Playtech Plc · LSE:PTEC
Playtech — Investor Day (May 2018)
63 slides from Playtech's investor day presentation, May 2018
Slide 1: Investor & Analyst Day May 2018
INVESTOR & ANALYST DAY MAY 2018
Slide 2: Today's agenda
Today’s agenda ▪ Introduction, brokers universe and TTG’s position ▪ Ron Hoffman, CEO TradeTech Group & Neil Offord, CFO TradeTech Group ▪ The presentation is split into three sections: Clearing & liquidity Risk management B2C business Christian Frahm Muhammad Al-Amin Rasoul Joe Rundle Marc Levin Ku
Slide 3: Key takeaways
Key takeaways TradeTech executing on opportunity to mirror Playtech’s success in gaming ▪ Dominant technology provider in the industry ▪ Present at all points of value chain ▪ Combination of data-driven technology & industry-leading expertise Strategic position in key B2B market ▪ Liquidity business
Slide 4: Introduction
Introduction | Neil Offord, CFO TradeTech Group Ron Hoffman, CEO TradeTech Group
Slide 5: Development of TradeTech Group
Development of TradeTech Group ▪ Acquired May 2015 ▪ 98.6% owned ▪ $250m consideration paid ▪ Earn-out expired in 2017, no further payments ▪ Call option for remaining minorities in 2019 ▪ Acquired November 2016 ▪ 75.9% owned ▪ $47m consideration paid to date ▪ Put & call option based on 6x 2018 adj
Slide 6: Overview of TradeTech Group
Overview of TradeTech Group ▪ Ron Hoffman, TradeTech Group Chief Executive Officer ▪ Neil Offord, TradeTech Group Chief Financial Officer ▪ Liron Greenbaum, TradeTech Group Chief Operations Officer ▪ Kurt Hoeksema, TradeTech Group Chief Risk Officer ▪ Stavros Anastasiou, TradeTech Group Chief Compli
Slide 7: Overview of TradeTech Group
Overview of TradeTech Group B2C: Markets.com broker TradeTech Group Head Office B2B: Institutional liquidity broker CFH: Tier 1 liquidity B2C: Customer support Alpha: Risk management and B2B: Outsourced partner services dealing CFH: Technology maintenance B2C: Marketing and development, and sales Al
Slide 8: What the end customer wants
What the end customer wants From the trading platform Service from the broker ▪ Not too complicated ▪ Approachable, high quality of service ▪ Not too simple ▪ Responsible broker ▪ Centre of his universe ▪ Relevant engagement ▪ Has to have everything he’s looking for for From the broker’s liquidity S
Slide 9: The broker needs
The Broker needs The end customer needs Trading tools Knowledge ▪ Not too complicated for customers base ▪ Not too simple Trading Platform ▪ Centre of his trading universe Access & insight ▪ One stop shop ▪ Quality of service CRM Compliance Back Office ▪ Responsible broker systems Onboarding & ▪ Mai
Slide 10: TradeTech Group position
The Broker needs TradeTech Group position Trading tools Knowledge for customers base TT’s “Indigo” trading Trading Platform platform Access & insight MT4/MT5 CRM Compliance Back Office TT’s “CRMBO” system systems Onboarding & CS verification Direct Online IB’s Marketing Affiliates A/B/C book Sustain
Slide 11: CFH
CFH | Christian Frahm, Founder & CEO CFH Group Marc Hoyer Levin, CCO CFH Clearing 11
Slide 12: The CFH story
The CFH story ▪ People ▪ Technology ▪ Liquidity INVESTOR & ANALYST DAY MAY 2018 12
Slide 13: The CFH story
The CFH story ▪ What is liquidity ▪ Why you need liquidity ▪ Benefits to clients ▪ Benefits to brokers INVESTOR & ANALYST DAY MAY 2018 13
Slide 14: Liquidity our game
Liquidity our game A retail trader’s ideal world INVESTOR & ANALYST DAY MAY 2018 14
Slide 15: Liquidity our game: a broker's ideal world
Liquidity our game A broker’s ideal world Broker INVESTOR & ANALYST DAY MAY 2018 15
Slide 16: Role of CFH Clearing
Liquidity our game Role of CFH Clearing Broker Broker Broker INVESTOR & ANALYST DAY MAY 2018 16
Slide 17: Risk and hedge (hybrid)
Liquidity our game Risk and hedge (hybrid) CFH’s ClearVision liquidity control system Broker hedge book Broker hybrid Broker risk book INVESTOR & ANALYST DAY MAY 2018 17
Slide 18: No risk – Fully STP
Liquidity our game No risk – Fully STP CFH’s ClearVision liquidity control system Broker no risk INVESTOR & ANALYST DAY MAY 2018 18
Slide 19: CFH's value to customers
Liquidity our game CFH’s value to customers: ▪ Prices ▪ Technology ▪ Balance Sheet INVESTOR & ANALYST DAY MAY 2018 19
Slide 20: Some of our awards
Some of our awards Named best liquidity provider for four consecutive years Finalists included Saxo Bank, LMAX, Sucden Financials, Citi Bank, XTX Markets • Industry award • 2,000 votes • Biggest brokers, banks, and players in the industry INVESTOR & ANALYST DAY MAY 2018 20
Slide 21: Video
ADETECH GROUP J PLAYTECH FINANCIALS VIDEO
Slide 22: TradeTech Alpha
TradeTech Alpha | Muhammad Al-amin Rasoul, Executive Director TTA Kurt Hoeksema, Group CRO & Chief Trader TTA 22
Slide 23: Risk management overview
Risk management overview Entities (group functions vs entity functions): ▪ TradeTech Alpha ▪ CFH ▪ Markets.com INVESTOR & ANALYST DAY MAY 2018 23
Slide 24: Risk management approach
Risk management approach Types of Risk: ▪ Credit risk ▪ Counterparty risk ▪ Exchange rate risk ▪ Reputation risk ▪ Operational risk ▪ Market risk ▪ Event risk ▪ Concentration risk There is value in the details. Our approach uses the information we have available in a thoughtful and prudent manner. W
Slide 25: Risk management approach
Risk management approach Top Down – Survive Bottom Up – Thrive ▪ Oversight & surveillance ▪ Instrument level sentiment indicators ▪ Realtime exposures & PL ▪ Account level profiling ▪ Execution quality ▪ Combine metrics to identify most attractive order flow ▪ Limits ▪ Direct flow to various buckets
Slide 26: Risk management example
Risk management example Example: Bottom up = value add New partner relationship - High level opportunity: ▪ 1,000 accounts ▪ 200 traded products ▪ 160,000 monthly trades ▪ $10 billion monthly volume traded ▪ $5 million yearly revenue opportunity INVESTOR & ANALYST DAY MAY 2018 26
Slide 27: Key metrics
Key metrics Multiple levels: Instrument, partner, individual trader A few key metrics: ▪ PL/MM ▪ Trade duration ▪ Short-term volume percent In isolation, the data points can mean different things in different situations. When used in combination, we have a complete picture that drives the risk manag
Slide 28: Key metrics: PL/MM
Key metrics PL/MM What does it measure? The rate at which trading PL is generated for every $1MM notional volume traded Why do we track it? PL/MM tells us how trading flow generates PL. It gives us clues about turnover, volatility and trading style How do we use it? We can better assess our ability
Slide 29: Key metrics example: instrument level PL/MM
Key metrics example Bottom up – Instrument level PL/MM Total Vol Total PL PL/MM Primary instruments with +/- 100k PL de30mini 18,378,876,745 445,216 24 usdcad 1,073,440,000 217,548 203 Aggregate data looks ok gbpnzd 813,794,124 209,715 258 ▪ Volume = 124 billion uk100 615,636,637 186,315 303 ▪ Tradi
Slide 30: Key metrics: Trade duration
Key metrics Trade duration What does it measure? The time for which a trade is held Why do we track it? Trade duration tells us a lot about trading style How do we use it? ▪ Short-term trading can be difficult monetise depending on the deal structure ▪ Long-term trading can highlight traders taking
Slide 31: Key metrics example: partner level trade duration
Key metrics example Partner level trade duration % of volume and trades by trade duration bucket % of Mins Volume % of PL % of Trades Accum Vol 18% 100% - 15% -26% 13% 15% 90% 1 10% -24% 6% 25% 16% 2 16% -24% 10% 41% 14% 80% 5 14% -17% 9% 55% 70% 10 11% -5% 9% 66% 12% 20 6% 16% 6% 72% 60% 10% 30 8%
Slide 32: Key metrics example: partner level trade duration
Key metrics example Partner level trade duration $73 billion in volume $4.4M in trading PL Mins Volume PL # Trades PL/MM % of Volume % of PL % of Trades Accum Vol - 20,544,347,653 1,260,552 208,240 61 15% 26% 13% 15% 1 12,810,702,795 1,154,370 90,740 90 10% 24% 6% 25% 2 21,716,126,813 1,170,438 156,
Slide 33: Key metrics: Short-term volume percent
Key metrics Short-term volume percent What does it measure? For a given trader or partner, it represents the amount of volume held for short time frames as a percent of total volume Why do we track it? It’s common for deal commercials to include a volume component. Short-term turnover can generate h
Slide 34: Key metrics example: account level short-term volume
Key metrics example Individual account level short-term volume percent % Vol <2mins Volume # Traders 0% 1,990,519,187 358 Short-term volume percent 5% 1,939,820,527 145 400 35,000,000,000 10% 8,975,172,632 97 15% 5,969,804,263 61 350 30,000,000,000 20% 28,919,636,445 55 25% 27,338,501,577 30 300 30%
Slide 35: Key metrics example: account level short-term volume
Key metrics example Individual account level short-term volume percent ▪ Common for traders to have some short term volume Account ***4539 Volume 2,173,275,280 PL 326,268 ▪ Isolate the traders that are consistently short term ***1397 1,256,833,897 (100,390) ***3942 1,413,938,134 426,658 ***4402 1,78
Slide 36: Bottom up review
Bottom up review ▪ PL/MM – identify low/high margin products ▪ Trade duration – identify tricky order flow ▪ Short Term Volume Percent – identify consistent short term traders What they have in common: Find the outliers. These are just a few. Added value example (best case): Instrument level drilldo
Slide 37: Coffee & refreshments
72 TRADETECH GROUP <I PLAYTECH FINANCIALS > Coffee & refreshments | 37
Slide 38: Why does it matter?
Why does it matter? Protects the group ▪ Risk limits ▪ Stress testing Enhances profitability ▪ Surveillance ▪ Metrics Business development ▪ Customer experience ▪ Custom pricing ▪ Quality execution ▪ Flexible solutions Assists with M&A efforts ▪ Understanding industry data details is a competitive a
Slide 39: Markets.com
Markets.com | Joe Rundle, CEO Safecap Investments Ltd 39
Slide 40: Markets.com overview
Markets.com overview ▪ Broker of multi-asset multi-platform CFD Products ▪ Allows customers to trade on desktop, mobile and tablet all on our own proprietary technology ▪ Acquires customers through automated digital and affiliate-led marketing channels ▪ On-boards customers with account sizes from $
Slide 41: A home for traders
A home for traders Markets.com has created a eco system that allows the customer to analyse and access the world’s markets in a single place We own and control our technology ▪ Marketing ▪ Trading platform ▪ CRM/Retention/Back Office ▪ Tools Automation allows us to improve our margins and increase c
Slide 42: The next year
The next year ▪ Continue growth in our existing customer segments ▪ Press home our technological advantage ▪ Continued roll-out of our elective professional category ▪ Expand into new customer segments ▪ Emotionalise our brand INVESTOR & ANALYST DAY MAY 2018 42
Slide 43: Tech advantage: CRMBO
Tech advantage CRMBO ▪ Multi-department hub for Markets.com ▪ Real-time analytics ▪ Automation for support ▪ Automation and reporting for compliance ▪ GDPR ▪ Sales tools ▪ Embedded BI capabilities INVESTOR & ANALYST DAY MAY 2018 43
Slide 44: Client experience
Client experience ▪ Through technology we deliver a unique bespoke customer experience ▪ In-house multi asset platform ▪ Our own CRM ▪ Embedded client communication across all media ▪ Our tools INVESTOR & ANALYST DAY MAY 2018 44
Slide 45: Analyst recommendations
Analyst recommendations INVESTOR & ANALYST DAY MAY 2018 45
Slide 46: Analyst recommendations
Analyst recommendations INVESTOR & ANALYST DAY MAY 2018 46
Slide 47: Analyst recommendations
Analyst recommendations INVESTOR & ANALYST DAY MAY 2018 47
Slide 48: Executive trading
Executive trading INVESTOR & ANALYST DAY MAY 2018 48
Slide 49: Executive trading
Executive trading INVESTOR & ANALYST DAY MAY 2018 49
Slide 50: Events and trade
Events and trade INVESTOR & ANALYST DAY MAY 2018 50
Slide 51: Events and trade
Events and trade INVESTOR & ANALYST DAY MAY 2018 51
Slide 52: Markets knowledge centre
Markets knowledge centre • Education • Analysis • Community • Information INVESTOR & ANALYST DAY MAY 2018 52
Slide 53: Launch of MarketsX
Launch of MarketsX | Joe Rundle, CEO Safecap Investments Ltd 53
Slide 54: MarketsX
MarketsX • Intuitive • Comprehensive • Customer-led • Value for money • Feature-rich INVESTOR & ANALYST DAY MAY 2018 54
Slide 55: Industry leading
Industry leading Industry-leading pricing and features • Industry leading competitive pricing • Service on demand • Enhanced platform • Product on demand INVESTOR & ANALYST DAY MAY 2018 55
Slide 56: Enhanced analysis
Enhanced analysis Enhanced analysis for MarketsX customers • Fundamental analysis • Technical analysis • Sentiment analysis • In-house experts INVESTOR & ANALYST DAY MAY 2018 56
Slide 57: Market commentary
Market commentary | Neil Wilson, Chief Market Strategist 57
Slide 58: Differentiation
Differentiation Setting Markets.com apart THE TRADE PROCESS MESSAGE STAGING Outsmart the Idea 1 market Emotional differentiator Where you can Access 2 trade the world Rational differentiator On a perfect Execute 3 platform Rational ‘expected’ feature INVESTOR & ANALYST DAY MAY 2018 58
Slide 59: Video
ADETECH GROUP J PLAYTECH FINANCIALS VIDEO
Slide 60: Markets.com: Why the beautiful trade?
Markets.com Why the beautiful trade? • Trading is emotionally charged • Instinct craves repetition of a good feeling • ‘Beautiful’ lends ‘tension’ to create interest • Connect • Stand out • Elevate INVESTOR & ANALYST DAY MAY 2018 60
Slide 61: Summary
Summary • MarketsX • Technology • Increasing margin • Home for traders INVESTOR & ANALYST DAY MAY 2018 61
Slide 62: Summary & key messages
72 TRADETECH GROUP Kt = PLAYTECH FINANCIALS > Summary & key messages | 62
Slide 63: Key takeaways
Key takeaways TradeTech executing on opportunity to mirror Playtech’s success in gaming ▪ Dominant technology provider in the industry ▪ Present at all points of value chain ▪ Combination of data driven technology & industry leading expertise Strategic position in key B2B market ▪ Liquidity business