Earnings call transcript: Flow Traders Q1 2025 sees net profit decline, stock drops

Flow Traders NV reported a decline in net profit for the first quarter of 2025, with earnings per share (EPS) at €0.84, down from €45.9 million in the same quarter last year. Despite strong net trading income (NTI) of €140.2 million, the company’s stock price fell by 19.31% following the earnings release, closing at €24.40. This decline was attributed to lower-than-expected profitability and increased fixed operating expenses. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.54 and has consistently paid dividends for 10 consecutive years, demonstrating long-term stability despite short-term challenges.

Key Takeaways

• Net trading income remained robust at €140.2 million, marking the third consecutive quarter of triple-digit NTI.
• Net profit decreased to €36.3 million, a significant drop from the previous year’s Q1 result.
• Fixed operating expenses increased by 15% year-over-year.
• The stock price experienced a sharp decline of 19.31% post-earnings announcement.
• Investments continue in digital assets and technology innovations.

Company Performance

Flow Traders maintained strong operational performance in Q1 2025, particularly in Europe and Asia, despite a muted performance in the Americas. The company continued to expand its trading capabilities across various asset classes and regions, with a significant focus on digital assets and technology innovation. However, the decrease in net profit and increased fixed operating expenses have raised concerns among investors.

Financial Highlights

• Net Trading Income: €140.2 million
• Total Income: €135.1 million
• Net Profit: €36.3 million, down from €45.9 million in Q1 2024
• Earnings per Share: €0.84
• EBITDA: €62.3 million with a 46% margin
• Fixed Operating Expenses: €50.8 million, a 15% increase year-over-year

Market Reaction

Following the earnings announcement, Flow Traders’ stock price dropped by 19.31%, closing at €24.40. This decline reflects investor concerns over the company’s decreased profitability and rising operational expenses. Currently trading at $28.60, the stock sits just 0.84% below its 52-week high of $34.06, suggesting resilience despite recent challenges. InvestingPro analysis shows the stock has demonstrated strong momentum over the past three months, with analysts projecting continued profitability this year.

Outlook & Guidance

The company has projected fixed operating expenses for 2025 to be between €190 million and €210 million. Flow Traders plans to continue expanding its trading capital and focus on leveraging technology to diversify revenue streams. The company remains optimistic about growth in electronic trading and digital assets. For detailed analysis and comprehensive insights into Flow Traders’ growth strategy and market position, investors can access the full Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.

Executive Commentary

Mark Johnson, an executive at Flow Traders, stated, "We are confident that such [triple-digit NTI] will be a regular occurrence going forward," emphasizing the company’s strong trading performance. CEO Mike Bruno highlighted the company’s strategic focus: "Our growth and diversification strategy has enabled the company to capture opportunities wherever they arose."

Risks and Challenges

• Increased fixed operating expenses could impact profitability.
• Market volatility and trading conditions remain unpredictable.
• Regulatory challenges in expanding digital assets trading.
• Competition from other liquidity providers in the ETP space.
• Potential economic downturns affecting trading volumes.

Q&A

During the earnings call, analysts inquired about the €10.5 million digital assets impairment and wage growth related to hiring subject matter experts. Executives also clarified trading conditions and market volatility, emphasizing the strategic importance of the APAC region in their growth plans.

Full transcript - Flow Traders NV (FLOW) Q1 2025:

Conference Operator: Hello and welcome to the Flow Traders First Quarter twenty twenty five Results Call. Please note this conference is being recorded. 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. I will now hand you over to your host, Eric Pend, Head of Investor Relations to begin today’s Please go ahead, sir.

Eric Pan, Head of Investor Relations, Flow Traders: Good morning, and thank you for joining FullTrader’s first quarter twenty twenty five trading update conference call. As you all have no doubt already seen, we released our trading update first thing this morning along with the leadership update. I am joined here on the call by Full Trader CEO, Mike Bruno, as well as our newly appointed co chief trading officer, Alex Keith, and Mark Johnson, who will run through this results presentation. Prior to detailing our results, Mike will share a summary of the leadership update. Afterwards, we will be happy to take any questions you

Mark Johnson, Executive, Flow Traders: may have.

Eric Pan, Head of Investor Relations, Flow Traders: Before we begin, let me draw your attention to the disclaimer on page two. Please be advised that if you continue to listen to this presentation, you are bound by disclaimer. Also, please note that the results we will discuss in this presentation are unaudited. With the formalities out of way, I would now like to hand over to Mike for his opening remarks.

Mike Bruno, CEO, Flow Traders: Thank you very much, Eric, and good morning, everyone, and thank you for dialing in. Prior to detailing the results, I would like to provide context in relation to my decision not to seek reelection as CEO for a full term at the upcoming AGM. After much reflection, I have decided to pursue my passion to increase my proximity to the emerging AI space and to contribute directly to accelerating the application of this technology to a broader array of use case spanning across the financial industry and beyond. I have become a strong believer in the potential impact of this technology both from a business and societal lens, and this is something I’m personally very passionate about pursuing going forward. To ensure a smooth transition and to support the handover to the best of my abilities, I will seek reelection until the 08/31/2025 at the AGM on June 13.

I’m immensely proud of what we have collectively achieved as evidenced by our strengthened position as a globally diversified trading firm. Equally, I take pride in the development and growth of our global leadership team. Cultivating and attracting talent has been a pivotal focus during my four years, and I’m thrilled about the current standing of this team. I have full confidence in Flow Trader’s future and the established leadership team as well as its ability to grow and become an even more significant force in promoting transparency, efficiency, and resilience within global financial markets. I’m also delighted to be joined today by Marc Jansen, who will also be nominated as Executive Director of the Flow Traders Limited Board and appointed as Co Chief Trading Officer alongside Alex Kieft, also appointed as Co Chief Trading Officer.

Now I would like to move on to sharing our first quarter results. The first quarter of twenty twenty five as a whole saw increased activity in the market trading environment, while volatility levels in the quarter were also elevated. Flow Traders’ ETP value traded increased by 24% in the quarter compared to the same period last year, outpacing the market’s 20% year over year increase and by twenty percent when compared to last quarter. Total value traded increased by 11% year over year and 4% quarter over quarter. Flow Traders value traded across each of our asset classes also saw corresponding increases that were largely in line with the increase in the total value traded.

We achieved a net trading income of €140,200,000 in the quarter, our third straight quarter of triple digit NTIs and only the second time in the company’s history. The strength in the quarter was driven mostly by increased activity in equity across Europe and Asia, offset somewhat by a lower contribution from digital assets when compared to the first quarter of last year, which benefited from the spot Bitcoin ETF launches in The U. S. Total income was €135,100,000 for the quarter when including a 5,100,000 loss in other income. As a reminder, other income reflects the unrealized gains and losses of our investment portfolio, which also includes digital assets holdings and can fluctuate from quarter to quarter.

In addition, we recorded a €10,500,000 impairment in intangible assets related to some of our digital assets holdings as the value of digital assets experienced pullback in the first quarter after a few quarters of increases. It is important to note that we hedged some of these digital assets holdings, and we saw a corresponding increase in our NTI as an offset in the quarter. However, given IFRS accounting standards have lagged behind the rapid adoption of digital assets, we had to allocate the gains and losses separately above and below the line. Fixed operating expenses in the fourth quarter were €50,800,000 an increase of 15 year over year and a 12% increase compared to the fourth quarter. The increase was to support selected hiring of subject matter experts as well as increased technology investments to further support our growth and diversification strategy.

Given our relatively fixed cost base and high operating leverage, we generated an EBITDA of €62,300,000 in the quarter, a 1% increase compared to the same period a year ago and a 46% margin. As a reminder, our variable employee compensation is set at 32.5% of operating results, which aligns employee incentives with those of shareholders. Net profit for the quarter decreased to €36,300,000 from €45,900,000 in the same period a year ago with a basic EPS of €0.84 given the aforementioned impairment and higher fixed operating expenses. The strong results this quarter despite the much lower contribution from digital assets serves further validation of our growth and diversification strategy as we were able to find opportunities in other asset classes. Will now hand it over to Alex Keefe, our Co Chief Trading Officer, to review recent ETP market dynamics on the next slide.

Alex Keith, Co Chief Trading Officer, Flow Traders: Thanks, Mike, and a very good morning, everyone. As shown at the top left hand side of this slide, market ETP value traded increased by 20% in the first quarter compared to the same period a year ago and by 9% compared to the fourth quarter. Implied volatility in the quarter as represented by the fixed increased by 30% year over year and by 7% compared to the fourth quarter. Total ETP assets under management increased by 3% in the first quarter versus the fourth quarter and 22% year over year to over €14,000,000,000,000 given record fund inflows ETPs in the quarter and the strength of the overall market, particularly in Europe. ETP velocity increased in the first quarter compared to the fourth quarter and was on par with the level seen in the same period a year ago.

In summary, market activity increased in the first quarter when compared to last year, but slightly less so when compared to the fourth quarter, while the secular industry trend across the E2P universe continues to be strong. I will now move on to the dynamics within the fixed income and crypto markets. As shown on the top left of this slide, trading volumes in the investment grade and high yield bond markets increased in the first quarter both compared to last year as well as the fourth quarter. However, volatility as measured by the MOVE Index declined both compared to last year and last quarter. Trading volumes in digital assets declined in the quarter compared to the fourth quarter, but remained higher than the same period a year ago.

Global crypto ETP market value traded also declined in the first quarter versus the fourth quarter, but remained significantly greater than the same period last year. However, it’s worth pointing out that net inflows into crypto ETP were significantly lower in the first quarter than last year, given the spot Bitcoin ETF launches in The U. S. Last January. On slide six, we present an overview of some of the key performance indicators for the quarter on a regional basis.

As mentioned earlier, market ETP value traded improved in the quarter when compared to the same period a year ago, as well as the fourth quarter. The robust and comprehensive trading capabilities that we have developed over the years across different regions and asset classes put us in the position to capture opportunities that arose in different parts of the market in the quarter. Given the limited trading capital base, we deployed more capital to equity asset classes across Europe and Asia in the period. The better opportunities in those regions and asset classes, plus the additional capital provided by our trading capital expansion plan propelled us to another strong first quarter. In Europe, we maintained our position as a leading liquidity provider in ETPs amidst increased market activity and heightened levels of volatility in the quarter.

We were able to benefit from the record net inflows into ETPs as well as asset rotation into European equity in the quarter. In The Americas, volumes in the quarter were more muted compared to Eurasia as uncertainties driven by changes in foreign trade policies resulted in less trading activity compared to other regions. As a result, we allocated more trading capital to Europe and Asia in the quarter, given the better opportunities in those regions. In Asia, volumes remained elevated in the quarter in Hong Kong and China, given continued investor interest following the stimulus unveiled by the government in the fourth quarter. This allowed us to achieve our second best quarterly result in Asia following the record quarter we just had in the fourth quarter of last year.

In digital assets, which trades 20 fourseven globally, volumes in crypto remained elevated compared to last year. However, net inflows into crypto ETPs were down significantly compared to the same period a year ago, as cryptocurrencies pulled back following a record year in the fourth quarter of last year. I will now hand it to Mike for the next slide.

Mike Bruno, CEO, Flow Traders: Thank you, Alex. Fixed operating expenses in the quarter increased by 12% when compared to the fourth quarter to €50,800,000 and was up 15% year over year given our planned targeted headcount additions and increased technology investments. We delivered a strong 46% EBITDA margin in the quarter compared to 48% in the same period a year ago, given the high operating leverage inherent in our business. We ended the quarter with six nineteen FTEs, an increase from the six zero nine FTEs at the end of last year. For 2025, we continue to expect fixed operating expenses to be in the range of €190,000,000 to €210,000,000 given additional technology investments and targeted additions of subject matter experts in growth areas, partially offset by expected operational efficiency gains.

On Slide eight, we take a look at the historical performance of the company in the context of market volatility. You can see in the chart on the left, the company has delivered structural NPI growth since the IPO with higher highs and higher lows given the investments we have made in our trading capabilities across different regions and asset classes. Our growth and diversification strategy has enabled the company to capture opportunities wherever they arose. This positions the company to deliver solid results during periods of muted market activity while periods of high volatility provide strong upside. On the chart on the right, you can see the strong and healthy through the cycle average EBITDA margins of over 40% over the years given the high operating leverage inherent in our business, of which our flexible compensation philosophy plays a large role.

Given our fixed versus variable compensation structure and the firm wide bonus pool, employee compensation tracks in line with the profitability of the company and aligns the interest of our employees with those of our shareholders. I will now hand it

Mark Johnson, Executive, Flow Traders: to Marc. Thanks, Hein, and good morning, everyone. Moving to slide nine, trading capital is the lifeblood of any trading firm, and bolstering our trading capital is a strategic priority. Given the strong historical return on trading capital, we took the decision last year to accelerate the expansion of our trading capital base with the suspension of the dividend and the pursuit of external debt. As a result of this major decision and strong profit generation, we continue to grow our trading capital base to record levels, and we’re able to increase our trading capital by 32% year on year and 4% versus the fourth quarter to $8.00 €3,000,000 Shareholders’ equity also continues to grow to record levels and increased by 25% year on year to a record €787,000,000 at the end of the first quarter, tracking the level of increase in trading capital.

Despite the rapid increase in trading capital and shareholders’ equity, we still delivered a strong 68% return on average trading capital and a 21% return on equity in the quarter. The strong first quarter results serve as validation of the firm’s trading capital expansion plan and a continued expansion of our diversified set of existing and newly emerging trading strategies. We continue to believe that with additional capital, we can deliver significant returns and further strengthen our company’s role as a leading global trading firm, providing liquidity and efficiency across a wide range of financial markets. Moving to the next slide, I will discuss market trends and our strategy. On slide 10, you can see that the supportive megatrends which underline the firm’s strategy remain very much intact.

These four key megatrends continue to shape our market environment, acting as tailwinds to our business and offer an abundance of opportunities for the company. Crucially, these trends all feed into and reinforce each other. Particularly relevant to our core business is the ever increasing acceptance of ETPs and growth in passive investment. Total industry ETP AUM increased by over €200,000,000,000 in the first quarter of this year and is projected to increase from today’s €15,000,000,000,000 to €25,000,000,000,000 by 02/1930, underscoring the strength and importance of the ecosystem here, a key part. Electronification of trading is critical for all of our activities, but in particular it is within the fixed income asset class where this is a key structural trend in corporate credit and emerging market sovereign bonds.

Increasing adoption of electronic trading ties into our core technology enabled competency set, as fixed income ETF AUM is projected to triple from 2,000,000,000,000 to 6,000,000,000,000 by 02/1930. With the recent regulatory developments regarding digital assets, institutional interest in this asset class also continues to increase globally. We anticipate continued growth in investor demand as the asset class remains a long term growth opportunity with the underlying technology forecasted to drive growth in the tokenization of real world assets from an estimated $250,000,000,000 today up to 30,000,000,000,000 by 2020. Then lastly, regulation continues to be conducive to our business in terms of creating a level playing field from the aspect of execution transparency. For digital assets, increased regulatory oversight helps to create safeguards around the industry while removing barriers for investors.

We continue to work with regulators all around the world to drive increased transparency, efficiency and improved liquidity across all markets and asset classes. Moving on to the last slide. On this slide, I will recap the firm’s four key strategic pillars to grow, strengthen and accelerate the business. The first is the continued optimization of our core and growth of capital. This means building an increasingly resilient and efficient business model through dedicated optimization of the firm’s trading port, while simultaneously growing the firm’s capital base to accelerate the monetization of all existing and new trading strategies across asset classes and regions.

The trading capital expansion plan we instituted last year was a significant step for the company in ensuring that we have the necessary capital to grow and diversify the business across regions and asset classes. The second is the continued expansion and enhancement of our trading capabilities. We will leverage our proprietary infrastructure capabilities and expertise to expand into existing products and enhance existing trading strategies. Our consistent investment into our digital asset trading capabilities over the past eight years that enabled us to be a first mover in this emerging asset class serves as a great example of this strategic pillar. Third is technology and innovation.

We will further adopt emerging technologies and increase the utilization of data insights within trading to improve our own pricing competency, as well as internal hedging and execution. This is what our CTO, Owen Lloyd, is working on given the wealth of experience and expertise he brings in this area. And last, but definitely not least, diversify our business model and revenue streams. We will continue to invest in adjacent business propositions as well as in connectivity, platforms, data and tokens via dedicated partnerships to accelerate innovation across financial markets and to diversify existing revenue streams. We are looking forward to the launch of AllUnity, our euro denominated stablecoin partnership with DWS and Galaxy.

It’s an instrument that we expect to help to bridge the world of traditional finance and digital assets, revolutionizing and bringing new possibilities to traditional finance as we know it. To conclude, as we execute on these four key strategic pillars, we are proud to deliver a third consecutive triple digit NTI part, only the second time in our company’s history. We are confident that such partners will be a regular occurrence going forward as we deliver on each of these strategic priorities. I will now hand the call back to Eric.

Eric Pan, Head of Investor Relations, Flow Traders: Thanks, Mark. This concludes the formal part of our presentation. We would now like to open up the floor for any questions you may have. Operator?

Conference Operator: Thank you. If you would like to ask the questions or make your contributions on today’s call, We will take our first questions from Julian DeWolfsche from ABN AMRO. Your line is open. Please go ahead.

Julian DeWolfsche, Analyst, ABN AMRO: Hello. Good morning, everyone, and thanks for taking my questions. I have three to begin with. Maybe the first one is on the one off impairment component. To be honest, a bit surprising this for the first time.

We certainly had much larger pullbacks in digital assets in the past. So again, a bit surprised by the announcement. So can you please again explain in kind of simple terms how you went about that? So maybe what goes into it? And also, did you impair the entire portfolio of crypto holdings or just few assets which imploded in the last quarter?

So that’s the first question. And the second one is on the wage growth, quite steep in my view. So 20% quarter over quarter and 18% year over year. Clearly, a bit of that is drive is is driven by higher number of FTEs that are now higher. But if I’m just looking at the average wage per FTE, this one is up 20% quarter over quarter.

So would appreciate if you could highlight some some some factors what what what is driving that. And maybe finally on trading capital, probably a bit of a technical question. You were at $7.75 at the end of 02/2024. That profit’s 36,000,000 in q one. So according to my math, you you should be ended up with 811 trading capital, but you reported 803.

So I was just wondering from where does the difference come from? Thank you.

Mike Bruno, CEO, Flow Traders: Thanks, Julian. Let me maybe start with the second question because that very much relates to our growth strategy and diversification strategy. I think a fair reflection of where we stand on that curve is that we had two focus points which we need to get right and will further get right. One is very much looking into driving efficiencies and upgrading also the talent base in order to accelerate the entire simplification automation effort across the organization. The other point is we are, as said before, very much dedicated on deploying talent onto growth areas.

And I think what has evolved over the last few years is that we have become more multifaceted on this. And one key element I can highlight is the entire effort across the firm now very systematically and globally on improving, enhancing our pricing capabilities, which is very much also a tech effort, led to a decision to also not just further promote internal talent, but also to hire subject matter experts in order to make sure that we can accelerate. The good news is there are two components, I think, economically that are relevant. One is as we embrace further and further pooling the simplification, there will be efficiency gains down the road in order to improve our cost position. Secondly, as we are leaning into these growth opportunities, we do expect that some of them might have an exponential payout curve.

This is related to further adoption of digital assets, ETPs, deeper penetration in markets we are focused on, but equally our capability in order to monetize trading activity much more dominantly in the future than today. I think this is a very strategic effort and interconnected and synergetic, I shall say, from an economic sense. The overlay is that, and I said it before, the entire perspective of the global leadership team on cost efficiency and cost containment is quite critical for us. So in that sense, I think this is quite relevant for us. The third point on the yeah, sorry, maybe we stopped schedule.

Julian DeWolfsche, Analyst, ABN AMRO: Yeah. Just a quick follow-up. Thanks for the answer, Mike. In terms of kind of the outlook for 02/2025, is this kind of more of a run rate figure that we should consider for the next of the quarters? Because, obviously, I mean, you know, if I’m just looking at a fixed OpEx run rate for the whole year, you end up at 200, and that’s exactly in the middle of the guidance range.

But just I think that is the very the modeling.

Mike Bruno, CEO, Flow Traders: That’s a very fair estimate. That’s a very fair estimate. Yeah. And just to build to continue building credibility also on this point, I think the entire focus of the firm on really maintaining cost efficiency, sometimes we highlight the importance of operational leverage in the firm. That is still a top priority for the firm.

But I think it’s a challenge, and that is not just a challenge for Flow. As you start investing, as you hire subject matter experts, there is a missing link between the cost and the payout, if you will. So what we will expect to see is that we have efficiency gains as the company grows. And I think the most important point from an economic point of view, we do believe, still firmly believe, that the top line growth will be higher than the evolution Right?

So the mid to long term perspective is very much on increasing our margins on this front. Yeah. Yeah. Okay. Thank you.

And then in terms of the trading capital question, so clearly and I think we talked about this in the past, but I just want to reiterate the difference between trading capital and now shareholders’ equity and specifically based on the numbers you mentioned. So most of the difference was due to currency translation reserve loss in the quarter given the strengthening of the euro from the December date to the March date, which lowered our shareholders’ equity by €13,000,000 We paid out annual cash bonuses in February, which lowered trading capital when compared to net profits. And the difference between shareholders’ equity and trading capital is mostly due to timing as shareholders’ equity is based, as you know, on accrual accounting basis, whereas the trading capital is based on actual cash flows. So I hope that this, at least as an overview, explains why there are differences, but very happy to engage further to dive into the numbers. Yeah.

Julian DeWolfsche, Analyst, ABN AMRO: Okay. It’s clear. And, yeah, then on the one off impairment, please.

Mike Bruno, CEO, Flow Traders: Yeah. I’ll hand over to Mark. He can share a bit more insights on this. Yeah.

Mark Johnson, Executive, Flow Traders: Thank you, Mark. So while we don’t disclose the exact contribution of digital assets or profitability in the quarter due to trade sensitivities, yeah, we can say that the trading volumes in cryptocurrencies and crypto ECs remained elevated in the period. The contribution from digital assets wasn’t far with that of fourth quarter. However, as as you obviously have seen, we recorded a 10,500,000.0 impairment in intangible assets related to some of our digital assets holding as the value of digital assets experienced a pullback in the first quarter after a few quarters of rapid increases. We had some of these digital assets holdings, and due to that, we saw a corresponding increase in our NTI as an offset in the quarter.

However, IFRS accounting standards have lagged behind the rapid adoption of digital assets. We had to allocate the gains and losses separately above and below the line. However, we do view the whole book as an yeah. As one big trading book and and and due to that, like, yeah, like like you see now due to these IFRS accounting standards, gains and losses which cancel each other out.

Julian DeWolfsche, Analyst, ABN AMRO: Yeah. Thanks, Alex. Sorry to kind of drill down on this, but I’m just curious why this quarter because we’ve seen pullbacks in the past, and you’ve never done that. So why this time?

Mark Johnson, Executive, Flow Traders: Well, we we we continue to evolve our business and, like, yeah, like, we we we take on different ways of investments or trades or or yeah. And, like, we haven’t had this kind of an investment book in in previous quarters, so that is why you didn’t see those there yet. And due to the way it’s structured, yeah, we we do see now a lag on intangible assets, impairment on the intangible assets.

Mike Bruno, CEO, Flow Traders: And, Julian, if I if I may add, I think what Mark just highlighted is is highly relevant for us strategically. So when we started building our crypto business, it was probably a one dimensional route in our head in terms of providing liquidity on spot crypto. Reality is that the entire evolution has evolved, and we talked about that in the past as well. But now we are seeing it more as a commercial flywheel effort. Yeah?

And there are many different opportunities. The market is evolving. There’s more institutional retail adoption, appetite interest. What we are trying to to make sure is that we’re embracing all these different profit pools, if you will, holistically at the same time, and that is probably from the outside. Difficult to predict, sir, but at the same time, I think the trajectory is giving us a very strong push in, yes, you need to embrace it holistically and and deliver into all these different bits and pieces.

The point on IFRS lacking behind creates then that conundrum maybe that the P and L as a whole, right, still reflects the true economic performance of the company, but the lines that are hit are are different in this case.

Julian DeWolfsche, Analyst, ABN AMRO: Okay. Let’s say I’m I’m just very keen to to have a deep understanding of that, but I guess I also understand that it gets probably cannot share more than what it can share.

Mike Bruno, CEO, Flow Traders: Yeah. Okay.

Julian DeWolfsche, Analyst, ABN AMRO: And maybe one final comment. Sorry to take so much of the time on the on the line. Any comments that I can share on the current trading conditions? I mean, clearly, I think expectations so far are building quite high given the the very massive volatility we’ve seen in a couple of days of April. But anything that I can share regarding trading maybe on the

Mike Bruno, CEO, Flow Traders: volume and spread size? Yes. We stick to our prior message that we are not able to give any indication on our NCI performance. What we can say, however, that the market activity and volatility we have seen recently benefited us and specifically the high levels of volatility recently in the first couple of weeks of April. I think just to maybe substantiate it a bit, the levels reached in April for way of background weren’t close to the levels we saw during COVID when intraday implied volatility levels went above 80 on the VIX during the most volatile days and averaged around 60 for almost, two straight weeks and more than 50 for three straight weeks.

So by contrast, the average implied volatility for the first couple of weeks of April averaged less than 40, and the highest level intraday barely touched 60. So maybe this is helping you a bit to compare the different settings here. Yes.

Julian DeWolfsche, Analyst, ABN AMRO: Sounds good. Thank you so much, guys. Thank you. Thanks, Julian.

Conference Operator: Thank you. We’ll take our next questions from Rick Watson from ING. Your line is open. Please go ahead.

Rick Watson, Analyst, ING: Good morning, all. Thanks. I think Julian touched on most of this. And Mike, thanks for the color on on VIX because I think the, you know, the the the base reading is we’ve had three episodes where VIX has traded above 50 in its entire history, those being the pandemic and GFC and obviously this month. So to to the outside world, it looks like, this ought to be a repeat of the pandemic, but it’s quite clear, I think, from your, brief, summary just then in terms of intraday and the extent to which things move that we’re not gonna see anything like that kind of NTI.

I I do have a sort of slight color to ask you some slight sorry. Question to ask you some slight color on this, which is that during the pandemic, you did actually come out with a statement effectively providing a positive profit warning on the NTI general from the elevated levels of VIX. Could you perhaps sort of cast your mind back to that period and some explain what the triggers were for that announcement and what triggers you might set today for a similar announcement?

Mike Bruno, CEO, Flow Traders: Yeah. That’s a very good question, Rajan, and thanks for for joining this morning’s call. The way I would describe it is that the business has meaningfully advanced strategically and setup wise. So we are now in a situation where we have, a, created a stronger baseload of the company. And equally, we have been quite vocal on the impact of diversification.

So we can now basically make a point that the rising volatility in many different areas across asset classes and regions is giving us an uplift in our top line. So I think this is an important message as to the expectation setting on how the business model is reacting to these different, yeah, market sentiments, if you will. In 2020, the company, from an expectation level setting, was still in a transformation, right, and going into that full adopted diversification play. And equally, I think COVID has not, as a whole, impacting the entire world globally, instantaneously, if you will, has never been a situation in which the company has operated in, right, in similar degrees. So we felt that managing expectations adequately was a must have given how the business model reacted to these situations.

So I try to stay a bit generic on this because ultimately, yes, we were diversified in 2020, but I think our narrative has been spot on in explaining what we are trying to build. The mentioning of asset agnostic or asset class agnostic and agnostic as the geography is more trading capital. I think there’s a higher degree of predictability and reference points, understanding from the outside world how our business model is reacting in different market circumstances.

Rick Watson, Analyst, ING: Okay. Okay. Understood. And then can I move on to APAC? You I think you demonstrated quite a strong uplift in APAC VT.

Is that something you expect we sorry, we should expect to continue as part of this strategy in terms of building a stronger platform and greater diversification?

Mike Bruno, CEO, Flow Traders: Yes. Maybe let me start by making a general comment. I think our mind starts with just highlighting again the strategic importance of APAC for flow traders. And I made similar comments in the past. We do like that there is fragmentation, which is more difficult to embrace for competitors, and we started our business in a quite fragmented setting in Europe.

So there are pieces of our DNA that gave us and still give us an opportunity to really thrive in these markets. That’s number one. Number two is as we have more capital, we can deploy and seek more deploy more capital and seek more opportunities. So that’s definitely a plus, and that is a repeating schedule. And I shall even say it’s not just repeating, it’s intensifying because we as the company grows also in trading capital, we are able to capture these opportunities much more systematically and with a bigger magnitude down the road.

The third point, we have been extremely active on the external side in in building strategic relationships across the landscape there. So, just to give you a very tangible example, the entire EDP adoption, we’re not stepping into the markets where ETP adoption is now thriving or about to thrive with a technical mindset. We are building deep ties to the counterparty base, to the buy side, and we are providing all our technological skills in order to have the right to play, right to win in these markets. Why is that relevant? It’s relevant because we are creating, implicitly more resilience in our top line by being, long term focused on these markets.

And then I think the overlay with APAC going, I think there is increasing adoption in terms of more diversified asset class, specifically on the fixed income side after equity. There will be an adoption in terms of digital assets, right, which clearly hits the entire planet, but we expect also EPIC to take more appetite on this. And then the entire fragmentation, I think it’s fair to say that over the next years ahead, those markets will become more unified. One impetus is clearly coming from the regulatory landscape, but also the market participants would be eager will be eager to consolidate flows and be more unified in trading. And I think that is a unique opportunity with us further building our infrastructure in that market.

And coming back to what I said earlier, APAC remaining a key growth area for the firm going forward.

Rick Watson, Analyst, ING: Okay. Thank you. And then my final question, coming back to this hedge loss. Have I understood correctly, you’ve lost money on the hedge and markets were down, you were effectively long the hedge, short the spot or short the physical or or book. Is that is that my correct reading of this?

So you made money in the book at NTI level because you were short, but the corresponding hedge lost you money, and that’s what’s booked below the line.

Mark Johnson, Executive, Flow Traders: Yeah. Yeah. So so I think if I understand you correctly, that it is that’s correct. So we so we have a hedge against a certain position. One position is making, the other one is losing.

Yep. And due to IFRS accounting standards, you see those split out.

Rick Watson, Analyst, ING: Yep. Okay. Thank you. Thanks for that. Mike, I think it only remains me for me to thank you for being a a great CEO and for your leadership of Flow, and wish you all the best in your future endeavors.

Mike Bruno, CEO, Flow Traders: Thank you so much. That means a lot to me. Thank you so much.

Conference Operator: Thank you. We will take our next questions from Michael Weyer from UBS. Your line is open. Please go ahead.

Michael Weyer, Analyst, UBS: Thank you, guys. I appreciate the presentation and the opportunity to ask questions. I’ve got two, if you don’t mind. If you could just discuss what you saw in The U. S.

Business. We definitely saw a bit of a decline in revenues there versus, I think, what the market had anticipated. So any color, if there’s any kind of one offs or anything going on there, that would be helpful, especially given the backdrop. And then second, just coming back to the impairment. I just want to clarify that in a world where the value of the digital assets increases, ultimately, would that mean that your NTI is essentially underreported?

My understanding is that you don’t get the write ups, you only take the write downs when it comes to kind of the impairments. But yes, I was just wondering how that would work with the NTI?

Alex Keith, Co Chief Trading Officer, Flow Traders: Thanks, Mike. I’ll take the first question. So The U. S. Saw indeed a bit more muted results as we didn’t see the same levels of opportunities in the region as we saw in Europe and Asia.

We therefore shifted we didn’t have the same capital allocation towards The U. S. Given the lower perceived opportunities. Also as a reminder, in Q1 of last year, we saw the spot Bitcoin ETF launch there, which was a tailwind to the region. And I would like to say that The U.

S. Is still highly strategic for us. Also in periods of really high volatility, we do see there’s a very clear profit center and we remain fully committed to growing the region further as opportunities arise and as our trading capital base grows and as our trading and pricing and technology advances that we can still tap into that market and be a very relevant player there.

Mark Johnson, Executive, Flow Traders: I can take your second question. So I think I think if I understood correctly, yeah, it was two parts. So the first part about previous NTIs being underreported or not, like so that that is not in the case. As also already, yeah, explained in in, like, the previous question, like, these kind of structures with impairment variant on our books in previous quarters. So due to that, yeah, we didn’t have an underreporting in our NTI in previous quarters.

However, going forward, there is a possibility that, yeah, that that due to these accounting standards, either NPI is over or underreported that in other lines, yeah, you would see their differences. Does that answer your question?

Michael Weyer, Analyst, UBS: I think so. Yeah. I’m happy to kind of just try to dive into this offline, but thank you. And again, Mike, just want to say, all the best. It’s been a pleasure, working with you, these past couple of years.

So, if we don’t cross paths again, before your, you leave, I just wanted to say congrats, wish you the best.

Mike Bruno, CEO, Flow Traders: Likewise. Thank you so much, Michael.

Conference Operator: Thank you. It appears we have no further questions. I will now hand over back to Eric Pan for any additional remarks. Please go ahead, sir.

Mike Bruno, CEO, Flow Traders: Thank you, operator. We would like

Eric Pan, Head of Investor Relations, Flow Traders: to thank all the analysts for participating in today’s call. Please note that we will host our next analyst call when we release our first half results in July. Details and timing of this call will follow in due course. This now ends the call. Thanks again.

Have a great day.

Conference Operator: Thank you for joining today’s call. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.