Financial results of XTB for 2021
The year 2021 was for XTB a period of dynamic business development, entering new markets and building a client base.
As a result, the Group acquired a record 189 thousand new clients compared to 112 thousand a year earlier (increase by 68,9% y/y). This translated into a significant increase in the volume of clients’ trading on CFD instruments expressed in lots – an increase from 3,2 million to 4,1 million lots, i.e. by 29,3% y/y.
XTB’s dynamic operating growth translated into very good financial results in 2021, despite the “high base” effect from the first half of 2020, when the markets experienced above-average volatility caused, among others, by the global COVID-19 pandemic. Consolidated net profit amounted to PLN 237,8 million compared to PLN 402,1 million a year earlier. Consolidated revenues amounted to PLN 625,6 million (2020: PLN 797,8 million) with operating expenses of PLN 348,7 million (2020: PLN 282,0 million).
In 2021, XTB’s revenues decreased by 21,6% y/y, from PLN 797,8 million to PLN 625,6 million. This decrease was due to the profitability per lot lower by PLN 99, amounting to PLN 152 (2020: PLN 251). This decrease is mainly due to the effect of the “high base” from the first half of 2020, when the markets experienced above-average volatility caused, among others, by the global COVID-19 pandemic. The client trading volume, calculated in lots, was higher by 29,3% y/y.
In the fourth quarter of 2021, revenues increased by 31,2% y/y, i.e. by PLN 43,6 million, from PLN 140,0 million to PLN 183,6 million. This change was influenced by: (i) higher turnover of clients in financial instruments expressed in the number of transactions concluded in lots – an increase by 272 613 lots (from 800 935 to 1 073 549 lots); (ii) slightly lower profitability per lot – a decrease by PLN 4 (from PLN 175 to PLN 171).
XTB has a solid foundation in the form of constantly growing client base and the number of active clients. This is the key to the amount of recurring income in the future. The Group reported another record in this area, acquiring 189 187 new clients compared to 112 025 a year earlier, which means an increase of 68,9%. This is the effect of continuing the optimized sales and marketing strategy, bigger penetration of already existing markets, successive introduction of new products to the offer and expansion into new geographic markets. Similarly to the number of new clients, the average number of active clients was also record high. It increased from 107 287 to 190 452, i.e. by 77,5% y/y.
The ambition of the Management Board in 2022 is to acquire, on average, at least 40 thousand new clients quarterly. As a result of the implemented activities, the Group acquired a total of 18,1 thousand new clients in January 2022, while in February 2022, 15.1 thousand new clients were acquired.
Looking at XTB’s revenues in terms of the classes of instruments responsible for their creation, it can be seen that in 2021, CFDs based on commodities were in the lead. Their share in the structure of revenues on financial instruments reached 49,3% compared to 33,0% a year earlier. This is a consequence of, among others high profitability on CFD instruments based on quotations of gold, natural gas, crude oil and silver prices. The second most profitable asset class was index-based CFDs. Their share in the revenue structure in 2021 was 32,8% (2020: 53,2%). The most profitable instruments in this class were CFDs based on the US 100 index, the German DAX share index (DE30) and the US 500 index. Revenues on CFDs based on currencies accounted for 12,5% of all revenues, compared to 11,5% a year earlier, where the most profitable financial instruments in this class were based on the 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 33,5% (2020: 37,0%). 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.
XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by: (i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and (vi) regulatory environment.
As a rule, the Group’s revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group’s clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of trading on the Group’s trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group’s clients leads, as a rule, to a decrease in the Group’s operating income. Due to the above, operating income and the Group’s profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within 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 on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group’s result on market making.
The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic of the Group’s business model.
The operating costs in 2021 amounted to PLN 348 772 thousand and were PLN 66 768 thousand higher than in the previous year (2020: PLN 282 004 thousand). The most important changes occurred in:
• marketing costs, an increase by PLN 32 370 thousand resulting mainly from higher expenditure on online marketing campaigns;
• commission costs, an increase by PLN 13 648 thousand resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;
• costs of remuneration and employee benefits, an increase by PLN 12 121 thousand mainly due to an increase in employment;
• other external services, an increase by PLN 8 991 thousand as a result of mainly higher expenditure on: (i) IT systems and licenses (increase by PLN 4 456 thousand y/y); (ii) legal and advisory services (increase by PLN 1 778 thousand y/y) and (iii) market data delivery services (increase by PLN 1 367 thousand y/y).