CORPORATE PRESENTATION - CORPORATE PRESENTATION flatexDEGIRO AG | January 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CORPORATE PRESENTATION CORPORATE PRESENTATION flatexDEGIRO AG | January 2021
At a glance
Investment highlights
First, largest and fastest growing pan-European discount broker, well-positioned to consolidate a highly fragmented
market
Benefiting from near-term market volatility as well as long-term secular trends that are increasing the addressable
market
Best-in-class product portfolio and highly competitive pricing drive impressive customer growth and leading
positions in several European countries
Fully fledged online bank (no brick and mortar branches) with full German banking license & EU passport, a
scalable proprietary core banking system and clear cost leadership
Homegrown, scalable and recently modernized IT infrastructure with more than EUR 30 million invested over last
three years
Entrepreneurial, top interdisciplinary management team that is significantly invested in the business
→ Corporate Presentation | January 20201 | Page 3
flatexDEGIRO at a glance
Online Brokerage Including Credit and Treasury
▪ Leading European online broker serving highly active private investors and traders in 18 countries
▪ Operating under German banking license with EU passport enhances customer monetization and provides ancillary services to core online brokerage
business
▪ Strong positioning in Germany, Netherlands and Austria with enormous potential to increase significantly European market share of currently approx. 8%
Revenue Model and Contribution
▪ Online brokerage ▪ Credit and treasury
(Commission income from clients and intelligent exchange and (Interest income on collateralized margin loans and low-risk
product partner partnerships) treasury investments)
Key Operating Metrics (flatex and DEGIRO pro forma)
Number of Number of exchanges and Executed trades Executed Trade Securities Customer
Customers OTC-partners L12M Volume L12M under Custody Cash Deposits
>1.0 m >60 >60 m >EUR 200 bn >EUR 20 bn >EUR 2 bn
Credit Book Average Interest Rate Return on Markets Employees
Balance Sheet Equity
(collateralized) (Loan Book) Tangible Equity
>EUR 700 m >3% p.a. >EUR 400 m >40 % 18 countries >900
Note: figures as of 1H 2020
→ Corporate Presentation | January 20201 | Page 4
Trailing year update
Key achievements
↗ Closing of DEGIRO acquisition, creating leading European online broker
↗ Number of customers grown to 1.16 m (+45.5% compared to pro forma Sept. 2019)
↗ Number of trades until end of September more than doubled to 53.97 m, pro forma
↗ Revenues in 9M 2020 up 66.9% to EUR 164.8 m, compared to 9M 2019
↗ Main Sponsor of Borussia Mönchengladbach
↗ Up-listing to Prime Standard
↗ Inclusion into SDAX
↗ Introduction of ‘flatex next‘
↗ Outstanding growth in the number of customers and trades
→ Corporate Presentation | January 20201 | Page 5
Strong sustainable growth of clients and trades
Number of customers (thousand) Assets under custody (in EUR billion)
CAGR 36% CAGR 23%
1.160 >1.200 26 25
22
850
16 16
648 13
500
352 7
258
2015 2016 2017 2018 2019 Sep 2020 EST 2020 2015 2016 2017 2018 2019 Sep 2020 EST 2020
Total number of trades (million)* Average trades per customer/year
CAGR 34%
>70 Ø 62 Ø 58
Ø 52
54 Ø 46 69 70
Ø 37
30 31
26
20
16
2015 2016 2017 2018 2019 YTD Sep 2020 EST 2020 YTD Sep 2020 EST 2020
2015 2016 2017 2018 2019
annualized
Legend: flatex DEGIRO flatexDEGIRO (pro forma)
→ Corporate Presentation | January 20201 | Page 6
Business model
Fastest growing online brokerage with excellent risk-return
profile
▪ Fastest growing online brokerage business in Europe with more than 1.2m retail clients doing
more than 70m transactions expected in 2020*
▪ Market share of >20% in Germany, >40% in Austria and >35% in Netherlands in terms of online
Market Leader brokerage transactions* (total est. # of transactions: 60m in Germany, 15m in Austria, 35m in
with High Value Netherlands**)
Clients ▪ Most trading-active client pool in the brokerage market (our clients: avg. 40-50 trades p.a. vs. market:
avg. 8-12 trades p.a.**)
▪ Dedicated brokerage offering with focused marketing strategy minimizes operating expenses
(cost per client acquisition less than EUR 50 vs. EUR 300-500 CPA at competitors)
Fully
Independent ▪ Only major bank-independent broker with German banking license and European passport
Platform and ▪ Full value chain under one roof, thus highly scalable platform at low additional costs
Banking ▪ Homegrown core banking system with outstanding expertise in transaction banking
License
▪ Brokerage agency only with no “black swan risks” (WTI, SFR unpeg) due to no market making,
Excellent Risk no trading book and no trading liquidity risk
Profile
▪ Positively geared to volatility with natural profit hedge to downturns
* Pro forma for DEGIRO ** Source: Company, competitor and market data
→ Corporate Presentation | January 20201 | Page 8
Our competitive edge: the triple „P“
▪ Top notch product offering including equities, bonds, ETPs, ETFs and mutual funds
Product ▪ Market leading ETP offering of Goldman Sachs, Morgan Stanley, Société Générale, UBS,
BNP Paribas, HSBC, Vontobel and other products
▪ Trading platform only – no research, recommendation or intelligence – avoiding regulatory
administration and costs
▪ Originally designed by traders for traders and has migrated to a platform that caters to a wide range
Platform of investors
▪ Economies of scale: each additional trade reduces cost per trade settlement –
doubling the # of transactions reduces CPT by >40% from currently 1.44 EUR to ~0.80 EUR
▪ Unlimited trading possibilities with a flat pricing model of max. EUR 5.90 per transaction –
regardless of type of asset (stocks, bonds, ETPs, ETFs, etc.) and transaction amount
Pricing ▪ Competitive technology edge due to self-developed, highly scalable security ordering/
settlement infrastructure ensures sustainable cost leadership with cost per trade (CPT)
of currently less than EUR 1.44
→ Corporate Presentation | January 20201 | Page 9
Product composition and customer demographics
2014 2019
Trades by
▪ Organic initiatives has 4% 10% client tenure:
grown B2C customers by 2.5x >3 years
Maturity profile over the last five years
of our trading 29%
27% 1-3 years
customers ▪ Very loyal and sticky customer
base ensures significant 67% 62%Highly profitable ETP distribution model
For trades with ETP partners, flatex participates in the partner’s revenue pool
↗ flatex AG has >15% market share in the distribution of Germany’s EUR ~70 billion ETP market
↗ flatex’s growth has driven economies of scale and significantly improved economics from issuing banks – 10%
historically increasing to 40%+
↗ Clients can trade almost 140,000 flatex-select products issued by Goldman Sachs at zero fee
Revenue generation for issuing
bank through:
• Inherent interest component
• Bid-ask spread
BANKS… …ISSUE ETPs… …OFFERED AT FLATEX… …TRADED BY CLIENTS
Market
90 : 10
standard in
the past: split
Partnerships 60 : 40
today:
split
REVENUE POOL
Note: Data excludes DEGIRO
→ Corporate Presentation | January 20201 | Page 11Market leading ETP offering is a differentiator
Goldman Sachs
Platinum
Société Générale
Morgan Stanley
UBS
Gold
Vontobel
BNP Paribas
HSBC
Silver
Note: Data excludes DEGIRO
→ Corporate Presentation | January 20201 | Page 12Collateralized credit products provide profitable
revenue contribution at minimized risk profile
~€1bn of customer cash deposits @ zero cost of funding*
Generated >€22m of revenue in 2019
Use of customer cash deposits
Credit Treasury & ECB deposits
B2C brokerage credit book Non-brokerage credit book C Treasury D ECB Deposits
A B
(margin loans) (niche portfolio)
Fully collateralized i.a. with Fund investments Pass-through to clients due
customers' securities Fully collateralized with credit to current negative ECB
default insurances Simple products rates
High-growth ▪ Government bonds No positive interest
▪ Municipal bonds income pass-through to
Receivables & asset financing
▪ Corporate bonds customers in case of
LTV up to 50% + opportunistic loans
▪ Interbank loans positive ECB rates
Scalable with B2C growth Opportunistic and strategic niches Short-duration (€350m Volume: €300m Volume: €150m Volume: €1bn
Interest income: (>300bps) Interest income: (>200bps) Other comprehensive income: (Growth drivers
flatexDEGIRO – size, speed and dedication
↗ Realization of our European growth
strategy
↗ Largest pan-European retail online
broker in 18 countries
↗ Cost and innovation leadership with
complete value creation in-house
↗ Improved and more extensive range
of products and venues for both brands
↗ Faster, cheaper and with lower
operating risk than with organic growth
strategy
↗ Significant synergy potential with low
implementation risk
→ Corporate Presentation | January 20201 | Page 15Correlation between customer trading behaviour
and market volatility (EURO STOXX 50® Volatility)
100 0,5
80 0,4
60 0,3
40 0,2
20 0,1
0 0
Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20
V2TX (left scale) average trades per customer per day (right scale)
→ Corporate Presentation | January 20201 | Page 16Changing investor behavior in Europe supports
long-term opportunities and growth
Source: Based on interviews
Source: Based on interviews
Estimated # of online brokerage accounts Estimated # of transactions
(seven core markets, millions of accounts) (seven core markets, millions of transactions)
Projected
and company reports
and company reports
growth in EU 43
30 36
online 26
377
430
brokerage 280 307
market
2018 2020E 2022E 2024E 2018 2020E 2022E 2024E
Household equity & fund holdings
% of total financial assets 53%
▪ Germany households are less invested in 36%
Source: Eurostat
Under
equities and investment funds compared 27%
penetration to other leading European markets
Germany EU Avg. Netherlands
European ETF AUM $US Bn
▪ Investors are increasing allocation 940
to more active investment 725
Changing
Source: hanetf.com
(shares and funds) 450 550
investor 290 325
100 150
behavior ▪ Low/negative interest rates make
ETF products more attractive 2006 2008 2010 2012 2014 2016 2018 Feb
'20
→ Corporate Presentation | January 20201 | Page 17Identification of massive client potential in Germany
What are the brokerage segments based How many people in Germany are
on trading behaviour?* brokerage customers in this segment?*
Heavy-traders (> 100 trades p.a.) less than 10 thousand
Current target
segment
Active traders (from 40-100 trades p.a.) < 1 million
New / extended
target segment
with focus on
more active
customers in
top 1/3
Less frequent traders
(< 40 trades p.a.) > 6 million
Potential in the new target segment:
1-2 million customers
Note: *Company estimates based on available information
→ Corporate Presentation | January 20201 | Page 18flatex next – investing for everyone
flatex next is…
↗ designed for newcomers to the world of
trading
↗ reduced to the essentials, structured in
a clear and simple way, well arranged
↗ attractive new customer offers for a
limited period
↗ revolutionary fast: account opening in
only 5 minutes including video legitimation
↗ designed for mobile use via the app
↗ from the leading retail online broker in
Europe
→ Corporate Presentation | January 20201 | Page 19Tactical focus and outlook
Strategy and rationale for acquisition of DEGIRO
Executes on strategy to expand client reach beyond Germany and Austria faster, cheaper and with lower
operational risk than what could be achieved organically
↗ Immediately creates the largest pan-European retail broker in 18 countries and positions flatex/DEGIRO as a credible,
scaled consolidator in the highly fragmented European brokerage industry
↗ Addition of significant non-German clients diversifies revenue by geography
↗ DEGIRO’s active customer base is a natural fit with flatex’s target customer profile (similar trading activity and asset levels)
↗ Enhances growth profile and trajectory in Europe of undermanaged asset potential with that generated an average annual client
growth of close to 50% over the last 3 years
Improve product offering for both brands
↗ DEGIRO offers futures & options and flatex does not
↗ flatex offers extended trading (8:00am – 10:30pm) and DEGIRO does not
Leverage highly achievable, low-hanging fruit synergies with limited integration risk
↗ Economies of scale around IT, trading costs and other operating expenses
↗ Increases bargaining power with suppliers, product partners and exchanges
↗ Leveraging of flatex’s banking and regulatory infrastructure
→ Corporate Presentation | January 20201 | Page 21Strategic priority – DEGIRO Synergies
Stronger product partner One banking license
economics and lower and one corporate One bank
One flow transaction costs infrastructure
Synergies: €15-20m EUR 200b annually Two brands Synergies: €3-5m
Central architecture
Access to 1m customers
(based on Java /C++)
One IT One firm
Combined marketing/
Combined data center
bargaining power
Synergies: €10-15m Synergies: €3-5m
Annual synergies of EUR >30m
→ Corporate Presentation | January 20201 | Page 22Outlook FY 2020
↗ 1.2 million customers
↗ 70 million executed transactions
on a pro forma basis
↗ Strong increase in reported revenues
(FY 2019: EUR 132.0 million)
↗ Adjusted EBITDA margin in-line with
EBITDA margin of H1 2020 (42.8%)
→ Corporate Presentation | January 20201 | Page 23Mid term ambition / Vision 2025
flatexDEGIRO, the leading online broker in Europe
Mid term ambition Vision 2025
2m clients
60m trades p.a. 3m clients
Revenues EBITDA EPS
100m trades p.a.
EUR 300m EUR 150m EUR 3.00
→ Corporate Presentation | January 20201 | Page 24Annex
Corporate information
Our management board
Frank Niehage has vast experience across all segments of retail and
commercial banking, working as Managing Director at Goldman Sachs
until August 2014 when he joined flatexDEGIRO AG. In previous
positions, he was instrumental in the growth of Bank Sarasin AG as CEO
in Germany. Prior to this he had served in various senior positions at
Commerzbank, Credit Suisse, UBS and international law firm Beiten
Burkhardt, both in Germany and internationally, especially in Asia. Frank
is an attorney at law in Germany and has received his Master of Laws
majoring in international economics from the University of Houston Law
Center.
Before joining flatexDEGIRO AG in 2015, Muhamad Said Chahrour
was CFO at Lamudi, one of Rocket Internet SE’s core ventures, and
primarily responsible for the financial funding and investor relations of
the global entities. He previously worked in M&A and Transaction
Services at UBS and pwc. Muhamad has a strong track record of
excellent work results and exceptional expertise and experience across
the sectors of corporate finance, credit and investment management,
and business development. Muhamad holds a Master of Science degree
in quantitative finance from the University of Bath School of
Management.
Frank Niehage, LL.M. Muhamad Said Chahrour, M.Sc.
Chief Executive Officer (CEO) Chief Financial Officer (CFO) flatexDEGIRO AG
flatexDEGIRO AG & flatex Bank AG Managing Director flatex Bank AG
→ Corporate Presentation | January 20201 | Page 27Diversity at work – our success is based on the
competence, commitment and flexibility of our team
#diversity
matters
→ Corporate Presentation | January 20201 | Page 28flatexDEGIRO AG - our shareholder structure
12.9% GFBK
(entity of flatex founder)
7.5m newly issued shares
to former DEGIRO
shareholder, incl. founders 5.2% Heliad Equity Partners
and employees
4.0% flatexDEGIRO management
27.3m
shares
outstanding*
77.8% free float
* excluding additional approx. 450k management options exerciseable over the next three years
→ Corporate Presentation | January 20201 | Page 29Our stock – a continuing success story on the
capital market
STOCKPRICE DEVELOPMENT L12M
70 EUR Shares outstanding: 27,273,137
22.12.2020
60,30 €
60 EUR Options outstanding: max. 0.5m
Market EUR 1,377m
50 EUR capitalisation: (as of 2020-11-06)
Regulated market /
40 EUR Listed: PRIME Standard /
Frankfurt Stock Exchange
30 EUR 22.11.2019
24,45 € ISIN: DE000FTG1111
19.03.2020
21,15 €
20 EUR Bloomberg: FTK GR Equity
Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20
Stock covered by:
Dec 2020 Dec 2020 Dec 2020 Dec 2020
PT EUR 66.00 PT EUR 73.00 PT EUR 64.00 PT EUR 70.00
Buy Buy Buy Buy
Dec 2020 Nov 2020 Dec 2020
PT EUR 64.00 PT EUR 54.00 PT EUR 67.00
Buy Buy Buy
→ Corporate Presentation | January 20201 | Page 30flatexDEGIRO AG - key milestones
1988 2015
Company founded in Langen Migration of mwb Fairtrade from CACEIS to FinTech
Group Bank for order routing and securities settlement
1997 2017
Full BPO IT provider for Bankenverband ever since Large Austrian bank selected FinTech Group as full BPO
for Austrian and German digital expansion
2001 2019
Development and full BPO provider for pan-European FinTech Group Bank AG renamed to flatex Bank AG
expansion (core bank system FTX:CBS:R1 is born) and FinTech Group AG renamed to flatex AG
2006 2020
Best German online broker goes live flatex acquires 100% of DEGIRO to become Europe's
online brokerage champion
2009 2020
L.O.X. OTC certificate platform developed (limit order To underscore its position as Europe's largest retail
system connects DB/Coba flow to 22 European brokers) online broker, the company name was evolved from
flatex AG to flatexDEGIRO AG
2010
Full white label Retail Bank operations begins (full BPO)
→ Corporate Presentation | January 20201 | Page 31Financial calendar 2020/2021
Financial Publications 2021
11 January 2021 Trading Update Q4/2020
28 April 2021 Annual Report 2020
4 May 2021 Interim Management Statement Q1/2021
30 September 2021 Half-year Report 20201
9 November 2021 Interim Management Statement Q3/2021
Investor Conferences & Roadshows H1/2021
January 2021 Oddo BHF Forum 2021, Lyon
UniCredit/Kepler Cheuvreux, German Corporate Conference 2021, Frankfurt
May 2021 Goldman Sachs, European Small & MidCAp Symposium, London
Stifel Europe, 4th German SMID Cap One-on-One Forum, Frankfurt
Berenberg, Tarrytown, New York
June 2021 Goldman Sachs, Financials Conference, Berlin
→ Corporate Presentation | January 20201 | Page 32Contact
Achim Schreck flatexDEGIRO AG
Head of IR and Corporate Communications Rotfeder-Ring 7
60327 Frankfurt/Main, Germany
Mobile +49 160 92774570
Phone +49 69 450001 1700
Mail: achim.schreck@flatexdegiro.com www.flatexdegiro.comYou can also read
