Record results send shares up 12%
Companies: Plus500 Ltd.
International CFD provider Plus500 on Tuesday released record preliminary results for the year ending 30 December, reporting revenues of $327.9m (+19%), EBITDA of $151m (+14%), and net profit ahead of expectations at $117.2m (+21%).
The AIM-listed firm said its strong revenue growth was due to an increase in New Customers and Active Customers, leading to EBITDA margins recovering in H2:
"Q4 EBITDA margin of 64% reflects the benefit of strong customer acquisition earlier in the year and more targeted advertising expenditure in Q4, yielding stable FY margins"
As a result, it will be another year of "significant" dividend payments with more than $100m in total being paid out, including a special dividend of $31m. This is a total payout of 87% of net profit for the year and gives the firm a div yield of more than 16% at its current price.
Plus has now paid out more than £300m in dividends since
its £200m IPO in 2013.
Operationally, PLUS saw record customer growth in excess of expectations and beating the industry average, which it says reflects effective marketing and a robust business model. Active customers increased 14% to 155k whilst new customers increased 23% to 104k during the period.
The company, which was rocked by the FCA crackdown on CFDs last December, says its leadership in tech and product innovation is key to its success, with the platform offering an "omni-channel trading experience" which allows usage across PC, web, tablet, mobile or wearable platforms in a device-agnostic manner.
"...a majority of revenues and signups come from mobile devices reflecting speed of innovation compared to competitors (over 70% of 2016 revenues and signups originated from mobile devices)."
Looking towards the rest of the year, management said there was a continued increase in new customers entering the year and it was continuing to achieve good results from online marketing initiatives and sponsorships. Management also confirmed it was expecting to broaden its footprint and continue to diversify revenues.
Asaf Elimelech, Chief Executive of Plus500, said:
"We are pleased to announce record annual results. Our continued focus on serving our customers' trading needs through product innovation and technology leadership, combined with our marketing activity, has led to strong new customer sign ups, reducing churn in H2 2016 and increased customer activity...
Speaking about the FCA crackdown on CFD platforms, Mr Elimelech said the firm would make the necessary changes to comply, confirming that proposals to reduce leverage are expected to have the greatest financial effect. He reiterated the company's previous stance that approximately 20% of its revenues go through the UK subsidiary, so it is insulated somewhat:
"At the same time, we have a highly flexible business model and a lean cost structure to help mitigate the impact of regulatory changes on our financial performance. Overall, we anticipate that the industry will consolidate around a smaller number of larger participants, of which we believe Plus500 will be amongst the leaders."
Shares in Plus500 opened up 12% before falling back slightly. The shares collapsed 44.5% late last year due to the FCA's intervention, but have since regained 39%.
