Exclusive: OANDA Europe revenues decline 20% in 2019, posts £3.5M loss
FNG Exclusive… FNG has learned via regulatory filings that OANDA Europe Limited, the London based, FCA regulated arm of Canada based Retail FX brokerage group OANDA, saw a significant decline in activity and profitability in 2019.
OANDA Europe posted revenues of £11.8 million in 2019, down 20% from £14.8 million in 2018. The company posted a net loss of £3.55 million for the year, versus a profit of £823,000 the previous year. As a result, OANDA Europe’s equity base shrunk from £7.9 million in 2018 to £4.4 million as at December 31, 2019.
Despite the decline in activity, OANDA Europe saw a rise is client funds held by the firm, which were up to £42.8 million as at 31/12/2019 versus £36.9 million in 2018.
OANDA Europe is an online margin trading business that provides leveraged trading for contracts for difference (CFDs) and spreadbets on foreign currencies, bonds, commodities and indices. This business is conducted primarily through OANDA’s proprietary trading platform FxTrade, a fully automated trading platform which is owned by OANDA Corporation, as well as MetaQuotes’ MT4 platform. The company economically hedges all its exposure with related OANDA entities immediately upon the execution of a client trade to make sure it does not take on any market risk associated with that position. The company currently hedges with OANDA Australia Pty Ltd, and OANDA (Canada) Corporation ULC.
During the year, the company said that key milestones were to increase the size of the active client base and start implementing a number of improvements to the conversion funnel with the introduction of a new website (achieved in Q3) and operational improvements to the onboarding process (achieved in Q4), whilst ensuring the business continues to meet its regulatory and legal obligations. As with all improvements made throughout a financial year, the company said that the true full year benefit will be realised in the following year.
OANDA’s poor 2019 performance was driven predominantly due to the full year effect of the new ESMA leverage limits, in line with the widely reported 20-40% revenue reduction across the FX/CFD industry in the UK and across the EU. Costs increased year on year as the company increased the size of its product team and invested in marketing and digital initiatives. The company said that investing in its product team is critical to ensure it maintains a competitive value proposition for its clients and prospects going forward into 2020 and beyond.
OANDA is controlled by private equity investment firm CVC Capital Partners.
OANDA Europe’s 2019 income statement and balance sheet follow: