Plus500 Ltd. · LSE:PLUS
Plus500 — H1 2016 Earnings Presentation
33 slides from Plus500's earnings presentation, August 2016
Slide 1: Results for the first six months ended 30 June 2016
Results for the first six months ended 30 June 2016 London Stock Exchange Symbol: PLUS
Slide 2: Strong KPIs H1 2016 – record HY results
Strong KPIs H1 2016 – record HY results Plus500 in numbers: #1 #1 #1 8 31 >50 Rated on Revenues from In new Unified Languages Countries mobile app mobile devices customers Platforms stores $158.8m +25% $59.1m 56,929 104,119 Revenues Growth in EBITDA H1 16 New customers H1 16 Active customers H1 16 H
Slide 3: H1 2016 Operational Highlights
H1 2016 Operational Highlights Increase in new customers a record for six months and substantially ahead of expectations: Temporarily suppressed EBITDA margins and ARPU due to extra costs being incurred prior to revenues Additional customers expected to benefit revenues and margins going forward Exc
Slide 4: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 4
Slide 5: Key Business Model Strengths
Key Business Model Strengths Self-developed, user friendly and robust trading platform Proprietary in-house developed technology Analytics driven, returns focused customer acquisition model Proprietary “Marketing Machine” and affiliate programme Strong international brand Differentiated user experie
Slide 6: Strong Product Platform
Strong Product Platform CFD products Platform and Devices Trading Platform 2,250 CFD products Supporting 31 languages in Retail customers only more than 50 countries iPhone / Stocks iPad / Apple Watch App WebTrader Android Commodities Indices App Plus500 Plus500 Product Platform Portfolio Windows Wi
Slide 7: 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 8: Flexible Business Model
Flexible Business Model Revenue Split Revenues FY 2015 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 9: Analysis of customer churn
Analysis of customer churn Churn Revenue split by client tenure 0-6 Months 14% 1% 7-12 Months 1-3 Years 3-5 Years 19 % 5+ Years 51% 15% 66% of Group’s Increased focus on revenues come from customer retention customers who trade for initiatives reduces churn more than one year Churn – [(Active custom
Slide 10: New and active customer KPIs
New and active customer KPIs H1 2016 H1 2015 2015 New Customers 56,929 52,217 84,858 % Growth % Growth FY 2015/FY 9% 28% H1 2016/H1 2015 2014 AUAC 1,328 1,033 1,227 % Growth % Growth 29% 33% H1 2016/H1 2015 FY 2015/FY 2014 Active Customers 104,119 93,267 136,540 % Growth % Growth 12% 29% H1 2016/H1
Slide 11: Significant Investment in Marketing
Significant 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 % Direct Online 88% 89% 92% 86% 86% * Due to Atletico Madrid s
Slide 12: Growing brand awareness increases efficiency
Growing brand awareness increases efficiency New Customers acquisition by marketing channel 120% Direct to Plus500 100% Affiliate Online marketing 80% 55% 56% 54% 56% 64% 60% 40% 12% 11% 12% 11% 14% 35% 20% 32% 33% 33% 22% 0% 2012 2013 2014 2015 1H 2016 Increased brand recognition Page 12
Slide 13: Marketing costs impact
Marketing costs impact Marketing costs are being expensed immediately when customers are onboarded. Revenues start to be generated with a lag of approx. 3 months 3 months gap Financial news leads to Marketing Number increased and other of new EBITDA EBITDA Revenues market costs customers margin marg
Slide 14: Marketing infrastructure: Online is key
Marketing infrastructure: Online is key Online advertising The use of our proprietary automated marketing platform ensures that spending is efficient with a demonstrable return on investment. Online advertising Focus is online Measurable Learns from experience Flexible spending Context-specific adve
Slide 15: Marketing infrastructure: Affiliates programme
Marketing infrastructure: Affiliates programme A large international affiliates programme Over 2,000 active affiliates who advertise Plus500 Paid on success only Easy-to-access and use affiliates’ portal as marketing collateral Fully automated online analysis and reward platform All Affiliates are s
Slide 16: Marketing infrastructure: Offline campaigns
Marketing infrastructure: Offline campaigns Increased activity offline to strengthen the Plus500 brand Continue with targeted campaigns Main official sponsor of Atlético Madrid FC Eurosport TV ads Key campaigns from 2016 Roland Garros US Open https://www.youtube.com/watch?v=TgdCQz8c0g8 Fox Sports Au
Slide 17: Mobile – a key growth driver
Mobile – a key growth driver Key driver of market growth Mobile is a key access point for retail customers GUI developed for mobile, consistent with other platforms Features and portfolio of instruments on par with PC version Key acquisition channel for Plus500 Successfully launched a dedicated app
Slide 18: 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% Windows Web IPhone Windows Web IPhone IPad Android AndroidTablet IPad Android AndroidTablet WindowsApp WindowsPhone AppleWatch
Slide 19: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 19
Slide 20: Regulation framework
Regulation framework Client Take-On FCA / CySEC / ASIC / ISA rules set Ltd out client take-on requirements Israeli Headquarters Client money treated the same across jurisdictions and kept in segregated accounts. Customers must self-certify their UK Ltd AU Pty Ltd CY Ltd IL Ltd understanding of the r
Slide 21: Commitment to regulatory, compliance and risk best practice
Commitment to regulatory, compliance and risk best practice Continuing focus on, and investment in, best practice Global compliance team consists of c.150 permanent staff UK team led by local UK based staff with significant experience and relationship skills Enhanced day to day relationship with the
Slide 22: Recent industry developments
Recent industry developments Regulators “Dear CEO” letter (FCA) – Plus500UK was not included in the sample of ten firms that were reviewed in the “Dear CEO” letter from the FCA ESMA Q&A document (EU) – to promote common supervisory approaches and practices in the application of MiFID AMF (France) –
Slide 23: Trading platform integrated with risk management
Trading platform integrated with risk management Market Risk Risk Management Advisory Spread of customers acts as a natural risk-mitigation: No dominant customers Real-time monitoring of exposure limits by: Individual clients Individual instruments Total Company exposure Significant degree of automa
Slide 24: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 24
Slide 25: Income Statement
Income Statement Key Financial Indicators – Income Statement ($’000): H1 16/H1 15 H1 2016 H1 2015 FY 2015 Growth Record H1 revenues Trading income (net) 158,772 127,026 275,651 25% driven by active customers. Selling and marketing Increase in selling and 91,488 63,655 125,413 44% expenses marketing
Slide 26: Balance sheet remains strong
Balance sheet remains strong Key Financial Indicators – Balance Sheet: ($’000): H1 16/H1 15 H1 2016 H1 2015 FY 2015 Growth Cash and cash Increase in cash balance 96,176 95,533 156,535 0.7% despite payment of $96.6m equivalents dividend in 2015. Other Current 17,966 17,777 10,169 1% Cash balances hel
Slide 27: Lean cost structure
Lean cost structure Key Financial Indicators: ($ ,000): H1 16/H1 15 H1 2016 H1 2015 FY 2015 Growth Salaries 6,647 5,465 11,645 22% Healthy and efficient cost base – “Advertising and Advertising and marketing marketing costs” and 75,616 53,934 103,760 40% “Processing costs” represent costs 84% of tot
Slide 28: Strong cash generation funds attractive dividend
Strong cash generation funds attractive dividend Key Financial Indicators – Cash Flow: ($ ,000): H1 2016 H1 2015 FY 2015 Operating activities: Limited capex needs 56,298 47,620 128,133 Cash generated from operations Low capital requirements Income tax paid - net (19,502) (21,467) (42,658) High cash
Slide 29: Dividend payments driven by increasing profits
Dividend payments driven by increasing profits $130,000,000 $123m 2016 Interim Dividend $26.7m $110,000,000 $90,000,000 $70,000,000 $65m $60m $50,000,000 $30,000,000 $15m $17m $10,000,000 $9m $10m -$10,000,000 2010 2011 2012 2013 2014 2015 2016 Dividend policy – 60% of net profit & a special dividen
Slide 30: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 30
Slide 31: Outlook – confident of another successful year
Outlook – confident of another successful year Strong start to Q3 2016 with increased number of new customers and active customers, revenues and EBITDA margin Focus on organic growth through continuing investment, innovation and brand building Focus on retention initiatives to drive customer lifetim
Slide 32: Investment Summary
Investment Summary Business model significantly differentiated from major peers Market leading in use of innovative technology and marketing techniques Low cost, low risk and low capital intensive financial model Highly cash generative – robust balance sheet Strong organic growth prospects on back o
Slide 33: 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