CMC Markets’ revenues decline year-on-year in Q3 FY19

Online trading services provider CMC Markets Plc (LON:CMCX) has earlier today provided a trading update for the period from October 1, 2018 to December 31, 2018.

Market conditions improved in Q3 FY19, following the particularly challenging Q2, with market events and trade tensions driving client activity, particularly in Indices. This translated into Q3 CFD net revenue performance showing a significant improvement in comparison to Q2. However, as forecast, revenue remains down year-on-year.

The quarter to end-December 2018 marked the first full quarter following the implementation of the ESMA measures. The broker notes that clients are continuing to trade when opportunities arise and retail client activity has remained steady throughout the period with client money remaining at similar levels to the first half. CMC says it continues to adapt to changing client behaviour following regulatory change.

The Group has made an encouraging start to Q4, which together with CMC’s ongoing focus on operating cost control, means that the Group’s FY 2019 outlook is unchanged. In the medium-term CMC remains well positioned to benefit from its increasingly diversified revenue streams across institutions and stockbroking as well as further geographic expansion.

Let’s recall that, during the first half of FY19, CMC Markets registered a statutory profit before tax of £7.2 million, down 76% on prior year (H1 2018: £29.8 million). Profit after tax was £7.8 million, down 69% against the equivalent period a year earlier (H1 2018: £25 million). Basic earnings per share were 2.7 pence in H1 2019 (H1 2018: 8.7 pence).

During the six months to September 30, 2018, operating expenses rose 6% to £62.7 million (H1 2018: £59.3 million), mainly due to investment in the stockbroking business and higher fixed salary costs across the Group. Revenue per active client fell 22% year-on-year to £1,413.