Plus500 Ltd (LON:PLUS) has reported a record performance for its 2020 financial year as usage of its stockbroking platform surged during market volatility caused by the coronavirus (COVID-19) pandemic.
In an update for the year to December 31, 2020, the FTSE 250-listed firm said revenues for the period stood at US$87.2mln, ahead of its expectations, while customer income, its core focus, also reached record highs of US$997mln.
Plus500 said the strong performance demonstrated its “exceptional ability to respond to news events and volatile financial markets while maintaining a sophisticated, efficient and responsible business model”, adding that its active and new customer numbers had also risen to record levels during the year with a “much reduced” rate of customer churn.
The firm noted that client deposits and new customers had more than doubled year-on-year in its fourth quarter, which it said was driven by sustained levels of “significant investment” in its marketing technology.
As a result of this investment, Plus500 said it expects its underlying earnings (EBITDA) for 2020 will be around US$515mln and “broadly in line” with its expectations, the same figure forecast in its third quarter update.
The company added that it “remains confident about the outlook going forward” and that it is driving a number of initiatives that it said will “produce sustainable growth and cash generation over the medium to long term”.
“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”, Plus500 chief executive David Zruia said in a statement.
“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”, he added.
Co-founder steps down
Meanwhile, Plus500 also announced that Gal Haber, one of its co-founders and its former chief executive, has said he will step down from his position as a managing director with immediate effect, although he will continue to provide consultancy services to the group.
The firm added that a selection process is being carried out with a view to recruiting additional non-executive directors to broaden the range of the board’s experience and continue to diversify its composition.
“The board would like to thank Gal for his significant contribution to the establishment and development of Plus500, since the company’s inception in 2008. Gal played a pivotal role as CEO in leading Plus500 through a successful IPO in 2013. Since then, the company has built a strong operational and financial track record, with its market capitalisation increasing from approximately US$200mln at that time to approximately US$2bn as at the end of FY 2020, along with over US$1bn paid in dividends and share buybacks to the company’s shareholders. We wish Gal well for the future and we look forward to working with him, on a consultancy basis, going forward”, said Plus500 chairman Penny Judd.
In a note on Tuesday, analysts at house broker Liberum reiterated their ‘buy’ rating and 1,950p target price on Plus500, saying the performance reflected “the benefits of the group’s best-in-class platform” and that its “scalable technology and agile marketing algorithms has enabled it to win significant market share and drive continued improvement in financial returns”.
“With the group taking the opportunity to reinvest a better than forecast revenue performance we leave our FY20 estimates broadly unchanged, but believe it leaves the group in an even stronger position in the long term”, the broker added.
Plus500 shares were down 0.6% at 1,412p in early deals.