The year 2023 was a further period of dynamic business development and building a client base for XTB. The continued volatility in the financial and commodity markets and a high inflationary environment meant that trading in financial instruments continued to be a very attractive proposition for many investors. As a result, the Group acquired a record 312,0 thousand new clients and the number of active clients increased by 51,0% y/y from 270,6 thousand to 408,5 thousand. XTB’s dynamic operational growth, combined with favourable market conditions, resulted in record financial results for 2023 year. Consolidated net profit amounted to PLN 791,2 million compared to PLN 766,1 million a year earlier. Consolidated revenues amounted to PLN 1 588,3 million (2022 r.: PLN 1 444,2 million) with operating expenses of PLN 694,2 million (2022 r.: PLN 558,6 million).
Revenues
In 2023, XTB reported record increase in revenue from PLN 1 444,2 million to PLN 1 588,3 million, i.e. by 10,0% y/y. Significant factors determining their level were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 51,0% y/y), connected with their high transaction activity expressed in the number of CFD contracts concluded in lots (increase by 16,5% y/y). As a consequence, the transaction volume in CFD instruments amounted to 7 416,5 thousand lots (2022: 6 365,6 thousand lots), and a profitability per lot amounted to PLN 214 (2022: PLN 227).
The Group’s operating income is generated from: (i) spreads (the differences between the “offer” price and the “bid” price); (ii) fees and commissions charged by the Group to its clients; (iii) swap points charged (being the amounts resulting from the difference between the notional forward rate and the spot rate of a given financial instrument); and (iv) net results (gains offset by losses) from Group’s market making activities. The table below presents percentage share of income categories in gross gain on transactions in financial instruments .
Looking at XTB’s revenues in terms of the classes of instruments responsible for their generation, it can be seen that in 2023 CFDs based on index were in the lead. Their share in the structure of revenues on financial instruments reached 47,8% compared to 46,4% in the previous year. This is due to the high profitability of CFD instruments based on the US 100 index, the German DAX index (DE30) or the US 500 index. The second most profitable asset class was CFD based on commodities. Their share in the revenue structure in 2023 was 39,9% (2022: 33,8%). This is due to the high profitability of CFD instruments based on natural gas, gold and oil prices. Revenues from CFDs based on currencies accounted for 10,1% of total revenues, compared to 17,0% in the previous year, with the most profitable financial instruments in this class being CFDs based on the EURUSD and USDJPY currency pairs.
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.
Operating expenses
Operating costs in 2023 amounted to PLN 694 231 thousand and were PLN 135 664 thousand higher than in the previous year (2022: PLN 558 567 thousand). The most significant changes were in:
• costs of remuneration and employee benefits, an increase by PLN 67 113 thousand, mainly due to an increase in the number of employees and higher provisions for variable remuneration components (bonuses);
• marketing costs, an increase of PLN 41 555 thousand resulting mainly due to higher expenses for online marketing campaigns;
• other external services, an increase by PLN 14 174 thousand, mainly as a result of higher expenses for: (i) IT systems and licenses (up by PLN 7 809 thousand y/y); (ii) legal and consulting services (up by PLN 3 404 thousand y/y) and (iii) IT support services (up by PLN 2 015 thousand y/y).
• commission costs, which increased by PLN 7 451 thousand as a result of higher amounts paid to payment service providers through which clients deposit their funds on transaction accounts.
On a quarter-on-quarter basis, operating expenses increased by PLN 22 703 thousand mainly due to PLN 10 496 higher online marketing expenses, PLN 6 826 thousand higher salary and employee benefits expenses, mainly as a result of an increase in the number of employees, and PLN 3 679 thousand higher commission expenses, as a result of higher amounts paid to payment service providers through which clients deposit their funds on transaction accounts.
As a result of XTB’s growth, the Board estimates that total operating expenses in 2024 could be up to a quarter higher than what we saw in 2023. The Board’s priority is to continue to grow its client base and build a global brand. As a result of ongoing activities, marketing expenses could increase by around a third compared to last year.
The final level of operating expenses will depend, in particular, on the rate of employment growth and the level of variable remuneration paid to employees, the level of marketing expenditure, the rate of geographical expansion into new markets and the impact of possible new regulations and other external factors on the level of revenues generated by the Group.
The level of marketing expenditure will depend on an assessment of its impact on the Group’s performance and profitability, the pace of overseas expansion and the degree of customer responsiveness to the activities 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.
Clients
XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In 2023, the Group recorded a further record in this area, acquiring 311 971 new clients compared to 196 864 a year earlier, an increase of 58,5%. Similar to the number of new clients, the number of active clients was also a record. It increased from 270 560 to 408 528, i.e. by 51,0% y/y.
These activities are supported by a number of initiatives, including the Investment Plans that have been introduced, which allow savings to be invested intelligently. Thanks to the new product, clients can easily set up their Plan and invest specific funds – starting from the amount of PLN 50. It is possible to launch up to 10 Investment Plans at the same time. Setting up and running Investment Plans at XTB is completely free of charge, as long as the monthly turnover does not exceed EUR 100 00, in which case the commission is 0,2%, minimum EUR 10.
In addition, from April 2023, XTB allows investment 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.
In November 2023, XTB introduced another new feature, i.e. interest on free funds in client accounts. The interest is calculated daily and paid to the account at the end of the month. Interest is offered for the following currencies: PLN, EUR, USD, GBP, CZK and RON.
The Board’s priority is to continue to grow the client base, which will strengthen XTB’s position in the global marketplace by reaching the mass client with its product offering. These activities are and will be supported by a number of initiatives, including the introduction of new products or promotional campaigns. The Management Board’s objective for 2024 is to acquire an average of at least 65-90 thousand new clients per quarter. In January 2024, the Group acquired a total of 41,6 thousand new clients, in February 2024: 41,2 thousand new clients, and in the first 25 days of March 2024: 39,1 thousand new clients. Consequently, in March 2024, the total number of XTB Group clients exceeded 1 million.
Marketing is XTB’s second engine. To strengthen its market position and global visibility, the Group works with successful athletes who are XTB brand ambassadors, such as Conor McGregor and Iker Casillas. A new brand ambassador is planned for 2024.
All-in-One Investment App
The Management Board’s ambition is for XTB to become the leading all-in-one investment application in Europe, offering clients easy, smart and efficient ways to trade, invest and save, while giving them instant access to their money.
XTB’s transformation from a CFD broker to a universal investment application has progressed over the past few years. This will continue into 2024 and beyond.
Product plan
In 2024, XTB will continue to focus on acquiring new clients and expanding the target group to be able to reach potential users interested in investing and also, more broadly, financial products and finance management.
In order to achieve it, XTB plans to strengthen its product offer and implement enhancements aimed at improving customer experience of both – the desktop platform as well as the mobile app. All those changes and improvements have been carefully planned, which is reflected in the continuous growth of the Product and Technology department and the ongoing works and developments in the research & development area, including those related to the implementation of AI-driven solutions.
The beginning of 2024 was marked with broadening of the passive product portfolio. Investment Plans, the ETF-based product allowing to invest in 350 ETFs, was enhanced with the autoinvest feature enabling clients to decide how often and how much money they want to invest regularly in their individual portfolios. As a result, the product has become even more attractive for clients looking for mid- and long-term investment opportunities when compared to solutions provided by XTB competitors.
In the upcoming quarters, passive investment offering will be supplemented by bonds. XTB clients will gain access to another asset class: government bonds (i.e. issued by Poland, the US or Germany) and corporate bonds issued by renowned, global companies with a relatively stable rating (from AAA to BBB-). Thanks to leveraging the same mechanism as in the case of fractional shares, investing in bonds will be possible with only a small amount of money.
At the same time, social trading will be launched. It will enable XTB clients to follow the transactions made by other users, whose investment strategy they find interesting or eye-catching. As part of this product, client data will be anonymized and classified based on the return on investment achieved as well as their risk appetite.
Third quarter of 2024 will mark the debut of the product that was long awaited by Polish clients – namely IKE and IKZE accounts. Currently, only a fraction of adults in Poland use it but the interest is growing year on year. As XTB sees potential in the further growth of long-term investment products, this offer will be implemented also in other global markets, including the UK, where the company plans to act as ISA Manager.
At the end of 2024, XTB plans to launch a product that will accelerate its transformation towards the everyday platform for managing personal finance. Virtual wallet and a multi-currency card will enable XTB clients to make instant local payments, transfers, card transactions and currency exchange. Thanks to this product, clients will be able to make payments between their XTB accounts instantly. Real-time notifications will support finance control and expense management.
In 2025 and beyond, XTB plans to add other new products to its offerings.
The above product plan is based on the current knowledge and resources. Therefore, it can be modified and changed, including due to the reasons resulting from XTB’s cooperation with third parties.
Basically FinTech
The research and development work carried out in 2023 was aimed at developing the tools necessary for the efficient operation of XTB’s trading systems, effective execution of orders, efficient process of acquiring new customers (so-called onboarding) and further development of tools to support the company’s internal processes as a result of identified development needs. The research areas focused on functionalities and operational security of systems, processes and databases. There was also research and development work focused on the development of new electronic trading systems.
In view of the business strategy adopted, which is based on the development of new technologies, an IT Development Department has been separated within the structure of XTB, in which a significant part of the staff is made up of people performing research and development work. The work has a significant, almost strategic impact on the business activities conducted by XTB. This not only translates into the level of revenue generated by XTB but is also crucial in the process of building and maintaining a highly competitive position of the Company on the global capital market.
The table below presents the number of people employed in the IT Development department and the costs incurred in related to the design and development of highly innovative, comprehensive solutions in the field of transactions and online investment solutions:
