REG - IG Group Hldgs plc - Third Quarter Revenue Update

IG groupAnnouncement

15/03/2023 07:00

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RNS Number : 9786S  IG Group Holdings plc  15 March 2023

15 March 2023

LEI No: 2138003A5Q1M7ANOUD76

IG GROUP HOLDINGS PLC

Third Quarter Revenue Update

 

'The Group delivered a good revenue performance in a quieter period of market
activity, with strong growth from our High Potential Markets, showcasing the
benefit of our diversification strategy.'

 

IG Group Holdings plc ("the Group", "the Company"), a purpose-led global
fintech, today issues its scheduled revenue update for the three months to 28
February 2023 ("Q3 FY23"), representing the third quarter of the financial
year ending 31 May 2023 ("FY23").

 

Business performance in Q3 YTD

 

Year-to-date total revenue from continuing operations(1) was £758.4 million,
up 5% (Q3 FY22 YTD: £722.7 million). Active client numbers for Q3 YTD were
335,400, down 5% on prior year, reflecting quieter market conditions in the
quarter.

Interest income was an important driver of revenue growth in the period. US
interest income was £32.7 million for Q3 YTD (Q3 FY22 YTD: £0.6 million),
and non-US interest income was £17.4 million (Q3 FY22 YTD: (£1.2) million).
The Group maintained the level of client money balances during the period.

 

 Total revenue by product (£m)   Q3 FY23 YTD  Q3 FY22 YTD  % Change

 OTC derivatives                 602.3        610.6        (1%)
 Exchange traded derivatives     135.8        89.5         52%
 Stock trading and investments   20.3         22.6         (10%)
 Group                           758.4        722.7(2)     5%

 

 Total revenue by portfolio (£m)   Q3 FY23 YTD  Q3 FY22 YTD  % Change
 Core Markets+                     606.9        621.9        (2%)
 High Potential Markets            151.5        100.8        50%
 Group                             758.4        722.7        5%

 

Q3 FY23 YTD revenue in the Core Markets+ was £606.9 million (Q3 FY22 YTD:
£621.9 million), down 2% due to OTC active clients and revenue per client
being down marginally versus the prior period.

Q3 FY23 YTD revenue in the High Potential Markets was £151.5 million, up 50%,
or 38% on a pro forma(3) basis. Revenue per client increased significantly
across all businesses in the portfolio, partially offset by a reduction in the
number of active clients. tastytrade total revenue for Q3 FY23 YTD was £122.8
million up 50% (Q3 FY22 YTD: £81.8 million) or 36% on a pro forma basis. On a
USD pro forma basis, tastytrade revenue was up 19%, with the benefit of
interest income offsetting a softer trading revenue performance.

 

On a year-to-date basis, our non-OTC businesses constituted 21% of Group total
revenue with our US businesses accounting for 18% of our total revenue.

 

Business performance in Q3

 

Q3 FY23 was a quieter quarter in the market, particularly in December, with
lower market volatility than in recent periods, and in Q3 FY22. The benefit of
our diversification strategy is becoming increasingly evident, with our
exchange traded derivatives business posting strong growth in both Europe and
the US.

 

 Total revenue by product (£m)   Q3 FY23  Q3 FY22  % Change
 OTC derivatives                 179.4    218.9    (18%)
 Exchange traded derivatives     52.0     31.5     65%
 Stock trading and investments   7.9      6.6      19%
 Group                           239.3    257.0    (7%)

 

Within our OTC derivatives business, lower market volatility in the period
resulted in a lower revenue per client, with active clients down 8%. Our US
OTC business reported another strong quarter of growth against Q3 FY22.

Within exchange traded derivatives, tastytrade total revenue for the quarter
of £44.9 million was up 57%, driven by a significant increase in interest
income. On a USD basis, the growth rate was 42%. Spectrum continued to deliver
strong organic growth and has reached an agreement with UniCredit to list
products on the exchange.

Stock trading and investments revenue grew year-on-year driven by interest
income. Client trading activity has reduced, returning to pre-pandemic levels,
however the number of clients remains steady, and materially higher than
pre-pandemic.

 Total revenue by portfolio (£m)   Q3 FY23  Q3 FY22  % Change
 Core Markets+                     182.6    221.6    (18%)
 High Potential Markets            56.7     35.4     60%
 Group                             239.3    257.0    (7%)

 

Core Markets+ total revenue in Q3 FY23 was £182.6 million (Q3 FY22: £221.6
million), reflecting the lower OTC derivatives revenue in the period against a
challenging comparative period.

High Potential Markets total revenue in Q3 FY23 was £56.7 million, up
significantly on Q3 FY22, reflecting strong growth across our US businesses as
well as our European ETD business, and highlighting the growth prospects of
this set of businesses.

 

Capital return to shareholders

 

As part of the new capital allocation framework, in July 2022 the Group
announced a £150 million share buyback programme, which was extended by £50
million in January 2023, to a total of £200 million. As at 13 March,
approximately 17.4 million shares have been re-purchased, at a cost of £137.4
million. We continue to recognise significant headroom above the minimum
capital requirement and the Board has kept the capital allocation framework
under continual review.

 

Guidance and outlook

 

We anticipate FY23 revenue and profit before tax will be in line with current
market expectations. Our medium-term revenue and profit margin guidance
remains unchanged.

 

Contact information

 IG Group Investor Relations  IG Group Press    FTI Consulting
 Richard Heading              Angela Warburton  Edward Berry

 020 7573 0742                020 7633 5382     077 0333 0199

 Simon Wright                 Alayna Francis    Katherine Bell

 020 7537 0099                020 7633 5395     079 7687 0961

 investors@ig.com             press@ig.com      iggroup.sc@fticonsulting.com

 

Financial reporting calendar

IG regularly updates the market on financial performance and delivery against
strategy. The next financial update will be the full year FY23 results,
scheduled for July 2023.

 

Footnotes

1.     Continuing operations exclude Nadex, which was sold on 1st March
2022

2.    Total revenue excludes £5.8 million foreign exchange hedging gain in
the prior period associated with the financing of the tastytrade acquisition

3.    Pro forma revenue growth reflects growth against a full comparative
period for tastytrade, including the period prior to acquisition

 

Disclaimer - forward-looking statements

This statement, prepared by IG Group Holdings plc (the "Company"), may contain
forward-looking statements about the Company and its subsidiaries (the
"Group"). Such forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "projects",
"estimates", "plans", "anticipates", "targets", "aims", "continues",
"expects", "intends", "hopes", "may", "will", "would", "could" or "should" or,
in each case, their negative or other various or comparable terminology.

Forward-looking statements involve known and unknown risks, uncertainties,
assumptions, and other factors which are beyond the Company's control and are
based on the Company's beliefs and expectations about future events as of the
date the statements are made. If the assumptions on which the Group bases its
forward-looking statements change, actual results may differ from those
expressed in such statements. There are several factors that could cause
actual results and developments to differ materially from those expressed or
implied by these forward-looking statements, including those set out under
"Principal Risks" in the Company's annual report for the financial year ended
31 May 2022. The annual report can be found on the Company's website
(www.iggroup.com (http://www.iggroup.com) ).

Forward-looking statements speak only as of the date they are made. Except as
required by applicable law and regulation, the Company undertakes no
obligation to update these forward-looking statements. Nothing in this
statement should be construed as a profit forecast.

 

No offer or solicitation

This announcement is not intended to, and does not constitute or form any part
of, an offer to sell, or an invitation to purchase or subscribe for any
securities, or a solicitation of any vote or approval in any jurisdiction.

 

No profit forecasts or estimates

No statement in this announcement is intended as a profit forecast or estimate
for any period.

 

About IG

IG Group (LSEG:IGG)
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.iggroup.com%2F&data=05%7C01%7CAlayna.Francis%40ig.com%7C0851504f4a7a4858f59f08da6a49ad6c%7C4b4cca9cedaf42f38e219070c5d9d76b%7C0%7C0%7C637939161908589617%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=n%2FVXlBM2yVHrp4K54z3Ann2hq8oAxd9Y7RUhiNtt%2BJU%3D&reserved=0)
is an innovative, global fintech company that delivers dynamic online trading
platforms and a robust educational ecosystem to power the pursuit of
financial freedom for the ambitious. For nearly five decades, the Company has
evolved its technology, risk management, financial products, content, and
platforms to meet the needs of its retail and institutional clients. IG
continues to innovate its offering for the new generation of tomorrow's
investors through its IG.com, tastytrade, IG Prime, Spectrum, and DailyFX
brands.

 

Established in 1974, IG Group is a London-headquartered FTSE 250 company
offering its clients access to ~19,000 financial markets through its offices
spread across Europe, North America, Africa, Asia-Pacific and the Middle East.

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