Q3 2020 Trading Update

RNS Number : 2591D

Plus500 Limited

27 October 2020

 

27 October 2020

Plus500 Ltd.

("Plus500", "the Company" or "the Group")

Q3 2020 Trading Update

Plus500, a leading technology platform for trading Contracts for Difference ("CFDs") internationally, today issues the following trading update for the three months ended 30 September 2020. 

Financial Highlights (unaudited):  

	Q3 2020	Q3 2019	Change %	YTD [1] 2020	YTD 2019	Change %
Revenue	$216.4m	$110.6m	96%	$780.6m	$258.6m	202%
EBITDA [2]	$134.2m	$70.1m	91%	$496.0m	$135.7m	266%
EBITDA Margin %	62%	63%	(2%)	64%	52%	23%

Operational Highlights (unaudited):

	Q3 2020	Q3 2019	Change %	YTD 2020	YTD 2019	Change %
Number of New Customers [3]	46,238	24,359	90%	244,414	71,899	240%
Number of Active Customers [4]	197,976	110,939	78%	378,862	175,526	116%
ARPU[5]	$ 1,093	$997	10%	$2,061	$1,473	40%
AUAC[6]	$1,066	$921	16%	$716	$1,026	(30%)

Key Headlines:

· Significant year on year growth in Group Revenue and EBITDA - with Plus500's market-leading technology ensuring the Group is able to continue to benefit from heightened platform usage during unprecedented levels of market volatility

· Exceptional performance across key customer-related metrics driven by continued ability to recruit high levels of New and Active Customers at attractive levels of ARPU and robust levels of client deposits

· Share buyback programme continues, with around 1 million shares acquired in Q3 2020 - over 10 million shares acquired by the Company since 2017, representing approximately 10% of the Company's current shares in issue

· Board remains very confident about the outlook for Plus500 - FY 2020 Group Revenue and EBITDA expected to be in line with current analysts' consensus forecasts[7]

Overview of trading during Q3 2020

Group Revenue increased by 96% in Q3 2020 to $216.4m (Q3 2019: $110.6m) driven by unprecedented market conditions continuing to provide trading opportunities for customers, and due to the high quality, resilience and capability of Plus500's technology in managing the consequent elevated platform usage.

Group EBITDA increased by 91% in Q3 2020 to $134.2m (Q3 2019: $70.1m) with Group EBITDA margin of 62%.

Customer Income[8] increased by 124% in the quarter to $240.0m (Q3 2019: $107.1m) highlighting the strong underlying performance of the business. Customer Trading Performance[9] was ($23.6m) in Q3 2020 (Q3 2019: $3.5m) and remained at relatively modest levels for the year to date.  

This overall performance was achieved with extreme monthly trading movements within the quarter, consistent with the level of market volatility experienced during the course of 2020 and particular trading conditions during Q3 2020.

Customer Income during the quarter was the second highest quarterly level of Customer Income in Plus500's history, although reduced from the record peak levels achieved in Q2 2020. This gradual reduction from peak levels has continued into Q4 2020.

The Company on-boarded a total of 46,238 New Customers in the quarter, up 90% on the prior period (Q3 2019: 24,359), as a result of the Company's continued significant investment in its marketing technological capabilities, enabling it to respond rapidly to market events and continue to evolve the Company's market-leading mobile and tablet offering . There was particularly strong growth in the number of New Customers on-boarded in several key strategic territories.

The number of Active Customers in the quarter increased to 197,976, an increase of 78% on the prior period (Q3 2019: 110,939) and has been broadly sustained at the high levels achieved during previous quarters in 2020.  ARPU increased by 10% to $1,093 in Q3 2020 (Q3 2019: $997).

Consequently, and as previously guided, given the gradual shift in customer profile to higher value customers, AUAC increased by 16% to $1,066 in Q3 2020 (Q3 2019: $921).

Customer Churn[10] increased to 43% in Q3 2020 (Q3 2019: 20%) as a consequence of the record number of Active Customers using the Plus500 platform during Q2 2020.

Reflecting customers' continued confidence in the Plus500 platform and product, and supported by the on-going success of the Company's customer attraction and retention activities, client deposits remained strong at $634.6m in Q3 2020 (Q3 2019: $280.8m) and at around $2.3   billion for the year to date (YTD 2019: $747.8m).

Cash balances as at 30 September 2020 were approximately $722.9m (30 June 2020: $587.8m), reflecting continued strong cash generation during the quarter, partially offset by $18.1m of shares acquired under the current share buyback programme, and the dividend payment of $40.6m on 13 July 2020.

Update on cash savings and repayments related to "Preferred Technological Enterprise" accreditation

In August 2020, Plus500 announced it has been recognised by the Israeli Tax Authority and Israeli Innovation Authority as a "Preferred Technological Enterprise". Consequently, Plus500 Ltd's Corporation Tax rate for the financial years 2017, 2018 and 2019 was reduced to 12% in each of these years. As a result, it was anticipated that over $100 million of initial repayments and cash savings would be delivered, including a c.$47 million rebate received in July 2020.

The expected repayments and cash savings as a result of this accreditation are now expected to be over $150 million, relating to financial years outlined above and the financial year for 2020, to 30 September 2020. These savings will be recognised in the Company's results for FY 2020 and during the course of FY 2021. Additionally, as already disclosed, subject to the Company complying with the statutory R&D spending thresholds, the Company's Corporation Tax rate for the financial years 2020 and 2021 is expected to remain at 12%.

Share buyback

Further to the announcement of a new share buyback programme of $67.3m at the Company's H1 2020 results in August 2020, the Company repurchased 928,609 shares in the quarter for a total consideration of $18.1m.

Following the continuation of this share buyback programme so far during Q4 2020, the Company has now acquired over 10 million shares, equivalent to around 10% of the Company's current shares in issue, since its initial share buyback programme commenced in 2017.

The achievement of this important landmark represents a clear validation of the Board's confidence in the Company's business model and future prospects. It also provides on-going evidence of the Board's diversified approach to capital returns with which to reward the Company's shareholders for their continued support.

Proposed regulatory changes in Australia

Last week, as anticipated, the Australian Securities & Investment Commission, ("ASIC") outlined its proposed regulatory changes for the CFD industry in Australia, to be applied from 29 March 2021 . As previously noted, Plus500 fully supports these changes, in the interests of raising standards in the industry, enhancing the CFD trading landscape and providing important additional protections for consumers.  The Company already operates in compliance with most of the regulatory changes being introduced by ASIC and will further adapt its business model where additional changes are required in due course.

As outlined in the Company's announcement earlier this month, the Board will continue to assess the potential impact on future years, but believes that such impact is already incorporated in the compiled analysts' consensus forecasts for Plus500 for FY 2021 [11] .

Outlook

While market conditions remain uncertain, the Board continues to be very confident about the outlook for the business, with Plus500 remaining well placed for the future, given its proprietary trading platform, its flexible and scalable business model, its robust financial position and a track record of delivery against key performance metrics.

The future development of the business will continue to be primarily delivered through organic means, focused on product extensions, technology enhancements, and in particular through introducing new product lines, and supplemented through continued development of Plus500's presence in new and existing geographies, which the Group will also look to access through potential targeted acquisitions. 

As the past five financial years have demonstrated, and with these factors in mind, the Group aims to deliver sustainable revenue growth and consistent levels of cash generation over the medium to long term.

In the short term, as outlined above, Customer Income during Q3 2020 was the second highest quarterly level of Customer Income in Plus500's history, although reduced from the record peak levels achieved in Q2 2020. This gradual reduction from peak levels has continued into Q4 2020, with the Board expecting Group Revenue and EBITDA for FY 2020 to be in line with current analysts' consensus forecasts [12] .

David Zruia, Chief Executive Officer, commented:

"Plus500 has delivered an excellent performance during Q3 2020, building on the positive momentum already achieved in the first half of the year. This performance has been driven by the quality and differentiation of our proprietary technology, which has enabled our business to consistently support our customers in these unprecedented market conditions. 

"Given Plus500's exceptional performance this year to date, and with macroeconomic and sector-specific news flow continuing to provide significant trading opportunities for our customers, we remain very confident about the outlook for the business."

For further details Plus500 Ltd Elad Even-Chen, Chief Financial Officer Rob Gurner, Head of Investor Relations [phone] [phone] [e-mail] MHP Communications Reg Hoare, Rachel Mann, Pete Lambie [phone] [e-mail]

About Plus500

Plus500 operates a proprietary technology platform for individual customers to trade CFDs internationally. The Group offers more than 2,500 different underlying global financial instruments, comprising equities, indices, commodities, options, ETFs, foreign exchange and cryptocurrencies. Customers of Plus500 can trade CFDs in more than 50 countries and in 32 languages. The trading platform is accessible from multiple operating systems (Windows, iOS, Android and Surface) and web browsers. Plus500 retains operating licences and is regulated in the United Kingdom, Australia, Cyprus, Israel, New Zealand, South Africa, Singapore and the Seychelles. 

Customer care is and has always been integral to Plus500, as such, customers cannot be subject to negative balances. A free demo account is available on an unlimited basis for platform users and sophisticated risk management tools are provided free of charge to manage leveraged exposure, and stop losses to help customers protect profits, while limiting capital losses. Plus500 does not utilise cold calling techniques and does not offer binary options.  Plus500 shares have a premium listing on the Main Market of the London Stock Exchange (symbol: PLUS) and are a constituent of the FTSE 250 index. www.plus500.com

The   information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. 

Forward looking statements

This announcement contains statements that are or may be forward-looking statements.  All statements other than statements of historical facts included in this announcement may be forward-looking statements, including statements that relate to the Company's future prospects, developments and strategies. The Company does not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions express by the press or other media regarding the Group. The Company makes no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication.

Forward-looking statements are identified by their use of terms and phrases such as "believe", "targets", "expects", "aim", "anticipate", "projects", "would", "could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative of those, variations or comparable expressions, including references to assumptions.  The forward-looking statements in this announcement are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.  Factors that may cause actual results to differ materially from those expressed or implied by such forward looking statements include, but are not limited to, those described in the risk factors.  These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such entity and the environment in which each will operate in the future.  All subsequent oral or written forward-looking statements attributed to the Company or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. Each forward-looking statement speaks only as at the date of this announcement.  Except as required by law, regulatory requirement, the Listing Rules and the Disclosure Guidance and Transparency Rules, neither the Company nor any other party intends to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

 

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[1]YTD - "Year to Date" refers to first nine months of the year, from 1 January to 30 September

[2]EBITDA - Earnings before interest, taxes, depreciation and amortisation

[3] New Customers - Customers depositing for the first time

[4] Active Customers - Customers who made at least one real money trade during the period

[5] ARPU - Average Revenue Per User

[6] AUAC - Average User Acquisition Cost

[7] Compiled consensus forecasts - Revenue of $829.2m and EBITDA of $520.5m for FY 2020. More details can be found on the Investor Relations section of the Company's website

[8] Customer Income - Revenue from customer spreads and overnight charges

[9] Customer Trading Performance - Gains/losses on customers' trading positions

[10] Customer Churn = [(Active Customers (T) + New Customers (T+1)) - Active Customers (T+1)]/ Active Customers (T)

[11] Compiled consensus forecasts - Revenue of $429.8m FY 2021. More details can be found on the Investor Relations section of the Company's website

[12] Compiled consensus forecasts - Revenue of $829.2m and EBITDA of $520.5m for FY 2020. More details can be found on the Investor Relations section of the Company's website

 

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