IG Group hails high potential market growth in Q3 despite revenue decline

In an update for the three months to 28 February 2023 IG Group said that, while revenue within its core markets declined, it had experienced growth in other markets with high potential, such as in the US and in Europe with exchange-traded derivatives (ETD) business.

Total revenue for the quarter declined by 7% to £239.3m (€271.6m/$290.1m), compared to £257.0m in its 2022 financial year.

Over-the-counter derivatives remained IG Group’s primary source of revenue, but this fell by 18% to £179.4m for the quarter, as lower market volatility resulted in a lower revenue per client, with active clients down 8%. 

Within the ETD segment, revenue climbed 65% to £52.0m, helped by a £44.9m contribution from Tastytrade, the brokerage and investor education platform acquired in June of 2021. 

Stock trading and investments revenue also increased by 19% to £7.9m, driven by interest income. IG Group noted that while client trading activity had reduced, returning to pre-pandemic levels, the number of clients remained steady and materially higher than pre-pandemic.

Revenue from core markets was 18% lower at £182.6m, which IG Group said reflected lower OTC derivatives revenue in the period against a challenging comparative period. However, high potential market revenue jumped 60% to £56.7m, helped by strong growth across the US business’ European ETD segment.

Year to date

For the nine months to 28 February, group revenue was 5% higher year-on-year at £758.4m, compared to £722.7m in the corresponding period of the previous year.

OTC derivatives revenue slipped 1% to £602.3m and stock trading and investments revenue also fell 10% to £20.3m. However, with ETD revenue coming in 52% higher at £135.8m, this led to higher overall revenue. 

Core market revenue for the period was 2% lower at £606.9m, due to OTC active clients and revenue per client being down marginally compared to the prior period in its 2022 financial year. 

High potential market revenue increased by 50% year-on-year to £151.5m, with IG Group noting that revenue per client increased “significantly” across all businesses in the portfolio, although this was partially offset by a reduction in the number of active clients. 

Looking to the remainder of the 2023 financial year, IG Group said revenue and profit before tax will be in line with current market expectations, with its medium-term revenue and profit margin guidance remaining unchanged.