CMC Markets reports flat revenue for FY2023, profit down 43%

abdelaziz Fathi

CMC Markets PLC (LSE:CMCX) reported flat growth in revenues and customer income for the financial year 2023 as the market environment stabilised following a period of high volatility during the Covid-19 pandemic.

The spread betting and online trading company reported its FY 2023 net revenue at £288 million, up two percent from £282 million a year earlier.

The company warned in its latest trading update of higher costs, prompting analysts to slash their earnings forecasts. Specifically, CMC’s operating costs for the twelve months ending March 2023, including variable remuneration, jumped by 24 percent to £236 million from £190 million in FY 2022.

Overall, the company’s profit before tax was down 43 percent to £52 million from £91 million the previous year.

The listed brokerage firm said in a trading update that February and March posed a more challenging environment with lower equity volumes and a higher proportion of lower margin institutional trading activity.

“Quiet market conditions in the first two and a half months of 2024 have resulted in client trading activity being down 15-20%, which in turn is expected to negatively impact Q1 2024 net operating income.  Expectations of the underlying 30% net operating income growth from 2022 to 2025 remain unchanged, with growth in the existing business driven by ongoing strength of underlying KPIs including client money AUM, new product delivery and assuming a return to normalised market conditions,” CMC said in a statement.

The firm’s notable updates included the ‘soft launch’ of its new online and mobile trading platform, “CMC Invest”, in Singapore. 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.

CMC Markets’ 16-year heritage in Singapore, where it has been offering CFDs since 2007, can serve as a strong foundation for the success of CMC Invest. With a holistic investment solution, CMC Invest can cater to the diverse needs of local customers, who are increasingly looking for more sophisticated investment products and services.

The company also highlighted the development upgrades across both its investing and trading platforms continue. Specifically, its UK non-leveraged platform for its British staff, CMC Invest, expanded its offering with the recent addition of ETFs, ISAs as well as responsible ESG screening functions. CMC noted that the platform will offer both B2C and B2B potential to the wider market.

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.

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