XTB S.A. (XTB) Earnings Call Transcript & Summary

Good afternoon. We would like to welcome all of you on behalf of the Management Board and the Investor Relations team. Today, we will recap the preliminary results of XTB for H1 2026. We plan to utilize this time with you by giving a presentation and summing up the most important information and figures. The CEO, Omar Arnaout, will run this presentation along with the CFO, Pawel Szejko. After the presentation, we'll move on to the Q&A session. [Operator Instructions] If there is a larger number of recurring questions, we will select one representative question and the Management Board will try to respond to the greatest extent possible in so far that's possible. And that would be it as a matter of preface, and I'll give the floor to my colleagues from the management team.

Good afternoon, ladies and gentlemen. I'm very pleased that I'll be able to walk you through the preliminary results, financial results of H1 2026. Without protractoring things, let's go ahead and move into the details. This was a spectacular record-breaking 6-month period in the history of XTB. Our revenue on total operating income was PLN 2.86 billion. That signifies growth of nearly 80% year-on-year. In the first half of 2025, we had PLN 1.116 billion in revenue. If we look at Q2 on a stand-alone basis, we had PLN 992 million in revenue, which as a natural fact with less volatility, this is a very good period. It's some 9% lower than in the record-breaking first quarter of the year. If we look at operating expenses, and I will, of course, move on to that subject in detail in a moment, we had PLN 884 million as a result, at the operational level, our EBIT was more than PLN 1.202 billion, which signifies growth of nearly 118% year-on-year. And from my point of view as the CFO, it's very important. The consolidated net profit for the first 6 months of this year, for the first time in our history, it has surpassed the magical barrier of PLN 1 billion. It was precisely PLN 1.027 billion. For the sake of comparison, 1 year ago at the same period, we had PLN 410 million. So we're talking about a growth rate in excess of 150%. So we can say these are historical figures, which show the enormous scale or magnitude at which XTB is operating. Here, I would like to draw your attention to one fundamental thing. I would like to mention our powerful operational leverage. We're effectively scaling up our business and the growth of cost is held under control in check. So that means our profits are growing exponentially. So our revenue -- operating revenue grew by nearly 80% year-on-year. At the same time, our operating expenses grew by 45%. And that difference in the growth rate of revenue and costs means operating profit EBIT has grown by nearly 118% and pure net profit has shot up by more than 150%. That is the essence of how we're building XTB as a modern, scalable fintech. Of course, our cost base is growing. We hire the best people. We're investing in technology. We're doing wonderful global marketing. But this investment outlay is converting into an increase in the customer base and revenue. So every 1 million of revenue generates a very high operating margin because the infrastructure is ready in place. So the figures you see on this slide are the best proof that we're able to combine the dynamic growth of the business with the highest possible profitability for the shareholders. So as I move on to the revenue side, as you are perfectly well aware, our business model in XTB means there's a natural volatility in revenue from quarter-to-quarter. And this is directly linked to the volatility on the financial markets and the commodity markets, as well as the activity of our customers. If we look at Q2 of 2026, so the CFD instrument trading volume was higher than 1,830,000 lots. That is a decline of in excess of 21% compared to the dynamic first quarter when customers entered into more than 2,320,000 lots, but this trading volume generated a higher profit per lot. And so in Q2, it reached PLN 484 from PLN 439 in the first quarter of the year. For the sake of comparison, in the entire first half of 2025, the average profitability per lot was PLN 251, whereas in the first half of this year, it was PLN 459. This shows that despite the slight decline in trading volume and lots year-on-year because we had a decline of a mere 1.1%, the high profitability per lot enabled us to generate in Q2, nearly PLN 1 billion in operating revenue. This proves that our engine for generating revenue is operating very efficiently and the high volatility is able to generate a high profitability despite a lower trading volume in a given period. So if we look at the revenue in terms of the mix, XTB continues to monetize its business through CFD instruments primarily. In H1 2026, they were responsible for roughly 93% of revenue. The most profitable were CFD instruments for commodities, and this represented 75% of our gross result. Last year, it was 33%. And this is the direct impact of our customers' interest in gold and silver, oil and [indiscernible]. Second very profitable asset class were index CFDs with a share of 14%. The driving force were American indices, USD 100 and USD 500. CFD for currencies generated 5% of the gross result and the strongest item in this category were cryptocurrencies, Bitcoin and Ethereum. So the change in this mix perfectly shows the flexibility of our customers in Q1, volatility was mostly in precious metals, and that's where the capital was flowing. In Q2, our investors with lightning speed turned their attention to the equity markets. They were looking at NASDAQ and having in mind the AI trends. And so we give our customers the best possible transaction platform in order to catch these opportunities wherever they appear. For XTB, what's very important is the product diversification for its revenue. And for that reason, for years, we've consistently been developing our product offering and building the top investment platform in Europe. So other sources of revenue besides CFD represents 7%. A few years ago, it was 2%. So we can see the fruits of our efforts and the ambition of the management team is for -- over the next 3 years, the share of other products in revenue should grow to 30%. Moving on to costs, operating expenses. Our total operating expenses in H1 were PLN 884 million. This is an increase of 45% year-on-year. Our largest cost item is marketing, which is responsible for 49% of the mix. In H1, we invested more than PLN 435 million, it is nearly 65% more year-on-year which is a result of the intensification of our globally -- global campaigns that have been very successful. Next line item is salaries. So PLN 247 million, so nearly 28% of the structure of the mix. In the first half of the year, we have stabilization of headcount in XTB. This is a result of increasing automation of process and the utilization of AI. This is easily visible if we look at the decline in headcount in the product and technology department, where at the end of 2025, the headcount was 616 persons. And at the end of the midyear, the interim period was 605. If we look on a quarter-on-quarter basis, operating expenses fell by 9.5%, largely, this is a result of marketing expenditures being down by PLN 35 million and then other expenses fell by PLN 18.5 million. The most -- the last decline is a result of having a nonrecurring event of PLN 20 million in the first half of the year. That was in the first quarter, there were no nonrecurring items in Q2. If we look at the full year of 2026, we upheld or uphold our assumption that our costs may be higher than in 2025 by roughly 30%, marketing spend may grow by 50% year-on-year because we see a gigantic rate of return in these investments in terms of customer acquisition. What is also very important is that the average customer acquisition cost is stable at least PLN 600, which is fully comparable to the years from 2023, 2025. In addition, in the midterm, which we see as a 3-year period from 2027 through 2029. We, as a management team, believe that marketing spend may grow by 30% to 40% year-on-year, while at the same time, the average customer acquisition cost should be at a similar level as in the period 2023 through 2026. It is our ambition in the midterm to increase the number of new customers by roughly 30% year-on-year. XTB is a growth company that pays dividends. We have been consistent in sharing our success with our shareholders. So at the end of June, we had a record level of PLN 2.934 billion in own funds. This is an increase of more than 47% compared to the end of last year. This cash is more than 28% of our total balance sheet value. In June of this year, we paid out a dividend of PLN 478 million, which is PLN 4.07 per share. This is 75% of the stand-alone profit for last year. So in the first half of the year, our profit was PLN 1.021 billion, which is an excellent base for future payouts. We maintain our intention of issuing recommendations for dividend payouts ranging from 50% all the way up to 100% of the stand-alone net profit. The final recommendation will always incorporate our plans for expansion and the guidelines given by the Polish FSA. But please take a look at our total capital ratio AFR at the end of June. It's roughly 193%. And this shows that XTB is a safe entity with a high level of capital. And as a management team, we have a lot of comfort in terms of planning to share profits with our shareholders. Now moving on to the market environment. This slide, from my perspective as the CFO is perhaps the most important and most fascinating slide in the presentation up until now. What does it show? It shows the total amount of assets that our customers have on the XTB platform. At the end of H1 2026, the customer assets reached a historical level of PLN 50.305 billion. In order to illustrate the magnitude of what's happened, let's take a look at the past. In 2019, we were at a mere PLN 705 million. And over 7 years, it's grown by 7x. As a CFO, the mix of these assets is important. So the equities held by our customers are worth some PLN 23 billion. The ETFs have surpassed the PLN 20 billion water market. Free cash is PLN 6 billion and CFD instruments are mere PLN 642 million. What does that mean in practice? That means that more than 86% of all the customer assets in the XTB platform are long-term instruments and savings instruments, so traditional equities as well as ETF funds. This is tangible evidence that our strategic transformation from a broker that was mainly seen as CFD provider looking at an all-in-one approach to have multiple classes of assets has been successful for millions of Europeans. We are a trusted institution of first choice for their long-term investments of their own capital, private capital. And that large stable base of long-term customers, of course, shores up the long-term nature and stability of our business for many years. And maybe as I wrap up, it's an interesting tidbit amongst our customers in the first half of the year. So the equities that were the most interesting to our customers were [ Microtonality ], NVIDIA as well as KGHM amongst the ETF instruments, we had the S&P 500 ETF. We also have an instrument that we're looking at the physical price of silver and the Vanguard fund, which tracks the FTSE -- all world. The most popular CFT instruments were gold, the American Index US 100 and the German index, DAX. I would like to thank you very much for your attention, and I'll give the floor to the CEO, who will tell you about our accomplishments in terms of operations and products.

Thank you very much, Pawel. So Pawel has already talked about the bulk of the interesting things. So my portion of the presentation will not be very lengthy. So I would reiterate what Pawel said. The first half of this year was wonderful for us, and maybe I would say a little bit modestly, but this is not a major surprise to us. It's not a major surprise because in recent years, we are profoundly convinced that our strategy is the right strategy. Of course, that means we have to create the best investment application for the retail customer who wants to manage his or her assets or savings. And of course, we're all in the company aware of the fact that this is also linked to the market situation. And we have said this many times over the years that we're focusing on those elements which we can control. So it's a matter of being consistent, unwavering in terms of building technology, being unwavering in terms of expanding the product offering, enlarging the product offering as well as building the brand everywhere we operate. And when we talk about that type of consistency and unwavering approach that when the proper market situations appear on the financial markets, we're able to generate such good financial results, and that's the most important thing to us. And so I must say that our unwavering approach has brought us to where we are today. And even though we know that we were not always happy with the results for last year, but I think we're all aware of what was happening in the financial markets last year. But now giving some specific remarks about our operating results. In the first half of this year, XTB was joined by more than 700,000 new customers, which is a result that is 94% higher than what we were able to do in H1 of last year. The total number of active customers has grown by more than 74% and net deposits have grown by more than 60%. So if we look at trading volume in lots, it has fallen this year compared to H1 of last year. But on the other hand, which is something that's noteworthy, this is highly connected to what's happening in the financial markets. Last year, as you know perfectly well, the markets had a long-term horizontal trend, which lasted almost at the very end of the year with the exception of gold, silver, so on and so forth. So in that situation, when we have a horizontal trend, frequently, customers have a higher number of transactions. However, when markets have a very clearly defined direction, then customers tend to hold open positions. And that's why there's a lower level of trading volume measured in lots. Continuing what Pawel mentioned previously, we're pleased by the fact that even though the marketing budget has grown so dynamically, we've been able to maintain the customer acquisition cost at the level of PLN 600. If we look at marketing efforts, we're currently preparing as is always the case at this time of the year, we're preparing for the biggest campaign in the history of the company, which will begin in September. As I recall, in recent months, over the last 6 months, we were sharing with you some of the new projects and cooperation arrangements. So cooperation with the Napoli Club, working with FIBA as well as the cooperation with [indiscernible]. Well, I won't be able to tell you too much about that at this point in time. The marketing team is currently working on many new projects, which we'll be able to share with you. I hope in 2 or 3 months, we'll be able to talk to you about them. But every few moments, new projects are coming forward. So a lot is happening in terms of the marketing perspectives and prospects. A lot of preparation is being done for Q4. And so I think that's all I can really say about marketing efforts. Let me move forward by one slide. If we look at our products, let me begin with the products which were already implemented regardless of whether they've been implemented in all of our markets or only some of the markets. If we talk about options, options are largely available in Europe. And in terms of offering it in Poland, it's only a matter of time. Technologically, we're prepared. So this rollout is maybe not from week to week, but it's pretty active. The same is true in terms of investment plans to 0. And we also have that in the first market, it's only a matter of time until it's implemented or they are implemented in all markets. Well, the situation is not entirely identical. But if we look at extended trading hours, so for ETFs and European equities, well, those extended hours have been introduced everywhere, and that's something we're very pleased with. In terms of cryptocurrencies... Well, I think in the most recent week, they were added to our market in Chile. And so that's the first full pledged branch where crypto assets are available in the spot market in Q3 of this year. The cryptocurrencies will be added in the Spanish market and other countries will be added based on the license from Cyprus. Nobody has that in Poland in Q4. Once MiCA is implemented in Poland, of course, we're going to want to offer cryptocurrencies in Poland from Poland. So we have customers in the U.K. have access to the cash ISA account. And so if we think about our current preparations in terms -- on top of the rollout that I mentioned already, I would say that we're outside of margin trading. We're primarily focusing on extending the pension accounts, so tax wrappers. This pertains to the Hungarian market, where I hope this product will be implemented in the next 2 or 3 weeks. We're also working on similar solutions for the German market because there's going to be a new product implemented there as of 1 January 2027. And the situation is similar for the OKI accounts, which will be implemented on the 1st of January 2027, if I'm not mistaken. So we're not taking into consideration the opportunity that we might not be successful. We're doing everything that we can for the OKI product as well as for the German market. We want to be ready on the date of the product launch. That would be it from my side. And so now I'd like to invite you to participate in the Q&A session.

So now I will begin probably. How is the development of XTB moving on in terms of the Indonesian market? Can you say that the company for now has forgotten about plans to expand in the Brazilian market?

Let me start with the second question. In terms of the Brazilian market, yes, the company has abandoned those plants, not even just for now, but we have abandoned those plants. We will not, however, focus on this market, and we're not planning any efforts in the Brazilian market. In terms of Indonesia, there are several things I would like to address. In the near future -- in the very near future, I'm thinking within this week or next week, we should receive a license to offer CFD instruments, and we're very pleased by that because we didn't have those opportunities up until now. That's the first and perhaps the most important piece of information that might be intriguing to you. The second piece of information is as follows. I've mentioned to you in many of our meetings, that there's huge interest in terms of the number of customers in Indonesia. That hasn't changed. It's only better. But I also mentioned that the net deposit was very low. And that has changed a lot recently. From the perspective of Indonesian market, we have a very prospective approach. The number of customers is growing dynamically. Net deposits are growing dynamically. And once we receive the license to offer CFD instruments, we think this could be a very good market for us. So at present, this looks much more optimistically than what we had seen a few months ago, and we're very pleased by that. I think I've already responded to the second question when I talked about crypto currencies, then we have changes in the rules and regulations suggest that after opening options in Poland, only XTB would issue those options. In the future, does the company intend to enable customers to issue options? Well, at present, no, I think this is something that the situation might change maybe next year or in the future. Well, there are certain plans, and we have analyzed the product from this vantage point as well. Thank you very much. Let's go on to the next question. Why are the loss in H1 '26 was lower than in '25, even though there was much more volatility in 2026 than in 2025. I think I've already responded to that question. This is basically a matter of the nature of the market. When the market is in a horizontal trend, there's a greater inclination on the part of the customers to open a larger number of transactions. I think we can go on. I've already responded to that question. Okay, we'll move on. The share of CFD transactions in the original transactions of new customers was 17% in H1 2026. In Q1, it was 21%. What is the reason for this major movement? I think the biggest difference in terms of gold, silver, oil. So customers who are already interested in that volatility had already set up their accounts in Q1. Having in mind -- that's point number one. If we think about point number two, what was crucial, maybe not crucial, but from a strategic and communication point of view, in Q2, we had a broad campaign linked to 2 products that are very passive. One was the cash ISA product. The other product was the account in France. So on one hand, there was a little bit of saturation, lower interest in gold and silver. It's also a matter of communication in terms of strategic communication about products amongst more passive products. Thank you very much. We also have a question about spreads. Are spreads still at an above-average level? There was also a question about the spreads that we present. Let me respond to the first question. In terms of the split, I think I know more or less what you're going to say, Pawel, but I'll respond to the first part. So spreads at an above-average level that was only when the volatility was enormous. So I think at the end of January, first, second weeks of February. So they're not an above average level. And so this was a relatively short period in which that was taking place. In terms of the second part of the question, the split of revenue with respect to spreads and swaps, market-making commissions, we always publish the things on an annual basis. We don't do that in interim periods. So you're going to have to wait to be a little patient and that information will be published in the annual report. Marketing spend, would it not be a good strategy to increase the marketing spend in the second half of 2026 in order to accelerate customer acquisition versus the competition, which is very active in a marketing basis. I fully concur. So when we don't have larger scale branding activities, this is July and August. These are 2 months in the year during which we're not doing a lot of branding of activity or efforts because of Google, social media or other. We're very active anyway. But of course, that doesn't alter the fact that starting in September all the way through the end of the year, we're going to run the largest campaign in the history of the company. So budgets are going to be much higher than ever before, but we're going to enter into new cooperations in the near future. So I fully agree. Generally speaking, if we think about marketing efforts, as Pawel mentioned previously, regardless of we're talking about this year or next year, the marketing budgets will grow on average by 30% to 40% per annum. Above all, they will focus on the French and the German market and perhaps on the United Arab Emirates. But if we want to be the largest investment company in Europe, and we know that we want to be that type of company, then we have to spend more. Thank you. Now we have a question about the product offering. You've already in part responded. You declared potential to acquire more than 1 million OKI accounts in the first month after the entry into force of this law. Is XTB fully ready in terms of the technology? And from the first day, will be able to offer that as a mobile application and a web application? And will this offer be fully exempt from fees and commissions? Just is it the case for equity accounts. Well, we're not ready technologically in full because we sold a lot of time. We knew we have to be ready by the 1st of January. I don't see any other opportunities or possibilities than not being ready. We will be ready. Will it be in a web app and a mobile app? It seems it will be in the mobile app. But just like with other products, we will add that to the web app. But having in mind right now that the same team is working on OKI and the new German product, we want those products to be in our offering immediately, even if that means that customers will have to wait 2 to 3 months for the web app. So I think the mobile app will be the priority. Will it be totally exempt from costs and commissions like in the equity account? We haven't had any talks about changing anything in the offering. So I think just as in every other aspect of our ETF and equity offering, it will be exempt from commissions up until PLN 100,000 per month. Okay. I'll look for the next question. Okay. We have a question about the spreads and swaps. I think Pawel already responded. What was responsible for the growth in profitability from PLN 439 million in Q1 to PLN 484 million in the second quarter?

Generally speaking, profitability per lot is driven by several factors. One of them is the market characterization in a given point in time because this affects investment decisions made by our customers and what sort of behavior they exhibited. I think Omar already referenced that just a few moments ago. And then the investment decisions made by our customers. So depending on the market characteristics with long clear trends on the market, generally speaking, our customers generate lower trading volume, but the profitability is higher. That's partly because customers are inclined to hold positions for a longer period of time. And that means there's a higher number of swap points contributing to profitability. But when there's a lot -- when there's horizontal trends and customers are utilizing that for range trading, then the characteristic is that the lot volume is high, but the profitability is much lower. And this is something that you could see perfectly last year that we had that type of market characteristic for that market feature for the last year. Thank you very much. We have a large number of questions about options. So I'd like to select one of them. How are the options developing? What sort of revenue did they generate in Q2?

I mentioned already that they were developing. They're going to be implemented market by market. They'll be implemented in most of our branches. If I'm not mistaken, Pawel, please correct me if I'm in error. I don't think we break down revenue into options. We combine all products with -- in a single category except for, let's say, CFDs. Pawel, if you would want to add anything, it would be grateful.

I would confirm what you said, having in mind that XTB is implementing more and more products and having in mind that our competition is actually tracking our activity very closely. This type of data is sensitive, and so we show this data in aggregate. I wouldn't preclude a situation that our approach might change in a few years. But in this key period as we diversify the revenue by products, well, data will be shown in aggregate, and we will not share that data -- individual data.

Thank you very much for that explanation. Let's go on to European expansion. If you can give a commentary in which one of the markets, the U.K., Germany or France is the closest to the target economic results and which requires the highest correction in terms of the product or acquisition channel. In terms of products, the most important aspect of product and offering, we have that to compete with the largest competitors in France and in Germany. So this is not a matter of making a correction. We can always add a higher number of products or options, cryptocurrencies, but there is no such product without which we're not able to compete for a position amongst the leaders in these markets. So from the point of view of the largest in terms of where we're the closest to the top through. I think France is the case. We're reaching the mass customer. Customers in France don't see a typical CFD broker, but a multi-asset broker. Most of the customers opened their first transactions in France on equities and ETFs. So I think we're the closest to success in France. The German market is #2. I think we're the farthest from achieving our goal is in the U.K. Well, this is a test year. The U.K. doesn't have such a large marketing budget where the French or German markets can brag about having such big marketing spend. So we're looking first at France and Germany, and we're very pleased with those results. The biggest challenge in Germany in the future will be reaching the mass client. In my opinion, from the viewpoint of the CFD offering in Germany, I think we're the company of first choice. But in terms of equity and ETF, we're not the company of first choice. This is not a huge surprise to us because the German competition has been advertising strongly intensively for many years. So it's not the case that just because we're spending more that we're suddenly going to become the leader. But as we expand our marketing budget in Germany and France, if we're going to be consistent, the current product offering should help us to be amongst the leaders. And if we add to that the fact that in Germany, there's a new pension product, even 2 pension products in January, that will be another reason to choose XTB. If we think about Lithuania, of course, I will respond in part. And Pawel, if you want to add, please say what you would like since we're such a large company. So such large companies have to have several additional licenses like the license we have in Cyprus. And a very good example is where that license was helpful in recent months was the ability to obtain a license for options as well as receiving a license to offer cryptocurrency. So Lithuania will be another center. We're going to be able to onboard customers, but also implement new products. Well, it might not curtail us. We're not talking about curtailments or mutations. But if we're looking at a company like XTB, what's very important is the ability to implement products quickly, having in mind the dynamic growth of AI and how frequently our technology department is utilizing AI in the process of coding. If this coding process is going to be accelerated substantially with respect to previous years, then receiving licenses and the ability to offer products will be very important. So we have to have several centers where we can obtain those type of licenses. Let me add that Lithuania and the Lithuanian government are highly supportive of fintech companies and Lithuania is becoming a hub, a regional hub for fintechs. I think it's worth emphasizing not our direct competitions, but Revolut and Robinhood are also regulated in Lithuania. And I would confirm what Pawel said that there's a very conducive set of conditions to develop fintechs in Lithuania.