Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue increased by 11% year-on-year, driven by stronger market conditions and higher revenue per customer.
- Tastytrade delivered another consecutive half of record trading revenue, up 24% in US dollars.
- Adjusted profit before tax increased by 30%, and EPS was up 42%, reflecting strong financial performance.
- The company announced the proposed acquisition of Freetrade, enhancing its platform for growth in the UK self-directed investment market.
- IG Group Holdings PLC (IGGHY, Financial) extended its share buyback program by an extra GBP50 million to GBP200 million, demonstrating a commitment to shareholder returns.
Negative Points
- Active client numbers remained flat, indicating a need for growth in the customer base to achieve sustainable growth.
- Over-the-counter active clients were down 3%, and first trades dropped 15%, highlighting challenges in this segment.
- The company's penetration in the B2C exchange-traded futures and options market remains low, with less than 3% market share.
- The crypto offering is limited, and the company missed out on the recent market uplift in this area.
- The decision to exit Spectrum and other initiatives not delivering acceptable returns indicates challenges in achieving desired outcomes from certain projects.
Q & A Highlights
Q: Can you provide a summary measure of the progress made in hiring and organizational changes? Are you halfway through the process?
A: Breon Corcoran, CEO: We are making progress with hiring, but long notice periods and non-competes have slowed us down. The energy from new hires is palpable, but we are at the end of the beginning rather than halfway through.
Q: Is the group's approach to hedging and revenue capture settled now, or are there still decisions to be made?
A: Clifford Abrahams, CFO: We are happy with our approach to internalizing market risk and have seen incremental progress in revenue retention. We will continue to optimize as markets change, but no fundamental changes are expected.
Q: Why run IG Invest alongside Freetrade? Are you not running two businesses in competition?
A: Breon Corcoran, CEO: We are late to the game and prefer to have multiple irons in the fire. IG Invest was quicker to launch, and Freetrade's acquisition is still pending regulatory approval. We are pursuing growth with several bets simultaneously.
Q: How are you embedding performance culture amid new hires, and can Freetrade benefit the wider IG business?
A: Breon Corcoran, CEO: We are enhancing performance management and meritocracy. Freetrade's team is enthusiastic about working with us, and we expect to share capabilities once regulatory processes are complete.
Q: Can you update on marketing expenses and whether you plan to increase spending?
A: Breon Corcoran, CEO: We would love to spend more on marketing but are focusing on efficient resource use. We need more conviction in our marketing strategies before increasing the budget.
Q: What progress has been made in risk management changes, and what is the client income retention?
A: Clifford Abrahams, CFO: We have made changes like differential pricing based on order size, but it's too early to provide specific financial guidance on these initiatives.
Q: What is the latest on cryptocurrency offerings at IG?
A: Breon Corcoran, CEO: Our crypto offering is subpar, and we missed recent market opportunities. We are working on organic and M&A strategies to improve this, but regulatory complexities remain a challenge.
Q: Why did you decide to exit Spectrum instead of improving or selling it?
A: Breon Corcoran, CEO: Spectrum was not growing fast enough to be relevant for the group. We explored selling but decided to wind it down to focus on more promising initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
