Exclusive: NAGA Group sees Revenues drop 27% in Q2-2020
FNG Exclusive… FNG has learned that social trading focused Retail FX brokerage firm NAGA Group AG has seen a 27% QoQ drop in Revenue, with Q2-2020 Revenue coming in at €5.1 million, versus a company record €7.0 million reported in Q1.
Despite the drop, NAGA has completed an amazing turnaround from last year. NAGA’s first half combined Revenues of €12.1 million far outpace 2019’s entire year’s Revenues of €3.9 million. The company turned profitable in the first half of 2020, with an EBITDA margin of around 30.5%. That’s much improved from a 2019 net loss of €13.4 million for the Hamburg, Germany based company.
NAGA said that in the first six months of 2020 over 46,000 new users registered at the company (HY1 2019: 18,500), and more than €26 million in new client deposits were made to the platform (HY1 2019: € 8.3 million). In the first six months of 2020, over 2.7 million real money trades with a trading volume of around €50 billion were executed via the platform, for a monthly average trading volume of about $9.5 billion. In the previous year, 1.1 million trades with a trading volume of €16.5 billion were posted at the same time.
NAGA Group CEO Benjamin Bilski commented on the company’s half-year results:
“We are growing very quickly. The last year was marked by a new growth strategy which has shown its first effects at the beginning of 2020. Another quarter in, we see that our growth is sustainable. Despite lower volatility on the markets than in Q1, we were able to generate more than € 5 million in sales from trading revenue in Q2. Our product and technology are now at an absolute top level and we will continue to attach great importance to user experience and full automation of internal processes. On the operational side, we focus heavily on new customer acquisition and prepare ourselves for the second half of 2020 with new hires, improved internal structures and further intensified marketing measures, but above all we want to be ready for the growth in 2021. The platform has by no means shown its full potential yet and we remain fully on track to generate further growth boosts whilst maintaining our profitability.”
The company also reported that regulatory authorities have approved Chinese investor FOSUN’s transaction to obtain a majority stake in NAGA. Last year NAGA was provided with €5 million in growth capital by FOSUN through shareholder loans and a convertible bond with the exclusion of shareholders’ subscription rights. As part of this transaction, the FOSUN Group increased its stake to a majority stake by acquiring a further 17.22% of the company’s shares from existing shareholders. The terms of the transaction also required NAGA management to also acquire shares from existing shareholders.
Furthermore, approximately 90% of the shareholders agreed to a lockup agreement for 3 more years for the total number of their shares. The transaction could not be fully completed due to conditions that are pending to be met, including an approval by the regulatory authorities. The process has also been significantly delayed due to COVID19 restrictions. The transaction, including the aforementioned transfer of shares to FOSUN and NAGA management, is now expected to be completed in the coming weeks.
“We are happy that we can now complete all of the restructuring tasks. In the course of the agreed transaction last August, where NAGA was in a very difficult situation, the management board and our anchor investor FOSUN acted with full conviction and we are pleased that the first goals have been achieved”, concludes Bilski.
NAGA raised a further €5 million late last month via a rights subscription, as was also exclusively reported by FNG.