corporate presentation · 2021. 1. 28. · →corporate presentation | february 2021 | page 7...

CORPORATE PRESENTATION

CORPORATE

PRESENTATIONflatexDEGIRO AG | February 2021

At a glance

→ Corporate Presentation | February 2021 | Page 3

Investment highlights

First, largest and fastest growing pan-European discount broker, well-positioned to consolidate a highly fragmented market

Benefiting from near-term market volatility as well as long-term secular trends that are increasing the addressable market

Best-in-class product portfolio and highly competitive pricing drive impressive customer growth and leading positions in several European countries

Fully fledged online bank (no brick and mortar branches) with full German banking license & EU passport, a scalable proprietary core banking system and clear cost leadership

Homegrown, scalable and recently modernized IT infrastructure with more than EUR 30 million invested over last three years

Entrepreneurial, top interdisciplinary management team that is significantly invested in the business


flatexDEGIRO at a glance

▪ Online brokerage

(Commission income from clients and intelligent exchange and

product partner partnerships)

▪ Credit and treasury

(Interest income on collateralized margin loans and low-risk

treasury investments)

Number of

Customers

Number of exchanges and

OTC-partners

Executed trades

L12M

Executed Trade

Volume L12M*

Securities

under Custody*

Customer

Cash Deposits*

>1.25 m >60 >75 m >EUR 200 bn >EUR 20 bn >EUR 2 bn

Credit Book

(collateralized)*

Average Interest Rate

(Loan Book)*Balance Sheet Equity*

Return on

Tangible Equity*

Markets Employees

>EUR 700 m >3% p.a. >EUR 400 m >40 % 18 countries >900

Online Brokerage including Credit and Treasury

▪ Leading European online broker serving highly active private investors and traders in 18 countries

▪ Operating under German banking license with EU passport enhances customer monetization and provides ancillary services to core online brokerage

business

▪ Strong positioning in Germany, Netherlands and Austria with enormous potential to increase significantly European market share

Revenue Model and Contribution

* figures as of H1 2020

Key Operating Metrics (pro forma)


79

73

66

56

45

73

2015 2016 2017 2018 2019 2020

Average trades per customer/year

Strong sustainable growth of clients and trades

1620

2630 31

75

2015 2016 2017 2018 2019 2020

Total number of trades (million)

0.240.32

0.46

0.60

0.80

1.25

2015 2016 2017 2018 2019

Number of customers (million)

2020

Businessmodel


Fastest growing online brokerage with excellent

risk-return profile

* Pro forma ** Source: Company, competitor and market data

Market Leader

with High Value

Clients

▪ Fastest growing online brokerage business in Europe with more 1.25m retail clients doing

75m transactions* in 2020

▪ Market share of >20% in Germany, >40% in Austria and >35% in Netherlands in terms of online

brokerage transactions* (total est. # of transactions: 100m in Germany, 20m in Austria, 50m in

Netherlands**)

▪ Most trading-active client pool in the brokerage market (2-3 times the average of direct peers*)

▪ Dedicated brokerage offering with focused marketing strategy minimizes operating expenses

(cost per client acquisition less than EUR 50 vs. EUR 300-500 CPA at competitors)

Fully

Independent

Platform and

Banking

License

▪ Only major bank-independent broker with German banking license and European passport

▪ Full value chain under one roof, thus highly scalable platform with significant operational leverage

▪ Homegrown core banking system with outstanding expertise in transaction banking

Excellent Risk

Profile

▪ Brokerage agency only with no “black swan risks” (WTI, SFR unpeg) due to no market making,

no trading book and no trading liquidity risk

▪ Positively geared to volatility with natural profit hedge to downturns


Our competitive edge: the triple „P“

Product

▪ Top notch product offering including equities, bonds, ETPs, ETFs and mutual funds

▪ Market leading ETP offering of Goldman Sachs, Morgan Stanley, Société Générale, UBS,

BNP Paribas, HSBC, Vontobel and other products

Platform

▪ Trading platform only – no research, recommendation or intelligence – avoiding regulatory

administration and costs

▪ Originally designed by traders for traders and has migrated to a platform that caters to a wide range

of investors

▪ Economies of scale: each additional trade reduces cost per trade settlement –

internal cost per trade down > 40% from EUR 1.44 (2019) to EUR ~0.80 (2020)

Pricing

▪ Unlimited trading possibilities with a flat pricing model of max. EUR 5.90 per transaction –

regardless of type of asset (stocks, bonds, ETPs, ETFs, etc.) and transaction amount

▪ Competitive technology edge due to self-developed, highly scalable security execution/

settlement infrastructure ensures sustainable cost leadership


2014*

67%

4%

29%

High level of recurring revenues

Maturity profile of our trading

customers

▪ High level of recurring revenues generated by loyal and sticky customer base

▪ Exceptionally strong customer growth particularly in 2020 has driven up relative share

of trading educated new customers

> Y-2

Y-1 to Y-2

Actual year (Y0)

Trades by

customer onboarding

* excluding DEGIRO

2020

46%

27%

28%


> 90%

Composition of trades

▪ > 90% of customers with max 6 trades per month

▪ High share of frequent trades (stock and ETF saving schemes)

▪ Buy/Sell ratio of ~ 1.5

Vast majority trades frequently but not heavily

2020

6-10 trades/month

3-6 trades/month

up to 3 trades/month

more than 10 trades/month


2014*

37%

33%

29%

1%

Shares & Bonds

ETPs

ETFs & Funds

Commodities / FX / CFDs

High share of classic assets with high profitability

* excluding DEGIRO

Composition of trades

▪ flatexDEGIRO’s trading mix has shifted towards more profitable & stable products

(cash equities) and away from highly levered OTC products (CFDs and FX)

▪ Significant absolute increase of highly profitable ETP business based on strong

partnership models

202014%

8%

10%

68%


60x lifetime return on CAC investment

Customer acquisition cost(CAC)

Annual revenue per client Discounted Customerlifetime value @9%

(DCLTV)

Customer lifetime value -undiscounted (CLTV)

~ 60x

~ 120x

~ 50

~ 3,000

~ 6,00

▪ Low customer acquisition costs

driven by secret sauce online

marketing and brand size

benefits (PR & word of mouth)

▪ High loyalty and stickiness

result in sustainably low historic

churn rates of < 5%

▪ Superb scalability of busines

model with strong operating

leverage of 85+%

Average lifetime customer value (gross revenues) in relation to acquisition costs, EUR

~ 300

Payback period:

~ 2 months


Collateralized credit products provide profitable

revenue contribution at minimized risk profile

AB2C brokerage credit book

(margin loans)

Fully collateralized i.a. with

customers' securities

High-growth

LTV up to 50%

Scalable with B2C growth

Volume: >€350m

Interest income: (>300bps)

BNon-brokerage credit book

(niche portfolio)

Fully collateralized with credit

default insurances

Receivables & asset financing

+ opportunistic loans

Opportunistic and strategic niches

Volume: €300m

Interest income: (>200bps)

C Treasury

Fund investments

Simple products

▪ Government bonds

▪ Municipal bonds

▪ Corporate bonds

▪ Interbank loans

Short-duration (

Growth drivers


flatexDEGIRO – size, speed and dedication

↗ Realization of our European growth

strategy

↗ Largest pan-European retail online

broker in 18 countries

↗ Cost and innovation leadership with

complete value creation in-house

↗ Improved and more extensive range

of products and venues for both brands

↗ Faster, cheaper and with lower

operating risk than competitors

↗ Significant synergy potential with low

implementation risk


Market growth potential of flatexDEGIRO

„underdeveloped G7“ key geographies: 4-5x

Massive growth potential in continental Europe..

285m

89%

55%

8% (23m people)

17m

96%

91%

23%

(4m people)

26m

95%

90%

50%

(13m people)

68m

98%

84%

33%

(22m people)

„Underdeveloped G7“:

Population

Digitized

Online banked

Online brokerage

Developed Brokerage markets

Massive structural gap between developed (35%) and

“underdeveloped G7” markets (8%) in online brokered population

111m

⌀ 97%

⌀ 86%

⌀ 35% (40m people)

∑

Source: company estimate


..driven by strong secular trends..

Next wealth-accumulating and investing generation (Generation Y) not negatively affected by historic stock marketcrashes (“What is the DotCom bubble?“)

Increasing digitization will increase the online banked population and thus online brokerage activities(“I can invest and manage my wealth on my mobile phone.“)

Negative interest rate environment drives people towards investing in alternative value preserving products like equities (“Saving accounts don‘t generate capital gains.“)

Systematic long-term issues of governmental pension schemes will force people to take actions themselves – seethe developed brokerage nations UK, Nordics and Netherlands with tax-incentivesed investement schemes vs. non-developed brokerage countries (“Will the existing penison schemes survive the next 30 years?“)

Higher visibility and easier access to a wide selection of known household brands(“I can invest easily in companies that I like and use.“)


..to be exploited by outstanding market positioning

Core markets

Research markets

Development marketsCompany Country

focus

Net new

customers 2020

%

Growth

Customers

2020

flatexDEGIRO Europe +450k 56% 1.25m

Nordnet Nordics +308k 34% 1.22m

Avanza Nordics +304k 31% 1.28m

comdirect Germany +230k 15% 1.80m

ING Diba Germany +210k 15% 1.64m

Hargreaves Lans. UK +193k 15% 1.47m

Consors Bank Germany +106k 9% 1.33m

AJ Bell UK +62k 27% 0.30m

Bourse direct France +45k 27% 0.21m

Fineco Italy +12k 1% 1.37m

Source: company data for publicly listed companies, press releases and news articles for non-listed companies

in 2020:

~ 65 m

online

brokerage

customers

in 2020:

market share

of

flatexDEGIRO

~ 2%

flatexDEGIRO is the fastest growing European online broker

in 2025:

Market share

of flatexDEGIRO

> 4%

in 2025:

> 80 m

online

brokerage

customers


Case study Germany: Identification of massive

client potential

Note: *Company estimates based on available information

What are the brokerage segments based

on trading behaviour?*

How many people in Germany are

brokerage customers in this segment?*

Additional potential in new target segment:

1-2 million customers

Heavy-traders (> 100 trades p.a.)

Active traders (from 40-100 trades p.a.)

Less frequent traders

(< 40 trades p.a.)

less than 10 thousand

> 1 million

> 6 million

Current target

segment

New / extended

target segment

with focus on

more active

customers in

top 1/3


flatex next is…

↗ designed for newcomers to the world of

trading

↗ reduced to the essentials, structured in

a clear and simple way, well arranged

↗ attractive new customer offers for a

limited period

↗ revolutionary fast: account opening in

only 5 minutes including video legitimation

↗ designed for mobile use via the app

↗ from the leading retail online broker in

Europe

Case study Germany: flatex next – investing for

everyone

Tactical focus andoutlook


Strategy and rationale for acquisition of DEGIRO

Executes on strategy to expand client reach beyond Germany and Austria faster, cheaper and with lower

operational risk than what could be achieved organically

↗ Immediately creates the largest pan-European retail broker in 18 countries and positions flatex/DEGIRO as a credible,

scaled consolidator in the highly fragmented European brokerage industry

↗ Addition of significant non-German clients diversifies revenue by geography

↗ DEGIRO’s active customer base is a natural fit with flatex’s target customer profile (similar trading activity and asset levels)

↗ Enhances growth profile and trajectory in Europe of undermanaged asset potential with that generated an average annual client

growth of close to 50% over the last 3 years

Improve product offering for both brands

↗ DEGIRO offers futures & options and flatex does not

↗ flatex offers extended trading (8:00am – 10:30pm) and DEGIRO does not

Leverage highly achievable, low-hanging fruit synergies with limited integration risk

↗ Economies of scale around IT, trading costs and other operating expenses

↗ Increases bargaining power with suppliers, product partners and exchanges

↗ Leveraging of flatex’s banking and regulatory infrastructure


Strategic priority – DEGIRO Synergies

Synergies: €15-20m

One flowStronger product partner

economics and lower

transaction costs

EUR 200b annually

One banking license

and one corporate

infrastructure

Two brands

One bank

Synergies: €3-5m

Access to 1m customers

Combined marketing/

bargaining power

Central architecture

(based on Java /C++)

Combined data center

One IT

Synergies: €10-15m

One firm

Synergies: €3-5m

Annual synerg ies of EUR >30m


Continued growth in 2021 expected

0.80

1.25

> 1.6

> 3.0

Number of Customers(in million)

31.4

75.0 65-75

> 100

Number of Trades(in million)

45

73

45-55

> 35

Average Number of Trades per Customer/year

VISION 2025

> 3m customers > 100m trades p.a. (even in a year with low volatility)

2020(A) Vision

2025

2019

(pro forma)

2021(e) 2020(A) Vision

2025

2019

(pro forma)

2021(e) 2020(A) Vision

2025

2019

(pro forma)

2021(e)


Correlation between customer trading behaviour

and market volatility (EURO STOXX 50® Volatility)

0,1

0,2

0,3

0,4

0,5

0,6

0

10

20

30

40

50

60

70

80

90

2019-01-01 2019-04-01 2019-07-01 2019-10-01 2020-01-01 2020-04-01 2020-07-01 2020-10-01 2021-01-01

Correlation between customer trading behaviour and market volatility (V2TX)

V2TX (left scale) average trades per customer per day (right scale)

Corporate information


Our management board

Frank Niehage, LL.M.

Chief Executive Officer (CEO) flatexDEGIRO AG & flatex Bank AG

Muhamad Said Chahrour, M.Sc.

Chief Financial Officer (CFO) flatexDEGIRO AG Managing Director flatex Bank AG

Frank Niehage has vast experience across all segments of retail and

commercial banking, working as Managing Director at Goldman Sachs

until August 2014 when he joined flatexDEGIRO AG. In previous

positions, he was instrumental in the growth of Bank Sarasin AG as CEO

in Germany. Prior to this he had served in various senior positions at

Commerzbank, Credit Suisse, UBS and international law firm Beiten

Burkhardt, both in Germany and internationally, especially in Asia. Frank

is an attorney at law in Germany and has received his Master of Laws

majoring in international economics from the University of Houston Law

Center. Number of flatexDEGIRO shares directly and indirectly held:

517,000.

Before joining flatexDEGIRO AG in 2015, Muhamad Said Chahrour

was CFO at Lamudi, one of Rocket Internet SE’s core ventures, and

primarily responsible for the financial funding and investor relations of

the global entities. He previously worked in M&A and Transaction

Services at UBS and pwc. Muhamad has a strong track record of

excellent work results and exceptional expertise and experience across

the sectors of corporate finance, credit and investment management,

and business development. Muhamad holds a Master of Science degree

in quantitative finance from the University of Bath School of

Management. Number of flatexDEGIRO shares/options directly and

indirectly held: 117,500.


Diversity at work – our success is based on the

competence, commitment and flexibility of our team

#diversity

matters


ESG status

Key achievements

• Successful completion of a materiality analysis and identification of material topics

• Appointment of an ESG officer (qualification as “Sustainability Manager (TÜV)”)

• ESG-relevant topics have been included as a regular component of the

Group's Governance Committee

Next steps

• Finalization of ESG strategy in progress (Q1/2021)

• Publication of the non-financial statement/sustainability report together with the

Annual Report 2020

• Intended to join the United Nations Global Compact in the first quarter of 2021

(further memberships under review)


flatexDEGIRO AG - our shareholder structure

77.8% free float

5.2% Heliad Equity Partners

12.9% GFBK

(entity of flatex founder)

7.5m newly issued shares

to former DEGIRO

shareholder, incl. founders

and employees

4.0% flatexDEGIRO management

* excluding additional approx. 450k management options exerciseable over the next three years

27.3m

shares

outstanding*


Our stock – a continuing success story on the

capital market

03/19/202021,15 €

01/26/202173,20 €

20 EUR

30 EUR

40 EUR

50 EUR

60 EUR

70 EUR

80 EUR

Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

STOCKPRICE DEVELOPMENT LTM

Shares outstanding: 27,273,137

Options outstanding: max. 0.5m

Market

capitalisation:

EUR 2.0 bn

(as of 2021-01-26)

Listed:

SDAX

Regulated market /

PRIME Standard /

Frankfurt Stock Exchange

ISIN: DE000FTG1111

Bloomberg: FTK GR Equity

Stock covered by:

Dec 2020

PT EUR 66.00 Buy

Dec 2020

PT EUR 73.00 Buy

Dec 2020

PT EUR 64.00 Buy

Jan 2021

PT EUR 73.00

Buy

Jan 2021

PT EUR 75.00 Buy

Jan 2021

PT EUR 78.00 Buy

Jan 2021

PT EUR 75.00 Buy

01/24/2020

26.15 €


Financial calendar 2020/2021

Financial Publications 2021

28 April 2021 Annual Report 2020

4 May 2021 Interim Management Statement Q1/2021

30 August 2021 Half-year Report 2021

9 November 2021 Interim Management Statement Q3/2021

Investor Conferences & Roadshows 2021

March 2021 Jefferies, Pan-European Mid-Cap Virtual Conference

May 2021 Goldman Sachs, European Small & MidCAp Symposium, London

Stifel Europe, 4th German SMID Cap One-on-One Forum, Frankfurt/Main

Eigenkapitalforum, Frankfurt/Main

Berenberg, Tarrytown, New York

June 2021 Goldman Sachs, Financials Conference, Berlin

August 2021 Montega, HIT – Hamburg Investment Day, Hamburg

Contact

Achim Schreck

Head of IR and Corporate Communications

Mobile +49 160 92774570

Phone +49 69 450001 1700

Mail: [email protected]

flatexDEGIRO AG

Rotfeder-Ring 7

60327 Frankfurt/Main, Germany

www.flatexdegiro.com

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