Plus500 doubles profits, and share value

Gal Haber Photo: Eyal Yitzhar

The Israeli online contracts for difference company has recovered from the crisis resulting from customer money laundering concerns.

Plus500 Ltd. (AIM: PLUS) today reported $188 million in revenue in the first half of the year, including $110 million in the second quarter, 19% more than in the corresponding period in 2016. The company also reported 104% growth to $90 million in net profit, following an 8% rise to 112,000 in the number of active customers. The number of new customers rose 43% to 32,000 in the second quarter.

Plus500 operates an online trading platform for contracts for difference (CFDs) on leading indices, currencies, commodities, and shares. The company's CEO is Asaf Elimelech.

Plus500's share price responded to the news with an 11% leap, pushing its market cap up to £800 million (over $1 billion). The company's share price has almost doubled this year. Founded in 2008, Plus500 held its IPO in London in July 2013, and its share price has increased several times over since then. After accumulating hundreds of millions of dollars by selling shares in the company and receiving dividends from it, company founders Gal Haber, Elad Ben-Izhak, Alon Gonen, Omer Elazari, and Shlomi Weizmann currently hold 22% of its shares.

"The topnotch customer base is widening"

Two years ago, businessman Teddy Sagi was about to acquire Plus500 for £460 million ($700 million at the time). The deal eventually fell through, however, following intervention by the UK regulator, who prevented Sagi from completing the deal. Sagi was trying to exploit the drop in Plus500's share price at the time, following a crisis resulting from a reexamination of some of the company's customer verification and identification documents in the UK, due to concern about money laundering offenses.

Another factor contributing to Plus500's strong results in the first half of 2017 is its average revenue per user (ARPU), which totaled $1,678, 10% more than in the corresponding period last year, combined with a 37% drop in the average user acquisition cost (AUAC), following what the company called "optimization of its marketing activity."

Plus500's stock of cash swelled from $136 million at the beginning of the year to $220 million at the end of June, following a 130% jump to $85 million in the company's operating cash flow. For the rest of the year, the company stated that trading in the third quarter remains strong, and it expects its results to outstrip the market's current expectations for 2017 as a whole. Before the publication of Plus500's results, the analysts covering the company predicted that its revenue would total $275 million on the year, with a $0.95 profit per share.

Following its results, Plus500 will distribute a $27 million dollar dividend to its shareholders. The company also announced that it spent the same amount on a buyback of its shares, in addition to a $10 million recently announced buyback , making a total buyback of $37 million.

Elimelech said today, "New customers continue to join, and the proportion of new and active customers originating in well-regulated markets is growing and continues to expand the group's base of topnotch customers. We believe that the current regulatory changes will help us promote a uniform system of rules of behavior for all European jurisdictions. These rules will ensure a sustainable industry, in which we intend to continue to stand out as one of the leading companies in the market. All in all, we expect that insofar as the current momentum persists, we will continue to report strong growth for the company in 2018 as a whole, with expectations of further growth in 2018."

Published by Globes [online], Israel Business News - www.globes-online.com - on August 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Gal Haber Photo: Eyal Yitzhar
Gal Haber Photo: Eyal Yitzhar
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