ii view: steady Plus500 details strong first half

Shares for this provider of contracts for difference, or CFDs, sit on a dividend yield of close to 5%. We assess prospects. 

First-half trading update to 30 June

• Revenue up 48% to $511.4 million (£429 million)
• Adjusted earnings (EBITDA) up 63% to $305.3 million (£256 million)

Chief executive David Zruia said:

"Plus500 continued to outperform in the first half of 2022, supported by positive momentum achieved in recent years and by the power of our market-leading proprietary technology. We made significant progress in delivering against our strategic priorities, in particular the major growth opportunities in the U.S., where we continue to make substantial investment."

ii round-up:

Online trading company and provider of contracts for difference (CFDs) Plus500 Ltd (LSE:PLUS) today pointed to a strong first half operational performance, with both revenues and adjusted profit (EBITDA) expected to be ahead of current City estimates. 

Plus500's ability to attract and retain higher value customers was highlighted by the FTSE 250 company in aiding its performance, despite lower volumes across the financial industry during the period.

Plus500 shares rose by more than 1% in UK trading. They've been a steady performer since the pandemic recovery and are up by over 15% year-to-date. That’s similar to the rise for London Stock Exchange (LSE:LSEG), although contrasts with a one-fifth fall for the FTSE All World index year-to-date. 

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Relatively new operations in the US and a new advertising campaign helped push revenues for the six months to the end of June up 48% to $511 million (£429 million). Adjusted profit rose 63% to $305 million.

A new strategic position as a market infrastructure provider in the US futures market enables it to support institutional clients in their trading, clearing and settlement activities.

Overall new customers in the first half totalled 57,275, including 23,535 during the second quarter. Active customer numbers fell to 216,928 during the six-month period, down from 333,940 during the first half of 2021. 

Plus500 held cash of $950 million as of the 30 June, helped by high levels of cash generation. First-half results are scheduled for 17 August. 

ii view:

Founded in 2008, Plus500 today offers customers a range of trading products, including CFDs and share dealing, as well as futures and options. It is regulated in the UK, Australia, Cyprus, Israel, Japan, New Zealand, South Africa, Singapore, and the USA. 

For investors, costs for businesses in general are rising. Competition across the financial services industry remains high, while the total annual dividend over the last five years has proved volatile. That said, a diversity of both products and geographical markets is held. New customers continue to be attracted, while both revenue and adjusted profit are comfortably higher year-over-year.

On balance, and while the shares arguably remain for the more speculative investor, a historic and estimated future dividend yield in the region of 5% is unlikely to be ignored by income seeking investors. 

Positives: 

• Product and geographical diversity
• Attractive dividend yield (not guaranteed)

Negatives:

• Subject to regulatory changes
• Low volatility in financial markets can hinder performance

The average rating of stock market analysts:

Buy