Hello and welcome to the Flow Traders First Quarter 2025 results call. Please note this conference is being recorded, and for the duration of the call, your line will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Eric Pan, Head of Investor Relations, to begin today's conference. Please go ahead, sir.
Good morning and thank you for joining Flow Traders First Quarter 2025 Trading Update Conference Call. As you all have no doubt already seen, we released our trading update first thing this morning along with the leadership update. I am joined here on the call by Flow Traders CEO Mike Kuehnel, as well as our newly appointed Co-Chief Trading Officer, Alex Kieft, and Marc Jansen, who will run through this results presentation. Prior to detailing our results, Mike will share a summary of the leadership update.
Afterwards, we will be happy to take any questions you may have. Before we begin, let me draw your attention to the disclaimer on page two. Please be advised that if you continue to listen to this presentation, you are bound by this disclaimer. Also, please note that the results we will discuss in this presentation are unaudited. With the formalities out of the way, I would now like to hand over to Mike for his opening remarks.
Thank you very much, Eric, and good morning everyone, and thank you for dialing in. Prior to detailing the results, I would like to provide context in relation to my decision not to seek re-election as CEO for full term at the upcoming AGM. After much reflection, I have decided to pursue my passion to increase my proximity to the emerging AI space and to contribute directly to accelerating the application of this technology to a broader array of use cases spanning across the financial industry and beyond. I have become a strong believer in the potential impact of this technology, both from a business and societal lens, and this is something I'm personally very passionate about pursuing going forward.
To ensure a smooth transition and to support the handover to the best of my abilities, I will seek re-election until the 31st of August 2025 at the AGM on the 13th of June. I'm immensely proud of what we have collectively achieved, as evidenced by our strengthened position as a globally diversified trading firm. Equally, I take pride in the development and growth of our global leadership team. Cultivating and attracting talent has been a pivotal focus during my four years, and I'm thrilled about the current standing of this team. I have full confidence in Flow Traders' future and the established leadership team, as well as its ability to grow and become an even more significant force in promoting transparency, efficiency, and resilience within global financial markets.
I'm also delighted to be joined today by Marc Jansen, who will also be nominated as Executive Director of the Flow Traders Board and appointed as Co-Chief Trading Officer alongside Alex Kieft, also appointed as Co-Chief Trading Officer. Now, I would like to move on to sharing our first quarter results. The first quarter of 2025 as a whole saw increased activity in the market trading environment, while volatility levels in the quarter were also elevated. Flow Traders' ETP value traded increased by 24% in the quarter compared to the same period last year, outpacing the market's 20% year-over-year increase and by 20% when compared to last quarter. Total value traded increased by 11% year-over-year and 4% quarter-over-quarter. Flow Traders' value traded across each of our asset classes also saw corresponding increases that were largely in line with the increase in the total value traded.
We achieved the net trading income of EUR 140.2 million in the quarter, our third straight quarter of triple-digit NTIs, and only the second time in the company's history. The strength in the quarter was driven mostly by increased activity and equity across Europe and Asia, offset somewhat by a lower contribution from digital assets when compared to the first quarter of last year, which benefited from the spot Bitcoin ETF launches in the US. Total income was EUR 135.1 million for the quarter when including a EUR 5.1 million loss in other income. As a reminder, other income reflects the unrealized gains and losses of our investment portfolio, which also includes digital assets holdings and can fluctuate from quarter to quarter.
In addition, we recorded a EUR 10.5 million impairment in intangible assets related to some of our digital assets holdings, as the value of digital assets experienced a pullback in the first quarter after a few quarters of increases. It is important to note that we hedged some of these digital assets holdings, and we saw a corresponding increase in our NTI as an offset in the quarter. However, given IFRS accounting standards have lagged behind the rapid adoption of digital assets, we had to allocate the gains and losses separately above and below the line. Fixed operating expenses in the fourth quarter were EUR 50.8 million, an increase of 15% year-over-year and a 12% increase compared to the fourth quarter. The increase was to support selected hiring of subject matter experts, as well as increased technology investments to further support our growth and diversification strategy.
Given our relatively fixed cost base and high operating leverage, we generated an EBITDA of EUR 62.3 million in the quarter, a 1% increase compared to the same period a year ago, and a 46% margin. As a reminder, our variable employee compensation is set at 32.5% of operating results, which aligns employee incentives with those of shareholders. Net profit for the quarter decreased to EUR 36.3 million from EUR 45.9 million in the same period a year ago, with a basic EPS of EUR 0.84 given the aforementioned impairment and higher fixed operating expenses. The strong results this quarter, despite the much lower contribution from digital assets, serves further validation of our growth and diversification strategy, as we were able to find opportunities in other asset classes. I will now hand it over to Alex Kieft, our Co-Chief Trading Officer, to review recent ETP market dynamics on the next slide.
Thanks, Mike, and a very good morning, everyone. As shown at the top left-hand side of this slide, market ETP value traded increased by 20% in the first quarter compared to the same period a year ago and by 9% compared to the fourth quarter. Implied volatility in the quarter, as represented by the VIX, increased by 30% year-over-year and by 7% compared to the fourth quarter. Total ETP assets under management increased by 3% in the first quarter versus the fourth quarter and 22% year-over-year to over EUR 14 trillion, given record fund inflows to ETPs in the quarter and the strength of the overall market, particularly in Europe. ETP velocity increased in the first quarter compared to the fourth quarter and was on par with the levels seen in the same period a year ago.
In summary, market activity increased in the first quarter when compared to last year, but slightly less so when compared to the fourth quarter, while the secular industry trend across the ETP universe continues to be strong. I will now move on to the dynamics within the fixed income and crypto markets. As shown on the top left of this slide, trading volumes in the investment grade and high-yield bond markets increased in the first quarter, both compared to last year as well as the fourth quarter. However, volatility, as measured by the MOVE index, declined both compared to last year and last quarter. Trading volumes in digital assets declined in the quarter compared to the fourth quarter, but remained higher than the same period a year ago.
Global crypto ETP market value traded also declined in the first quarter versus the fourth quarter, but remained significantly greater than the same period last year. However, it's worth pointing out that net fund flows into crypto ETP were significantly lower in the first quarter than last year, given the spot Bitcoin ETF launches in the US last January. On slide six, we present an overview of some of the key performance indicators for the quarter on a regional basis. As mentioned earlier, market ETP value traded improved in the quarter when compared to the same period a year ago, as well as the fourth quarter. The robust and comprehensive trading capabilities that we have developed over the years across different regions and asset classes put us in the position to capture opportunities that arose in different parts of the market in the quarter.
Given the limited trading capital base, we deployed more capital to the equity asset classes across Europe and Asia in the period. The better opportunities in those regions and asset classes, plus the additional capital provided by our trading capital expansion plan, propelled us to another strong first quarter. In Europe, we maintained our position as a leading liquidity provider in ETPs amidst increased market activity and heightened levels of volatility in the quarter. We were able to benefit from the record net fund flows into ETPs, as well as asset rotation into European equity in the quarter. In the Americas, volumes in the quarter were more muted compared to Europe and Asia, as uncertainties driven by changes in foreign trade policies resulted in less trading activity compared to other regions.
As a result, we allocated more trading capital to Europe and Asia in the quarter, given the better opportunities in those regions. In Asia, volumes remained elevated in the quarter in Hong Kong and China, given continued investor interest following the stimulus unveiled by the government in the fourth quarter. This allowed us to achieve our second-best quarterly result in Asia following the record quarter we just had in the fourth quarter of last year. In digital assets, which trades 24/7 globally, volumes in crypto remained elevated compared to last year. However, net fund flows into crypto ETPs were down significantly compared to the same period a year ago, as cryptocurrencies pulled back following a record year in the fourth quarter of last year. I will now hand it back to Mike for the next slide.
Thank you, Alex. Fixed operating expenses in the quarter increased by 12% when compared to the fourth quarter to EUR 50.8 million and was up 15% year-over-year, given our planned targeted headcount additions and increased technology investments. We delivered a strong 46% EBITDA margin in the quarter compared to 48% in the same period a year ago, given the high operating leverage inherent in our business. We ended the quarter with 619 FTEs, an increase from the 609 FTEs at the end of last year. For 2025, we continue to expect fixed operating expenses to be in the range of EUR 190-EUR 210 million, given additional technology investments and targeted additions of subject matter experts in growth areas, partially offset by expected operational efficiency gains. On slide eight, we take a look at the historical performance of the company in the context of market volatility.
As you can see in the chart on the left, the company has delivered structural NTI growth since the IPO, with higher highs and higher lows given the investments we have made in our trading capabilities across different regions and asset classes. Our growth and diversification strategy has enabled the company to capture opportunities wherever they arose. This positions the company to deliver solid results during periods of muted market activity, while periods of high volatility provide strong upside.
On the chart on the right, you can see the strong and healthy, through the cycle, average EBITDA margins of over 40% over the years, given the high operating leverage inherent in our business, of which our flexible compensation philosophy plays a large role. Given our fixed versus variable compensation structure and the firm-wide bonus pools, employee compensation tracks in line with the profitability of the company and aligns the interests of our employees with those of our shareholders. I will now hand it back to Marc.
Thanks, Mike, and good morning, everyone. Moving to slide nine, trading capital is the lifeblood of any trading firm, and bolstering our trading capital is a strategic priority. Given the strong historical return on trading capital, we took the decision last year to accelerate the expansion of our trading capital base with the suspension of the dividend and the pursuit of external debt. As a result of this major decision and strong profit generation, we continue to grow our trading capital base to record levels, and we're able to increase our trading capital by 32% year-on-year and 4% versus the fourth quarter to EUR 803 million. Shareholders' equity also continues to grow to record levels and increased by 25% year-on-year to a record EUR 787 million at the end of the first quarter, tracking the level of increase in trading capital.
Despite the rapid increase in trading capital and shareholders' equity, we still delivered a strong 68% return on average trading capital and a 21% return on equity in the quarter. The strong first quarter results serve as validation of the firm's trading capital expansion plan and continued expansion of our diversified set of existing and newly emerging trading strategies. We continue to believe that with additional capital, we can deliver significant returns and further strengthen our company's role as a leading global trading firm, providing liquidity and efficiency across a wide range of financial markets. Moving to the next slides, I will discuss market trends and our strategy. On slide 10, you can see that the supportive megatrends, which underline the firm's strategy, remain very much intact.
These four key megatrends continue to shape our market environment, acting as tailwinds to our business and offering an abundance of opportunities for the company. Crucially, these trends all feed into and reinforce each other. Particularly relevant to our core business is the ever-increasing acceptance of ETPs and growth in passive investment. Total industry ETP AUM increased by over EUR 200 billion in the first quarter of this year and is projected to increase from today's EUR 15 trillion to EUR 25 trillion by 2030, underscoring the strength and importance of the ecosystem we are a key part of. Electronification of trading is critical for all of our activities, but in particular, it is within the fixed income asset class where this is a key structural trend in corporate credits and emerging markets sovereign bonds.
Increasing adoption of electronic trading ties into our core technology-enabled competency set, as fixed income ETF AUM is projected to triple from EUR 2 trillion to EUR 6 trillion by 2030. With the recent regulatory developments regarding digital assets, institutional interest in this asset class also continues to increase globally. We anticipate continued growth in investor demand as the asset class remains a long-term growth opportunity with the underlying technology forecasted to drive growth in the tokenization of real-world assets from an estimated EUR 250 billion today up to EUR 30 trillion by 2030. Lastly, regulation continues to be conducive to our business in terms of creating a level playing field from the aspect of execution transparency. For digital assets, increased regulatory oversight helps to create safeguards around the industry while removing barriers for investors.
We continue to work with regulators all around the world to drive increased transparency, efficiency, and improved liquidity across all markets and asset classes. Moving on to the last slide. On this slide, I will recap the firm's four key strategic pillars to grow, strengthen, and accelerate the business. The first is the continued optimization of our core and growth of capital. This means building an increasingly resilient and efficient business model through dedicated optimization of the firm's trading core, while simultaneously growing the firm's capital base to accelerate the monetization of all existing and new trading strategies across asset classes and regions. The trading capital expansion plan we instituted last year was a significant step for the company in ensuring that we have the necessary capital to grow and diversify the business across regions and asset classes. The second is the continued expansion and enhancement of our trading capabilities.
We will leverage our proprietary infrastructure capabilities and expertise to expand into adjacent products and enhance existing trading strategies. Our consistent investment into our digital asset trading capabilities over the past eight years that enabled us to be a first mover in this emerging asset class serves as a great example of this strategic pillar. Third is technology and innovation. We will further adopt emerging technologies and increase the utilization of data insights within trading to improve our own pricing competency, as well as internal hedging and execution efficiencies. This is what our CTO, Owen Lloyd, is working on, given the wealth of experience and expertise he brings in this area. Last, but definitely not least, diversify our business model and revenue streams.
We will continue to invest in adjacent business propositions as well as in connectivity platforms, data, and tokens via dedicated partnerships to accelerate innovation across financial markets and to diversify existing revenue streams. We are looking forward to the launch of AllUnity, our Euro-denominated stablecoin partnership with DWS and Galaxy. It's an instrument that we expect to help to bridge the world of traditional finance and digital assets, revolutionizing and bringing new possibilities to traditional finance as we know it. To conclude, as we execute on these four key strategic pillars, we are proud to deliver our first consecutive triple-digit NTI quarter, only the second time in our company's history. We are confident that such quarters will be a regular occurrence going forward as we deliver on each of these strategic priorities. I will now hand the call back to Eric.
Thanks, Marc. This concludes the formal part of our presentation. We would now like to open up the floor for any questions you may have. Operator.
Thank you, Eric. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We will take our first questions from Julian Dobrovsky from ABN AMRO. Your line is open. Please go ahead.
Hello, good morning, everyone, and thanks for taking my questions. I have three to begin with. Maybe the first one is on the one of improvement components. To be honest, a bit surprising this for the first time. We certainly had much larger pullbacks in digital assets in the past. A bit surprised by the announcement. Can you please again explain in kind of simple terms how you went about that? Maybe what goes into it? Also, did you impair the entire portfolio of crypto holdings or just a few assets which imploded in the last quarter? That is the first question. The second one is on the wage growth, quite steep in my view, 20% quarter over quarter and 18% year- over- year. Clearly, a bit of that is driven by a higher number of FTEs that are now higher.
If I'm just looking at the average wage per FTE, this one is up 20% quarter over quarter. I would appreciate if you could highlight some factors what is driving that. Maybe finally on trading capital, probably a bit of a technical question. You were at EUR 775 million at the end of 2024. That profits EUR 36 million in Q1. According to my math, you should be ended up with EUR 811 million trading capital, but you reported EUR 803 million. I was just wondering from where does the difference come from? Thank you.
Thanks, Julian. Let me maybe start with the second question because that very much relates to our growth strategy and diversification strategy. I think a fair reflection of where we stand on that curve is that we had two focus points which we need to get right and will further get right. One is very much looking into driving efficiencies and upgrading also the talent base in order to accelerate the entire simplification automation effort across the organization. The other point is we are, as said before, very much dedicated on deploying talent onto growth areas. I think what has evolved over the last few years is that we have become more multifaceted on this.
One key element I can highlight is the entire effort across the firm now very systematically and globally on improving, enhancing our pricing capabilities, which is very much also a tech effort, led to a decision to also not just further promote internal talent, but also to hire subject matter experts in order to make sure that we can accelerate. The good news is there are two components, I think, economically that are relevant. One is as we embrace further and further pooling the simplification, there will be efficiency gains down the road in order to improve our cost position. Secondly, as we are leaning into these growth opportunities, we do expect that some of them might have an exponential payout curve.
This is related to further adoption of digital assets, ETPs, deeper penetration in markets we are focused on, but equally our capability in order to monetize trading activity much more dominantly in the future than today. I think this is a very strategic effort and interconnected and synergetic, I shall say, from an economic sense. The overlay is that, and I said it before, the entire perspective of the global leadership team on cost efficiency and cost containment is quite critical for us. In that sense, I think this is quite relevant for us. The third point on the—yeah, sorry, maybe we stopped there too.
Yeah, just a quick follow-up. Thanks for the answer, Mike. In terms of kind of the outlook for 2025, is this kind of more of a run rate figure that we should consider for the next of the quarters? Because obviously, I mean, if I'm just looking at a fixed OpEx run rate for the whole year, you end up at EUR 200 million, and that's exactly in the middle of the gaped range, but just kind of—
That's a very fair estimate. That's a very fair estimate. Just to continue building credibility also on this point, I think the entire focus of the firm on really maintaining cost efficiency, sometimes we highlight the importance of operational leverage in the firm. That is still a top priority for the firm. What I think is a challenge, and that is not just a challenge for Flow Traders, as you start investing, as you hire subject matter experts, there is a missing link between the cost and the payout, if you will. What we will expect to see is that we have efficiency gains as the company grows. I think the most important point from an economic point of view, we do believe, still firmly believe that the top line growth will be higher than the evolution of our base. The mid to long-term perspective is very much on increasing our margins on this front. Yeah.
Yeah. Okay. Thank you.
In terms of the trading capital question, clearly, I think we talked about this in the past, but I just want to reiterate the difference between trading capital and our shareholders' equity, and specifically based on the numbers you mentioned. Most of the difference was due to currency translation reserve loss in the quarter, given the strengthening of the euro from the end of December date to the end of March date, which lowered our shareholders' equity by EUR 13 million.
We paid out annual cash bonuses in February, which lowered trading capital when compared to net profits. The difference between shareholders' equity and trading capital is mostly due to timing, as shareholders' equity is based, as you know, on accrual accounting basis, whereas the trading capital is based on actual cash flows. I hope that this, at least as an overview, explains why there are differences, but I'm very happy to engage further to deep dive into the numbers. Yeah.
Okay. It's clear. Yeah, then on the one of impairment, please.
Yeah. I'll hand over to Marc. He can share a bit more insights on this.
Thank you, Mike. While we do not disclose the exact constitution of digital assets or profitability in the quarter due to trade sensitivities, we can say that the trading volumes in cryptocurrencies and crypto ETPs remained elevated in the period. The contribution from digital assets was on par with that of the fourth quarter. However, as you obviously have seen, we recorded a EUR 10.5 million impairment in intangible assets related to some of our digital assets holding, as the value of digital assets experienced a pullback in the first quarter after a few quarters of rapid increases.
We had some of these digital asset holdings, and due to that, we saw a corresponding increase in our NTI as an offset in the quarter. However, given IFRS accounting standards have lagged behind the rapid adoption of digital assets, we had to allocate the gains and losses separately above and below the line. However, we do view the whole book as one big trading book. Like you see now due to these IFRS accounting standards, gains and losses which cancel each other out.
Yeah. Thanks, Alex. Sorry to kind of drill down on this, but I'm just curious why this quarter, because we've seen pullbacks in the past and you've never done that. Why this time?
We continue to evolve our business, and yeah, we take on different ways of investments or trades or yeah. We haven't had this kind of an investment in the book in previous quarters. That is why you didn't see those there yet. Due to the way it's structured, yeah, we do see now a lag on intangible assets, impairment on intangible assets.
Julian, if I may add, I think what Mark just highlighted is highly relevant for us strategically. When we started building our crypto business, it was probably a one-dimensional route in our head in terms of providing liquidity on spot crypto. Reality is that the entire evolution has evolved, and we talked about that in the past as well. Now we are seeing it more as a commercial flywheel asset. There are many different opportunities. The market is evolving. There is more institutional retail adoption, appetite, interest.
What we are trying to make sure is that we are embracing all these different profit pools, if you will, holistically at the same time. That is probably from the outside difficult to predict. At the same time, I think the trajectory is giving us a very strong push in, yes, you need to embrace it holistically and deliver into all these different bits and pieces. The point on IFRS lacking behind creates then that conundrum maybe that the P&L as a whole, right, still reflects the true economic performance of the company, but the lines that are hit are different in this case.
Okay. Let's say I'm just very keen to have a deeper understanding of that, but I guess I also understand that he just probably cannot share more than what he can share.
Yeah.
Okay. Maybe one final comment. Sorry to take so much of the time on the line. Any comments that he can share on the current trading conditions? I mean, clearly, I think expectations so far are building quite high given the very massive volatility we've seen in a couple of days of April. Anything that he can share regarding trading, maybe on the volume and spread size?
Yeah. We stick to our prior message that we are not able to give any indication on our NTI performance. What we can say, however, is that the market activity and volatility we have seen recently benefited us, and specifically the high levels of volatility recently in the first couple of weeks of April. I think just to maybe substantiate it a bit, the levels reached in April, for way of background, were not close to the levels we saw during COVID when intraday implied volatility levels went above 80 on the VIX during the most volatile days and averaged around 60 for almost two straight weeks and more than 50 for three straight weeks. By contrast, the average implied volatility for the first couple of weeks of April averaged less than 40, and the highest level intraday barely touched 60. Maybe this is helping you a bit to compare the different settings here. Yeah.
Yeah. Sounds good. Thank you so much, guys. Thank you.
Thanks, Julian.
Thank you. We'll take our next questions from Reg Watson from ING. Your line is open. Please go ahead.
Morning, all. Thanks. I think Julian touched on most of this. Mike, thanks for the color on VIX because I think the base reading is we've had three episodes where VIX has traded above 50 in its entire history, those being the pandemic and GFC and obviously this month. To the outside world, it looks like this ought to be a repeat of the pandemic, but it's quite clear, I think, from your brief summary just then in terms of intraday and the extent to which things moved that we're not going to see anything like that kind of NTI.
I do have a sort of slight question to ask for some slight color on this, which is that during the pandemic, you did actually come out with a statement effectively providing a positive profit warning on the NTI generation from the elevated levels of VIX. Could you perhaps sort of cast your mind back to that period and sort of explain what the triggers were for that announcement and what triggers you might set today for a similar announcement?
Yeah. That's a very good question, Reg. Thanks for joining this morning's call. The way I would describe it is that the business has meaningfully advanced strategically and setup-wise. We are now in a situation where we have, A, created a stronger baseload of the company, and equally, we have been quite focused on the impact of diversification. We can now basically make a point that the rising volatility in many different areas across asset classes and regions is giving us an uplift in our top line. I think this is an important message as to the expectation setting on how the business model is reacting to these different, yeah, market sentiments, if you will. In 2020, the company, probably from an expectation level setting, was still in a transformation, right, and going into that full adopted diversification play.
Equally, I think COVID has not, as a whole, impacting the entire world globally instantaneously, if you will, has never been a situation in which the company has operated in, right, in similar degrees. We felt that managing expectations adequately was a must-have given how the business model reacted to these situations. I try to stay a bit generic on this because ultimately, yes, we were diversified in 2020, but I think our narrative has been spot on in explaining what we are trying to build. The mentioning of asset agnostic or asset class agnostic and agnostic as to geographies, more trading capital, I think there's a higher degree of predictability and reference points, understanding from the outside world how our business model is reacting in different market circumstances.
Okay. Okay. Understood. Can I move on to APAC? I think you demonstrated quite a strong uplift in APAC VT. Is that something you expect we should expect to continue as part of this strategy in terms of building a stronger platform and greater diversification?
Yeah. Maybe let me start by making a general comment. I think our mind starts with just highlighting again the strategic importance of APAC for Flow Traders. I made similar comments in the past. We do like that there is fragmentation, which is more difficult to embrace for competitors. We started our business in a quite fragmented setting in Europe. There are pieces of our DNA that gave us and still give us an opportunity to really thrive in these markets. That's number one. Number two is, as we have more capital, we can deploy and seek more, deploy more capital and seek more opportunities. That's definitely a plus. That is a repeating schedule.
I shall even say it's not just repeating, it's intensifying because we, as the company grows also in trading capital, we are able to capture these opportunities much more systematically and with a bigger magnitude down the road. The third point, we have been extremely active on the external side in building strategic relationships across the landscape there. Just to give you a very tangible example, the entire ETP adoption, we're not stepping into the markets where ETP adoption is now thriving or about to thrive with tactical mindsets. We are building deep ties to the counterparty base, to the buy side, and we are providing all our technological skills in order to have the right to play, right to win in these markets. Why is that relevant? It's relevant because we are creating implicitly more resilience in our top line by being long-term focused on these markets.
I think the overlay where it's APAC going, I think there is increasing adoption in terms of more diversified asset classes, specifically on the fixed income side after equity. There will be an adoption in terms of digital assets, right, which clearly hits the entire planet, but we expect also APAC to take more appetite on this. The entire fragmentation, I think it's fair to say that over the next years ahead, those markets will become more unified. One impetus is clearly coming from the regulatory landscape, but also the market participants will be eager to consolidate flows and be more unified in trading. I think that is a unique opportunity with us further building our infrastructure in that market and coming back to what I said earlier, APAC remaining a key growth area for the firm going forward.
Okay. Thank you. My final question, just coming back to this hedge loss. Have I understood correctly if you've lost money on the hedge and markets were down, you were effectively long the hedge, short the spot, or short the physical, or short the book? Is that my correct reading of this? You made money in the book at NTI level because you were short, but the corresponding hedge lost you money, and that's what's booked below the line.
Yeah. Yeah. I think if I understand you correctly, that's correct. We have a hedge against a certain position. One position is making, the other one is losing. Due to IFRS accounting standards, you see those two split out.
Yeah. Okay. Thank you. Thanks for that. Mike, I think it only remains for me to thank you for being a great CEO and for your leadership of Flow and wish you all the best in your future endeavors.
Thank you so much. That means a lot to me. Thank you so much.
Thank you. As a final reminder, if you'd like to ask a question, please signal by pressing star one on your telephone keypad. We will take our next questions from Michael Werner from UBS. Your line is open. Please go ahead.
Thank you, guys. Appreciate the presentation and the opportunity to ask questions. I've got two, if you don't mind. If you could just discuss what you saw in the U.S. business. We definitely saw a bit of a decline in revenues there versus, I think, what the market had anticipated. Any color, if there's any kind of one-offs or anything going on there, that'd be helpful, especially given the backdrop. Second, just coming back to the impairment, I just want to clarify that in a world where the value of the digital assets increases, ultimately, would that mean that your NTI is essentially underreported? My understanding is that you don't get the write-ups, you only take the write-downs when it comes to kind of the impairments. I was just wondering how that would work with the NTI.
Thanks, Mike. I'll take the first question. The U.S. saw indeed a bit more muted results as we didn't see the same levels of opportunities in the region as we saw in Europe and Asia. We therefore shifted. We didn't have the same capital allocation towards the U.S. given the lower perceived opportunities. Also, as a reminder, in Q1 of last year, we saw the spot Bitcoin ETF launch there, which was a tailwind to the region. I would like to say that the U.S. is still highly strategic for us.
Also, in periods of really high volatility, we do see it as a very clear profit center, and we remain fully committed to growing the region further as opportunities arise and as our trading capital base grows and as our trading and pricing and technology advances, that we can still tap into that market and be a very relevant player there. I can take your second question. I think if I understood correctly, yeah, it was two parts. The first part about previous NTIs being underreported or not.
That has not been the case. As also already explained in the previous question, these kind of structures with impairments were on our books in previous quarters. Due to that, yeah, we did not have underreporting in our NTI in previous quarters. However, going forward, there is a possibility that, yeah, that due to these accounting standards, either NTI is over or underreported, and there have been other lines, yeah, you would see there are differences. Does that answer your question?
I think so. Yeah. I'm happy to kind of just try to dive into this offline. Thank you. Again, Mike, just want to say all the best. It's been a pleasure working with you these past couple of years. If we don't cross paths again before you leave, I just want to say congrats and wish you the best.
Likewise. Thank you so much, Michael.
Thank you. It appears we have no further questions. I will now hand over back to Eric Pan for any additional remarks. Please go ahead, sir.
Thank you, Operator. We would like to thank all the analysts for participating in today's call. Please note that we will host our next analyst call when we release our first half results in July. Details and timing for this call will follow in due course. This now ends the call. Thanks again and have a great day.
Thank you for joining today's call. You may now disconnect.