Trading firm Plus500 grew revenues in 2015 despite a year from hell
To make things worse, the company went through an abortive merger with Israeli gambling software company Playtech last year too.
All the issues weren't fully resolved until January this year - but Plus500 still managed to grow revenues in that time.
Plus500, a shirt sponsor of Atletico Madrid, released its full-year results on Wednesday, showing:
- Revenue up 20% to $275.6 million (£193.2 million);
- Net profit down 5.7% to $96.6 million (£67.7 million);
- Earnings margin down from 63.6% to 48.2%.
While margins and profit took a hit from the cost of dealing with regulatory problems, it's pretty incredible that Plus500 still managed to grow revenue.
The Israeli-based company, which is listed on London's AIM market, says this is down to new customer sign-ups and new active customers - people who trade on the platform for the first time after depositing funds.
Plus500 lets people trade risky, leveraged financial instruments called contract for differences (CFDs). CFDs are essentially bets on whether a share price, currency, or commodity price go up or down. The punter making the bet wins or loses in increments depending on how close or far the asset is to the price predicted.
Plus500 was told last year by the UK's Financial Conduct Authority (FCA) to freeze all UK customer accounts and stop on-boarding new clients to its UK business (it also operates in Cyprus, Australia, and Israel) until it fixed its anti-money laundering checks. New clients began on-boarding to the UK business only last month.
Subsequent investigations by BI revealed that the FCA was likely tipped off by rival CFD brokers who distrusted Plus500's technology-heavy approach to onboarding and regulation. Plus500 says in today's results that 65% of revenues and new sign-ups came on mobile phones last year, for instance.
While it was dealing with the regulator, Plus500 was also the subject of a lowball takeover bid from Israeli gambling software company Playtech. This was eventually abandoned.
Plus500 dubs all this "the distractions and disruptions of an eventful year" and says the fact that it grew revenues "reflect[s] the strength of Plus500's brand and business model."
Despite weathering the storm, CEO and founder Gal Haber is stepping aside to take the role of managing director in April, to be replaced by 35-year-old Asaf Elimelech. is currently in charge of Plus500's various subsidiary businesses and prior to that was CEO of Plus500 Australia.
While revenues increased in 2015, there are two numbers that will worry investors. The average cost of acquiring new users jumped by 33% last year to $1,227 (£860) while the average revenue per user fell by 7% to $2,019 (£1,415). That means Plus500 is having to spend more on marketing to sign-up customers who are spending less.
Somewhat paradoxically then, Plus500 says the increase in customer sign-up costs is set to continue "as it continues to obtain higher value customers."