XTB Reports Strong Q3 Recovery After Disappointing Q2

XTB reports strong Q3 2024 results with increased revenues and client growth, signaling recovery after a disappointing Q2.

Key Points: 

• Q3 2024 revenues increased 23% to PLN 470 million ($118 million), and net profit rose 27% to PLN 204 million ($51 million).
• XTB gained 108,104 new clients, a 60.1% year-over-year increase, reaching a record 474,117 active clients.
• Average monthly trading volumes rose 12% to $232 billion, and profitability per transaction improved from $154 to $174.

Following a lackluster second quarter, Poland-based retail FX and CFDs broker XTB (WSE) has unveiled its preliminary results for Q3 2024, showcasing a significant revenue and profit rebound. Despite not reaching record highs in Q1, the figures indicate a positive trajectory for the company.

XTB reported revenues of PLN 470 million (approximately $118 million) for Q3 2024, marking a 23% increase from the $96 million recorded in Q2. The company also saw its net profit rise by 27% quarter-over-quarter, reaching PLN 204 million (about $51 million), compared to $40 million in the previous quarter.

The company made these results public after its shares closed for trading on Wednesday, leaving investors anticipating market reactions when trading resumes on Thursday.

In early September, XTB shares dropped more than 10% following reports that controlling shareholder Jakub Zablocki had cashed out $135 million in a secondary offering, reducing his stake in the company below 50% for the first time.

XTB Reports Strong Q3 Recovery After Disappointing Q2

Trading activity at XTB reflected positive financial trends, with average monthly trading volumes reaching $232 billion in Q3, up 12% from $207 billion in Q2. Profitability per million USD in transaction volume also improved, rising from 154 to 174 in the same period.

Client Growth and Acquisition

Regarding client acquisition, XTB experienced remarkable growth in Q3, onboarding 108,104 new clients compared to 67,505 during the same period last year, representing a 60.1% increase. The total number of active clients surged to a record high of 474,117, a 68.7% year-over-year increase from 281,101.

Breakdown of Asset Classes

An analysis of revenue by asset class reveals that CFDs based on indexes generated the highest returns, accounting for 44.9% of overall revenue in Q3 2024, up from 25.4% in Q3 2023. The strong performance of CFD instruments linked to the US 100 index, the German DAX, and the US 500 index drives this surge.

CFDs based on commodities followed as the second most profitable asset class, contributing 38.2% to total revenues, compared to 47.7% the previous year. This was driven by strong returns on gold, natural gas, and oil CFDs. Currency-based CFDs accounted for 14.6% of revenues, down from 22.2% the previous year, with Bitcoin and Ethereum leading the profitability in this category.

Rising Operational Expenses

On the expenses front, XTB‘s operating costs for Q3 amounted to PLN 208.5 million, an increase of PLN 43.5 million from PLN 165 million in Q3 2023. Major contributors to this rise included:

• Salaries and Employee Benefits: Increased by PLN 16.1 million due to a growing workforce.
• Marketing Costs: Up by PLN 13 million, primarily for online campaigns, including a new initiative featuring brand ambassador Zlatan Ibrahimović.
• Commission Costs: Increased by PLN 10.1 million, reflecting higher payments to payment service providers.
• External Services: Up by PLN 4.3 million, driven by IT system and license expenses.

Given the company’s dynamic growth, the Management Board projects operational costs in 2024 may rise by approximately 20% compared to 2023. The focus remains on expanding the client base and enhancing the brand’s global presence, with an anticipated increase in marketing expenditures.

As XTB moves forward, the preliminary results for Q3 2024 provide a hopeful outlook following a challenging Q2. With rising revenues, profitability, and a burgeoning client base, XTB is to capitalize on market opportunities despite the ongoing adjustments to its operational expenses and shareholder structure. Investors will closely monitor how these developments impact share performance in the upcoming trading sessions.

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