• Net Trading Income (NTI): EUR153.8 million for Q4 2024; EUR467.8 million for the year.
• Total Income: EUR159 million for Q4 2024; EUR479.3 million for the year.
• Fixed Operating Expenses: EUR45.3 million for Q4 2024; EUR179.1 million for the year.
• EBITDA: EUR82.1 million for Q4 2024 with a 52% margin; EUR214.9 million for the year with a 45% margin.
• Net Profit: EUR63.2 million for Q4 2024; EUR159.5 million for the year.
• Basic EPS: EUR1.47 for Q4 2024; EUR3.69 for the year.
• Trading Capital: Increased by 33% to EUR775 million at the end of 2024.
• Shareholders' Equity: Increased by 31% to EUR768 million at the end of 2024.
• Return on Equity: 24% for the year.
• ETP Value Traded: Increased by 13% in Q4 2024 compared to the same period last year.
• Total Value Traded: Increased by 14% year on year and 6% quarter on quarter for Q4 2024.
• Digital Assets Trading Volume: Doubled in Q4 2024 compared to Q3 2024.

• Warning! GuruFocus has detected 4 Warning Sign with FLTLF.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Flow Traders Ltd (FLTLF) achieved the best fourth quarter in company history with a net trading income of EUR153.8 million, marking a 114% increase compared to the same period a year ago.
• The company recorded the second most successful year in its 20-year history with EUR467.8 million of net trading income, showcasing strong growth and diversification strategy.
• Flow Traders Ltd (FLTLF) maintained a high operating leverage, generating an EBITDA of EUR82.1 million in the quarter, an almost sevenfold increase compared to the same period last year, with a 52% margin.
• The company's trading capital expansion plan led to a 33% increase in trading capital over the year, reaching EUR775 million, the highest level in company history.
• Flow Traders Ltd (FLTLF) continues to lead in the ETP market, with a 13% increase in ETP Value Traded in the fourth quarter compared to the same period a year ago, and a 5% increase for the year compared to 2023.

Negative Points

• Fixed income value traded saw a decline compared to a year ago as the company allocated trading capital towards other asset classes with more attractive opportunities.
• Unrealized gains in the Digital Assets investments may potentially turn into unrealized losses in future periods should the market reverse.
• Fixed operating expenses increased by 3% year on year, reaching EUR179.1 million, which may impact profitability if not managed carefully.
• The company's NTI contributions from the Americas and Asia accounted for 43% of total group NTI, down slightly from 45% in 2023, indicating a potential need for better regional balance.
• Despite strong results, the company faces criticism for potentially losing market share to better-capitalized competitors, highlighting the need for continued capital expansion and strategic positioning.

Q & A Highlights

Q: How much more capital can Flow Traders retain, and what are the plans for additional sources of capital? A: Mike Kuehnel, CEO, stated that as long as the company can generate attractive returns on incremental capital, they will continue to retain and add capital through debt. The 69% trading capital return in 2024 with nearly EUR200 million additional capital is a strong indicator. They see growing opportunities, especially in ETP adoption in emerging markets like China. The company plans to explore external debt options in 2025 to support growth in asset classes and regional expansion.

Q: How does Flow Traders respond to criticism about losing market share to better-capitalized competitors like Jane Street? A: Alex Kieft, Global Head of Trading, responded that Flow Traders remains a market leader in Europe and saw a slight increase in market share. The focus is on profitability and providing liquidity rather than market share. With the expanded capital base, they can compete for larger trades and maintain their leading position.

Q: Are there any changes in strategy regarding unrealized gains in the crypto space, and what is the size of these gains? A: Mike Kuehnel clarified that there is no shift in strategy regarding balance sheet intensity. The company has made strategic minority investments in areas like connectivity and tokens to build strong market alliances. Unrealized gains in digital assets are part of these strategic investments, and while they contribute to other income, they could be impacted if the market reverses.

Q: What is the company's approach to external debt and capital expansion? A: Mike Kuehnel emphasized that Flow Traders is committed to exploring different structures for adding external debt to the balance sheet. The strategy is to accelerate growth through asset class expansion and regional diversification, supported by increased capital.

Q: How does Flow Traders plan to maintain its market position amid increasing competition? A: Alex Kieft highlighted that the company focuses on profitability and liquidity provision rather than market share. The expanded capital base allows them to compete for larger trades, ensuring they maintain their leading position in the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.