Plus500 Ltd. (PLUS) Earnings Call Transcript & Summary

Good morning, everyone. I'm David Zruia, Plus500 CEO, and I'm joined by Elad Even-Chen, our Group CFO. Thank you for joining us on the call today. Before we start, I wanted to quickly introduce myself, having been appointed CEO on a full-time basis last month. I have been with Plus500 for 10 years, so I have been very much part of the growth story since the company's foundation, most recently, our COO, where I ran our day-to-day operations. Prior to that, I held a number of roles in our marketing division. I'm honored to have been appointed CEO of Plus500. I firmly believe that we are in an excellent position, with leading market positions, a strong balance sheet, a unique best-in-class technology platform and a team of highly talented people with a broad range of skills. I'm confident that this business has an exciting future. My confidence is supported by an excellent performance we delivered in the first half of 2020. During which time, we produced outstanding growth across all financial and operational metrics. I would also like to welcome Rob Gurner, our new head of IR, who joined us in May to help develop our relationship within the investment community. Of course, due to the COVID-19 situation, we are unable to hold our usual face-to-face presentation today, but I look forward to meeting you all in person in the future as and when circumstances allow. Now turning to Slide 2, which shows our agenda for today. We'll run through the results, the strategy and the business model as usual, and we have included some new slides to help you understanding of what makes Plus500 tick. Once we have finish the presentation, Elad and I will take your questions. Feel free to ask questions directly over how do you like or post them on the webcast facility, and Rob will put your questions to us. Before we get into our first half performance, in this section, I reiterate our strategic -- of the business. On Slide 4 is our investment case. For those of you who don't know us, Plus500 operates a proprietary technology platform for customers to create CFDs internationally. We offer more than 2,500 different underlying global financial instruments in over 50 countries and in 32 languages across multiple operating systems and web browsers. We have a robust financial foundation from which to grow, with a flexible cost base, a consistently high level of cash generation and minimal capital expenditure requirements. And we have a solid function and infrastructure with an embedded risk management culture and rigorous compliance procedures and processes. This foundation support our key value driver, our proprietary technology, which powers our platform, our technological marketing capabilities and our back-office operations. Our in-house innovative technology is a major enabler for us. It drives our competitive advantage. It ensures we can have a clear approach to capital allocation, and it allows us to adjust rapidly to regulatory changes. In addition, it gives us the ability to access 5 major growth opportunities. Firstly, we are looking to execute further technology enhancements and add new features to drive customer attraction and satisfaction. Secondly, we are targeting product extensions by continuing to expand our already wide range of CFDs to meet client demand at pace. The third revenue is new product lines, where we are looking to target new product areas in addition to CFDs. Fourthly, we aim to grow our presence in existing geographies to drive market share. And the final growth opportunity I want to mention is entering new markets where we have no presence today but believe there is either an untapped opportunity or low-quality incumbent operators. These growth areas will continue to be primarily accessed by organically. And as and where appropriate, we are also actively looking to target potential acquisitions, particularly in relation to new product line and new geographies. With these opportunities in mind, supported by track record of performance since our IPO in 2013, I believe that Plus500 remains very well positioned for sustainable growth in the future. On the next slide, highlighting the scalability, efficiency and diversity of our business model, our business thrives in periods of heightened financial news and events. It provides the opportunity to step change the scale of our business with a significant number of new customers attracted and active customers continuing to use our platform following every phase of heightened market volatility. Our business model, therefore, operates as a cycle of growth. I just talked about market share gains on the top left of the cycle here. Moving clockwise around this graphic, this market share gains enable us to further develop our customer offering and drive ongoing investment in our technology, which supports and drives each of the cycles items. This investment ensures further scalability and efficiency gains, on the right of this cycle, as well as continued optimization of our risk management framework as we deliver further growth. We are then able to make enhancements to our technological marketing capabilities for truck and retain customers. This is all supported by best-in-class compliance procedures and systems. Our business model is highly cash generative and has low capital intensity, ensuring we can continue to deliver outstanding returns for shareholders. In summary, I believe that the virtual circle of our business model enables consistent reinvestment to drive future growth and continued success of Plus500. Turning now to Slide 6 on our technology, our key value driver. Our platform helps us to deliver a high-quality service to our customers to drive our efforts in digital marketing technology and to ensure our back office operation systems are managed efficiently. Our technology is built on a robust and scaled system architecture, which enabled it to seamlessly manage heightened trade volumes while also consistently delivering a high-quality service to the hundreds of thousands of active customers already using our platform. In addition, our technology has an embedded proprietary CRM and data analytic systems within it. This distribute, for example, tailored reminder e-mails and push notifications on the automated basis, the likes of which helps to drive customer retention and, ultimately, lifetime customer volume. The technology is wholly-owned by -- and developed by Plus500, enabling us to immediately react to customers' need, first emerging market trends and regulatory changes. Again, our proprietary technology is our key value driver. Powered by this technology, Plus500 is very well positioned as we continue to build a sustainable, successful business for long-term growth. On the next slide on ESG. During the period of lockdown due to COVID 19, we give continuous support to our employees globally around flexible working, well-being and child care. In addition, we provided a monetary donation to a local hospital funding the purchase of critical care medical equipment, and we organized food package and supplies for vulnerable communities. Beyond our efforts relating to COVID-19, we continue to participate in several initiatives to support local communities, charities and our employees. This included monetary contributions to various charities, including the Australian bushfire relief as well as providing resources and equipment to various nonprofit organizations and community centers. On the governance side, we made progress to further diversify the composition of the Board with the nomination of Anne Grim to be appointed at the upcoming AGM as Non-Executive Director. Anne has 30 years experience in the financial services sector, holding senior roles at American Express, Barclays and Wells Fargo, among others, and most recently as Chief Customer Officer at Fidelity International. She is an excellent addition to the Board, given that her expertise in customer experience, strategic planning and execution, technology innovation and business transformation. We look forward to working with her in the future. In addition, we aim to appoint an additional lead to further diversify the composition of the Board in due course. We have also established a new Board committee on environmental, social and government matters within the objective of regularly reviewing our activities in these areas and ensuring best practice is adhered to on a consistent basis. I will now hand over to Elad to take you through the results highlights.

Thanks, David, and good morning, everyone. Let's now turn to our results for the first half of 2020. Starting with Slide #9 on the operational highlights. We delivered an outstanding performance with considerable growth across all financial and operational metrics. This was driven by the high quality and consistent performance of our technology, which supported both the high level of platform usage and the onboarding of a significant number of new customers in unprecedented market conditions of heightened volatility. As a consequence, there were record levels of new and active customers using our platform at attractive levels of average revenue per user and average user acquisition cost. AUAC was materially lower at $634 compared to over $1,000 last year. This drove unprecedented level of customer income, which grew by 218%, highlighting the strength of our underlying business. Customer income picked in March and April with levels in May and June, in line with previous peak trading levels experienced in the first half of 2018. In these circumstances, of course, platform usage was particularly intense with over 47 million trades executed in the period, up by a factor of 2.7x from the prior year. Client deposits increased by a factor of 3.5x to over $1.6 billion during the first half of 2020. This is really important as it reflects customers' strong trust in Plus500, the strength of our customers' resources and an increasing customer demand to use our platform. Additionally, last month, we were honored to be recognized as a preferred technological enterprise. Plus500 is one of the first companies to receive this accreditation under the new tax regime by the Israeli Innovation Authority and the Israel Tax Authority, following an extensive process of more than 3 years. This is a very prestigious status to have in Israel, reflecting our position as well as the known and highly regarded technology company in the startup nation. This recognition has an immediate benefit for our shareholders, thanks to much reduced corporation tax rate of 12% from the full tax rate of 23%, estimated to deliver both cash savings and repayments of over $100 million, with approximately $47 million rebate already received in July 2020. This will remain enforced until the end of 2021 and has the potential to be extended after that. This is another independent validation of the quality of our technology, our organization and our people. Turning now to Slide 10 on financial highlights. We're very pleased with our financial performance in the half, during which we delivered excellent growth across all metrics. Total revenue for the half was $564.2 million, up by 281%. EBITDA in the half grew to $361.8 million, up by 452%. Despite the significant increase in operating expenses predominantly driven by growth in marketing technology investment, which I will cover later, EBITDA margins grew to 64% in the half. Earnings per share were up by 562% compared to the first half of 2019. Our financial performance during the half was well ahead of the entire year of 2019. As always, our business model supported consistently high levels of cash conversion, which was 106% in the period. Turning to Slide #11 on shareholder returns. Our shareholder returns policy continues to be returned at least 60% of net profits to shareholders through a combination of dividends and share buybacks with at least half of this distribution through dividends. And the Board is also considering payment of special dividend at each year-end. Our Board has considered that the benefit of the change in the tax rate from the Israeli statutory rate of 23% to 12% are special rather than normal. And so this 60% will be assessed according to the full rate of 23%. The Board is therefore pleased to declare an interim dividend of $101 million, representing $0.9531 per share up by 249% on the prior year. Additionally, we have announced today a new share buyback program amounting to $67.3 million. Having completed our previously announced share buyback program in the first half with over 3 million ordinary share purchase, amounting to a total of $38.9 million at an average share price of GBP 10.45. This adds further to our strong track record of shareholder return with a company returning around $1.1 billion to shareholders since our IPO in July 2013, including today's new declaration of which $932.2 million was through dividend payments and $163.2 million was through share buybacks. I will now hand back to David who will take you through the operating review of our results.

Turning to Slide 13 on key market trends during the period. The industry faced an unprecedented market environment. It particularly heightened volatility across all markets and regions, which drove intensified platform usage. Trading in the equities and commodity sectors was particularly popular. We are extremely well placed to manage this outstanding trading volumes as a result of our technological capabilities, which facilitated our consistent performance during the period. Due to the commitment in our bulk of our employees and Plus500's agile operational business model, we maintained a high level of service delivery for our customers through the period. This high level of service was delivered in compliance with global regulatory standards and requirements. On the next slide, you can see our continued leadership positions in key markets. We maintained our #1 position in a number of markets, and we remain the largest CFD provider in the U.K., Germany and Spain for the 3rd year in a row according to the independent investment trends report. We have also included some customer quotes on this slide to give you a sense of the high levels of customer satisfaction. Looking at our developments on the technology side on Slide 15, we continue to improve the trading experience for customers. The very popular dark mode feature is now available across all operating systems, including on mobile platforms on the back of continued customer demand following its introduction on WebTrader last year. We introduced a number of new chart enhancements and features, including improved charging controls and multiple charts analysis feature. We upgraded our integrated notification system to improve our communications with customers, and we launched several tailored solutions in certain local markets on the back of customer demand for features like additional payment methods, including Apple Pay. We also upgraded our Trader's Guide by extending the variety of training tools and tutorial videos in this portal. We increased the range of CFDs available for customers, including a variety of new instruments in commodities and equity CFDs. We will continue to add more features and solutions, including new educational and training models as well as introducing additional financial instruments and technical enhancements. This will help to further improve the best-in-class experience we deliver for customers. I will now hand back to Elad.

Thanks, David. Moving to Slide 16, which covers the excellent performance we achieved across all customer KPIs. Our active customer base more than doubled with strong increases in all regions. Overall, the number of active customers in the first half increased by 132% to over $328,000, including over $264,000 in the second quarter. This was driven by a record number of new customers using the platform in the period as well as the successful implementation of a number of retention measures. We onboarded more than 198,000 new customers in the half, including more than 115,000 in the second quarter. Average user acquisition cost was much improved at $634 from over $1,000 in the prior period. This was due to the record number of new customers onboarded, driven by the group's strong marketing technological capabilities and, of course, thanks to the market conditions during the period. We continue to expect that AUAC will rise steadily over time as our customer profile further shifts to higher-value customers and as the heightened level of market volatility normalizes. The next slide covers our revenue performance in ARPU by region. There was significant revenue growth across all regions during the half and in the second quarter. There was some moderation in sequential revenue growth in the second quarter due to particularly heightened volumes in the first quarter. ARPU also increased materially in each region during the first half, following particularly strong ARPU in the first quarter. I will now hand back to David.

The next slide shows the distribution of our marketing spend by year and by channel. As you can see, the majority of our investment remains online, where our targeted digital marketing delivers consistently high level of return, as you'll see in the next slide, and helps us to drive customers acquisition and satisfaction. We view this efficient technology-based marketing as an investment, not simply as a cost. In this area, we continue to strengthen our already close relationship with Google around paid digital advertising, which remains a barrier to entry for competitors. The next slide shows the returns achieved from our investment in technology-based marketing. Each bar chart shows a cumulative returns over several years from annual customer cohorts. For example, if you look at the chart on the left, we chose the cumulative return from customers registering in 2015. You can see that we invested $104 million in that year. This delivered a total of $376 million in revenue over 5.5 years to the end of this first half of the year, based on customers who registered in 2015. Of the total revenue return over the period, $44 million was produced from this group of customers in the first half of the year. Around $3 million of that $44 million was generated by around 4,600 customers registered in 2015, but only started to trade in our platform in the first half of 2020. This shows the power of our marketing, particularly of our free demo account option, which means customers can sign up, use the demo account for a long period of time but actually only starting to trade on the platform at a much later date. And, of course, their contribution at the later date is pure profit as the marketing cost of attracting them has already been expensed at the time of their initial registration. We also made investment in offline marketing, specifically in the area of sports sponsorships where we signed deals with leading Swiss football club, Young Boys, during the period; and Legia Warsaw in Poland, as announced yesterday, to help build brand awareness in these markets. The next slide further emphasizes the long-term nature of and value for customer relationships. It shows cumulative revenue per customer from their initial deposits over time. Taking the 2015 customer cohort, the dark blue line, as an example, we have generated total revenue of nearly $5,000 per customer on a cumulative basis over a period of 5.5 years. Both this chart and the previous slide highlights several important points. They show that we can easily monitor and measure our return on investment over time. They emphasize the long-term nature of our customer profile, customer satisfaction and the long-term value delivered by our customer-related investments. I will now hand back to Elad.

I'd now like to take you through some of our key customer dynamics in more detail. Starting with Slide 23. This shows our base of active customers over time. This graph highlights the step change in growth of active customers base every few years. As we mentioned earlier, this year's market volatility is a real opportunity for us to attract customers, and this chart is evidence that we're doing that. Importantly, we're also succeeding in retaining a substantial proportion of these customers once market conditions normalize, which we expect they will in the second half. So you can see from the chart that after each period of extreme volatility, we have built a substantially higher base of active customers in the more normalized market conditions thereafter. This success is clearly connected to our business model characteristics and driven by our retention initiatives and the quality of the platform as well as our rapid response to cater in demand, financial news and market events. All of these elements help us to attract and retain customers. We aim, of course, to continue driving this positive momentum going forward. So at this current point in time, we expect this chart in 2021 to show a higher base of active customers than we had before, the heightened level of market volatility in this year. Our customer churn rate on the next slide was relatively low during the half at 8.3% from 34% in the prior period, including 23% in the second quarter. In the first quarter, we achieved a positive churn rate for the first time in our history as recently inactive customers return to trading, highlighting the popularity of our platform and continued success of our marketing technology initiatives. I will now hand back to David.

The next slide is on customer tenure. We are really proud of our success in this area as we continue to ensure that our customer relationships remain high quality and long term. During the period, there were a record number of new customers and significantly higher revenue, which skewed the best of the data on this slide towards the near term. In this context, we continue to improve the tenure of our long-term relationship with customers. 27% of our customers have been trading with us for over 3 years, and 12% of our customers have been trading with us for over 5 years from just 2% in 2016. Turning now to Slide 26 on mobile revenues and sign-ups. Plus500 is the market leader and an innovator in this area. We entered the mobile space back in 2010, and our numbers here reflect our continued success in this area. In today's world, where mobile technology is almost universal, this is so important. It reduces seasonality, provide an improved user experience and is key to the success of our advanced marketing technologies. Our mobile and tablet offering remains extremely popular with customers, helping us to continue to drive market share in a number of key territories. Over 80% of our revenue was generated from mobile devices during the period with more than 70% of all customer trades on a mobile device, both broadly in line with the prior year. I will now hand back to Elad.

On to Slide 27, on risk management and customer execution. Our risk management technology is fully embedded across the business to ensure our risk exposures are aligned with our risk appetite across the wide portfolio of the CFD instruments that we offer to our customers. Our technology support, our risk management process systems and procedures with a risk management mindset remaining fundamental to our corporate culture. Consequently, our approach to customer execution is driven in the context of a clear rigorous risk management framework. Risk exposure is managed through real-time monitoring technology embedded in the platform and predefined risk limits at the group level and on a customer-by-customer basis as well as internal offsetting controls. This approach is aligned with our technology platform and customer-centric model through which we always seek to protect customers via various embedded platform features. In particular, we offer all of our customers, on a global basis, negative balance protection, which helps to minimize risk and protect our customers. These features have been embedded within the platform since inception, ahead of it being required under relatively new regulatory standards in certain regions. As a result of such features, we can ensure that customers benefit from high-quality trading execution. Our approach to customer execution mirrors many of our industry peers. Plus500 in our peer group are all market makers, acting as principal to and, therefore, taking a neutral position on customers' trades as well as taking the risk inherent in their trading positions. Consequently, the company does not have a targeted intention to make financial gains from a negative outcome for customers in relation to their trading activity. I will now hand back to David.

Slide 28 shows 2 important points. Firstly, the group's revenue is being generated from 2 revenue sources. Customer income, which includes the customer spreads and overhead charges and the customer trading performance. Secondly, during the period and, in fact, over the last 6.5 years, customer trading performance accounted for just 1% of total revenues. This is in line with our view that while a time of heightened market volatility, there can be some short-term fluctuations in this revenue component, we continue to expect that it will be broadly neutral over time, validating our approach to risk management. Moving to the regulatory coverage, Slide 29. We believe that regulatory measures support the industry and provide better protection to customers, and we will, therefore, ensure continued compliance with global regulatory standards. We continue to closely monitoring the regulatory environment in Australia, where it is expected that the regulatory there will impose certain restrictions on the sale and marketing of CFDs to retail customers in due course. There were no further developments on this in the first half, but we will update you on the situation as and when appropriate. Given the agility of our technology and the cultural mindset of our people, we remain very well placed to accommodate any future regulatory changes around the world, both in existing and new markets for us as and when they are implemented. Now back to Elad.

Turning to the financial highlights of the period. Slide 31 covers our income statement. I discussed the headline revenue and EBITDA numbers earlier, and I will discuss costs shortly. So I will focus here on our new tax status as announced today. As mentioned earlier, we were delighted to receive approval from the Israeli Innovation Authority and the Israeli Tax Authority, recognizing the company as a preferred technological enterprise. As a result, Plus500 LTD's corporation tax rate for the 3 financial years 2017, 2018 and 2019 has been reduced retrospectively from 24%, 23% and 23% in each respective year to 12% in each year. This results in over $100 million of initial repayments and cash savings expected to be delivered with a rebate of around $47 million already received from the Israeli tax authority in July 2020. Additionally, as a result of the Israeli Tax Authority tax ruling and subject to our compliance with the statutory R&D spending thresholds, our corporation tax rate for the years 2020 and 2021 is expected to be at the level of 12% as well with the potential to be extended after that. Another benefit for shareholders from this update, the tax status, is that withholding tax rate applicable for a dividend for the years 2020 and 2021 will be reduced from 25% to 20%. This is also applicable to the recent final dividend for the year of 2019 paid to shareholders. So we'll have a positive impact for shareholders very shortly and will continue up to 2021. We will provide further updates on our tax status in due course. Slide 32 covers our cost base, in particular, highlighting its flexibility. 82% of the group's costs were variable in the period, which positively correlates to our enhanced performance, driving EBITDA margins and cash flow. Total SG&A expenses increased by 144% to $203.6 million in the half. The main component here is marketing and technology costs, which increased by 145% to $125.8 million, driven by continued technological marketing investment to acquire and retain customers. However, as the number of new customers during the first half increased to a record level, the unit cost AUAC was materially lower. For the full year of 2020, we expect a more moderate increase in marketing costs. Processing costs increased from $7.2 million in the first half of 2019 to $30.1 million in the first half of 2020, driven by the level of customer deposits. So it is another positive indicator of customer confidence in the popularity of our platform. And of course, once customer deposit increase, this has an impact on revenue growth over time. Finally, on this slide, we continue to deliver a high level of productivity with revenue per employee of over $1.5 million during the period, well ahead of the peer group average. This was driven by an optimized efficient business model supported by our teams of highly skilled employees with a deep understanding of the business and our technology. Turning to the balance sheet on Slide 33. Our business has never carried any debt, and our balance sheet remains healthy with a high level of cash balances. This financial health cannot be underestimated in the current macroeconomic climate. This position ensures we are well placed to continue investing in the business for our future growth and gives us the confidence to maintain attractive shareholder returns. Slide 34 covers the cash flow. The business again delivered a substantial cash generation, with operating cash conversion of 106%. This continued level of cash generation was supported by growth in revenue and EBITDA and our limited CapEx needs and low capital intensity given the automated and technological nature of the business. Even after share buybacks of $38.9 million in marketing and technology spend of more than $125 million and more than $30 million of payment processing costs, cash balances at the period end were at the level of $587.8 million. I will now hand back to David.

Thanks a lot. Let's now look at the outlook. Slide 36 covers the key points here. The Board remains very confident about the outlook, particularly given the outstanding performance in the half. Customer income so far in the half is more than double that the prior year, supported by ongoing heightened level of market volatility. However, while it remains difficult to predict the duration of market volatility, we are expecting it to be normalized during the course of H2 2020. Looking further ahead, we are well placed for future growth, given our proprietary trading platform, our flexible and scalable business model, our robust financial position in our track record of delivery against key performance metrics. Future growth will continue to be primarily accessed through organic mix, focused on product extensions, new product lines, technology enhancements and developing our presence in new and existing markets. In addition, supported by the company's healthy financial position where we continue to consider targeted acquisitions where appropriate, particular for new product lines and new geographies. With this in mind, we aim to deliver revenue growth and consistent level of cash generation over the medium to long term. So that's it from us. We would be happy to take your questions now. As I mentioned earlier, feel free to ask us questions directly over the phone or post them on the webcast facility and we'll ask your questions. Thank you.

[Operator Instructions] We will take our first question today from Ian White of Autonomous Research.

Just a few for me, please. First, just in terms of the recognition of the preferred technology enterprise. Can you just talk us through the specific criteria you will need to meet in order to have made the tax treatment extended beyond FY '21, please? And can I just check whether the $100 million you're calling out is the rebate for 2017 to 2019 or if that's the total benefit, including savings in FY '20 and '21? That's question one, please. Secondly, in terms of expansion and you're now sponsoring a Swiss football team, but I think I might say, you don't currently have a Swiss license. Is that the most likely new market for you to enter in the near term. And should we expect that in the second half of 2020, please? And just lastly, in terms of the current trading, you're calling out that the customer income has more than doubled so far year-over-year. How is customer trading performance been so far in 2H'20, please?

This is Elad. So from a criteria perspective, on the tax accreditation, the criteria are, of course, to meet the thresholds that are included within the legislation of ILS 75 million also on the R&D cost. And also that is payment of Plus500 over the last 3 years, so that should be applicable for the year 2020. And also once that we'll finish the year of 2020, we'll be able, of course, to assess it and of course, for the Israeli Tax Authority to assess it by themselves and accordingly also to approve that accreditation for the year of 2021. With respect to years to come, the fundamentals of the business are, of course, there. So we have our understanding that we'll meet that exemption and that reduced level of tax for the years to come as well. But time by time, we'll need to assess it with the tax authorities. And with respect to the rebate, the cash savings, the $100 million refer to the period of '17 and '19 as a whole, $47 million were already received, an additional amount, of course, to be applicable for the years of 2020 and 2021, okay?

Okay. [indiscernible] Yes. That's fine.

It's David. So regarding your second question, sponsoring the Swiss, the Young Boys team as well as the Legia Warsaw is part of our marketing approach and part of our strategy to expand our presence in local markets, and that's all.

And as with respect to the customer income, so we were in a great position also to reflect with the market the debt momentum that was also in the first half 2020, has continued with the customer income performance, which is the fundamental and the underlying level of the performance correlates, of course, with the number of transactions, the activity in the market, the number of active customers in the system. And as a whole, we found it to be very applicable and very relevant we indicated this morning.

Got it. Can I have maybe just one clarification, please, to make sure I got it right. The threshold for the tax accreditation is ILS 75 million R&D expenditure per year? Have I got that right, please?

That's correct. And of course, there are lots of other measures and other kind of examinations that need to be taken into account. The only viable determination that needs to be taken in addition on a year-by-year by the ruling that was obtained, of course, measured a lot of other specifications for the technology itself, for the innovation, which is embedded within it and what the level of platform innovation and features the company brings to the table. It's not something that is a straight forward kind of tick the box ILS 75 million. And by that, to get the exemption on the contrary, there are lots of hurdles and a lot of examination from the technology itself. And thanks to the proprietary technology, the edge, the Plus500 is bringing to the table and the superior technology that we offer our customers, the innovation authority in Israel found that the technology of plus would be very applicable. And that's why we got that presidential ruling.

[Operator Instructions] I'll turn the call back to our speakers to see if we have any questions from the webcast.

This is Rob. I've got a question from [ Steve Keeling ] [ Maven ] Capital. David, 4 questions. First is how have you found the first few months as CEO and how do you organize your time? The second is, what are your -- what's your top priority over the next 12 months for the business? The third is what you -- can you give some more color on your acquisition strategy, particularly around return on capital? And what are you expecting in terms of -- where should we expect you to make acquisitions? And can you give us -- the fourth question is can you give us some more thoughts on the products, where you're going to be expanding your product range? No further questions for the audit cost at this time.

Thank you, Rob. So referring to the first question. First 2 months were very exciting for me. I want to remind that I'm part of Plus500 as of 2010. I was part of the establishment and growing of the group, and I was responsible for many of the innovation and innovative parts of the company, established the full operation worldwide and basically touched everything. So I can say that not too much is new to me in the company. I bring -- I'm an engineer in my background. And I see the company first as a high-tech fintech company rather than just a financial services company. And also in turn, I started to push this agenda and to promote some of these areas. And I'm very much excited about the opportunity that was given to me, and I'm very positive and confident that we'll do great stuff together with the successful team. Second thing is top priorities. The second question was related to my top priorities. So my top priority is to keep enhancing the company and lead it forward within the 5 growth areas, which we discussed over this presentation, mainly growing and extending our presence in the local markets and into new geographies. And the third thing is to keep enhancing our CFD platform with new features, new innovative elements as well as new CFD instruments to trade with. And regarding the third question, the acquisition strategy is we are actually examining possibilities. And of course, that it should be aligned with our -- within the financial services sector. The idea is to target new product lines or new geographies. And we will announce when there is something compressed and when appropriate. And the fourth question is regarding the expansion of the product. So as mentioned, this is something that I truly believe that Plus500 should do, should expand, must expand into new product line. We are actively looking and working on that. It's -- there are many options with this. I can, in general, say that such option can be share dealing, which is trivial and our competitors offer this, but there are other product lines which we target. That's all from my side. Thank you.

Thanks, David. I had 1 other question on the audiocast from Ben Williams, an independent analyst. He's asking, perhaps for Elad, how you think the lifetime value 2020 new customers will compare to the lifetime value customers from previous years.

So we can definitely say that the characteristics of the customers that we onboarded in the first half was in an improved level. It's being reflected through the level of deposits that you all saw today, the $1.65 billion level of deposits versus the one which was in the first half. The tremendous increase obviously reflects their capability, the sources and, of course, the revenues to be generated on an ongoing basis. So this is one. Secondly, we are continuing to expand within our strategic countries to be the market leader in the U.K., in Germany, in Spain, according to investment trends, and it's not by surprise. We have a superior technology in the marketing side as well. And our understanding based on the KPIs, and you saw as well the level of return of those customers and registrations, the historical as well registration is going up year-by-year. And it goes hand with hand with the level of offering with the platform features and the expansion of the offering itself.

Thanks, Elad. And a follow-up question from Ben on a different subject. Has Plus500 benefited from platform outages at some of our competitors?

We can just say that overall, our status was very strong. Putting aside the competitors will focus on Plus. So our position was very strong during the period. And I think our customers are welcoming that in a great capacity. And not just that. It's also going hand with hand with the level of offering in the mobile devices. You saw that the 80% and 70% revenues and trade, respectively, were executed and generated in the mobile devices and are the leader in the mobile space. We'll continue to be that, and also thanks to the robustness of the platform.

Thank you. Now a question from Alastair Gunn from Jupiter. Four questions. First 2 around shareholder returns. First question is explain how the Board decides the right level of return versus buyback, so the dividend versus buyback. And as a follow-up question on that is what's the ideal size in terms of your -- the net cash position to sustain that net cash position that is on the balance sheet. Two other questions, given Plus500's tech platform advantage in terms of competitive advantage, why would we consider M&A in new markets as opposed to effectively scaling the platform there? And the final question is what proportion of increase in share-based payments and bonuses is discretionary versus contractual?

Sure. I'll take the first, David, the second and the third would be with me. So with respect to the contact dividend, the dividend at the core. So the dividend and the buyback, the composition, of course, the Board examines period-by-period the benefit of the shareholders. We're having our internal discussions and based on the optimization to cater a various level of shareholders. And also based on our understanding, we came across with the split of the 60%-40% this morning. And we believe it caters also the income fund and also from the company's perspective, the outlook, the great outlook and the growth to come for the company and also with respect to the valuation and where the share price is. Putting that aside, yes, the shareholder return today is enormous, is very attractive, and it reflects the great position we were in the first half of 2020. Putting aside that's more than $1 billion already been returned to the shareholders through the last 7 years as a public company.

Plus500 is a great technology engine with a proprietary technology that allows us to integrate and implement a new possible future M&A quite intuitive. And, as mentioned, we are looking and we will real target for M&A opportunities for both enter new markets and add new product lines.

And the third question referring to the cost base. So you could have seen the majority, the majority of more than 80% of the cost is reliable, which grows with the marketing spend, the processing cost and the bonuses. On the bonuses side, actually, the majority of the bonuses of the year have already been recorded due to the targets that were achieved, thanks to the increased level of performance in the first half. So definitely, you shouldn't look at those numbers to be doubled in the second half of the year.

Great. No questions on the audiocast.

Thank you, everyone, for your questions. Just to sum up. We delivered an outstanding performance during the half, driven by the strength of our technology platform, which enables us to benefit from the unprecedented market volatility experienced during the period. We remain very confident about the outlook and our ability to deliver sustainable growth in revenues and earnings with continued strong cash generation over the medium to long term. That's it from us today. Thank you for your time. Goodbye, everyone.