Financial year 2023 characterised by difficult market environment and launch of SMARTBROKER+

Smartbroker Holding AG presents preliminary figures: Financial year 2023 characterised by difficult market environment and launch of SMARTBROKER+
 

• Group revenue of € 46.3 million in 2023; Media segment contributed 60%, Transaction 40%
• Group EBITDA of € 0.5 million - Media positive, Transaction negative as planned
• Assets under custody up to € 9.4 billion - average assets per customer of € 52,000
• Successful launch of SMARTBROKER+. Migration of existing customers and closure of inactive securities accounts Q4 / 2023
• 2024: Return to operational growth, further investments in product and customer care. Management plans sales of € 50-55 million (plus 13%)

Berlin, 22 February 2024

Smartbroker Holding AG (ISIN: DE000A2GS609, FSE: SB1) and its subsidiary Smartbroker AG launched SMARTBROKER+ last year, and successfully completed one of the largest securities account migrations of the German financial sector. The challenging retail investment environment, the simultaneous focus on the relaunch of Smartbroker to SMARTBROKER+ and the related expenditures and investments have led to declines in sales and profitability in both operating segments of the business. Based on preliminary, unaudited figures for the 2023 financial year, the company generated consolidated HGB Group revenue of € 46.3 million (2022: € 52.6 million). Group EBITDA after customer acquisition costs amounted to € 0.5 million (€ 8.8 million in the previous year).

These results are in line with the revised guidance published in September 2023. The macroeconomic environment during the financial year was difficult and characterised by multiple geopolitical crises, high inflation and tight monetary policies. Despite this, many stock exchange indices reached historic highs. However, private investors acted cautiously. The number of shareholders in Germany fell by more than 570,000[1] in 2023, and turnover on the cash market of the Frankfurt Stock Exchange fell by more than 20%[2].

Number of page views has increased again since the beginning of the year

The transition from Smartbroker to SMARTBROKER+ took place during this commercially challenging environment. Management had announced at the start of the 2023 financial year that it would reduce marketing expenditure ahead of the transition phase. The acquisition of new Smartbroker customers was therefore reduced during the first half of 2023 and stopped altogether ahead of the migration in October. The migration of existing customers from Smartbroker to SMARTBROKER+ also provided the opportunity to eliminate inactive securities accounts. This led to a significant reduction in the number of customer securities accounts under management[3], while at the same time there was a slight increase in customer assets under management. In December 2023, Smartbroker AG managed a total of 180,000 customer securities accounts[4] (2022: 267,000 customer securities accounts) with € 9.4 billion in assets under custody (2022: € 9.2 billion) and average assets per securities account of around € 52,000. Revenue remained almost constant as planned at around € 18 million, while segment EBITDA was also in line with expectations at around minus € 5 million.

The revenue decline in the Media segment[5] was largely due to the difficult market environment described above. Retail investors' interest in capital markets and related news declined over the course of the year, and hence the reach generated by the media assets fell from 2.6 billion page views in 2022 to 2.1 billion in 2023. Revenue in the Media segment shrank by around 18% to € 28 million, which also impacted profitability; segment EBITDA fell to just under € 6 million. There were no significant shifts in the relative competitive market position of the portals, as the overall market also declined. However, the declines appear to have come to an end for the time being:  As illustrated by the new monthly KPIs - which are being published by the business since January 2024[6] - the number of page views recovered by almost 30% between November 2023 and January 2024.

Investments in expanded customer care and SMARTBROKER+ product enhancements

For the first time, SMARTBROKER+ will make a full-year contribution to the Group's revenues during the current financial year. The focus will therefore shift to normalising and streamlining operational processes, and and the resumption of new customer acquisitions from the middle of 2024 onwards. Management expects to gain 20-30,000 new SMARTBROKER+ customers by the end of the year. 2024 revenues are expected to be in the range of € 50-55 million, which corresponds to a revenue increase of 13%[7] compared to the previous year. EBITDA is forecast at between minus € 1 million to plus € 3 million. The company expects the higher number of SMARTBROKER+ customers and the improved business model of SMARTBROKER+, which allows for an expanded product range and thus broader income streams, to drive this growth.

André Kolbinger, founder and CEO of Smartbroker Holding AG, commented on the figures presented today: "In all material aspects, 2023 witnessed the conclusion of a historically far-reaching transformation for our company, the ripples of which can still be felt in the 2024 financial year.  We continue to process the backlog of customer enquiries that were caused by the migration, and we will soon be able to return our customer service levels to our high pre-migration standards. Next, we will ramp up new customer acquisition again, whilst at the same time continue to invest in SMARTBROKER+ functionality. The advertising environment is likely to remain subdued for the foreseeable future. Nevertheless, we are looking forward to the coming months as they herald a sustainable new growth phase for our business."

About the Smartbroker Group:

Through its Transaction division, the Smartbroker Group operates SMARTBROKER+ – a next-generation broker that is the only provider in Germany to combine the extensive product range of classic brokers with the extremely favourable pricing conditions of neo brokers. The portfolio also includes the digital fund broker FondsDISCOUNT.de. At the same time, via its Media division, the Group operates four high-reach digital media assets dedicated to bringing capital markets news and information to retail investors (wallstreet-online.de, boersenNews.de, FinanzNachrichten.de and ARIVA.de). With several hundred million monthly page views, the group is by far the largest publisher-independent financial portal operator in the German-speaking world and maintains the largest financial community.

^[1] Deutsches Aktieninstitut:  https://www.dai.de/fileadmin/user_upload/DAI_23049_Aktionaerszahlen_240109_300dpi.pdf

^[2] Deutsche Börse Kassamarkt-Jahresstatistik 2023: https://deutsche-boerse.com/dbg-de/media/pressemitteilungen/Deutsche-B-rse-ver-ffentlicht-Kassamarkt-Jahresstatistik-2023-3810744

^[3] Includes the brands SMARTBROKER+, Smartbroker 1.0, FondsDISCOUNT.de as well as the former brokerage clients of Volkswagen Bank

^[4] Excluding approx 70,000 inactive zero balance accounts that are in the process of being closed, but which formally remained active as of 31 December 2023

^[5] Encompasses the four financial portals wallstreet-online.de, finanznachrichten.de, ariva.de and boersennews.de, their mobile apps and related digital and social media assets; newsletters and a print magazine

^[6] Link to the monthly KPIs: https://smartbroker-holding.de/websites/smartbroker-holding/German/3400/monatliche-kpis.html

^[7] Based on the middle of the revenue guidance band