Plus500 Ltd. · LSE:PLUS
Plus500 — FY2018 Earnings Presentation
46 slides from Plus500's earnings presentation, 2019
Slide 1: Results for the twelve months ended 31 December 2018
Results for the twelve months ended 31 December 2018 London Stock Exchange symbol: PLUS * Illustrative figures
Slide 2: Record Results
Record Results Revenues EBITDA EBITDA Margin EPS $720.4m $506.0m 70.2% $3.33 +65% +95% +18% +90% Year-End Cash Generated Dividends Total Returns to Net cash From operations Shareholders Interim – $157.0m $315.3m $495.0m Final – $70.4m $229.7m +30% +78% Total – $227.4m +15% + 18% 2
Slide 3: Financial & Operating Highlights
Record Results Financial & Operating Highlights Record financial performance: Strong progress and trading activity: Exceptional first quarter benefitting in particular from Cryptocurrency Leadership in technology and product innovation trading Total number of transactions in 2018 increased by 6% yea
Slide 4: Record Results
Record Results * By total number of relationships with UK CFD traders. Investment Trends 2018 UK Leverage Trading Report **** ** By total number of client relationships. Investment Trends 2018 Germany & Spain CFD & FX Reports *** By own client rating. Investment Trends 2017 Australia CFD Report ****
Slide 5: Key Business Model Strengths
Record Results Key Business Model Strengths NON-MARKETING & PROCESSING COST EFFICIENCY AVERAGE REVENUE & COST PER EMPLOYEE ($,000) $300 14.0% $2,500.00 245 12.0% $250 12% 228 $2,000.00 10% 10.0% 1,723 $200 10% 8.0% $1,500.00 $150 141 1,093 1,107 6.0% $1,000.00 $100 591 515 4.0% 452 $500.00 $50 2.0%
Slide 6: Lean Cost Structure
Record Results Lean Cost Structure Key Financial Indicators ($m) FY 17 / FY 18 Efficient cost base – “discretionary advertising and 2018 2017 Growth marketing costs” and “processing costs” represented Advertising and marketing costs 125.4 117.0 7% 68% of FY 18 expenses Processing costs 20.1 16.9 19%
Slide 7: Outlook
Outlook Plus500 is well positioned to capitalise on the significant global market opportunity in the financial trading industry, building on its success to date Following our latest assessment of the impact of the ESMA regulatory measures, FY19 revenue is expected to be lower than current market exp
Slide 8: Business Model
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 8
Slide 9: Strong Product Platform
Business Model Strong Product Platform CFD Financial Instruments Platform and Devices Unified Trading Platform Over 2,200 CFD financial instruments Supporting 32 languages in more than 50 countries Stocks iPhone / iPad Commodities Indices Web Android Trader App Plus500 Plus500 Product Platform Portf
Slide 10: Market Leading Technology
Business Model Market Leading Technology Proprietary technology, developed in-house - key differentiator and flexible advantage System Architecture User Interface rapid product development consistent experience across all platforms “Marketing Machine” efficient acquisition of new customers Back Offi
Slide 11: Business Performance
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 11
Slide 12: New Customer and Active Customer KPIs
Business Performance New Customer1 and Active Customer2 KPIS FY 2018 FY 2017 H2 2018 H2 2017 Active Customers 304,616 317,175 (4%) 142,804 263,624 (46%) ARPU 2,365 72% (Average Revenue per User) 1,379 1,785 944 89% New Customers 134,237 246,946 (46%) 40,089 193,065 (79%) AUAC 934 474 97% 1,537 373 3
Slide 13: KPIs Trends
Business Performance KPIS Trends Revenues ($m) ARPU New Customers Active Customers 2018 2017 % 2018 2017 % 2018 2017 % 2018 2017 % UK 100.5 68.6 47% 2,199 1,360 62% 21,349 39,427 (46%) 45,694 50,426 (9%) EEA (exc. UK and 384.7 247.8 55% 2,154 1,346 60% 78,400 138,676 (43%) 178,576 184,074 (3%) Switz
Slide 14: Revenues ($m) Breakdown
Business Performance Revenues ($m) Breakdown FY 2018 FY 2017 H1 2018 H2 2018 H1 2017 H2 2017 Professional 141.0 - 48.4 92.6 - - Retail 344.2 - 284.1 60.1 - - Total EEA 485.2 316.4 332.5 152.7 137.5 178.9 Australia 84.8 23.7 47.6 37.2 6.9 16.8 Rest of the World 150.4 97.1 85.4 65.0 44.0 53.1 Total 72
Slide 15: Number of Active Customers
Business Performance Number of Active Customers FY 2018 FY 2017 H1 2018 H2 2018 H1 2017 H2 2017 Professional 5,935 - 3,802 5,567 - - Retail 218,335 - 182,876 97,999 - - Total EEA 224,270 234,500 186,678 103,566 85,022 194,242 Australia 35,769 38,994 30,265 13,264 6,433 35,862 Rest of the World 44,57
Slide 16: Deposits
Business Performance Deposits Average Deposits $700 $650 $600 $550 $500 $450 $400 $350 $300 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 July 2018 Aug 2018 Sep 2018 Oct 2018 Nov 2018 Dec 2018 Average Deposit($) Per Pro Customer Average Deposit($) Per Retail Customer Average Deposit($) Per EEA Cus
Slide 17: Analysis of Inactive Customers ('Churn')
Business Performance Analysis of Inactive Customers (‘Churn’) 70% Retention Machine Algorithms 2016 62% 60% Increased activity of Active Customers 55% 2017 Reactivation of dormant customers 50% 46% 2018 Events & Market News driven 40% 30% 30% 23% 19% 20% 10% 0% Q4 FY Churn – [(Active Customers (T) +
Slide 18: Revenue Split by Customer Tenure
Business Performance Revenue Split by Customer Tenure FY 2016 FY 2017 FY 2018 2% 5% 4% 8% FY 2018: 73% of the Group’s 13% 12% 25% revenues derive from customers 32% 12% 23% who have traded for more than one year 37% 36% 23% 53% 15% >1 year >1 year >1 year FY 2018 PROFESSIONAL & RETAIL FY 2018 Profes
Slide 19: Analysis of Revenues % Split by Customers
Business Performance Analysis of Revenues % Split by Customers FY 2018 3%, 91% customers 43%, 8% customers 53%, 1% customers Professional FY 2018 PROFESSIONAL & RETAIL Retail 4%, 22% 91% customers 40% 1% customers 91% customers 51%, 1% customers 45%, 8% customers 38% 8% customers 19
Slide 20: High Return on Marketing Investment
Business Performance High Return on Marketing Investment Marketing spend per year and by channel Cumulative return from 2014 registrations Cumulative return from 2015 registrations Online Affiliates Offline 2014 2015 2016 2017 2018 140 350 M 2015 2016 2017 2018 350 M 120 304 * 13 16 300 M 282 300 M
Slide 21: Brand Awareness
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 21
Slide 22: Industry Leading Marketing Capabilities
Brand Awareness Industry Leading Marketing Capabilities Proven marketing optimisation technology Fast to react and accurate bidding algorithm ESMA measures had minimal impact on customer acquisition Affiliates: Focus on high value partners Strong compliance monitoring Improved graphic design and in-
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% 46% 55% 56% 56% 57% 53% Online marketing 70% 64% 60% 50% 40% 14% 23% 12% 11% 12% 12% 30% 14% 20% 31% 33% 33% 32% 33% 31% 10% 22% 0% 2012 2013 2014 2015
Slide 24: Regulatory Framework
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 24
Slide 25: Regulatory Framework
Regulatory Framework Regulatory Framework HQ Monetary Authority ISRAEL SECURITIES of Singapore AUTHORITY 25
Slide 26: Plus500 Compliance Approach and Principles
Regulatory Framework Plus500 Compliance Approach and Principles Regulatory Commitment: Full implementation of regulations, ongoing monitoring and auditing of regulatory stance CFD the Core Business: CFD trading is, and always has been, our only product offering – we never offered binary options Exec
Slide 27: Compliance as a Culture
Regulatory Framework Compliance as a Culture Plus500 has established a robust Compliance & AML framework to ensure the Company continues to meet its regulatory obligations and delivers best practice: Licensed subsidiaries are led by seasoned executives locally determined regulatory policies & best p
Slide 28: 2018 at a Glance
Regulatory Framework 2018 at a Glance Plus500 invested to ensure implementation of and compliance with regulatory changes, the most prominent of which were: General Data Protection Regulation (”GDPR”) Post MiFID II implementation roll-out ESMA intervention measures and guidance Evaluation and approv
Slide 29: Post-ESMA Measures Mitigation
Regulatory Framework Post-ESMA Measures Mitigation Investment in positioning 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 regulatory l
Slide 30: Risk Management
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 30
Slide 31: Risk Management Revenue Split FY 18 Performance
Risk Management Revenue Split 5 Year Performance FY 18 Performance Market PL, 3% Premium , 9% Dealing Spreads Difference between the buy price and the Amount ($m) # of losing days sell price of a CFD Overnight Funding 0-0.25 14 Interest charges on open customer positions held overnight 0.25-0.5 9 Cl
Slide 32: Minimising Downside Risk: 92% Profitable Trading Days In 2018
Risk Management Minimising Downside Risk: 92% Profitable Trading Days In 2018 Strong track record in managing market risk demonstrated by looking at number of profitable trading days. In 2018 the Group made a profit on approximately 92% of the trading days with remaining 8% of trading days showing m
Slide 33: Financial Overview
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 33
Slide 34: Income Statement
Financial Overview Income Statement Key Financial Indicators – Income Statement ($m) FY 18/FY 17 2018 2017 Growth Record revenues for FY 18 driven by an Trading income (net) 720.4 437.2 65% increased level of trading activity and by difference in P&L gain Selling and marketing expenses 175.9 156.0 1
Slide 35: Balance Sheet
Financial Overview Balance Sheet Key Financial Indicators – Balance Sheet ($m) No debt and loans FY 18/FY 17 2018 2017 Growth Strong balance sheet with positive Cash and cash equivalents 315.3 242.1 30% working capital Other Current Assets 12.8 25.3 (49%) Client money held with Barclays plc, Credit
Slide 36: Strong Cash Generation
Financial Overview Strong Cash Generation Key Financial Indicators – Cash Flow ($m) FY 18 / FY 17 Limited capex needs FY 2018 FY 2017 Growth Operating activities: Low capital intensity 495.0 278.7 78% Cash generated from operations High cash conversion, available for Interest received (paid), net 3.
Slide 37: Dividend and Share Buy Back Payouts
Financial Overview Dividend and Share Buy Back Payouts 500,000,000 Total Shareholders Return of $761m $395m 400,000,000 300,000,000 200,000,000 $123m $110m 100,000,000 $60m $65m $8m 0 2013 2014 2015 2016 2017 2018 Total of $395m being returned to shareholders in 2018 (including $2.3m through a share
Slide 38: Investment Summary
Business Model Brand Regulatory Framework Financial Investment Business Performance Awareness Risk Management Overview Summary 38
Slide 39: 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 40: Appendices
Appendices = Plussoo
Slide 41: Plus500 – an Attractive Proposition
Business Model Plus500 – an Attractive Proposition CFDs only Product portfolio CFDs and additional products CFDs and additional products (over 2,200 instruments, 7 asset classes) - Unified platform Combination of third-party Combination of third-party Technology platform - Core expertise (MetaTrader
Slide 42: Brand Interest by Google Trends
Brand Awareness Brand Interest by Google Trends Key Markets (July 2010 - December 2018) Worldwide 2018 FXCM IG Group CMC Markets City Index • Source: Google Trends web searches 42
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) Steven Baldwin, Independent Non-Executive Director Daniel King, Independent Non-Executive Director Mr. Baldwin is a non-executive Director and chairman of the Nomination and External Director Committee. Mr. Baldwin has an extensive corporate finance background and
Slide 45: Plus500 Board (continued)
Appendix Plus500 Board (continued) Asaf Elimelech, Chief Executive Officer Elad Even-Chen, Group Chief Financial Officer & VP Business Development Asaf Elimelech is chief executive officer of the Company. He previously Elad Even-Chen is the Chief Financial Officer of the Group, Vice President of ser
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