Plus500 Ltd. · LSE:PLUS
Plus500 — H1 2018 Earnings Presentation
54 slides from Plus500's earnings presentation, 2018
Slide 1: Investors Presentation
INVESTORS PRESENTATION * Illustrative numbers
Slide 2: R&D Marketing Compliance Operations
R&D Marketing Compliance Operations 2
Slide 3: Plus500 R&D Themes
R&D Plus500 R&D THEMES R&D INFRASTRUCTURE PRODUCT REGULATION Best in Class Security | Delivery Apply Best Practices Online Trading Platform 3
Slide 4: 30K Feet Technical Overview
R&D 30K FEET TECHNICAL OVERVIEW Trading Machine Data Client Platforms Server ML | Marketing | BI iOS | Android | Web Cloud Payment Processing | Feeds | More 4
Slide 5: Infrastructure Overview
R&D INFRASTRUCTURE OVERVIEW Delivery Network World leading infrastructure providers: Rackspace Managed Hosting – Provider for over half of the Fortune 100 Verizon’s Edgecast Delivery Network Robust Scalable DATACENTERS Fast Secure 5
Slide 6: Product Update
R&D PRODUCT UPDATE Added over 100 CFD Instruments since 2017: Xiaomi was available and traded the platform within minutes from the IPO Economic Calendar in the website and platform One Click Registration with Google / Facebook Advanced Client Communication System Focused communication and retention
Slide 7: Regulation Update
R&D REGULATION UPDATE Implemented MiFID II / MiFIR rules Implemented ESMA CFD Rules Implemented GDPR compliance Implemented Elective Professional Trading Accounts 7
Slide 8: Outlook
R&D OUTLOOK Focus on the high frequency high volume traders New appealing CFD instruments: and keep it simple More options CFDs Leveraged CFDs Bring more value to users: Best in class mobile charts Support business expansion to new markets Decision supporting features Education Platform Hire the bes
Slide 9: R&D Marketing Compliance Operations
R&D Marketing Compliance Operations 9
Slide 10: Online Marketing
Marketing ONLINE MARKETING Marketing Machine- Data Driven Marketing YouTube - Video can bring performance Google as main channel New Channels: Apple Search Ads Bing as source for high quality users ASO & SEO Social: Snapchat, Pinterest Social Facebook, Twitter & Instagram - strong online presence 10
Slide 11: Marketing Partnerships
Marketing MARKETING PARTNERSHIPS Best Affiliates Program High ROI Long term relationships High growth potential Comparison sites Offline Atlético Madrid & Brumbies Sponsorships TV, Newspapers & Outdoor 11
Slide 12: Watch!
TRADING Y GOLDEN EGG? BUYING?
Slide 13: #1 CFD Broker in UK, Germany, Spain
Marketing #1 UK CFD Broker #1 Germany CFD Broker #1 Spain CFD Broker By total number of client relationships. Investment Trends 2018 UK, Germany and Spain CFD & FX Reports 13
Slide 14: Growth in Active Reals - H1 YOY
Growth in Active reals - H1 YOY 400% 366% 350% 200% 150% 100% aig 0% Spain Germany Australia =Plussoo
Slide 15: Customer Value Increases Over Time
Marketing CUSTOMER VALUE INCREASES OVER TIME 15
Slide 16: Revenues in Q2'18 by Customer Age
Marketing Revenues in Q2'18 Q2‘s Revenues by Customer Age 16
Slide 17: Mitigation of Competition
Marketing MITIGATION OF COMPETITION Bids Optimization CTR has increased by 60% Leverage the leadership position: Plus500 is #1 CFD platform in UK, Germany & Spain Innovative ads 17
Slide 18: Competition
Marketing COMPETITION Competition increased over April to June - “Bids Battle” on “Plus500” search term 18
Slide 19: Retention Campaigns
Marketing RETENTION CAMPAIGNS 19
Slide 20: Singapore
Marketing SINGAPORE Increase traffic in all channels while Reg/Real conversion continues to improve Adding Offline activity on TV 20
Slide 21: What's Next?
Marketing WHAT’S NEXT? We keep ruling Online High Focus on Retention - Engine for improving conversion & LTV Expanding Affiliates & Media Buying Capabilities 21
Slide 22: R&D Marketing Compliance Operations
R&D Marketing Compliance Operations 22
Slide 23: Compliance Organisational Chart
Compliance COMPLIANCE ORGANISATIONAL CHART Erez Levy Head of Compliance Plus500 UK - Michelle West CY - Despina CY - Timothy IL – Compliance SG – Joyce Lim AU - Joana Muresan Head of Compliance & Spyrou Georghiou Officer Head of Compliance Manager MLRO Compliance Officer AMLCO Barak Roth Compliance
Slide 24: Plus500 Group Compliance
Compliance Plus500 GROUP COMPLIANCE The principles Triangular Communication Scheme Support growth responsibly Group If it is not simple, it simply won’t be Compliance Focus on the same to make a better difference Organisational knowledge centre Regulated Peers Subsidiary 24
Slide 25: Plus500 Group Compliance
Compliance Plus500 GROUP COMPLIANCE The principles (cont.) Triangular Communication Scheme Support growth responsibly enable business initiatives within the parameter Group balance between regulation and business Compliance If it is not simple, it simply won’t be simple procedures, processes and pol
Slide 26: Plus500 Group Compliance
Compliance Plus500 GROUP COMPLIANCE The principles (cont.) Triangular Communication Scheme Focus on the same to make a better difference learn from peer experience Group solutions transferring Compliance Organisational knowledge centre HQ as knowledge centre central data repository Group level proje
Slide 27: 2018 Main Regulatory Projects
Compliance Plus500 GROUP COMPLIANCE 2018 Main Regulatory Projects MiFID II GDPR ESMA Intervention Measures Elective Professional Clients 27
Slide 28: ESMA Product Intervention Measures
Compliance ESMA PRODUCT INTERVENTION MEASURES 5 main restrictions on CFDs are in effect since 1 August 2018 Negative Balance Protection 50% account based margin close-out rule No incentives New reduced margin levels: 1:30 on major forex 1:20 on major equity indices, minor forex, gold 1:10 on minor e
Slide 29: ESMA Product Intervention Measures (cont.)
Compliance ESMA PRODUCT INTERVENTION MEASURES 5 main restrictions on CFDs are in effect since 1 August 2018 (cont.) New standardized risk warnings: Long version (website) Short version (banners, mobile apps, emails) 29
Slide 30: EPC Compliance Developments
Compliance EPC COMPLIANCE DEVELOPMENTS Enhancing our customer due diligence process following ESMA’s Q&A Qualitative test – pass Appropriateness or Knowledge + Experience Quantitative test documents requirement conflicts resolution (with the qualitative test) Further information requirements EPC vid
Slide 31: GDPR in Plus500
Compliance GDPR IN Plus500 Transparency – updated privacy and cookie policies Consent – collecting consents for targeted marketing – complying with the highest standard 31
Slide 32: GDPR in Plus500 (cont.)
Compliance GDPR IN Plus500 (cont.) Data subjects requests – implemented a fully automated requests submission system, as well as an operational workflow to handle such requests (extended to all operators) Legal Documents – documenting, registering and amending contracts. Constantly monitoring our co
Slide 33: R&D Marketing Compliance Operations
R&D Marketing Compliance Operations 33
Slide 34: Main Responsibilities
Operations MAIN RESPONSIBILITIES Customer application verifications Content & Creative Customer service HR Backoffice IT helpdesk Payment processing Global group administration Anti Fraud 34
Slide 35: Customer Verifications - EIC
Operations CUSTOMER VERIFICATIONS - EIC Verify customers KYC details (identity and address) Use of multiple providers for optimization Enabled for customer from 12 countries (Main markets) Fully monitored from compliance perspective 35
Slide 36: EIC Success Rate
Operations EIC SUCCESS RATE Fully Verified Partly Verified Documents required 36
Slide 37: Customer Verifications
Operations CUSTOMER VERIFICATIONS Manual verification of documents: Operated from three different locations for full efficiency and scalability Median review time of documents in Q2 2018: 2.55 minutes Photo ID auto approval mechanism is implemented to assist during workloads Pay methods verification
Slide 38: Payments Processing - Supported Pay Methods
Operations PAYMENTS PROCESSING - SUPPORTED PAY METHODS 38
Slide 39: Payments Processing
Operations PAYMENTS PROCESSING Fully self developed cashier and processing Domestic processing to reduce costs where mechanism possible Integrated to many payment processors for Implemented PayPal’s one click solution optimization Smart transaction route to reduce costs Moved to tokenization methodo
Slide 40: Payments Processing
Operations PAYMENTS PROCESSING 40
Slide 41: Payments Processing
Operations PAYMENTS PROCESSING 41
Slide 42: Payments Processing
Operations PAYMENTS PROCESSING 42
Slide 43: Withdrawals Processing
Operations WITHDRAWALS PROCESSING Auto approve withdrawals to speed withdrawals handling times while reducing risks Daily manual approval of withdrawals with higher AML/Fraud risk Dedicated transactions support team to provide immediate answers to customers in payments processing related issues - Ne
Slide 44: Withdrawals Processing
Operations WITHDRAWALS PROCESSING 44
Slide 45: Anti Fraud
Operations ANTI FRAUD Trust levels (system limits) mechanism Suspicious activity monitoring: Monitoring reports Escalation from AML and backoffice Anti Fraud alerts Hedge abusing: Automated system monitoring. Daily reports Chargebacks >> 45
Slide 46: Anti Fraud - Chargebacks
Operations ANTI FRAUD - CHARGEBACKS Financial services industry average chargeback ratio: 0.65% Source: https://chargebacks911.com/chargeback-stats-2017/ 46
Slide 47: Anti Fraud - Chargebacks
Operations ANTI FRAUD - CHARGEBACKS Plus500 group average chargeback ratio across all credit card processors: 47
Slide 48: Anti Fraud
ANTI FRAUD Fraudsters ratio of reals 2017-2018 2017-Qtrl = 2017-Qtr2 = 2017-Qtr3._- 2017-Qtr4 = 2018-Qtr1 = 2018-Qtr2 = 2018-Qtr3 =Plussoo
Slide 49: Customer Service
Operations CUSTOMER SERVICE Native customer support in 16 languages over chat and email: English Czech German Polish Dutch Arabic Italian Hebrew Spanish Danish Chinese Portuguese Norwegian Slovakian French Bulgarian 49
Slide 50: Customer Service
Operations CUSTOMER SERVICE Email support is available in the above languages 24/7 and chat during day shifts Chat support is available 24/7 for the main languages (English, French, Italian, German, Spanish, Dutch) Proactive chat team - Engage customers when needed to enhance service provided Averag
Slide 51: Customer Service
Operations CUSTOMER SERVICE 51
Slide 52: FOS Complaints
Operations FOS COMPLAINTS Complaints Active customers H1 2017 49 112,317 H2 2017 60 263,624 H1 2018 51 248,564 52
Slide 53: Operations in New Markets
Operations OPERATIONS IN NEW MARKETS Market research Staff and administration Localization Training Local and popular payment methods Go live Onboarding and KYC design Operational processes 53
Slide 54: 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