XTB S A : CR no. 23/2024 – Preliminary financial and operating results for the I quarter of 2024

XTB S.A.

(joint stock company with its registered office in Warsaw and address at Prosta 67, 00-838 Warszawa, entered into the Register of Business Entities of the National Court Register under No. 0000217580)

DISCLAIMER

This English language translation of the Polish version of Current Report No. 23 dated 29 April 2024 has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain discrepancies, omissions or approximations may exist. In case of any differences between the Polish and the English versions, the Polish version shall prevail. XTB, its representatives and employees decline all responsibility in this regard.

CURRENT REPORT NO. 23/2024

Warsaw, 29 April 2024

Preliminary financial and operating results for the I quarter of 2024

The Management Board of the XTB S.A. (the "Issuer", the "Company", "XTB") hereby announces that on 29 April 2024, the process of aggregation of financial data for the purpose of preparing the condensed consolidated financial statements of the Issuer's Group for the I quarter of 2024 was completed. Therefore, it has been decided to publish the preliminary consolidated selected financial and operating data for the above mentioned period, which the Issuer submits as an attachment to the above mentioned current report.

The Issuer also announces that the final financial and operating results for the I quarter of 2024 will be presented in the extended consolidated report of the Issuer's Group for the I quarter of 2024, publication of which was scheduled for 9 May 2024.

Legal basis:

Article 17 paragraph 1 MAR - inside information.

APPENDIX

TO THE CURENT REPORT

NO. 23/2024 DATED 29 APRIL 2024

PRELIMINARY FINANCIAL

AND OPERATING RESULTS FOR THE I QUARTER OF 2024

APPENDIX TO CR NO 23/2024

XTB S.A.

XTB KEY

PERFORMANCE INDICATORS Q1 2024

www.xtb.com

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APPENDIX TO CR NO 23/2024

XTB S.A.

SELECTED CONSOLIDATED FINANCIAL DATA

	(in PLN'000)		THREE-MONTH PERIOD ENDED
			31.03.2024		31.12.2023			31.03.2023
	Total operating income	556 012	510 512		537 553
	Total operating expenses		(204 702)		(187 669)			(184 219)
	Profit on operating activities (EBIT)	351 310	322 843		353 334
	Finance income		17 602		16 149			21 454
	Finance costs	(270)	(35 328)		(7 776)
	Profit before tax		368 642		303 664			367 012
	Income tax	(65 895)	(54 615)		(64 198)
	Net profit		302 747		249 049			302 814

(in PLN'000)

Own cash

Own cash + bonds

Equity

AS AT

31.03.2024	31.12.2023	31.03.2023
1 332 284	1 409 897	1 535 170
2 128 406	1 805 705	1 906 622
2 038 746	1 734 663	1 808 373

SELECTED CONSOLIDATED OPERATING DATA (KPI)

				THREE-MONTH PERIOD ENDED
				31.03.2024			31.12.2023			31.03.2023
	New clients1	129 747	77 267		104 206
	Clients in total			1 018 899			897 573			703 928
	Number of active clients2	378 476	310 220		260 095
	Average number of active clients3			378 476			310 220			260 095
	Net deposits (in PLN'000)4	1 896 812	1 161 678		1 025 264
	Average operating income per active client (in PLN'000)5			1,5			1,6			2,1
	Transaction volume in CFD instruments in lots6	1 964 890	1 789 481		1 845 160
	Profitability per lot (in PLN)7			283			285			291
	Transaction volume in CFD instruments in nominal value	581 865	548 927		596 645
	(in USD'000000)
	Profitability for 1 million USD transaction volume in CFD			239			231			207
	instruments in nominal value (in USD)8
	Turnover of shares in nominal value (in USD'000000)	1 873	1 310		1 091

1) The number of new Group's clients in the individual periods.

2) The number of clients who at least one transaction has been concluded over the individual periods.

3) The average quarterly number of clients who at least one transaction has been concluded over the last three months.

4) Net deposits comprise deposits placed by clients less amounts withdrawn by the clients in a given period.

5) The Group's operating income in a given period divided by the average quarterly number of clients who at least one transaction has been concluded over the last three months.

6) Lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments. Presented value does not include CFD turnover on shares and ETFs, where 1 lot equals 1 share.

7) Total operating income divided by the transaction volume in CFDs in lots.

8) Total operating income converted into USD by the arithmetic average of exchange rates published by the National Bank of Poland on the last day of each month of the reporting period, divided by turnover of CFD in nominal value (in USD'000000).

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APPENDIX TO CR NO 23/2024

XTB S.A.

Management Board's commentary on the preliminary results

The first quarter of 2024 was a consecutive period of dynamic business development and building a client base for XTB. Clear long trends in the stock and commodity markets made trading in financial instruments further strongly attractive to many investors. As a result, the Group acquired a record 129,7 thousand new clients, which is an increase by 24,5% y/y, while the number of active clients increased by 45,5% y/y from 260,1 thousand to 378,5 thousand.

XTB's dynamic operational growth, coupled with favourable market conditions, translated into record-breaking financial results in the first quarter of 2024. Consolidated net profit amounted to PLN 302,7 million compared to PLN 302,8 million a year earlier. Consolidated revenues amounted to PLN 556,0 million (Q1 2023: PLN 537,6 million) with operating expenses of PLN 204,7 million (Q1 2023: PLN 184,2 million).

Revenues

In the first quarter of 2024, XTB reached a record level of revenues of PLN 556,0 million (increase by 3,4% y/y). Significant factors determining the level of revenues were high volatility in the financial and commodity markets and the constantly growing number of active clients (increase by 45,5% y/y), connected with their high transaction activity expressed in the number of CFD contracts concluded in lots (increase by 6,5% y/y). As a consequence the transaction volume in CFD instruments amounted to 1 964,9 thousand lots (Q1 2023: 1 845,2 thousand lots), a profitability per lot amounted to PLN 283 (Q1 2023: PLN 291).

THREE-MONTH PERIOD ENDED

				31.03.2024		31.12.2023		30.09.2023			30.06.2023		31.03.2023			31.12.2022			30.09.2022			30.06.2022
	Total operating income	556 012		510 512	281 269	293 375	537 553		221 924	393 654		396 566
	(in PLN'000)
	Transaction volume			1 964 890			1 789 481			2 011 452			1 770 385			1 845 160			1 720 381			1 594 606			1 489 917
	in CFD instruments in lots1
	Profitability per lot	283	285		140		166		291		129	247		266
	(in PLN)2
	Transaction volume
	in CFD instruments			581 865			548 927			593 232			547 088			596 645			548 781			539 879			539 673
	in nominal value
	(in USD'000000)
	Profitability for 1 million
	USD transaction volume	239	231	114	128	207		89	153		168
	in CFD instruments
	in nominal value (in USD)3

1) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments. Presented value does not include CFD turnover on shares and ETFs, where 1 lot equals 1 share.

2) Total operating income divided by the transaction volume in CFDs in lots.

3) Total operating income converted into USD by the arithmetic average of exchange rates published by the National Bank of Poland on the last day of each month of the reporting period, divided by turnover of CFD in nominal value (in USD'000000).

www.xtb.com

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APPENDIX TO CR NO 23/2024

XTB S.A.

PERIOD ENDED

				THREE-									TWELVE-MONTH
				MONTH
				31.03.2024		31.12.2023		31.12.2022			31.12.2021		31.12.2020			31.12.2019			31.12.2018			31.12.2017
	Total operating income	556 012		1 622 709	1 451 949	625 595		797 750	239 304	288 301		273 767
	(in PLN'000)
	Transaction volume			1 964 890			7 416 479			6 365 643			4 104 566			3 175 166			1 597 218			2 095 412			2 196 558
	in CFD instruments in lots1
	Profitability per lot	283	219	228	152		251	150	138		125
	(in PLN)2
	Transaction volume
	in CFD instruments			581 865			2 285 891			2 259 588			1 737 351			1 021 835			541 510			773 899			653 373
	in nominal value
	(in USD'000000)
	Profitability for 1 million
	USD transaction volume	239	170	144	93		200	115	103		111
	in CFD instruments
	in nominal value (in USD)3

1) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments. Presented value does not include CFD turnover on shares and ETFs, where 1 lot equals 1 share.

2) Total operating income divided by the transaction volume in CFDs in lots.

3) Total operating income converted into USD by the arithmetic average of exchange rates published by the National Bank of Poland on the last day of each month of the reporting period, divided by turnover of CFD in nominal value (in USD'000000).

Looking at XTB's revenues in terms of the classes of instruments responsible for their creation, it can be seen that in the first quarter of 2024 CFDs based on commodities leaded. Their share of the revenue structure in the first quarter of 2024 was 48,7% (Q1 2023: 48,8%). This is due in part to the high profitability of CFD instruments based on natural gas, gold and cocoa prices. The second most profitable asset class was CFD based on index. Their share of the revenue structure on financial instruments reached 41,9%, compared to 45,3% a year earlier. This is a consequence of the high yield on CFDs based on the German DAX (DE30) stock index, the US 100 index or the US 500 index. Revenue on currency-based CFD instruments accounted for 6,7% of total revenue, compared to 4,2% a year earlier. The most profitable financial instruments in this class were CFDs based on the bitcoin cryptocurrency and the USDJPY currency pair.

THE STRUCTURE OF REVENUE BY ASSET CLASS (IN%)

Q1 2024		Q4 2023					Q1 2023
2,7%			1,2%			1,7%
41,9%	37,7%			45,3%
					53,9%	48,8%
48,7%
6,7%			7,2%			4,2%
		Index CFD's		Currency CFD's		Commodity CFD's			Other

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APPENDIX TO CR NO 23/2024

XTB S.A.

	(in PLN'000)		THREE-MONTH PERIOD ENDED
			31.03.2024		31.12.2023			31.03.2023
	Commodity CFDs	269 432	189 966		264 713
	Index CFDs		232 166		271 873			245 812
	Currency CFDs	36 853	36 117		22 852
	Stock CFDs and ETFs		6 881		2 677			6 943
	Bond CFDs	258	(94)		177
	Total CFDs		545 590		500 539			540 497
	Shares and ETFs	8 127	3 544		2 398
	Gross gain on transactions in financial instruments		553 717		504 083			542 895
	Bonuses and discounts paid to clients	(1 589)	(2 310)		(2 598)
	Commission paid to cooperating brokers		(12 792)		(12 908)			(11 751)
	Net gain on transactions in financial instruments	539 336	488 865		528 546

The Group's operating income is generated from: (i) spreads (the differences between the "offer" price and the "bid" price);

1. fees and commissions charged by the Group to its clients; (iii) swap points charged (being the amounts resulting from the difference between the notional forward rate and the spot rate of a given financial instrument) and (iv) net results (gains offset by losses) from Group's market making activities.

The business model used by XTB combines the features of the agency model and the market maker model, in which the Company is a party to transactions concluded and initiated by clients. XTB does not engage, in the strict sense, in transactions carried out on its own account in anticipation of changes in prices or values of underlying instruments - proprietary trading).

The hybrid business model used by XTB also uses the agency model. For example, on most CFD instruments based on cryptocurrencies, XTB secures these transactions with external partners, practically is not to be the other party to the transaction (of course, from a legal point of view, it is still XTB). The fully automated risk management process adopted by the Company limits exposure to market changes and forces the Group to hedge its positions in order to maintain appropriate levels of capital requirements. In addition, XTB executes all transactions on shares and ETFs as well as on CFD instruments based on these assets directly on regulated markets or in alternative trading systems. XTB is not a market maker for this class of instruments.

XTB's business model includes high volatility of revenues from period to period. Operating results are mainly affected by:

1. volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and

1. regulatory environment.

As a rule, the Group's revenues are positively affected by higher activity of financial markets due to the fact that in such periods, a higher level of turnover is realized by the Group's clients and higher profitability per lot. The periods of clear and long market trends are favourable for the Company and at such times it achieves the highest revenues. Therefore, high activity of financial and commodities markets generally leads to an increased volume of trading on the Group's trading platforms. On the other hand, the decrease in this activity and the related decrease in the transaction activity of the Group's clients leads, as a rule, to a decrease in the Group's operating income. Due to the above, operating income and the Group's profitability may decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability than in the case of larger directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed, which leads to a decrease in the Group's result on market making.

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APPENDIX TO CR NO 23/2024

XTB S.A.

The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group in the subsequent quarters. This is characteristic for the Group's business model.

Expenses

The operating costs in the first quarter of 2024 amounted to PLN 204,7 million and were PLN 20,5 million higher compared to the same period a year earlier (Q1 2023: PLN 184,2 million). The most important changes occurred in:

• costs of remuneration and employee benefits, an increase by PLN 9,5 million, mainly due to an increase in employment;

• commission costs, an increase by PLN 6,2 million resulting from higher amounts paid to payment service providers through which clients deposit their funds in transaction accounts;
• other external services, an increase by PLN 2,9 million as a result of mainly higher expenditure on support database systems (increase by PLN 3,1 y/y).

	(in PLN'000)		THREE-MONTH PERIOD ENDED
			31.03.2024		31.12.2023			31.03.2023
	Marketing	81 106	69 081		81 435
	Salaries and employee benefits		72 845		70 593			63 367
	Commission expenses	21 324	18 255		15 079
	Other external services		16 961		18 645			14 062
	Amortization and depreciation	4 748	5 271		3 746
	Taxes and fees		3 580		876			3 004
	Costs of maintenance and lease of buildings	2 205	1 555		1 926
	Other costs		1 933		3 393			1 600
	Total operating expenses	204 702	187 669		184 219

In q/q terms, operating costs increased by PLN 17,0 million, mainly due to higher online and offline marketing expenses by PLN 12,0 million, higher commission expenses by PLN 3,1 million resulting from higher amounts paid to payment service providers through which customers deposit their funds in transaction accounts.

THREE-MONTH PERIOD ENDED

		31.03.2024	31.12.2023	30.09.2023	30.06.2023	31.03.2023		31.12.2022	30.09.2022		30.06.2022
	Total operating expenses	204 702	187 669	164 966	157 377	184 219		158 235	132 546		136 750
	including: (in PLN'000)
	- Marketing	81 106	69 081	58 585	54 823	81 435		68 478	48 579		54 662
	New clients1	129 747	77 267	67 505	62 994	104 206		51 038	44 796		45 697
	Clients in total2	1 018 899	897 573	826 042	762 624	703 928		614 934	567 387		525 287
	Average client acquisition	0,6	0,9	0,9	0,9	0,8		1,3	1,1		1,2
	cost3

1) Number of new Group clients by quarter.

2) Number of clients at the end of each quarter.

3) The average cost of client acquisition is defined as the marketing spend in a quarter divided by the number of clients acquired in the same quarter.

www.xtb.com

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APPENDIX TO CR NO 23/2024

XTB S.A.

PERIOD ENDED

			THREE-					TWELVE-MONTH
			MONTH
			31.03.2024		31.12.2023	31.12.2022		31.12.2021	31.12.2020		31.12.2019	31.12.2018		31.12.2017
	Total operating
	expenses including:	204 702		694 231	558 567	348 772	282 004		173 892	172 492		145 497
	(in PLN'000)
	- Marketing		81 106		263 924	222 369		120 101	87 731		37 716	33 322		24 841
	New clients1	129 747		311 971	196 864	189 187	112 025		36 555	20 672		18 913
	Clients in total2		1 018 899		897 573	614 934		429 157	255 791		149 304	116 517		105 662
	Average client	0,6	0,8	1,1	0,6	0,8		1,0	1,6		1,3
	acquisition cost3

1) Number of new Group clients by quarter.

2) Number of clients at the end of each quarter.

3) The average cost of client acquisition is defined as the marketing spend in a quarter divided by the number of clients acquired in the same quarter.

Due to the dynamic development of XTB, the Management Board estimates that in 2024 the total costs of operating activities may be even higher by about a one-fourth to the level we observed in 2023. The priority of the Management Board is to further increase the client base and build a global brand. As a consequence of the implemented activities, expenditures on marketing may increase by about one-fifth compared to the previous year.

The final level of operating costs will depend on employment growth rate and the level of variable remuneration components paid to employees, the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of potential product interventions and other external factors on the level of revenues generated by the Group.

The level of marketing expenditures depends on their impact on the Group's results and profitability, the rate of foreign expansion and the degree of client responsiveness to the actions taken. The employment growth in the Group will be driven by its dynamic development, both on the existing and new markets. The amount of variable remuneration components is influenced by the Group's results.

Clients

XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the first quarter of 2024 Group reported another record in this area, acquiring 129 747 new clients compared to 104 206 a year earlier, which means an increase of 24,5%. Similarly to the number of new clients, the number of active clients was also record high. It increased from 260 095 to 378 476, i.e. by 45,5% y/y.

THREE-MONTH PERIOD ENDED

				31.03.2024		31.12.2023		30.09.2023			30.06.2023		31.03.2023			31.12.2022			30.09.2022			30.06.2022
	New clients1	129 747		77 267	67 505	62 994		104 206		51 038	44 796		45 697
	Clients in total2			1 018 899			897 573			826 042			762 624			703 928			614 934			567 387			525 287
	Number of active clients3	378 476		408 528	355 461	307 511		260 095		270 560	237 527		205 778
	Average number of active			378 476			310 220			281 101			259 318			260 095			203 410			190 210			179 731
	clients4

1) The number of new Group's clients in the individual periods.

2) Number of clients at the end of individual quarters.

3) Number of active clients respectively in the 3 months of 2024 and 12, 9, 6 and 3 months of 2023 and 12, 9 and 6 months of 2022 respectively. An active client is a client who carried out at least one transaction in a period.

4) The average quarterly number of clients who at least one transaction has been concluded over the last three months.

www.xtb.com

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APPENDIX TO CR NO 23/2024

XTB S.A.

PERIOD ENDED

				THREE-									TWELVE-MONTH
				MONTH
				31.03.2024		31.12.2023		31.12.2022			31.12.2021		31.12.2020			31.12.2019			31.12.2018			31.12.2017
	New clients1	129 747		311 971	196 864	189 187		112 025		36 555	20 672		18 913
	Clients in total2			1 018 899			897 573			826 042			762 624			703 928			614 934			567 387			525 287
	Number of active	378 476		408 528	270 560	193 180		108 312		46 642	38 135		33 369
	clients3
	Average number of			378 476			277 684			186 053			125 463			61 527			30 250			23 461			20 171
	active clients4

1) The number of new Group's clients in the individual periods.

2) Number of clients at the end of individual quarters.

3) Number of active clients respectively in the 3 months of 2024 and 12, 9, 6 and 3 months of 2023 and 12, 9 and 6 months of 2022 respectively. An active client is a client who carried out at least one transaction in a period.

4) The average quarterly number of clients who at least one transaction has been concluded over the last three months.

The Board's priority is to continue to grow the client base, which will strengthen XTB's position in the global marketplace by reaching the mass client with its product offering. These activities are and will be supported by a number of initiatives, including the introduction of new products or promotional campaigns. The Management Board's objective for 2024 is to acquire, on average, at least 65-90 thousand new clients per quarter. As a result of the implemented activities, the Group acquired in the first quarter of this year 129,7 thousand new clients, while in the first 28 days of April 2024, 33,2 thousand new clients were acquired.

Marketing is XTB's second engine. To strengthen its market position and global visibility, the Group works with successful athletes who are XTB brand ambassadors, such as Conor McGregor and Iker Casillas. A new brand ambassador is planned for 2024.

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