Lykke builds a global marketplace for the free exchange of financial assets
Lykke builds a global marketplace for the free exchange of financial assets
Past twelve months
• Crypto bull run
• Rapid growth
• Explosion of fees
• Move to centralized exchange
• Consolidation phase from exploration to focused growth
Agenda
• Organizational structure / Richard Olsen
• Transition update / Nicholas Harwood
• Financials / Philipp Richner
• User base / Marina de Mattos
• Key metrics / Sergey Ivliev
• Product / Mikael Vaivre
• Liquidity / Richard Olsen
• Marketing / Laura Arcade
• Fields / Laura Arcade
• Regulations / Ivan De Casseres
Organizational structure
Richard Olsen
Richard is a pioneer in high-frequency
finance with extensive entrepreneurial
experience. He is also well known for his
academic work. He is the co-founder of
OANDA, a currency information company
and foreign exchange market maker, and a
visiting professor at the Centre for
Computational Finance and Economic
Agents at the University of Essex.
Heinrich Zetlmayer
Heinrich Zetlmayer is the founder of
Blockchain Valley Venture, a spinoff of
Lykke. He co-managed the largest global
e-sports company, served as a member
of IBM's executive board in Switzerland,
and was an international management
consultant at Arthur D. Little. He holds
a Ph.D. in industrial engineering.
Iulian Circo
Iulian Circo thrives at the intersection
of innovation, technology and impact.
He led and turned around large global
operations and delivered ambitious
strategy at scale in some of the world’s
most challenging markets across Africa
and Asia. He is also co-founder of several
technology startups that have
exponential technology at their core.
Lykke Board
Mikhail Nikulin
Mihail is an architect and designer with
hands-on experience in creating market
solutions for financial institutions, including
anti-money laundering, fraud detection, and
financial market compliance. He combines
deep knowledge of financial architecture
with blockchain technology.
Sergey Ivliev
Sergey's dream is to make financial markets
better, faster, and more inclusive. For the past
twenty years, he has been an industry
professional, lecturer, author, event curator,
and board member for academic journals and
expert councils to promote best practices for
financial markets and risk management.
He is the regional director at PRMIA Russia and
associate professor at Perm State University.
The future of Lykke
Organizational design: overview
Principles: agility, autonomy, dependency, high level KPI
Enterprise Finance Risk &security Marketing Products Fintech Engineering Customer
success Field
Enable Deliver
New units
Product line
Andrey Migin
Andrey is an exceptional team leader with a
decade of professional experience in
developing FX marketplace systems. He
brings world-class best practices to drive
the development and maintenance of
mission-critical applications.
Engineering
Management team
Mikaël VaivreProduct
Mikaël graduated from the Swiss Federal
Institute of Technology in Lausanne as an
environmental engineer but quickly shifted
his career, helping to grow a software
startup from three to forty employees.
His experience in software development,
design, and business and product
management helps him to deliver
high-quality, user-driven solutions.
Marina de Mattos
Marina brings over a decade of experience
handling customer success in the financial
services industry. She has established and
managed a network of service centers
around the globe to understand the drivers
of positive customer experience and apply
this knowledge toward more efficient and
effective service delivery.
Customer Success
Management team
Laura Arcade
Laura is an expert online marketer and
brand builder. She brings ten years of
progressive experience in world-leading
companies like P&G, along with various
roles at marketing agencies and startups.
She has a passion for leveraging digital
and online technologies to drive
company growth.
MarketingNick Harwood
Nick has been the head of equity and
managing director of the global markets
department at CJSC Sberbank CIB since
October 2013. He also served as head
of equities for Russia and the CIS countries
at UBS Securities. He has over two decades
of experience in emerging market equities
in Moscow, London, New York, and
Johannesburg.
Enterprise
Transition update
Lykke 2.0 — The transition journey
Built on learnings from previous phase, reviewed strategy and refocused resources on proven models, and put in place executive team to deliver.
Continuous optimization
We are hereIn this phase, the focus is on
optimization at scale and using momentum to trigger new product
cycles and innovation.
Vel
ocity
StabilityInvestments in technology and regulation. Product experimentation. Growth largely organic.
Implementation of business model, and deployment of enterprise-grade and scalable organizational systems and infrastructure. Acceleration of customer acquisition and product roll-out and execution of the regulatory strategy.
Lykke 1.0 Transition Lykke 2.0 / Scaleup
Lykke 2.0 — the goals
The overall purpose of the transition phase was to activate Lykke 2.0
1
Completing a global brand positioning platform
Implementing a new organiza-tional design built around lean principles and accountability
Building and activating a leadership team
Implementing predictable processes that maximize output across the whole organization
2 3 4
Aim: a new organizational design built around lean principles and accountability
1. Most leadership positions have been filled, with two in progress.
2. Continued engagement of the Lykke founders embedded through the creation of the Founders Forum.
3. Success metrics have been defined for the company overall and for all teams.
4. Meaningful progress on regulatory strategy.
5. Further strengthening of strategic alliances with key partners to ensure that Lykke is able to deliver a leading-edge digital financial service offering.
Finance Risk andsecurity Marketing Products Fintech Engineering Customer
success Field
Enable Deliver
Founders Forum
Enterprise
Lykke 2.0 — June 2018, forward in partnership
Lykke 2.0 — Blockchain Valley Ventures
• Spin-off of Lykke
• Important Lykke shareholder
• Accelerator and venture capital firm offering investment, financing, and advisory services
for blockchain-enabled businesses.
Financials
Financials 2017
• Lykke Corp 2017 Financials (audited)
• Lykke Group Consolidated 2017 Financials (audit commences soon)
• Outlook 2018
• Crypto and token values increase
• Financial assets represent the share and regulatory capital of subsidiaries
Bal
ance
she
et
AssetsCHF 1’000
31.12.2017
Cash and cash equivalentsTrade accounts receivableOther short-term receivablesPrepaid expenses and accrued income
CHF 1’00031.12.2016
548.1843.9
1’256.48.5
3’846.3330.8
1’664.9–
Total current assets 2’656.95’842.0
Financial assets 0.1733.8
Total fixed assets 0.1823.6
* Represents Lykke Corp — Swiss entity on a standalone basis
Lykke Corp* 2017 financials (audited)
Total assets 2’657.06’575.9
• Short-term liabilities increase due to several intercompany transactions; deferred taxes also contribute
• No change to share capital
• Profit for 2017 of CHF 2.2 million
Bal
ance
she
et
Liabilities and Shareholder’s equityCHF 1’000
31.12.2017
Trade accounts payableOther short-term liabilitiesAccrued expenses and deferred income
CHF 1’00031.12.2016
209.1223.7329.2
–2’352.21’925.7
Total short-term liabilities 762.04’278.0
Other long-term liabilities 9.0–
Total long-term liabilities 9.00.0
* Represents Lykke Corp — Swiss entity on a standalone basis
Lykke Corp* 2017 financials (audited)
Total liabilities 771.04’278.0
Share CapitalReserves from capital contributionAccumulated losses/gainsProfit/Loss for the yearTreasury shares
128.62’862.2
(175.0)(745.8)(184.0)
128.62’862.2(920.7)
2’206.2(1’978.4)
Total shareholder’s equity 1’886.02’297.9Total liabilities and shareholder’s equity 2’657.06’575.9
• Operating income increase driven by both operational activities and intercompany relationships
• Operating costs increase to support the activity in the Swiss entity and subsidiaries
• Growth in financial income offsets operating loss, delivering a net gain for the year
Inco
me
stat
emen
t IncomeCHF 1’000
2017
Income from projects and advisoryOther income
CHF 1’0002016
163.5685.0
2’675.23’331.1
Total operating income 848.56’006.2
* Represents Lykke Corp — Swiss entity on a standalone basis
Lykke Corp* 2017 financials (audited)
Operating expensesPersonnel expensesBusiness expensesAdministration expensesAdvertising expendituresDepreciation and impairment losses on non-current assets
(2’199.8)(98.3)(20.9)(272.1)(101.5)
0
(7’348.2)(1’439.2)
(73.4)(955.1)(363.1)
(1’108.4)
Operating expenses (2’692.6)(11’287.6)
Operating result (1’844.1)(5’281.3)
Financial resultNon-operational costs/incomeExtraordinary, non-recurring costs/income
1’099.90.12.1
7’890.40.0
(11.4)
Gain/(Loss) for the year before taxes (741.9)2’597.7
Direct taxes (3.9)(391.4)
Gain/(Loss) for the year (745.8)2’206.2
• Consolidated results demonstrate materiality of the UK exchange
• Client accounts drive both the increase in assets and in liabilities
• All client assets in colored coins are backed by assets in crypto, accounts receivable from credit card providers, and cash on bank accounts
• Consolidated profit for 2017 of CHF 4.6 million
Bal
ance
she
et
AssetsCHF 1’000
31.12.2017
Cash and cash equivalentsTrade accounts receivableOther short-term receivablesInventoryPrepaid expenses and accrued income
CHF 1’00031.12.2016
733.2161.4137.5
895.68.5
12’570.75’566.7
18.35’984.5
29.1
Total current assets 1’936.324’169.3Total assets 1’936.324’169.3
Liabilities and Shareholder’s equity
Trade accounts payableOther short-term liabilities
209.1659.7
13.420’267.3
Total short term liabilities 868.820’280.7
Long-term liabilities 9.00–
Total long term liabilities 9.00–Total liabilities 877.820’280.7
Share capitalLegal capital reservesReserves from capital contributionAccumulated lossesLoss carried forwardGain / (Loss) for the yearTreasury sharesTranslation reserve
128.6–
2’862.2–
(175.0)(1’617.7)(184.0)
44.4
128.6–
2’862.2–
(1’812.7)4’644.1
(1’978.4)44.8
Total shareholder’s equity 1’058.53’888.6Total liabilities and Shareholder’s equity 1’936.324’169.3
* Grant Thornton review of consolidation commencing soon
Lykke Group* consolidated 2017 financials
• Operating income increase driven by both the UK exchange and the Swiss projects and advisory activity
• Operating costs increase to support the activity across the group
• Growth in financial income offsets operating loss, delivering a net gain for the year
Inco
me
stat
emen
t IncomeCHF 1’000
2017
Operating income
CHF 1’0002016
163.911’865.3
Total operating income 163.911’865.3
* Grant Thornton review of consolidation commencing soon
Lykke Group* consolidated 2017 financials
Operating expensesPersonnel expensesBusiness expensesAdministration expensesAdvertising expenditures
(2’246.8)(98.3)(20.9)(272.1)(101.5)
(10’330.1)(2’125.4)
(87.7)(1’235.0)
(363.1)
Operating expenses (2’739.6)(14’141.3)Operating result (2’575.7)(2’276.0)
Financial resultNon-operational costs/income
959.62.3
7’322.9(11.4)
Gain / (Loss) for the year (1’617.7)4’644.1
Profit / (Loss) for the year before taxes
Direct taxes
5’035.5 1’613.8
(391.4) (3.9)
Outlook 2018
• Overall trend reversal of crypto asset values
• H1 absorbed by consolidation and transition into Lykke 2.0
• Momentum from rollout of revised strategy during H2
User base
Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018*
New accounts opened
1’000
3’200
4’500 4’100 3’700
7’100
16’600
13’100
5’900
4’0002’900
3’400
10’000
Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018*
Active users
9’000
8’000
7’000
6’000
5’000
4’000
3’000
4’400
1’000
2’000
2’900
3’600 3’500 3’300
5’000
8’8009’400
3’800
2’800 2’900
5’900
14K
Jan 2018
Registered users vs KYC status
2K
4K
6K
8K
10K
12K
Feb 2018 Mar 2018 Apr 2018 May 2018
12.8 K
5.8 K
4.0 K
2.8 K 3.3 K
9.2 K
3.5 K
4.8 K
1.0 K
3.5 K
0.4 K2.5 K 3.0 K
KYC status: Ok Rejected Unverified Total client count
Key metrics
250 M
200 M
150 M
100 M
50 M
Jun 2017 Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018*
Type: Wallet HFT-API
Trading volume
$ 106MAvg volume per month
Trading volume structure
89%4FX, BTC, ETH
8%LKK, LKKxY
3%Altcoins,
ERC20-tokens
20 M
15 M
10 M
5 M
0 M
Net fiat cash-ins/cash-outs
20 M
15 M
Jun 2017 Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018*-5 M
$ 2MAvg net fiat
inflow per month
Cash and ALM overview
Jun 20181.3
Cryptocurrencies
–15.5Liabilities
1.3Net liquidity
15.5Cash
Jun 2017 1.0Cryptocurrencies
–1.2Liabilities
5.2Net liquidity
5.4Cash
$ 1.3MNet liquidity (as of June 1)
$ 4MBeing raised (no dilution)
Product
Internal process improvements
• Internal structure: from silos to cross-functional product teams
• We hired and empowered product owners for each product
• Most of the teams are now agile, adapting the scrum framework to their needs, increasing development velocity
• Noticeable improvements in communication, predictability, capacity to plan
Focus on core product, quality, and UX
• Background work: fixing technical debts, improving security, identifying UX bottlenecks
• Prioritize the delivery of our web trading platform
• Conceptualize, design, and plan our next product iterations, simplifying the UX and streamlining the user flow — according to community feedback
• UX improvement visible in the next redesign of Lykke Wallet, and in our web trading platform (web terminal, fund management, web KYC)
• Both are expected to be delivered this summer (Q3 2018)
Next iteration: mobile redesign preview
Next iteration: mobile redesign preview
Next iteration: web trading platform preview
Web terminal: continuous improvement
Next iteration: web trading platform preview
Innovation in trading: the AlgoStore
Innovation in trading: the AlgoStore
• We kept working in the background on some innovative products
• The AlgoStore enables anyone — even with low tech or financial skills — to pick an algo, tweak some parameters, try it on past data with a fake wallet, and finally let it run with real funds
• Making algo trading simple
• Interesting for advanced traders: very low latency
• Status: close to MVP; first beta expected in Q3 2018
Designing the future of Lykke
• The future of Lykke is not only about trading
• The cryptomarket is still in its infancy
• We aim to truly democratize finance through an ecosystem of apps that are accessible, reliable and easy to use
• Market research: help refine the product vision to broaden our audience for quick yet sustainable growth
• New products at the concept phase; more info before the end of the year
Liquidity
Liquidity
• Passport requirement
• Focus on improving liquidity
• Liquidity strategy:
• External
• Inhouse
• No fee strategy for retail
• Smart fees for professionals
• Marketing push
• Algo store
• Third-party market makers
Users generate liquidity
Lykke liquidity
• Market making engine
• Integration with other exchanges
• Cash and risk management
• Alpha engine
• Investment products of liquidity provision
Marketing
Where do we stand today?
90’000Registered users
Marketing goal for 2018/2019
650’000Registered users
How are we going to get there?
Getting the basics right: a new marketing organisation
Getting the basics right: a new brand strategy for Lykke
Getting the basics right : Brand strategy development process
Align consumer proposition
Design business proposition
Develop global communication platform
Prepare market launch
Execute market entry
! Core consumer target
! Communication message strategy
Q2 2018 Q2/Q3 2018 Q3 2018 Q3 2018 Q3/Q4 2018
! Holistic communication brief
! Communication Idea
! Communication plan choices
! Agency call for work
! Communication platform finalized
! Global marketing strategy finalized
! Local marketing strategy
! Local communication plans (including budget)
! Final customized execution
! Execute marketing campaigns
! Measure results and adapt strategy as needed
Field
Role of the Lykke Field Team
Keeping up to date with the latest regulatory development in different parts of the world.
Providing localization feedbacks on how best to enter different markets.
Being the anchoring point of contact for stakeholders in their respective region.
Where are we today?
EuropeUK & NL Cyprus
Demetrios Zamboglou
Middle EastDubai
Manuel Rensink
Asia-PacificSingapore
Quah Zheng Wei
AfricaSouth Africa
Tobie van der Spuy
HQ SwitzerlandThe AmericasNew York
Victor Maniaci
Field strategy
Core characteristics
Lykke Light Fast | Scalable | Profitable Singapore, Dubai, South Africa
Possible use cases
Lykke Local Regulated | Sustainable Cyprus, Switzerland, Asian market
Regulation
Regulation strategy for the Lykke Exchange
Lykke Exchange
Formerly unregulated tokens are becoming regulated
Lykke aims to offer a broad range of financial products
Regulation strategy
Exchange license: to operate a marketplace for regulated instruments
Organized Trading Facility (OTF) in Switzerland
! Lykke can be a market maker to our own exchange
! Progressive regulator
! No services of other financial institutions required
Cyprus Investment Firm
Trades on the OTF for investors from the EEA (EU+)
Recent regulatory achievements
• Cyprus — CySEC CIF License provisional approval
• Singapore — MAS registered as Stored Value Facility
• Australia — AUSTRAC registered as Digital Currency Exchange
Please go to coinholdermeeting2018.lykke.com to share your questions and vote on the annual report.
Thank you!