flatexDEGIRO continues profitable growth in challenging environment

PRELIMINARY FIGURES (UNAUDITED)

flatexDEGIRO continues profitable growth in challenging environment

• Revenues of € 407 million (previous year: € 418 million) and EBITDA of € 183 million (previous year: € 112 million)
• Adjusted¹ EBITDA margin of 39.3% (previous year: 42.4%)
• Net income of € 106 million (previous year: € 52 million)
• More than 460,000 new customer accounts (gross) in 2022, customer base increases to 2.4 million (December 2021: 2.1 million), with a total of 67 million transactions settled (previous year: 91 million)
• BaFin findings are being processed as planned and are fully on schedule, appointment of special representatives enables timely adjustment of measures, misdemeanor proceedings from 2020/2021 fully concluded
• Guidance 2023: Slight increase in Adjusted [1] Revenues with an Adjusted¹ EBITDA margin of over 40% and an Adjusted¹ EBT margin of over 30%
• Significant increase in interest income, focused marketing expenses and general cost discipline contribute significantly to further increase in profitability
• Monthly publication of commercial KPI to increase transparency

Frankfurt/Main – flatexDEGIRO AG (WKN: FTG111, ISIN: DE000FTG1111, Ticker: FTK.GR), Europe's leading online broker, today published preliminary figures for fiscal year 2022. Despite negative sentiment among retail investors across the industry, flatexDEGIRO continued its profitable growth in 2022, adding more than 460,000 new customer accounts. Revenues and operating result (EBITDA) were slightly above the expectations last specified at the beginning of December 2022. For 2023, Management expects further growth and an increase in profitability.

Frank Niehage, CEO of flatexDEGIRO: "In a difficult environment, we have once again delivered a strong operational and financial performance, generating a net profit of over 100 million euros for the first time. Customer deposits increased by 15 percent to over 3.2 billion euros, demonstrating once again the sustainable potential of our customers. It remains to be seen exactly when we will begin to experience a rebound retail trading activity. This is much conditioned by the geopolitical situation as well as the expected interest rate steps by FED and ECB. In this environment, we expect customer growth rates to be 50 to 100 percent above the average of major peer companies and are focusing even more strongly on expanding our profitability. At the same time, we are selectively expanding our customer offering and are scaling back our marketing expenses."

Muhamad Chahrour, Deputy CEO & COO of flatexDEGIRO: "Most global equity indices have lost between 20 percent and 35 percent in 2022. With customer assets under custody of 40 billion euros, we have only observed a comparatively slight decline of 10 percent. At the same time, net cash inflows on our platform were close to 6 billion euros in 2022. Both speak for the quality of our customers and their sustained interest in trading and investing. We will use this quality to focus even more strongly on the profitability of our growth in the future. Operational cost discipline and additional interest income due to the now positive interest rate environment will make a significant contribution to the sustainable improvement in margins."

Earnings

Revenues in 2022 amount to 407 million euros (previous year: 418 million euros). Adjusted for income from the reversal of provisions relating to long-term variable compensation (SARs), operating revenues (Adjusted Revenues) amount to 369 million euros.

EBITDA of 183 million euros was achieved in fiscal 2022 (prior year: 112 million euros). Excluding the reversal of provisions for SARs, Adjusted EBITDA amounts to 145 million euros. Net profit was 106 million euros (previous year: 52 million euros). Excluding the reversal of provisions for SARs, adjusted net profit amounts to 79 million euros.

Focus on high-growth online brokerage

flatexDEGIRO sees its greatest growth and earnings potential in a targeted expansion of its online brokerage offering in the Core Markets (Netherlands, Germany and Austria) and the Growth Markets (Spain, France, Portugal, Italy, Switzerland, UK and Ireland). Accordingly, B2B activities not related to brokerage, including a five-digit number of customer accounts in this area, were terminated. In online brokerage itself, flatexDEGIRO withdrew from the peripheral markets of Hungary and Norway, where DEGIRO had serviced around 6,000 customer accounts. As part of the brand consolidation, DEGIRO customers in Austria were migrated to the much larger flatex brand. A similar process took place in the Netherlands, where a migration from flatex to the much larger DEGIRO brand took place. Freed-up internal resources can thus be used in a more targeted manner for profitable growth in the remaining 16 countries.

Processing of BaFin findings fully on schedule

In November 2022, as part of the presentation of the results of a special audit pursuant to section 44 of the German Banking Act (Kreditwesengesetz), the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) informed the Company, among other things, that risk mitigation strategies applied with respect to margin loans issued by DEGIRO are temporarily not applicable due to procedural weaknesses. While this finding neither directly affects the commercial business nor results in direct product restrictions, flatexDEGIRO is pushing ahead with a remediation of the identified deficiencies at full speed and aims at a successful implementation of the necessary procedural measures still in the course of 2023. By appointing a special representative, BaFin has the possibility, depending on the progress made in remedying the deficiencies and in consultation with the special representative, to adjust measures even before a follow-up audit, which usually takes place after 12-24 months.

Furthermore, with the issuance of a non-material fine of 1.05 million euros, the misdemeanor proceedings due to infringements in 2020/2021 mentioned in the 2022 half-year report have been fully concluded.

Outlook

After several years of strong expansion of the customer base, flatexDEGIRO expects customer growth also in 2023 to be 50 percent to 100 percent above the average growth rates of major peer companies. Customer trading activity is difficult to forecast. For the 2023 baseline scenario, Management assumes that the trading activity of retail investors will remain at the level seen in the second to fourth quarters of 2022. In addition, rising interest income on customer cash under custody totaling around 3.2 billion euros at year-end 2022 will make a significant additional contribution to revenues and earnings.

In the view of the Management Board, this gives rise to the potential to increase adjusted sales slightly in 2023 and to achieve an adjusted EBITDA margin of over 40 percent and an adjusted EBT margin of over 30 percent.

Beyond 2023, Management will continue to drive the strategic increase in profitability through targeted expansion of the customer offering and strict cost discipline.

Publication of commercial KPI on a monthly basis

In order to increase transparency, the Management Board of flatexDEGIRO AG has decided to publish the monthly development of commercial KPI such as customer account growth, the number of settled transactions, and customer assets under custody in the future. The publication is scheduled to take place on the third trading day after the end of each month.

The monthly report for January 2023 is available on our website www.flatexDEGIRO.com > Investor Relations > Reports & Financial Calendar (https://flatexdegiro.com/en/investor-relations/reports-financial-calendar)

Press briefing on the preliminary figures on February 28, 2 p.m. CET

A press briefing on the preliminary figures will be held on February 28, 2023, at 2 p.m. CET. The presentation by Management and the subsequent Q&A session will be broadcast live by flatexDEGIRO at the following link, https://channel.royalcast.com/flatexdegiro/#!/flatexdegiro/20230228_2.

If you are a journalist and would like to actively participate in the Q&A session, please contact Achim Schreck, Head of Corporate Communications, directly.

For the full report on the preliminary figures 2022, please visit our website www.flatexDEGIRO.com > Investor Relations > Reports & Financial Calendar (https://flatexdegiro.com/en/investor-relations/reports-financial-calendar)

The publication of the audited Annual Report 2022 will take place on March 29, 2023.

Contact:

Achim Schreck
Head of Investor Relations & Corporate Communications

flatexDEGIRO AG
Omnitower - Große Gallusstraße 16-18
D-60312 Frankfurt am Main
Phone +49 (0) 69 450001 0
achim.schreck@flatexdegiro.com

 

About flatexDEGIRO AG

flatexDEGIRO AG (WKN: FTG111, ISIN: DE000FTG1111, Ticker: FTK.GR) operates a leading and fastest growing online brokerage platform in Europe. Based on modern, in-house state-of-the-art technology, customers of the flatex and DEGIRO brands are offered a wide range of independent products with execution on top TIER 1 exchanges. The technological edge as well as the high efficiency and strong economies of scale enable flatexDEGIRO to continuously improve its service offering to customers.

With around 2.4 million customer accounts and over 67 million securities transactions settled in 2022, flatexDEGIRO is the largest retail online broker in Europe. In times of bank consolidation, low interest rates and digitalization, flatexDEGIRO is ideally positioned for further profitable growth.

For more information visit https://www.flatexdegiro.com/en

Key figures

 

        2022   2021     Change in %   Q4 2022   Q4 2021   Change in % Commercial KPI                               Customer accounts at the end of the period   m   2.40   2.06     16.3   2.40   2.06   16.3 New customer accounts (gross)   k   462   800     -42.2   86   141   -39.2 New customer account growth (gross)   %   22.4   60.1     -62.7   3.7   7.3   -49.8 Transactions settled   m   67.0   91.0     -26.4   13.6   19.8   -31.3                                                       Q4 2022   Q3 2022   Change in % Assets under Custody   EUR bn   39.5   43.9     -10.0   39.5   37.7   4.8 of which: securities   EUR bn   36.2   41.0     -11.7   36.2   34.0   6.5 of which: cash   EUR bn   3.2   2.8     14.3   3.2   3.5   -8.6                                

 

        2022   2021     Change in %   Q4 2022   Q4 2021   Change in % Financial KPI                               Revenues   EUR m   407.0   417.6     -2.5   105.4   103.4   2.0 EBITDA   EUR m   183.3   112.1     63.5   56.5   28.8   96.2 EBITDA margin   %   45.0   26.8     67.8   53.7   28.0   91.8 Adjusted* EBITDA   EUR m   145.0   177.1     -18.1   39.0   31.0   25.9 Adjusted* EBITDA margin   %   39.3   42.4     -7.2   44.5   30.0   48.2 Net income   EUR m   106.2   51.6     106.0   -   -   - Adjusted* Net income   EUR m   78.6   96.5     -18.6   -   -   -                                

 

* excluding effects from the recognition (2021) or reversal (2022) of provisions for long-term variable compensation (Stock Appreciation Rights Plan, SARs) and in 2021 from expenses from the business combinations in the personnel area

 

Disclaimer

Preliminary results

This release contains preliminary information that is subject to change and does not purport to be complete.

Non-IFRS key figures (APMs)

This presentation contains non-IFRS measures, including Adjusted EBITDA. These measures are alternative performance measures as defined by the European Securities and Markets Authority ("ESMA"). flatexDEGIRO presents these non-IFRS measures because (i) they are used by management to measure performance, including in presentations to the Management Board and members of the Supervisory Board and as a basis for strategic planning and forecasting; and (ii) they represent measures that flatexDEGIRO believes are widely used by certain investors, securities analysts and other parties as supplemental measures of operating and financial performance. These non-IFRS measures may not be comparable to similarly titled measures of other companies and have limitations as analytical tools and should not be considered a substitute for analysis of flatexDEGIRO's operating results as reported under IFRS. Non-IFRS measures are not a measure of flatexDEGIRO's performance or liquidity under IFRS and should not be considered as an alternative to net income or other performance measures derived under IFRS or other generally accepted accounting principles, or as an alternative to cash flows from operating, investing or financing activities.

Forward-looking statements

This release may contain forward-looking statements and information identified by terminology such as "expect", "aim", "anticipate", "intend", "plan", "believe", "estimate" or "will". Such forward-looking statements are based on current expectations and certain assumptions that may be subject to a variety of risks and uncertainties. Actual results achieved by flatexDEGIRO AG may differ materially from these forward-looking statements. flatexDEGIRO assumes no obligation to update these forward-looking statements or to revise them in the event of developments that differ from those anticipated.

 

^[1] Excluding effects from the recognition (2021) and reversal (2022) of provisions for long-term variable compensation (Stock Appreciation Rights Plan, SARs) and in 2021 from expenses in the personnel area in connection with business combinations