Playtech has just reported on the financial outcome for the company in 2018. Focusing on the performance of the financial division, TradeTech, the firm announced that it transacted a record amount of B2B trading volumes.
The solid performance of the company’s B2B unit, which includes CFH Group and TradeTech Alpha, continued last year. The company is reporting that a total $2 trillion of trading volumes were transacted through for institutional clients. This is more than 50 percent growth from 2017’s $1.3 trillion figure.
The company is highlighting that the growth in its trading volumes comes due to the significant increase in new customers to each of the sub-segments of TradeTech’s B2B business.
In contrast to volumes, however, revenues only increased by nine percent in 2018, or 13 percent on a constant currency basis. Currently, the income from the financial division of Playtech represents about 7.4 percent of the company’s total. The rise in the number last year was driven by the increased B2B volume and contributed $92.9 million to the parent company's $1.24 billion top line.
Organic Growth
In a year that was difficult for the retail trading industry, TradeTech Group relied on organic growth in its B2B segment. Revenues and adjusted EBITDA increased by 15 percent and 21 percent respectively, compared to 2017 and by four percenet and 12 percent respectively, on a proforma basis.
The positive headline results reflect an improvement in the company’s EBITDA margin from 32 in 2017 to 33 percent in 2018. Revenues from B2B activity rose by 17 percent during the period. The growth was driven by the company’s Liquidity offering which increased to $27.9 million in 2018, which is a 20 percent higher year-on-year.
The Alpha division also contributed materially to the growth in the B2B segment with $24.8 million of revenues for the year. This represents a 118 percent growth on the company’s execution and Risk Management offering.
“TradeTech management believe these results reflect the successful execution of its strategy to become the provider of choice to brokers in the financial trading industry. The combination of the Group's liquidity offering, execution and risk management offering, and its frontend and backend technology, enables it to deliver an end to end solution for brokers,” the company elaborated in a statement.
Markets.com Performance
The B2C brand of TradeTech, Markets.com, continued growing in 2018, despite the headwinds from the new ESMA regulations. During the period the company posted a 12 percent rise in revenues.
The number of new clients declined when compared to 2018 by about 12,900 to a total of 15,100. That said, the company’s customers have become more active during the period. Markets.com reported an increase in trading activity of 60 percent.
All-in-all, the company appears to have managed to attract enough valuable clients at a critical time for the industry. The diversification efforts of the company are netting results with about 18 percent of the company’s clients now coming from outside of the EU and are on-boarded via non-EU licenses.
Elaborating on the EU regulatory challenge, the company states: “While it's still too early to properly evaluate the long-term impact of ESMA's new measures, given the continued healthy revenue generation post ESMA's implementation, Management commenced a gradual increase on marketing spend and new customers numbers are now returning to a growth trajectory.”
