Buy the dip
Buy the dipEARNINGS/SALES RELEASES
Swissquote this morning released some numbers regarding FY2021. Both revenues and pre-tax profit were above guidance and our own expectations which had been in line with guidance. This makes FY2021 another incredible year for Swissquote vs 2020. The share price is down about 5% as investors might have (wrongly) bet on H221’s numbers coming in close to their H121 level. We remain positive on Swissquote as all growth engines will stay active going into 2022.
FACT
Swissquote’s FY2021 revenues at CHF472m were above the guidance of CHF465m and the pre-tax profit at CHF223m was also above the guidance of CHF210m. PBT was more than twice its 2020 level (which had also been an exceptional year for Swissquote).
The company will publish full results for FY2021 on the 17th March. There may be new guidance for 2022 and later at that time. The previous guidance for the coming years has been out of date for some time now (NB at the beginning of 2021, management was expecting CHF500m revenues and CHF200m PBT for 2024).
ANALYSIS
Both revenues and PBT were slightly ahead of guidance (and our expectations). The share price is however down 5% as investors had been hoping for the second semester’s revenues to be close to their H121 level or at least not so far off; they were effectively well below at CHF88m (CHF135m in H121). This still remains a strong semester. And management’s most recent guidance (at the time of the H121 release) is ambitious as it currently expects revenues to go on growing in 2022.
While volatility in 2020 and 2021 has helped Swissquote onboard new (active) clients, the key to Swissquote’s strong growth will remain the institutionalization of the crypto-market. We are confident Swissquote is well ahead of the competition in Switzerland and its development in Europe should strengthen that expertise.
The announced acquisition of Keytrade Bank Luxembourg, a small online and trading bank in Luxembourg, is another brick in the fintech’s development. Keytrade has about 8000 clients and €1.7bn of assets under custody. This is slightly lower than InternaxX which was acquired by Swissquote in 2018.
Considering a margin of 90bps on assets, the contribution to revenues should be in the area of €15m. And as importantly, it should help Swissquote’s expansion in Europe.
IMPACT
Following these results, we will adjust our numbers for 2021. We remain comfortable with our opinion on the company.
Swissquote Group Holding is engaged in the provision of Online Financial Services. Co. provides online securities trading services (including custody services) and quantitative asset management services (ePrivate Banking among others) to self-directed private investors, independent asset managers, investment funds, and third party financial institutions. Co. provides access to over-the-counter FX markets through in-house technology platform to retail customers, money managers, and third-party financial institutions. In addition, Co. operates an online bank that accepts deposits in the form of current accounts and saving accounts from its customers.
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