Trading 212 UK’s Gains Impacted by Marketing Costs

Trading 212 UK’s 2023 gains were impacted by higher marketing costs despite rising interest income and user growth.

Key Points

• Revenue decreased by 3 percent, and pre-tax profit dropped by 28% in 2023.
• Interest income surged to £14.8 million, up from £451,994 in the previous year.
• Administrative costs rose 45 percent to £71.2 million due to heightened marketing activities.
• Monthly active users increased by 28 percent, and client custody assets grew by 55 percent. New offerings include a multi-currency payment card and a stock lending program.

Trading 212 UK’s subsidiary faced a challenging year in 2023 as increased marketing costs ate into its gains despite a significant rise in interest income. The brokerage generated approximately £14.8 million from interest income, yet higher marketing expenditures pushed its administrative expenses 45 percent higher.

Trading 212 UK’s Gains Impacted by Marketing Costs

After a series of record-breaking years, Trading 212 UK’s revenue growth and profits slowed in 2023. The company reported a 3 percent decline in revenue and a 28 percent drop in pre-tax profits. According to the latest Companies House filing, Trading 212 UK Limited’s revenue for 2023 stood at £95.3 million, with a pre-tax profit of £38.6 million, down from £50.9 million the previous year. Net profit after taxes was £30.4 million, compared to £41.1 million in 2022.

Despite the downturn, the company described 2023 as a “continued stabilization in revenue following the exponential growth seen between 2019 and 2021.” The rise in interest rates proved beneficial, boosting interest income to £14.8 million from just £451,994 the year before.

However, the surge in administrative expenses, climbing 45 percent to £71.2 million due to heightened marketing activities, heavily impacted profits. The company ramped up its marketing efforts in the last quarter of 2022 and allocated over £7.4 million for research and development.

Improvements in Non-Financial Metrics

Founded in Bulgaria in 2004 as Avus Capital and incorporated in the UK in 2013, Trading 212 focuses on the UK and the European Union, operating through three entities in the UK, Cyprus, and Bulgaria. While the group has yet to release its 2023 figures for non-UK businesses, the UK entity is shifting its focus from contracts for differences (CFDs) to stockbroking.

“While operating both a stockbroking and CFD platform, T212’s growth strategy remains focused on the stockbroking part of the business and growing the value of client money and client asset balances,” the filing noted.

The company highlighted several improvements in non-financial metrics: monthly active users increased by 28 percent, and monthly trades rose by 32 percent. Additionally, the total value of client deposits and client monies jumped by 22 percent and 37 percent, respectively, with client custody assets increasing by 55%.

Expansion of Products and Services

Trading 212 continues to expand its product offerings. Recently, the broker launched a multi-currency payment card for its UK customers and introduced interest on uninvested cash and a stock lending program.

“T212 continues to review new product ideas to further contribute and support the investing public in gaining access to the wider financial markets, enabling them to take control of their financial undertakings, investment portfolios, and ultimately to build wealth for their futures,” the company stated.

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