July 22, 2021 - IG Group has reported a record set of results for the full year ending May 2021 today, with Net trading revenue up 31% to £853.4 million (FY20: £649.2 million). The company reported that total active clients rose 31% to 313,300 (FY20: 239,600) and new clients onboarded rose 39% to 134,800 (FY20: 96,900).
Profit before taxation was up 52% to £450.3 million (FY20: £295.9 million), while adjusted profit before taxation up 61% to £477.8 million. Revenue outperformance and good cost control delivered positive operating leverage and an adjusted profit before tax margin of 55.5% (FY20: 45.6%).
Total active clients rose 31% to 313,300 (FY20: 239,600) and new clients onboarded rose 39% to 134,800 (FY20: 96,900). The company reported that new client retention rates remain comparable to historical averages, providing confidence that the larger client base is sustainable.
IG Group maintained strong capital and liquidity positions that continued to support client growth, with regulatory capital resources of £860.7 million (31 May 2020: £675.5 million).
June Felix, Chief Executive Officer, commented, "I am thrilled to announce a record-breaking performance for the Group and the substantial achievement of the revenue target for our Significant Opportunities portfolio one year ahead of plan. This record set of results has been delivered during a global pandemic and is a testament to the hard work and dedication of our people, the long-standing investments in making our technology resilient, and the strength of our client offering.
"We empower our clients as they identify opportunities to trade, providing them with a superior platform, innovative products and high-quality service to deliver an excellent trading experience. We are rewarded by their loyalty and advocacy.
"Following a sustained period of strong acquisition, elevated demand and new client retention, IG now services a substantially larger client base, which provides a quality asset going into FY22. Today, we believe that we are in a better position than ever before. We have announced revised and upgraded growth guidance that reflects our outperformance in FY21, our strategic acquisition of tastytrade and the quality of our client proposition, putting us in a position of strength to continue to deliver sustainable value for our shareholders.....
"In FY21, we delivered a 39% increase in first trades to 134,800 from a 15% increase in targeted marketing investment. The new clients we have onboarded are exhibiting similar characteristics to our existing client base with retention rates remaining comparable to historical averages. This gives us confidence in the sustainability and quality of our client base. Clients continued to fund their accounts, with IG holding funds of £3.1 billion at 31 May, which equates to an average client balance of more than £10,000. Well-funded accounts indicate that a client is ready to trade when they identify the right opportunity.
"In May 2019 we announced ambitious targets: to grow revenue from our Core Markets by 3 - 5% per annum over the medium-term and to deliver an incremental £100 million from our portfolio of Significant Opportunities by FY22. FY21 saw us exceed our expectations against these targets.
"Our Core Markets delivered revenue of £709.5 million representing a compound annual growth rate (CAGR) of 30% over the two-year period since the announcement of our targets. The rate of growth achieved by these markets is materially ahead of our expectations and has been supported by a sustained period of high market volatility and our ability to capture the opportunities that this presented.
"Within the UK and European businesses we have seen a substantial increase in the number and value of retail clients, with the revenue generated by these clients growing in FY21 by over 50% on the prior year. IG's brand strength in this region has facilitated this growth, with IG capturing 29% of primary accounts and a market-leading position in the UK. We also remain a market leader across the EU leveraged market.
"Our stock trading business grew its revenue by 184% in FY21 and now serves almost 90,000 active clients with assets under administration of £3.3 billion. This business had an outstanding Q3 with 18,300 first trades bolstered by a peak in interest in a small number of US equities in response to the 'short squeeze' initiated on those stocks by retail traders collaborating through social media.
"In our Significant Opportunities portfolio, we delivered revenue of £151.8 million, substantially achieving the £160 million revenue target one year ahead of plan and providing evidence of the Group's ability to diversify our revenue base. We chose to accelerate our strategy in January when we announced our acquisition of tastytrade, a high-growth, high-margin US options and futures platform that materially enhances our presence in the US and provides an additional exchange traded derivatives (ETD) business to our portfolio.
"In Japan, we saw continued success with our focus on localisation, driving a 48% year-on-year increase in revenue to £68.7 million. Following extensive local market research, we delivered a targeted programme of customisation for our Japanese clients in FY21. This was supported by increased investment in social media to further build our online presence and a successful use of influencers to strengthen our multi-channel marketing approach. Our experience in Japan provides a proven approach for further geographic expansion.
"Spectrum, our pan-European multilateral trading facility (MTF), continued to build momentum in FY21 following its launch in October 2019 (FY20), doubling its client base to 5,400 while more than tripling the revenue per client. In January, we signed our first third-party Standard Member and are in advanced discussions with major brokers and issuers who are interested in partnering with us to deliver additional on-exchange products across the EU. We will continue to invest in this opportunity to deliver the next stage of growth and will be launching an expanded product set in FY22
"The tastytrade acquisition is a strategic transaction that expands and diversifies the Group's growth drivers through entry into the world's largest listed derivatives market. With an estimated 1.5 million retail traders, the US options and futures market is larger than the global CFD/FX and European turbo markets combined. (Latest Investment Trends market reports and internal analysis.)
"The transaction significantly increases the scale and relevance of IG's existing US businesses through the acquisition of a fast-growing, high-margin brokerage business, tastyworks, that is well-positioned to benefit from the structural growth in self-directed investing in the US listed options and futures market. The team have also proven their ability to innovate and disrupt with the creation of their uniquely developed financial media network to bring authentic, fun and actionable research and content to their clients through tastytrade. I am personally thrilled to welcome the tastytrade group of businesses to the IG family. IG and tastytrade share a strong culture and client-centric ethos. Both companies also focus on the same client demographic of ambitious, self-directed retail traders.
"On a pro forma IG FY21 basis, tastytrade's total revenue was £100.6 million1, and operating profit was £45.8 million. This was driven by growth in the active client base as a result of continued strong client acquisition, with 129,000 active accounts in the period from 101,800 active clients. The strong performance that these results highlight reinforces our confidence in the future growth prospects of the business.
"Looking forward to FY22, our first focus for tastytrade will be to deliver continued growth in the US market. The team will be laser-focused on this and will be seeking to capture market share in the US options market in order to deliver on this expectation. However, there are a number of additional opportunities that we have identified which we believe will drive further value from the combination of IG and tastytrade. We will refine these plans over the coming months now that we've completed the acquisition but I can share our first thoughts with you today.
"Firstly we will be seeking to maximise our share of wallet from our existing US client base across IG US, our retail foreign exchange dealer (RFED), Nadex, DailyFX and tastytrade. The teams will be working closely together to seize opportunities where we can deliver more from these businesses together than we could individually. We see opportunities to bring IG and tastytrade's collective capabilities together to grow the US business faster by collaborating on client acquisition and education, strategic marketing, new products and cross-selling across the businesses.
"Secondly, IG has a proven track record of geographic expansion having established a presence in 17 countries. We will use this experience, our long-standing regulatory relationships and our deep capability in multi-channel marketing to support tastytrade's international expansion ambitions. We are evaluating and prioritizing the best markets to target for expansion and initial indications are positive.
"Thirdly, we will also seek to use IG's marketing expertise to further develop tastytrade's search engine optimisation (SEO) activity, adopting the approach that IG has successfully followed across our global website and specifically within our Emerging Markets business. To date, tastytrade has grown at a remarkable speed through informal channels and some social media; bringing IG's well-developed and sophisticated marketing processes together with tastytrade's existing skillset will deliver further growth at tastytrade.
Commenting on the resilience of IG's technology, Felix commented, "Our technology and systems have also been resilient in the face of incredible demands, handling average daily trading volumes that were double those seen in FY19 and peaks many times above the level of activity seen before the Covid-19 pandemic, including over 25,000 new account applications in one three-day period. To preserve the quality of service to our existing client base, we chose at one time to restrict new client account opening and increased our onboarding thresholds."
"Today we believe that we are in a stronger position than ever before. We have grown our client base, our revenues, and improved our profit margin through organic growth. We are accelerating our growth strategy with tastytrade and now have a material footprint in the world's largest listed derivatives market. With a combined client base of over 400,000 active traders across a wide geographic reach, we are well-positioned to benefit from the structural shift towards increasing digitalisation, ease of access to financial information, and the inexorable trend toward self-directed trading and investing.
While we anticipate FY22 trading activity to moderate compared to some of the record peaks in Q4 FY20 and at points this year, the significantly enlarged, high-quality client base that IG is known for will serve us well in the years ahead.
I would like to take this opportunity to thank our employees around the world for their hard work, commitment and continued focus throughout this challenging period. Without their contribution we would not have been able to deliver such an outstanding set of results or be so well positioned to deliver future growth."
Chief Financial Officer's Statement:
OTC leveraged derivatives FY21 OTC leveraged revenue was £798.2 million, 29% higher than FY20, reflecting a 22% increase in the number of active OTC leveraged clients and a 6% increase in the average revenue per client.
There were 216,300 active OTC leveraged clients in FY21. During the extreme market volatility in Q4 FY20, the Group onboarded a significant number of new clients, many of whom continued to trade throughout FY21. New client acquisition continued to be strong throughout FY21, with an additional 85,100 new active clients onboarded, a 19% increase on FY20. New OTC leveraged clients generated £162.5 million in revenue compared with £125.3 million in FY20, an increase of 30%.
Average revenue per client was £3,690, 6% higher than FY20, reflecting an increase in the level of client trading, noting that FY20 was heavily skewed by the significant increase in trading in Q4, whereas average revenue per OTC leveraged client has been steady across each quarter of FY21.
Stock trading and investments Revenue from stock trading and investments was £38.7 million in FY21, up 184% on FY20, reflecting a 63% increase in the number of stock trading clients served by the Group and a 74% increase in the average revenue per client.
Throughout FY21 the stock trading client base grew each month driven by a significant and sustained increase in new active clients, with 51,400 onboarded, an increase of 98% on FY20.
Exchange traded derivatives Revenue from exchange traded derivatives in FY21 was £24.4 million, 33% higher than FY20. Of this, £19.5 million was from Nadex, the Group's US retail-focused exchange, an increase of 10% on FY20. This was driven by a 28% increase in the number of active clients, with average revenue per client down 14%. Spectrum, the pan-European multilateral trading facility (MTF) which launched in October 2019 (FY20), delivered £4.9 million revenue compared with £0.6 million in FY20. During FY21, 3,800 new clients were onboarded, an increase of 44% on FY20.
OTC leveraged derivatives revenue - Core Markets OTC leveraged revenue in the Core Markets was £670.8 million in FY21, 27% higher than FY20, from a 16% increase in the number of active clients and a 10% increase in the average revenue per client.
UK and EU revenue in FY21 was £420.1 million, 28% higher than in FY20. The significant increase in revenue was driven by the 18% increase in the number of active clients trading, the result of good retention of the existing client base and the acquisition of 39,900 new active clients in the period, 17% higher than FY20. The revenue increase was most significant in our retail client segment, driven by record new client acquisition, resulting in an 18% increase in active clients and a 29% increase in the average revenue per client. Our professional client segment also saw a 5% increase in active clients and a 2% increase in revenue per client.
Revenue from Australia increased by 36% to £119.7 million, benefitting from a 12% increase in the active client base, and a 21% increase in revenue per client. In FY21 we acquired 10,100 new clients, an increase of 9% on FY20. On 29 March 2021, the Australian Securities and Investments Commission (ASIC) leverage restrictions were introduced. The impact on revenue in the last two months of FY21 was in line with expectations.
Singapore revenue was £74.5 million, 31% higher than FY20, reflecting a 12% increase in the number of active clients and a 17% increase in revenue per client. Acquisition was strong with 4,300 new clients onboarded, an increase of 5% on FY20.
EMEA non-EU revenue, which includes the Group's offices in Switzerland, Dubai and South Africa, was £56.5 million, 5% higher than FY20, with an 8% increase in active clients and a 3% reduction in revenue per client. Performance in this region, particularly in Switzerland and Dubai, is more concentrated in a small number of higher-value clients, and these markets did not see the same benefit from the increased new client demand and increased client activity as the broader Core Markets businesses.
OTC leveraged revenue - Significant Opportunities
OTC leveraged revenue in the Significant Opportunities portfolio was £127.3 million in FY21, 41% higher than FY20, driven by the continued growth in the client base, 54% higher than FY20. Revenue per client reduced by 8%, driven by changing client mix as the portfolio continued to develop. IG Markets OTC leveraged revenue - Significant Opportunities
Japan revenue was £68.7 million in FY21, an increase of 48% on FY20 driven by a 46% increase in the active client base, with average revenue per client materially unchanged. The success of localisation, a new brand campaign, and influencer marketing resulted in the addition of 12,400 new clients in FY21, an increase of 30% on FY20.
Emerging Markets revenue increased by 22% as we continued to see natural demand for our products from locations where we do not have an office. Growth was driven by a 32% increase in the number of active clients, offset by a 7% reduction in average revenue per client.
US OTC leveraged revenue was £11.6 million, an increase of 101% on FY20. Active clients increased to 14,600, a 95% increase on FY20 as the client base continues to build. Average revenue per client increased 3% on FY20.
Revenue from IG Prime, our institutional business, in FY21 was £12.3 million, 33% higher than FY20. This was driven by a 25% increase in the number of clients, and a 6% increase in the average revenue per client, which for institutional clients is significantly higher than the average revenue per client in the other markets in the portfolio.
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