Despite a significant decrease in revenue and a significant deepening of net losses, along with a 40% reduction in staff in 2023, the supervisory board of the listed company NAGA Group AG (XETR:N4G) is satisfied with the achievements of the past year. According to company representatives, they have successfully “achieved a turnaround in profitability as planned” through positive changes in EBITDA and cost reductions.
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NAGA’s revenue declined, net losses deepened
A comprehensive income statement released by NAGA over the weekend showed that revenue decreased from 57.6 million euros in 2022 to 39.7 million euros in 2023, a 32% decrease. The results were even worse than the preliminary results announced by the company earlier this year.
As a result, gross profit decreased from 48.5 million euros to 31.9 million euros, and net losses deepened by nearly 40% from 44.1 million euros to 60.9 million euros compared to the previous year. NAGA explained that the biggest single impact on net revenue “is the need to confirm impairment losses on brokerage business goodwill – 57 million euros (previous year: 15.3 million euros) – as determined by impairment testing.”
The larger annual loss also led to a higher loss per share, increasing from 0.82 euros in 2023 to 1.13 euros.
The company explained: “Revenue declined as expected, particularly due to challenging market conditions faced by online brokers, reduced marketing and sales measures, and the cessation of NAGA Coin trading.”
In the narrative of the significantly weaker report, NAGA focuses on positive factors: reduced operating costs and an increase in EBITDA.
NAGA significantly reduces marketing and advertising costs
The most noticeable cost reduction for online brokers is marketing expenses, which decreased from 28.3 million euros to 4.6 million euros.
This move led to the lowest customer acquisition costs in the company’s history, with acquisition costs per trading account reading period of 380 euros, compared to 151 euros in the previous year.
Despite the reduced marketing efforts, NAGA reported growth in several non-financial indicators, including active users, trades, and trading volume. The company also noted improvements in user-related data, such as average activity, portfolio size, and lifetime value.
The company commented in the annual report: “Trading volume reached 143 billion euros (previous year: 137 billion euros). As of the end of the year, the number of active users exceeded 21,000 (previous year: 18,700). Therefore, all indicators for each user show a strong upward trend, with higher average activity, portfolio size, and lifetime value.”
While cutting costs, NAGA also had to part ways with a large number of employees. The number of employees in 2023 decreased by over 40%, with 73 out of 173 employees in 2022 becoming unemployed. This saved the company approximately 4.2 million euros.
In April, Loukia Matsia was appointed as NAGA’s Compliance and Anti-Money Laundering Officer. At the same time, NAGA shareholders approved the merger with CAPEX.com, which was initially announced in December of the previous year. At the special shareholders’ meeting on April 12, the vast majority (99.81%) of NAGA shareholders supported the merger.
