flatexDEGIRO SE (FTK) Earnings Call Transcript & Summary

Thank you for standing by. My name is [ Prilla ] and I will be your conference operator today. At this time, I would like to welcome everyone to the flatexDEGIRO Management Update. [Operator Instructions] I'd now like to turn the conference over to Achim Schreck, Head of Investor Relations at flatexDEGIRO. You may begin.

Good morning, everyone, and many thanks for dialing in on short notice. Following this morning's announcement, in which we informed the market about the extension of our Management Board, we wanted to make ourselves available as quickly as possible to provide the necessary context. My name is Achim Schreck, and I'm heading the Investor Relations team here at flatexDEGIRO, and as usual, I'm here with our CEO and Chairman of the Management Board, Oliver Behrens; as well as with Benon Janos, our now former CFO, who has today been appointed CEO with responsibility, particularly for our brokerage business. We will start today's call by Oliver Behrens providing some context around the communicated extension of the Management Board, before we are happy to take questions from our analysts. Please note that the call is scheduled for 30 minutes and no presentation materials will be used during today's discussion. And without any further ado, I'm very pleased to hand over now to Oliver. Please go ahead, the floor is yours.

Thank you, Achim, and good morning, everyone. Allow me to start briefly summarizing today's announcement. This morning, the Supervisory Board has appointed my colleague, Benon Janos, as CEO with immediate effect. The Supervisory Board also made changes to the Board responsibilities. He, Benon, will assume responsibility -- no sorry, I will assume responsibility for our B2B brokerage business. I will remain CEO and Chairman of the Management Board with a clear focus on further strengthening the B2B business activities and our growing treasury activities, and Benon will focus on the B2C brokerage business. With this step, we are strengthening customer and market-facing expertise at Management Board level and further enhancing our execution capabilities in a dynamic competitive environment. I remain fully committed to supporting flatexDEGIRO, our customers, and our strong team with full dedication. Benon switching roles from CFO to CEO, however, not leave the CFO position vacant. Dr. Thomas Lindner, our valued colleague and long-term veteran with the firm, has been promoted to Chief Financial Officer. He has held senior finance roles in flatexDEGIRO since 2012. With Thomas, we are filling the CFO position with an experienced leader from within our own ranks. He has comprehensive expertise in finance, regulation, and corporate management, has known the company for many years, and also brings sound experience at the interface, between finance and artificial intelligence. His promotion underlines the strength of our management team and our commitment to continuity in leadership. With this, I pass on to Benon for some additional remarks on his side. Thank you very much.

Thank you very much, Oliver. Good morning to everyone from my side as well. Thanks for joining us today. By expanding the Management Board and introducing the new leadership structure, we demonstrate our clear focus on sustainable growth and on the systematic development of further market potential. I'm very much looking forward to working even more closely with Oliver, on an operational level with Thomas, as our new CFO. Together, as part of the management team, we have shaped flatexDEGIRO's successful growth trajectory. Our focus is now to continue to fully capitalize on the opportunities in our markets, further expand our core brokerage business, and strengthen flatexDEGIRO's position as Europe's leading platform for trading and investing and building wealth. Many of you have known me for years and are aware that I have had already an extensive operational history at flatexDEGIRO, before I became CFO. Allow me to add some details for those, that maybe don't know me that well. I joined flatexDEGIRO almost 11 years ago. I am 54 years old, however, flatexDEGIRO is actually only my second job. I have started my career at Goldman Sachs, where I spent some 15 years in the equities business. Since joining flatexDEGIRO in 2016, I have had the opportunity to lead several key operational departments across the organization, starting as Head of B2B and Business Customers and IT, and then later for a couple of years, Head of B2C Customers as well. I successfully developed the flatex brand in Germany, ahead of COVID, drove and oversaw flatex's international growth strategy as well as the acquisition of DEGIRO in 2020, with the announcement made in December of 2019. In 2021, I became CFO of our bank and was appointed Group CFO in 2023. For a short period of time, before Oliver joined us as CEO in October of 2024, I already had the honor to lead flatexDEGIRO as a co-CEO for an interim period. With approximately 25 years of experience in securities trading and a long, long operational track record within our firm, I feel very well equipped to support our management team in leveraging our potential by expanding our brokerage business further. FlatexDEGIRO is well positioned and on track to be the leading European platform for securities trading and wealth building, and I am pleased to play an even more active role in developing our successful growth strategy. The skill sets of Oliver and I are also very complementary. Maybe, Achim, you can take over and run us through the process for the queue right now.

Thanks a lot, Oliver. Thanks, Benon, for providing the context around today's announcement. We're now very happy to answer questions from our analysts, and I would ask the moderator to please call up the first question here.

[Operator Instructions] And your first question comes from the line of Andrew Lowe with Citi.

Explaining the changes today. Could I please ask you to spell out the reasons for the departure of your Chair last week, the week before as well as another Board member. What were the areas of strategic disagreement there? And then the follow-up is, are you still searching for a supervisory Chairman? Or does Oliver intend to sort of fill that role going forward?

Look, we are not commenting on internal discussions of the Supervisory Board, number one. So we cannot give you details of the discussion. And part two, thank you that you already see me on the way to retirement, to become Chairman of the organization, but that's exactly not the case. The Supervisory Board had early on as you probably also aware, extended my contract because of the great performance of this organization into '29, and that is the case, so -- and also, if I wanted to -- I think these are the governance rules and maybe Achim can jump in. I can never immediately take over such a role, because there's a cool-off period, which is at least 12 months from my understanding. And I think part of your other question, correct me, if I understood it wrong, is will the Supervisory Board be filled up again with two missing candidates. By the way, at the moment, I think we are at 3.5, so -- but it will be refilled to five people, that's my understanding. But obviously, that's a joint effort between the Supervisory Board and the Management Board to match all the necessary skills that are required and of course, subject to regulatory approval as usual. Thank you. In case your question was not fully answered, please add another one.

Yes. I'm just curious on your thoughts then. So if you've, I guess, effectively taken the CEO role and split it across two people and I'm sort of curious to hear more about Oliver, why you're going to be focusing on the parts of the business, that are sort of, I guess, noncore and there might be exciting growth opportunities with third-party deposits, but sort of ultimately, that is probably still 2% to 3% of net revenues going forward. So how involved are you going to be in the sort of core business, the brokerage business, which now sits below Benon?

First of all, these are decisions taken by the Supervisory Board, which we are not commenting. Number two, I'm the Vorstandsvorsitzender, which means under German regulatory framework, it's an elevated position between the two CEOs. Number three, if you want more details, you need to talk to the Supervisory Board. Number four, as Vorstandsvorsitzender, I'm involved in the entire organization. Under German framework anyway, there's a joint responsibility of the entire Management Board to manage the organization along the strategy, which is set by the Management Board and evaluated by the Supervisory Board. I think that is a very important difference to a U.K. type of single-tier structure, where you would have just one CEO, most likely and as such. Slight different nuances in the business.

And your next question comes from the line of Ian White with Autonomous Research.

A couple of questions from me, please. Put simply, why did the Supervisory Board make this change to the CEO role? How is it linked to the recent departures on the Supervisory Board, if at all? And what is it here that sort of requires improvement? As you said, Oliver, you referenced your contract extension, things have been going well. You're talking about achieving guidance a year early. Why would this be an appropriate time to make a significant change to the leadership?

Maybe I'll start and then I'll hand over to Oliver. But I really would love to start focus on our operations and our current daily business. If you look at our history over the last three, four years, you know that we have invested a lot of time, money, effort and mental capital on the Management Board to make sure that we tick all boxes on the regulation side. If you also look at our management structure, you can make the point that we have three or four people, depending on how you count, who are rather on the defense side of the organization and Oliver was our striker, trying to push forward and has very successfully led our company where we are today. We are trying to make a shift in mind, in a way that we want to strengthen the offense part of the game. And that's where my complementary skills from retail brokerage from five to eight years ago come into play. So literally, we're expanding the Board in order to not only have a very stellar defense organization, but also continue to now strengthen our offensive game and you have seen the appointment of our divisional Board member, Dominik Beier, who will be joining us playing on the offense team. And maybe, Oliver, you can take over.

Yes, I think it's fair, what Benon said. There is -- there has been -- the whole organization over the last, I would say, four or five years has been mainly focused on getting the operational procedures in order and in proper shape. Let's not forget, we've been under special supervision of the BaFin and all that stuff, that's all behind us. The procedures and the processes are running well. The BaFin has released us or giving us almost we are at the stage of getting the final blessing to be released to the regular Joe's on the street. The external auditors are pretty happy, internal audit is pretty happy, compliance is happy and so on. And at the same time, competition is shaping up. Every mom and Joe is trying to open shop in Germany. Competition might get a bit tougher, and that's why I think it's -- the idea behind this decision of the Supervisory Board is to move more people into the front office and Benon is a very experienced chap with more than 10 years in the organization, played in many different roles, as he explained in his talk. And so we have two in front and four in the back office in a way, yes.

And the goal is to do all that without sacrificing anything on the defensive side and on the regulatory side, which is where Thomas comes in, who knows the organization also very, very well. And I can probably also mention that I will most likely continue to run the Investor Relations department. So you will still have me.

Good to hear. Can I just ask one short follow-up, please? Just directly to Oliver. Is this structure something that you suggested? Or is it something that the Supervisory Board came up with and kind of told you that they wanted to do, please?