Smarkets makes £8.9m full-year loss despite user growth
CEO Jason Trost says growth slowed down as work was done “under the hood” to put the business in better shape for 2019 and beyond
Smarkets has reported a 42% decline in 2018 revenues to £11.9m, with the exchange operator pointing to challenging wider market conditions and changes “under the hood” of the business to prepare it for future growth.
According to new figures filed with Companies House, the firm also made an £8.9m loss in the 12-month period after profits of £6.6m in 2017.
Commission revenues fell 20% to £7.4m due to “substantial marketing investment,” particularly via 0% promotions with high-volume partners for much of the year.
Revenues from its trading arm Hanson fell to £4.6m from £11.4m last year as the subsidiary expanded the range of markets it offered to help the exchange appeal to a broader customer base and reduced spreads on the contracts it offered.
Smarkets also opened up its APIs to external market-makers meaning Hanson had more competition on the platform.
Underlying user metrics were more positive, with trading volume up 46% to £4.6bn and monthly active users up 15% to 29,199. Annual sign ups-climbed 35% to 69,200.
Jason Trost
“This shows that our customer base is growing and users are trading more,” Smarkets CEO Jason Trost said.
“While we cannot shy away from the fact that some numbers didn’t reach expectations last year, so much important work was done under the hood and now the business is in the best shape it’s ever been in.
“No betting app is rated higher than Smarkets, and with our new industry-disrupting SBK sportsbook we’re ready to take our platform to the enticing US market where I have no doubt that we will punch above our weight like we currently do in the UK.”
The exchange operator also enjoyed a record “record” Q1 2019, with revenues of £8.4m and costs of £3.8m, leading to EBITDA of £4.6m, according to recent investor documents obtained by EGR.