Plus500 Limited Q1 Trading Update (3290D)

TIDMPLUS

RNS Number : 3290D

Plus500 Limited

26 April 2017

Plus500 Ltd.

("Plus500" or "the Company")

Trading update for the three months ended 31 March 2017

Significant improvement in profitability and quality of earnings

Plus500, a leading online service provider for retail customers to trade CFDs internationally, is pleased to announce the following trading update for the three months ended 31 March 2017.

Overview

   --     Significant improvement in profitability and quality of earnings: 

o Quarterly revenues of $77.5m and EBITDA(1) of $45.8m, an increase of 25% compared to Q1 2016

o Strong EBITDA margin of 59% ahead of market expectations

-- Performance reflects the Company's efficient business model and improved marketing productivity, despite current regulatory uncertainties in the market

   --     Strong operational KPIs: 

o Record number of Active Customers(2) during the quarter; a 6% increase on Q1 2016

   o  Average user acquisition cost(3)   decreased by 31% compared to Q1 2016 

o Average revenue per user(4) diluted by New Customers(5) and reduced market volatility in the quarter

-- Continued expansion of global footprint - new licence in South Africa follows the addition of licences in New Zealand and Israel in H2 2016

-- Renewed sponsorship with Atlético Madrid in January 2017; new Plus500 Brumbies Super Rugby sponsorship underway

-- Directorate changes announced separately today (to take effect from the Company's AGM on 1 June); Alastair Gordon intends stepping down from the position of Chairman to be replaced by current non-executive director Penelope Judd. In addition, Steve Baldwin will become a new non-executive director

KPIs

Key customer and revenues metrics for the three months ended 31 March 2017 were as follows:

 
                     FY 2016   Q1 2016*   Q1 2017*   % Growth 
 Revenues            $327.9m    $85.2m     $77.5m      -9% 
------------------  --------  ---------  ---------  --------- 
 New Customers       104,432    28,792     22,210      -23% 
------------------  --------  ---------  ---------  --------- 
 Active Customers    155,956    67,821     71,827       6% 
------------------  --------  ---------  ---------  --------- 
 ARPU(4)             $2,103     $1,256     $1,080      -14% 
------------------  --------  ---------  ---------  --------- 
 AUAC(3)             $1,195     $1,316      $907       -31% 
------------------  --------  ---------  ---------  --------- 
 

*Unaudited

(1) Earnings before interest, tax, depreciation and amortization

(2) Active Customers: Customers who made at least one trade using money on the trading platform during the relevant period

(5) New Customers: Customers who have deposited money into their own account for the first time

Trading review

The Company has reported a strong first quarter's trading with a record number of quarterly Active Customers. The Board believe this reflects the quality of the customer experience (as measured by strong customer satisfaction ratings) from Active Customers, who have chosen to continue using Plus500's intuitive and user-friendly trading platform.

The Company continues to focus its marketing activity on acquiring long term, Active Customers who deliver higher lifetime value even when markets are less volatile. The company is pleased that this refocussing has led to strong profit growth in the quarter and this shows the benefit of its low fixed cost structure.

Regulation

Plus500 will continue its rigorous approach to regulation and will ensure its activity is compliant with evolving regulatory requirements in all its territories.

In the first quarter, Plus500 took an active role in responding to the consultation paper issued in the UK and implemented the regulatory changes included within the various circulars which were issued by other authorities, including:

-- In the UK, Plus500 made a comprehensive submission to the Financial Conduct Authority's (the "FCA") current consultation, and is awaiting the FCA's response to the multiple submissions made by industry participants.

-- As a result of developments in France, Plus500 has launched a new version of its trading platform that complies with the limited risk and other requirements of the French regulator.

As the Company has announced on an RNS issued on 25 April 2017, it has reached a settlement agreement with the Belgium Financial Services and Markets Authority ("FSMA") for the amount of EUR 550.000. The settlement was reached in the context of the public offering of investment instruments, including CFDs as offered by the Company, in Belgium. The settlement does not amount to an admission of guilt or non-compliance by Plus500.

Plus500 will continue to implement necessary adjustments to its business model when required by regulatory changes. The Company reaffirms that it does not have any regulatory restrictions in any of the Group's regulated markets.

Outlook

Having achieved a record number of Active Customers and reported a strong EBITDA margin in Q1 2017, the Company has entered Q2 2017 with positive momentum. The Board believes that this performance is consistent with current market expectations for the full year.

The Board reaffirms its base 60% pay-out ratio dividend policy, reflecting the strength of Plus500's business model in its ability to convert net earnings into cash-flow. The Board also retains flexibility to pay special dividends or buy back shares when the Company generates surplus cash, as appropriate.

Asaf Elimelech, the Chief Executive Officer of Plus500, commented:

"Plus500 is pleased to announce a strong quarterly performance, with a significant improvement in its profitability and quality of earnings. We have reported a record increase in Active Customers, which shows the strength of and satisfaction with our trading platform. The strong quarterly EBITDA margin and significant decrease in AUAC reflect improved efficiency and targeted marketing activity and spending.

"We have started 2017 positively; we are confident we can continue to expand and enhance our competitive position whilst successfully incorporating regulatory changes with the minimum of disruption. Our strategy is supported by our strong financial position and cash generative business model, enabling us to deliver good shareholder returns despite short term regulatory uncertainty."

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

For further information please contact:

Plus500 Ltd. [phone]

Elad Even-Chen, Chief Financial Officer

Liberum - Nomad and Broker [phone]

Clayton Bush, Neil Elliot, Josh Hughes

Berenberg (Joint Broker) [phone]

Chris Bowman, Amritha Murali, Marie Stolberg

MHP Communications [phone]

Reg Hoare, Tim Rowntree, Kelsey Traynor

[e-mail]

About Plus500

Company website: www.plus500.com

Plus500 operates an online trading platform for retail customers to trade CFDs internationally over more than 2,100 different underlying global financial instruments comprising equities, indices, commodities, options, ETFs and foreign exchange. Retail customers of Plus500 can trade CFDs in more than 50 countries and in 31 languages. The trading platform is also accessible from multiple operating systems (Windows, smartphones (iOS, Android and Windows Phone), tablets (iOS, Android and Surface), Apple Watch and web browsers).

Plus500 retains operating licences and is regulated in the United Kingdom, Australia, Cyprus, New Zealand, Israel and South Africa. Customer care is integral to Plus500: customers cannot lose more than and there are no commissions on trades. Plus500 offers its customers sophisticated risk management tools to manage their trading positions and a free demo account is available on an unlimited basis for platform users.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 26, 2017 02:00 ET (06:00 GMT)