Poland based Retail FX and CFDs brokerage group XTB SA (WSE:XTB) closed out a record year for both Revenues and Profits in 2023, reporting very strong results for the fourth quarter of the year.
In Q4, XTB saw a 79% QoQ increase in Revenues, to $123 million, and a 106% QoQ jump in Net Profit, to $62 million. Q4-2023 was XTB’s second best quarter ever, second only to this year’s Q1.
Overall for 2023, XTB reported record Revenues of PLN 1.59 billion (USD $397 million) – up 10% from 2022 – and Net Profit of PLN 791 million (USD $198 million), up 3% over 2022.
In Q4, XTB averaged USD $183 billion in monthly trading volumes. For the full year 2023, monthly trading volumes at XTB averaged $190 billion.
XTB’s Management Board said that 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 thousand new clients, and the number of active clients increased by 51% 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, as noted above.
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) and the US 500 index. The second most profitable asset class was CFDs 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.
The business model used by XTB combines the 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 the strict sense, in transactions carried out on its own account in anticipation of changes in prices or values of underlying instruments (proprietary trading).
Looking ahead, XTB management stated that as a result of XTB’s rapid growth, it 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 the global brand. As a result of ongoing activities, marketing expenses could increase by around a third compared to last year.
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 the first 29 days of January 2024, the Group acquired a total of 27.3 thousand new clients.
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.
XTB said that social trading will be launched in 2024. 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.
Regarding foreign expansion in 2024, XTB said that it is increasingly boldly building its presence in non-European markets, consistently pursuing the strategy of creating a global brand. The Management Board of XTB puts the main emphasis on organic growth, on the one hand increasing the penetration of European markets, and on the other successively building its presence in Latin America, Asia and Africa. In 2024, the Management Board’s efforts will focus on obtaining the necessary licenses and starting operations in Brazil and Indonesia.
Selected financial and operating data at XTB for Q4 and for the full year 2023 at XTB follows.
