NAGA grows amid difficult market environment: restructuring and strategy implementation bear fruit

• In the first half of 2022, NAGA significantly increased consolidated  sales by 51% to EUR 35.0 million - earnings figures still affected by  short-term negative effects 
• Extensive cost reductions in the second half of 2022  
• 2023: Full focus on improving earnings indicators 
• Focus on NAGA Capital Seychelles and the launch of the NAGA  Institutional Desk for volume traders  

Hamburg, December 30, 2022 - NAGA Group AG (XETRA: N4G, ISIN:  DE000A161NR7), operator of the neo-broker NAGA, the cryptocurrency platform  NAGAX and the neo-banking app NAGA Pay, has strengthened its position in a very  difficult market for neo-brokers in 2022 via extensive structuring measures and a  targeted strategy shift and plans to return to profitability in the first half of 2023. 

Strong sales growth in the first half of 2022 - positive earnings effects from  restructuring and strategy shift will not be felt until the end of the year  

While NAGA closed the first half of 2022 stronger than ever in terms of revenue - consolidated revenues expanded by 51% to EUR 35.0 million (H1 21: EUR 23.2 million)  - this growth proved ineffective amid a rapidly deteriorating overall environment. After a  successful start to the year for NAGA in 2022, the war between Ukraine and Russia  significantly worsened market conditions and deeply depressed investor sentiment. The  significant decline in interest in the equity market was reflected in trading activity at  NAGA, particularly in April and May 2022, which was at an all-time low, as well as rising  new costs per client. NAGA's management reacted immediately with a complete change  of strategy and initiated a consistent restructuring. The core tasks of this restructuring  represent the full focus on the trading business and the reduction of acquisition costs  while maintaining the same lifetime value. In this respect, the first half of H1 2022 was  still characterized by short-term negative effects on the earnings side - also due to  necessary impairments on long-term crypto assets - and Group EBITDA decreased to  EUR -2.7 million (H1 21: EUR -0.2 million). 

Based on extensive cost reductions, NAGA was able to reduce its cost base from EUR  20 million in the first quarter of 2022 to EUR 12 million in the fourth quarter. At the same  time, the cost per acquisition was reduced from EUR 1,609 at the peak of the year to  EUR 613. These successes were achieved through significantly reduced marketing  costs, a 20% reduction in headcount across the Group, and the completion of NAGA's  product range and thus the considerable reduction in research and development costs  for NAGAX and NAGA Pay, while at the same time significantly reducing operating costs.  

"Looking at the transaction and user KPIs confirm that the measures we have  implemented are correct," says Benjamin Bilski, CEO and founder of NAGA Group AG,  and continues, "In the second half of 2022, customer acquisition costs in particular have  fallen by over 60% compared to the first half, and new customer growth is at its best  level since NAGA was founded." 

NAGA focuses on improving earnings ratios in 2023  

For 2023, the NAGA Management Board is confident that it will be able to achieve visible  improvements in earnings in the near future in view of the growth projects and the first  full-year effects from the strategy change and the restructuring. "Very specifically, we  want to bring NAGA into the profit zone by the second quarter of 2023," Bilski explains  the 2023 targets. "We want to achieve this by no longer focusing on aggressive sales  growth, but on generating stable and reliable profits. We want to further reduce costs  compared to 2022." 

The recently granted license in the Seychelles enables NAGA to grow even more outside  Europe. With increasing B2B business, NAGA can now offer multiple payment  processors, which are essential in many markets such as Latin America or Southeast  Asia. NAGA has already been able to build up a lot of customer interest there, which can  now be monetized with the license and the newly available payment methods. The  business outside Europe offers strong growth opportunities with the comparatively lower  acquisition costs here and the increased profitability per customer. 

In addition, NAGA will introduce the NAGA Institutional Desk for volume traders at the  beginning of 2023. Thus, the product range will be supplemented by additional brokers,  high-frequency desks and prop trading. This will enable NAGA to generate stable  volume-based revenues in the future. 

"Based on a well improved cost base, our now fully developed technology platform and  a healthy growing customer base, we are confident of delivering a profitable first half of  2023," Bilski concludes.

Monthly trading updates start from January 2023 

NAGA further announces that monthly trading updates will be held via Zoom, presented  by CEO Bilski, starting in January 2023. Interested parties can register at any time for  the webinars, which will also be recorded and made available on the NAGA Group  website. 

The half-year report 2022 can be downloaded from the website of The NAGA Group AG  in German and English at https://group.naga.com/investor-relations/financial-reports.