Swissquote announced yesterday both revenues and the pre-tax margin for 2019. The two numbers are above guidance at CHF230m and CHF50m, respectively. Management confirmed its guidance for 2022 and the full report will be available on 17 March. Swissquote was up 10% yesterday is up 3.5% today.
Revenues at CHF230m were in the mid-range of management’s guidance and slightly above our expectations. Pre-tax margin was also higher than guidance (at CHF48m) and 6% above our own forecasts. While we do not have any further details (until 17 March) regarding the split in revenues, the increase in assets positively surprised (at CHF32.3bn vs CHF31bn for our expectations). Following this good set of results, we are confident of increasing our numbers going into 2020 and 2021, even more as management confirmed its ambitious guidance for 2022.
With financial markets enjoying the current strong momentum, Swissquote’s assets have mechanically increased as well. It has also gathered about CHF4.6bn in 2019. Management is targeting about CHF36bn of assets under custody in 2022 to reach its CHF320m revenue target. Given the ongoing gathering, this level should be reached even if financial markets have a pause.
Even if we remain wary regarding the revenue guidance due to the uncertain level of interest rates going into 2022, we are comfortable in increasing our bottom line to get closer to management’s guidance of CHF100m pre-tax margin for 2022 (we currently expect a CHF64m pre-tax margin for 2021).
Share is up 13% in the last two days and even 22% since the beginning of December. Recent M&A operations have helped (and will help) the repricing of the sector. While consolidation has started in the very competitive US market (Charles Schwab and TD Ameritrade), operations should help increase multiples in Europe as well. The acquisition of DeGiro by Flatex recently (December) was done at a price of 4.3x P/Sales (an investor has currently to pay about 3.5x for Swissquote).
While we will have more details regarding the P&L numbers in the 2019 annual report, the higher than expected pre-tax margin, the confirmation of the guidance and the rerating of the sector’s multiples make us confident of increasing our bottom line for Swissquote.
