Leading tech, lower pricing – Visit cBridge today
It’s been a sleepy Easter week for me and I hope it has been for you too (or will be if you’re celebrating this Sunday). And because I am feeling more lethargic than usual, I thought we’d take a look at FTMO again.
We’ve looked at the prop firm on a few occasions recently and so we’ll try to make this the last time in a while.
But the reason for doing so is that they now publish their average payouts for each challenge they offer. I could be wrong but I’m unaware of other big providers doing this and I found it interesting.
You can see a breakdown of the figures below..
| Account Size (USD) | Refundable Fee (€) | Avg. Payout (€) | Payout as % of account size |
|---|---|---|---|
| $200,000 | €1,080 | €12,234 | 6.12% |
| $100,000 | €439* | €5,957 | 5.96% |
| $50,000 | €345 | €2,805 | 5.61% |
| $25,000 | €250 | €1,431 | 5.72% |
| $10,000 | €89 | €680 | 6.80% |
If we take those figures into account, FTMO would need to operate like this in order to hit different revenue / profit targets…
| Payout Ratio (% of revenue) | Success Rate | Failure Rate |
|---|---|---|
| Breakeven (100%) | 6.86% | 93.14% |
| 60% | 4.12% | 95.88% |
| 50% | 3.43% | 96.57% |
| 40% | 2.75% | 97.25% |
| 30% | 2.06% | 97.94% |
| 20% | 1.37% | 98.63% |
| 10% | 0.69% | 99.31% |
What actually happens in practice?
We have FTMO’s 2024 accounts and we can get some idea of how they operate as a result.
FTMO operated in 2024 with 5 core entities…
| Entity Name | Function |
|---|---|
| FTMO s.r.o. | The Hub: Captures group revenues from ‘Evaluation’ entities, sends money back to ‘Trading’ entities. |
| FTMO Evaluation Global s.r.o. | Global Intake: Collects challenge fees from customers worldwide (excl. USA). |
| FTMO Evaluation US s.r.o. | US Intake: Specifically handles fee collection for the first two evaluation phases from customers based in the United States. |
| FTMO Trading Global s.r.o. | Global Payout Vehicle: Manages the “FTMO Account” stage for successful global traders. Distributes rewards and profit splits. |
| FTMO Trading US s.r.o. | US Payout Vehicle: Manages payouts and the “FTMO Account” stage for successful traders based in the United States. |
As you can see, the ‘Evaluation’ entities that FTMO operates take payments for trader challenge fees.
Those funds appear to then be funnelled to a top level entity (FTMO SRO).
This entity then sends back money to ‘FTMO Trading’ entities – with one for global and one for US clients. Those entities then manage the payouts to traders. It’s worth noting here that the FTMO US entity seems to be winding down. It’s unclear how US payments are structured today.
Working with an exchange rate of CKD 100 to $4.81, the company’s financial results for those companies were as follows:
| Category | Amount (Millions USD) |
|---|---|
| Total Global Revenue | $322.8 |
| Total US Revenue | $2.3 |
| Total Global Payouts | $176.3 |
| Total US Payouts | $6.6 |
| Total Operating Expenses | $48.1 |
| Net income | $90.8 |
| Dividends paid to owners | $90.9 |
Note that the US entity probably paid out more than it took in due to prop firms being forced to stop taking on US customers in 2024. Dividends also exceeded profits because of retained earnings from a prior year.
What this means is that FTMO has payouts that are equal to approximately 55% of revenue, with a payout ratio of about 3.7%.
What this also reveals is the fragility of the model.
If FTMO’s payout ratio was to go up to 5.4% – admittedly a ~46% increase – that would mean it is at breakeven. But that increase could have easily happened over the last few months, given higher levels of market volatility.
The flipside of this is that it’s a sign of what scale can do. Some prop firms operate with extremely lean operating costs, primarily because of very low staff numbers.
If you do this then, and are relatively successful as a business, you can run much higher risk than FTMO does, as you can survive off margins that are something like 5% – 10% of revenue.
From what we understand, that’s what some props are indeed doing – and is part of the reason they have been surviving and continuing to offer more competitive conditions, despite what we’re seeing elsewhere in the industry.
