Plus500 forecasts 2019 profit to be below market expectations

Maria Nikolova

Average user acquisition costs jumped 97% in 2018, whereas the regulatory changes in Europe are set to weigh on profitability in 2019.

Online trading company Plus500 Ltd (LON:PLUS) has earlier today posted its preliminary results for the year to the end of December 2018. As marketing spending rises, and regulatory climate in Europe sours, the outlook is not particularly positive.

The company stated:

“Following our latest assessment of the impact of the ESMA regulatory measures, FY19 revenue is expected to be lower than current market expectations. This, combined with our intention to maintain our marketing spend, is likely to result in 2019 profit being materially lower than current market expectations”.

As indicated in Plus500’s third-quarter report, its average user acquisition costs (AUAC) are on the rise. The annual report showed a marked rise in AUAC. For 2018, average user acquisition costs reached $934, up 97% from the previous year.

During the three months to December 31, 2018, AUAC reached $1,489, up 424% from the year-ago quarter. The final quarter of 2018 also saw a 55% drop in the number of active customers, whereas the number of new customers was down 87%.

On the brighter side, Plus500 registered 65% rise in revenue in 2018 at $720.4 million (2017: $437.2 million), whereas EBITDA was up 95% at $506.0 million (2017: $259.2 million).

2018 included an exceptional first quarter (revenue: $297.3 million), following the record customer acquisition at the end of 2017, which was enabled by the considerable investment in back-office technology, procedures and regulatory compliance. The second half of 2018 was subject to a combination of extreme variations in market volatility and weak customer trading performance. In addition, retail customer revenue in the EEA region was significantly impacted by the ESMA regulatory measures.

The total number of transactions in 2018 increased by 6% compared to the prior year.

Read this next

Digital Assets

Binance buys Japanese crypto exchange Sakura BitCoin

Binance, the world’s largest crypto exchange by traded volume, has made a fresh bid to enter Japan with the acquisition of Japanese-registered crypto exchange service provider Sakura Exchange BitCoin (SEBC). The financial terms of the transaction were not disclosed.

Industry News, Inside View

Viacheslav Taran: FX and Crypto industry mourns death of Libertex Group co-founder

FinanceFeeds reports with great sadness that Viacheslav Taran, Co-Founder of Libertex Group, passed away last Friday. 

Digital Assets

FTX founder SBF called to testify by Texas regulator

The Texas State Securities Board (TSSB) has called on Sam Bankman-Fried to testify during an administrative hearing scheduled for Feb. 2, 2023. The move marks yet another expansion of enforcement agencies’ probes into FTX’s activities following its insolvency.

Digital Assets

Despite FTX chaos, Italy welcomes crypto lender Nexo

Crypto lender Nexo has won regulatory approval from Italy’s financial regulators, allowing the exchange to continue serving Italian customers.

Institutional FX, Interviews

ION Markets for execution and clearing: Francesco Margini at FIA EXPO 2022

The CPO of Cleared Derivatives at ION Markets spoke about the need for automated execution and clearing in times of surging volumes and increased volatility.

Institutional FX

FIA EXPO 2022: Baton Systems President on building post trade rails for capital markets

As the world’s largest trade show for the listed derivatives dealers, the FIA Futures and Options Expo is a high point for the global cleared swaps community, with dozens of panels, educational sessions, networking opportunities and more.

Inside View

Olga Taran releases public statement in Monaco regarding “false accusations” against her late husband Viacheslav

Vyacheslav Taran, 53, founder of Forex Club and CEO of Libertex Group, was the sole passenger of a helicopter that crashed in Villefranche-sur-Mer this weekend. The helicopter crash is still under investigation, and authorities have not indicated any possibility of foul play.

Industry News

Brokeree Solutions Wins the “Best Emerging Fintech” Award

2022 has become, for Brokeree Solutions, a time of new inventions and developments. We are pleased that the industry has appreciated this emergence of new technologies

Metaverse Gaming NFT

Glip raises $2.5 million to develop class-A Web3 games ecosystem

Web3 game discovery & wallet app, Glip has raised an additional $2.5 million in new funding from a range of investors, bringing the total investments it received to $6 million thus far.