Shares of London based online trading firm CMC Markets crossed the £4 line for the first time ever on Thursday morning, after the company reported record results for the first half of its fiscal 2021 year, covering the six month period from April to September 2020 (CMC has a March 31 fiscal year end).
CMC reported revenues of £230.9 million for the period and net income of £110.8 million – both by far records for the company. To put things in perspective, CMC 6-month revenues had never crossed the £100 million line – mind you the £200 million mark – before 2020. And its bottom line net profit so far this year surpassed even its greatest revenue result before 2020.
Another note we’d make is that these results don’t include March 2020, which was a one-time event for many online brokers that saw tremendous trading volumes in the first few weeks of the COVID-19 outbreak as financial markets went wild. It does seem as if CMC has been able to sustain a higher level of activity and profitability following that month.
CMC saw strong performance across all business lines, and geographies. Active client numbers are way up. Its UK home market accounted for just 33% of CFD and spread betting revenue as the company experienced more than 100% YoY growth in continental Europe and the Asia-Pacific region.
On the product side of things, CMC’s continued focus on its B2B business – providing white labels, liquidity, and other services to smaller brokers around the globe – also paid dividends, with B2B revenues hitting a record £38.9 million in 1H-2021.
As noted above, CMC shares reacted this morning by trading up to as high as 418.25p, before settling back down somewhat to sit at 388.42 as at the time of writing. We would have expected an even bigger pop in CMC shares, except that the company somewhat telegraphed the good results already in its CMC Trading Update early last month, and the shares had traded up to near-record levels in the weeks since.
CMC Markets shares, past six months. Source: Google Finance.
At its current share price, CMC Markets has a valuation just north of £1.1 billion (USD $1.5 billion).
Peter Cruddas, controlling shareholder and longtime CMC CEO commented on 1H-2021 as follows:
“I am delighted with our record first half performance, which vindicates our strategy of continuing focus on high value clients. I am tremendously proud of the resilience, flexibility and capability displayed by all of my colleagues at CMC, and would like to personally thank them all for their commitment and passion with which they deliver the continued quality service to our clients.
At CMC our goal is to constantly provide a superior and unrivalled online trading experience for our clients and through this period of market uncertainty we have provided a CFD platform with 99.97% uptime. We look to lead with quality and in the period have been able to on-board a record number of high quality clients and deliver significant growth across all of our key businesses.
The significant increase in net trading revenue across all areas of the business in H1 2021 is a result of the Group’s unwavering focus on our strategic initiatives. This has delivered increased diversification of Group revenues, improved CFD client income and an increased number of active clients.
During the period we continued to recruit new staff, we did not request to participate in any Government financial support schemes and all staff were paid in full through the normal payroll. Our new Chief Technology Officer, Brendan Foxen, has settled in well and is already making a valuable contribution.
Looking ahead, while it is still too early to know the full extent of the changes in client trading demand, we have had the ability to demonstrate the strength of our offering and are confident in retaining the high-quality clients we target. I believe that CMC is in an excellent position. We have many opportunities to leverage our technological innovation, quality client service and platform strength, and these will allow us to expand our product portfolio and deliver further profitable growth for the Group. I believe that, based on these competitive advantages, we will be able to provide highly attractive returns for our shareholders over the coming years.”