CMC Markets revenue drops 20% in the first semester

abdelaziz Fathi

CMC Markets PLC (LSE:CMCX) has released its interim results for the half-year ended 30 September 2023, revealing a mixed financial performance amid challenging market conditions.

The spread betting and online trading company reported a net operating income of £122.6 million for H1 FY 2024, reflecting a 20% decline compared to the same period last year when the figure stood at £153.5 million. The trading net revenue for H1 2024 was £87.4 million, down 32% from £128.4 million a year earlier. Additionally, investing net revenue saw a 20% decrease, reaching £16.8 million compared to £20.8 million in the previous year.

The decline in revenue was attributed to lower client activity and market uncertainty stemming from the prevailing inflationary and higher interest rate environment. However, other income experienced a substantial increase, rising by 338% to £18.4 million, primarily driven by global interest rate hikes and resulting income from client and own cash balances.

Operating costs for H1 2024, excluding variable remuneration, amounted to £121.9 million, reflecting an increase from £106.3 million in H1 2023. This included a £5.3 million impairment related to internally developed trading platforms for the UK Invest and cash equities offerings due to unfavorable equity market conditions and operational delays.

Despite challenging conditions, client trading assets under management ended the period at £501 million, slightly below the H1 2023 figure of around £506 million. The number of active trading clients decreased by 7% to 46,832 compared to H1 2023.

Operational highlights

The listed broker said it continues to execute its diversification strategy with the successful launch of CMC Invest Singapore in September 2023. The company achieved development and upgrades across its platforms, including the launch of US cash equities for B2B clients, mutual funds on CMC Invest UK, and the introduction of cryptocurrencies on CMC Invest Australia in October 2023.

The company also expanded its regional presence in the Middle East, with a focus on enhancing services for institutional clients in Dubai.

Looking ahead, CMC Markets maintained its operating cost guidance for FY 2024 at £240 million, excluding variable remuneration. Operating expenses are expected to decline as projects are delivered, and the company passes the peak of the investment cycle, it said.

Commenting on the results, CMC Markets’ CEO Lord Cruddas said: “We continue to widen our trading offering which will be bolstered by the upcoming rollout of our options products, whilst the addition of cash equities to our institutional offering will allow us to expand the services available to this valuable segment and help us attract new business. Our geographical diversification has also continued with the recent expansion of our Dubai subsidiary in the DIFC providing us a strong foothold in one of the most exciting financial centres in the world.”

While there is potential for underlying market activity to recover, if the current market conditions persist for the rest of FY24, the broker anticipates that net operating income will fall between £250 million and £280 million. However, the company assured investors that its key performance indicators, such as client money, assets under management, and active clients in both trading and investing businesses, continue to show resilience.

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