Interactive Investor: Company performance analysis

There have been very few insider transactions at abrdn in 2024. There are several transactions – not shown below – where the insider makes multiple transactions on the same day but the net number of shares held does not change. This may reflect insiders exercising stock options, often referred to as a “cashless exercise”.

• Stephen Bird – Chief Executive Officer
  Uninformative Buy: Grant/Award/Other – 209,619 shares
• Stephen Bird – Chief Executive Officer
  Informative Sell: Options Exercised and fully sold – 104,810 shares

Data published by Interactive Investor and abrdn points to a positive trajectory in Assets Under Administration (AUA). As of Q2 of 2024, abrdn had £72.9 billion of AUA on its Interactive Investor platform, complementing a broader abrdn portfolio worth £505.9 billion. Since being acquired by abrdn, Interactive Investor has demonstrated its ongoing ability to attract new clients and encourage new deposits. The rise of AUA over the past 12 months can also be attributed to asset appreciation.

Number of users vs previous year and quarter.

Interactive Investor had 422,000 clients as of 30 June 2024, representing a 4% increase from the figure reported at the end of FY2023. The company’s SIPP (Self-Invest Personal Pension) services were among the fastest-growing parts of the business, registering 17% growth over six months to 73,000.

Monthly active users (MAU) vs previous year and quarter.

Share dealing volumes were not explicitly detailed in the H1 2024 results, but the company claims to execute 25% of the UK’s share trades on its platform. In 2023, the daily average retail trading volume was 15,700, down from 17,300 in 2022, and 21,900 in 2021.

Average revenue per user (ARPU) vs previous year and quarter.

Average Revenue Per User (ARPU) rose in 2023, marking further progress since the takeover. This improved performance, however, likely reflects higher returns on customer cash deposits.

The ARPU in 2023 was approximately £564.62 based on the total revenue of £230 million and the reported customer numbers of 407,000 at the end of the period.

The APRU for the quarter ending 30 June 2024 is approximately £324.64. This can be projected to an annualised figure of £649.28.

Revenue vs previous year vs consensus estimates.

Revenue generation fell in H1 of 2024, versus the first half of 2023 – down by £15m. This, according to the business, reflected the sale of abrdn Capital.

The platform has been making steady progress since the takeover with net operating revenue hitting £230m in 2023. However, it’s worth noting that improving margins on customer cash deposits are likely responsible for stronger revenue generation in 2023.

Earnings per share (EPS) vs previous year vs consensus estimates.

The parent company of Interactive Investor – abrdn – has faced a challenging few years. Financial performance has been undermined by capital outflows. The company’s purchase of Interactive Investor for £1.49 billion – completed in December 2021 – was also questioned by analysts given the premium paid for the platform. These factors are among the wider issues impacting profitability.

Revenue breakdown

In H1 of 2024 and 2023, revenue generated from Treasury Income was the largest contributor to overall revenue. In turn, this figure reflects strong margins on cash due to elevated interest rates. Fee income fell in H1 of 2024 reflecting the sale of abrdn Capital.

Cost/Income ratio vs previous year and quarter vs consensus estimates

The cost-to-income ratio, primarily used in the banking and financial sectors, measures the costs of running a business as a percentage of its income. A lower cost-to-income ratio indicates higher efficiency, meaning the company is spending less to generate each unit of income. The data shows that the company’s cost-to-income ratio has followed a linear path in recent years.

Free cash flow vs previous year vs consensus estimates.

FactSet data demonstrates that abrdn’s free cash flow has been negative in recent years. This isn’t a positive indicator for Interactive Investor, although the platform side of the business appears to be performing well.

Net debt/cash vs previous year vs previous quarter.

Interactive Investor’s parent company, abrdn, has an evolving net debt position. However, due to complex financial mechanisms and cash balances, this shouldn’t concern investors.

Analysts’ price targets and ratings including commentary.

Based on 10 analysts offering 12-month price targets for abrdn in the last month, the average price target is 163.07p.