The online broker from Frankfurt had already significantly lowered its expectations for the current year.
(Photo: Reuters)
Frankfurt Flatexdegiro is feeling the effects of the current market environment of interest rate turnaround, inflation and the Ukraine war: In the second quarter, the Frankfurt online broker was able to increase its operating profit (Ebitda) to 37.4 million euros. In the same quarter last year there was a loss of 3.3 million euros. Overall, the Ebitda grew in the first six months of this year compared to the previous year by almost 68 percent to around 89 million euros.
Nevertheless, the number of transactions and new customers fell significantly. Flatexdegiro processed a total of around 38 million transactions in the first half of the year, which means a decrease of 28 percent compared to the same half of the previous year.
The gross number of new customers increased by just 282,500, after 528,000 in the same period of the previous year. Revenues fell by around seven percent compared to the first half of 2021 to almost 210 million euros.
“The first half of 2022 was a challenge for all players in the capital market,” said CEO Frank Niehage. CFO Muhamad Chahrour added that retail investor trading activity had returned to pre-Corona levels. “This increases the pressure on business models with a focus on inexperienced first-time adopters, many of whom have completely withdrawn,” he said.
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At the end of June, the online broker had to scale back its expectations for the current year. Instead of 95 to 115 million processed transactions, Flatexdegiro only expects 75 to 85 million. In addition, the online broker expects only 600,000 to 700,000 new customers, up to now there was talk of up to 840,000.
Stock loses two percent
Flatex was launched in 2006, and in 2020 the online broker took over Dutch competitor Degiro. According to Flatexdegiro, it is currently active in 18 European countries. The most important markets include Germany, the Netherlands and Austria.
In total, the company has more than two million customer accounts and claims to be the largest online broker for private customers in Europe. Within the next five years, the customer base is to be expanded to between seven and eight million accounts.
investors showed not enthusiastic about the quarterly figures. The stock lost about two percent by early afternoon. The Flatexdegiro papers had already come under a lot of pressure in the past few months. They reached their all-time high of almost EUR 30 in June 2021, and the share is currently trading at just over EUR 9.
Nevertheless stays Never optimistic. The online broker would continue to grow faster than any competitor in acquiring new customers. And while others cut staff, some drastically, they would continue to hire, said the CEO.
Last week, Niehage announced that Flatexdegiro was considering distributions to shareholders in the form of dividends and share buybacks. According to the company, it currently has 220 million euros in cash reserves. At the end of the year it could even be 300 million euros, he said.
“We’ll probably have to start paying money back to our shareholders at some point now. We are working on precisely such measures,” explained Niehage.
more on the subject: Online broker Flatexdegiro is rowing back on forecasts for 2022