Earnings Call: flatexDEGIRO Reports Strong Growth in Q3 2024

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Earnings Call: flatexDEGIRO Reports Strong Growth in Q3 2024

Europe's leading online brokerage firm flatexDEGIRO (FTG.DE), under the leadership of CEO Oliver Behrens, reported strong financial results during its Q3 2024 earnings call. The company achieved significant revenue growth of 22% year-over-year, reaching 353 million euros, while net income more than doubled to 86 million euros, reflecting a 111% increase from the previous year.

This robust performance has led flatexDEGIRO to raise its 2024 revenue forecast to over 15% growth, maintaining its net income growth estimate at up to 50%. The call also highlighted the conclusion of the specific commissioners' duties by BaFin, the initiation of a share buyback program valued at 50 million euros, and plans for product expansion, including direct cryptocurrency trading and individual retirement accounts in Germany.

Key Highlights:

  • flatexDEGIRO experienced a 22% revenue increase year-over-year, totaling 353 million euros in Q3 2024.
  • Net income rose by 111% to 86 million euros.
  • The company raised its 2024 revenue forecast to over 15% growth while maintaining a net income growth estimate of 25-50%.
  • Regulatory challenges were addressed with the end of the specific commissioners' duties by BaFin.
  • A share buyback program valued at up to 50 million euros was initiated on October 1, 2024.
  • flatexDEGIRO plans to transition to a Societas Europaea legal structure by mid-2025.
  • The customer base grew by 19%, while managed assets increased by 37% to 64.6 billion euros.
  • Commission income and interest income grew by 9% and 15%, respectively.
  • Personnel expenses rose by 12% due to salary increases and hiring for regulatory compliance.

Company Outlook:

  • The company is preparing to launch cryptocurrency trading in Q4 2024.
  • flatexDEGIRO anticipates that new product offerings, including individual retirement accounts, will help mitigate potential declines in net interest income.
  • Preliminary figures for the 2024 fiscal year will be announced in February 2025.
  • Administrative costs are expected to drop to approximately 50 million euros in 2025.

Declining Points:

  • The company experienced weakness in trading activities in September.
  • Personnel and administrative expenses increased, with rises in administrative costs attributed to IT and consulting expenses.

Rising Points:

  • Trading activity showed improvement in October.
  • The company expects a significant decrease in administrative expenses in Q4 2024.
  • The decision to transition to an SE legal structure is expected to enhance flexibility in decision-making and governance.

Shortcomings:

  • No specific shortcomings were mentioned during the earnings call.

Q&A Highlights:

  • Benon Janos discussed potential increases in marketing investments to boost growth over the next six to twelve months.
  • A draft legislative document from the German government related to retirement accounts signals a potential launch date of January 1, 2026.
  • Customer acquisition costs have improved, allowing for more effective customer growth.
  • The company is not relying on third-party partners for the product launch of retirement accounts.
  • Upcoming roadshows in London and the U.S. were discussed.

flatexDEGIRO's strong financial performance, alongside the anticipated launch of cryptocurrency trading and the transition to an SE legal structure, underscores the company's commitment to growth and innovation in the competitive brokerage market. With a focus on expanding product offerings and enhancing cost efficiency, flatexDEGIRO appears poised to maintain its positive trajectory in the upcoming quarters.