REG - IG Group Hldgs plc - Third Quarter Revenue Update

IG groupAnnouncement

16/03/2022 07:00

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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 operations(1) of £257.2 million (Q3 FY21:
£226.7 million) up 13%, or 1% on a pro forma(2) 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.

 

 Adjusted(3) 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  Alayna Francis                  Ed Berry / Katherine Bell

 020 7573 0742 / 0099            020 7896 0011 / 020 7633 5395   077 0333 0199 / 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 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 (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 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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