Plus500 Ltd. · LSE:PLUS
Plus500 — H1 2017 Earnings Presentation
31 slides from Plus500's earnings presentation, August 2017
Slide 1: Results for the six months ended 30 June 2017
Results for the six months ended 30 June 2017 London Stock Exchange Symbol: PLUS
Slide 2: Record HY results
Record HY results Plus500 in numbers: $188.4m +104% $118.5m 53,881 112,317 Revenues H1 17 Growth in Net profit EBITDA H1 17 New customers H1 17 Active customers H1 17 +19% H1 17/H1 16 +100% +8% Growth H1 17/H1 16 Growth H1 17/H1 16 Growth H1 17/H1 16 #1 #1 #1 8 32 >50 Rated on Revenues from In new U
Slide 3: H1 2017 Financial and Operating Highlights
H1 2017 Financial and Operating Highlights Record first half results, significantly ahead of original and recent expectations, benefitting from: Active Customers1 – increased 8% to a record level of 112,317 New Customers2 – significant growth of 43% to 31,671 in Q2 2017 (Q1 2017: 22,210) ARPU – incr
Slide 4: Business Overview
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 4
Slide 5: New and active customer KPIs
New and active customer KPIs H1 2017 H1 2016 Q2 2017 Q2 2016 2016 Total Active Customers 112,317 104,119 80,526 70,958 155,956 % Growth % Growth 8% 13% H1 2017/H1 2016 Q2 2017/Q2 2016 ARPU 1,678 1,525 1,377 1,037 2,103 % Growth % Growth 10% 33% H1 2017/H1 2016 Q2 2017/Q2 2016 New Customers 53,881 56
Slide 6: Key Business Model Strengths
Key Business Model Strengths Self-developed, user friendly and robust trading platform – based on proprietary technology Analytics driven, returns focused customer acquisition model – driven by “Marketing Machine” and affiliate programme Strong international brand awareness – driven by successful ma
Slide 7: Strong Product Platform
Strong Product Platform CFD Financial Instruments Platform and Devices Unified Trading Platform 2,100 CFD financial instruments Supporting 32 languages in Retail customers only more than 50 countries iPhone / Stocks iPad / Apple Watch App WebTrader Android Commodities Indices App Plus500 Plus500 Pro
Slide 8: Market Leading Technology
Market Leading Technology Proprietary technology, developed in-house: key differentiator and flexible advantage System Architecture rapid product development User Interface “Marketing Machine” consistent experience efficient acquisition of new customers across all platforms Back Office Affiliate Pro
Slide 9: Flexible Business Model
Flexible Business Model Revenue Split Revenues FY 2016 International Footprint Plus500UK FCA UK-regulated Dealing Spreads subsidiary Difference between the buy price and the sell price of a CFD Plus500CY CySEC regulated subsidiary Overnight Premiums Charges on open customer positions held overnight
Slide 10: Plus500 is an attractive proposition to retail customers
Plus500 is an attractive proposition to retail customers Peer Company A Peer Company B CFDs only CFD, Spread betting, Binary Product portfolio CFD, Spread betting, Binary Options (2,100 instruments, 6 asset classes) Options -Unified simple platform Combination of third-party Multi-layer platform wit
Slide 11: Analysis of customer churn
Analysis of customer churn Churn H1 2017 Revenue split by client tenure 0-6 Months 12% 7-12 Months 4% 1-3 Years 35% 3-5 Years 5+ Years 30% 19% 51% of Group’s Increased focus on Revenues from 5+ years revenues come from customer retention customers have customers who trade for initiatives reduces inc
Slide 12: Efficient and flexible investment in marketing
Efficient and flexible investment in marketing Focus remains online but Plus500 will continue to explore offline opportunities Advertising Spend ($m) Online * Advertising Search engines Referrals Offline Mass Media (TV, print, radio) Word of Mouth Sport Sponsorship % Direct Online 88% 89% 92% 86% 82
Slide 13: Mobile – a key growth driver
Mobile – a key growth driver Key driver of market growth – and key acquisition channel for Plus500 Mobile is a key access point for retail customers GUI developed for mobile, consistent with all platforms Features and portfolio of instruments on par with PC version Successfully launched a dedicated
Slide 14: Mobile revenues and sign ups by device
Mobile revenues and sign ups by device Number of Signups by Device Revenues by Device 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2
Slide 15: Regulatory & Risk Management Overview
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 15
Slide 16: Regulatory framework
Regulatory framework Best Practice Approach Negative balance protection Ltd Israeli Headquarters Enhanced appropriateness test No advice self execution venue No bonuses for majority of business Default leverage of 50 AU Pty Ltd UK Ltd Australia & CY Ltd IL Ltd No Binary Options UK New Zealand & Cypr
Slide 17: Plus500 compliance landscape
Plus500 compliance landscape Plus500 welcomes a co-ordinated approach by regulators and consistent conduct rules across all European jurisdictions: The FCA and ESMA conclusions are expected to create a more cohesive approach to protect customers from poor industry practices Customer balance protecti
Slide 18: Commitment to regulatory, compliance and risk best practice
Commitment to regulatory, compliance and risk best practice Continuing focus on and investment in best practice reflected in the Company’s regulatory culture Global compliance and support teams consists of c.170 permanent staff Local Compliance teams with significant experience and skills Enhanced a
Slide 19: Recent and ongoing regulatory consultations
Recent and ongoing regulatory consultations ESMA June 2017 statement on product intervention concerning CFDs; outcome expected in 2018 FSMA (Belgium) CySEC (Cyprus) FCA (UK) BaFiN (Germany) AMF (France) • New regulation • Enhancing the • Enhancing the • New regulation • New marketing • Plus500 condu
Slide 20: Regulation – current situation and potential impact
Regulation – current situation and potential impact Regulator focus Plus500 compliance Potential impact Negative balance protection √ Limited Market P&L √ Limited Reduced leverage ratios Industry standard Subject to ESMA / FCA No high pressure sales √ None No binary options √ None No bonuses Already
Slide 21: Minimising downside risk: 87% profitable trading days in H1 2017
Minimising downside risk: 87% profitable trading days in H1 2017 Strong track record in managing market risk demonstrated by looking at number of profitable trading days. In H1 2017 the Group made a profit on over 87% of the trading days with remaining 13% of trading days showing relatively immateri
Slide 22: Financial Overview
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 22
Slide 23: Income Statement
Income Statement Key Financial Indicators – Income Statement ($’000): H1 17/H1 16 H1 2017 H1 2016 FY 2016 Growth Trading income (net) 188,417 158,772 19% 327,927 Record H1 revenues driven by an increased level of active customers and new and ongoing Selling and marketing expenses 61,227 91,488 -33%
Slide 24: Lean cost structure
Lean cost structure Key Financial Indicators: ($‘000): H1 2017 H1 2016 H117/H116 FY 2016 Growth Advertising and marketing Healthy and efficient cost base – 45,066 75,616 -40% 124,848 “Advertising and marketing costs” costs and “Processing costs” represent 73% of total H1 2017 expenses Processing cos
Slide 25: Balance sheet remains strong
Balance sheet remains strong Key Financial Indicators – Balance Sheet: ($’000): H1 17/H1 16 H1 2017 H1 2016 FY 2016 Growth Cash and cash Record level of cash balance. 220,651 96,176 129% 136,518 Stated before 2016 final dividend equivalents payment of $75m paid on 3 July Other Current 2017 25,243 17
Slide 26: Strong cash generation funds attractive dividend
Strong cash generation funds attractive dividend Key Financial Indicators – Cash Flow: ($ ,000): H1 16/H1 17 H1 2017 H1 2016 FY 2016 Growth Limited capex needs Operating activities: 115,029 56,298 104% 153,455 Cash generated from operations Low capital requirements Income tax paid - net (30,474) (19
Slide 27: Dividend and share buy back payouts (2017 proposed to date)
Dividend and share buy back payouts (2017 proposed to date) 160,000,000 $139m * 140,000,000 $123m $26.7m 120,000,000 100,000,000 80,000,000 $65m $60m 60,000,000 40,000,000 $15m $17m 20,000,000 $10m 0 2011 2012 2013 2014 2015 2016 2017 An interim payout (60% of H1 2017 net profit) comprised of two eq
Slide 28: Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 28
Slide 29: Outlook – confident of another successful year
Outlook – confident of another successful year Strong start to Q3 2017 with promising new customers, active customers, revenues and EBITDA margin performance Focus on organic growth through continuing investment, innovation and brand building Expect to broaden footprint and continue to diversify rev
Slide 30: Investment Summary
Investment Summary Business model significantly differentiated from major peers Market leading in use of innovative technology, use of mobile, and marketing techniques Low cost, low risk and low capital intensive financial model Highly cash generative – robust balance sheet and cash conversion Focus
Slide 31: Disclaimer
Disclaimer The Presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities of the Company, nor shall it (or any part of it), or the fact of its distribution, form the basis of