Market leadership further expanded
At the Annual General Meeting of wallstreet:online AG, the extremely successful fiscal year 2021 was looked back on for the last time. The largest independent financial portal operator in the German-speaking world by far, as well as the sole shareholder of the Smartbroker operating company, closed the books with another record year and revenues of EUR 51.4 million, which equates to an increase of 82%, and EBITDA before customer acquisition costs of EUR 17.5 million. Although the financial portals continued to gain in reach, the growth of the "Transaction" segment, with Smartbroker, which has only been launched since the end of 2019, eclipses everything. Already 63% of the growth falls on this area, the remaining 37% on the media business. Customer deposits more than doubled to over 120,000. Customer assets under management, which were valued at EUR 8.8 billion at the end of the fiscal year and have currently grown to well over EUR 9 billion, make Smartbroker by far the largest next generation broker in the German-speaking world in terms of this key figure.
Enormously important transition year
The current financial year will be enormously important for the future of "Smartbroker Holding AG". The change of name was approved at the last Annual General Meeting with 99.99% of the votes. The significance of Smartbroker is also to be reflected in the name. In addition to the change of name, many things are to be renewed and optimized in 2022 under the hood of the leading German neobroker in assets under custody. Despite the transition year, as CEO Matthias Hach titled it, the capital expects a 25% increase in revenues to EUR 62 million to EUR 67 million, while operating EBITDA after customer acquisition costs is expected to grow from EUR 4.4 million to EUR 10 million to EUR 12 million. In addition, securities accounts are expected to grow by 22% to 300,000 by the end of 2022, and assets under management should break the EUR 10 billion sound barrier during the year, reaching around EUR 10.3 billion by year-end.

Smartbroker 2.0 unfolds its potential
Despite its great success and popularity, Smartbroker is falling short of its potential, according to management. However, the planned launch of "Smartbroker 2.0" and the establishment of its brokerage infrastructure in the second half of 2022, which will create a fundamentally renewed user experience, an expanded product range and an optimized business model, should allow the enormous economies of scale to come to fruition significantly. The basic prerequisite for the implementation of this model is the upgrading of the KWG license from securities trading bank to securities institution, which BaFin has yet to decide on. Assuming a positive approval, Smartbroker would no longer act as a deposit broker, but would be its own broker in the future and would no longer have to give up a share to a partner bank. In addition, new target groups are to be addressed through the planned launch of the smartphone app, its own desktop solution and the establishment of trading with cryptocurrencies. By removing the restrictions on marketing, there is also the chance to integrate targeted social media advertising, which would significantly lower the average costs for acquiring new customers. Furthermore, the broker would generate increasing margins per trade and could benefit from the increasing interest margin.
Presentation of "Case Study 2026" - Share facing revaluation
In the course of the virtual Annual General Meeting, the medium-term growth potential was shown based on a scenario calculation. Management assumes that the optimized "Smartbroker 2.0" will manage more than 600,000 securities accounts by the end of 2026. Assets under management are then estimated at more than EUR 14 billion, equating to average securities account assets per customer of a still high EUR 23,000. Depending on the number of transactions, revenue of between EUR 140 million and EUR 180 million would be possible across the Group in 2026 under these assumptions, which would correspond to a tripling of the revenue of EUR 51.4 million generated in fiscal year 2021. Through the planned internalization of the IT infrastructure and economies of scale, the EBITDA margin after customer acquisition costs is expected to explode from just under 10% in the last fiscal year to around 37%. Of course, this estimate and a timeframe of just under five years should take into account that the Company's targets are subject to various uncertainties, assumptions and risks.

Peer group comparison lags, insiders buy
Despite the strong figures for the full year 2021 and the positive outlook for the future, the share of wallstreet:online AG has corrected by around 40% since the all-time high in May 2021 to currently EUR 17.56. The market leader's stock market value is currently around EUR 260 million. Compared to Trade Republic, which falls into the peer group of neobrokers, there is thus a clear undervaluation. Trade Republic received EUR 250 million in the course of a capital increase at the beginning of the month, based on a post-money valuation of no less than EUR 5 billion. At the same time, both the assets under custody, which are "over EUR 6 billion" according to the latest publication, and the custody volume per customer, which is valued at EUR 6,000, are far below the benchmarks of Smartbroker. Its customer has, on average, EUR 30,000 in the portfolio. No wonder this discrepancy has put CFO Roland Nicklaus on the spot, in addition to founder and Supervisory Board Chairman André Kolbinger. Thus, since the end of May, they have bought w:o shares worth more than EUR 300,000.
Interim conclusion
The starting point for Smartbroker 2.0 is unique. By dovetailing the two segments Media and Transaction, wallstreet:online reaches at least 40% of the self-deciding investors in German-speaking countries. In addition, Smartbroker is the only full service online broker with a EUR 0 fee model. With the granting of the BaFin license and the introduction of "Smartbroker 2.0", the share is likely to face a revaluation. In order to finally be perceived as a neobroker and thus comparable to competitors such as Trade Republic, the launch of the smartphone app is missing, which should be a top priority. At the current level, the optimizations and expected economies of scale offer attractive entry opportunities.
The update is based on our initial report 11/21.