Plus500 Ltd (LON:PLUS) has today announced its operating revenues and metrics for the first half of 2015.
2014 was a fantastic year for Plus500, with a total revenue of $228 million and customer acquisition costs having remained below $1,000 on average per user, with the final quarter’s $66 million in revenues being a massive leap forward. The first quarter of 2015 was also a period of stellar performance, with the company reporting record revenues of $82 million and onboarding 33,000 new clients during those three months.
The second quarter of this year was a period during which revenues tailed off considerably to $44.9 million, almost half that of the previous quarter, however compared to 2014’s first half, revenues are up 19.59% at $127 million compared to $106.2 million in the first half of 2014.
KPIs
Key customer and revenues metrics for the six months ended 30 June 2015 were as follows:
Trading review
As previously reported, after a record first quarter, revenues in the second quarter were lower than the same quarter last year due to a combination of quieter markets and the temporary suspension of trading activity in the Plus500UK business. Unlike this time last year, Plus500 now has far more significant business in its other regulated subsidiaries, which has helped to offset the lower activity in the Plus500UK business.
The Group continues to invest in the growth of the business, increasing levels of marketing to acquire new customers to contribute to future revenue.
This includes the sponsorship of Atletico Madrid as well as introducing new contracts and on-line trading incentives. This increased marketing spend coincided with the unexpected period of reduced revenue caused by the trading difficulties in the UK. As previously announced, there were one off costs of approximately $2m incurred in connection with the regulation and remediation processes in Plus500UK.
Taken together, all these factors impacted EBITDA margins and this was particularly exaggerated in the quieter second quarter which produced the lowest quarterly margins since the IPO.
However, the Group was profitable in all months year to date and Plus500’s business model continues to be cash generative. Net cash stood at $97.5m as at 30 June 2015 (31 December 2014: $140.2m) excluding that held in client segregated accounts and after the payment of dividends of $65m in May.
Regulatory Update
Further to the announcement on 30 June 2015, the second Skilled Person’s final report on Plus500UK’s existing customers was issued to the FCA on 3 July. This covered reviews of a sample of trades and other transactions in a number of areas, all of which received satisfactory results.
The overall conclusion of the sample test was that there was no indication that the UK company had breached the requirement 2(i) of the second VREQ (requirement 2 dated 15 May 2015) that was agreed with the FCA.
he report made some recommendations on areas for further improvements identified in the review, each of which have been taken into consideration in the revision of the UK company’s financial crime policies and procedures.
As announced on 30 June 2015, Plus500UK has concluded its work with compliance consultants and agreed revised procedures to enable the onboarding of new customers. The onboarding of new customers in the UK is now expected to recommence in August.
The Plus500 Group continues to be the subject of a high level of regulatory scrutiny.
Outlook
The Group will continue to invest in acquiring new customers for its future growth. Whilst dependent on trading levels and market volatility, with existing Plus500UK customers able to trade again, the Board now expects that revenue for 2015 will be similar to that achieved in 2014 but the Board still expect margins to be significantly lower.
Gal Haber, Chief Executive of Plus500, commented: “The investment which we continue to make in the Plus500 brand and infrastructure has proved its value during the recent period of disruption during which we traded profitably in each month. Our superior proprietary technology and continued investment in the business position us well for continued profitable trading.”
Merger Proposal
As previously announced, the Information Statement and Notice of Special General Meeting to approve the recommended cash acquisition of Plus500 Ltd by a subsidiary of Playtech plc to be effected by means of a merger under Israeli companies law (the “Merger”) was posted to Shareholders on 11 June 2015.
The Information Statement and Notice of Special General Meeting to be held in relation to the Merger is also available online on the Company’s website, www.plus500.com.
The Special General Meeting is to be held at 11 a.m. on 16 July 2015 at the Regus Offices, Level 9, CityPoint, 1 Ropemaker Street, London EC2Y 9HT.
Shareholders are reminded of the following 2 key dates with regard to the Special General Meeting as set out in the Information Statement sent to Shareholders dated:
11 am 14 July – Last time for lodging the Form of Direction (DI holders only)
11 am 15 July – Last time for lodging the Form of Proxy
Shareholders should refer to the Information Statement in which the Directors unanimously recommend that Shareholders vote in favour of the Resolution being proposed in relation to the Merger.
For the official announcement from Plus500, click here.