The share of Plus500 Ltd. (AIM: PLUS), which operates Internet platforms for capital market trading, closed yesterday at £4.815. Today, however, after the company reported its results, the share had climbed 9% to £5.25, as of web posting, reflecting a $969 million market cap, 71% higher than at the beginning of the year. At the same time, the Plus500 share has lost 26% of its value since hitting a peak of £7.07 in April. Incidentally, the share's dividend yield stands at 8% (including the dividend for the 2014 results, scheduled for distribution in the first quarter of 2015).
Plus500 operates a contracts for difference (CFD) online trading floor, meaning that a contract can be purchased for almost any underlying asset in the capital market, from shares to goods. The difference is the gap between the bid and ask prices for the asset.
Plus500 reported its third quarter results today. As permitted under UK law, the report listed only the company's top line.
The company finished the third quarter of 2014 with $56.2 million in revenue, an annualized 181% increase, indicating how far the company is from realizing its potential. Its revenue in the first three quarters of 2014, totaled $162.4 million, up an annualized 151%, compared with $115.1 million in revenue in all of 2013. Plus500 operates mainly in the UK and European market (in countries like France and Germany), which accounted for 70% of its revenue in the quarter.
94% of Plus500's revenue came from countries in which CFD trading is regulated, and the rest from countries in which the company operates according to what it calls "a legal opinion." In order to increase the number of countries in which it does business, Plus500 recently obtain a license in Cyprus, but company CEO Gal Haber said the license was not designed to enable Plus500 to operate in that country, saying, "It's a strategic asset. Our competitors have many licenses, and a Cypriot license enables us to operate everywhere in Europe."
Plus500 continues to report double-digit percentage growth in the numbers of its new customers and active customers, but its growth rates are lower than in 2013 as a whole, indicating slower growth.
"In 2012, we were a really small company, and it's much easier for a small company to grow," Haber says. "Plus500 is now one of the biggest companies in its field, and even though the growth rates are slowing, it's still excellent. We're growing in both the number of customers and in ARPU (average monthly revenue per user). Growth in just one of these two figures is enough to increase our revenue, but we're growing in both of them, and that's great."
The company's report also indicates that its third quarter results enable it to declare that its results for all of 2014 will be better than the market forecasts in both the top and bottom lines. Plus500 trades at a future p/e ratio (for the coming 12 months) of 8, compared with a sector average of 14 (according to figures from Reuters). "Compared with our competitors, we're trading at a lower p/e ratio, but the market determines that, not me," Haber says in conclusion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 22, 2014
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