CMC Markets posts 21% YoY rise in Revenues for 1H-2023
Confirming an earlier Trading Update, London based online trading firm CMC Markets (LON:CMCX) has reported its financial and operating results for the first half of Fiscal 2023 (CMC has a March 31 fiscal year end), indicating significant improvement over 1H-2022. Revenues were also stable as compared to the most recent six-month period, 2H-2022.
H1 2023 Financial Highlights
- Net operating income of £153.5 million (H1 2022: £126.7 million +21% yoy).
- Trading net revenue was £128.4 million (H1 2022: £101.0 million +27% yoy).
- Investing net revenue was £20.8 million (H1 2022: £24.2 million -14% yoy).
- Operating costs (excluding variable remuneration) of £106.3 million (H1 2022: £83.1 million1 +28% yoy) and £115.6 million (H1 2022: £89.7 million1 +29% yoy) including variable remuneration. The majority of the cost increase reflects investment for growth across CMC’s investing and trading platforms.
- Regulatory total capital ratio of 610% (FY 2022: 489%) and net available liquidity of £254.2 million (FY 2022: £245.9 million).
- Interim dividend of 3.50 pence per share (H1 2022: 3.50 pence) with a total dividend for the year expected to be in line with policy at 50% of profit after tax.
- Plans to grow Group net operating income by 30% over three years based on the 2022 results and underlying conditions, remain on track.
- Significant development upgrades delivered across existing trading platforms in H1 2023. These include enhanced FX liquidity functionality, new trading analytics, new pricing functions and enhanced onboarding initiatives. Further product upgrades on track for delivery in H2 2023.
- Expansion of CMC Invest continues. The recent launch of the UK investment platform, CMC Invest UK, which will see new product additions over the coming months, will be followed by the launch of CMC Invest Singapore by the end of FY 2023. Further regional expansion in New Zealand and Canada also being considered.
- Trading active client figures decreased by 7% although all regions saw an increase in revenue per client (+36% yoy) largely due to higher client income along with an increase in client income retention to 83% (H1 2022: 80%). CMC’s marketing focus on premium customers continues to act as a successful strategy for the Group.
Operating cost guidance for FY 2023 remains unchanged at £215 million excluding variable remuneration. Ongoing GBP weakness and the rate of recruitment for the delivery of strategic initiatives could result in higher costs.
Lord Cruddas, CMC Markets Chief Executive Officer, commented:
“I am pleased to report another strong performance for the first six months of the year. We saw an acceleration in activity across FX and commodities in addition to the normal activity across our index flow during a period of heightened focus on monetary policy action around the globe and a pickup in market volatility and trading volumes.
Against this backdrop, we are on track to deliver our three-year expansion initiatives aimed at driving higher revenues and diversifying our earnings. We remain committed to improving our offering across our core trading CFD and spread bet businesses, allowing our clients to access a wider range of products through our award-winning platforms. In our Institutional trading business, we continue to grow volumes as a non-bank liquidity provider in the FX spot market. I am also pleased to have launched our new UK investing business, CMC Invest UK. This move in the UK into self-directed investing marks a significant milestone for us and complements our already sector-leading stockbroking business in Australia. CMC Invest UK will see significant new product additions in coming months, enhancing the platform to include ISAs, multi-currency accounts, mutual funds, and SIPPs. The UK wealth market remains an attractive environment and we are on target to offer retail investors a market-leading solution for long-term investment and wealth creation.
I am also excited about the ongoing geographical expansion of our offering into new regions like Singapore. We have committed to launch CMC Invest Singapore by the end of FY 2023. This will complement our already substantial business in Australia, where the migration of the approximately 500,000 ANZ Share Investing client base is set to be completed on time, by the end of this financial year.
We are on a fast track to diversification, using our existing platform technology to win B2B and B2C investing business. Our strategic growth plans are on track and set to deliver significant new business expansion as we introduce new products across our retail, institutional and stockbroking businesses.”
CMC Markets Outlook
Regarding outlook, CMC said that its three-year growth plans remain unchanged and on track. New business expansion is expected to grow net operating income by 30% over the next three years based on the FY 2022 result and underlying conditions, with expansion in profit margins expected from FY 2024 onwards. The targeted growth is expected to be broadly linear over that period. New growth investment will focus on initiatives aiming to enhance functionality and capture a broader share of wallet as CMC evolves its execution services and investment platforms. The company will continue to utilise its technology to enter new markets and expand its investing offering. The impact of this growth and diversification will reduce revenue volatility in the medium term and grow pre-tax profit margins from FY 2024.
In respect of operating costs, guidance for FY 2023 remains unchanged at £215 million excluding variable remuneration. Currency volatility still leads to some uncertainty over non-GBP costs although any sustained GBP weakness would have a net positive effect on profit due to non-GBP denominated revenue. CMC expects inflationary pressures to persist in H2 and the company continues to monitor the rate of recruiting success for the delivery of core strategic initiatives for the remainder of the year. Further expansion into the institutional space and the geographic expansion of the investment business is expected to cause some cost increases in FY 2024 when comparing against FY 2023.
CMC Markets’ full H1-2023 report can be seen here.