flatexDEGIRO AG

Hello and welcome to the Flatex DeGiro Analytics call Q1 2024. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, Mr. Ashim Shrek. to bring into this conference. Thank you.

Good morning, everyone. My name is Achim Schreck. I'm heading investor relations at FlatEx De Giro, and a warm welcome from our side as well to our analyst call related to the Q1 numbers we published yesterday evening. As usual, we would like to give you a short run through the numbers before we open for questions. I'm very happy that we have the whole management board team here with us today. And for the introductionary remarks, I would very much like to hand over to our CEO, Frank Niehage. Frank, go ahead, please.

Yeah, thanks, Achim. Good morning, everyone. Welcome to the Q1 earnings call of our firm and my last call. Before I start, like always, with the highlights of the quarter and hand over to the CFO thereafter, allow me a few personal words with mixed emotions. With my resignation, I hope to avoid further damage with respect to the reputation of our firm and to resolve the tension with the NIP founder prior to the upcoming annual general meeting. After 10 years of tenure as CEO of our firm, time to say goodbye. First, I would like to thank you, the analyst and shareholders, for your trust, support, and it was a pleasure working with you. And you challenged me, which was very helpful. So please continue to support the firm and the new management like that. I will obviously continue to stay as a key shareholder of the firm, and I will enjoy observing the amazing profitable growth story of this firm in the future and hope to stay in touch with you once in a while. At the School of Life taught us that we always meet twice. Second, I would like to thank all our employees once again. I did that already in an internal mail. But again, thank you all for the great support, achievements, and hard work. And allow me to thank one person especially. It's our chairman, Martin Korbmacher, with whom I started together and who's one of the most professional bankers I've ever worked with. And a great guy, too. Some used to call him in the old days God's gift of investment banking. And without the professional relationship between chairman and CEO, the success story of our firm would not have been possible. If you don't believe me, you can read about that in a study published by the Reinhard Mohn Institute, which I always like to cite, which has investigated the performance of listed companies, highlighting how important the professional relationship between the two roles of chairman and CEO by having influenced the performance of the company, and last but not least, of the stock price. If you don't recall the performance over the last years of our stock price, I'm happy to share with you the number, which equals over 550% until today. And by the way, this outperformed the DAX. during the same period, or if you want to look at it from another perspective, the market cap appreciation of the same period equals 11x. Allow me now a few seconds to take you back into the past. When we were convinced 10 years ago to rescue the distressed FinTech group by another shareholder with the name of Christian Angermeyer, Flatex was a loss-making German focused only niche broker from Kulmbach with 120,000 clients roughly. The founder and the supervisory board member at that time did start a dispute with the key partners and managed the firm into a dead end with 8 million losses in EBITDA. We agreed on a new strategy together of independency from the founder asked him to step down as supervisory board member, relocated the head office from Kulmbach to Frankfurt, agreed on a dilution through capital increases and improving corporate governance. Two major acquisitions, the XCOM-BIW group deal in 2014 and obviously the Giro acquisition in 2019, were inter alia a game changer. I could go on now and now, but with respect to timing, I prefer to look at the situation today. We've created Europe's largest online broker listed in the SDAX, headquartered in Frankfurt. We are heading towards the service of 3 million clients this year, with 1,300 employees out of 30 nationalities, doing business in 16 countries across Europe. We built a true European champion. I am very proud of having served as CEO for so long. The firm is very well managed, very robust, and highly profitable. But is it not strange that now exactly the same founder tries to come back as a supervisory board member through the back door? claiming to know better what's good for the firm? I leave the answer to you all. I trust that the new management will continue to follow the strategy of profitable growth. And allow me one more last request. Please register yourself for the upcoming annual meeting and exercise your voting power. It is like in democracies. If you don't vote, you support minorities. What's most important about the agenda of the upcoming annual general meeting, and everything obviously is important, but let me highlight the share buyback and the new long-term incentive plan for the employees. And last but not least, please support our chairman, Martin Korkmacher, who will guarantee professionalism, good corporate governance, and the sustainable profitable growth strategy. Which brings me back to the purpose of today's call. Let's talk about how profitable the first quarter was now. Here are the highlights. We continued to manage our costs very well. And we did win over 120,000 new clients in the first quarter. And this we did by bringing down the CEC below 100 euro to 95 euros. which was an amazing job of the marketing department. We continued further with the monetization and increased the revenues per trade again. Let's look into the detailed numbers. Our revenues, they went up by 25%. The EBITDA even went up by 177%. And last but not least, the income went up by 341%. That's what I call strong numbers. And last but not least, net cash inflows amounted to 1.8 billion euros. And again, like I always mention in the last couple of calls, without paying interest, proving that we find the right clients who come to us for trading and not for savings. No surprise that we expect the guidance to reach the upper end of the given guidance. And obviously if interest decline in summer and trading activities will pick up, you all know what's going to happen with the guidance. But obviously I leave it now to the new management to decide over that in the future. Finally,

will hand over now like always to the ceo he will shift gears and tell you more about the details and i thank you all again and please take care being on the floor is yours thank you very much frank and good morning to all of you as cfo of latex tissue it is my pleasure to also welcome you to this q1 2024 financial call however Before I start with the financial metrics, which should not hold any real surprises for you, I would like to express my greatest thanks to Frank. I met Frank in 2013, more than 11 years ago, and without Frank's vision and support, I would not be where I am today. I have never met a person more inspirational and passionate than Frank. I've also learned a lot from him in the past decade. Thank you for being a great leader and visionary. We will miss you. Good luck with all your future endeavors, Frank, and thank you very much. And you should be proud indeed. Today, Frank Miehage, Stefan Simang, Christiane Strubel, and I represent the management board. And I'd like to take the opportunity to also welcome Stefan and Christiane, who sit next to me today. Upon Frank's departure, Stefan and I will make a step forward to co-head the business with an interim mandate. The supervisory board has been in a structured process and in close contact with us over the past weeks and we feel very well informed about the search process for a suitable successor. We are happy to support the new candidate once he is introduced to us. Once again, We thank Frank personally for the command of the FlatEx De Hero ship for a decade. Stefan and I, on the other hand, have been working together on a professional level and in a constructive way, including our roles at our previous employer since 2001. You can rest assured we will continue to do so. One more topic before we get into the numbers. We are particularly proud to have been rewarded a substantially higher ESG rating by MSCI recently. In April, MSCI raised our rating by two notches from double B to single A. To give you a perspective on the rating, within the peer group investment banking and brokerage, within the MSCI All-Country World Index, there are only 15% of companies ranked higher than FlatX De Hero. Morningstar Sustainalytics confirmed our ESG rating in the low risk category. We have, however, improved our score and now rank in the risk rating ranking as number four out of a total of 147 in the investment banking and brokerage category where a low rank is better and represents lower risk. Now on to commercial performance. Gross customer additions amounted to 121,000, an increase of 8% year-on-year and 57% sequentially. 25% of these new customer accounts, i.e. about 30,000, were won at the Flatex brand in Germany and Austria. Assets under custody reached a record 58 billion euros and are up 29% year-on-year and 12% quarter-on-quarter. We settled 16.1 million transactions almost flat year on year despite less trading days and up 19% sequentially. Client trading activity remains relatively stable over the past quarter with a mild uptick in Q1 of 2024 compared to Q4 of 2023. It puts us in the middle of some of the competitors. However, Q1 of 2023 did see still higher trading activity. The development of assets under custody is a relatively straightforward message. Clients' cash deposits of about 3.6 billion euros in the fourth quarter are essentially flat sequentially and grew by about 10% over the past five quarters. Securities under custody grew to 54.4 billion euros, driven by higher index levels and fresh clients' purchases. It is a very positive signal to be able to grow the cash position over the past quarter, despite elements of an aggressive and expensive rush for clients' deposits elsewhere in the market. Cash inflows of 3.8 billion euros compared to cash outflows of negative 2 billion euros, leaving us with a net inflow number of 1.8 billion euros. The size of our margin loan book expanded slightly, leading to net investments of 1.9 billion on our platform in the first quarter of 2024. The cash under custody position remained basically unchanged. Commission income of 75 million euros and interest income of 44 million euros alongside other income of approximately 4 million euros at up to 123 million. Hence, revenues are up 25% year on year and 23% sequentially. Commission income is up 10% year on year and up 36% sequentially. Income interest income in the first quarter rose to a record 44 million euros up 65 percent compared to the first quarter of 2023 and up 13 percent compared to the last quarter of 2023 let us come to trade monetization we were able to generate an average of 4.64 euros per transaction in the first quarter of 2024 This number is up 12% year on year and up 13% sequentially. While we typically enjoy an uplift every year in the first quarter based on selected fees that are mostly paid in the first quarter, some additional explanations may be helpful. We gave up on some low-earning trades while at the same time enjoying the full benefits of price increases made in mid-May 2023 on the DeGiro platform. We've also seen generally high US trading volumes on which we benefit when it comes to FX conversion. Also, the trade mix in Q1 favored slightly trades with a higher commission per transaction. EBITDA, which we continue to highlight for comparison purposes, is up 177% to 54 million euros year on year and up 4% sequentially. Net income of 30 million euros is essentially flat sequentially and up approximately 340% compared to Q1 of 2023. A few highlights on cost developments in the first quarter compared to the first quarter of last year. Current personnel expenses are up 3.4 million to 24.9 million euros. driven by a general 8% inflation driven salary increase in early 2023 and new hires related to the BaFin audit. We expect both effects to be significantly less pronounced in the last three quarters of 2024 due to base effects. We were able to reduce marketing expenses by 33% from 17.2 to 11.5 million euros and hence to reduce client acquisition costs from 153 to 95 euros. Other operating expenses are essentially flat. We will now give you an overview of the financial topics in relation to our annual general meeting on June 4 of 2024. The agenda and related documents will be published on our website today. The share buyback will be split into two votes to properly reflect and protect the rights of all shareholders. There is a vote on the share buyback without the possibility of excluding any subscription and tender rights, and this item requires a 50% quorum for approval. Then there is also a vote on the share buyback with the possibility of excluding any subscription and tender rights. This vote requires a 75% quorum for approval and gives more flexibility to the company. So in effect, with a 50% plus but less than 75% vote, the company can still buy back shares but has more limitations compared to the 75% plus vote. In any case, the individual and combined size of the share buyback is limited to 10% over five years. We will also put up for vote a new long-term incentive program that will run over a time span of six years. It is a stock option plan consisting of approximately 5.5 million shares. This is 5% of the shares outstanding with a four-year vesting period and a two-year execution period. It includes a share price related factor with a 30% hurdle rate as well as risk adjusting factors. As mentioned already, the documents are at this stage not yet uploaded to our webpage. This will happen during the course of the day. Hence, we will not be able to answer detailed questions about the AGM during this call today and would kindly ask to direct any inquiries starting Monday in the usual manner to our Investor Relations Department and Achim Schreck. A final slide on our Pillar 3 transparency report that we also published last night. Our risk-weighted assets decreased from 1.3 billion euros at the end of 2022 to 908 million euros at year end 2023. This is mainly related to the reapplication of credit risk mitigation techniques as communicated to the market in September of 2023. Our common equity at Tier 1 ratio on group level reached approximately 27% at the end of 2023, up from about 20% at the end of 2022. Again, the largest factor in the big improvement is the reapplication of credit risk mitigation techniques. Regarding the use of our 2023 annual profits for our core Tier 1 capital, no application was made in accordance with Article 26, Section 2 of the Capital Requirements Regulation, or CRR in short, to use those profits as regulatory-owned funds within our group. It can be stated that theoretically, the CET1 ratio could have risen to a level well above 32%, if we would have applied for this treatment or an according future decision at the AGM without any further plans. Again, this was only a theoretical remark. Our CET1 ratio for the end of 2023 stands at 27%. This non-application was done against the background of the AGM proposal for dividend and share buyback, for which a significant portion of the 2023 profits are earmarked. we are currently in the process of calculating the exact number. We are also finalizing the calculations on the impact from the introduction of the third iteration of the capital requirements regulation CRR3, which will become effective for all EU banks at the beginning of 2025. The CRR3 generally can lead to higher capital requirements and more complex processes. Once we have completed all work, we will communicate to the markets accordingly. We would therefore kindly ask you to stay patient and not ask specific questions about the share buyback amount for 2024 right now. Thank you for your understanding. With that, we would like to conclude the financial presentation, and it is my pleasure to hand back to Achim.

Thank you, Benon, for the run-through through the numbers. We are now very happy to take your questions on the Q1 financial.

Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star one now. And to withdraw your question, please press star two. The first question comes from the line of Benjamin Concon calling from KBW. Please go ahead.

Good morning, gentlemen. I hope you can hear me all right. A few questions from my side, please. Can I start maybe on marketing? And if I'm not mistaken, you've given a budget in the last call of 30 to 35 million for the year. Now, maybe against the backdrop of what seems like a pickup in retail trading activity, Are you starting to see more and better opportunities, I guess, to win customers in this sort of new environment? And would you consider a step up in marketing efforts? And secondly, maybe sticking with the trading environment. Now, this morning, there were a few reports about trading volumes from some of your new broker peers, arguably only of indirect nature. And If true, they seem very strong for the first quarter, right? And I guess the question here is twofold. Why do you think Fladex is not growing as much or in an inferior way here, significantly inferior way? And are you kind of worried that the likes of Trade Republic are increasingly eating into your target customer base? That would be it for me, yeah.

Thank you very much and good morning.

Let me start with the marketing question. So indeed, the range is about 30 to 35 million and today we have no real plans to change that. What we do see is that when we started to shift a bit away from brand marketing to targeted marketing, we are able to continue to generate new clients with substantially lower client acquisition costs. Should we have the need to increase the marketing budget because clients' inflow increases meaningfully, we will react and probably do so. For now, everything is in line and on track and we feel comfortable with our current plans. That would be my comment on the first question. On the second question, I would hand over to Ahim Schrepp.

Thanks, Benon. Hi, Ben. Yeah, so when you're relating to, I think the article was about trading volumes at one exchange. the indirect version, so to speak, of what's happening in the market. First of all, as we've mentioned a couple of times, we're talking about a different group of customers here. So we obviously do not know anything about their trading activity, the size, the profitability, et cetera, and would therefore also like to not further comment and speculate on their basis. There are for sure, as you all know, in Germany a couple of more players in the market compared also to our international business. But I think as the numbers now in the first quarter have also shown that out of the 122,000 new customers we have won, roughly a quarter is coming from the Flatex brand in Germany. Sorry, for Germany and Austria. So we're pretty happy with our performance and our development. So I think that's all we would like to state at this point.

All right. Thank you very much. And maybe just one quick follow up, if I may. And that's on personnel cost. I was a little surprised to see this sort of steep increase year over year, especially given that you booked these around about three million of inflation bonus in the first quarter last year. And just to confirm, Binon, I think what you indicated in the last call was a sort of broadly flat year over year development in personnel cost. And I was just I just wanted to check if this was excluding or including the SAAS component. Thank you.

So, first of all, we plan to finish 2024 with fewer people on our payroll compared to the beginning of the year. a traditional Q1 salary increase round, which had been way more benign than last year. But clearly, we added up cost base on the personnel side due to the additions that we hired mostly last year and some of them who came onto our platform at the end of the year. We will see how the year continues to play out, but we certainly plan not to grow our employment base, period. And should we need to make any salary adjustments for whatever reasons over the year in order to make our people happy, then we would decide to do so. So we may see a mild increase in personal costs, but not in headcount.

Okay, but that's including or excluding SARS on both metrics?

So for 2024, all numbers are including any SARS expenses. Okay, thank you. And for 2023, we clearly had both adjusted and non-adjusted numbers. Sure, sure. Thank you very much.

The next question comes from the line of Marius Ferberg calling from research. Please go ahead.

Yeah, thanks for taking my questions. A couple from as well. First one with regard to the revenues per trade, which were quite significantly up, also quarter over quarter. Did you perform any price increases at the zero in Q1 or what was the specific driver of that? Second question is with regards to the competition fine that you received in Italy, that you received last year in Q2. any progress with regards to that and that you're fighting it and any visible timeline when it comes to court dates or when to expect any sort of repayment or confirmation of the fine. And the last question from my side is, last year in some calls you mentioned that you plan to enlarge the credit book at 3 Euro and any comments towards that, what are your actions in order to do so and how are you looking at it right now?

Thank you for the questions, Mario.

Let me start with your first question on the revenues per trade. Like always in financial markets, there is this good old rule, never extrapolate January and never extrapolate Q1. We have seen a nice combination of effects, which led to this really nice commercial per trade number. And very clearly, we expect that number to go down in Q2 and the full 2024 number to be, of course, below the Q1 number. There were a couple of effects. So indeed, we had price increases on the Dehiro platform around May of last year. which contributed in consequence only partially to 2023 numbers, but fully into 2024 numbers. But we've also seen a pretty highly skewed trading towards US trades, where we do benefit through the FX conversion, and we have seen also a slightly positively skewed mix towards more ETP trades, and that's something that led to the to the number that we posted for Q1. Please expect that number to go down in Q2. On the competition fine in Italy, there is no news that we can report. There is no real timeline. And once we will receive any formal updates, we will certainly mention it on one of the upcoming calls. On the credit book at the HIRO, well, it did grow. It is going up. It's not doubling clearly. We extended the product offering to all of the De Hero clients, but it's a process where most clients who wanted it beforehand already had the option to get it by changing their client status. So the effect that we have seen is mild, but nevertheless contributes to the expansion of the margin loan book.

Thank you very much.

The next question comes from the line of Panos Elinas calling from Morgan Stanley. Please go ahead.

Hi, thanks for taking my questions and good luck to Frank. Maybe if I start the first one, can you maybe share what level of US trading have you seen in the quarter in terms of the share of total trades? And also, if you can share what level of effects commissions you had in the quarter and how it compares to last year, Q1 last year. That's my first question.

Hey Panos, Achim speaking here. These are actually details we wouldn't like to give out now, but just to give you a feel for, let's say, the magnitude of things. Just compare quarter on quarter, so we had basically the same number of trades, 200,000 trades less actually than the first quarter last year. That delta is basically a reduction of CFD trades, so not very profitable trades and not part of our . So if you then look at the, basically on the same number of trades, the delta in the provision income, which is roughly 7 million euros, The largest part is coming from the price changes we have done on the Digiro side. And the other section is then coming from more U.S. trading. And when we're talking about more U.S. trading, it's not the number of trades, it's the higher volume of trades we have seen. And obviously, our FX benefit is based on the The volume, given that it's 25 basis points, if customers ask us to do the FX conversion for them. Um, so it's a volume effect more than a number of trades effect when it comes to that.

Sure. And then my, my other question is around the, you know, flat ex trading activity was up, you know, a yard, but the gyro is still down here or a yard, despite the, you know, storing their customer growth, maybe kind of give us a bit more color on the activity and what sounds you have seen so far in the gyro. And then just to complete, in terms of the guidance, now you are targeting towards upper end. Maybe can you share more of the drivers and what makes you more confident on hitting the upper end of the guidance? Do you see sort of potential upside to previously guided customer growth or trades per customer, or is it mainly driven by better monetization for the remaining of the year and likely higher NII than you initially expected because of the cash balances? And then just to one more, if I may, obviously positive development in net profit growth, but the margin still remains low on about 24% compared to the other listed European platforms. So I'm just taking into account that interest income likely is turning into headwind as we approach the rate cuts. Do you see scope for further improvement in the net profit margin in the next couple of years? So that's all from me. Thank you so much.

Thank you, Franz. Let me maybe start with your question about the trading activity of De Giro versus Platex. If you account for the fact that we had less trading days, I think the trading or the number of trades at De Giro would also have been flat or slightly up. Germany has indeed performed better, Austria as well. So what we have seen is rather kind of an outperformance. And I think that also goes back a little bit to the question Ben had at the beginning about what we're currently seeing in the German market, that there has been a rather positive development. But there aren't any real specifics now about individual digital markets where trading activity was materially different.

On your second question as to what is maybe slightly different to the beginning of the year, I would probably highlight two things. The first thing is visible um in the presentation and it's the commission per transaction which we would not have expected at these levels and we went through the details a few minutes ago so that's a positive for us and also given the situation the war war for deposits so to speak we do not participate and yet despite that we were able to grow our cash deposit base And that number is now also at a level that is actually a bit higher than what we would have thought. So those are probably the effects that surprise us the most, so to speak. On the net profit margin, I think we are going through a year where profitability is really changing meaningfully from last year to this year. There is also a reason as to why we have given a range for the consolidated net income. I think once we finish 2024, we will have a pretty good benchmark as to what our general net profit margin or net profit margin range could be going forward.

Arno, does that answer your question?

Yeah, that's very clear. Thanks so much. And again, good luck to Frank. Thank you.

The next question comes from the line of Ian White calling from Autonomous Research. Please go ahead.

Hi there. Thanks for taking my questions. Just a few follow-ups from my side, please. Just on the costs, can you just talk us through the sensitivity of costs with respect to revenues? Basically, what do costs like vary with revenue? Is it just transaction related costs or are there other elements within staff or even investments you might make if revenues were to come in say above your guidance or would that just drop mostly through to EBITDA please? That's question one. Just secondly I was interested to understand is there anything else sort of notable to call out or understand in terms of client trading activity aside from just the trades per client? Do you see more clients being active, for example, in the first quarter, more clients logging into their accounts? Just wondering if there are any broader indicators of client trading interest in the first quarter. And maybe just a slight follow-up on the previous comments. What have you sort of tweaked specifically your thinking regarding the guidance for 2024 is the sort of base case now for cash to be you know somewhere higher than 3 billion on average for the year is it commission per trade i don't know 440 or something like that what have you tweaked in your model um to say things about the upper end of the range please thank you thank you ian i i will start and on your first question um most of the

costs that are related to trades are clearly in the Cox line. So indeed, once you account for that, from then on, there is a pretty straight drop through into EBITDA. There is no special effects that we would need to do in order to generate more revenues through trades other than pay the typical market data providers, exchanges, custodians. and all the others who get a fraction of the trade revenue when we settle a single trade. With interest income, the Cox line is obviously even lower and it falls through more straightly, but that's also the reason as to why the entire line is lower than it has been in the past. And we do not expect effectively any huge changes. If trades go up meaningfully in the second half, so to speak, then the costs of good sold line will go up a little bit because interest income will be in the mix smaller compared to commission income. On the client activity trends, I would hand over to Achim.

Yeah, thanks, Benon. So when it comes to client activity, i.e. the number of customers that have done at least one trade, which is how we would define an active client, Yes, we've seen an increase in the first quarter. We've seen that more people have been active. On the one hand side, it's the usual uptake you have, given that also for seasonal reasons that the first quarter is always good. It has been maybe slightly ahead of that. But we're still talking order of magnitude of around, on a quarterly basis, 30%, 31% of clients having done a trade. So, yes, it has increased a little bit. But by no means, obviously, it's back to what we've seen in the hype phases or anything like this. But a good two, three percentage points higher than the last three quarters.

And with respect to the tweaked guidance reasons, I think the larger sector indeed has the cash positions we hold within our bank on behalf of our clients, because we certainly expected a lower number when we started the year but it really seems that the mix is also turning nicely in our favor and I hope at some point on the call or one of the future calls I will be able to comment on a more profounded pickup in client activity but for today it is what it is sequentially there is a nice trend which seems to be in line with some of the competitors that publish numbers But let's make no mistake, we are still down on a year-on-year basis and that's something that we would like to address going forward.

Super, thanks. The next question comes from the line of Christoph Grolitsch calling from Barenberg. Please go ahead.

Good morning and thanks a lot for taking my questions. A few from my side, please. First one on the buyback, and I fully appreciate that you can't give detailed numbers here, but just a bit more broadly on the plan for execution, if you could let us know what you're thinking there. Will that be in, let's say, a roughly linear way, or are you trying to do that in a more opportunistic manner, and really depending on where the shares are at the moment, basically buy more or less shares back? Then the second one, if you could give us a quick update on the situation with the Special Commissioner of the BaFin, if there's anything to report regarding the timeline, if there's any update. And then thirdly, maybe also a bit of just an update on what is the pipeline with regard to commercial initiatives, what are the things you're working on, on what can we expect in the coming months and quarters? Thank you.

On the buyback, we, as alluded to in my speech, we cannot pinpoint a number today. We have to finish some of the considerations that I introduced in my speech. However, what we of course would like to share is that it's not about dividing 10% of the shares outstanding by five years as allowed by the German Securities Act. That's not the point. But as soon as we have finished it, we will let you know. On the special commissioner, there is luckily no updates, no changes. No news is good news. And we continue to be on track to finish the final tasks to allow the special commissioner to review and wrap up his mandate. And we today expect that to happen in the summer as we have communicated over the past quarter. So thankfully, no new updates there. And on the pipelines of potential commercial products, I think Stefan, I and the management team will take some time to make sure that we have a full grip on the potential timelines. So we are today a bit hesitant to present data on that. We will come back to you at some point over the coming months, but we are clearly seeing 2024 as a transitionary year in a way that the regulatory issues are thankfully largely solved, not all of them, but most of them, and the commercial angle can slowly creep into our company, which we are looking very much forward to. That's all very clear.

Thanks for that. If I could just have one quick follow-up on the The marketing budget. So based on what you've been saying regarding the budget for the year sounds, yeah, it will be more or less flat compared to 2023. If I look at the Q1 number, that was down quite meaningfully. So do I understand correctly that the marketing spending will have a somewhat different seasonality compared to what we've seen in the previous years with this strong skew towards Q1?

Not necessarily. I think the biggest change is that we started last year to shift away from brand marketing. Brand marketing was an important element in our corporate strategy that we initiated five years ago when our name was not broadly recognized in the general demographic of the respective countries. We have reached levels where we last year decided to step back from that and those were very costly endeavors. We have exited our sponsorship in Spain with the soccer club FC Sevilla and we announced that we will terminate the main sponsorship with the German soccer club in the middle of the year. Those are marketing euros which will be available for other means if needed. So we will rely more on targeted marketing, affiliate marketing and other methods for 2024 compared to last year. So we think it may have two elements. On one, we can reduce our clients' acquisition costs, a trend that is clearly visible in Q1. And either that trend continues, or we will be able to simply find more clients that we are willing to pay 100 euros for. And then the number of clients that come onto our platform will be higher. So what we will not do is that if client growth should come, we will not limit ourselves to, you know, a fixed budget in marketing. But as of today, I think what you just said is pretty much what we expect.

Great.

Yeah.

Thanks, Ben.

And good luck to Frank. Thank you. As a final reminder, if you'd like to ask a question, please press star one now. The next question comes from the line of Andrew Lowy. Please go ahead.

Hi, guys. Thanks for taking the question. I hope the line is okay. Two quick ones from me. Firstly, are you willing to share your assumptions about the deposit balances for the rest of the year? And then secondly, we previously backed out from the guidance in February. that you could be talking to commissions per trade of 4.35, but on the conference call you seem to suggest that that was a bit too high. Is that still the case for the rest of the year? Do you expect commissions per trade to come in below that 4.35 figure? Thanks.

Thanks, Andy.

Actually, once I've given you the answer to the second question, I'd like you to repeat the first one, which didn't come through clearly. So when it comes to the revenues per trade or the commissions per trade we've seen in the first quarter, they have clearly been quite positive. One element that's mentioned is, of course, the higher share of U.S. volume within So if you were to assume that we would continue to see similarish volume increases in U.S. trading in the following quarters, then I think a number like 435 might be reasonable. But of course, it still depends on that variable as well.

And then, please, could you repeat your first question, please? Sure. Sorry about that. Hopefully this is better.

I just wondered if you were willing to share your assumptions about the deposit balances for the rest of the year. You obviously previously guided to 3 billion, which seemed quite low, and it's coming a lot higher. So any guidance on what your guidance assumes would be great.

Yes. We started the year with an assumption of approximately 3 billion euros. And we are now at the end of April, and the number continues to hold steady at 3.5, 3.6. So we clearly have to look into our eyes and bring that up a little bit.

And that's also the main reason as to why we moved in our guidance range from the lower to the upper half.

OK, thanks.

are no further questions so i will hand you back to your host to conclude this conference thank you thank you very much and thank you all for for your participation um and obviously if you have any further questions i'm happy to to help um and thank you also from the name of the the management team here um so thanks again and have a great friday speak soon bye bye bye

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