26 July 2024
Amsterdam, the Netherlands - Flow Traders Ltd. (Euronext: FLOW) announces its unaudited 2Q 2024 results.
Highlights
- Flow Traders recorded Net Trading Income of €79.5m and Total Income of €76.2m in 2Q24, compared to €49.5m and €51.4m, respectively, in 2Q23.
- Flow Traders’ ETP Value Traded increased 4% in 2Q24 when compared to the same period last year.
- Total Operating Expenses were €55.2m in 2Q24, compared to €48.2m in 2Q23, with Fixed Operating Expenses of €44.9m in the quarter, compared to €45.0m in 2Q23 (including one-off expenses).
- EBITDA was €21.1m in 2Q24, generating an EBITDA margin of 28%, compared to €3.2m and 6%, respectively, in 2Q23.
- Net Profit was €12.8m in 2Q24, yielding a basic EPS of €0.30, compared to a Net Loss of -€4.3m and EPS of -€0.10 in 2Q23.
- Trading capital stood at €624m at the end of 2Q24 and generated a 56% return on trading capital1, compared to €609m and 52% in 1Q24.
- Shareholders’ equity was €635m at the end of 2Q24, compared to €631m at the end of 1Q24.
- Flow Traders employed 635 FTEs at the end of 2Q24, compared to 633 at the end of 1Q24.
- Flow Traders has initiated a multi-layered trading capital expansion plan including a revision of its dividend policy.
The full press release can be found here.
Trading Capital Expansion Plan
In recent years, Flow Traders has successfully diversified its core trading model into diversified asset classes and geographies, which resulted in increased optionality for the business. The Board sees a significant range of emerging opportunities to accelerate growth for the firm, stemming from the investments it has made in these new markets and through diversifying its revenue streams. It believes now is the time to seize these opportunities and move the firm into a growth phase by meaningfully expanding its trading capital base, especially given the strong historical returns it has made on trading capital.
In recent months, the firm has been exploring various options to achieve this expansion in trading capital. It has concluded that the most cost-effective way to expand the firm’s trading capital base is to retain additional earnings on the Company’s balance sheet, as part of a multi-layered trading capital expansion plan.
Revised Dividend Policy
Accordingly, the firm is suspending regular dividend payments until further notice, a decision that will accelerate the expansion of the trading capital base and that the Board is confident will generate long-term value for shareholders.
External Debt Funding
Flow Traders is also currently working on other parts of the plan and has recently secured a €25 million bank term loan as a first step towards embracing debt financing to unlock the growth opportunities the firm sees. Management is also actively exploring other debt financing options that will enable the firm to take full advantage of the opportunities it sees.
Share Buyback
€5.3m worth of shares were repurchased in 2Q24 as part of the €15m share buyback program announced in October 2022, with €2.2m of the program remaining. A portion of the shares to be repurchased under this program could be allocated to employee incentive plans as needed.
Outlook
Fixed operating expenses guidance for the year remains unchanged and is expected to be in the same range as FY23 as headcount is expected to be flat to down for the year, offset by continued technology investments and inflationary pressures. The firm remains fully focused on operational and cost efficiencies across the business while implementing its growth and diversification strategies and bolstering trading capital.
CEO Statement
Mike Kuehnel, CEO
“Over the past 18 months, Flow Traders has made a concerted push into new markets, asset classes and geographies, with considerable success. Following the arrival of the newly constituted Board we have conducted a broad-ranging strategic review and concluded that we have a significant opportunity to capitalise on this period of development and move Flow Traders into a growth phase.
A critical element of this development will be the expansion of our trading capital base, especially given the significant returns we have generated on trading capital historically. Following a review of the various options to achieve this, we are implementing a wide-ranging trading capital expansion plan. As a first element of this we recently secured a €25 million bank term loan, and we are looking at several other ways to increase external financing.
We have also concluded that a central pillar of the plan, and the most cost-effective means of increasing our trading capital, is to increase the level of retained earnings in the business. Accordingly, we are suspending regular dividend payments until further notice, a move that will accelerate the expansion of the trading capital base and that the Board is confident will generate long-term value for the shareholders.
We believe that the firm’s new trading capital expansion plan and the continued expansion of our diversified set of existing and newly emerging trading strategies will deliver significant returns and further strengthen Flow Traders’ role as a leading global trading firm, providing liquidity and efficiency across a wide range of financial markets.
Coming to the quarter, market activity remained muted as volatility declined across most major asset classes compared to the same period a year ago. Nevertheless, we continue to expand our relationships across both the TradFi and DeFi ecosystems and actively sought out innovative partnerships to continue to support the adoption of Digital Assets. Internally, we continue to focus on our automation and efficiency initiatives, and we are pleased to have received shareholder and regulatory approval for Owain’s nomination as our Chief Technology Officer and as an Executive Director of the Board.”