CMC Markets reports higher H1 revenues, shares down +10%

CMC Markets PLC (LSE:CMCX) shares dropped 13 percent to 233p in Wednesday’s trading after the firm reported results for the first half of its fiscal year 2023, which came in line with expectations.

CMC Markets kept its guidance for the current year unchanged, and declared an interim dividend of 3.50p per share. The online trading and investment broker confirmed its plans to grow net operating income by 30% over three years based on the 2022 results and underlying conditions.

The listed brokerage firm announced its FY H1 2023 net operating income at £153 million, up 21 percent from £127 million a year earlier and also hitting a record performance outside the Covid-19 pandemic.

CMC said it achieved a gross leveraged client income of £155, representing a 22 percent year-on-year decline compared to its £127 million intake in 2021.

The company also highlighted a leveraged trading revenue of £128 million at a 27 percent year-on-year increase against £101 million in 2021. However, the broker reports a 14 percent lowered non-leveraged trading revenue of £21 million compared to £24 million in 2021.

CMC’s operating costs hit £109 million against £84 million in the prior year, apparently reflecting higher personnel costs in the course of reaching strategic objectives. The group cautioned that its expenses were set to climb higher on its scheduled growth in marketing expenses, along with a ramped up investment in personnel.

“We saw an acceleration in activity across FX and commodities in addition to the normal activity across our index flow during a period of heightened focus on monetary policy action around the globe and a pickup in market volatility and trading volumes,” said chief executive Lord Cruddas.

“CMC Invest UK will see significant new product additions in coming months, enhancing the platform to include ISAs, multi-currency accounts, mutual funds, and SIPPs. The UK wealth market remains an attractive environment and we are on target to offer retail investors a market-leading solution for long-term investment and wealth creation,” he added.

The firm’s notable updates included the official launch of its UK non-leveraged platform for its British staff, CMC Invest, on September 30. CMC noted that the platform will offer both B2C and B2B potential to the wider market.

Shares in CMC Markets lost nearly 25 percent of their value at one point in July after the spread betting and online trading company warned on higher costs, prompting analysts to slash their earnings forecasts.

CMC Markets, founded by tycoon Lord Cruddas, has set ambitious growth targets for their B2B arm of business which CMC expect to achieve by catering to a greater range of institutional client types and their respective trading strategies.

In addition, the listed broker will be launching a new investment platform in Singapore within a year, as well as considering two other jurisdictions for launch in 2023. CMC says the move comes as the firm continues to diversify and expand its geographic footprint through its technology, leveraged institutional offering, and non-leveraged platforms.