FLOW TRADERS Q323 TRADING UPDATE
Highlights
Flow Traders recorded Normalized Net Trading Income of €67.6m and Normalized Total Income of €68.0m in Q323.- Flow Traders’ ETP Value Traded declined 18% y/y given the decline in the overall market trading environment.
- Normalized Operating Expenses were €52.1m in Q323, with Normalized Fixed Operating Expenses of €46.7m.
Flow Traders employed 658 FTEs at the end of Q323, compared to 653 at the end of Q223.- Normalized EBITDA in Q323 came in at €15.9m, generating a Normalized EBITDA margin of 23%.
- Q323 Normalized Net Profit was €9.4m, with Normalized basic EPS of €0.22.
- Trading capital stood at €585m at the end of the quarter, up from €574m at the end of Q223 and generating a 59% return on trading capital1.
- Shareholders’ equity was €590m at the end of the quarter, up from €586m at the end of Q223.
Financial Overview
€million | Q323 | Q322 | Change | YTD23 | YTD22 | Change |
Normalized Total income | 68.0 | 112.2 | (39%) | 226.9 | 346.7 | (35%) |
Normalized Net trading income2 | 67.6 | 111.7 | (40%) | 227.5 | 343.9 | (34%) |
EMEA | 33.0 | 87.4 | (62%) | 121.7 | 246.3 | (51%) |
22.3 | 14.4 | 54% | 64.8 | 54.7 | 19% | |
APAC | 12.3 | 9.9 | 25% | 41.0 | 42.9 | (4%) |
Normalized Other income2 | 0.4 | 0.4 | - | (0.6) | 2.8 | - |
Normalized employee expenses3 | 24.8 | 40.1 | (38%) | 83.1 | 122.6 | (32%) |
Technology expenses | 15.8 | 16.1 | (2%) | 49.1 | 44.8 | 10% |
Other expenses | 11.5 | 7.1 | 61% | 26.0 | 19.4 | 34% |
Normalized operating expenses | 52.1 | 63.3 | (18%) | 158.2 | 186.7 | (15%) |
Normalized EBITDA | 15.9 | 48.8 | (67%) | 68.8 | 159.9 | (57%) |
Depreciation / amortisation | 4.5 | 4.4 | 2% | 14.1 | 12.1 | (17%) |
Write off of (in) tangible assets | 0.0 | - | - | 0.0 | 0.2 | - |
Normalized profit before tax | 11.4 | 44.5 | (74%) | 54.6 | 147.7 | (63%) |
Normalized tax | 2.0 | 9.9 | (80%) | 10.5 | 31.0 | (66%) |
Normalized net profit | 9.4 | 34.5 | (73%) | 44.2 | 116.6 | (62%) |
Normalized basic EPS4 (€) | 0.22 | 0.79 | (73%) | 1.02 | 2.67 | (62%) |
Normalized EBITDA margin | 23% | 44% | 30% | 46% |
Value Traded Overview
€billion | Q323 | Q322 | Change | YTD23 | YTD22 | Change |
Flow Traders ETP Value Traded | 334 | 409 | (18%) | 1,089 | 1,379 | (21%) |
127 | 178 | (28%) | 467 | 609 | (23%) | |
181 | 212 | (14%) | 551 | 697 | (21%) | |
26 | 20 | 31% | 71 | 74 | (4%) | |
994 | 1,182 | (16%) | 3,041 | 3,781 | (20%) | |
Flow Traders Value Traded | 1,328 | 1,591 | (17%) | 4,130 | 5,160 | (20%) |
Equity | 723 | 714 | 1% | 2,248 | 2,567 | (12%) |
Fixed income | 253 | 344 | (26%) | 865 | 960 | (10%) |
Currency, Crypto, Commodity | 303 | 495 | (39%) | 890 | 1,489 | (40%) |
Other | 49 | 37 | 127 | 141 | ||
Market ETP Value Traded5 | 10,146 | 11,410 | (11%) | 31,366 | 40,170 | (22%) |
446 | 532 | (16%) | 1,482 | 1,866 | (21%) | |
8,301 | 9,638 | (14%) | 25,997 | 34,894 | (25%) | |
1,399 | 1,240 | 13% | 3,887 | 3,411 | 14% | |
457 | 395 | 16% | 1,193 | 1,187 | 1% |
Market Environment
- Market-wide, trading volumes and volatility across almost all regions and asset classes remained muted in the quarter. While trading volumes improved compared to last quarter, they remain down significantly compared to the same period a year ago. Market volatility, on the other hand, continued to decline compared to last quarter. Average VIX reached a low of 14 in the month of July before rebounding slightly in August and September.
- Looking across the regions, the same market-wide dynamic was seen within each region, with some regions faring better than others. The
Americas saw a stronger rebound in trading volumes in the quarter compared to EMEA as it experienced a more severe decline in the prior quarter. APAC saw a similar rebound in the quarter compared to the last quarter and continues to outperform all other regions, driven in part by a strong rebound in trading volumes inChina . - Volumes and volatility also remained depressed from an asset class perspective. In a continuation from last quarter, fixed income fared slightly better than other asset classes in terms of volumes but volatility was down significantly compared to a year ago, similar to the other classes. Cryptocurrencies continue to see the most pressure as Bitcoin, the bellwether of the industry, continued the downward trend in trading volumes and volatility as compared to the prior quarter.
Share Buyback
- After a brief pause during a period of unusually subdued market trading environment, execution of the €15m share buyback program that was previously extended until
26 October 2024 will commence shortly.
Outlook
- The firm continues to remain fully focused on operational and cost efficiencies across the business while implementing its prioritized growth strategies. Normalized Fixed Operating Expenses are expected to remain in the range of €175-185m for the full year and headcount is expected to remain broadly flat for the year, in-line with previous guidance.
Management Comments
“We saw an improved trading environment in the third quarter when compared to the second quarter, though volumes and volatility were still down significantly compared to the same period last year. We are, however, seeing a slight increase in volatility recently after a period of subdued market activity. We are pleased to see our diversification strategy yielded solid results during a seasonally quiet period which we may not have been able to achieve otherwise when looking at the varying degrees of rebounds in different segments of the market globally. While the structural growth of ETPs across different asset classes around the world continues unabated, the recent surge of investor interest in bonds and digital assets, offset in turn by less interest in equity, validates the strategic and economic relevance of our diversification strategy.
Throughout the quarter, we remained focused on structurally enhancing our trading capabilities and related infrastructure in different asset classes and regions to take full advantage of arising opportunities when market volumes and volatility return. In
From an efficiency and cost perspective, we are on track with our previous cost guidance as we remain focused on balancing our key growth initiatives while improving the underlying operational efficiency of the business in parallel. We believe the continuous fostering of talent through all cycles of the market that has underpinned the success of
During the quarter, the firm’s leadership experienced a transition as
Preliminary Financial Calendar
18 January 2024 Start silent period ahead of Q423 / FY23 results
8 February 2024 Release Q423 / FY23 results (incl. analyst conference call)
1 March 2024 Release 2023 Annual Report
31 March 2024 Start silent period ahead of Q124 trading update
25 April 2024 Release Q124 trading update (no analyst conference call)
13 June 2024 AGM
Contact Details
Investors
Phone: +31 20 7996180
Email: investor.relations@flowtraders.com
Media
Phone: +31 20 7996125
Email: press@flowtraders.com
About
Normalized Performance
Flow Traders makes certain adjustments to various IFRS expense and profit measures in order to derive Alternative Performance Measures (APM). The policy is to exclude or adjust items that are considered to be significant in both nature or size and where the treatment as an adjusted item provides stakeholders with useful information to assess the year-on-year or quarter-on-quarter underlying performance. On this basis, the following items were adjusted or excluded for the Q323 trading update:- Removal of IFRS 2 treatment of share-based payments which include the deferral of a portion of the current year share plans as well as recognition of prior years’ share plans. This adjustment provides insights into the relationship between the current year variable employee expenses and current year trading performance.
- Other income line includes all the realized and unrealized results on Flow Traders’ long-term equity investments whether accounted for as Fair Value Other Comprehensive Income (FV OCI), Fair Value Profit and Loss (FVPL) or Results of Equity Accounted Investments.
- Exclusion of one-off expenses which relate specifically to the completed corporate holding structure update. These are not considered to be part of the underlying operating expenses of the business.
- Tax expenses are adjusted based upon the pre-tax adjustments and/or excluded items above.
IFRS Financial Overview
€million | Q323 | Q322 | Change | YTD23 | YTD22 | Change |
Total income | 67.7 | 111.7 | (39%) | 229.6 | 343.1 | (33%) |
Net trading income | 67.6 | 111.8 | (40%) | 227.6 | 344.5 | (34%) |
Other income | 0.1 | (0.1) | - | 2.0 | (1.3) | - |
Employee expenses3 | 27.1 | 39.9 | (32%) | 94.4 | 130.2 | (28%) |
Technology expenses | 15.8 | 16.1 | (2%) | 49.1 | 44.8 | 10% |
Other expenses | 11.5 | 7.1 | 61% | 26.0 | 19.4 | 34% |
One-off expenses6 | 1.0 | 0.8 | 23% | 4.3 | 12.5 | (66%) |
Total operating expenses | 55.3 | 63.9 | (13%) | 173.8 | 207.0 | (16%) |
EBITDA | 12.4 | 47.8 | (74%) | 55.8 | 136.2 | (59%) |
Profit before tax | 8.1 | 43.4 | (81%) | 37.2 | 123.7 | (70%) |
Net profit | 6.3 | 33.8 | (81%) | 29.8 | 97.4 | (69%) |
Basic EPS4 (€) | 0.15 | 0.78 | (81%) | 0.69 | 2.23 | (69%) |
Fully diluted EPS7 (€) | 0.14 | 0.75 | (81%) | 0.66 | 2.16 | (69%) |
EBITDA margin | 18% | 43% | 24% | 40% |
- Normalized EBITDA and margin are based on the relevant profit share percentage of operating result for the relevant financial period without any IFRS 2 adjustments for share-based payments. The profit share percentage was adjusted to 32.5% in Q222 from 35%. €1.0m of one-off expenses are also excluded.
- Tax based on estimated expected effective tax rate for the relevant financial period: Q323 - 22.5%; Q223 - 24.6%; Q322 - 22.0%.
- A summary reconciliation of Normalized to IFRS is presented below:
Normalized to IFRS Reconciliation
€million | Q323 | Q322 | YTD23 | YTD22 |
Normalized EBITDA | 15.9 | 48.8 | 68.8 | 159.9 |
FV OCI adjustment | (0.1) | (0.5) | (1.8) | (3.7) |
Results of equity-accounted investments | (0.2) | 0.0 | 4.4 | 0.2 |
One-off expenses6 | (1.0) | (0.8) | (4.3) | (12.5) |
Prior year share plans | (3.7) | (4.2) | (13.7) | (18.3) |
Current year share plan deferral | 1.4 | 4.4 | 2.4 | 10.6 |
Other variable remuneration adjustment | - | - | - | - |
IFRS EBITDA | 12.4 | 47.8 | 55.8 | 136.2 |
Normalized net profit | 9.4 | 34.5 | 44.2 | 116.6 |
Profit before tax IFRS adjustments | (3.3) | (1.1) | (17.4) | (24.0) |
Tax difference | 0.2 | 0.4 | 3.0 | 4.7 |
IFRS net profit | 6.3 | 33.8 | 29.8 | 97.4 |
Notes
- Return on trading capital defined as LTM NTI divided by end of period trading capital.
- Normalized NTI is adjusted for the fair value change of economic offsetting positions presented in the NTI line instead of Other income. Normalized Other income is adjusted for Fair value through other comprehensive income and Results of equity-accounted investments.
- Normalized employee expenses is adjusted for the impact of share-based variable remuneration payments from prior years. Fixed employee expenses for the quarter were: Q323 - €19.3m; Q223 - €19.2m; Q322 - €19.0m.
- Weighted average shares outstanding: Q323 - 43,293,467; Q223 - 43,289,018; Q322 - 43,615,044.
- Source -
Flow Traders analysis. - One-off expenses of €1.0m predominantly related to previously capitalized expenses incurred as part of the balance sheet review work.
- Determined by adjusting the basic EPS for the effects of all dilutive share-based payments to employees.
Important Legal Information
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The information and materials contained in this press release are provided ‘as is’ and
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
Financial objectives are internal objectives of
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.
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All results published in this release are unaudited.
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Attachment
- Q323 Trading Update
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