Plus500 (LON:PLUS) has today released its quarterly operating metrics for the third quarter of 2014, with once again astronomical gains in revenue across all sectors of its business.
In this particular report, Plus500 considers that its in-house technical and operational enterprise has resulted in tremendous capital savings and abilities to drive profits, heralding the efficient nature of the company which has long since championed the virtues of a maintaining a lean operation despite expansions into new areas, the opening of an office in Cyprus and of course the high-value IPO with which the company became publicly listed on London’s Alternative Investment Market.
In the nine months to 30 September 2014, revenue was $162.4m, 151% higher than revenue for the comparative period of 2013 and surpassing the total revenue generated in the whole of 2013 by 41%, thereby positioning the Company for another year of strong growth. Key customer and revenue metrics for the nine and three month periods ended 30 September 2014 were as follows:
In Q3 2014, the Company continued to experience strong growth worldwide as revenue nearly tripled and the ARPU (average revenue per user) more than doubled in almost all countries compared with the equivalent period in 2013. Geographically, the vast majority of trading occurred in the UK and Western Europe. Revenue from the UK accounted for 15% of total revenue in the quarter (Q3 2013: 15%), and revenue from the UK combined with Western European countries such as France and Germany accounted for 70% of total revenue in the quarter (Q3 2013: 70%). Overall, in Q3 2014, 94% of total revenue was derived from regulated markets, with the remainder from countries where the Company operates under a legal opinion. The Company expects the profile of revenues to be similar for full year 2014.
The strength of the Company’s proprietary trading platform, supported by in-house technical expertise, has continued to allow Plus500 to react quickly to market conditions and offer customers the ability to trade CFDs immediately following events such as the initial public offerings of Alibaba and GoPro. Similarly, with the increased market volatility as a result of the geo-political situation in Europe as well as the changing global macro environment, the Company experienced particularly strong growth in trading in commodities as well as equities. In addition, the success of the Company’s proprietary automated marketing platform in improving brand awareness across multiple advertising channels enabled Plus500 to attract a greater number of high value customers.
During the nine months to 30 September 2014, the Company added 300 new instruments and, during the third quarter, it reduced the spread of the most popular instruments to very competitive levels, such as FTSE100 (0.88pips), GBP/USD (1 pip), EUR/USD (1pip) and oil (3 pips). The same spreads are offered to the entire customer base. The Company also expanded its live chat feature, to offer more native language support worldwide.
As a result of the above, the Company was able to attract new customers and saw ARPU increase to $1,290, representing an increase of 10% on Q2 2014. AUAC was only 1% higher sequentially, however the Company is committed to maintaining its marketing spend and also creating a bespoke campaign to attract a greater number of higher value customers. The Company is comfortable with the increase in AUAC in order to gain higher value customers because the automated function of the marketing machine ensures that it will not, in aggregate, acquire customers that will not generate profits for the Company.
Additional Regulatory Approval
Plus500 views its ongoing FCA regulated status as one of its most important assets and the Company continues to invest in its operational and compliance infrastructure to maintain that status. To complement the Company’s existing regulatory authorisations in the UK and Australia, post period end, Plus500 has been granted a CFD market maker licence from the Cyprus Securities and Exchange Commission (CySEC) to operate as a regulated investment firm. This brings the Company in line with other CFD providers that maintain multiple licences throughout Europe. The Company will continue to seek additional regulatory approvals in jurisdictions that represent attractive commercial opportunities.
Research and Development
The Company continues to invest in R&D in order to maintain its competitive advantage. Over the year, the Company has experienced an increased use of mobile and tablet devices to trade. As previously announced, the Company is working on a Windows phone app, which it now expects to launch within the next six months. This will enable the Company to reach a wider audience. The Company is also working on a next generation version of its web browser, which is also expected to be launched over the next six months.
Additionally, the iOS app has been updated to be fully compatible with iOS 8, which occurred on the same day that Apple rolled out the new operating system. The Android version has also been updated and has seen a step up in its usability. The Company believes that these updates also contributed to a higher ARPU.
Outlook
The Company entered Q4 2014 with greater momentum and stronger trading compared with Q3 2014. The continuing market volatility, focused marketing strategy and ongoing improvement in the brand’s strength are expected to be significant contributors to the Company’s ability to gain new customers at an attractive cost. The Company is also on target to add an extra 200 new instruments to its portfolio, which will contribute to the attraction and retention of customers. As a result, the Company now expects to exceed current market expectations for both revenue and profit for the year ending 31 December 2014.
Gal Haber, Chief Executive Officer of Plus500, said: “We are very happy to report another quarter of significant growth where we almost trebled our revenues and more than doubled our ARPU compared with last year, as we saw an increase in market activity globally.
“Looking ahead, we entered Q4 with increased momentum as the initiatives we introduced in the previous quarter continue to bear fruit. Our intuitive marketing technology continues to attract and retain higher value customers, which gives us the confidence of exceeding market expectations for the full year 2014.”
To read the full report from Plus500, click here