Flow Traders Ltd

Hello, welcome to the Flow Traders first quarter 2026 Trading Update conference call. For the first part of the call, the participants will be in listen-only mode. Afterwards, there will be question and answer session. If you wish to ask a question, please press pound key 5 on your telephone keypad. You may also submit written questions via the form at the bottom of the player. I would now like to hand over the call over to Dictators. Please go ahead.

Thank you.

Good morning and thank you for joining FlowTrader's first quarter 2026 trading update presentation. As you may have seen, we published our trading update earlier this morning. I'm joined today by our CEO, Thomas Spitz, and our co-chief trading officer, Alex Stift, who will take you through the results. After our prepared remarks, we will be happy to take any questions you may have. Before we begin, let me draw your attention to the disclaimer on page two. As always, this presentation is for information purposes only. Any results will be discussed and audited. I will now hand over to Thomas for the trading update snapshot.

Thank you, Dick, and good morning, everyone. Let me start with a high-level overview of our quarter one performance. We delivered a strong first quarter, resulting in a net profit of 50.4 million euros and EPS of 1.15 euros. Our ETP value traded increased 27% year-on-year and 25% quarter-on-quarter, underscoring the healthy trading environment. Our total value traded grew 27% year-on-year. In the first quarter, we generated an NPI of €155.9 million, increased slightly by €1.8 million in other income, leading to a total income of €158 million. Our fixed operating expenses were 56.5 million euros in Q1, in line with our guidance of 220 to 230 million euros for the year. The EBITDA reached 72.2 million euros for Q1, with an EBITDA margin of 46%. We ended the quarter with 656 full-time employees, up from 635 at the end of 2025. Overall, we delivered steady I will now hand it over to Alex to walk you through the market environment and the original performance.

Thank you, Thomas, and good morning, everyone.

The global ETP markets have a strong momentum, with ETP value traded up 77% year-on-year and 23% quarter-on-quarter, setting a new record high. Implied volatility, measured by the VIX, was elevated compared to the previous quarters, driven by the geopolitical events in the Middle East. In terms of assets under management, there's a solid year-on-year growth of 19%. On a quarterly basis, AOM growth is more muted, though this is mainly caused by market weakness. ETP philosophy increased both quarter-on-quarter and year-on-year, which correlates with the increase in volatility, as you can see by comparing the two charts on the right. The overall fundamentals remain very supportive for continued long-term growth in the global ETP market. Here we discuss the fixed income and crypto market dynamics. In fixed income, US investment rates and high yield volumes showed strong pickups. Fixed income volatility stabilized in Q1 on the back of the trend of declining volatility, which peaked back in 2022. on the back of significant rate increases. Moving to crypto. Crypto markets saw continued declining trading activity after the peak in October last year. Bitcoin volumes are still slightly up, but in the overall crypto market, volumes are down. Global crypto ETP value traded decreased quarter-on-quarter, but showed material growth year-on-year underscored continued institutional adoption of crypto ETPs. Moving to our regional performance overviews. In Europe, we maintained our position as a leading liquidity provider in European ETFs, supporting liquidity both on and off exchanges. Our results came in higher than the previous periods, benefiting from increased activity in both equity and commodity ETPs. The Americas saw continued NTI increases compared to prior quarters, supported by increased ETF volumes and our ability to participate in larger transaction flows, following the increase in trading capital on our balance sheet. In Asia, overall ETF market volumes are up significantly year on year. We are still developing and expanding our Asian market presence, and as such, we're not yet able to fully capture this increase in volumes. though results are still off meaningfully quarter on quarter. We continue to view APEC as a poor growth region and continue to focus on strengthening the business. Moving to crypto, as mentioned earlier, the crypto market is still in a downturn, leading to lower trading volumes and fewer trading opportunities. On the positive side, we continue to see growth in tokenized real-world asset trading, reflecting a shift to 24-7 trading models. We are actively providing liquidity in tokenized equities and other real-world assets on a 24-7 basis, as mentioned in our press release in March. I'll now hand it back to Thomas to walk you through our NTI, cost base, and capital base.

Thank you, Alex. This slide illustrates our social goals in NTI relative to implied market volatility. Our investments in trading capabilities across regional and inter-classes continue to enable us to capture opportunities under varying market conditions. 1Q2026's performance is strong due to a conducive market environment, combined with the number of actions taken to expand our trading operations.

As shown on slide 8,

Fixed operating expenses were 56.1 million euros in Q1, an increase of 10% year-on-year and 7% quarter-on-quarter. These increases were driven primarily by high employee expenses and ongoing technology investments and are consistent with our growth paths. We delivered 46% EBITDA margin in Q1, underscoring the strength of our variable compensation model and our high operating leverage. We ended the quarter with 656 FTEs, reflecting targeted hiring to support our strategic initiatives. Fixed operating expenses guidance for the year 2026 is 220 to 230 million euros, driven by continued technology investment, selective headcount additions to support growth initiatives, and inflationary pressures. Turning to capital. As you need, trading capital is one of the core of our businesses, and since 2024, we have continued to strengthen our balance sheet. In October 2025, we secured a $200 million private credit facility and a $75 million revolving credit facility, significantly enhancing our financial flexibility. Both of them have not been fully deployed and will continue to optimize the allocation of this capital across our trading operations. At the level, trading capital increased by 36% share on year, reaching 1.01 billion 92 million euros, the highest level in the company's history. Shareholder's equity also reached a recall of 918 million, up 17% share on year. Return on average shareholder's equity is 23% for the quarter. Our continued capital expansion ensures that we can continue to optimally position and capture opportunities across asset classes and geographies, and we'll continue to support our diversification strategy. As a reminder, on the 23rd of June, we will be hosting our Capital Market Day. During our Capital Market Day, me and the rest of the leadership team will provide the market with an update on the business, as well as its strategy and our expansion plan going forward. Further details regarding the CMD will follow in due course, and we are looking forward to have the opportunity to introduce our updated strategy and meet with our investors.

Thank you. That concludes our prepared remarks.

We would now like to open the floor for questions, so operator, please go ahead. Ladies and gentlemen, we are now ready to take your questions. You may submit written questions via the form at the bottom of the player or press pound key 5 on your telephone keypad. If you wish to withdraw your question, please press pound key 6 on your telephone keypad. Our first question comes from Julian Dobrovolsi from Avian Ambro, Odo BHF. Julian, go ahead.

Good morning, gentlemen, and thanks for taking my questions. Congrats on the quarter.

I think it looks pretty good, but still I have a couple of questions just to understand some dynamics. The first one is on the U.S. market shares. This one, again, seems to be on the low side, 1.5% in Q4, marginally up to 1.6% in Q1. But if you look in the previous quarters, you were at about 2% in the U.S. in the ETP business. So I would appreciate if you could share additional color on why underperforming in the recent quarters. And also, how does that actually correlate with your ability to participate in larger transaction flows following the expansion of capital? I believe that's exactly what Alex just said during the presentation. So there's the first one. The second one is on the returns on capital. This one seems to be flat quarter over quarter, but technically, you had on hand the entire pool of trading capital available for the full quarter. That was clearly not the case for Q4, for example. So just wondering, you know, if anything has changed operationally that could answer the flat progression in the returns of capital Q1 versus Q4. And then on the P&L line items, A and B parts, on the A part, so we see another small impairment becoming a beautiful recurring item. Just wondering what the origin of it. And how can we make sure this does not happen in the next quarter? And the part B is the equity account in the investments. It looks quite volatile. This went from 4.5 positive in Q4 to minus 1.3 in Q1. I'm just wondering what's driving this vola in the general case. And also would appreciate related to that if you could speak about the underlying VC portfolio position that it has.

Thanks, Julian.

Thanks for the questions. I'll take at least the first two. So, on U.S. market share, indeed, we saw slight pickup quarter-on-quarter amidst a general rise in volumes. Our ability to participate in larger trades is not always, does that mean higher only since turnovers can also be large RFQ or OTC trades with counterparties that we previously could not do. The volumes in the US are highly concentrated to the mega cap ETFs, like Black Spy and QQQ, where our market share is low compared to other ETFs that require more diverse pricing capabilities. We are monitoring and making sure that our market share remains where it is. We don't necessarily target to increase it massively. We prioritize profitability in the U.S. over purely going for market share. Then on the return on capital question, the public numbers are LTM. So trailing ROC, so on the quarterly basis, it's slightly higher than the previous one. We see that we can deploy on peak days, can deploy the majority of the PCF and even on some day through the RCF. But given that we've increased our capital base now by almost 80% in two years, we know that we need a bit of time to optimize it further. And as we do that, we expect that we can continue to deploy it accretively, but also that we have more buffer to participate and to use it when volatility peaks. And on the third question you had on the impairments, there that's comparable to the previous quarters whereby We have certain token investments and that we had whereby, depending on the market, either we have a positive NPI and a negative impairment or the other way around. And typically, for accounting purposes, those sit in different lines. But this is the same as what we saw in previous quarters. And given the declining crypto prices, this is, there was a small positive NPI and a small impairment. comparable to the previous ones. If there's an increase in crypto prices, you expect it the other way around.

Understood. And then I also had a second part on the equity account, the counted investment, also quite some swings. Anything to flag the way you see the evolution of the VC portfolio there?

Yeah. So, Gini, in terms of the numbers specifically on this quarter, So that's mainly due to the venture capital portfolio where we're seeing that some of the investments where we're having a revaluation, well, not exactly revaluation, but an equity accounting where we see that there's a cost one that impacts the value, the carrying value of those assets.

The next question is about capital allocation.

The trading capital has risen. Is there room for dividends or buybacks in the future?

Let me take that one. There's currently no plan for new share buyback or reinstatement of the dividend as that would not be in line with the trading capital expansion plan that was implemented and communicated before. We will provide an update on that as well if there's any change to that.

The next question comes from Mike Werner from UBS. Mike, go ahead.

Thank you very much for the presentation and the opportunity to ask a question. I have two, please. One, you know, we saw a bit of an uptake in the headcount in the quarter. Can you just tell me, you know, where, you know, which areas you are hiring for, either regions or departments? within Float Traders. And then second, you were talking about, you know, improving the capabilities to deploy all the capital. What do you need to get to, you know, being, you know, fully operational from a capital allocation perspective with the new capital basis that you've built up in recent quarters? And how long do you think it will take to get there, I guess? Thank you.

Thank you. I'll take the first part of the question regarding headcounts. It is true that we have been increasing our headcounts, as mentioned and noted. Our focus at the moment is very much on the quantitative technology and related businesses. So the headcounts are more focused on a number of technology initiatives. AI initiatives and quantitative initiatives that are complementary to existing business and will accelerate our existing business and that we can now use much more or much more efficiently as we are deploying more capital as well and I will let Alex explain the second part.

Yeah, regarding the capital deployment. So what we saw in March, when it was very volatile, then we could deploy everything. So there we have a, you know, for ETF business, having a diversified trading strategy. So from ETFs to fixed income and FX to crypto allows us to and also across the regions allows us to optimally deploy it where we can. We are, of course, a market maker, so we cannot, we typically respond to opportunities that happen in the market rather than take on positions actively. So this flexibility allows us to provide liquidity even in this, when volumes and activity and volatility increases. to our counterparties and to the exchanges. And we're confident that as time passes, we're able to fully absorb the PCF that we've added alongside with the increase in retained earnings. And I think when we added the PCF as a six-year facility, we have now had it on the balance sheet for five months. I think we're quite pleased with how quickly we've been able to increase trading activity in certain parts, and we continue to optimize it further in the coming quarters.

Thank you.

Our next question, are you expecting operating expenses to continue growing over the next quarters?

As Kamal explained, we continue to invest in our growth through investment in technology as well as starting with add-ons of subject matter experts, which results in higher costs as we experience this quarter. But as also guided, we expect for the year to fix the operating expense to end up at in a range of 220 to 230 million. I believe that's what the expectation is for the rest of the year.

So, we don't provide any further guidance beyond that.

Just as a reminder, you can press pound key five on your telephone keypad at any time to ask a question. You may also submit written questions via the form at the bottom of the player.

Thank you.

And with that, I will now turn the call back to Dick for any closing remarks.

Thank you, operator, and thank you all for joining today's call. We appreciate your continued interest in flow traders and look forward to speaking with you again during our 2026 Capital Markets Day. This concludes today's presentation. Have a great day. Thank you.