In the third quarter of 2023 XTB reported a consolidated net profit of PLN 121,1 million compared to PLN 236,2 million a year earlier. Consolidated revenue amounted to PLN 275,7 million (Q3 2022: PLN 391,3 million) and operating expenses amounted to PLN 165,0 million (Q3 2022: 132,5 million). During the period, the Group acquired 67,5 thousand new clients, while the number of active clients amounted to 223,1 thousand compared to 151,7 thousand a year earlier, which is an increase of 47,1% y/y.
Revenues
In the third quarter of 2023, the Group’s revenues decrease by 29,5% y/y, i.e. from PLN 391,3 million to PLN 275,7 million. This decrease was contributed by a lower profitability per lot of PLN 108, amounting to PLN 137 (Q3 2022: PLN 245). Significant factors determining their level were lower volatility in the financial and commodity markets in the third quarter of 2023, understood as the presence of long and clear trends, compensated in part by an increase in the number of active clients (increase of 47,1% y/y), combined with their high trading activity represented by the number of CFD contracts concluded in lots. Consequently, the transaction volume in CFD instruments amounted to 2 011,5 thousand lots (Q3 2022: 1 594,6 thousand lots).
XTB has a solid foundation in the form of constantly growing client base and the number of active clients. From the beginning of the year, the Group recorded a further record in this area, acquiring 234 704 new clients compared to 145 826 a year earlier, an increase of 60,9%. Similar to the number of new clients, the number of active clients was also a record, increasing by 47,3% y/y, from 224 339 thousand to 330 357.
The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s global position by reaching the mass client with its product offerings. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients per quarter. These activities are supported by a number of initiatives, including the first passive investment product introduced in September 2023, which allows clients to build up to 10 strategies based on ETFs. Each strategy can consist of up to 9 ETFs. Investors have a choice of over 350 exchange traded funds currently available on the xStation 5 platform. The client determines the percentage of each ETF included in the plan.
The product is currently launched in 6 markets: Czech Republic, Slovakia, Germany, Portugal, Romania and Italy. It will also be launched in Spain and Poland in the fourth quarter of this year. According to the company, the product is attracting considerable interest despite the lack of significant marketing activity around it.
In addition, from April 2023, XTB will allow you to inve
st in selected European and non-European markets in company shares and ETFs at a fraction of their price. Fractional shares offer greater flexibility and control over investments. This makes it easier for clients to tailor their investment portfolio to their individual financial goals and risk tolerance.
Following the realized activities, the Group acquired a total of 104,2 thousand new clients in the first quarter of 2023, in the second quarter of this year 63,0 thousand new clients, and more than 67,5 thousand new clients in the third quarter of this year. In turn, 26,3 thousand new clients were acquired in October 2023.
In order to strengthen its market position and global recognition, XTB cooperates with titled athletes who are XTB brand ambassadors. In February 2022, an advertising campaign was introduced featuring titled combat sports athlete, the first Polish woman in the UFC organization and a champion in the organization, as well as three-time world champion in Thai boxing – Joanna Jędrzejczyk.
In September 2022, promotional activities were launched featuring Conor McGregor, another XTB brand ambassador – the Irish mixed martial arts (MMA) and UFC fighter. Conor McGregor is the biggest combat sports star in the world and the highest paid athlete according to a list compiled by Forbes. In addition to being a fighter, Conor is also a successful business person as an investor in number of interesting projects.
Jiří Procházka, a Czech fighter, one of the one of the top MMA fighters, UFC champion, also became the face of XTB brand. This cooperation ended in May 2023.
Iker Casillas, former Real Madrid footballer, considered one of the best goalkeepers of all time, also joined the XTB ambassador team in 2022. He currently serves as deputy general manager of the Real Madrid Foundation.
XTB, thanks to its cooperation with such celebrities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, has started to promote the investment solutions it offers, in particular convincing that investing in different types of assets is accessible to everyone, with tools that make it easier to enter the world of investment into the world of investment: through daily market analyses, as well as numerous educational materials.
Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that commodity based CFDs led the way in the third quarter of 2023. Their share in the structure of revenues on financial instruments reached 47,7%. This is a consequence of high profitability on CFD instruments based on oil, gold and wheat quotes. The second most profitable asset class was CFD instruments based on indices. Their share in the revenue structure in the third quarter of 2023 was 25,4%. The most profitable instruments in this class were CFDs based on the US 100 and the US 500 index. Revenue on CFD instruments based on currencies accounted for 22,2% of total revenue, where the most profitable instruments in this class were CFDs based on the EURUSD, USDJPY and GBPUSD currency pairs.
XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 20,7% in the third quarter of 2023 (Q3 2022: 49,3%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.
XTB puts also strong emphasis on diversification of segment revenues. Therefore, the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.
The business model used by XTB combines features of the agency model and the market maker model, in which the Company is a party to transactions concluded and initiated by clients. XTB does not engage, in proprietary trading for its own account in anticipation of changes in the price or value of the underlying instruments (so-called proprietary trading).
The hybrid business model used by XTB also uses an agency model. For example, on the majority of trading in CFD instruments based on cryptocurrencies, XTB hedges these transactions with third-party partners, virtually ceasing to be the other party to the transaction (legally, of course, it is still XTB). The Company’s fully automated risk management process limits exposure to market changes and forces it to hedge positions in order to maintain appropriate levels of capital requirements. In addition, XTB executes directly on regulated markets or alternative trading venues all transactions in shares and ETFs and CFDs instruments based on these assets. XTB is not a market maker for this class of instruments.
It is inherent in XTB’s business model that revenues are highly volatile from period to period. Operating results are affected primarily by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) the volume of their transactions in financial instruments; (iv) general market, geopolitical and economic; (v) competition in the FX/CFD market and (vi) the regulatory environment.
As a general rule, the Group’s revenues are positively affected by higher activity in the financial and commodity markets due to the fact that in such periods see higher levels of trading by the Group’s clients and higher profitability per lot. Periods of clear and long market trends are favourable for the Company and it is at such times it achieves the highest revenues. Therefore, the high activity of the financial and commodities markets generally leads to increased trading volume on the Group’s trading platforms. Conversely, a decrease in this activity and the related decrease in trading activity of the Group’s clients generally leads to a decrease in the Group’s operating income. Accordingly, the Group’s operating income and profitability may decline during periods of low activity in the financial and commodity markets. In addition, a more predictable trend may emerge in which the market moves in a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements in the markets, which creates favourable conditions for trading within a narrow market range (range trading). In this case, a higher number of profitable trades are observed for clients, leading to a reduction in the Group’s market making result.
Expenses
In the third quarter of 2023 operating expenses amounted to PLN 165,0 million and were higher PLN 32,4 million to the same period a year earlier (Q3 2022 r.: PLN 132,5 million). The most significant changes occurred in:
• costs of salaries and employee benefits, an increase of PLN 14,7 million mainly due to the increase in employment;
• marketing costs, an increase of PLN 10,0 million mainly due to higher expenditures on marketing online and offline campaigns;
• other external services, an increase by PLN 2,8 million as a result of mainly higher expenditure on: (i) legal and advisory services (increase by PLN 1,6 million y/y); (ii) IT systems and licenses (increase by PLN 1,0 million y/y).
In q/q terms, operating costs increased by PLN 7,6 million mainly due to PLN 3,8 million higher offline marketing expenses and PLN 2,3 million higher salary and employee benefits expenses, mainly resulting from an increase in employment, as well as 0,7 million higher commission expenses resulting from higher amounts paid to payment service providers through which clients deposit their funds on transaction accounts.
As a result of XTB’s rapid growth, the Board estimates that total operating expenses in 2023 could be as much as a quarter higher than what we saw in 2022. The Management Board’s priority is to further increase the client base and build a global brand. As a consequence of the ongoing activities, marketing expenditure may increase by less than a fifth compared to last year.
The final level of operating expenses will depend, in particular, on the rate of employment growth and the amount of variable remuneration paid to employees, on the level of marketing expenses, on the rate of geographical expansion into new markets and on the impact of possible new regulations and other external factors on the level of revenues generated by the Group.
The level of marketing expenses will depend on an assessment of its impact on the Group’s performance and profitability, the pace of overseas expansion and the degree of client responsiveness to the actions undertaken. Employment growth in the Group will be contributed by its dynamic growth, both in existing and new markets. In turn, variable remuneration components will be influenced by the Group’s performance.
Dividend
XTB’s dividend policy assumes that the Management Board recommends to the General Meeting of Shareholders the payment of dividend in the amount which takes into account the level of net profit presented in the Company’s standalone annual financial statements and a number of various factors concerning to the Company, including the prospects for further operations, future profits, cash requirements, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this respect as well as FSA guidelines. In particular, the Management Board will be guided by the need to ensure an adequate level of the Company’s capital adequacy ratios and the capital required for the Group’s growth when making its dividends payment proposals.
The Management Board reiterates that its intention is to recommend the General Meeting in the future to adopt resolutions on the payment of dividend, taking into account the factors indicated above, in an amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The standalone net profit for the nine-months period of 2023 amounted to 540,6 million.
The levels of the total capital ratio (IFR) of XTB on individual days in Q1-Q3 2023 are presented in the chart below.
At the end of the third quarter of this year the total capital ratio in the Company amounted to 174,2%. The total capital ratio informs about the ratio of own funds to risk-weighted assets, in other words, it shows whether the brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.
Cash and cash equivalents
XTB invests part of its cash in bank deposits and in financial instruments with a 0% risk weight, i.e. in treasury bonds and bonds guaranteed by the State Treasury. As at September 30, 2023 the total value of own cash and bonds in the XTB Group was PLN 1 629,1 million, which PLN 1 236,4 million was cash and PLN 392,7 million for bonds.
In connection with the information appearing in recent days regarding the potential impact of the guidelines published by the Spanish CNMV (Comisión Nacional del Mercado de Valores) on our business, we would like to remind of key information relevant from the point of view of our clients and investors:
1. The guidelines published by the CNMV on July 18, 2023 refer to the prohibition of advertising CFDs, but do not refer to the rules of offering this product to clients or to advertising activities for other products. For XTB this means that we will continue to actively conduct advertising activities on the Spanish market.
2. The local Spanish regulations have been reviewed by the European Securities and Markets Authority (ESMA). According to this opinion, there are no preconditions which allow to state that similar regulations should be introduced on other markets.
3. Nothing changes in our business and advertising strategy. As in previous years, we will focus on promoting the rest of our products from our offer, building awareness of the XTB brand and educational activities as well as building financial knowledge among our clients.
4. We are consistently implementing our business strategy and expanding our product offerings in all markets of our activity. Through our platforms we offer the opportunity to invest in, among others, stocks, ETFs or Fractional Shares.
5. We are constantly developing the offer for our clients. We are currently finalizing the work related to launch of a new product for a long-term, passive investment.
At the same time, as XTB, we support all activities of local regulators, whose aim is to protect the rights and interests of investors. From our point of view, the new CNMV guidelines will strengthen our competitive position in the long term and will allow us to clear the local market of unfair practices that have negatively impacted the image of the entire industry.
As XTB, we support all activities of local regulators aimed at protecting the rights and interests of investors. From our point of view, the changes in the CNMV (Comisión Nacional del Mercado de Valores) guidelines regarding the ban on advertising and any marketing activities related to CFDs (contract for difference) on the local market will help clean the local market of unfair practices that negatively affected the image of the entire industry.
We have not conducted any significant advertising activities related to CFDs in Spain for almost two years, hence the impact of the new regulation on XTB’s operating activities is assessed as minor. In recent years, our marketing activities on this market have focused primarily on the promotion of the stock offer and educational activities. In connection with the CNMV guidelines, we have adapted our websites, social media activities, principles of cooperation with partners and payment methods offered to customers. All these changes have already been implemented.
Since the introduction of the CNMV guidelines, we do not see any significant changes in terms of the pace of acquiring new customers in this region. In our opinion, in the long term, this regulation will contribute to further strengthening XTB’s market position in Spain, also because the product offer of our local competition is limited. Soon, customers from this region will be able to use our new – passive product. On the other hand, XTB’s marketing strategy on the Spanish market will not change significantly. At the beginning of 2024, we are planning a large advertising campaign related to our new concept of communication with clients.
In the first half of 2023 XTB reported a consolidated net profit of PLN 421,0 million compared to PLN 479,6 million a year earlier. Consolidated revenue amounted to PLN 818,9 million ( H1 2022: PLN 836,2 million), and operating expenses amounted to PLN 341,6 million (H1 2022: PLN 267,8 million). During the period, the Group acquired a record 167,2 thousand new clients, while the number of active clients increased by 44,4% y/y from 190,1 thousand to 274,5 thousand.
Revenues
In the first half of 2023, r. the Group’s revenues decreased by 2,1% y/y, from PLN 836,2 million to PLN 818,9 million. Contributing to this decline was a lower profitability per lot of PLN 48, amounting to PLN 226 (H1 2022: PLN 274). This decrease is mainly the results of lower volatility in the financial and commodity markets in Q2 2023, compensated in part by the constantly increasing number of new clients (increase by 65,5% y/y), combined with their high transactional activity expressed in the number of CFD contracts concluded in lots. Consequently, trading in derivatives amounted to 3 615,5 thousand lots (H1 2022: 3 050,7 thousand lots). 
XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first half of 2023, the Group recorded another record in this area by acquiring 167 200 new clients compared to 101 030 a year earlier, an increase of 65,5%. Analogous to the number of new clients, the number of active clients was also a record. This rose from 190 088 to 274 450, i.e. an increase of 44,4% y/y.
The priority of the Management Board is to further increase the client base leading to the strengthening of XTB’s market position globally by reaching the with its product offering to the mass client. The ambition of the Management Board in 2023 is to acquire, on average, at least 40-60 thousand new clients per quarter. These activities are supported by a number of initiatives, including the offer, introduced on April 11, 2023, to invest in the Romanian market (expanded in other markets, including: the Portuguese, Czech, Slovak, Polish, Italian or Spanish markets) in company shares and ETFs for a fraction of their price. Fractional shares allow greater flexibility and control over investments. This makes it easier for clients to tailor their investment portfolio to their own unique financial goals and risk tolerance.
Following the ongoing activities, the Group acquired a total of 104,2 thousand new clients in the first quarter of 2023, and nearly 63,0 thousand new clients in the second quarter of this year. In turn, 22,8 thousand new clients were acquired in July 2023.
In order to strengthen its market position and global recognition, XTB cooperates with titled athletes who are XTB brand ambassadors. In February 2022, an advertising campaign was introduced featuring titled combat sports athlete, the first Polish woman in the UFC organization and a champion in the organization, as well as three-time world champion in Thai boxing – Joanna Jędrzejczyk.
In September 2022, promotional activities were launched featuring Conor McGregor, another XTB brand ambassador – the Irish mixed martial arts (MMA) and UFC fighter. Conor McGregor is the biggest combat sports star in the world and the highest paid athlete according to a list compiled by Forbes. In addition to being a fighter, Conor is also a successful business person as an investor in number of interesting projects.
Jiří Procházka, a Czech fighter, one of the one of the top MMA fighters, UFC champion, also became the face of XTB brand. This cooperation ended in May 2023.
Iker Casillas, former Real Madrid footballer, considered one of the best goalkeepers of all time, also joined the XTB ambassador team in 2022. He currently serves as deputy general manager of the Real Madrid Foundation.
XTB, thanks to its cooperation with such celebrities as Joanna Jędrzejczyk, Conor McGregor, Jiří Procházka or Iker Casillas, has started to promote the investment solutions it offers, in particular convincing that investing in different types of assets is accessible to everyone, with tools that make it easier to enter the world of investment into the world of investment: through daily market analyses, as well as numerous educational materials.
Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that CFDs based on indices led in the first half of 2023. Their share in the structure of revenues on financial instruments reached 51,8%. This is a consequence of the high profitability on CFDs instruments based on the US 100 index, the German DAX stock index (DE30) or US 500 index. The second most profitable asset was CFD instruments based on commodities. Their share in the revenue structure in the first half of 2023 was 38,5%. The most profitable instruments in this class were CFDs based on natural gas and gold quotation. Revenues on CFDs instruments based on currencies accounted for 7,7% of total revenues, where the most profitable financial instruments in this class were those based on the USDJPY and EURUSD currency pair.
XTB places great importance on the geographical diversification of revenues, consistently implementing the strategy of building a global brand. The country from which the Group derives more than 20% of revenues each time is Poland, with a share of 47,9% (H1 2022 r.: 39,8%). Due to the overall share in the Group’s revenues, Poland was separated for presentation purposes as the largest market in terms of revenues in the Group. The Group breaks down its revenues by geographic area according to the country of the XTB office in which the client was acquired. The exception is the Middle East region, which also presents revenues from clients from this market acquired by the subsidiary XTB International Ltd. based in Belize.
XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities under X Open Hub brand, under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from period to period, analogically to the retail segment, which is typical for the business model adopted by the Group.
The business model used by XTB combines features of the agency model and the market maker model, in which the Company is a party to transactions concluded and initiated by clients. XTB does not engage, in proprietary trading for its own account in anticipation of changes in the price or value of the underlying instruments (so-called proprietary trading).
The hybrid business model used by XTB also uses an agency model. For example, on most CFD instruments based on cryptocurrencies, XTB hedges these transactions with third-party counterparties, virtually ceasing to be the other party to the transaction (legally, of course, it is still XTB). The Company’s fully automated risk management process limits exposure to market changes and forces it to hedge positions in order to maintain appropriate levels of capital requirements. In addition, XTB executes directly on regulated markets or alternative trading venues all transactions in shares and ETFs and CFDs instruments based on these assets. XTB is not a market maker for this class of instruments.
XTB’s business model includes high revenue volatility from period to period. Operating results are affected primarily by: (i) volatility in the financial and commodity markets; (ii) the number of active clients; (iii) the volume of their transactions in financial instruments; (iv) general market, geopolitical and economic; (v) competition in the FX/CFD market; and (vi) the regulatory environment.
As a general rule, the Group’s revenues are positively affected by higher activity in the financial and commodity markets due to the fact that in such periods see higher levels of trading by the Group’s clients and higher profitability per lot. Periods of clear and long market trends are favourable for the Company and it is at such times it achieves the highest revenues. Therefore, the high activity of the financial and commodities markets generally leads to increased trading volume on the Group’s trading platforms. Conversely, a decrease in this activity and the related decrease in trading activity of the Group’s clients generally leads to a decrease in the Group’s operating income. Accordingly, the Group’s operating income and profitability may decline during periods of low activity in the financial and commodity markets. In addition, a more predictable trend may emerge in which the market moves in a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements in the markets, which creates favourable conditions for trading within a narrow market range (range trading). In this case, a higher number of profitable trades are observed for clients, leading to a reduction in the Group’s market making result.
Volatility and market activity is driven by a number of external factors, some of which are market specific and some of which may be linked to general macroeconomic conditions. It can significantly affect the Group’s revenues in subsequent quarters. This is characteristic of the Group’s business model.
Expenses
Operating expenses in H1 2023 amounted to PLN 341,6 million and were PLN 73,8 million higher than in the comparable period (H1 2022: PLN 267,8 million). The most significant y/y changes occurred in:
• costs of salaries and employee benefits, an increase of PLN 31,8 million, mainly due to an increase in employment;
• marketing costs, an increase of PLN 30,9 million resulting mainly from higher expenditures on online marketing campaigns;
• other external services, increase by PLN 7,6 million as a result of incurring mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 3,8 million y/y); (ii) legal and advisory services (increase by PLN 2,1 million y/y) and (iii) market data services (increase by PLN 0,8 million y/y).
On a quarterly basis, operating expenses decreased by PLN 26,8 million, mainly due to PLN 26,6 million lower offline marketing expenses.
As a result of XTB’s rapid growth, the Board estimates that total operating expenses in 2023 could be as much as a quarter higher than what we saw in 2022. The Management Board’s priority is to further increase the client base and build a global brand. As a consequence of the ongoing activities, marketing expenditure may increase by around a fifth compared to last year.
The final level of operating expenses will depend, in particular, on the rate of employment growth and the amount of variable remuneration paid to employees, on the level of marketing expenses, on the rate of geographical expansion into new markets and on the impact of possible new regulations and other external factors on the level of revenues generated by the Group.
The level of marketing expenses will depend on an assessment of its impact on the Group’s performance and profitability, the pace of overseas expansion and the degree of client responsiveness to the actions undertaken. Employment growth in the Group will be contributed by its dynamic growth, both in existing and new markets. In turn, variable remuneration components will be influenced by the Group’s performance.
Dividend
XTB’s dividend policy assumes that the Management Board recommends to the General Meeting of Shareholders the payment of dividend in the amount which takes into account the level of net profit presented in the Company’s standalone annual financial statements and a number of various factors concerning to the Company, including the prospects for further operations, future profits, cash requirements, financial situation, the level of capital adequacy ratios, expansion plans, legal requirements in this respect as well as FSA guidelines. In particular, the Management Board will be guided by the need to ensure an adequate level of the Company’s capital adequacy ratios and the capital required for the Group’s growth when making its dividends payment proposals.
The Management Board reiterates that its intention is to recommend the General Meeting in the future to adopt resolutions on the payment of dividend, taking into account the factors indicated above, in an amount ranging from 50% to 100% of the Company’s standalone net profit for a given financial year. The standalone net profit for the first half of 2023 amounted to PLN 422,8 million.
The levels of XTB’s total capital ratio (IFR) at individual dates in the first half of 2023 are presented in the chart below. 
At the end of the first half of the year, the Company’s total capital ratio was 164,3%. The total capital ratio provides information on the ratio of own funds to risk-weighted assets, or to put in other words, it shows whether a brokerage house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds.
Cash and cash equivalents
XTB invests part of its cash in bank deposits and financial instruments with a 0% risk weighting i.e., in government bonds and bonds guaranteed by the State Treasury. As at June 30, 2023, XTB Group’s total own cash and bonds amounted to PLN 2 030,9 million, of which PLN 1 651,1 million was in cash and PLN 379,9 million in bonds.
