Despite a significant decrease in revenue and a significant deepening of net losses, 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 the planned turnaround in profitability” through positive changes in earnings before interest, taxes, depreciation, and amortization (EBITDA) and cost reductions.
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NAGA’s comprehensive income statement released over the weekend shows that revenue declined from €57.6 million in 2022 to €39.7 million in 2023, a decrease of 32%. The result is even worse than the preliminary results announced by the company earlier this year.
As a result, gross profit decreased from €48.5 million to €31.9 million, and net losses deepened by nearly 40% to reach €60.9 million, compared to €44.1 million in the previous year. NAGA explained that the largest single impact on net income “is the impairment loss on the recognition of goodwill in the brokerage business—€57 million (previous year: €15.3 million)—determined by impairment testing.”
The larger annual loss also resulted in a higher loss per share, increasing from €0.82 in 2023 to €1.13.
The company explained, “Revenue decreased as expected, especially due to the challenging market environment faced by online brokers, reduced marketing and sales measures, and the cessation of NAGA Coin trading.”
In the narrative of the noticeably weaker report, NAGA focused on positive factors: a decrease in operating costs and an increase in EBITDA.
The most significant cost reduction for online brokers is in marketing expenses, which decreased from €28.3 million to €4.6 million.
This measure led to the lowest customer acquisition costs in the company’s history, which were €380 per trading account, compared to €1,510 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 its annual report, “Trading volume reached €143 billion (previous year: €137 billion). By the end of the year, the number of active users exceeded 21,000 (previous year: 18,700). Therefore, all indicators per 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 significant number of employees. The number of employees decreased by over 40% in 2023, with 73 out of 173 employees in 2022 becoming unemployed. This saved the company approximately €4.2 million.
In April, Loukia Matsia was announced as the appointed Compliance and Anti-Money Laundering Officer of NAGA. Meanwhile, 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 majority (99.81%) of NAGA shareholders supported the merger.
