Shares of Retail FX and CFDs broker Plus500 (LON:PLUS) opened up slightly by about 1% in early Tuesday trading on the London Stock Exchange, after the company reported a Trading Update for the just-completed Q4 and full-year 2020.
While in the big picture Plus500 had a record year with 2020 Revenue of $872 million and EBITDA of $515 million, Q4 was markedly slower than the first nine months of the year. Q4 Revenue at Plus500 came in at $91 million – Plus500’s slowest quarter since Q2-2019 – and EBITDA was just $19 million, versus $496 million total in the first three quarters of 2020.
However the markets seem to have expected the lower figures, with Q4 being traditionally slower at Plus500 and other online brokers due in part to an extended holiday season. Also, investors seem to be mainly focused on 2021 already, which Plus500 lines up nicely for after record new client signups which continued into Q4 (more on that below).
Plus500 had an absolutely monster Q1-2020 with $317 million of Revenue and EBITDA of $232 million, driven by outsized market volatility from the end of February through March as the COVID-19 pandemic shook global markets. While everything from trading activity to new client signups remained high in the ensuing months and well above historical levels, it looks like that came to an end in Q4.
Part of the reason for the low Q4 result was a hit that Plus500 took on what it calls Customer Trading Performance – the company’s gains/losses on its customers’ trading positions. Customer Trading Performance during Q4 was -$109 million, versus just -$16 million during the first 9 months of the year. Plus500 said that it continues to expect that the contribution from Customer Trading Performance will be broadly neutral over time.
As far as the future looks, however, Plus500 noted that it has onboarded a record number of new customers in FY 2020. During Q4 2020, both client deposits and the number of new customers more than doubled from Q4 2019, and the number of new customers was also higher than the level achieved in Q3 2020. This was driven in Q4 2020 by sustained levels of the company’s already significant investment in its marketing technology capabilities to help attract new customers. The heightened investment was made in light of the clear and substantial opportunities available in Q4 2020 to on-board new customers at an anticipated attractive return-on-investment.
Publicly traded Retail FX and CFD brokers were among the best performing stocks in 2020, including Plus500. The company’s shares were up 64% over the past 12 months.
Given the company’s performance in 2020, building on the momentum of previous years and its strong balance sheet, the Board said that it remains confident about the outlook going forward. Plus500 said that it continues to drive a number of initiatives which will produce sustainable growth and cash generation over the medium to long term. These initiatives, to be delivered through continued organic growth and potential acquisitions, include expanding into new markets and extending into new product lines (the company didn’t specify which, though).
David Zruia, Chief Executive Officer of Plus500, commented on the company’s performance in FY 2020:
“In the context of an unprecedented and uncertain market environment, 2020 was an outstanding year for Plus500, during which we delivered a record financial and operational performance. The positive momentum built up during 2020 was driven by the strength and differentiation of our proprietary technology. This was supported by the expertise of our people, who ensured that our customers received a consistently high quality service during the year, and we are extremely grateful to our people for their continued hard work and commitment.
“We continued to significantly invest in all elements of our technology during the year, with a view to driving its scale, agility and attractiveness for customers. In addition, given our robust compliance systems and our regulatory know-how, we are well prepared for the regulatory changes being introduced in 2021, including those being adopted as a result of last month’s Brexit agreement, and we are well positioned to deliver new products and services for our customers. Given these factors, the Board remains confident about the outlook for Plus500.”