Plus500 Sees 20% Margin on US Business, CEO Says

Plus500's CEO David Zruia revealed on an earnings call that the company's US futures and prediction markets business is expected to achieve a profit margin of "20% and above," which he noted is double the "market practice" of 10%. This is the first public indication of profitability for this segment, which is not separately reported in Plus500's interim accounts. The non-OTC business, which includes futures, prediction markets, and share dealing, generated approximately $70 million in revenue in the first half of 2024, representing about 15% of group revenue. The company targets about $140 million annualized revenue from this segment by 2026.

During the call, CFO Elad Even-Chen broke down the institutional prediction markets business into four revenue streams: software fees, clearing fees, order routing fees, and interest earned on omnibus accounts. Retail customers pay commissions instead. The company also highlighted that it owns its clearing and execution infrastructure and sells these services to other firms, having recently signed deals with Wealthsimple in Canada and Nelogica in Brazil.

CEO Zruia outlined plans to launch a "super app" next year, a one-stop-shop trading application. To support this, Plus500 is seeking bolt-on acquisitions to acquire necessary licenses and capabilities. The company's recent purchase of Mehta Equities in India closed in February, but its contribution is not yet included in near-term plans. Latin America is seen as a "quite untapped" market, with Plus500 adding marketing and operational staff there.

Regarding full-year guidance, Plus500 said revenue and EBITDA will be in line with market consensus, relying on repeating the second quarter's run rate. However, the 20% margin figure is a management expectation, not a reported result, and the company did not specify whether it is pre- or post-tax. Retail forex and CFD traders should note that this margin statement provides insight into the company's expansion strategy, but the actual profitability of the US business remains opaque due to lack of segment reporting. As Plus500 continues to diversify into non-OTC products, its traditional CFD operations remain the core revenue driver, and regulatory developments in various jurisdictions could affect its overall performance.

This is information, not investment advice.