How are energy investors positioned?
Flatex DeGiro reported record revenues of €480 million for the fourth quarter of 2024, marking a 23% increase from the previous year. The company’s net income surged by 55% year-over-year. The earnings call highlighted strategic expansions and product innovations, including the launch of crypto trading and plans for securities lending. According to InvestingPro data, the stock has delivered an impressive 161% return over the past year, despite recent market volatility.
Key Takeaways
- Record revenues of €480 million, up 23% year-over-year.
- Net income increased by 55% compared to the previous year.
- Launched new crypto trading platform in December 2024.
- Reduced employee headcount by 4% to control costs.
- Expanded customer base to 3 million, with 421,000 new customers in 2024.
Company Performance
Flatex DeGiro demonstrated strong performance in Q4 2024, with revenues exceeding the previous COVID-19 peak by 15%. The company maintained robust EBITDA margins between 40-45%, showcasing efficient cost management. InvestingPro analysis reveals a GREAT Financial Health Score of 3.05, with particularly strong growth metrics. The company operates with a moderate debt-to-equity ratio of 0.1, while maintaining a healthy current ratio of 1.93. The expansion into 16 countries and a growing customer base of nearly 1 million active traders underscore its competitive edge in the European market.
Financial Highlights
- Revenue: €480 million (23% increase year-over-year)
- Net Income: 55% increase year-over-year
- EBITDA Margins: Maintained at 40-45%
- Customer Base: 3 million total, 421,000 new in 2024
Outlook & Guidance
For 2025, Flatex DeGiro projects revenue growth within ±5% and anticipates up to a 10% increase in net income. The company is targeting a 10% revenue CAGR and a 20% earnings CAGR by 2027, driven by ongoing product diversification and market expansion. Investors should note that InvestingPro has identified several key factors affecting the company’s valuation, including its high EBITDA multiple of 22.72x. Get access to 8 additional ProTips and comprehensive valuation metrics with an InvestingPro subscription, with the next earnings report scheduled for March 13, 2025.
Executive Commentary
CEO Oliver Behrens emphasized the company’s ambition to become Europe’s leading investment platform, stating, "Our aspiration is to be Europe’s leading investment platform to build wealth." He also highlighted the importance of customer satisfaction, noting, "If you do good for customers, you do good for shareholders and employees."
Risks and Challenges
- Economic Uncertainty: Potential macroeconomic pressures could impact customer investment activity.
- Regulatory Changes: New regulations in the financial sector might affect operations.
- Market Competition: Increasing competition from fintech and traditional banking institutions.
- Technological Integration: Challenges in harmonizing IT platforms across expanded operations.
Flatex DeGiro’s strategic initiatives and robust financial performance position it well for future growth, despite potential market challenges.
Full transcript - Flotek Industries Inc (FTK) Q4 2024:
Achim Schreck, Head of Investor Relations, Flatex DeGiro: Good afternoon. Welcome, everyone. Thank you for dialing into our presentation of the preliminary results 2024 as well as our update on our strategic priorities. My name is Achim Schreck. I’m heading the IR function here at 5x2zero.
And before we dive straight into the presentation, let me do a little bit of housekeeping first. Firstly, I’d like to welcome our speakers today. We have with me Oliver Behrens, our CEO since October as well as Bernon Janos, our CFO, who’s been with us now for ten years. When it comes to the agenda, our setup is as usual that we would like to guide you through our preliminary single items worth highlighting in the P and L before we go into the outlook, which will both be presented by Benon. Oliver will then follow-up with the strategic priorities, which we have communicated yesterday evening as well as this morning and our roadmap for achieving our midterm guidance in 2024.
As today’s presentation is open for all analysts and investors, we’ve opted for taking questions via the Q and A tool you see here in the webcast, and we highly encourage all of you to make active use of it already during the presentation. Following the presentation, we will take a short fifteen minutes break before we then go into Q and A. And during the Q and A process, we will then also take the liberty to group similar questions into one in order to make sure that we get through most of the questions in the time available. For that reason, please accept that we will not be able to read out individual names to the questions. I will repeat the housekeeping for the Q and As once we get to it.
But now without any further ado, I would like to hand over to Oliver for some introductionary remarks, please.
Oliver Behrens, CEO, Flatex DeGiro: Thanks, Anat, Achim, and also a very warm welcome from my side. Thank you for joining us today. My name is Oliver Behrens, and as Achim mentioned, I joined Flat Exterghero as CEO in last October. While it is obviously a great pleasure to stand in front of you today and open my first appearance by pointing to a record year in revenues and earnings, it goes without saying that this is more than anything the success of my colleagues in the management board and more than 1,200 colleagues across the firm who have greatly delivered in times that were not always very easy. To some extent, we made our lives harder ourselves by not keeping up with regulatory requirements in the past, but we have largely rectified this by now.
With the mandate of the Special Commissioner ending in September and Baffin reducing our SREP by 150 basis points in December, we are clearly on the right track. And following this right track, we have the capacities to again focus more on commercial topics, our customers’ needs and how to better serve them. The launch of crypto trading has been a first step, but only one of more to come. This is why, and after some intense first month at the company, I’m very excited to also share our strategic priorities and vision for Flat Ex Degiro as we look ahead to 2027. These strategic priorities will guide us over the next three years, enabling us to continue to deliver value, especially to our customers.
And when you do good or when we do good for our customers, I’m convinced that you are also doing good for your shareholders and employees as well. Our aspiration is to be Europe’s leading investment platform to build wealth, and our strategy to get there is to build on three core pillars. We will expand our existing business, diversify our product and service offering and increase operational efficiency. Please have a bit of patience. I will dive deeper into these three pillars later on.
The opportunity we have with Flat Ex Teshero is highly attractive, and I’m a very realistic guy. From forty years in the financial industry, I know that this is not a walk in the park. We’ll have to work hard for it to materialize, and there might be some bumps along the way. But the ambition we have set ourselves for 2027 to grow revenue by more than onethree and thereby to almost double our net income is what the whole management team is committed to delivering. Based on the individual initiatives I will provide more detail on later.
But for the moment, let me close my introductory remarks here and hand over to Benon first to present the preliminary 2024 results. Thank you. Thank you, Oliver.
Benon Janos, CFO, Flatex DeGiro: Good afternoon, everyone, also from my side. Many thanks for dialing into today’s presentation, and I also very warmly welcome you. I’m very pleased to present over the next few minutes our strong preliminary results for the fiscal year 2024 to you. Please do note that these figures are still preliminary. The full and audited annual report 2024 will be published on March 26.
We have clustered the presentation of our 2024 preliminary results in six buckets, namely customer growth, commission income, interest income, revenues, costs and earnings and the outcome of our 2024 guidance and of course, what to expect for 2025. Please note that in the interest of time and focus, we will not go through all slides that were uploaded in the presentation this morning in full depth. That’s also particularly true for the Q4 performance slides, which you’ll find in the appendix and will not be part of my presentation today. We will revert to the usual financial results format with our Q1 twenty twenty five quarterly figures, but this time, the focus is on our three year outlook in addition to a record fiscal year 2024. First, let’s take a closer look at our customer growth metrics for 2024 on Slide eight and Slide nine.
I’m pleased to report that our monthly customer growth in 2024 consistently outpaced 2023 with a significant acceleration observed in the fourth quarter. While the peak in Q4 surely was supported by more market activity around the U. S. Election, the general trend clearly underscores the effectiveness of our strategies and the growing demand of our offerings across Europe. For the full year, we achieved a remarkable growth of 421,000 new customers, representing a 24% increase over 2024 sorry, over 2023.
Moreover, we have made substantial progress in optimizing our customer acquisition costs. In 2024, our acquisition cost per customer was which is a 24% reduction compared to 2023. This improvement reflects our ongoing efforts to enhance efficiency and maximize the return on our marketing investments. As you might have seen earlier, we have reached a significant milestone with our customer base now exceeding 3,000,000. Our customer base has grown by 1,000,000 over the past three years.
This consistent growth reflects annual rates ranging from 13% to 16%, showcasing our consistent ability to attract and retain customers year over year despite a more demanding base effect. Also, with these results, we were able to continue our industry leading customer growth with a compound annual growth rate of 14% over the past three years. It’s worth noting that probably only one non listed peer has demonstrated stronger growth during this period. However, this peers growth is mostly driven by its pivot from Neo Brokerage to Neo Banking. Despite all challenges over the last three years, as you can see on this chart, we have constantly performed top of the industry in relative terms and given that we meanwhile have achieved the largest customer base, even more so on absolute numbers.
Of the peers you see on this graph, we are the only player not bound by one or a small number of countries operating in, but rather taking on Europe as a whole. Let’s turn our attention to our active customer base. In Q4 of twenty twenty four, we achieved the largest active customer base in our history with close to 1,000,000 customers actively trading. Please note that we define an active customer here as a customer that is performing at least one trade per quarter. The share of active customers per quarter has also shown a positive trend, slightly increasing to 31% in Q4 of twenty twenty four.
And while the share has been pretty stable over the last two point five years at around 30%, we clearly do see some room for improvement, to which we will also come back later in our strategic priorities. Now let’s move on to the development of our commission income. First, as you can see on Slide 13, we have maintained a stable range of 20 to 25 trades per customer per year on average over the last two point five years. Why am I referring to two point five years here like on the customer activity chart before? Because the first quarter of twenty twenty two and to a much lesser degree, the second quarter of twenty twenty two has still been unaffected by negative external factors such as the strong increase in inflation and the central bank’s reaction to it by hiking interest rates.
As one would expect, trading activity has been higher at Flatex, though we observe very similar trends across both of our brands. Our customer base at Flatex is a bit older and therefore, in general, wealthier and trading savvier, which explains the difference to the hero. Let’s now examine the growth and the number of settled transaction across our brands. Our growing customer base has been a key driver for our 11% increase in settled transactions. Notably, our performance in 2024 has outpaced 2023 with accelerated growth particularly evident in the second half of the year.
The growth in transactions was also supported by external factors such as, for example, the increase in volatility in financial markets around the U. S. Election in November of twenty twenty four. Moving on to the next slide. We saw a notable increase in our average commission per transaction driven by several key factors.
Firstly, the price adjustments implemented in May of twenty twenty three at De Hero have positively impacted our revenue from the third quarter of twenty twenty three onwards. Additionally, a favorable product mix and a higher share of U. S. Trades have contributed to this growth. The latter being particularly visible in our high Q4 numbers.
It’s also important to note that the first quarter traditionally shows higher commission per transaction due to seasonal effects. This is driven by the booking of certain annual fees that are typically charged in January or February each year. In summary, all these factors combined have led to a substantial growth of 20% year over year, reinforcing our strong financial performance and positioning us well for future success. Now let’s move on and focus on interest income, our second most important revenue stream after commission income. In 2024, again, we have seen impressive net cash inflows onto our platform amounting to a total of billion, a 47% increase compared to 2023.
We saw positive net cash inflows of more than EUR 500,000,000 per month on average in 2024. ’90 ’5 percent of these inflows were invested in securities, up from 91% in 2023. Additionally, we have observed an increase in cash per customer in 2024, coinciding with falling interest rates. This trend has led to a 17% increase in cash under custody at year end. As a result, we now have over billion of cash assets our customers entrust us with on which we are not paying interest ourselves.
A consequent strategy that has been in place since inception of Flatex almost twenty years ago. Let me quickly remind everyone how we use these billion of cash under custody to generate interest income. We currently redeploy around a quarter of the cash volumes back onto our platforms to provide fully collateralized margin loans to our customers. Our margin loan book had a volume of billion at the end of twenty twenty four and has significantly benefited from our expanding customer base and the additional access provided to the hero customers. The average interest rate for these loans has also increased in 2024.
Of the remaining cash under custody, we keep most of the funds overnight with the German Bundesbank. Although interest rates fell during the year, they were still 9% higher on average than in 2023. To sum up, we have seen growing volumes in our interest income as well as rates in all relevant areas, resulting in a 32% increase in interest income to million in fiscal year 2024. Obviously, there will be some real headwind with regard to the rates in 2025. But I’ll come to that in some more detail when I’ll present our outlook for this current year.
Let’s first finalize the full revenue picture before we discuss costs and earnings for 2024. In total, we generated the highest revenues in the history of Flat Ex The Hero in 2024. Revenues of EUR $480,000,000 exceeded previous year’s numbers by 23% and are a good 15% higher than even the previous record seen during the COVID mean stock hype year of 2021, where we posted EUR415 million in revenues. The share of interest income in revenues has risen continuously in recent years, but this trend is not likely to continue this year. Other operating income is mostly related to IT services and typically a smaller position for us.
In 2022, it was artificially boosted by the non operating reversal of provisions for long term variable compensation. Although the underlying business included in other operating income has played a minor role over the past years, this should change in the future. Oliver will further elaborate on this when detailing our strategic priorities. After a detailed review of our top line, let’s move on to costs and then earnings. On this slide, we have portrayed our different cost items and their development over the past years.
Let me dive a bit deeper into the different drivers for each cost item. It is clear to see that our operating expenses have gone up quite considerably over the year, especially personnel expenses and admin expenses, a trend we plan to reverse in 2025. Personnel expenses increased by 19% year on year to EUR 116,000,000. Salary increases as well as the hiring of additional employees over the course of 2023 actually in the context of remedying regulatory findings led to this increase in personal expenses. Please do note that our personal expenses already include EUR 5,000,000 of provisions for measures planned in 2025.
We have also capitalized some EUR 2,000,000 less of development costs this year. In 2024, we fulfilled our commitment to keep the number of employees at year end below the level we started with in January. We ended the year with twelve fifty three employees, some 4% less compared to the thirteen oh one we had on December 31 in 2023. For 2025, our commitment is now to go a bit further and keep the personnel expense line in the profit and loss statement at or below previous year’s level. These provisions are one important element to get there.
On marketing, we have spent some 7% less despite an acceleration of customer growth. With a total marketing spend of million, our average cost for customer acquisition fell significantly to compared to in 2023. Other administrative expenses increased to EUR 61,000,000 in 2024 compared to EUR 49,000,000 in 2023. The increase is mainly attributable to higher IT costs as well as higher professional services, legal and consulting costs. They were partly related to projects in connection with regulatory requirements and helped us to successfully close the last severe BAF and findings, which led to the termination of the Special Commissioner’s mandate at the September.
In sum, and I said that at our Q3 call already back in October, our admin expenses are up to million too high. We plan on reducing them with a focus on lowering expenses for professional services, legal and consultancy fees. As a side note, being a regulated bank requires various fees to be paid that are levied on the actual size of the bank, whether it is on balance sheet or customer deposits. So we do have a natural tendency to a higher admin costs line as we successfully grow. So we have to work twice as hard to bring these costs down.
Let’s move to our orders. EBITDA margins were between 4045%. In addition to the already mentioned one off items in the personal expenses, I. E, the EUR 5,000,000 provision for personal measures in 2025 and the EUR2 million lower capitalization of development costs, we also booked an additional EUR2.5 million depreciation from streamlining IT developments this year. So combined, that’s a EUR 9,500,000.0 pre tax effect or approximately EUR 6,500,000.0 post tax.
In other words, our record net income of million could have been noticeably higher. However, this more prudent and long term oriented approach served and will continue to serve us well. Before we close the chapter for our preliminary 2024 results, let’s see how we have performed versus our 2024 guidance. We started the year with the guidance of revenue growth between 515% and net income growth of 25% to 50%. We have raised both to the upper end of these ranges after a good and solid first quarter.
We increased the revenue guidance further after the Q3 figures to slightly above the upper end. With the now presented numbers, we have exceeded both, driven by a fourth quarter that was clearly better than anticipated due to the lasting effect of the U. S. Elections. Revenues grew by 23% year on year and net income increased by strong 55% year over year.
With these results, top line was slightly ahead of most recent market expectations, while net income was a tad below. But I guess this can be mostly explained by the one off items I just described in detail to you. With this, I will now close our look back on the past business year and have a quick look at our expectations for 2025. We expect an overall mixed picture with growth in commissions income compensating for a decline in interest income. At the same time, we will focus on bringing down costs as mentioned previously already.
This means that we expect the top line in a range of plus, minus 5% with some more optimism on the bottom line where the range goes up to plus 10%. While our guidance is based on revenues and net income only, you also find on this chart some key assumptions we have taken in order to get to these numbers. Some of these assumptions might be considered conservative by some, such as keeping trading activity and levels of cash under custody only stable despite recent numbers. As mentioned before, staying prudent and conservative has served us well, and we would like to keep it that way. Markets can turn quickly, things can change.
We have a meaningful amount of interest income headwind to compensate. Now I’m very pleased to hand back to Oliver, who will walk you through our strategic priorities for the next three years. Over to you, Oliver.
Oliver Behrens, CEO, Flatex DeGiro: Thank you, Benon. Before going into our upcoming strategic priorities in some more detail, allow me a minute to put in context context where we currently stand. The last three years have been quite challenging for us, both from the perspective of a rather dull trading environment that at least was compensated by our ability to increase our interest income, but also when it comes to our internal homework, we had to do and have done. We are therefore in a much better place today. There are still some things left to be done, for example, with regard to the last remaining less severe findings from the Baffin audit, And we will do them thoroughly.
So maybe the deck is not yet 100% clean, but it’s definitely not slippery anymore so that we can start running on the deck again instead of tiptoeing around. And running is clearly the faster way of getting us to our next milestones. So what are we running towards? Interest rates are expected to come down further in 2025 before stabilizing in 2026. That will cost us some interest income we have to compensate for this year as Benon mentioned in the outlook for 2025.
At the same time, lower interest rates are generally good news for equity markets. But we don’t want to rely on this. We want to be in the driver’s seat to accelerate our growth. To do this, we will enhance our commercial focus, improve organizational setup and bring the cost down in areas where they have been bloated. But let me also be very clear here.
Yes, this will have a positive impact on revenues. Yes, this will have a positive impact on earnings. And yes, this will likewise be beneficial for our shareholders. But at the core, this is about becoming Europe’s leading investment platform to build wealth. This is the positioning we will claim for Flatex de Hero.
The rest will follow from it. Not the other way around. In a fast paced industry, you constantly need to deliver for existing and future customers and never rest on historic laurels. If you look at the strategic opportunity, there are three categories. The first category is focused on making sure we as an organization are fit for growth and create the high financial leverage that one would expect from a growing online platform business.
Ensuring that we are running in one harmonized IT platform is key here. Second, there is an already existing huge potential which are not fully we are not fully utilizing. We have more than 3,000,000 customers, but the share of those who actively trade in any given year is actually less than half of this. And the share of highly active customers that generate 80%, ninety % of our revenues is comparably small. That might be normal in our industry, but we want to put this the business on a wider, more stable basis.
Geographically, we have already started to diversify the business operating in 16 countries instead of just The Netherlands and Germany. And some markets are doing really well and have grown to quite some size. Especially in those key countries, we need to increase our local presence to ensure we properly understand market differences and serve special local customer needs. And finally, in this category, there are certainly opportunities in our treasury activities when I look at the billion of cash we can work with. In the third category, you have products and services.
We don’t have but will launch over the next three years to enhance our offering. That’s purely brokerage related on the one hand side, but it also includes revitalizing one of our legacy businesses, which is currently kind of hidden in the other operating income, namely business process outsourcing, where we basically can offer non retail banks a solution to collect retail deposits. We call this deposits as a service, if you like. And albeit it’s a business we in assets already have. It’s in this second category of new products as we are talking about utilizing the unique strength of a legacy side business to grow it into a relevant business line.
We are simply seeing a lot of growing demand for the service, and we are able to supply to the demand with a little extra effort. Product and service launches are obviously driven by customer needs. At the same time, finding ways to increase our share of recurring revenues is also something we constantly have in mind. For the next few minutes, I would now like to dive a little bit deeper into these three categories and put some more flesh on the bones I’ve just thrown at you. Increase efficiency.
Let me start by laying the foundation for what is the basis of every successfully growing business, an efficient organization and what we will focus on to make the most out of this future growth. As Binon mentioned in his comments on our cost base, it currently is a bit too high. There are good and valid reasons for it: the acquisition of Tejiro, our strong growth, the Baffin findings, which obviously were homemade. But we are at a point now where we simply need to reverse this trend. Some cost reduction has already been initiated and were visible in our cost base declining from Q3 to Q4.
This we need to absolutely continue, and this is largely related to admin expenses such as legal and consultancy fees. But we also need to challenge the general relation between head count revenues and profits. If you just simply compare our revenues per employee or our net core income per employee with a wider peer group, we don’t look too good. In some areas, the growth measures I just described will help us to also grow into the organizational structure that has already been created. In other areas, we will have to do a bit more on costs.
And Binan mentioned already that our accounts for 2024 already include some million in provisions for such measures. Will this be enough to fully close the gap to peers on revenues per employees? Probably mostly, yes. On net income? Not.
As our business setup naturally requires some higher costs in marketing, for which in return we should also expect to continue to see industry leading growth. Talking about ballpark figures here, we would expect to be able to keep our operating costs very much in check over the next three years despite our expected top line growth. Reduce complexity. Reducing complexity is also the key word for my last slide on this strategic category. We have already communicated that we are in the process of switching from a German Aktsingersehrlschaft to a European SA.
This will give us more flexibility, but most of all, just simply a much better expression of our DNA as a European leader. We aim to switch to the SA already at some point during the second half of twenty twenty five. Lastly, we are also successfully getting rid of some legacy alternative credit and investment engagements that are not related at all to our core business. They were entered into mostly during the negative interest rate environment, but with the benefit of hindsight, not worth the effort and basically with zero yield over the last three years. Or to put it in perspective, we haven’t lost any money with them, but we can surely deploy the capital much better going forward.
Grow and strengthen existing business. In online brokerage, with a cost efficient organization, you can achieve quite some operational leverage, particularly in a fixed cost led setup like ours. But that’s only really fun when you also grow your top line. So how do we want to achieve that? Let’s start with the opportunities in our existing business.
Building on a strong customer base. Over the last three years, of which none was helped by unusually special market conditions such as COVID or MIMI stock hype, we have achieved a 13% to 16% customer growth every single year. Obviously, we want this trend to continue going forward. And even if we just add another 10% per annum, we will cross the 4,000,000 mark by client mark by the end of twenty twenty seven. Now you can just look back at the history and hope it will continue like this by itself, or you can define specific measures to substantiate your assumptions.
Of course, launching new products will make us more attractive to new and existing customers. But it’s also about improving what we already have. For example, we added another platinum ETP partner in Germany in January. We will optimize the search functionalities, the market data we provide and enhance portfolio analytics and charting tools, none of which is rocket science, but all of it is important. So is the general customer experience in the app, attractive offerings to various audiences and to also target them accordingly in our marketing efforts.
These efforts don’t just play a role in winning new customers. They are likewise important to activate or reactivate customers that are inactive today. So the dimensions we are talking about here is the share of active customers. In 2024, slightly less than 50% of our customers have done at least one trade one transaction. And there is a clear difference across the individual cohorts, which you can see on the slides, I.
E, the years in which we have onboarded new customers. It’s probably no surprise that during COVID years, we won a large amount of additional customers, which we never targeted in our marketing and which, therefore, basically came for free in addition to the customers we would have normally won in those years. Clearly, those three customers have a lower quality for us in the sense of being less active and thus diluting for the group wide activity rate. What is quite encouraging to see is that already the last two cohorts, I. E, new customers we won in 2023 and 2024, show an above average in those customers that might not have done a transaction but still have meaningful assets on our platform.
On the one hand side on the other hand side, we will also optimize our communication processes to engage with customers on a more personal level so that a higher share will not even become inactive in the first place. More specifically, looking at individual countries, you see that the top six countries account for roughly 80% of our customer base. Half of this customer base we have in our home markets, The Netherlands and Germany. But also in growing markets such as Spain, Austria and France and Italy, we have built a present that makes it worth adapting a more localized approach in these countries. That starts with tailoring our offering and communication to local needs but also stretches into building local relationships with partners and regulators.
In the first step, we are talking about a rather limited local staff representation. In addition to our existing customer base and market presence, my experience of the last forty years tells me that we also have more potential when it comes to our treasury strategy. From the roughly $4,000,000,000 of customer cash at Flatex De Giro on which we are paying no interest, a good 1,000,000,000 is used for fully collateralized margin loan business overnight at the German Federal Bank. That’s great to avoiding risk. And to even get some interest on it, but it’s probably not the most efficient way.
We are looking into slightly more active strategies without abandoning our fanta mainly risk averse approach. But with the significant size of these deposits, even a single basis point of improvement on average already would result in a €250,000 more pretax profits. And these funds, we would also like to grow further by offering term deposits to our customers in the future, by which we would again extend our product offering for customers without cannibalizing existing business, at the same time strengthen our maturity profile. With this, I would conclude the category of growing and strengthening the existing business and switch to the new product ideas and how to further diversify our offering. It was essential to launch a new product very late in the last year and very early after my arrival where the rollout of crypto, which was the first product, has started in December.
And the pickup so far has been in line with our initial expectations. Our offering does stand out in the German market as we are giving full transparency over the total cost for a crypto trade. With most customers with most peers, you will find some marketing claims such as no commission, just the spread. But then this so called spread is significantly bigger than most people would expect. With us, customers know it will be between zero point six and zero point seven of the volume.
And that is that said, this is a significantly more attractive pricing compared to what you would otherwise pay as a customer. For the sorry, it was a busy slide. For the operational setup, we’ve decided for a partnership structure with experts in the corresponding fields, increasing our time to market and also lowering the operational and liability risk at our end. With the launch of crypto, we now offer our customers the trading in almost all major asset classes in our platform. We may look into still missing products such as foreign exchange further down the road.
For our international rollout, we have already submitted our Mika license application to the Baffin and expect to hear back from them at the end of this quarter. We are in a very good dialogue with them to get us there. As you can see from our road map, we will concentrate first on the geographical rollout before we extend the product offering. The next go lives are planned for Flatex Austria and Tejiro in The Netherlands, France and Spain, with further Tejiro markets to still follow this year. Other new products one other new product we have already spoken about is securities lending, by which we would allow our customers to lend out some of the stocks and ETF they are holding to generate additional income for them.
The focus at the moment is on De KIRO as the process is significantly easier under Dutch law. From today’s perspective, we would estimate the approximately 20% to 30% of the De Giro assets are of particular interest for specialized security lending desks at global investment banks. So that would be something like billion to billion today, on which the generated basis point returns were to be split between the customers, us and the partners required to facilitate the process. A more basic looking product is savings plans, where we frankly have to do some catch up to ensure that we are offering our customers a state of the art product, including also the option to include single stocks into our savings plan for which the handling of fractional shares is required. In Germany, we have an ongoing political debate about adding capital market based elements to the pension system.
The former government made some promising proposals in that direction at the end of twenty twenty four. And we believe that the new government, however, it will be formed now after last Sunday’s election, will pick up this topic again with some priority. It is therefore absolutely crucial to have a strong savings plan offering in the market as soon as such pension accounts become reality. For an online brokerage platform like Flatex, the attractiveness will first and foremost lie in the long term customer growth and the stickiness of these customers and their assets. The product itself, it will likely come with relatively low commissions, and the trading activity of these accounts will also probably be on the low side.
But the underlying effect of bringing millions of Germans more into contact with investing in capital markets must not be underestimated. More importantly, the government will most likely change its tone towards investing in capital markets, which will be beneficial for our overall business. However, while we are optimistic about it, let’s wait and see until the new government has eventually formed and what the concrete proposals are they will come up with. But this is not only a discussion in Germany that is held in Germany. There are an increasing need to address the pension gap or the unfunded pensions across Europe.
We are also planning to potentially add products that are tailored to clients with a lower risk category or lower risk appetite, such as structured deposits. While, strictly speaking, these are not saving plan products, we have added them here as well as they are addressing a very similar target audience. Deposits as a service. The last point in relation to new products is business process outsourcing, what I have called deposits as a service earlier in my introductory remarks. For more than ten years, we are already offering our banking capabilities to nonretail banks that want to attract term deposits but don’t have the infrastructure to deal with thousands of clients.
It’s a white label solution which is seamlessly integrated into the partner bank’s market presence. It’s a relatively small business today, which forms part of our other operating income. And in a negative interest rate environment, it has frankly not been attractive to try to grow in this field. However, the market environment has changed, making it a lot more attractive today and not just against the positive interest rate environment. The general demand for sources of retail funding is rapidly growing in the European financial market, driven by changes in the European Capital Requirements Directive, but not all banks have the retail presence in Europe.
Our service offering will probably come quite handy for many players to comply with these new requirements in a fast and efficient way. After presenting all these measures, I still owe you a summary of what it means if we add together all the bits and pieces. We have intentionally decided to do this on the basis of 2027 numbers. By then, we expect to have the presented measures in full swing and can therefore consider a full year impact. So in summary, our ambition is to accelerate top line growth in our core banking business unit, also in non brokerage.
When it comes to business process outsourcing to help third party banks to attract term deposits from retail customers. Hand in hand with this growth, we will keep a close eye on costs, reduce complexity and further harmonize our IT landscape. While we focus on organic growth measures such as reduced complexity and harmonization will obviously also be very beneficial in case of any M and A opportunities should those arise. Delivering on these measures, together with the improvements we have already made over the last two years, We would expect to be able to also regain the full trust of the capital markets and to continue to close the gap of our valuation against peers. Financially speaking, we expect with these measures to be able to generate in 2027 revenues of approximately million and a net income of approximately million.
Comparing to our 2024 record results, this ambition equates to a roughly 10% CAGR on top line and 20% on earnings. Now let me quickly hand back to Beylon for a few remarks on our thinking about capital allocation.
Benon Janos, CFO, Flatex DeGiro: Thank you, Oliver. Twenty twenty four has been another strong year with a net income well over million. And I do understand that on the basis of our solid capital structure, there is quite some interest in better understanding our capital allocation policy going forward. As you know, in 2024, we have earmarked million or around 75% of 2023 profits for a small dividend and a share buyback program, which is still running for about two more months. So far, we have bought back a bit over 2% of outstanding shares and our AGM approval is for up to 10%.
So there still is ample room. However, over the last month since Oliver joined, we have been fully focused on our strategic priorities and developing a sound understanding of the potential over the next three years, which today we have presented to you. Before we can communicate specifics on timing and size of future capital allocation to shareholders, we will now finalize our annual financial statements. And on the basis of these additional measures, update our financial midterm planning, including our capital planning and risk modeling to ensure that we are not limiting our options in any way. Once this process and potential subsequent discussions with the regulator have been completed, we will be able to discuss any midterm policy on a solid factual basis.
Thank you for your understanding. Also, many, many thanks for your attention today. I hope Oliver, Achim and I have been able to give you a good overview of the Flat Ex Degiro’s development in the last business year and our strategic roadmap looking forward. However, we, of course, also want to give you the opportunity to ask any additional questions you might have on these topics. Maybe, Achim, over to you again, and you run us once more through the process for the Q and A session.
Achim Schreck, Head of Investor Relations, Flatex DeGiro: Thank you, Benon. Thank you also, Oliver, for this insightful presentation. As mentioned at the beginning, we are going to take now a fifteen minutes break. We have already received quite a number of questions, but please do feel free to continue sending in questions via the Q and A tool. We will then, as mentioned earlier, group them and answer as many of them as possible.
In case we were not able to answer all of them, don’t worry, we’ll then come back individually from the IR team, so myself and Laura. Thanks for your attention so far. We will be back at 03:30 Thanks again and see you in fifteen minutes. See you in a
Oliver Behrens, CEO, Flatex DeGiro: couple of minutes. Thank you.
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