XTB just posted its annual results for 2018, delivering a solid message to its investors. The company not only increased its revenues throughout the year but also on-boarded the highest number of new clients in the final quarter.
Looking at the top line numbers, revenues increased by five percent to PLN 288.3 million ($75 million). The bottom line of the company was affected by an increase in marketing and salaries spending as the operating profit came in at PLN 115.5 million ($30 million). Net profits did increase however by almost nine percent to PLN 124 million ($32 million).
Final Quarter of 2018
Overall, the final quarter of 2018 has been positive with XTB attracting the biggest number of new clients in the first three month period that includes ESMA ’s full impact. With a total of 5,742 clients added in Q4, the company brings the total for the year to 20,672. For a year when a slew of regulatory challenges has been making life difficult for retail brokers, XTB’s metric stands out.
Despite strong new clients numbers, active customers have been slowly grinding lower throughout the year, reaching 21,279 in Q4. That said, the figure is higher by 14 percent when compared to the final quarter of 2017, putting the company on a solid footing for this year.
Despite increased new and active clients numbers, the number of deposits didn’t keep up. In fact, the Polish broker reports that net deposits declined by seven percent throughout the year. Trading volumes also followed this trend and declined by five percent.
Profitability per lot hit a multi-year low in Q4, reaching to as low as 93PLN ($24) per lot. This number was lower by a whopping 32 percent when compared to the third quarter of 2018.
Latin America Growth
The growing presence of XTB in Latin America has largely offset a decline in trading revenues from Western Europe. During 2018, the importance of the non-European segment, which previously also included revenues from Turkey, has grown materially. LatAm accounted for PLN 23.3 million ($6 million) of revenues, when compared to PLN 8.8 million ($2.3 million) in 2017.
The presence of the retail broker in Central and Eastern Europe also marked a positive turn, despite a decline in the domestic market. The company posted a revenue increase of PLN 9 million ($2.3 million) in the region, despite a drop of PLN 5.8 million ($1.5 million) in its domestic market.
Institutional Business Decline
While the company was focused on growing its retail clients base, the institutional business of XTB declined significantly last year. X Open Hub revenues halved to about PLN 18.8 million ($5 million).
The change underscores the success of the Polish brokerage in its retail segment. That said, the company hasn't abandoned its efforts on the institutional side of the business. In October last year, X Open Hub delivered to market its new platform called XT5 which is built using HTML5 technology.
Notable Shift in Revenues
XTB observed a material shift in its revenues composition throughout 2018. The lion’s share of the company’s income was previously driven exquisitely by index CFDs. Last year appears to have been the year of commodities, as the share of commodities CFDs increased from 11.9 percent in 2017 to 24.3 percent in 2018.
XTB Revenues Composition 2018 vs 2017
The market share of FX remained stable at 23.5 percent when compared to 24.3 percent in 2017, while index CFDs declined from over 60 percent to just under 50.
