Poland based Retail FX and CFDs brokerage group XTB SA (WSE:XTB) has followed up a record 2023 with an even better start to 2024, reporting record quarterly Revenues and near-record Profits for the first quarter of the year.

XTB financial results Q1 2024

Revenues at XTB came in at PLN 556.0 million (USD $139 million) in Q1-2024, topping the company’s previous record of $134 million in Q1 of last year. Net Profit of PLN 302.8 million ($76 million) was just short of Q1-2023’s record profit.

Client trading volumes at XTB averaged $194 billion monthly in Q1-2024, up slightly from the $190 billion monthly that XTB averaged during 2023.

Management said that the first quarter of 2024 was a consecutive period of dynamic business development and building a client base for XTB. Clear long trends in the stock and commodity markets made trading in financial instruments further strongly attractive to many investors. As a result, the Group acquired a record 129,7 thousand new clients, which is an increase of 24,5% y/y, while the number of active clients increased by 45,5% y/y from 260,1 thousand to 378,5 thousand.

In the first quarter of 2024, XTB reached a record level of revenues of PLN 556,0 million, as noted above. Significant factors determining the level of revenues were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 45,5% y/y), connected with their high transaction activity expressed in the number of CFD contracts concluded in lots (increase by 6,5% y/y). As a consequence the transaction volume in CFD instruments amounted to 1 964,9 thousand lots (Q1 2023: 1 845,2 thousand lots), a profitability per lot amounted to PLN 283 (Q1 2023: PLN 291).

XTB asset classes traded Q1 2024

Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation (see chart above), it can be seen that in the first quarter of 2024 CFDs based on commodities led. Their share of the revenue structure in the first quarter of 2024 was 48,7% (Q1 2023: 48,8%). This is due in part to the high profitability of CFD instruments based on natural gas, gold and cocoa prices. The second most profitable asset class was CFD based on indices. Their share of the revenue structure on financial instruments reached 41,9%, compared to 45,3% a year earlier. This is a consequence of the high yield on CFDs based on the German DAX (DE30) stock index, the US 100 index or the US 500 index. Revenue on currency-based CFD instruments accounted for 6,7% of total revenue, compared to 4,2% a year earlier. The most profitable financial instruments in this class were CFDs based on the bitcoin cryptocurrency and the USDJPY currency pair.

XTB expenses Q1 2024

XTB’s operating costs in the first quarter of 2024 amounted to PLN 204,7 million and were PLN 20,5 million higher compared to the same period a year earlier (Q1 2023: PLN 184,2 million). The most important changes occurred in:

• costs of remuneration and employee benefits, an increase by PLN 9,5 million, mainly due to an increase in employment;
• commission costs, an increase by PLN 6,2 million resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;
• other external services, an increase by PLN 2,9 million as a result of mainly higher expenditure on support database systems (increase by PLN 3,1 y/y).

Due to the dynamic development of XTB, the Management Board estimates that in 2024 the total costs of operating activities may be even higher by about a one-fourth to the level observed in 2023. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, expenditures on marketing may increase by about one-fifth compared to the previous year.

XTB client base

The Board said that its priority is to continue to grow the client base, which will strengthen XTB’s position in the global marketplace by reaching the mass client with its product offering. These activities are and will be supported by a number of initiatives, including the introduction of new products or promotional campaigns. The Management Board’s objective for 2024 is to acquire, on average, at least 65-90 thousand new clients per quarter. As a result of the implemented activities, the Group acquired in the first quarter of this year 129,7 thousand new clients, while in the first 28 days of April 2024, 33,2 thousand new clients were acquired.

XTB plans for 2024

Looking forward, at the end of 2024 XTB plans to launch a product that will accelerate its transformation towards an “everyday platform” for managing personal finance. Virtual wallet and a multi-currency card will enable XTB clients to make instant local payments, transfers, card transactions and currency exchange. Thanks to this product, clients will be able to make payments between their XTB accounts instantly. Real-time notifications will support finance control and expense management.

XTB and foreign expansion

XTB, with its strong market position and dynamically growing client base, is increasingly boldly building its presence in non-European markets, consistently pursuing the strategy of creating a global brand. The Management Board of XTB puts the main emphasis on organic growth, on the one hand increasing the penetration of European markets, and on the other successively building its presence in Latin America, Asia and Africa. Following these actions, the composition of the capital group may expand with new subsidiaries. It is worth mentioning that geographical expansion is a process carried out by XTB on a continuous basis, the effects of which are spread over time. Therefore, one should rather not expect sudden, abrupt changes in the Group’s results.

In 2024, the Management Board’s efforts will focus on obtaining the necessary licenses and starting operations in Brazil and Indonesia.