New campaign for increasing brand awareness could put pressure on costs in the short term
The preliminary report for 2013 that the publicly listed CFD broker Plus500 (LON:PLUS) has released yesterday, have caused quite a dramatic share prices spike in London trading. The main points that we already outlined were the revenue doubling over 2012 (even more than that) and the staggering revenue numbers for the last quarter of 2013 that surpassed $50 million.
Mind this last point, as if we put Plus500’s Q4 numbers in context with the volumes metrics released in the last quarter of 2013 by major ECNs and brokerages there is a huge divergence in the opposite direction. While most of the industry experienced subsided trading activity and consolidated at best, the quietest quarter for the past year has increased revenues at the UK based brokerage by about 150%!
The company has announced a special dividend pay-out of $0.1369 per share and has already disbursed $33 million in dividend payments to its shareholders. The company is definitely doing something right – while the number of new customers has grown by more than 50% over last year the average useracquisition cost has barely budged – rising 1%.
The value of the brand has risen sharply after the IPO back in July 2013 and the firm now ranks amongst the top five online CFD trading providers in the UK with a 5% market share. Most of Plus500’s growth has come from the UK in the past year and it would be naive to believe that this tempo can be sustained easily, we can expect some rise in customer acquisition costs as management turns its efforts to other markets.
Setting new all-time highs, share prices of the company have closed yesterday to mark a rise by 250% since its IPO price in July. So what’s next? According to the company the average user acquisition costs will be rising in the short term as a new brand awareness campaign will be engaging in offline marketing and sponsorships which we all know is more expensive than typical online adverts. The bet is aimed to pay off over the medium and long term, while the company aims to increase it’s per user revenue numbers.
The company also stated that it will engage in expansion across new geographical regions which can also result in increased costs. How will this pan out? Stay tuned to LeapRate to find out as we keep our coverage of publicly listed brokerages.
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