CMC Markets Plc (LON:CMCX), a leading provider of online trading and institutional platform technology solutions, today reported its final results for the year to March 31, 2022.

Net operating income for FY22 amounted to £282 million – at the top end of the guidance released earlier this year.

Leveraged net trading revenue decreased by £119.6 million (34%) driven by decreases in both gross client income and client income retention. The reduction in gross client income was a result of the significant volatility in the market in 2021 resulting in exceptionally high client trading activity, with the majority of 2022 returning to more normalised levels.

Client income retention was lower during the period at 80% (2021: 104%) as a result of a change in the mix of asset classes traded by clients and lower natural hedging of flow within indices. This resulted in revenue per active client (“RPC”) decreasing by £985 (22%) to £3,575.

Leveraged active client numbers decreased by 16% in comparison to 2021; however, monthly active clients remain significantly above pre-COVID-19 levels, demonstrating the structural shift in the Group’s client base.

Non-leveraged net trading revenue was 12% lower at £48.0 million (2021: £54.8 million), with decreased client trading activity during the less volatile market environment offset by an active client base which was 6% larger than 2021 and 36% higher than 2020.

Profit before tax for the period was £92 million (2020: £224 million).

The £30 million share buyback commenced on 15th March. As of 7th June, the broker has repurchased and cancelled 4,603,703 Ordinary Shares with nominal value of 25 pence for an aggregate purchase amount of £12.7 million.

CMC Markets forecasts that 2023 new business expansion is expected to grow net operating income by 30% over next three years based on the 2022 result and underlying conditions. The targeted growth is expected to be broadly linear over that period with benefits expected in 2023.

New investments will focus on seven core initiatives aiming to enhance functionality and capture the broader wallet share as the broker evolves its execution services and investment platforms. CMC Markets will continue to utilise its technology to enter new markets and expand its non-leveraged offering. The impact will reduce revenue volatility and grow pre-tax profit margins from 2024.

CMC Markets’ 2023 investment plans are expected to increase operating costs to approximately £205 million excluding variable remuneration, underpinning the expected 30% growth in underlying net operating income by 2025 as well as longer-term growth from the UK non-leveraged business. Over two thirds of the new investment will be associated with people, product development and marketing. The rate of spending will be dependent on the Group’s ability to make additional personnel hires.

Singapore expansion is on track and planned for 2023.

CMC’s leveraged B2B offering continues to perform well, delivering 60% client income growth in 2022 versus 2021. CMC is expecting future 20% CAGR in B2B client income. B2B expansion continues to be a major growth pillar.

The broker notes that its new UK non-leveraged platform has been successfully soft launched to staff and will be rolled out to new clients over coming months.

The Board recommends a final dividend of 8.88 pence per share (FY 2021: 21.43 pence), equating to £26 million, resulting in a total dividend payment for the year of 12.38 pence per share (FY 2021: 30.63 pence).