Wednesday 12 February 2020 8:14 am

Plus500's 2019 profits sink after regulatory crackdown

Plus500 revealed plummeting profits for its 2019 financial year today, but said market volatility boosted trading volumes in the second half.

Read more: Plus 500 profit set to slump 62 per cent after regulatory crackdown

The figures

Earnings before interest, tax, depreciation and amortisation (Ebitda) sank 62 per cent year on year from $506m (£390.2m) to just $192.3m.

Two-thirds of that was booked in the second half of the year after a disastrous first half where market volatility was extremely low.

Revenue halved from $720.4m in 2018 to just $354.5m last year, the trading platform added.

Earnings per share dived 59 per cent year on year to $1.35, having slumped to $0.45 in the first half of the year.

Why it’s interesting

Plus500 along with rivals CMC Markets and IG have faced a tough last two years as the UK regulator comes down hard on high-risk betting. The Financial Conduct Authority (FCA) has clamped down on contracts-for-difference (CFD) betting, where amateur traders bet on whether a stock will rise or fall in value. It made restrictions permanent last July.

But Plus500 said core earnings almost doubled in the second half of the year as client trading picked up. 

“Positive momentum has continued into 2020, reflecting heightened levels of volatility in the financial markets due to global events,” Plus500 said.

The online betting firm also announced a separate $30m share buyback scheme.

It said customer trading has “stabilised” following the crackdown on CFDs, and expects to grow customer numbers despite a 32 per cent dive in new customers over 2019.

Read more: German digital bank N26 quits UK ‘due to Brexit’

What Plus500 said

Chief executive Asaf Elimelech said:

We finished 2019 in good financial and operational shape following a period of changes for the industry, which has provided a more certain regulatory outlook for Plus500 and the industry as a whole.

We were particularly pleased with the strong improvement in financial performance in the second half of 2019 and believe that customer trading patterns have now adjusted following the regulatory changes introduced in Europe last year. We continue to monitor and prepare for any potential product intervention measures that are expected to take place in Australia during 2020.

Looking forward to 2020 we are confident of the prospects for the Group as we focus on further strengthening our customer offering and market positions, thereby delivering growth and further strong shareholder returns.