FLOW TRADERS Q122 TRADING UPDATE

FLOW TRADERS Q122 TRADING UPDATE

Amsterdam, the Netherlands - Flow Traders N.V. (Euronext: FLOW) announces its unaudited Q122 trading update.

Highlights

• Market ETP Value Traded increased by 41% quarter-on-quarter and by 62% vs Q121
• Flow Traders ETP Value Traded increased by 27% quarter-on-quarter and by 26% vs Q121
• Flow Traders NTI increased to €148.0m in Q122 reflecting a more active market environment and strong trading performance. This compares to NTI of €80.3m in Q421 and €142.2m in Q121
• Normalized operating expenses of €75.8m incurred in Q122. Employee expenses reflect increased variable remuneration due to an improved operating result, impact of strategic headcount growth and the implementation of targeted base compensation increases. Other expenses include non-recurring advisory costs relating to the firm’s recent corporate strategy and group legal structure review and the implementation of a corporate venture capital unit
• 624 FTEs as at 31 March 2022 compared to 613 FTEs as at 31 December 2021
• Normalized EBITDA in Q122 reached €72.2m representing a margin of 49% compared to Normalized EBITDA in Q421 of €32.6m with a margin of 41%
• Q122 Normalized net profit amounted to €54.0m with Normalized basic EPS of €1.24
• Regulatory Own Funds Requirement (OFR) as at 31 March 2022 was €365m, resulting in excess capital of €175m as at 31 March 2022. Trading capital stood at €607m at the end of the first quarter

Normalized Financial Overview

€million	Q122	Q421	Change	Q122	Q121	Change
Net trading income	148.0	80.3	84%	148.0	142.2	4%
EMEA (Europe)	108.2	59.8	81%	108.2	81.4	33%
Americas	21.5	8.1	165%	21.5	38.8	(45%)
APAC	18.3	12.4	48%	18.3	22.1	(17%)
Net trading income	148.0	80.3	84%	148.0	142.2	4%
Normalized employee expenses1	52.8	29.3	80%	52.8	51.3	3%
Technology expenses	13.8	13.2	4%	13.8	11.9	16%
Other expenses	9.2	4.6	98%	9.2	3.4	168%
One-off expenses	-	0.6	-	-	0.7	-
Normalized operating expenses	75.8	47.7	59%	75.8	67.3	13%
Normalized EBITDA1	72.2	32.6	122%	72.2	74.9	(4%)
Depreciation / amortisation	3.8	3.9		3.8	3.7
Write off of (in) tangible assets	0.2	-		0.2	-
Results of equity-accounted investments	0.1	(0.5)		0.1	-
Normalized profit before tax	68.2	29.3	133%	68.2	71.2	(4%)
Tax	14.2	7.5		14.2	13.2
Normalized net profit	54.0	21.7	148%	54.0	58.0	(7%)
Normalized basic EPS2 (€)	1.24	0.50		1.24	1.31
Normalized EBITDA margin	49%	41%		49%	53%

Value Traded Overview

€billion	Q122	Q421	Change	Q122	Q121	Change
Flow Traders ETP Value Traded	521.9	410.2	27%	521.9	414.4	26%
EMEA (Europe)	238.2	181.5	31%	238.2	199.4	19%
Americas	255.2	202.3	26%	255.2	189.6	35%
APAC ex China	28.5	26.4	8%	28.5	25.5	12%
Flow Traders’ non-ETP Value Traded	1,434	1,231	16%	1,434	915	57%
Market ETP Value Traded4	15,085	10,666	41%	15,084	9,313	62%
EMEA (Europe)	767	532	44%	767	590	30%
Americas	13,305	9,103	46%	13,305	7,780	71%
APAC	1,013	1,032	(2%)	1,012	944	7%
APAC ex China	392	344	14%	392	415	(5%)

Regional Highlights

EMEA:

• Standout trading performance across the region as Flow Traders maintained its position as the leading liquidity provider in ETPs, both on- and off-exchange - #1 position in fixed income, equity and commodity ETFs
• Further increases in Flow Traders’ market share in European single bond corporate credit across all the major RfQ platforms. This again highlights the continued traction of this business with counterparties
• Continued to support new crypto ETP listings in EMEA as well furthering the development of the broader digital asset ecosystem through participation, amongst other strategic investments, in BloXroute’s Series B funding round. BloXroute is the first and fastest blockchain distribution network
  
  

AMERICAS:

• Improved trading performance quarter-on-quarter, particularly in equity-related ETPs. Pro-actively repositioning certain trading strategies
• Further momentum in ETF Lead Market Maker activities- acted as Lead Market Maker in all seven debut high yield bond ETFs from new issuer BondBloxx
• Continued strategic focus on the fixed income business with increased volumes becoming evident on the major platforms including TradeWeb, MarketAxess, Bloomberg, ICE and MTS. Additional progress made in converting existing counterparties to transact in corporate credit
  
  

APAC:

• Strong trading performance in equity ETPs throughout the region
• Awarded Best ETF Market Maker by the Tokyo Stock Exchange and received the Top Market Maker - ETP Coverage award from the HKEX for Flow Traders' contribution to the ETF market in 2021. Flow Traders is currently a market maker in more than 200 ETPs on HKEX
• Expansion of Flow Traders’ global ETP trading footprint by becoming an official market maker on ASX and CBOE Australia in 55 tickers
  
  

Corporate Venture Capital Unit

• During 2021, Flow Traders designed and implemented a strategic ecosystem approach to accelerate the execution of its strategy and as well as capturing more of the overall value chain. This is a natural evolution given Flow Traders’ core capabilities as well as position within the financial markets ecosystem. The emphasis is on three key themes of platforms, data, and connectivity across the three strategic focus areas of equities, fixed income and digital assets
• Recent strategic activities made in line with these key themes include ErisX, MEMX, Shape Q, LedgerEdge, D2X, Pyth and BloXroute
• Significant work has been undertaken during the first quarter to formalize this strategic ecosystem approach into a dedicated corporate venture capital unit as the pace of investments continues to accelerate. The set-up of this unit is expected to be finalized by the end of the second quarter
  
  

Outlook

• To maintain Flow Traders’ status as an employer of choice and to remain competitive in the global employment market, it has been necessary to shift the total compensation mix of certain employee groups towards a greater fixed component. Accordingly, targeted base compensation increases have been implemented. These actions will ensure Flow Traders continues to attract the talent necessary to execute its strategic growth agenda
• The first quarter did see certain one-off strategy related costs being incurred, which are expected to deliver meaningful benefits going forward. In addition, COVID business continuity plan-related expenses were reclassified into operational expenses from the start of 2022. Nonetheless, Flow Traders continues to be focused on cost discipline particularly with reference to the maximum growth in fixed operating expenses of c. 15% for this year

Management Board Comments

Dennis Dijkstra, CEO, stated:
“The successes in Q1 once again confirmed the numerous strengths of our business.This includes our pricing and hedging excellence, a robust risk management framework and a truly global trading footprint. Astronger operational focus has been required so far in 2022 but this has not been to the detriment of progressing and driving forward our strategic growth agenda across our three key growth areas of equities, fixed incomeand digital assets.We continue to quote more products as well as support new introductions as the trading footprint continues to grow. Once again, we confirmed our ability to deploy into new markets by becoming an official market maker in Australia on the ASX and CBOE.

“Lastly, while this has been a successful quarter for Flow Traders, we are mindful that this has been an extremely challenging and distressing time for those affected by the conflict in Ukraine. Accordingly, we have made an initial donation of €500,000 to the Red Cross, UNHCR and several local initiatives nominated by colleagues and partners. We are also proud of the individual efforts from colleagueswho directly raised more than €40,000 through various activities and conducted a successful donation drive in the Amsterdam office. This continues our longstanding tradition of charitable giving.”

Folkert Joling, Chief Trading Officer, added:
“We saw a strong trading performance across the board with all desks and regions responding to a more active and volatile market environment.In particular, ETP flowsand volumes were focused in the European time zoneduring the quarter. We continued to expand and deepen our ETP trading footprint during the quarter as evidenced by our new market making activities in Australia and expanded Lead Market Maker activities in the US. Encouragingly, our market share in corporate credit single bond market making continues to increase both in Europe and in the US as the buyside engages further with our proposition. From a trading and operational standpoint, we were successfully able to navigate the various market issues that arose upon the start of the Ukraine conflict.”

Mike Kuehnel, Chief Financial Officer, added:
“We have made substantial progress in the review of our strategic roadmap with tangible ideas now ready for the team to action. We look forward to sharing these outputs at a capital markets day to be held in June. In parallel, we completed an investment in BloXroute as we further intensify our strategic ecosystem approach to drive change and innovation in global financial markets. Our increased pace of strategic investments has created a desire to formalise these activities within a dedicated corporate venture capital unitthat will help us to accelerate our ecosystem strategy even further. From a cost perspective, we have commenced the process of systematically adjusting the base compensation for certain targeted employee groups. There were also one-off expenses incurred this quarter relating to the recentcorporate strategy and group legal structure review. Notwithstanding these cost dynamics, the operational leverage within the business was still very much evident with significantly improved margins quarter on quarter, indicating that our operational leverage and underlying cost efficiency remain key priorities.”

Preliminary Financial Calendar

29 April 2022                 AGM
3 May 2022                FY21 final dividend proposed ex-dividend date
4 May 2002                FY21 final dividend proposed record date
6 May 2022                FY21 final dividend proposed payment date
TBD June 2022                Capital markets day
30 June 2022                Start silent period ahead of H122 results
22 July 2022                Release H122 results (inc. analyst conference call)
16 August 2022                Proposed FY22 interim dividend ex-dividend date
17 August 2022                Proposed FY22 interim dividend record date
19 August 2022                Proposed FY22 interim dividend payment date
30 September 2022        Start silent period ahead of Q322 trading update
27 October 2022                Release Q322 trading update (no analyst conference call)

Contact Details

Flow Traders N.V.

Investors
Jonathan Berger
Phone:         +31 20 7996799
Email:        investor.relations@flowtraders.com

Media
Laura Peijs
Phone:         +31 20 7996799
Email:        press@flowtraders.com

About Flow Traders

Flow Traders is a leading global financial technology-enabled liquidity provider in financial products, historically specialized in Exchange Traded Products (ETPs), now expanding into other asset classes. Flow Traders ensures the provision of liquidity to support the uninterrupted functioning of financial markets. This allows investors to continue to buy or sell ETPs or other financial instruments under all market circumstances. We continuously grow our organization, ensuring that our trading desks in Europe, the Americas and Asia can provide liquidity across all major exchanges, globally, 24 hours a day. Founded in 2004, we continue to cultivate the entrepreneurial, innovative and team-oriented culture that has been with us since the beginning. Please visit www.flowtraders.com for more information.

IFRS Financial Overview

€million	Q122	Q421	Change	Q122	Q121	Change
Net trading income	148.0	80.3	84%	148.0	142.2	4%
EMEA (Europe)	108.2	59.8	81%	108.2	81.4	33%
Americas	21.5	8.1	165%	21.5	38.8	(45%)
APAC	18.3	12.4	48%	18.3	22.1	(17%)
Net trading income	148.0	80.3	84%	148.0	142.2	4%
Employee expenses1	54.9	37.0	49%	54.9	47.0	17%
Technology expenses	13.8	13.2	4%	13.8	11.9	16%
Other expenses	9.2	4.6	98%	9.2	3.4	168%
One-off expenses	-	0.6	-	-	0.7	-
Total operating expenses	77.9	55.4	41%	77.9	63.0	24%
EBITDA	70.1	24.9	182%	70.1	79.3	(12%)
Depreciation / amortisation	3.8	3.9		3.8	3.7
Write off of (in) tangible assets	0.2	-		0.2	-
Results of equity-accounted investments	0.1	(0.5)		0.1	-
Profit before tax	66.1	21.6	207%	66.1	75.5	(13%)
Tax	13.7	5.5		13.7	14.0
Net profit	52.3	16.0	227%	52.3	61.6	(15%)
Basic EPS2 (€)	1.20	0.37		1.20	1.39
Fully diluted EPS3 (€)	1.17	0.35		1.17	1.35
EBITDA margin	47%	31%		47%	56%

Normalized to IFRS reconciliation

• Normalized EBITDA and margin are based on the standard 35% profit share of operating result across the various financial periods without any IFRS 2 adjustments for share-based payments
• Tax based on estimated expected effective tax rate for the relevant financial period: Q122 - 20.8%; Q421 - 25.7%; Q121 - 18.5%
• A reconciliation of Normalized to IFRS is presented below:
  
  

€million	Q122	Q421	Q121
Normalized EBITDA	72.2	32.6	74.9
Prior year share plans	7.9	8.6	4.5
Current year share plan deferral	(5.8)	(0.9)	(8.9)
IFRS EBITDA	70.1	24.9	79.3

€million	Q122	Q421	Q121
Normalized net profit	54.0	21.7	58.0
EBITDA adjustments	2.1	7.7	(4.3)
Tax difference	(0.4)	(2.0)	0.8
IFRSnet profit	52.3	16.0	61.6

Notes

1. Fixed employee expenses: Q122 - €16.1m; Q421 - €13.5m; Q121 - €13.0m
2. Weighted average shares outstanding: Q122 - 43,514,470; Q421 - 43,177,846; Q121 - 44,348,083. 43,683,405 shares outstanding as at 31 March 2022
3. Determined by adjusting the basic EPS for the effects of all dilutive share-based payments to employees
4. Source - Flow Traders analysis

Important Legal Information

This press release is prepared by Flow Traders N.V. and is for information purposes only. It is not a recommendation to engage in investment activities and you must not rely on the content of this document when making any investment decisions. The information in this document does not constitute legal, tax, or investment advice and is not to be regarded as investor marketing or marketing of any security or financial instrument, or as an offer to buy or sell, or as a solicitation of any offer to buy or sell, securities or financial instruments.

The information and materials contained in this press release are provided ‘as is’ and Flow Traders N.V. or any of its affiliates (“Flow Traders”) do not warrant the accuracy, adequacy or completeness of the information and materials and expressly disclaim liability for any errors or omissions. This press release is not intended to be, and shall not constitute in any way a binding or legal agreement, or impose any legal obligation on Flow Traders. All intellectual property rights, including trademarks, are those of their respective owners. All rights reserved. All proprietary rights and interest in or connected with this publication shall vest in Flow Traders. No part of it may be redistributed or reproduced without the prior written permission of Flow Traders.

This press release may include forward-looking statements, which are based on Flow Traders’ current expectations and projections about future events, and are not guarantees of future performance. Forward looking statements are statements that are not historical facts, including statements about our beliefs and expectations. Words such as “may”, “will”, “would”, “should”, “expect”, “intend”, “estimate”, “anticipate”, “project”, “believe”, “could”, “hope”, “seek”, “plan”, “foresee”, “aim”, “objective”, “potential”, “goal” “strategy”, “target”, “continue” and similar expressions or their negatives are used to identify these forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of Flow Traders. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no undue reliance should be placed on any forward-looking statements. Forward-looking statements speak only as at the date at which they are made. Flow Traders expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statements contained in this press release to reflect any change in its expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law.

Financial objectives are internal objectives of Flow Traders to measure its operational performance and should not be read as indicating that Flow Traders is targeting such metrics for any particular fiscal year. Flow Traders’ ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Flow Traders’ control, and upon assumptions with respect to future business decisions that are subject to change. As a result, Flow Traders’ actual results may vary from these financial objectives, and those variations may be material.

Efficiencies are net, before tax and on a run-rate basis, i.e. taking into account the full-year impact of any measure to be undertaken before the end of the period mentioned. The expected operating efficiencies and cost savings were prepared on the basis of a number of assumptions, projections and estimates, many of which depend on factors that are beyond Flow Traders’ control. These assumptions, projections and estimates are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. Flow Traders cannot provide any assurance that these assumptions are correct and that these projections and estimates will reflect Flow Traders’ actual results of operations.

By accepting this document you agree to the terms set out above. If you do not agree with the terms set out above please notify legal.amsterdam@nl.flowtraders.com immediately and delete or destroy this document.

Market Abuse Regulation

This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

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