Plus500 Ltd. · LSE:PLUS
Plus500 — H1 2018 Earnings Presentation
46 slides from Plus500's earnings presentation, August 2018
Slide 1: Results for the first six months ended 30 June 2018
Results for the first six months: ENDED 30 JUNE 2018 London stock exchange symbol: PLUS * Illustrative figures
Slide 2: Record HY Results: Plus500 in numbers
RECORD HY RESULTS Plus500 in numbers: +121% +195% 248,564 94,148 $465.5m +147% $349.0m ACTIVE CUSTOMERS H1 18 NEW CUSTOMERS REVENUES GROWTH IN REVENUES EBITDA H1 18 (GROWTH H1 18/H1 17) H1 18 H1 18 H1 18/H1 17 (GROWTH H1 18/H1 17) 2
Slide 3: Record HY Results: Plus500 in numbers
RECORD HY RESULTS Plus500 in numbers: #1 RATED ON MOBILE APP STORES #1 REVENUES FROM MOBILE DEVICES #1 #1 UK CFD BROKER1 #1 SPAIN CFD BROKER2 #1 GERMANY CFD BROKER2 #1 AUSTRALIA CFD BROKER3 #1 1 By total number of relationships with UK CFD traders. Investment Trends 2018 UK Leverage Trading Report 2
Slide 4: Financial & Operating Highlights
FINANCIAL & OPERATING HIGHLIGHTS Record half year of strong revenue growth due to increased Strong progress and trading activity: New Customers1 and Active Customers2: Internationally regarded brand strengthened further due to Exceptional first quarter combined with a good second Group’s technology
Slide 5: Business Overview
Business Brand Regulatory & Financial Outlook Overview Presence Risk Management Overview 5
Slide 6: Business Model
Business Overview BUSINESS MODEL Revenue Split Revenues FY 2017 International Footprint Plus500UK FCA regulated Dealing Spreads 0% Spreads Difference between the buy price and 11% Plus500CY the sell price of a CFD Overnight CySEC regulated Funding Overnight Funding Plus500 Ltd. Israel HQ Interest ch
Slide 7: Key Business Model Strengths
Business Overview KEY BUSINESS MODEL STRENGTHS Self-developed, user friendly and robust trading platform – Analytics driven, returns focused customer based on proprietary in-house developed technology acquisition model – based on proprietary “Marketing Machine” and affiliate programme 94,148 $836 $6
Slide 8: Key Business Model Strengths
Business Overview KEY BUSINESS MODEL STRENGTHS Attractive financial profile – significant operational flexibility and ongoing focus on shareholder returns 2013 - 2018 Dividend Funnel* Revenue Net Profit Dividend $1,850m $827m $680m Effective, comprehensive risk management capabilities– based on sign
Slide 9: Strong Product Platform
Business Overview STRONG PRODUCT PLATFORM CFD Financial Instruments Platform and Devices Unified Trading Platform 2,200 CFD financial instruments Supporting 32 languages in more than 50 countries Stocks iPhone / iPad / Commodities Indices Android WebTrader App Plus500 Plus500 Product Platform Portfo
Slide 10: Market Leading Technology
Business Overview MARKET LEADING TECHNOLOGY Proprietary technology, developed in-house: key differentiator and flexible advantage System Architecture rapid product development User Interface “Marketing Machine” consistent experience efficient acquisition of new customers across all platforms Back Of
Slide 11: Plus500 an Attractive Proposition
Business Overview PLUS500 AN ATTRACTIVE PROPOSITION CFDs only Product portfolio CFD, Spread betting, Binary Options CFD, Spread betting, Binary Options (2,200 instruments, 7 asset classes) -Unified platform Multi-layer platform with third-party Combination of third-party Technology platform -Core ex
Slide 12: New and Active Customer KPIs
Business Overview NEW AND ACTIVE CUSTOMER KPIS H1 2018 H1 2017 Q2 2018 Q2 2017 2017 Total Active Customers 248,564 112,317 103,086 80,526 317,175 % Growth % Growth 121% 28% H1 2018/H1 2017 Q2 2018/Q2 2017 ARPU 1,873 1,678 1,632 1,377 1,379 % Growth % Growth 12% 19% H1 2018/H1 2017 Q2 2018/Q2 2017 Ne
Slide 13: KPIs Trends
Business Overview KPIS TRENDS Revenues ($m) ARPU New Customers Active Customers H1 2018 H1 2017 % H1 2018 H1 2017 % H1 2018 H1 2017 % H1 2018 H1 2017 % UK 69.6 30.5 128% 1,933 1,617 20% 13,690 10,048 36% 36,010 18,867 91% EEA 262.9 107.0 146% 1,745 1,617 8% 57,945 28,628 102% 150,668 66,155 128% (ex
Slide 14: Analysis of Customer Churn
Business Overview ANALYSIS OF CUSTOMER CHURN Churn Churn (Rolling 12 months) 70% 70% 63% 62% 2015 60% 60% 2016 55% 51% 50% 48% 2017 50% 41% 43% 41% 2018 40% 37% 38% 40% 35% 32% 31% 31% 30% 30% 20% 20% 20% 10% 10% 0% 0% Q1 Q2 H1 H115-H116 H116-H117 H117- H118 Churn – [(Active Customers (T) + New Cust
Slide 15: Analysis of Customer Revenue
Business Overview ANALYSIS OF CUSTOMER REVENUE Revenues % split by Customers Revenue split by customer tenure – H1 2018 9%, 91% of Customers 0-6 Months 45%, 1% of Customers 11% 7-12 Months 21% 5% 1-3 Years 3-5 Years 5+ Years 26% 37% 46%, 8% of Customers 37% of Group’s revenues come from customers wh
Slide 16: High Return on Marketing Investment
Business Overview HIGH RETURN ON MARKETING INVESTMENT Marketing spend per year and by channel Cumulative return from 2014 registrations Online Affiliates Offline 300 2014 2015 2016 2017 2018 140 267 120 * 13 * 250 29 9 * 13 37 100 *9 200 6 27 48 80 150 1 60 4 *6 103 12 79 100 1 89 40 77 1 3 56 50 20
Slide 17: Mobile Revenues and Sign Ups by Device
Business Overview MOBILE REVENUES AND SIGN UPS BY DEVICE Revenues by Device Number of Signups by Device 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q1
Slide 18: Brand Awareness
Business Brand Regulatory & Financial Outlook Overview Awareness Risk Management Overview 18
Slide 19: Brand Interest by Google Trends 2018
Brand Awareness BRAND INTEREST BY GOOGLE TRENDS 2018 FXCM IG Group CMC Markets City Index Group Jul 1, 2010 Aug 1, 2012 Oct 1, 2015 June 30, 2018 Source: Google Trends web searches, (July 2010 – July 30, 2018) https://trends.google.com/trends/explore?cat=7&date=2010-01-07%202018-06-30&q=%2Fm%2F0wzqy
Slide 20: Plus500 #1 CFD Provider within Core Markets | UK
Brand Awareness Plus500 #1 CFD PROVIDER WITHIN CORE MARKETS | UK Plus500 is the largest CFD provider in the UK by total number of client relationships Providers' shares of primary and secondary relationships with UK CFD traders Top 10 providers 0% 10% 20% 30% 40% 50% IG 18% Plus500 15% 6% eToro 9% 5
Slide 21: Plus500 #1 CFD Provider within Core Markets | Germany
Brand Awareness Plus500 #1 CFD PROVIDER WITHIN CORE MARKETS | GERMANY Among German CFD/FX traders, Plus500 has the largest reach Providers' shares of primary and secondary relationships with German CFD/ FX traders Top 10 providers 0% 5% 10% 15% 20% 25% 30% CMC Markets 8% 5% eToro 7% 3% GKFX 7% 3% Pl
Slide 22: Plus500 #1 CFD Provider within Core Markets | Spain
Brand Awareness Plus500 #1 CFD PROVIDER WITHIN CORE MARKETS | SPAIN Plus500 is the largest CFD/FX provider in Spain by total number of client relationships Providers' shares of primary and secondary relationships with Spanish CFD/FX traders Top 10 providers 0% 5% 10% 15% 20% 25% 30% Plus500 17% IG 8
Slide 23: Growing Brand Awareness Increases Efficiency
Brand Awareness GROWING BRAND AWARENESS INCREASES EFFICIENCY New Customers acquisition by marketing channel 100% Direct to Plus500 90% Affiliate 80% 45% 55% 56% 56% 57% 53% Online marketing 70% 64% 60% 50% 40% 24% 12% 11% 12% 12% 14% 30% 14% 20% 31% 33% 33% 32% 33% 31% 10% 22% 0% 2012 2013 2014 2015
Slide 24: Regulatory & Risk Management
Business Brand Regulatory & Financial Outlook Overview Presence Risk Management Overview 24
Slide 25: Regulatory Framework
Regulatory & Risk Management REGULATORY FRAMEWORK Ltd Headquarters Listed on LSE UK Ltd AU Pty Ltd CY Ltd IL Ltd SG Pte Ltd SA Pty Ltd UK Australia, Cyprus Israel Singapore South Africa New Zealand, (FCA) (CySEC) (ISA) (MAS, IE (FSCA) South Africa Regulated Regulated Regulated Singapore) Regulated (
Slide 26: Plus500 Compliance Approach and Principles
Regulatory & Risk Management PLUS500 COMPLIANCE APPROACH AND PRINCIPLES CFD trading is, and always has been, our only product offering – we never offered binary options The trading platform has always been a self execution venue (no advice, no call centre operation) Revenues derived from dealing spr
Slide 27: Commitment to Regulatory, Compliance and Risk Best Practice
Regulatory & Risk Management COMMITMENT TO REGULATORY, COMPLIANCE AND RISK BEST PRACTICE Plus500 has already implemented the latest regulatory changes, having: made the required adjustments to comply with MIFID II requirements complied with the General Data Protection Regulation (”GDPR”) complied wi
Slide 28: Regulation – Post-ESMA Potential Impact
Regulatory & Risk Management REGULATION – POST-ESMA POTENTIAL IMPACT ESMA changes as of 01/08/2018 Plus500 compliance pre-ESMA Plus500 compliance post-ESMA Potential impact Negative balance protection None Maintenance margin None Appropriateness None Risk Warning Disclosure Industry stan
Slide 29: Post-ESMA - Mitigation Measures
Regulatory & Risk Management POST-ESMA - MITIGATION MEASURES Invest in position as #1 International CFD broker Continue to leverage technology edge and marketing advantage Expansion within existing core markets Further geographical diversification – entrance into new markets (including new licences)
Slide 30: Customer Loss Rate – New Disclosure
Regulatory & Risk Management CUSTOMER LOSS RATE – NEW DISCLOSURE Our overall EEA customer loss ratio is in line with the industry at 80.6% However, it should be noted that most losses are relatively minor: 8% of total customers lost $20 or less 39% of total customers lost $350 or less 50% of total c
Slide 31: Minimising Downside Risk: 94% Profitable Trading Days in H1 2018
Regulatory & Risk Management MINIMISING DOWNSIDE RISK: 94% PROFITABLE TRADING DAYS IN H1 2018 Strong track record in managing market risk demonstrated by looking at number of profitable trading days. In H1 2018 the Group made a profit on approximately 94% of the trading days with remaining 6% of tra
Slide 32: Financial Overview
Business Brand Regulatory & Financial Outlook Overview Presence Risk Management Overview 32
Slide 33: Income Statement
Financial Overview INCOME STATEMENT Key Financial Indicators – Income Statement ($m) H1 18/H1 17 H1 2018 H1 2017 FY 2017 Growth Record H1 revenues driven by an Trading income (net) 465.5 188.4 147% 437.2 increased level of Active and New Customers Selling and marketing expenses 92.8 61.2 52% 156.0 I
Slide 34: Lean Cost Structure
Financial Overview LEAN COST STRUCTURE Key Financial Indicators ($m) H118/H117 H1 2018 H1 2017 FY 2017 Growth Healthy and efficient cost base – Advertising and marketing 63.8 45.1 41% 117.0 “Advertising and marketing costs” costs and “Processing costs” represent Processing costs 12.2 6.3 94% 16.9 65
Slide 35: Balance Sheet
Financial Overview BALANCE SHEET Key Financial Indicators – Balance Sheet ($m) H1 18/H1 17 H1 2018 H1 2017 FY 2017 Growth Record level of cash balance Cash and cash equivalents 511.9 220.7 132% 242.1 Cash balances held on deposit at Other Current Assets 11.6 25.2 (54%) 25.3 Barclays Plc, Credit Suis
Slide 36: Strong Cash Generation
Financial Overview STRONG CASH GENERATION Key Financial Indicators – Cash Flow ($m) H1 18/H1 17 H1 2018 H1 2017 FY 2017 Growth Limited capex needs Operating activities: Cash generated from operations 335.5 115.0 192% 278.5 Low capital requirements Income tax paid - net (63.2) (30.5) 107% (66.5) Net
Slide 37: Dividend and Share Buy Back Payouts
Financial Overview DIVIDEND AND SHARE BUY BACK PAYOUTS 350,000,000 $322m 300,000,000 250,000,000 200,000,000 150,000,000 $123m * $110m 100,000,000 $60m $65m 50,000,000 $17m 0 2013 2014 2015 2016 2017 2018 * Shareholders return included a share buyback programme of $7.5 million which was executed dur
Slide 38: Outlook
Business Brand Regulatory & Financial Outlook Overview Presence Risk Management Overview 38
Slide 39: Current Trading
Outlook CURRENT TRADING Q3 2018 trading to date is in line with market expectations and overall, the Group is on track to meet expectations for the year as a whole The Board continues to assess the potential impact of recent regulatory changes on future years The Japanese experience in 2013 showed a
Slide 40: Long Term Outlook
Outlook LONG TERM OUTLOOK Customer-centric strategy – to offer the best protection combined with the best trading platform 10 years on from our foundation, our technology edge remains a significant competitive advantage Leading international brand – increased brand recognition optimises ROI levels a
Slide 41: Investment Summary
Outlook 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 & cash conversion
Slide 42: Appendix
Appendix =Plussoo
Slide 43: Plus500 Board
Appendix Plus500 BOARD Penny Judd, Independent Non-Executive Director and Chairman Charles Fairbairn, Senior Independent Non-Executive Director Ms. Judd is a non-executive Director, Chairman of the Board and and External Director chairman of the Risk and Regulatory Committee. Ms. Judd is a chartered
Slide 44: Plus500 Board (continued)
Appendix Plus500 BOARD (continued) Daniel King, Independent Non-Executive Director and External Director Steven Baldwin, Non-Executive Director Daniel King is a non-executive Director and chairman of the Mr. Baldwin is a non-executive Director. Mr. Baldwin has an extensive Remuneration Committee and
Slide 45: Plus500 Board (continued)
Appendix Plus500 BOARD (continued) Asaf Elimelech, Chief Executive Officer Elad Even-Chen, Group Chief Financial Officer & VP Business Asaf Elimelech is chief executive officer of the Company. He previously Development served as the CEO of Plus500AU Pty Ltd. and has worked for the Group Elad Even-Ch
Slide 46: Disclaimer
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 t