Alternative exchange group Aquis Exchange (AQX:AIM) reported better than expected annual revenue growth of 73% to £6.9m for the year ended 31 December 2019, pushing the shares up 6% to 355p.
SUBSCRIPTION GROWTH
Strong revenue growth was driven by higher subscription fees resulting from increased trading levels, growth in new members and supplemented by growth in fees from the data divisions.
Revenues from the exchange increased by 71% to £5.3m while the group’s market share of pan-European trading rose from 3.8% to 4.6% and is up by 73% since the firm came to market in June 2018.
Demonstrating the benefits of increasing scale and relatively fixed costs, the company managed to reduce operating losses from £2.4m in 2018 to just £200,0000, well below broker Liberum’s forecast of £1.3m.
There is an element of growth that is driven by clients moving up to higher tiers which attract higher fees. The top tier generates £50,000 of revenues per month, while the lowest tier costs just £2,000.
The company licenses its technology to third parties and this segment generated £1.3m of revenues, up 72% over the year, showing increasing interest from international players and different asset classes.
Data fees were up 135% to £340,000 and are currently a small contributor to the top line, but this segment could prove to be a significant part of the business in future when the European regulator introduces reform to the way that data is charged across the region.
Aquis entered the primary listings market in March with the acquisition of the UK’s NEX exchange. The long-term goal is to provide a differentiated platform for growth companies to raise capital with simplified prospectuses and lower costs.
While management doesn’t know how long heightened current market volatility will last, it believes the company’s unique proposition, offering transparency and lower trading costs will continue to drive market share growth and push the business towards profitability.
