Plus500 Ltd (LON:PLUS) reported revenues up 487% and cash balances boosted 70% as the first three months of 2020 as the online broker saw a surge in trading activity on the back of financial market volatility due to coronavirus.
Underlying profits (EBITDA) of $231.6mln were generated in the quarter, up 1,863% compared to the same quarter last year and more than the US$218m that City analysts expected from the FTSE 250 company for the whole of 2020.
This surge has driven higher levels of customer trading activity and an increased rate of new customer acquisition, plus
Active customer numbers almost doubled to 194,024 by the end of March and, happily for the Israel-headquartered group, at half the average user acquisition cost.
Not only that, more customers than usual lost money.
First-quarter revenue of US$316.6m compared well against the US$53.9mln generated in a poor start this time last year, with customer income representing roughly three quarters of revenue.
Cash in the bank surged to US$515.6mln by the end of the quarter, from US$292.9mln at the start, with directors giving a commitment to continue existing dividend and buyback policies.
Plus500 said revenue and profitability for the full year were expected to be “substantially ahead” of current consensus expectations.
“However,” said chief executive Asaf Elimelech, “as we remain at an early stage in the financial year, and there are global markets uncertainties as well as ongoing regulatory changes, it remains difficult to predict the outcome for the full year.”
Shares in the company were 2% higher at 1,128.75p by mid-morning, up 30% since the start of the year.
Analysts at broker Peel Hunt said it was "exceptionally strong growth" with revenues in the quarter of US$316mln compared to full-year expectations of US$424mln, with the number of new customers recruited almost times higher than same quarter last year, with average revenue per user almost trebling.
The balance sheet remains very strong, with net cash of US$515.6m, with a commitment to continue existing dividend and buyback policies. Clearly forecasts will need to be massively increased, we also place our target price/recommendation under review for now.