XTB, a major retail FX/CFDs broker headquartered and listed in Poland, closed 2022 with EUR 163.3 million in net profit, which jumped 214.4 percent. Operating revenues also came in at a record EUR 308.1 million, jumping from the previous year's EUR 136.7 million.
The impressive figure was achieved despite a dull fourth quarter when revenue dropped by almost 45 percent quarter-over-quarter. In addition, the Q4 profit took a hit as it came in 79 percent lower than the previous quarter and 27.1 percent below the comparable quarter (Q4) of 2021.
Moreover, the broker posted a record number of client metrics last year, whether it be active clients or trading activities.
Finance Magnates recently sat down with the CEO of XTB, Omar Arnaout, who has been heading the broker since March 2017, to discuss the financials of 2022, rising client metrics, and other developments in the company.
Here is the full Finance Magnates (FM) interview with Omar Arnaout (OA):
FM: XTB posted a solid year-over-year uptick in Q4 2022 revenue. However, the figures went down significantly compared to the other three quarters of the year. What is the reason behind this quarterly decline? Is it only market cycles, or something else too?
OA: The fourth quarter of 2022 was an excellent period for XTB from the operational perspective. We managed the biggest marketing campaign in the history of the company, onboarding over 50,000 new clients and generating the highest quarterly volume in the history of XTB. On the other hand, market conditions were not favorable for us, thus the lower net profit.
Our business model is cyclical and, therefore, should be observed from the long-term perspective, and here, what must be said is that, beyond any doubt, 2022 has been the best in the history of XTB, and we are incredibly happy with what we were all able to achieve.
FM: Regarding new client additions, the figures were outstanding. Why did the revenue drop despite client activities soaring on the platform?
OA: Market conditions were not favorable for us, but in our business model, this is something regular that has to occur from time to time. October was characterized by a shift in market trends on some of the most meaningful markets for XTB, whilst December had markets moving in horizontal trends, influencing lower profitability in both months.
FM: What are the challenges (technical or other areas) a broker usually faces with increasing client activities? How did XTB overcome them?
OA: In January alone, XTB onboarded over 40,000 new clients, which is approximately 10,000 less than in the whole fourth quarter of 2022. The biggest challenge for us was certainly the onboarding process itself which tripled the amount of work our customer support team had in comparison to previous quarters. This challenge and many others push us to automate as many processes as possible, whether talking about onboarding, sales, or supporting the client with his many needs. Fortunately for us, we are a Fintech that employs close to 300 people in our IT department, and many such changes are developed and processed on a monthly basis.
FM: What changes did you witness in client activities in the pre and post-Covid era? And, how will it be in the future?
OA: During Covid, market volatility exploded, and what could be realized is that under a certain impulse, people around us would start talking about financial markets like any other everyday topic, such as the weather or football. In this period, people have become more financially aware, which we could see in the surge of interest in our services. I believe this is the current trend, and our goal is to be able to provide people with investment products suited to their needs which is one of the key goals for 2023.
FM: XTB gained a South Africa license in 2021 but has no plans to launch services in the country at least until 2024. Why the delay?
OA: Managing a business is always a question of prioritization. One of our main goals in 2023 is the addition of new products to our offer, and it is crucial for us to make sure to first strengthen our position in the markets where we are strongest to make sure we do not lose our edge. That is the sole reason for the delay, and hopefully, in 2024, we will come back to our project in South Africa.
FM: Do you have any other expansion plans apart from Africa? And how are your MENA operations going? What are the benefits and challenges of operating in the Middle East?
OA: At this moment, we do not plan to expand into new geographies, and we want to focus on strengthening our position in the countries where we are present both from the brand perspective and also from the product perspective. As to the MENA region, then, we are incredibly happy with the work that is being done by the whole team in Dubai, and it is one of the quickest-developing branches in the history of XTB.
The benefits are obvious because it is a very dynamically prospering market, whilst the challenges were finding the best business model to make sure that we continue our growth. It is undoubtedly a different market compared to the other branches we have, and I am happy, thanks to the local team, we were able to find the best possible model for XTB quickly.
FM: And what's next for XTB? Where will the management focus the company's resources when the share prices are hitting all-time highs?
OA: As mentioned before, our priorities have not changed, and we want to continue our rapid growth in terms of our client base. We also want to strengthen our brand significantly. Still, most importantly, we want to make sure that we broaden our product offering to be able to facilitate as many clients as possible with all their different investment needs.
