Argentex IPOed in June 2019 and, in its short time on the public markets, has delivered some steady results. It reported its annual results to 31 March 2020 this past week which we start with below.
Argentex focuses on the mid-size and up corporate segment and has been growing at a healthy rate since launching back in 2012.
Some takeaways from Argentex’s numbers:
- 41% of its revenue come from its top 20 clients (out of a total of 1,212 clients). Average annual revenue for these top 20 clients sits at £592k – significant, with the balance of clients averaging just over £14k.
- Revenue between spot and forwards has been pretty evenly split the past few years and Argentex did not report any adverse material impact from its hedging business from the pandemic
- Argentex’s focus on mid-size and up corporates is best highlighted by its take rate (Revenue share of FX Flow) which has hovered around 0.2%.
How does Argentex compare to some of its peers?
Note the numbers below do not reflect the impact of the pandemic which we address in the text and exclude AFEX, Global Reach and Monex due to lack of recent / available data.
Return per employee
Argentex’s stand-out metric is the revenue it generates per employee. As of 31 March 2020, just 54 staff members generated nearly £30m of revenue. At the other end of the spectrum is Ebury, a very different model with its SME focus and nearly 40,000 clients. How long Argentex can maintain this return on employees will be a key function of its growth and valuation and will it revert to the levels of its peers?
Argentex has been growing at similar rates to other leading B2B-focused players such as Ebury, Cambridge and Alpha. Any growth rate north of 20% year-on-year, especially in a human-sales driven B2B businesses is certainly to be commended.
Much has changed since the reported FY2019 numbers shown above. Some of Argentex’s peers who had taken on more hedging risk have had a tougher time since the pandemic began. EncoreFX didn’t make it, Cambridge had to report a $90m loss against one of its biggest clients and Alpha FX reported what initially was a significant potential loss in April but has since been mitigated to a loss provision of £2m.
Corporates remains a very attractive segment of the market with a very long tail of small providers offering relationship driven sales. Revolut and TransferWise are making great inroads in terms of customers counts (Revolut just reported 500,000 business customers) but these are typically very small businesses with much, much small per customer revenue.