Shares in FTSE 250 financial trading platform Plus500 (PLUS) advanced 1.3% to £15.91 following plans to buy back an additional $50 million shares to the $55 million buyback programme already in motion.
This follows on from yesterday’s first quarter results, where earnings before interest tax, depreciation and amortisation was double the consensus estimate at $162 million.
Together these bits of news have helped to drive the share price by nearly 10% over the past five days.
The share buyback is additional confirmation of management’s confidence in the group’s outlook and robust financial position.
The ability of the group to engage in another share buyback is indicative of its strong financial position with a net cash balance of $886.6 million as at 31 March.
This is equivalent to 45% of the group’s market value, an increase from $750m at the end of 2021.
This implies approximately $437 million of surplus cash over regulatory capital requirements that could be used for future acquisitions.
STRONG START TO 2022
First quarter revenue of $271 million was significantly ahead of a consensus estimate of $150 million.
This was driven by an 18% increase in customer income coupled with strong average revenue per user which was ahead by 30% on a year-on-year basis.
The first quarter performance also benefited from a decline in average user acquisition costs which fell from $1,502 in the fourth quarter to $1,416.
Plus500 signed up 33,700 new customers in the first quarter. New customer acquisitions are still running at 50% higher than pre-pandemic levels.
Jefferies analysts Martin Price estimates that Plus500’s quarterly customer income moderates to just under $120 million for the rest of the year. That’s a drop of 35% versus the $188 million seen in the first quarter which Price attributes to elevated commodities market volatility.
Plus500 recently announced plans to expand into Japan, playing to a general trend in the financial trading sector to do business in new regions.
