IG Group posts revenue of £242.9M in Q1 FY24
Electronic trading major IG Group Holdings plc (LON:IGG) today issued its revenue update for the three months to 31 August 2023 (“Q1 FY24”), representing the first quarter of the financial year ending 31 May 2024.
Total revenue of £242.9 million reflected the benefit of business diversification over the past few years, as some moderation in OTC derivatives revenue in the quarter was offset by exchange traded derivatives and stock trading, both of which grew revenues significantly year over year.
Similar to trends seen in Q4 FY23, a decrease in net trading revenue reflected substantially lower volatility across a range of asset classes, which was more than offset by strong growth in interest income, which resulted from a combination of higher interest rates and stable client money balances from the year end.
Net interest income within total revenue was £34.4 million (Q1 FY23: £7.1 million). Of this, £11.8 million related to OTC derivatives (Q1 FY23: £1.2 million), £18.0 million was attributable to exchange traded derivatives (Q1 FY23: £5.6 million) and £4.6 million related to stock trading and investments (Q1 FY23: £0.3 million).
Total revenues within the Core Markets+ portfolio reduced by 6% to £188.7 million, reflecting softer market conditions through most of the quarter, although client money balances remained strong, indicating clients’ interest in and propensity to trade when they see opportunities in the market.
Within the High Potential Markets portfolio, tastytrade achieved another record level of quarterly total revenue (USD), which increased by 48% to $60.0 million; on a reported GBP basis, total revenues increased 39% to £47.1 million (Q1 FY23: £33.9 million). Within total revenue, net trading revenue increased by 10% and 3% in USD and GBP terms, respectively, to $37.1 million (Q1 FY23: $33.8 million) and £29.1 million (Q1 FY23: £28.3 million). Total client equity on the platform reached record levels with average balances in the quarter up 9% on the prior quarter, as we continue to attract large balance accounts.
Total active clients across the Group in the quarter were 267,000 (Q1 FY23: 279,300).
Total client money balances of £4.1 billion remained stable on the year end balances as clients maintained their interest in trading financial markets around the world.
In July, the Board announced a £250 million share buyback programme. The first tranche of £100 million commenced during the quarter. As at 12 September, approximately 5.9 million shares have been re-purchased, at a cost of £39.6 million. The first tranche is anticipated to be completed on or before 12 December 2023.
In terms of outlook, IG stated:
“The Group remains confident of achieving its medium-term targets. We are progressing with plans to drive even greater cost efficiency, leveraging the scale advantages that we have as a global Group.
As announced on 29 August 2023, the Board has commenced a comprehensive search process for a permanent CEO and expects to make an appointment in the coming months”.