The great advantage of having companies publicly listed on a stock exchange is that they are required to release information that reflects on the all market. Binary options and simple forex trading platform developer TechFinancials released today its first annual report to investors shedding light on the performance of the firm (and the market) in 2014.
The report from the London Stock Exchange AIM listed developer shows that 2014 was a great year the binary options industry with substantial growth. The total number of active customers on the TechFinancials trading platform grew by 108.6% compared to the previous year. The total number of trades executed through its licensees (brands) reached 19.38 million during the year, up 183% from 6.85 million in 2013.
Additionally, as released earlier this month, TechFinancials saw the number of licensees (brands) using the its software grow to 48 in 2014, up from 36 the previous year. Total revenues reached $15.5 million, compared with $8.4 million in 2013 and TechFinancials’ cash generation from operating activities was $2.1 million.
TechFinancials management is justifiably proud of the achievements of firm in terms of growth and profit generation. In the report they showcased on the firm successes such as penetrating the Asian market with operations in both China and Japan, and of course the cooperation with Cantor Exchange opening the American market. However the report must contain warnings for investors and those can be very interesting comments on the industry.
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Gross margins have fell slightly in 2014, from 70% in 2013 to 65%. The year-on-year reduction reflects the costs of acquisition of larger affiliates which have produced higher revenues but at a lower margin. In 2015, the costs of affiliate acquisition are expected to fall as TechFinancials concentrates on smaller affiliates and other marketing channels.
At present, the TechFinancials Directors believe that there are only four companies that market software and systems to online brokers which provide significant competition to TechFinancials. Some of its existing and potential competitors are better established, benefit from greater name recognition, and have significantly greater financial, technical, sales, and marketing resources.
In addition, some competitors, particularly those with a more diversified revenue base, may have greater flexibility to compete aggressively on the basis of price and other contract terms. New competitors may emerge through acquisitions or through development of disruptive technologies. Strong and evolving competition could lead to a loss of market share or make it more difficult to grow its business profitably or enter into new markets. Constant investment in research and development of new products and services is key to remaining competitive and attractive to new customers.
The reports admits TechFinancials currently derives a substantial proportion of its revenues from a single customer, and there is no guarantee that it will retain this customer in the future. The Directors understand that the customer has developed high/low Binary Option software of its own and believe that should it continue to develop its own software, there is a greater chance of losing it as a customer in the longer term. Should this occur and TechFinancials fails to replace the lost income, this would have an adverse effect on its revenues, financial performance and prospects.