Smartbroker Holding AG: Audited consolidated financial statements confirm preliminary figures from March – SMARTBROKER+ market launch imminent

Smartbroker Holding AG: Audited consolidated financial statements confirm preliminary figures from March – SMARTBROKER+ market launch imminent

 

• Despite the difficult market environment, group sales amounted to €52.8 million (preliminary: €52.6 million); EBITDA of €8.8 million (preliminary: approx. €9 million)
• Stable revenues in the media business and continued profitability
• Increase in brokerage accounts to a total of approx. 267,000
• Assets under custody reached €9.2 billion
   

 Berlin, 20 July 2023

Smartbroker Holding AG (previously wallstreet:online AG, ISIN: DE000A2GS609, FSE: SB1), a leading online broker operator and by far the largest publisher-independent financial portal operator in German-speaking Europe, published its audited figures for 2022 today,  confirming the preliminary financials presented on 15 March 2022.

Despite the challenging market environment, the Smartbroker Group achieved important milestones on the way to the relaunch of its online broker Smartbroker. Even with a reduced marketing budget, it was possible to increase the number of brokerage accounts to 267,000 and the amount of client assets under custody by €0.3 billion to €9.2 billion.

Media business remains the largest revenue contributor, but transaction business is catching up

Consolidated group sales in accordance with the German Commercial Code (HGB) amounted to €52.8 million (€56.8 million on a comparable basis in 2021^[1]). The transaction business, of which Smartbroker is by far the largest source of revenue, contributed almost €19 million to the group's turnover. The media business remained the largest revenue contributor. Our digital media assets, led by our four financial media portals, generated revenues of around €34 million and an EBITDA of approximately €15 million, which corresponds to a margin of 43%. Group EBITDA after customer acquisition costs amounted to €8.8 million (€4.4 million in the previous year). This represents an increase of 99%. Customer acquisition costs totalled  €4.0 million in 2022, resulting in an EBITDA before customer acquisition costs of €12.8 million  (preliminary: €13.1 million). Net income for the year has been burdened by extraordinary depreciation and amortization charges in relation to  the SMARTBROKER+ project[2] amounting to almost €13 million.^[3]

Strengthening the revenue base through diversification and introduction of new products

After a promising  first quarter of 2022, the Smartbroker Group was confronted with a decline in retail investor trading activity and a reduction in available advertising budgets as the year progressed. The number of trades per custody account decreased from 29 in 2021 to 18 in 2022 (-38%). At the same time, the number of page impressions generated by the Group’s digital media assets decreased by more than 30% (2.6 billion in 2022) – driven by the ongoing war in Ukraine, uncertainty on the markets, rising inflation and the economic aftermath of the Corona pandemic.

Nevertheless, the Company was able to maintain the profitability of its media business and thus continue the largely self-financed investments into the expansion of its transaction business.

In order to strengthen and diversify the revenue base, the Smartbroker Group introduced a range of premium media content (including “Börsenbriefe”, paid-for subscription newsletters) and launched its own video editorial team. New employees were hired, especially in the areas of product and development. In 2021, on average 196 professionals worked for the Smartbroker Group, in 2022 it was 239 (+22%).

Partnership with Baader Bank creates basis for the upcoming launch of SMARTBROKER+

The Company entered into a cooperation agreement with Baader Bank in November 2022, which will act as custodian bank and transaction processor for SMARTBROKER+. In addition, the squeeze-out to obtain a 100% stake in Smartbroker's operating company Smartbroker AG (formerly wallstreet:online capital AG) was successfully completed – as were the renamings of wallstreet:online AG to Smartbroker Holding AG and wallstreet:online capital AG to Smartbroker AG.

Media assets and SMARTBROKER+ will be closely integrated

For the current year, the Smartbroker Group expects revenues between €51 million and €56 million. Operating EBITDA after customer acquisition costs is expected to range between €1 million and €4 million. The focus is on the imminent market launch of SMARTBROKER+ and the subsequent migration of the existing Smartbroker customers to the new platform. The Management Board of Smartbroker Holding AG therefore considers 2023 to be another, final transition year. One-off cost for the development and launch of SMARTBROKER+ and the parallel operation of the current version of the online broker are expected to lead to a negative cash flow. However, SMARTBROKER+ is expected to contribute to revenue growth on a full year basis from 2024 onwards, and also strengthen the Group's profitability for the first time.

On the media side, the first step in the redesign of wallstreet-online.de – the group's oldest brand – has been successfully completed. As part of the rebrush, a completely new design and typeface were developed for the website and mobile apps. In due course, the page structure, user flows and the technical structure of the applications will be further optimized. The Group's other media offerings will be modernized subsequently, tailored to the respective target group. At the same time, SMARTBROKER+ is to be integrated closely with the Group’s media assets. Among other things, trading directly from the portals is one of the mid-term goals.

Annual General Meeting scheduled for mid-October 2023

The Company will provide detailed insights into its business development at its Annual General Meeting, which will take place as a physical face-to-face event in Berlin this year, on 17 October 2023. Prior to this, the 2023 half-year report will be presented at the end of September.

Roland Nicklaus, CFO of Smartbroker Holding AG, commented on the final results for 2022 and the targets for 2023: "Despite having generated the second highest revenues since inception, 2022 was a challenging year for our company. The current year continues to be dominated by the transformation process of our transaction business, which – after the difficulties encountered in 2022 - is now progressing to plan. The product launch of SMARTBROKER+ is imminent, the feedback from our test users has been very encouraging to date, and the interest within the industry is extraordinarily high. There are already numerous pre-registrations for our revamped broker. Following the migration of our existing customers to the new system, we will once again focus on acquiring new customers from the end of 2023. We therefore expect the growth in accounts and client assets under custody to pick up in 2024. At the same time, the cost structure will return to normal, one-off expenses will materially reduce, and the transaction business’ share of total revenues will increase."

About the Smartbroker Group

The Smartbroker Group operates the Smartbroker – a multiple award-winning digital broker, which is the only provider in Germany to combine the extensive product range of traditional brokers with the extremely favorable conditions of neo brokers. In addition, the Group operates four high-reach stock market portals and related digital media assets (wallstreet-online.de, boersenNews.de, FinanzNachrichten.de and ARIVA.de). With several hundred million monthly page impressions, the Group is the by far largest publisher-independent financial portal operator in German-speaking countries, and also hosts the region’s largest finance community.

Press contact:

Felix Rentzsch
Head of Communications
Phone: +49 (0)176 4165 0721
Mail: f.rentzsch@smartbroker-holding.de

Investor Relations contact:

Sabrina Kassmannhuber
Head of Investor Relations
Phone: +49 (0)30 20 456 500
Mail: ir@smartbroker-holding.de

^[1] Pro forma revenue, including Smartbroker AG fully consolidated as of 1 January 2021 in accordance with the German Commercial Code (HGB). Based on the management information system, the figure would have amounted to €51.4 million, with no significant impact on the EBITDA.

^[2] Previously referred to as the "Smartbroker 2.0" project

^[3] See ad hoc announcement of 9 March 2023