XTB.com sees 34% Revenue decline in Q3 2020
Poland based Retail FX and CFDs brokerage house X Trade Brokers Dom Maklerski SA – operator of the XTB.com and X Open Hub brands – has released preliminary financial results for the third quarter of 2020, showing that activity slowed significantly from the first half of the year.
In a rare weekend earnings update, XTB.com indicated that Revenues came in at PLN 139.6 million (USD $36 million), down 34% from PLN 211 million in Q2 – which itself was down 31% from Q1’s PLN 306 million. Q1’s record revenue of course was helped by the heightened volatility in the currency and equity markets at the outset of the COVID-19 crisis. At most brokers we have seen a decline in trading volumes and resulting revenues since Q1, but not nearly as sharp as at XTB, with Q3 down 54% from Q1.
Net profit at XTB in Q3 was PLN 68.4 million (USD $18 million), down 42% from Q2’s PLN 117.5 million.
In the “big picture”, however, despite the activity decline XTB is still well ahead of where it was last year, when Revenues averaged $15 million quarterly and the company was marginally profitable for most of the year.
XTB.com brought on board 21,178 new clients in Q3, down from 30,253 in Q2. The average number of active clients in Q3 was 55,760, down slightly from 58,508 in Q2.
Client net deposits in Q3 were PLN 296.3 million, down 50% from Q2’s PLN 590.8 million.
CFD trading volumes totaled USD $275.1 billion in Q3, or about $92 billion monthly, which was actually up nicely from $69 billion monthly in Q2. However profitability per volume traded was down by almost half, PLN 131.3 per million versus PLN 257.9 per million in Q2.
It will be interesting to see how XTB shares react tomorrow morning. After rising steadily during the first seven months of the year to an all time high of PLN 29.30, XTB shares fell sharply after the company released its Q2 results in late July and have not recovered since, closing Friday at PLN 16.50, giving XTB a market capitalization of PLN 1.94 billion (or USD $504 million).
XTB share price past 6 months. Source: Google Finance.
Looking forward, the company said it expects the effectiveness of the new offer for shares and ETFs as well as the recently launched campaign with José Mourinho to help it approach the possibility of repeatedly obtaining 30,000 clients in the coming periods – like XTB did in Q2, as we note above. In particular, the ambition of the Management Board is to acquire in the fourth quarter of 2020 approximately 25-30 thousand new clients and in 2021 an average 30 thousand new clients quarterly. As a result of the implemented actions, in the period from 1 to 23 October this year the Group acquired 8.4 thousand new clients in total.
Some more information and breakdown of activity by instrument, and by geographic region follow:
XTB’s full Q3 preliminary report can be downloaded here (pdf).