Flow Traders 2Q 2024 Results
Flow Traders 2Q 2024 Results
Amsterdam, the Netherlands - Flow Traders Ltd.
(Euronext: FLOW) announces its unaudited 2Q 2024
results.
Highlights
- Flow Traders recorded Net Trading
Income of €79.5m and Total Income of €76.2m in 2Q24, compared to
€49.5m and €51.4m, respectively, in 2Q23.
- Flow Traders’ ETP Value Traded
increased 4% in 2Q24 when compared to the same period last
year.
- Total Operating Expenses were €55.2m
in 2Q24, compared to €48.2m in 2Q23, with Fixed Operating Expenses
of €44.9m in the quarter, compared to €45.0m in 2Q23 (including
one-off expenses).
- EBITDA was €21.1m in 2Q24,
generating an EBITDA margin of 28%, compared to €3.2m and 6%,
respectively, in 2Q23.
- Net Profit was €12.8m in 2Q24,
yielding a basic EPS of €0.30, compared to a Net Loss of -€4.3m and
EPS of -€0.10 in 2Q23.
- Trading capital stood at €624m at
the end of 2Q24 and generated a 56% return on trading
capital1, compared to €609m and 52% in 1Q24.
- Shareholders’ equity was €635m at
the end of 2Q24, compared to €631m at the end of 1Q24.
- Flow Traders employed 635 FTEs at
the end of 2Q24, compared to 633 at the end of 1Q24.
- Flow Traders has initiated a
multi-layered trading capital expansion plan including a revision
of its dividend policy.
Financial Overview
€million |
2Q24 |
2Q23 |
Change |
1H24 |
1H23 |
Change |
Net trading income |
79.5 |
49.5 |
61% |
206.6 |
160.0 |
29% |
Other income |
(3.3) |
1.9 |
NM |
(0.8) |
1.9 |
NM |
Total income |
76.2 |
51.4 |
48% |
205.8 |
161.9 |
27% |
Revenue by
region2 |
|
|
|
|
|
|
Europe |
48.4 |
33.1 |
46% |
116.7 |
91.6 |
27% |
Americas |
13.5 |
9.3 |
45% |
54.9 |
42.1 |
30% |
Asia |
14.3 |
9.0 |
60% |
34.3 |
28.2 |
21% |
Employee expenses |
31.7 |
22.4 |
42% |
76.2 |
67.3 |
13% |
Fixed employee expenses |
21.5 |
19.2 |
12% |
41.1 |
39.2 |
5% |
Variable employee expenses |
10.3 |
3.2 |
224% |
35.2 |
28.1 |
25% |
Technology
expenses |
16.8 |
16.7 |
1% |
32.6 |
33.3 |
(2%) |
Other
expenses |
6.6 |
7.2 |
8% |
14.8 |
14.5 |
2% |
One-off expenses3 |
0.0 |
1.9 |
(100%) |
0.0 |
3.3 |
(100%) |
Total operating expenses |
55.2 |
48.2 |
15% |
123.6 |
118.5 |
4% |
EBITDA |
21.1 |
3.2 |
552% |
82.2 |
43.4 |
89% |
Depreciation / amortisation |
4.4 |
4.7 |
(5%) |
8.7 |
9.7 |
(10%) |
Profit/(loss)
on equity-accounted investments |
(0.2) |
(4.2) |
(94%) |
(0.6) |
(4.6) |
(87%) |
Profit before tax |
16.4 |
(5.6) |
NM |
72.8 |
29.1 |
150% |
Tax expense |
3.6 |
(1.4) |
NM |
14.1 |
5.6 |
150% |
Net profit |
12.8 |
(4.3) |
NM |
58.7 |
23.5 |
150% |
Basic EPS4 (€) |
0.30 |
(0.10) |
NM |
1.35 |
0.54 |
149% |
Fully diluted
EPS5 (€) |
0.29 |
(0.09) |
NM |
1.33 |
0.52 |
153% |
EBITDA
margin |
28% |
6% |
|
40% |
27% |
|
Revenue by Region
€million |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
1Q24 |
2Q24 |
Europe |
58.5 |
33.1 |
33.6 |
42.6 |
68.3 |
48.4 |
Americas |
32.8 |
9.3 |
22.0 |
18.1 |
41.3 |
13.5 |
Asia |
19.2 |
9.0 |
12.1 |
13.6 |
19.9 |
14.3 |
Value Traded Overview
€billion |
2Q24 |
2Q23 |
Change |
1H24 |
1H23 |
Change |
Flow Traders ETP Value Traded |
347 |
333 |
4% |
755 |
755 |
0% |
Europe |
147 |
144 |
2% |
300 |
340 |
(12%) |
Americas |
177 |
163 |
8% |
406 |
370 |
10% |
Asia |
23 |
25 |
(8%) |
50 |
45 |
10% |
Flow Traders non-ETP Value Traded |
1,132 |
916 |
24% |
2,278 |
2,047 |
11% |
Flow Traders Value Traded |
1,479 |
1,248 |
18% |
3,034 |
2,802 |
8% |
Equity |
754 |
699 |
8% |
1,573 |
1,524 |
3% |
Fixed income |
212 |
265 |
(20%) |
482 |
612 |
(21%) |
Currency, Crypto, Commodity |
465 |
247 |
89% |
887 |
587 |
51% |
Other |
48 |
39 |
23% |
92 |
79 |
17% |
Market ETP Value
Traded6 |
11,014 |
9,872 |
12% |
22,993 |
21,221 |
8% |
Europe |
583 |
464 |
26% |
1,178 |
1,036 |
14% |
Americas |
9,090 |
8,164 |
11% |
19,054 |
17,696 |
8% |
Asia |
1,341 |
1,245 |
8% |
2,761 |
2,489 |
11% |
Asia ex China |
444 |
373 |
19% |
883 |
738 |
20% |
Trading Capital
|
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
1Q24 |
2Q24 |
Trading Capital (€m) |
634 |
651 |
647 |
574 |
585 |
584 |
609 |
624 |
Return on Trading
Capital1 |
67% |
71% |
65% |
67% |
59% |
51% |
52% |
56% |
Average VIX |
25.1 |
25.4 |
21.0 |
16.7 |
15.1 |
15.4 |
13.9 |
14.2 |
Market Environment
Europe
Equity trading volumes in the quarter increased both
year-over-year and quarter-over-quarter but remain below the levels
seen in 2021 and 2022. Market volatility improved slightly this
quarter compared to the prior quarter but remains below the same
period a year ago and well below the levels seen in 2021 and
2022.
Fixed Income trading volumes increased year-over-year but were
flat-to-down on a quarter-on-quarter basis depending on the MTF
platform.
Americas
Equity trading volumes in the U.S. were mixed as NYSE saw
declines both on a year-over-year and quarter-on-quarter basis,
while Nasdaq saw a slight increase both on a year-over-year and
quarter-on-quarter basis. Market volatility in the U.S. was similar
to Europe as the VIX saw a slight increase quarter-on-quarter but
remains below the same period a year ago and well below the levels
seen in 2021 and 2022.
Fixed Income trading volumes in the U.S. were similar to Europe,
increasing year-over-year but declined on a quarter-on-quarter
basis. Market volatility declined both year-over-year and
quarter-on-quarter, and remains well below the levels seen in
2022.
Asia
Equity trading volumes in Asia were mixed across the region.
Trading volumes declined on the Hong Kong and Tokyo Stock Exchanges
both year-over-year and quarter-on-quarter while volumes increased
significantly in China both year-over-year and
quarter-on-quarter.
Digital Assets
Within Digital Assets, which trades across regions on a 24/7
basis, trading volumes in Bitcoin (the barometer of the industry)
declined by double-digits quarter-on-quarter as the elevated
initial fund flows into U.S. spot Bitcoin ETFs in the first quarter
slowed significantly to flows more in-line with traditional ETFs in
the second quarter. However, volumes were still elevated compared
to the same period a year ago. Volatility in Digital Assets, as
indicated by the BitVol index, was also down single-digits
quarter-on-quarter but up by double-digits year-over-year.
Trading Capital Expansion Plan
In recent years, Flow Traders has successfully diversified its
core trading model into diversified asset classes and geographies,
which resulted in increased optionality for the business. The Board
sees a significant range of emerging opportunities to accelerate
growth for the firm, stemming from the investments it has made in
these new markets and through diversifying its revenue streams. It
believes now is the time to seize these opportunities and move the
firm into a growth phase by meaningfully expanding its trading
capital base, especially given the strong historical returns it has
made on trading capital.
In recent months, the firm has been exploring various options to
achieve this expansion in trading capital. It has concluded that
the most cost-effective way to expand the firm’s trading capital
base is to retain additional earnings on the Company’s balance
sheet, as part of a multi-layered trading capital expansion
plan.
Revised Dividend Policy
Accordingly, the firm is suspending regular dividend payments
until further notice, a decision that will accelerate the expansion
of the trading capital base and that the Board is confident will
generate long-term value for shareholders.
External Debt Funding
Flow Traders is also currently working on other parts of the
plan and has recently secured a €25 million bank term loan as a
first step towards embracing debt financing to unlock the growth
opportunities the firm sees. Management is also actively exploring
other debt financing options that will enable the firm to take full
advantage of the opportunities it sees.
Share Buyback
€5.3m worth of shares were repurchased in 2Q24 as part of the
€15m share buyback program announced in October 2022, with €2.2m of
the program remaining. A portion of the shares to be repurchased
under this program could be allocated to employee incentive plans
as needed.
Outlook
Fixed operating expenses guidance for the year remains unchanged
and is expected to be in the same range as FY23 as headcount is
expected to be flat to down for the year, offset by continued
technology investments and inflationary pressures. The firm remains
fully focused on operational and cost efficiencies across the
business while implementing its growth and diversification
strategies and bolstering trading capital.
CEO Statement
Mike Kuehnel, CEO
“Over the past 18 months, Flow Traders has made a concerted push
into new markets, asset classes and geographies, with considerable
success. Following the arrival of the newly constituted Board we
have conducted a broad-ranging strategic review and concluded that
we have a significant opportunity to capitalise on this period of
development and move Flow Traders into a growth phase.
A critical element of this development will be the expansion of
our trading capital base, especially given the significant returns
we have generated on trading capital historically. Following a
review of the various options to achieve this, we are implementing
a wide-ranging trading capital expansion plan. As a first element
of this we recently secured a €25 million bank term loan, and we
are looking at several other ways to increase external
financing.
We have also concluded that a central pillar of the plan, and
the most cost-effective means of increasing our trading capital, is
to increase the level of retained earnings in the business.
Accordingly, we are suspending regular dividend payments until
further notice, a move that will accelerate the expansion of the
trading capital base and that the Board is confident will generate
long-term value for the shareholders.
We believe that the firm’s new trading capital expansion plan
and the continued expansion of our diversified set of existing and
newly emerging trading strategies will deliver significant returns
and further strengthen Flow Traders’ role as a leading global
trading firm, providing liquidity and efficiency across a wide
range of financial markets.
Coming to the quarter, market activity remained muted as
volatility declined across most major asset classes compared to the
same period a year ago. Nevertheless, we continue to expand our
relationships across both the TradFi and DeFi ecosystems and
actively sought out innovative partnerships to continue to support
the adoption of Digital Assets. Internally, we continue to focus on
our automation and efficiency initiatives, and we are pleased to
have received shareholder and regulatory approval for Owain’s
nomination as our Chief Technology Officer and as an Executive
Director of the Board.”
Preliminary Financial Calendar
31 October
2024 Release
of 3Q24 trading update
Analyst Conference Call and Webcast
The 2Q24 results analyst conference call will be held at 10:00
am CEST on Friday 26 July 2024. The presentation can be downloaded
at https://www.flowtraders.com/investors/results-centre and the
conference call can be followed via a listen-only audio webcast. A
replay of the conference call will be available on the company
website for at least 90 days.
Contact Details
Flow Traders Ltd.
Investors
Eric Pan
Phone: +31 20
7996799
Email: investor.relations@flowtraders.com
Media
Laura Peijs
Phone: +31 20
7996799
Email: press@flowtraders.com
About Flow Traders
Flow Traders is a leading trading firm providing liquidity in
multiple asset classes, covering all major exchanges. Founded in
2004, Flow Traders is a leading global ETP market marker and has
leveraged its expertise in trading ETPs to expand into fixed
income, commodities, digital assets and FX. Flow Traders’ role in
financial markets is to ensure the availability of liquidity and
enabling investors to continue to buy or sell financial instruments
under all market circumstances, thereby ensuring markets remain
resilient and continue to function in an orderly manner. In
addition to its trading activities, Flow Traders has established a
strategic investment unit focused on fostering market innovation
and aligned with our mission to bring greater transparency and
efficiency to the financial ecosystem. With nearly two decades of
experience, we have built a team of over 600 talented
professionals, located globally, contributing to the firm's
entrepreneurial culture and delivering the company's mission.
Notes
- Return on trading capital defined as
LTM NTI divided by end of period trading capital.
- Revenue by region includes NTI,
Other Income, and inter-company revenue.
- One-off expenses related to the
completed corporate holding structure update and capital structure
review work.
- Weighted average shares outstanding:
2Q24 - 43,270,311; 1Q24 - 43,515,359; 2Q23 - 43,289,018.
- Determined by adjusting the basic
EPS for the effects of all dilutive share-based payments to
employees.
- Source - Flow Traders analysis.
Important Legal Information
This press release is prepared by Flow Traders Ltd. and is for
information purposes only. It is not a recommendation to engage in
investment activities and you must not rely on the content of this
document when making any investment decisions. The information in
this document does not constitute legal, tax, or investment advice
and is not to be regarded as investor marketing or marketing of any
security or financial instrument, or as an offer to buy or sell, or
as a solicitation of any offer to buy or sell, securities or
financial instruments.
The information and materials contained in this press release are
provided ‘as is’ and Flow Traders Ltd. or any of its affiliates
(“Flow Traders”) do not warrant the accuracy, adequacy or
completeness of the information and materials and expressly
disclaim liability for any errors or omissions. This press release
is not intended to be, and shall not constitute in any way a
binding or legal agreement, or impose any legal obligation on Flow
Traders. All intellectual property rights, including trademarks,
are those of their respective owners. All rights reserved. All
proprietary rights and interest in or connected with this
publication shall vest in Flow Traders. No part of it may be
redistributed or reproduced without the prior written permission of
Flow Traders.
This press release may include forward-looking statements, which
are based on Flow Traders’ current expectations and projections
about future events, and are not guarantees of future performance.
Forward looking statements are statements that are not historical
facts, including statements about our beliefs and expectations.
Words such as “may”, “will”, “would”, “should”, “expect”, “intend”,
“estimate”, “anticipate”, “project”, “believe”, “could”, “hope”,
“seek”, “plan”, “foresee”, “aim”, “objective”, “potential”, “goal”
“strategy”, “target”, “continue” and similar expressions or their
negatives are used to identify these forward-looking statements. By
their nature, forward-looking statements involve known and unknown
risks, uncertainties, assumptions and other factors because they
relate to events and depend on circumstances that will occur in the
future whether or not outside the control of Flow Traders. Such
factors may cause actual results, performance or developments to
differ materially from those expressed or implied by such
forward-looking statements. Accordingly, no undue reliance should
be placed on any forward-looking statements. Forward-looking
statements speak only as at the date at which they are made. Flow
Traders expressly disclaims any obligation or undertaking to
update, review or revise any forward-looking statements contained
in this press release to reflect any change in its expectations or
any change in events, conditions or circumstances on which such
statements are based unless required to do so by applicable
law.
Financial objectives are internal objectives of Flow Traders to
measure its operational performance and should not be read as
indicating that Flow Traders is targeting such metrics for any
particular fiscal year. Flow Traders’ ability to achieve these
financial objectives is inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond Flow Traders’ control, and upon assumptions with
respect to future business decisions that are subject to change. As
a result, Flow Traders’ actual results may vary from these
financial objectives, and those variations may be material.
Efficiencies are net, before tax and on a run-rate basis, i.e.
taking into account the full-year impact of any measure to be
undertaken before the end of the period mentioned. The expected
operating efficiencies and cost savings were prepared on the basis
of a number of assumptions, projections and estimates, many of
which depend on factors that are beyond Flow Traders’ control.
These assumptions, projections and estimates are inherently subject
to significant uncertainties and actual results may differ, perhaps
materially, from those projected. Flow Traders cannot provide any
assurance that these assumptions are correct and that these
projections and estimates will reflect Flow Traders’ actual results
of operations.
By accepting this document you agree to the terms set out above.
If you do not agree with the terms set out above please notify
legal.amsterdam@nl.flowtraders.com immediately and delete or
destroy this document.
All results published in this release are unaudited.
Market Abuse Regulation
This press release contains information within the meaning of
Article 7(1) of the EU Market Abuse Regulation.
- 2Q24 Trading Results Press Release