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IG Group Hldgs plc (IGG)

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Wednesday 16 March, 2022

IG Group Hldgs plc

Third Quarter Revenue Update

RNS Number : 8896E
IG Group Holdings plc
16 March 2022
 

 

16 March 2022

LEI No: 2138003A5Q1M7ANOUD76

 


IG GROUP HOLDINGS PLC

Third Quarter Revenue Update

 

'Our highest quarterly revenues of the year, driven by continuing momentum across our businesses as we deliver on our strategy to expand and diversify.'

 

IG Group Holdings plc ("the Group", "the Company"), a purpose-led global financial technology business, today issues its scheduled update on revenue for the three months to 28 February 2022 ("Q3 FY22"), representing the third quarter of the financial year ending 31 May 2022 ("FY22").

 

Business performance in Q3

 

Q3 FY22 was another consecutive quarter of revenue growth for the Group, with net trading revenue from continuing operations1 of £257.2 million (Q3 FY21: £226.7 million) up 13%, or 1% on a pro forma2 basis, against a very challenging comparative period which included the extraordinary 'meme stock' related volatility. This reflects an all-time high in the number of active clients of 292,200 (Q3 FY21: 220,900). As anticipated, first trades in Q3 FY22 of 25,600 were down 32% on the prior year (Q3 FY21: 37,600) but continued to be significantly higher than the pre-pandemic quarterly average (Q1-Q2 FY20: 13,200).  

 

Net trading revenue by product (£m)

Q3 FY22

Q3 FY21

% Change

OTC leveraged derivatives

219.3

210.5

4%

Exchange traded derivatives

31.3

1.9

n/m

Stock trading and investments

6.6

14.3

(54)%

Group

257.2

226.7

13%

 

Within OTC leveraged derivatives, performance was excellent across all regions reflecting increased trading in commodities and indices in particular. The UK and EU reported their highest quarterly revenue since Q4 FY20, which represented the peak of the pandemic-related trading activity. Our success in Japan continued, delivering another consecutive quarter of growth with record levels of revenue and active clients.

 

Within exchange traded derivatives, on a pro forma basis, tastytrade revenue for the quarter of £28.4 million was up 5%, or 3% in USD. Stock trading and investments revenue decreased year-on-year by 54%, although active clients reached record levels. The prior year comparative was especially challenging for both businesses due to the extraordinary 'meme stock' volatility.

 

Net trading revenue by segment (£m)

Q3 FY22

Q3 FY21

% Change

Core Markets+

222.0

221.7

0%

High Potential Markets

35.2

5.0

n/m

Group

257.2

226.7

13%

 

Q3 FY22 revenue in the Core Markets+ segment was £222.0 million (Q3 FY21: £221.7 million); revenue increased 6% on the prior quarter (Q2 FY22: £209.0 million), reflecting the growing client base, which reached a record high in Q3.

 

Q3 FY22 revenue in the High Potential Markets segment was £35.2 million, up 9% on a pro forma basis (Q3 FY21: £32.1 million). Alongside continued growth in tastytrade, Spectrum revenue grew 89% on the prior year period as volumes on the exchange increased. Spectrum continues to make good progress on adding additional brokers and issuers.

 

Business performance in Q3 YTD

 

Year to date Group revenue from continuing operations was £729.1 million. Excluding the foreign exchange hedging gain in Q1 associated with the financing of the tastytrade acquisition, adjusted net trading revenue from continuing operations of £723.3 million was 14% higher than the prior year period, (Q3 FY21 YTD: £635.3 million) with active clients up 33% to 354,400. On a pro forma basis, Q3 YTD adjusted net trading revenue was up 3%, with active clients up 1%, demonstrating further growth in the post-pandemic period.

 

Adjusted3 net trading revenue by product (£m)

Q3 FY22 YTD

Q3 FY21 YTD

% Change

 

OTC leveraged derivatives

611.9

599.8

2%

Exchange traded derivatives

88.9

5.8

n/m

Stock trading and investments

22.5

29.7

(24)%

Group

723.3

635.3

14%

 

 

Adjusted net trading revenue by segment (£m)

Q3 FY22 YTD

Q3 FY21 YTD

% Change

Core Markets+

623.1

621.1

0%

High Potential Markets

100.2

14.2

n/m

Group

723.3

635.3

14%

 

Q3 FY22 YTD revenue in the Core Markets+ was £623.1 million, marginally ahead of the corresponding period last year (Q3 FY21 YTD: £621.1 million). Active clients in Q3 YTD FY22 of 251,200 was consistent with the prior year, highlighting our client loyalty and successful retention programmes.

 

Q3 FY22 YTD revenue in the High Potential Markets was £100.2 million, up 22% on a pro forma basis (Q3 FY21 YTD: £82.2 million). Active clients increased 5% on the prior period, with 105,900 active clients YTD. tastytrade revenue for Q3 YTD was £81.2 million up 19% (21% in USD) on a pro forma basis (Q3 YTD FY21: £68.0 million) against the very challenging comparable for Q3 as discussed above.

 

Guidance and outlook

 

At a Group level, we anticipate FY22 revenue will moderately exceed current market expectations.

 

Our Core Markets+ segment remains strongly positioned following consecutive quarters of revenue growth and continues to benefit from our largest ever active client base.

 

For tastytrade, given the slower growth in US options trading volumes in Q3, which have persisted into the start of Q4, revenue growth may remain below the previously guided 25 - 30% range for FY22, depending on market activity through the remainder of the period. We remain confident about the opportunities that tastytrade brings to the wider Group, due to the large total addressable market in the US, and also further international expansion.

 

Overall, the Group remains well positioned for the future and our medium-term revenue guidance remains unchanged.

 

June Felix, Chief Executive Officer:

 

"I'm delighted to be reporting another quarter of outstanding performance driven by a record number of clients trading in the period. Today, we have more clients and a broader range of products to trade than ever before in our history. But we aren't stopping here - a new IG is emerging, and we're excited by the opportunities ahead of us, building on our strengths and track record of delivery.

 

The success of our Group is underpinned by the fantastic contribution of our staff globally. At present, the thoughts of everyone at IG are with those impacted by the conflict in Ukraine. We will continue to provide support for our people, particularly our staff and their families in Poland, and to contribute to charities responding to the humanitarian crisis.

 

I look forward to providing a further update with our full year results in July."

 

Contact information

IG Group Investor Relations

 

IG Group Press

FTI Consulting

Richard Heading / Simon Wright

020 7573 0742 / 0099

[email protected]

Alayna Francis

020 7896 0011 / 020 7633 5395

[email protected]

Ed Berry / Katherine Bell

077 0333 0199 / 079 7687 0961

[email protected]

 

 

Financial reporting calendar

 

IG regularly updates the market on financial performance and delivery against strategy. The next financial update will be the Full Year FY22 results, scheduled for July 2022.

 

Footnotes

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

2.    Pro forma reflects revenue from tastytrade in the period post acquisition, from 28 June 2021 to 28 February 2022, and for the equivalent prior period in FY21

3.   Adjusted net revenue excludes £5.8 million foreign exchange hedging gain associated with the financing of the tastytrade 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 2021. The annual report can be found on the Company's website ( 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 is a purpose-led global financial technology business that has been at the forefront of trading innovation since 1974. Since then, we've evolved into a global financial technology company incorporating the IG, tastytrade, IG Prime, Spectrum and DailyFX brands, with a presence in Europe, North America, Africa, Asia-Pacific and the Middle East. Our award-winning products and platforms empower ambitious people the world over to unlock opportunities around the clock, giving them access to over 19,000 financial markets.

 

IG Group Holdings plc is an established member of the FTSE 250 and holds a long-term investment grade credit rating of BBB- with a stable outlook from Fitch Ratings.

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