Despite a significant revenue decline, a notable deepening of net loss and 40% staff cuts in 2023, the supervisory board of the publicly listed NAGA Group AG (XETR: N4G) is satisfied with the results achieved over the past year. According to company representatives, they managed to "achieve the planned turnaround in earnings" through a positive change in EBITDA and cost reduction.

NAGA's Revenue Down, Net Loss Deepens

The consolidated statement of comprehensive income published by NAGA over the weekend shows that revenues shrank 32% from €57.6 million reported in 2022 to €39.7 million in 2023. The results turned out to be worse than the preliminary outcomes that the company reported at the beginning of this year.

As a result, gross profit fell to €31.9 million from €48.5 million, and net loss deepened by almost 40% from €44.1 million to €60.9 million last year. NAGA explained that the largest single effect on the net income “was the need to recognize an impairment loss on the goodwill of the Brokerage business – of €57.0 million (previous year: €15.3 million) – as determined by an impairment test."

The larger annual loss also resulted in a higher loss per share, which increased to €1.13 from €0.82 in 2023.

"Revenue decreased as expected, in particular, due to reduced marketing and sales measures in a challenging market environment for online brokers and the discontinuation of NAGA Coin trading," the company explained.

In its narrative to the significantly weaker report, NAGA focuses on the positives: reduced operating costs and an increase in EBITDA (earnings before depreciation and amortization).

NAGA Significantly Reduced Marketing and Advertising Costs

The online broker's cost reduction was most noticeable in marketing expenses, which were reduced from €28.3 million to €4.6 million.

This move resulted in the lowest customer acquisition cost per trading account in the company's history, at €380 compared to €1,510 in the previous year.

Despite the reduced marketing efforts, NAGA reported growth in several non-financial metrics, including active users, trades, and trading volume. The company also noted improvements in user-related figures such as average activity, portfolio size, and lifetime value.

"The traded volume amounted to 143 billion euros (previous year: 137 billion euros). The number of active users at the end of the year was over 21,000 (previous year: 18,700). As a result, all metrics per user showed a strong upward trend with higher average activity, portfolio size, and lifetime value," the company commented in the annual report.

While cutting costs, NAGA also had to part ways with a significant number of employees. Employment in 2023 was reduced by over 40%, with 73 out of 173 people working in 2022 losing their jobs. This allowed the company to achieve savings of around €4.2 million.

In April, Loukia Matsia announced her appointment as the Head of Compliance and Anti-Money Laundering (AML) at NAGA. Simultaneously, NAGA shareholders ratified the merger with CAPEX.com, which was initially declared in December of the previous year. A significant majority, 99.81 percent, of NAGA shareholders supported the merger during the extraordinary general meeting on April 12.