quot;may,quot;
quot;will,quot; quot;should,quot; quot;expects,quot; quot;intends,quot; quot;plans,quot; quot;anticipates,quot; quot;believes,quot; quot;estimates,quot;
quot;predicts,quot; quot;potential,quot; quot;continuequot; or the negative of these terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. The forward-looking statements made in this
presentation relate only to events as of the date of this presentation. We undertake
no ongoing obligation to update these statements.
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4. Optionetics Overview
• Founded in 1995 by George Fontanills and Richard Cawood
– George Fontanills: Professional options trader, Harvard MBA, demand for AMEX seminars he
taught in 1993 spawned creation of Optionetics, author of numerous books on option, stock
and ETF trading, frequent guest appearances on TV and radio
– Richard Cawood: President and CEO of Optionetics – New York Attorney, New Zealand
Barrister and Solicitor and United Kingdom Solicitor
• Leading independent investor educator - teaching investors how to manage, build
and protect wealth through risk-management techniques
• Annually hosts over 1,900 live workshops and seminars
– over 40,000 attendees/year
– 15 home study courses
– 17 multimedia titles
– 10 different mentoring and coaching programs
• Courses offered in US, Canada, Australia, New Zealand, Singapore, Puerto Rico,
UK, Ireland, China, Hong Kong, Malaysia and Taiwan
• 150 employees
• Primary locations in California and Australia
• 2008 Revenues of $60MM
• Brands:
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5. Deal Rationale
• Education is one of the three pillars of oX customer-centric approach and a key
component of oX marketing strategy
• Wild market fluctuations over last 6 months have increased demand for education
• Customers leaving full service brokers crave education to better understand and
react to market conditions
• Derivatives industry growth continues and drives demand for derivatives education
– 26% annual growth for U.S. listed options and futures in past 5 years
– 3.6 billion contracts cleared on OCC in 2008 –26% annual volume growth over last 10 years
• Optionetics focus on derivatives and international reach highly complementary
• Educated Investors = better customers
• Good track record with Optionetics as channel partner – oX has been working with
Optionetics since 2001
• Low-cost account acquisition opportunity
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6. Transaction Summary
• Agreement to acquire of 100% of interests in Optionetics and its affiliates
• Purchase price
– $20MM cash at closing
– Five-year cash earnout tied to financial performance and brokerage
account referrals to optionsXpress ($0 to $7MM per year)
– Midpoint of total consideration of $37.5MM
• Employment agreements and non-competes with key management
• Closing expected in 2-4 weeks
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7. Comprehensive Product Offerings
Options Education – risk management
strategies regardless of market direction
Technical Analysis Courses – technical
trading system & market forecasting
Stock Market Education – technical and
fundamental analysis & trading approaches
Foreign Exchange – strategies for the FX
markets - technical, economic and fundamentals
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8. Extensive Product Library
25+ different Seminars & Workshops 10 different Online Coaching Programs
15 different Home Study Courses 17 Multimedia Titles
• Unrivaled “library” of intellectual property created over 14 years
• Competitive advantage and unparalleled resource
• Strategy based education to empower retail clients
• Clear progression maintains client engagement
• Subject matter expertise -Stocks, options, contracts for difference
(CFDs), futures, FX, financial planning and more…
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9. Software Tools Product Overview
• Range of proprietary software
• Fundamental, technical, options & integrated analysis tools
• Strategies and trading signals
• Data from all major domestic and international exchanges
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10. Investor Education Lifecycle
Marketing
Prospects Students Graduates
Source
Direct Marketing
Foundation
• Press
Education
• Radio/TV
Continuing
• Online Preview
Software
• EDM Education
Workshops
Tools
• Expos
Coaching
Low Price
Home Study
Indirect Marketing
Intro Advanced
• Partnerships Courses
Product
• Content Courses
Interactive
Syndication
• Media Activities Workshops
Brokerage Acquire Funding Active Trader
Interaction Accounts Accounts Accounts
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11. Realistic Referral Expectations – Year 2 expectations after Integration
Estimated
2008 Estimated New OXPS
Attendees Conversion Accounts
2-3 Hour Workshop Attendees 31,800 15% 4,770
Unique, 1st Time 2-day Seminar Attendees 7,400 60% 4,440
Other 1st Time Buyers 2,500 40% 1,000
Total 41,700 24% 10,210
Additional Potential Referral Sources
Unique Alumni Attending Semiinars 10,000
Non-Attendees added to Database 120,000
Total Database including Historical Purchasers 2 million+
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12. Benefit to optionsXpress: Lowering Account Acquisition Costs
OXPS Standalone
OXPS 2008 advertising spend $20.7 million
OXPS 2008 net new accounts 53,400
Cost per net new account $388
With Optionetics referrals
Additional net new accounts 10,000
Proforma combined accounts 63,400
Cost per net new account $327
Account acquisition cost reduction (16%)
Perpetual source of inexpensive
accounts lowers cost per new account
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13. Benefit to optionsXpress: Compelling Economics
Top Line Impact
Average OXPS accounts - 2008 290,500
2008 OXPS Revenue $247 million
Revenue Per Acct $849
Annual Optionetics account additions 10,000
Annual Revenue added each year $8.5 million
Firm Value Creation
OXPS Market Capitalization (4/27/09) $810 million
Current Accounts (3/31/09) 328,300
Value per Account ~ $2,500
Annual Optionetics referrals 10,000
Value created each year ~ $25 million
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14. Financial Impact
Run Rate Annual Financial Impact
- Does not include impact from new account referrals
OXPS Optionetics Annual Run Rate Pro Forma*
2008 Actual Low High Low High
Revenues
Brokerage Revenues $ 246,558 $ - $ - $ 246,558 $ 246,558
Educational Sales 43,000 57,000 43,000 57,000
Change in Deferred Revenue 2,000 (2,000) 2,000 (2,000)
Net Revenues 246,558 45,000 55,000 291,558 301,558
Expenses
Compensation 28,571 15,000 15,000 43,571 43,571
Brokerage Costs 27,675 27,675 27,675
Advertising and Product/Seminar Costs 20,716 27,000 32,000 47,716 52,716
Other 28,273 5,000 6,000 33,273 34,273
Total Expenses 105,235 47,000 53,000 152,235 158,235
Pretax $ 141,323 $ (2,000) $ 2,000 $ 139,323 $ 143,323
* Adds Optionetics annual projected results to optionsXpress 2008 actuals. This is not a quot;forecastquot; for the remainder
of 2009 - it is intended to show how Optionetics' results will impact optionsXpress results on an annualized basis.
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15. Integration Plans
• Integration team currently in place
• Primary goal is conversion of Optionetics customers into optionsXpress
customers
• Communication to all Optionetics and optionsXpress clients Day 1 to
describe the benefits of the partnership
– Additional education opportunities for existing oX clients – offering free online
presentation from Optionetics educators
– Quick and easy account creation for Optionetics customers
• optionsXpress remains committed to existing partner relationships
• Trading connectivity to Optionetics software within 4 months
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16. First Quarter 2009 Earnings Call
April 28, 2009
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