Plus500 (LON:PLUS), a leading online service provider for trading Contracts for Difference internationally, has issued the following trading update.
Following the Q1 Trading Update issued on 7 April 2020 and the subsequent Trading Update issued on 28 April 2020, heightened levels of market volatility have persisted, and the Company has continued to see record levels of customer trading activity. Performance across the Company’s financial and operational KPIs remains strong, with the Group continuing to attract significant numbers of new customers at an attractive cost, and increased levels of activity from existing customers. The Company has added 100,574 New Customers since the start of Q2, which is already ahead of our expectations for the entire quarter, and in excess of the 82,951 New Customers added in Q1.
Revenue from Customer Income1 remains at record levels, with the Company generating approximately $249.0m in Q2 to date. However, in recent weeks, most particularly, the week ended 5 June, the Company’s Customer Trading Performance2 for the year now represents a gain for customers and consequently total revenue for Q2 to date stands at approximately $102.5m. The Board continues to expect Customer Trading Performance2 to be neutral over time, consistent with aggregate Customer Trading Performance2 representing an insignificant proportion of revenue over many years historically.
This Customer Trading Performance2, along with the average deposit per Active Customer remaining strong, has resulted in a significant increase in the level of net client deposits which are currently approximately $488.4m, three times the level as at 31 December 2019.
Plus500 is a high cash conversion business, with no debt, low capital intensity and limited capital expenditure needs. The Group maintains a substantial level of cash to support current and future levels of activity, including potential fluctuations in Customer Trading Performance2. The Company’s cash balance is currently approximately $473.9m.
As announced when reporting gains from Customer Trading Performance2 in Q1, the Board expected this performance to revert to a medium-term historic level of near zero. Consequently, notwithstanding the uncertainty regarding the duration of current levels of volatility or the unquantified potential impact from regulatory changes in Australia and the relatively early stage in our financial year, revenue and profitability for the full year is currently expected to be in-line with consensus expectations, as revised following the Trading Update on 28 April 2020. A further update will be provided when we report on Q2 trading in early July.
David Zruia, Plus500 ltd Interim Chief Executive Officer, commented:
“We are pleased the business has continued to generate record levels of Customer Income, added over 100,000 new customers so far in Q2 and has materially grown the net client deposits balance to almost half a billion dollars.
“We have consistently stated that Customer Trading Performance2 is subject to significant market movements and is therefore likely to fluctuate. This is magnified during periods of heightened market volatility such as those we are currently experiencing and given the growing scale of the business. Nonetheless we continue to expect this performance to revert to a medium-term historic level of near zero and our outlook for the year remains unchanged.”
1 Customer Income – Revenue from customer spreads and overnight charges
2 Customer Trading Performance – Gains/losses on customers’ trading positions