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

DappRadar report: NFTs volume below $1 billion for the first time since June 2021

DappRadar’s July 2022 industry report found that blockchain games and their NFTs remain resilient amid a crypto winter accentuated by the debacle of Terra.

Digital Assets registers to operate crypto business in Italy had registered as a digital asset provider in Italy, following in the tracks of rivals who joined a special registry with brokerage regulator Organismo degli Agenti e dei Mediatori (OAM).

Digital Assets

Binance rolls out crypto card in Argentina with 8% cashback

Binance is launching its crypto debit card in Argentina, the first country in Latin America to have the product thanks to a partnership with Mastercard.

Digital Assets

Greece sends BTC-e operator Alexander Vinnik to US

Alexander Vinnik, an alleged Russian hacker accused of laundering $4 billion of criminal proceeds through BTC-e, has been extradited from Greece to the United States.

Retail FX

Saxo Bank reports weakest FX volume in 6 months

As many traders were away on annual summer leave, currency markets saw a relatively quiet period in July. Within that context, Copenhagen-based Saxo Bank has reported its monthly metrics, which showed a renewed decline month-over-month.

Market News

The Week Ahead: 5 August from David Madden, Market Analyst at Equiti Group

It has been an interesting week and despite a lot of negative news, equity markets enjoyed a positive run. US House Speaker, Nancy Pelosi, defied the warnings from the Chinese government and carried out a visit to Taiwan. The Beijing authorities moved military hardware close to the self-governed island to flex its muscles. Stock markets came under a little pressure as a result and risk-off assets like the Japanese yen and gold found themselves in high demand.


Alina Strogonova of Muvon Payments: How Can Fintech Optimise Payments

Financial services in their conventional form are obsolete, according to fintech startups. New-age finance is constantly redesigning electronic money transactions and testing innovative solutions.

Digital Assets

No need for CFDs: BitMEX introduces leveraged FX perpetual swaps

Previously retail FX trading was mostly possible via CFDs (contract for difference). BitMEX’s FX perps allow both retail users and institutional traders to access FX markets through an exchange-traded contract.

Digital Assets

BEQUANT launches index measuring dollar against crypto

“Our research team has worked hard to quantify and capture the latest economic story into the broader crypto market.”