Electronic trading major IG Group Holdings plc (LON:IGG) today posted its results for the six months ended 30 November 2021 (H1 FY22).
The broker reported net trading revenue of £471.9 million for H1 FY22, up 16% from the result of £408.5 million registered in the corresponding period a year earlier. Excluding the foreign exchange hedging gain associated with the financing of the tastytrade acquisition, adjusted net trading revenue increased 14% to £466.1 million.
IG Group’s CEO June Felix notes that the strategic acquisition of tastytrade significantly expands the Group’s presence in the US and diversifies its revenue through entry into US options and futures.
tastytrade has performed very well in the first 5 months since acquisition, delivering 34% revenue growth in H1 FY22 against the comparable period in the prior year, and again delivered another consecutive quarter of record revenue.
Ms Felix added:
“We have made good progress on the integration of tastytrade. We are leveraging IG’s sophisticated marketing expertise, especially in search engine optimisation, combining that with tastytrade’s strong social media presence”.
Regarding IG’s presence in the United States, let’s recall that IG has recently announced the planned sale of Nadex and the Small Exchange. The deal is set to close in the fourth quarter of FY22.
In the first half of fiscal year 2022, IG saw its profit before tax increase 8% to £245.2 million, while adjusted profit before tax increased 13% to £258.0 million.
The number of active clients increased 42% to 320,400 (H1 FY21: 225,200) reflecting the acquisition of tastytrade; 53,600 new clients acquired (H1 FY21: 60,800), lower than FY21, as anticipated in less volatile market conditions, but significantly higher than pre-pandemic client acquisition (H1 FY20: 26,400).
Performance in the UK and EU has been strong, against a backdrop of softer market conditions. In the UK, revenue was up 5% on H1 FY21, and 69% up on H1 FY20, showing the maintained step change in the client base. There was a similar story in the EU, where revenue was up 4% on H1 FY21, and 55% up on H1 FY20.
IG registered record revenue in the half in Japan, as IG Japan is attracting clients at a faster rate.
Australia saw the implementation of new Australian Securities and Investments Commission (ASIC) regulations in March 2021, therefore H1 FY22 represents the first full half of trading in that environment. As anticipated, this has led to a reduction in revenue from H1 FY21. However, comparing this to pre-pandemic in H1 FY20, revenue was up 23%, and second quarter revenue was up 17% on the first quarter, as clients adapted to the new regulations.
The Board has approved an interim cash dividend of 12.96 pence per share. The dividend will be paid on 4 March 2022 to those shareholders on the register at the close of business on 3 February 2022.
June Felix commented:
“We continue to target revenue growth in Core Markets+ in the range of 5-7% per year over the medium term. We anticipate that our High Potential Markets portfolio will continue to grow revenue at a rate of 25-30% per year in the medium term, with tastytrade at the higher end of that range; for FY22 we now anticipate that tastytrade will be within this range.
The excellent performance we have seen so far this year means that our variable remuneration charge will be higher than originally anticipated. All other costs are being managed in line with the previous guidance. We expect the FY22 full year variable remuneration charge to be above the FY21 charge, reflecting the increase in the number of Group employees. As a result, we now expect our total adjusted operating costs to increase by around 7% on the combined FY21 IG and tastytrade cost base”.