Plus500 Ltd (LON: PLUS), a leading online service provider for trading Contracts for Difference (“CFDs”) internationally, has issued the following trading update for the three months ended 30 September 2019.
Highlights
· Strong improvement in quarterly performance compared to the previous period with good revenue growth and a strong increase in EBITDA
· Consistent new customer numbers and customer activity over the last two quarters driven by macro and geopolitical events
· 45% of Q3 Group revenues derived from outside the EEA region (Q2 2019: 44%)
· 40% of Q3 EEA revenues from Elective Professional Clients (“EPC”) (Q2 2019: 40%)
· Trading for the first nine months of 2019 in line with current expectations for the year
Key customer and revenue metrics for the period ended 30 September 2019 were as follows:
| 3 months to 30 Sept* | % Change | 3 Months to 30 June* | % Change Q3 19 Vs. Q2 19 | ||
| 2019 | 2018 | 2019 | |||
| Revenue | $110.6m | $100.1m | 10% | $94.1m | 18% |
| Number of New Customers1 | 24359 | 20684 | 18% | 26,234 | -7% |
| Number of Active Customers2 | 110939 | 102043 | 9% | 108,724 | 2% |
| ARPU3 | $997 | $981 | 2% | $866 | 15% |
| AUAC4 | $921 | $1,581 | -42% | $956 | -4% |
*Unaudited
[1] A customer who has deposited real money for the first time
[2] A customer who makes at least one trade using real money on the Trading Platform during the relevant period
[3] Average revenue per user
[4] Average user acquisition cost
Overview of trading
In the three months ended 30 September 2019, the Group’s revenue was $110.6m, an increase of 10% compared to the same period last year (Q3 2018: $100.1m). This has been achieved despite the comparator period having benefitted from one month of trading activity prior to the implementation of ESMA’s product intervention measures in August 2018. The period benefitted from geopolitical events in the quarter, with this heightened activity reflected in trading patterns. Revenue for the third quarter is stated after $3.5m of positive customer trading performance (Q3 2018: $5.5m).
Active Customers increased to 110,939 in the period, a rise of 9% on the previous year. New Customer acquisition also improved, up 18% compared to the same period last year. Encouragingly, this increase in New Customers was coupled with a 42% fall in AUAC to $921 per customer. ARPU showed a 15% sequential improvement, and a year-on-year increase of 2%.
EBITDA in Q3 2019 was $70.1m, a 39% increase in comparison to Q3 2018, with expansion of EBITDA margin to 63% in Q3 2019 from 57% in Q2 2019 (Q3 2018: 50%).
Trading for the first nine months of 2019 remains in line with current expectations for the year as a whole.
Share buyback programme and cash balance
The Company repurchased 1,639,246 shares in the quarter for a total consideration of $14.7m as part of its $50.0m share buyback programme that commenced on 20 August 2019. Cash balances as of 30 September 2019 were approximately $297.5m (30 June 2019: $327.3m), reflecting the share buyback and the dividend payment on 9 July 2019 of $70.2m.
Regulatory outlook
As detailed in the Company’s interim results and reiterated in an announcement (respectively issued on 13 and 22 August 2019) following the release of a consultation paper by The Australian Securities and Investments Commission , the Group had anticipated potential product intervention measures to be introduced in Australia.
Plus500 responded constructively to the Consultation Paper and continues to assess the potential impact on the c.15% of Group revenues contributed by Australian clients in the nine months ended 30 September 2019. The Board believes that the introduction of the measures will, over time, reduce the number of its competitors, enabling it to gain increased market share at lower customer acquisition cost. Inevitably, the transition period after any new regulations is challenging, but as seen in Europe, client trading patterns subsequently have adjusted and stabilised and the Board therefore expects to see a similar pattern evolve in Australia.
Asaf Elimelech, Chief Executive Officer of Plus500, commented:
“During the period we continued to concentrate on delivering significant enhancements to the trading platform, with the addition of functionality which appeals to more sophisticated traders, and to customer service, which is an effective retention tool.
“Underlying operational performance and new customer acquisition metrics remain robust. We are confident we can continue to outperform our peer group in terms of customer acquisition, by maintaining the level of highly targeted marketing investment to exploit market opportunities as they appear, with these new customers expected to provide incremental revenues in due course.
“Like all operators in the sector, Plus500’s performance for the remainder of the year is dependent, among other things, on financial market conditions providing sufficient trading opportunities for customers. However, we are encouraged by the continued improvement reported in Q3 and we remain on track to meet expectations for the year as a whole.”
