Sempra Energy
NYSE:SRE
Sempra Energy
In the dynamic landscape of energy utilities, Sempra Energy stands out as a towering figure, steering its operations with a blend of innovation and strategic foresight. Headquartered in San Diego, Sempra was established in 1998 following the merger of two formidable entities, Pacific Enterprises and Enova Corporation. As an energy infrastructure company, it operates through its subsidiaries, including Southern California Gas Company, San Diego Gas & Electric, and Sempra Infrastructure Partners. These entities allow Sempra to engage in the transmission and distribution of natural gas and electricity across North America. Its operational footprint extends beyond domestic borders, reaching into Latin America, where it manages liquefied natural gas (LNG) facilities and renewable energy projects, catering to a growing global demand for sustainable energy solutions.
Sempra’s business model pivots around the stable revenues of regulated utilities and the high-growth potential of infrastructure projects. Its regulated utilities provide a predictable income stream, as these entities are allowed to recover expenditures and earn a reasonable return on investments through customer rates. Simultaneously, Sempra invests substantially in infrastructure projects such as LNG export facilities and cross-border energy pipelines. These ventures position it at the intersection of increasing energy needs and environmental consciousness, capturing opportunities in a transitioning energy sector. By balancing regulated utility operations with more volatile yet lucrative infrastructure ventures, Sempra Energy not only generates substantial earnings but positions itself as a vital player delivering stable energy solutions across varied geographies.
Earnings Calls
In the fourth quarter of 2024, Flow Traders experienced heightened market activity and volatility, driving a record net trading income of EUR 153.8 million—a 114% increase year-on-year. Total income for the year reached EUR 479.3 million, marking their second-best annual performance. Notably, the company saw substantial growth in ETP trading, with a 14% year-on-year increase. Their EBITDA margin improved to 52%, while net profit surged to EUR 63.2 million, translating to a basic EPS of EUR 1.47. For 2025, fixed operating expenses are expected to be EUR 190 million to EUR 210 million, amidst further diversification of trading capabilities and asset classes.
Management
Jeffrey Walker Martin is an accomplished executive known for his leadership at Sempra. He became CEO of Sempra in May 2018 and also serves as chairman. Under his leadership, Sempra Energy focuses on delivering energy infrastructure and services, positioning itself as a leader in the global energy transition. Martin has successfully guided the company in expanding its U.S. and international operations, particularly in the areas of liquefied natural gas (LNG) and renewable energy. His strategic vision has supported Sempra's growth and commitment to sustainability and innovation. Before becoming CEO, Martin held various strategic roles within the company, leveraging his background in finance and strategic planning. His tenure at Sempra is marked by efforts to fine-tune operations and advance the company's initiatives in cleaner energy sources. Prior experience includes senior positions related to utility management and financial services, equipping him with a diverse skill set that supports his leadership at Sempra. Martin’s contributions to the company underscore his commitment to meeting the dynamic demands of the energy sector while emphasizing efficiency and responsible management.
Karen L. Sedgwick is the Chief Human Resources Officer of Sempra Energy. She has extensive experience in human resources, including strategic leadership in employee development, engagement initiatives, and organizational culture. Sedgwick previously served in a variety of roles at Sempra Energy and its subsidiaries, contributing significantly to the company's HR strategies and initiatives. She holds a strong track record of supporting the company’s business objectives through effective human resources management and leadership.
Peter R. Wall is a recognized figure in the energy industry, particularly known for his role as an executive at Sempra Energy, a leading energy infrastructure company based in San Diego, California. With a career spanning several decades in the energy and utilities sector, Wall has developed extensive expertise in energy management, strategic planning, and operations. During his tenure at Sempra Energy, Peter R. Wall has been instrumental in advancing the company's strategic initiatives and contributing to its growth and success. His leadership encompasses overseeing significant energy projects, integration of renewable energy solutions, and enhancing the company's operational efficiencies. Wall's academic background and prior professional experiences have equipped him with the skills necessary to navigate the complexities of the energy market and regulatory environment. His contributions to Sempra Energy have also involved stakeholder engagement and ensuring sustainable practices are embedded in the company's operations. Under his guidance, Sempra Energy continues to position itself as a leader in the transition to cleaner energy resources, aligning with global sustainability goals and addressing the challenges posed by climate change. Peter R. Wall's influence extends beyond his corporate responsibilities as he often participates in industry conferences and forums, contributing insights on the future of energy.
Trevor Ian Mihalik is a seasoned finance executive who holds the position of Executive Vice President and Chief Financial Officer (CFO) at Sempra Energy, a leader in the utilities and energy infrastructure sector. With a Certified Public Accountant (CPA) designation, Mihalik brings a wealth of experience in financial management, reporting, and strategic planning to the company. At Sempra Energy, Mihalik is responsible for overseeing the company’s financial operations, including its accounting, budgeting, and financial planning activities. His role is crucial for ensuring that the company maintains financial integrity and continues driving shareholder value while supporting its long-term strategic objectives. Before his tenure at Sempra Energy, Trevor Mihalik held various leadership roles in both public and private sectors, showcasing his versatility and expertise in finance. His previous positions have equipped him with a robust understanding of both the regulatory environment and market dynamics that are essential for steering a major energy company. Throughout his career, Mihalik has been recognized for his strong analytical skills, leadership, and ability to navigate complexities in the ever-evolving energy industry. His contributions are instrumental in maintaining Sempra Energy’s position as a significant player in the energy market, focusing on sustainability and innovation.
Louise Bick is not an executive officer at Sempra Energy. If you were referring to another individual or would like information on a different person affiliated with Sempra Energy, feel free to provide additional details. Otherwise, this information might not correspond to any current, well-known executive at the company.
Diana L. Day serves as an executive at Sempra Energy, a leading North American energy infrastructure company. In her role, Day is responsible for leading significant initiatives that enhance the strategic objectives and operational excellence of the company. With a strong background in the energy sector, she brings extensive experience in corporate governance, strategic planning, and risk management. Day has played a critical role in shaping policies that drive sustainable energy practices and innovative solutions at Sempra Energy. Her leadership has been instrumental in promoting a culture focused on safety, reliability, and efficiency. Prior to her current role, Day held various leadership positions within the organization where she contributed to key projects and development strategies that support Sempra Energy's mission to deliver clean, safe, and reliable energy to its customers in a responsible manner. Her visionary approach and dedication to continuous improvement have earned her recognition as a leader in the industry.
Sandeep K. Mor is a notable executive with a comprehensive background in finance and strategy. He serves as the Vice President of Audit Services for Sempra Energy, a leading North American energy infrastructure company. In this role, Mor is responsible for overseeing the internal audit function, ensuring the effectiveness and efficiency of operations, and safeguarding the organization's assets. Mor joined Sempra Energy in 2019 and brought with him years of extensive experience in auditing and finance. Before his tenure at Sempra, he worked in various leadership positions, demonstrating expertise in risk management, compliance, and strategic planning. His educational background includes a Bachelor’s degree in Commerce and Economics, and he is a Certified Public Accountant (CPA), which further underscores his proficiency in financial oversight and management. Mor's leadership at Sempra Energy emphasizes transparency, accountability, and enhanced operational procedures, aligning with the company's commitment to ethical business practices and sustainable growth.
Justin Christopher Bird is a prominent figure in the energy sector, particularly known for his role at Sempra Energy, where he has held significant leadership positions. He is renowned for his expertise in energy infrastructure and his strategic vision in advancing the company’s objectives. Bird serves as the CEO of Sempra Infrastructure, a business platform that integrates Sempra's North American infrastructure assets, including liquefied natural gas (LNG), net-zero solutions, and renewable energy. His leadership is instrumental in driving the growth of Sempra's natural gas infrastructure projects and advancing the company's clean energy goals. Under Bird's guidance, Sempra Infrastructure aims to develop innovative solutions and sustainable energy practices, contributing to the global transition to cleaner energy resources. His insights into the energy market and commitment to sustainability are key factors in the company's strategic direction. Bird joined Sempra in 2012 and has since held various key management roles. His educational background includes a Juris Doctor degree from the University of Pennsylvania Law School and a Bachelor of Science degree from Arizona State University. Bird's legal expertise and business acumen have made him a pivotal figure in navigating complex regulatory landscapes and fostering cross-border energy collaboration. Overall, Justin Bird's leadership at Sempra Energy reflects his dedication to innovation and sustainability in the energy sector.
Ms. Lisa M. Larroque Alexander is an accomplished business executive renowned for her strategic leadership and expertise in communications and sustainability. At Sempra Energy, she serves as the Chief Sustainability Officer and Senior Vice President of Corporate Affairs. In her role, Ms. Alexander is responsible for overseeing the company's sustainability initiatives, corporate social responsibility programs, public policy, and communications strategies. Her work focuses on advancing Sempra Energy’s commitment to sustainable business practices and enhancing its reputation for environmental stewardship. Under her leadership, the company has made significant strides in integrating sustainability into its core business operations, contributing to the development of cleaner energy solutions and promoting social responsibility. Ms. Alexander brings extensive experience in communications and public affairs, having previously held senior roles in various organizations where she led efforts to effectively communicate corporate missions and engage stakeholders. She is highly regarded for her ability to drive organizational change and foster a culture of environmental and social consciousness within the corporate sector. Overall, Ms. Lisa M. Larroque Alexander's leadership plays a crucial role in shaping Sempra Energy's strategic direction towards sustainability and corporate excellence.
Robert J. Borthwick is recognized for his leadership and expertise in the energy sector, particularly through his role at Sempra Energy. As a key executive, he has contributed significantly to the company's strategic direction and operational excellence. Borthwick has been involved in enhancing Sempra Energy's infrastructure and has played a vital role in the company's expansion and development projects. His focus has often been on ensuring the company's projects align with modern energy needs and sustainability goals. His tenure at Sempra is marked by a commitment to innovation and efficiency, contributing to the company's influential position in the energy industry.
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Hello, and welcome to the Flow Traders' Fourth Quarter 2024 Results Call. Please note, this conference is being recorded. [Operator Instructions]
I will now hand you over to your host, Eric Pan, Head of Investor Relations, to begin today's conference. Please go ahead.
Good morning, and thank you for joining Flow Traders' Fourth Quarter 2024 Results Call. As you have -- well, as you will have no doubt already seen, we released our results first thing this morning.
I am joined here on the call by Flow Traders CEO, Mike Kuehnel; as well as Global Co-Head of Trading, Alex Kieft, who will run through this results presentation. Afterwards, we will be happy to take any questions you have.
Before we begin, let me draw your attention to the disclaimer on Page 2. 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. Good morning, everyone, and thank you for dialing in.
The fourth quarter of 2024 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 tracked in line with the market as it increased by 13% in the quarter compared to the same period last year and by 16% when compared to last quarter.
Total value traded increased by 14% year-on-year and 6% quarter-on-quarter. For the year, Flow Traders' ETP Value Traded increased by 5% when compared to '23, while total value traded increased by 12%.
Flow Traders value traded across each of our asset classes in the fourth quarter and for the year saw corresponding movements that were largely in line with the market, with crypto seeing the largest increase both year-on-year and compared to last quarter.
Fixed income value traded saw a decline compared to a year ago as we allocated our trading capital towards other asset classes with more attractive opportunities.
Given increased activity in the quarter across Asia, Europe and Digital Assets, we achieved the best fourth quarter in company history, with a net trading income of EUR 153.8 million and other income of EUR 5.1 million, for total income of EUR 159 million, which is a 114% increase compared to the same period a year ago. As a reminder, other income reflects the unrealized gains and losses of our strategic investments portfolio.
Within that, our Digital Assets investments continue to make a positive contribution as several projects, where we were early investors, saw additional uplift during the quarter. However, it is worth highlighting that given the volatility inherent with Digital Assets investments, the unrealized gains we saw in 2024 may potentially turn into unrealized losses in future periods should the market reverse and return some of the recent gains.
For 2024, we recorded the second most successful year in the company's 20-year history with EUR 467.8 million of net trading income, EUR 11.5 million of other income and EUR 479.3 million of total income, which is second only to the COVID disruption year of 2020.
Fixed operating expenses in the fourth quarter was EUR 45.3 million, flat compared to the third quarter; and EUR 179.1 million for the year, a 3% increase year-on-year and in line with our guidance.
Given our relatively fixed cost base and high operating leverage, we generated an EBITDA of EUR 82.1 million in the quarter, an almost sevenfold increase compared to the same period last year, and a 52% margin. For the year, we generated an EBITDA of EUR 214.9 million, a more than threefold improvement compared to '23, and a 45% 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 increased to EUR 63.2 million with a basic EPS of EUR 1.47, an almost tenfold increase compared to the same period last year. Net profit for the year increased to EUR 159.5 million with a basic EPS of EUR 3.69, a more than fourfold increase compared to 2023 and also the second most successful year in Flow Traders' 20-year history on a per share basis.
The strong results this quarter and for the full year serve as further validation of our growth and diversification strategy and the Trading Capital Expansion Plan that was announced in July of last year. The bank loan and strong profit generation throughout the year immediately helped to increase our capacity to capture opportunities that arose over the course of the year.
I will now hand it over to Alex Kieft, our Global Co-Head of Trading, to review recent ETP market dynamics on the next slide.
Thanks, Mike, and good morning, everyone. As shown at the top left-hand slide -- top left-hand side of this slide, ETP market value traded increased by 13% in the fourth quarter compared to the same period a year ago, and by 12% compared to the third quarter. For the year, ETP Value Traded increased by 5% compared to 2023.
Implied volatility in the fourth quarter, as represented by the VIX, increased by 12% when compared to the same period a year ago, and was relatively flat compared to the third quarter of this year. For the year, average implied volatility decreased by 9% compared to '23.
Total ETP assets under management increased by 6% in the fourth quarter and 29% year-on-year to almost EUR 14 trillion given record fund inflows into ETPs, as well as the strength of the overall market.
ETP velocity increased slightly in the fourth quarter compared to the third quarter, but was below the level seen in the same period a year ago. Average ETP velocity for the year remained below the level seen in 2023.
In summary, market activity increased in the fourth quarter when compared to the same period last year, but slightly less so when compared to the third quarter of this year, 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 when compared to the same period a year ago, but declined when compared to the third quarter of this year -- of last year.
Volatility, as measured by the MOVE Index, increased slightly compared to the third quarter, but was below the levels seen last year. Trading volumes in digital assets doubled in the fourth quarter when compared to the third quarter, and is slightly higher than the same period a year ago. Volatility was up slightly in the quarter compared to both the third quarter and the same period a year ago.
Global crypto ETP market value traded also doubled in the quarter versus the third quarter, and increased by more than tenfold compared to the same period a year ago.
On Slide 6, we present an overview of some of the key performance indicators for the fourth quarter on a regional basis. As Mike mentioned earlier, market ETP Value Traded improved in the fourth quarter when compared to the same quarter a year ago, as well as the third 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 Europe, Asia and Digital Assets in the quarter. The better opportunities in those regions and asset class, plus the additional capital provided by our Trading Capital Expansion Plan, propelled us to the record fourth quarter results and the second best annual result in the company's 20-year history.
In Europe, we maintained our position as the leading liquidity provider in ETPs amid increased market activity and heightened levels of volatility in the quarter. In the Americas, the heightened levels of implied market volatility going into the U.S. election in early November dissipated almost immediately post the election.
In Asia, we achieved record performance in the quarter given the volatility around the monetary stimulus that was announced by the Chinese government in the quarter. The increased activity and volatility in Asia throughout the year resulted in a record year for us in Asia.
In Digital Assets, which trade 24/7 around the world, our through-the-cycle investment in our trading capabilities in the asset class allowed us to participate in its resurgence over the course of 2024. With easing regulations expected in the U.S. following the election of the new U.S. administration in November, Digital Assets received another boost in the fourth quarter, and we were there to provide the liquidity the market required.
This development and the continued institutional adoption of Digital Assets around the world further affirms our long-term investment strategy in Digital Assets.
And last but not least, we continue to partner with emerging market infrastructure providers in both the traditional finance as well as digital assets to further participate in the growth and development of financial markets. Our latest partnerships include Börse Stuttgart Digital and Wormhole in the digital assets space and OpenYield in the fixed income space.
I will now hand it back to Mike for the next slide.
Thank you very much, Alex. After a few years of rapid expansion, we focused on integrating new talent and operational efficiencies in the last couple of years, while still implementing our growth strategy at the same time.
Fixed operating expenses in the quarter were flat when compared to the third quarter at EUR 45.3 million and up 12% year-on-year due mostly to timing differences. Fixed operating expenses for the year came in at EUR 179.1 million, which is an increase of 3% year-on-year and in line with guidance.
We achieved strong margins in the quarter as an upturn in NTI delivered a 52% EBITDA margin compared to 16% in the same period a year ago. Our EBITDA margin for the year was 45% compared to 22% in 2023. The strong performance is a result of the high operating leverage inherent in our business, derived from the variable compensation philosophy that has contributed to the company's success over the past 20 years.
We ended the year with 609 FTEs, slightly below the number at the end of 2023 and in line with guidance. We would like to note that the FTE figures were restated to exclude contractors and those on garden leave as per the new CSRD reporting requirements.
For 2025, we expect fixed operating expenses to be in the range of EUR 190 million to 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 #8, we present both the NTI by region and NTI by asset class breakdown, as they demonstrate the progress of our regional and asset class diversification strategy as presented at our Capital Markets update back in July of 2022.
For 2024, NTI contributions from the Americas and Asia accounted for 43% of total group NTI, down slightly from 45% in 2023, given the strong contribution from Digital Assets, which is traded mostly from Europe during the year.
From an asset class perspective, we decided to combine fixed income and CCC into FICC, which is more in line with the segmental reporting in our industry. NTI contributions from FICC together accounted for 51% of total group NTI in 2024. This is an increase from the 48% in '23 and is the first time that the non-equity portion of our trading strategies has exceeded the equity portion.
As Alex mentioned before, our diversification strategy and the high degree of flexibility to quickly deploy trading capital across different asset classes and regions gave us the opportunity to steer liquidity to optimally capture market dislocations when they occur.
On Slide #9, 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 pool, employee compensation tracks in line with the profitability of the company and aligns the interest of employees with those of our shareholders.
Moving to the next slide. Trading capital, as said before, is the lifeblood of any trading firm and bolstering our trading capability -- capital is the strategic priority. Given the strong historical return on trading capital, we took the decision last July 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 were able to boost our trading capital by 33% over the course of the year to EUR 775 million at the end of 2024, the highest level in company history.
Note that given the rapid increase in trading capital as a result of the Capital Expansion Plan, we will be using a return on average trading capital instead of return on trading capital going forward, which uses the average of the prior and current end-of-period trading capital instead of the current end-of-period trading capital in the denominator of the trading capital return calculation.
Shareholders' equity also increased by 31% to a record level of EUR 768 million at the end of the year, tracking the level of increase in trading capital. Please let me note that the difference between trading capital and shareholders' equity at the end of the year is mostly due to employee bonuses and taxes that will be paid in the first half of the year.
Despite the rapid increase in shareholders' equity, we still delivered a strong 24% return on equity for the year as the company has averaged an impressive 35% return on equity since its IPO. The strong fourth quarter and 2024 results serve as a validation of the firm's Trading Capital Expansion Plan and the continued expansion of our diversified set of existing and newly emerging trading strategies.
We continue to believe that with the 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 slide, I will now discuss market trends and our strategy. On Slide 11, you can see that the supporting megatrends, which underline the firm's strategy remain very much intact. These 4 key megatrends continue to shape our market environment, acting as tailwinds to our business and offer an abundance of opportunities for the company. Crucially, these trends all feed into and reinforce each other.
Especially relevant to our core business is the ever-increasing acceptance of ETPs and growth in passive investing. Total industry ETP AUM increased by USD 3 trillion in '24 and is projected to increase from today's USD 15 trillion to USD 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 credit and emerging market sovereign bonds. Increasing adoption of electronic trading ties into our core technology-enabled competency set.
As highlighted in the fixed income white paper we published, credit algos have comprised close to 50% of executed volumes in euro credit in the last 2 to 3 years, especially in the sub-1 million ticket sizes. Fixed income ETF AUM is projected to triple from USD 2 trillion to USD 6 trillion by 2030.
With the recent regulatory developments regarding digital assets, institutional interest in this asset class and total assets invested in cryptocurrencies accelerated over the course of 2024. Over $40 billion of net funds have flowed into U.S. spot bitcoin ETFs so far. And BlackRock's spot bitcoin ETFs became the fastest ETF ever to hit $50 billion in assets under management in just 11 months.
Cryptocurrencies are now a $3 trillion asset class, having doubled over the past year. 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 $250 billion today up to $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 actively work with regulators all around the world to drive increased transparency, efficiency and improve liquidity across all markets and asset classes.
Moving on to the last slide. On this slide, I will recap the firm's 4 key strategic pillars to grow, strengthen and accelerate the business. The first is to optimize our core and grow 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 implemented last July 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 to expand and enhance 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 8 years ensured we were ready to support the launch of the U.S. spot bitcoin ETFs last January, and we were able to reap the benefits of our multiyear investments.
The 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 hedge and execution efficiencies. The hiring of Owain Lloyd, our CTO, last year will help accelerate our efforts in building out our capabilities in these areas and enable improvements in our revenue capture.
And last but 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 bridge the world of traditional finance and digital assets, revolutionizing and bringing new possibilities to traditional finance as we know it.
To conclude, we have much to celebrate with a record fourth quarter and the second best annual result in the company's history, a timely and rewarding milestone given the celebration of the company's 20-year history.
However, much work remains to be done to further diversify and strengthen our trading capabilities in order to deliver more consistent results quarter after quarter and year in and year out that are less dependent on market volatility.
We expect to bring forth a clear road map to achieve this goal at our next capital markets update later in the year.
I will now hand the call back to Eric. Thank you.
Thanks, Mike. This concludes the formal part of our presentation. We would now like to open up the floor for any questions you may have. Operator?
[Operator Instructions] We currently have no questions coming through. [Operator Instructions] We will take our first question from Reg Watson from ING.
Congratulations on the results. Clearly, a vindication of your decision to suspend the dividend and go for retention of capital. I guess it begs the question then, how much more capital can you retain? You've spoken in the past about additional sources of capital. You have the bank loan. You still haven't tapped the hybrid instrument market yet. What's your latest thinking on this?
Yes. Thank you so much. And indeed, we'd like to give a bit of color on this. So what I said last year still holds true. So as long as the company is able to generate attractive trading capital returns on the incremental capital that we retain and/or additionally put onto the balance sheet through debt, we will retain and continue our journey on that end. And I think the 69% trading capital return in '24 with close to EUR 200 million additional capital is a very strong indication.
The second point I would like to share is, as we look into the trends I talked about, ETP adoption and acceleration, digital assets, et cetera, and even electronification, we see an ever-growing amount of opportunities in front of us.
And if I just give you an example on the ETP adoption and specifically related to APAC and the growth we have seen doubling our NTI last year, you now see that the ETP adoption is now hitting emerging markets and the potential we see in countries such as China and other APAC countries. It's still a way to go for us to capture these opportunities over the next few years, but I think it's a very appealing opportunity for which we need capital.
The last point I would like to say is very much in line with earlier statements. As we look into now opportunities to put external debt onto the balance sheet, I think we had clearly the benefit in 2024 to have more capital to retain earnings. So that reduced the pressure on tipping into external debt. But at the same time, I also was quite vocal that our strategy is also around acceleration.
And we are still committed in looking into different structures of putting debt onto the balance sheet. And I think it's a fair statement to make that, in 2025, we will continue on that journey and increase that on our balance sheet in order to grow. And then in terms of growth, it's also fair to say it will be a combination of asset class growth and regional expansion.
Okay. And I have a follow-up question. I have my own views on this, and I think I know what your answer is going to be, but I'd like to hear it again. And the reason I ask this question is that there is criticism from some quarters -- not mine, I hasten to add, so I'm just a messenger here, that you are losing share to better capitalized competitors such as Jane Street. How do you respond to this criticism?
I think that in Europe, we're still a market leader. I think we also saw a small uptick in market share. Market share is not necessarily something we target, we look at profitability and we're there to provide liquidity.
We do see, with the increase in capital base, that we're able to compete also for larger trades. So we expect that with the expansion of our capital base, that's a requirement for us to maintain the leading position, and we're -- we believe that we are in a good position to keep doing that.
[Operator Instructions] We will take our next question from Michael Werner from UBS.
Congrats on the strong quarter. I believe you mentioned earlier that there were some unrealized gains in the crypto space that helped your revenues that you say potentially could unwind going forward in Q1, if I heard correctly. I was just wondering if this is kind of a change in strategy. You guys have been very kind of balance sheet neutral in the past. I was wondering if crypto requires you to maintain an inventory. And ultimately, what -- any color in terms of the size of those unrealized gains?
Michael, thank you so much. Yes, so directly to your question, it's not a shift in strategy in terms of balance sheet intensity, if I can put it like that. We have been, with the inception of our venture fund 2 years ago, quite vocal that we see that some minority investments across themes like connectivity, data, platforms, tokens give us an edge as a market maker to position ourselves adequately.
And the second leg to that is once we do that, we form a very strong partnership with these propositions and parties in the market, helping them with our expertise and experience to really drive growth faster. So this is very much embedded in the investment we do, is the bridge into building strong alliances across the market in order to help the market to thrive.
And I think the last point on this, if there is a challenge around digital assets, then there is not yet a unified vision or version of where it might land in a few years. So by doing these -- or building these alliances across the market, we also have an ability to have a higher share of voice. So you can expect that this is not increasing the balance sheet intensity going forward, and we are also quite selective on the bets we place in the market.
And then to the unrealized gains, so the point I just made is, as you might expect with the other income line for the full year '24, that this is a growing trend. And I was just cautious in making the point that if the market would revert and turn into negative, just hypothetical, that this other income line would be impacted by it. So the way we look at it, these are deep strategic investments, and they very much help us on the core business side of the firm to grow faster.
It appears we have no further questions. I will now hand back to Eric for any additional or closing 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 quarter trading update in April. 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.