IG Group H1 2025 Earnings Report

IG Group EPS Results

• Actual EPS: GBX 55.30
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

IG Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

IG Group Announcement Details

• Quarter: H1 2025
• Date: 1/23/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 23, 2025
• Conference Call Time: 4:30AM ET

IG Group (LON:IGG) (LSEG:IGG) is an innovative, global fintech company that delivers dynamic online trading platforms and a robust educational ecosystem to power the pursuit of financial freedom for the ambitious. For nearly five decades, the Company has evolved its technology, risk management, financial products, content, and platforms to meet the needs of its retail and institutional clients. IG Group continues to innovate its offering for the new generation of tomorrow’s investors through its IG, tastytrade, IG Prime, Spectrum, and DailyFX brands. Established in 1974, IG Group is a London-headquartered FTSE 250 company offering its clients access to ~19,000 financial markets through its offices spread across Europe, North America, Africa, Asia-Pacific and the Middle East.

IG Group H1 2025 Earnings Call Transcript

Presentation

[Breon Corcoran, CEO at IG Group Holdings]

Good morning, and welcome to our results presentation for the first half of the twenty twenty five financial year. I'm Brien Corcoran, Chief Executive. Thank you for taking the time to join us this morning. I'm joined by Clifford Abrams, our Chief Financial Officer. Clifford joined us last month.

[Breon Corcoran, CEO at IG Group Holdings]

I'm delighted to welcome him to IG. We'll be running through the presentation together this morning. Starting with today's agenda, I'll kick off with some highlights on the first half and hand over to Clifford to take you through the details of our financial performance. I'll return to look at the progress we've made across the various priorities I presented in July before opening the line for questions. Beginning with highlights on Slide 4.

[Breon Corcoran, CEO at IG Group Holdings]

Looking back over the last 6 months, we've made progress. Personally, I'd say it was a 6 out of 10. Total revenue was up 11%, reflecting stronger market conditions, which resulted in higher revenue per customer, but active client numbers were flat. Performance in the period shows that the business remains well placed to capture cyclical upside, but demonstrates we have a lot of work to do to grow the active client base, which will be necessary to deliver sustainable stronger growth. As I outlined in July, our focus is on 3 initial priorities: improving our product, enhancing our culture and increasing efficiency, and we've made some progress.

[Breon Corcoran, CEO at IG Group Holdings]

Product velocity has some green shoots supported by the implementation of our new organizational model. We're embedding a high performance culture across the business and we've initiated digital servicing work streams to enhance efficiency. Back in July, I said that we'd take decisive action to close initiatives not delivering acceptable returns. And we've done that with the exit from daily FX, Spectrum and a legacy stock trading initiative. We're continuing to review SandBox projects and are prepared to fail fast and cheaply where I see a lack of acceptable progress.

[Breon Corcoran, CEO at IG Group Holdings]

In the first half, we demonstrated a commitment to deploy our strong capital generation to enhance shareholder returns and increase long term growth potential. Last week, we announced the proposed acquisition of Freetrade, the fast growing UK self directed investment platform, and I'm pleased to announce today that we're extending our existing share buyback program. Performance in the first half and current trading keeps us on track to meet consensus revenue and profit before tax expectations for the current financial year. You can find these on our Investor Relations website. In summary, we've made progress, change is underway, and we have a lot of work ahead of us.

[Breon Corcoran, CEO at IG Group Holdings]

Turning now to the financial highlights on Slide 5. Total revenue increased 11% year on year, driven by higher revenue per client reflecting stronger market conditions. Tastytrade delivered another consecutive half of record trading revenue, up 24% in U. S. Dollars.

[Breon Corcoran, CEO at IG Group Holdings]

Costs were well controlled, down 1% on the prior year, supported by efficiency measures initiated in October 23 before I joined IG. Adjusted profit before tax increased 30% and EPS was up 42%, reflecting the undemanding comparator and lower share count resulting from buybacks. We expect to complete the remainder of the €150,000,000 share buyback we announced in July by the end of this month. Today, we've extended our share buyback program by an extra €50,000,000 to €200,000,000 and we expect to complete this in the second half of the current financial year. Since the end of 2022 financial year, we've returned over £1,000,000,000 to shareholders via dividends and share buybacks, including €281,000,000 in the first half of the current financial year.

[Breon Corcoran, CEO at IG Group Holdings]

Turning now to the operational performance on Slide 6. As I said in July, we operate in large target addressable markets. We're the global over the counter market leader, but our penetration of the revenue pool is small at under 10% and we must add scale. The B2C exchange traded futures and options revenue opportunity in the United States, Europe, Australia and Singapore alone is similar to the OTC opportunity. Our penetration of this revenue pool is less than 3% and there's a huge opportunity in emerging markets.

[Breon Corcoran, CEO at IG Group Holdings]

In stock trading and investments and crypto, our existing proposition only scratches the surface of the opportunity, but free trade will give us a stronger platform on which to grow. There are clear benefits from being in multiple categories compared to a single vertical industry, but we must move faster to capitalize on the opportunities in front of us. In the first half of the year, active clients and first trades were flat on the prior year. Within this, Tastytrade grew customers by 9% and first trades were up 32%. By contrast, over the counter active clients were down 3% and first trades dropped 15%.

[Breon Corcoran, CEO at IG Group Holdings]

I'm confident we can return the OTC business to growth, but we must invest in product and brand to realize our potential. We must bring high performance talent to IG to help us deliver and strategic hiring is one of my top priorities. We've made some progress in recent months. With that, I'll hand over to Clifford to go through our first half financial performance in more detail.

[Clifford Abrahams, CFO at IG Group Holdings]

Thanks, Brion, and good morning, everyone. I joined IG after the current reporting period in mid December, so I'm just over a month into the role. I've met some of you already and look forward to meeting others in coming months. 1st, I'll give a brief personal introduction and explain why I'm delighted to have joined IG. And after that, I'll run through financial performance in the period in detail.

[Clifford Abrahams, CFO at IG Group Holdings]

I'm an experienced CFO of Scale International Financial Institutions. I've spent my career in regulated digital consumer businesses and have considerable M and A experience. Like Brion, I'm ambitious and here for the opportunity. IG has solid positions in large and growing addressable markets, and we're competing against many new and highly capable players. As Brion said in July, there's been some complacency here at IG in recent years and we're changing this.

[Clifford Abrahams, CFO at IG Group Holdings]

We detailed our initial priorities in July and we're moving at pace to deliver. As we do this, I'm confident that we'll compete more effectively, increase our active customer numbers and build scale. That commercial growth will translate into growth in our earnings and ongoing capital returns for shareholders. Now kicking off with the P and L on Slide 8. You can see here trading revenue of £452,000,000 increased 12% on the prior year, reflecting stronger market conditions and a soft comparative.

[Clifford Abrahams, CFO at IG Group Holdings]

Interest income of £71,000,000 was up fractionally as customer cash balances increased 7% to £3,800,000,000 which offset the impact of low interest rates. Adjusted operating costs of £277,000,000 declined 1%, reflecting normalisation of bad debt charges and efficiency measures. Net finance income in the period was £19,800,000 up 29 percent. And within this, finance income increased 29 percent to £33,600,000 partly offset by finance costs up 29% to £13,800,000 These higher finance costs reflected increased interest payments to customers on their cash deposits. Altogether, adjusted profit before tax increased 30% to £267,000,000 and we delivered a pleasing PBT margin of 51%.

[Clifford Abrahams, CFO at IG Group Holdings]

Group tax expense includes a non recurring tax write off of £2,500,000 resulting from our exiting spectrum. As a result of this, we now expect the group effective tax rate for the year to be around 25%. Adjusted profit after tax was up 30% to £201,000,000 and adjusted earnings per share increased 42 percent to 55.3p as the share count dropped 8% with our share buybacks. As Brien mentioned, we're comfortable with consensus revenue for the full year and expect net trading revenue to be broadly stable, H2 versus H1. And alongside this, some pressure on net interest income as rates come down.

[Clifford Abrahams, CFO at IG Group Holdings]

We'll now look at top line performance in more detail on slide 9. 1st half volatility normalized closer to long term averages against the weak prior year comparative and this increased revenue per client in all our product lines. In our OTC business, trading revenue was up 10% to £360,000,000 as high volatility increased client trading volumes. Revenue per client was up 13%, partly offset by a 3% decline in active clients. OTC client income retention for the half year was in line with typical levels in a mid-seventy percent range, but performance was at the top end in Q1 and the low end in Q2.

[Clifford Abrahams, CFO at IG Group Holdings]

Despite a stronger market backdrop, total active clients were flat with growth at Tastytrade offset by weakness in our OTC and stock trading businesses. Turning now to performance by division on slide 10. In the first half, we implemented a decentralized organizational model, enhancing client centricity and accountability across the business. It's still early days, but we're encouraged by the positive impact already. We now have 5 divisions arranged geographically with group revenue well diversified around the world.

[Clifford Abrahams, CFO at IG Group Holdings]

This gives us a solid platform for growth. A reconciliation from our prior disclosure is in the appendix of this presentation. Now looking at the figures, trading revenue increased against the prior year in all divisions. Higher revenue per client offset lower active client numbers in all divisions except the U. S.

[Clifford Abrahams, CFO at IG Group Holdings]

Where stronger performance was equally driven by revenue per client and growth in active clients. Moving down the P and L, we'll now turn to costs on Slide 11. Overall, costs were well controlled declining 1% on the prior year to £277,000,000 Within this, fixed remuneration was down 5% to £95,000,000 reflecting our implementation of efficiency measures initiated in 2023 and which reduced average headcount by 10%. Marketing costs declined 4% to £42,000,000 and revenue related costs dropped 25 percent to £23,000,000 reflecting normalization in our bad debt charge from an unusually high level in the prior year. IT costs increased 20%, reflecting investment in digitization of business processes and relocation of our data centers.

[Clifford Abrahams, CFO at IG Group Holdings]

Looking forward, we expect costs to be modestly higher in the second half, reflecting the timing of the provision we take for the U. K. Compensation scheme levy, higher marketing costs, further investment in digitization and some costs associated with the acquisition of Freetrade. Turning now to our capital position on Slide 12. Today, we announced that we're extending our share buyback by £50,000,000 to £200,000,000 It's pleasing to show how we can both invest in accretive growth and return capital at attractive rates of return through our buyback, all while safeguarding our robust balance sheet.

[Clifford Abrahams, CFO at IG Group Holdings]

At the end of November 2024, we had £658,000,000 of headroom over the minimum regulatory capital requirement of £286,000,000 And the group capital position remains strong following the acquisition of Freetrade and following the execution of the 50,000,000 extension to our share buyback with indicative pro form a headroom of £424,000,000 and this is stated prudently prior to capital generation from the end of November. Turning now to capital allocation on slide 13. You can see here we have a well embedded capital allocation framework, which has served us well. And I'll consider if it can be further refined and will update you here in coming months. With that, back to Brion.

[Breon Corcoran, CEO at IG Group Holdings]

Let me start by recapping what we said at our full year results presentation in July. Back then, we detailed 3 initial priorities: deliver better product, better performance culture across the business and increase efficiency. All of this is necessary to drive faster growth and our priorities are unchanged. Moving on to our current product assessment and geographical coverage on Slide 16. We have broad over the counter product range and global reach, but most add scale in this category and our B2B2C offering requires investment.

[Breon Corcoran, CEO at IG Group Holdings]

Tastytrade provides us with a footprint in one of the world's largest retail futures and options markets, the United States. Our market share there has flatlined. We must address this by simplifying our offering and differentiating our brand and performance marketing. We've made progress to enhance our U. K.

[Breon Corcoran, CEO at IG Group Holdings]

Stock trading and investments offering with the launch of IG Invest and the acquisition of Freetrade will take our proposition to the next level. Our crypto offering around the world remains very limited. Turning now to our progress on Slide 17. I remain convinced that I joined a business with huge potential. We have a strong sense of purpose and I will invest in colleagues that are driven to better serve our customers' needs to accelerate growth.

[Breon Corcoran, CEO at IG Group Holdings]

Our focus on improving our products has some early momentum and we've delivered content and features which our customers have asked us far. In our OTC business, we've rolled out IG Top Trader, which provides our customers with information on the positioning of our most successful traders. And we've deepened integration with TipRanks, a popular trading and investment research platform. We've recently completed integration of our OTC and exchange traded derivatives business with TradingView, a leading charting platform on social network. At the end of the first half, we rolled out measures that will enhance revenue retention in our OTC business by capturing more spread income and lowering our hedging costs without taking more market risk whilst enhancing client experience.

[Breon Corcoran, CEO at IG Group Holdings]

In our exchange traded derivatives business, we launched Tastytrade in the U. K. Revenue generated in the first half was minimal, but active clients in First Trades are growing from month on month, and I'm encouraged about the long term potential of this offering. In Stock Trading and Investments, we rolled out IG Invest, which we intend to operate as a separately branded proposition alongside Freetrade. This will give us flexibility to deliver relevant products to different customer segments and experiment with UX and different fee and commission structures.

[Breon Corcoran, CEO at IG Group Holdings]

We're configuring new stock trading and investment propositions in other countries tailored to local market demand. In summary, we're making progress and have more to do to enhance our offering and broaden customer appeal to drive sustainable growth. Now turning to the acquisition of Freetrade on Slide 18. This is a great transaction for IG and Freetrade. Victor has built a disruptive high growth business in a large and fast growing market, and I'm delighted to welcome him and his colleagues at Freetrade to IG.

[Breon Corcoran, CEO at IG Group Holdings]

The UK's self directed investment platform market is compounding at 10% per annum and forecast to grow strongly, reflecting structural drivers. These include the democratization of financial markets, greater individual responsibility for retirement planning, increased pension freedoms, growing financial literacy, digitalization of services and demand for better value proposition. Freetrade brings us capabilities I've talked a lot about us needing, including a great brand in UX, product velocity, performance marketing capability, highly scalable technology and a proven ability to acquire and serve customers at a low cost. This deal broadens our addressable market. Most of Freetrade's customers are in their 20s 30s and this gives us optionality around new product and market entry.

[Breon Corcoran, CEO at IG Group Holdings]

Our initial focus will be on scaling Freetrade in the U. K. And completing the product roadmap to ensure that it offers everything a self directed investor wants. Turning now to Freetrade's growth profile on Slide 19. Since it launched in 2018, Freetrade has become one of the most successful challengers in the UK with 720,000 customers and assets under administration more than doubling over the past couple of years to £2,500,000,000 Free Trade has well diversified revenue, split broadly equally across subscriptions, foreign exchange transaction fees and interest income.

[Breon Corcoran, CEO at IG Group Holdings]

In 2024, revenue increased 32% year on year to GBP27.5 million including a record Q4 of GBP8.3 million. Top line growth has been delivered on a lower cost base, which has driven strong operating leverage. Freetrade achieved positive EBITDA for the first time last year as it scales through the important growth phase. I'm confident that we are buying the business at the right time at the right price and that we can help take it to the next level. Turning now to culture on Slide 20.

[Breon Corcoran, CEO at IG Group Holdings]

One of my initial priorities has been to implement an organizational structure which enhances client centricity and increases P and L ownership and accountability throughout the business. Each of our divisions has been and will continue to be provided with dedicated marketing, technology and product engineering resources to deliver product aligned with local market needs. I've put in place new leadership for 2 divisions in the period, the United Kingdom and Ireland and Institutional and Emerging Markets. Michael Healy joins us as the Head of the U. K.

[Breon Corcoran, CEO at IG Group Holdings]

And Ireland from Ryanair, where he was a Commercial Director. Laura Jane O'Shea joins us Chief Business Officer. She was most recently Chief Trading and Marketing Officer at Flutter in the U. K. And Ireland.

[Breon Corcoran, CEO at IG Group Holdings]

Since November, we've hired over 100 new joiners from organizations with best in class digital offerings, including TikTok, N26, Deliveroo, Justeet, Alphabet and Flutter. And we're continuing to seek high performing talent to drive growth. Hiring great people is one of my top priorities. In the first half, we communicated new performance expectation with all colleagues, enhanced performance evaluation and changed incentive schemes effective from FY 'twenty five with further enhancements planned for next year. In summary, change is underway.

[Breon Corcoran, CEO at IG Group Holdings]

Our engagement survey shows that colleagues have an appetite to move faster to drive growth and we're prepared to pay for high performance. Turning now to efficiency on Slide 21. We've taken decisive action to close initiatives not delivering acceptable returns over the past 12 months, including daily FX, Spectrum and a legacy multiyear stock trading initiative. Spectrum was established in 2019 to diversify our product offering in Europe. The Group has invested significant resources over the past 5 years attempting to scale it.

[Breon Corcoran, CEO at IG Group Holdings]

It's clear to me that the original momentum, which had been hoped for, has not materialized. Spectrum was broadly breakeven in the first half of the year, generating some £8,000,000 of revenue with modestly lower costs. I'm allocating the capital and resources it consumed to more promising initiatives. Headcount declined in the period and we expect to have fewer but higher performing people in the business in the future. To achieve this objective, we've initiated digital servicing work streams which will enhance our automation and scalability, initially focused on client onboarding and servicing processes.

[Breon Corcoran, CEO at IG Group Holdings]

Reducing costs to serve will create capacity for investment in product and marketing to drive growth. To conclude on Slide 23. I'm confident that we have a solid platform for growth. Our first half performance demonstrated that the business is well placed to capture cyclical upside, but also showed that we have work to do to grow the active client base and drive sustainable growth. I'm delighted to have announced the acquisition of Freetrade and extend our share buyback program supported by strong capital generation.

[Breon Corcoran, CEO at IG Group Holdings]

We're allocating capital in a disciplined manner, balancing distributions and the high equivalent rates of return from buying back our own stock with investments in growth that will create long term value for all stakeholders. We will continue to monitor M and A opportunities that will close product and capability gaps and we're on track to meet consensus revenue and profit before tax expectations for the current financial year. Our focus is on executing against the 3 priorities I outlined in July: product velocity, improved culture and efficiency. We made progress in the first half of the year, perhaps, as I said earlier, a 6 out of 10, evidencing stronger growth will take time, but I remain very excited about our prospects. I'll leave it there and move on to Q and A.

[Operator]

Thank you very much. And our first question comes from Ian White, Autonomous Research.

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Sorry. My question is maybe I can start with Hi, there. Thanks for taking my questions. Maybe I can just start with them with 3, please. Firstly, in terms of the hiring and organizational change, is there a sort of summary measure you can provide to us that basically tells us how much you think has already been achieved and how much is still to do?

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Are you broadly halfway through? You sort of made the most difficult sort of steps already? How do you see it, please? As I said, just sort of summary level, that's question 1. Question 2, on hedging and risk management, should we interpret that the group's approach to hedging and revenue capture is settled now with the changes that you've introduced towards the period end?

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Or is that still an area where there is a decision to be made about how that looks over the medium term? That's question 2. And maybe just the third one. In terms of the decision to run IG Invest alongside Freetrade, can you just help me in a little bit more detail to understand why that's the optimal proposition? I'm sorry, are you not running 2 businesses in direct competition with one another in that regard?

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Just interested to understand a bit more the thinking behind that, please. Thank you.

[Breon Corcoran, CEO at IG Group Holdings]

Okay. Are we off mute? Yes. Ian, hi, good morning. It's Brienne.

[Breon Corcoran, CEO at IG Group Holdings]

I'll let Clifford take the second question if he's happy to. He tells me all of about 6 days. Hiring, I'm happy with I'm happy enough with the progress we're making. I'm very happy with the people who have joined. I think the reality of long notice periods in the U.

[Breon Corcoran, CEO at IG Group Holdings]

K. In particular and in some cases, draconian non competes has slowed us down. That's not helpful. I was asked a question 6 months ago about where the brand was and whether that was the employee brand, whether that was an inhibitor to getting some people on board. It's proven to be some people look at this and they go, it's a turnaround in a public company.

[Breon Corcoran, CEO at IG Group Holdings]

There's a bit of cultural change and you're competing against the likes of Revolut and some other big American firms. So this is not for everyone. But the ones that I have joined so far, I'm very happy to have them here and I'm excited about the impact they're making. I don't have a heuristic for how far along the journey we are. I think I'm pretty sure that someone asked me 6 months ago what the kind of typical level of change is at a time like this.

[Breon Corcoran, CEO at IG Group Holdings]

And I would have said onethree of people go and then onethree of people decide it's not for them. I think the work from home thing and I think the soft job market in London has probably slowed voluntary attrition versus what it might have done at different stages in the cycle. So in summary, the energy that the new people are bringing is palpable. Their enthusiasm about the opportunity and the kind of the journey ahead of us is really exciting and helping enormously. But we're definitely not.

[Breon Corcoran, CEO at IG Group Holdings]

We're sort of at the end of the beginning rather than whatever the other side of that cliche is. Clifford?

[Clifford Abrahams, CFO at IG Group Holdings]

Yes. Ian, thanks for the question. I'm happy with our overall approach to internalizing market risk, and it's pleasing to see the recent initiatives making sort of incremental progress here in terms of revenue retention. I'd expect us to continually be looking for such optimization initiatives, particularly as markets continually change,

[Clifford Abrahams, CFO at IG Group Holdings]

and

[Clifford Abrahams, CFO at IG Group Holdings]

we have new ideas. But I'm not expecting any fundamental changes in our approach.

[Breon Corcoran, CEO at IG Group Holdings]

Cool. And then the question about IG Invest and the free trade. I think it feels like we're late to the game. And I mean generally across multiple product lines across multiple geographies. And although we met Freetrade first, the company had met them previously, but I met them first in March last year, maybe April last year.

[Breon Corcoran, CEO at IG Group Holdings]

As you know, the deal only got closed last week. And I don't like kind of when we can avoid taking binary bets that may not pay off, I'd rather have multiple irons in the fire. So we're progressing on boarding for IG products generally across the markets. IG Invest was quicker and easier to launch a new UX because that's really what it is for a slightly different customer base and that has some effect. Free Trade was never certain and indeed we still have a way to go in terms of change of control from the FCA.

[Breon Corcoran, CEO at IG Group Holdings]

So I feel that given the urgency to be competitive and have our brands have better products in front of customers, we have to have several bets at the same time. And that's partly the reason why we're not being more aggressive on guidance in terms of efficiency. We are running slightly inefficiently in the pursuit of growth to be to build a business that's more relevant to more customers sooner rather than later. I'm sure we'll come back to Freetrade later.

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

That's super. Thank you.

[Operator]

And our next question comes from Richard Taylor from Barclays. Please go ahead.

[Richard Taylor, Equity Analyst at Barclays]

Yes, morning. A few questions from me, please. Keen to hear an update on incentives and how you're embedding the performance culture amid all the new hires. Secondly, it sounds like they're being run separately. But is there anything you can benefit from Freetrade to the benefit of the wider IG business, UX, marketing and so on?

[Richard Taylor, Equity Analyst at Barclays]

And finally, ACT is flat overall, but a big variance, say, with tastytrade up and Asia Pacific especially lower. Can you signal when you would aspire to turn 1st trades and active in the OTC business into positive territory? Thank you.

[Breon Corcoran, CEO at IG Group Holdings]

I'll take some of those or maybe have a shot at all of those, jump in if I miss something. Good morning, Richard. Incentives, the company had some performance management stuff in place, but it's been run a little more rigorously now. We are paying kind of non linearly for really great performance and talking much more about the benefits of meritocracy and how that's not for everyone and how the best people that have the most to contribute should be should find great fulfillment here. So I think we're on that journey.

[Breon Corcoran, CEO at IG Group Holdings]

The culture is changing. I think there's always a risk that people measure the change from where they were rather than think about the gap between where they need to be. So we're somewhere on that journey, but we're further to go. Free trade, so the way it works, I'm sure you know this, but for others on the call, we've announced the deal. It's subject to change of control by the approval by the regulator.

[Breon Corcoran, CEO at IG Group Holdings]

I'm sure that will come in time. The team there is very I like the team a lot. I mean, Victor, the CEO, who I've spent a fair amount of time with, is smart and hardworking and focused, but also humble and low ego. Paul, the CFO there, briefly was at Revolut after he had previously worked at IG for 7 or 8 years. The tech team there were kind of known to us peripherally as well.

[Breon Corcoran, CEO at IG Group Holdings]

So there is overlap between what they do and what we do. And I would expect that we will start sharing. I've received some kind of nice warm e mails from some of their people this morning after the results. So there's an enthusiasm there to work with us. There's a humility on our side, I think, that we can learn from them.

[Breon Corcoran, CEO at IG Group Holdings]

But I also have to respect the kind of the process, the regulatory process, and that's not yet done. But I would hope that we will start working closer with them in the coming months, and we would hope to have the full deal completed late summer. But I can't give explicit guidance on that. It's outside of our control. And the last question, actives.

[Breon Corcoran, CEO at IG Group Holdings]

Yes, I mean, that's the worry. That's the number that I look at too. I can't give you a forecast. I know we're trying more things. We're being more honest about how hard it is and how we have to try more things more quickly.

[Breon Corcoran, CEO at IG Group Holdings]

We've ramped up some of the thinking in terms of creative. We've learned that this is all about IG in the U. K. We've learned that we've worked to do there. We're investing hard, and I don't just mean financially.

[Breon Corcoran, CEO at IG Group Holdings]

We're investing hard in terms of talent as well. The Tasty guys have had a good run for the last number of months. They're also working hard. The difference in growth there in terms of the First Trades and Actives is clear to us. So it's very much under focus.

[Breon Corcoran, CEO at IG Group Holdings]

I can't give you guidance as to Gwen. Do you want to jump in?

[Clifford Abrahams, CFO at IG Group Holdings]

Yes. Just I think in terms of sort of sequencing, I think clearly, we're sort of flattish sequentially now, flat to down. I think the thing that I'm looking to see the business deliver are that sustained uptick in First Trades, which and some of that seasonal, you've got ISO season and the start of the year in certain markets, combined with improved retention, clearly driving actives and then look to see a sustained quarterly rise in all those metrics quarter on quarter, right, rather than blips through quarter. So that's what sort of early success would look like.

[Richard Taylor, Equity Analyst at Barclays]

Very good. Thanks for your answers.

[Operator]

Thank you. And the next question comes from Ben Bathurst from RBC Capital Markets. Your line is open.

[Ben Bathurst, Stock Analyst at RBC Capital Markets]

Good morning. I have questions in 3 areas if I may. Starting on costs, where I see marketing and advertising expense was 4% lower year on year in the first half and what you sort of characterized as supportive market conditions. I think you recall this during the summer was that you may have been under spending on marketing historically so I just wondered if there's any update on thinking there and secondly on free trade and a detailed question but you showed revenue growth on slide 19 of 32% in 2024, I wondered if you could split out that growth and give an indication as to how much of that comes from higher interest income and then thirdly really on longer term targets with the senior leadership team somewhat refreshed and new CFO on board, I wonder do you have any plans to do a broader strategic update to the market in the next 12 months or so? Or is that still rightly further down the line?

[Ben Bathurst, Stock Analyst at RBC Capital Markets]

Thank you.

[Breon Corcoran, CEO at IG Group Holdings]

And I'll let Clifford might take the free trade question. I don't have look, we see merit. There's a new team here. We see merit in transparent, open, whatever the word is, inclusive conversations with shareholders, whatever. So that may get us to a strategy day, but I don't think today is the day to commit to that.

[Breon Corcoran, CEO at IG Group Holdings]

On the marketing thing, I'd love to spend more money in marketing. Absolutely, we'd love to spend more money in marketing. But I'm forcing people to operate in a resource constrained way. And periodically, I task the CMOs to justify incremental budget. And to date, in the first half of the year, we haven't really had enough conviction that we could spend money efficiently.

[Breon Corcoran, CEO at IG Group Holdings]

So we are trying to focus our efforts. We are measuring the return on those efforts more carefully. And I've got appetite to spend more money. I think we're underspending. But I don't have such clear conviction that the full proposition for marketing creative all the way through to onboarding journeys all the way through to monetization is sufficiently slick that we can step change marketing up.

[Breon Corcoran, CEO at IG Group Holdings]

And that may be as people are focused on proving things that gets them to trimming some of the fat first to take some pressure off themselves, I suppose, as much as anything else. So marketing is very much a work in progress. It goes back to Richard's question. Clifford's answer is right, but this is going to take us some time. Do you want to talk about the revenue mix of free trade?

[Clifford Abrahams, CFO at IG Group Holdings]

Yes. I think free trade has a broad revenue mix. I think you can see from the proposition that it offers good value across the sort of various revenue drivers. So I don't want to comment particularly on net interest income, but their revenue streams around subscriptions, around FX. And so we're content that, that franchise has legs, which will drive the accretion that we expect to see over time.

[Operator]

And the next question comes from Vivek Raja from Shaw Capital. Your line is open.

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

Good morning, chaps. Thanks for taking my questions. Two areas to question on, please, if I may. The first one is on on your initial comments about 6 out of 10 progress so far. I wonder if you could say a little bit more about that.

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

So particularly what has gone well in your sort of 1st year and what would you like to have gone better? Next question is on the risk management changes. And if you could quantify for us the output of that. I'd used to communicate that in terms of client income retention. So I just wondered if you could tell us what you achieved in the first half in terms of client income retention and what you expect risk management changes could deliver in future?

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

And then the last thing, I appreciate you sort of talked at high level in terms of efficiency improvement. But I wonder if you could communicate that in terms of pretax margin. I mean, it's not a shabby pretax margin that you generated. And where would you like that to get to overtime? Thanks.

[Breon Corcoran, CEO at IG Group Holdings]

It's interesting to answer the last question. So I might have to jump in before him.

[Breon Corcoran, CEO at IG Group Holdings]

Okay. Like

[Breon Corcoran, CEO at IG Group Holdings]

these are volatile

[Breon Corcoran, CEO at IG Group Holdings]

we've committed to running the business more efficiently. I think we're evidencing that. But I think it's way too premature to be giving long term guidance. Too many moving parts and too many unknowns. To the 6 out of 10, I think that's a that would be my score on what we've achieved rather than the effort put in.

[Breon Corcoran, CEO at IG Group Holdings]

A lot of people have kind of raised their game and put a lot of energy and thought into how we can make this company more relevant to more customers. So I think the 6 out of 10 is an output measure rather than a reflection on how much effort went in. But if we look back, I wish we had brought in more new people earlier. I can't tell you how excited the team is to have Clifford here. He's helping enormously.

[Breon Corcoran, CEO at IG Group Holdings]

It's good for the finance team, but it's good more generally as well. And Sperling is blushes, although he's not blushing for the record. The other people who come in bring in energy and bring new ideas from other often great companies, that's refreshing and helps people that were formerly here or previously here to raise their game as well. So I wish I'd kind of accelerated the rate of change, but it does take some time to kind of diagnose kind of what the right blend is. But if I had the time again, I would have brought in more new people earlier.

[Breon Corcoran, CEO at IG Group Holdings]

You will recall there were some departures. I think there were 4 departures in March of last year. And you're trying to steer a company through change and have shareholders and the board and regulators keep them comfortable as well. But the one regret is not bringing in more people more quickly. I'm happy with the progress we're making in technology.

[Breon Corcoran, CEO at IG Group Holdings]

I'm happy with the divisional structure. I'm happy with some of the cultural moves. I'm very excited about free trade. So maybe it's a 6.5 out of 10. But there still is a reflection, there's a lot of work to do.

[Breon Corcoran, CEO at IG Group Holdings]

On the guidance sorry, on the pricing thing, do you want to take that?

[Clifford Abrahams, CFO at IG Group Holdings]

Yes. I think clearly, we've got some large, strong, high margin businesses that we're proud of. And we're looking to grow and are growing in some low margin areas and bluntly some low margin areas. What we're not going to guide or yet target against PBT margins. What I can say is we're committed to accelerating growth in sustainable revenue.

[Clifford Abrahams, CFO at IG Group Holdings]

We do think there is strong operating leverage in the business and that will safeguard margins. And ultimately, we want to drive consistent profit after tax growth, EPS growth and ultimately distributions to investors. So that's how we're thinking about the growth of the business.

[Breon Corcoran, CEO at IG Group Holdings]

Quebec, your second question, I'm not sure if that was an operating margin question or a kind of a gross margin like an RTV question. So on that, because I guess it will be interesting to other people as well. We continue to invest there. We have real capability in terms of risk management. It goes back to, I think, Clifford answered the question earlier.

[Breon Corcoran, CEO at IG Group Holdings]

I don't think there's a bit there is some volatility there. I think there's more we have made investments in something called price and size, which is recognized as the fact that some of our customers trade in very small size and some trade very large and that pricing in that business accordingly makes sense for us and indeed the customer. So there's an opportunity to make ongoing investments to improve the quality of the business and indeed improve the customer experience. But I think it's too early to give guidance on what that looks like from a financial point of view.

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

Really a guidance question. It was actually it was about, I suppose, gross margin. It's about revenue retention. So gross client income and then net trading revenue that you recoup from that after hedging costs and client P and L. I just wondered after this one has been changed, what you achieved in the first half?

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

And I'm not necessarily asking you to say what you think is achievable over time, but can you say what you did in the first half?

[Breon Corcoran, CEO at IG Group Holdings]

The primary change was a product change that in most of our OTC businesses, not all, but in most of our OTC businesses, has differential pricing based on order size. So you can imagine that absent that, which is where we were, somebody trading in 1 lot versus 100 lots is getting the same price. Sometimes that led to one of those trades being mispriced. So we fixed that. There's a road map of other things to do.

[Breon Corcoran, CEO at IG Group Holdings]

Some very talented people in the risk and trading team here, very talented. And they have literally years of work in terms of what they'd like to do to improve the proposition for customers and for the business. But this is very important. I can't just focus on monetizing the existing customer base better. I have to grow the customer base as well.

[Breon Corcoran, CEO at IG Group Holdings]

And that's the tension that we're living with.

[Vivek Raja, Equity Research - Financial Companies at Shore Capital]

Thank you very much, Javes.

[Operator]

And there's a follow-up question from Ian White. Please go ahead.

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Hi, there. Thanks again. Just a few follow ups from my side, please. Firstly, on cryptocurrency, just sort of first part, am I right to think you've captured sort of more or less no upside from the heightened interest in crypto assets that really began in late October? And secondly, can you just set out your latest thinking regarding the introduction of crypto asset trading at IG.

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Sorry if I missed that in the prepared remarks. But is that something that's currently under development internally, maybe more likely to be addressed through M and A, potentially rolled out in some geographies before others? Some help with that would be appreciated, please. Secondly, on the decision to exit spectrum, we can see that the financial performance hasn't been there in the last few years. But what made you conclude that, that business couldn't be improved or indeed sold as opposed to the sort of wind down option that you've chosen ultimately?

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

And just lastly on Tastytrade, what's the latest regarding the international expansion plans there, either execution on the existing plans that you discussed last year and also any new markets that might be being considered? Thanks.

[Breon Corcoran, CEO at IG Group Holdings]

A couple

[Breon Corcoran, CEO at IG Group Holdings]

of the spicy ones there. Yes, at a very high level, our crypto offer is very subpar and at a very high level you can presume that we missed the uplift in the market over the last 6 months, whatever it's been, 3 months. That's not to address maybe the effort that we've made internally to improve some products and offer more coins or whatever else, but effectively our product is not right. That's one of the big misses actually for the first half. I'd like to have made more progress there.

[Breon Corcoran, CEO at IG Group Holdings]

We have some organic work. We're doing some work internally. We've looked at things like Acquihares. We've looked at some M and A. But it's a hard one to crack, otherwise we would have progressed it faster.

[Breon Corcoran, CEO at IG Group Holdings]

So that remains a work in progress. But recent events in the United States, we can't pretend that companies like ours have a future that are kind of where we're crypto agnostic. We have to embrace this. That's what our customers want to do. On Spectrum, I can't remember Spectrum, I think it's 5 years old, something like that.

[Breon Corcoran, CEO at IG Group Holdings]

It was very well resourced. Nicky, the CEO, did a solid job, and the team worked hard. But in the context of the group, it wasn't relevant, and it wasn't growing fast enough. And I guess the reason we did run a very small We did we made some efforts to see could we sell it or was there another way out of this. But focus is a very valuable thing right now, and we have an awful lot of work to do.

[Breon Corcoran, CEO at IG Group Holdings]

So we wind it down. We appreciated the efforts of the team. We wanted a safe transition for our partners and our customers, and we couldn't find a way to sell the business that would get us sufficient value in terms of solving for all of those things. So a decision was made whenever except October, November, and that's progressed reasonably well since that. Taste of Chet, what was the question?

[Breon Corcoran, CEO at IG Group Holdings]

Oh, international. Taste of Chet, yes. Yes. The experience in the U. K.

[Breon Corcoran, CEO at IG Group Holdings]

Has been educational. Educational for people and for all of us really, including for the guys in Chicago. They have an enormously strong appeal to a somewhat niche audience. And that's evidenced by the events they run as they did recently in the U. K.

[Breon Corcoran, CEO at IG Group Holdings]

And Ireland. Tom and his colleagues, JJ is the CEO there, but Tom Sawson is the founder. Tom has extraordinary charisma and appeal with some customers. But in terms of materiality for the group and relevance to the broader customer base in the U. K, there's still some work to do.

[Breon Corcoran, CEO at IG Group Holdings]

So I don't think we should be drawn now on where we go next. It's also subject to regulatory approval, which is outside of our control. So we're thoughtful about it, but nothing to announce this morning.

[Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research]

Thanks very much.

[Operator]

Thank you.

[Operator]

Our next question comes from Richard Stouffler from Deutsche Numis. Please go ahead.

[Richard Stuber, Director at Deutsche Numis]

Sorry, all my questions have been answered. Sorry, thank you.

[Operator]

Thanks. So the next question comes from Richard Taylor from Barclays. Please go ahead.

[Richard Taylor, Equity Analyst at Barclays]

Yes. A couple of quick follow ups, please. On your answer on crypto, and it sort of cuts out, so I didn't actually hear all of it. But a different point, really, you're not hiding behind the regulatory issues. So can you just give us an update in terms of if there is anything you're waiting for from a regulatory perspective to accelerate your product there?

[Richard Taylor, Equity Analyst at Barclays]

I realize you're saying you need to do better yourselves, but what are the rates that like in your major markets? And secondly, Tastytrade market share, I know it's growing, but how has its share gone in the last 6 months or so?

[Breon Corcoran, CEO at IG Group Holdings]

Tasty is growing, but I don't think it's growing share in any demonstrable, sustainable way. So I think we should be very honest with ourselves about that. And indeed, the guys are. And that's the reason why focusing on their core market is a prerequisite for to build a platform for future international success as well. So there's work to do at Tasty as well.

[Breon Corcoran, CEO at IG Group Holdings]

I don't mean to hide behind the regulators, but the regulatory thing is complicated. And different geographies have different appetite for crypto. Our existing licenses, in some case, crypto might be an incremental kind of variation of I can't remember what the term is, but variation of license application. In other places, it's a completely new stand alone thing, and that could be a year away. So I can't go all in on crypto at the cost of focus on the core business, But we're pursuing organic licensing.

[Breon Corcoran, CEO at IG Group Holdings]

We're pursuing, as I said earlier, a bunch of other strategies to try and accelerate this. I believe we must have a crypto offer. It's the miss of last year that we didn't progress it further.

[Richard Taylor, Equity Analyst at Barclays]

Okay. So just you could offer it in the U. K. And U. S.

[Richard Taylor, Equity Analyst at Barclays]

Today, given the regs or that would be?

[Breon Corcoran, CEO at IG Group Holdings]

U. K. To retail today. I can offer CFDs to professional customers. So that's a gap.

[Breon Corcoran, CEO at IG Group Holdings]

In the U. S, I could offer more in the U. S. We were I'm going to get the numbers wrong, but order of magnitude, there was a stage when we offered 30 or 40 altcoins. We cut that back to 6.

[Breon Corcoran, CEO at IG Group Holdings]

I think we're back to 10 now. There's obviously been a change in the SEC the day before the inauguration. The former leadership of the SEC was very cryptoskeptical. That now appears to have changed dramatically. We're a small business in the U.

[Breon Corcoran, CEO at IG Group Holdings]

S. And perhaps we've been a little conservative there. So I understand the importance of sorry, I understand the question, I understand the importance of the question. I don't really have anything very satisfactory to tell you, Richard. I would expect we will talk more about crypto in 6 months' time.

[Operator]

There are no further questions on the line. I would like to turn the conference back over to Martin, Head of Investor Relations, who will read the web questions.

[Martin Price, Global Head of Investor Relations at IG Group Holdings]

Thanks, Mello. We have a couple of questions that have come in over the web. The first is from Haley Tam at UBS, and it's on the group surplus capital position. So Haley notes that pro form a regulatory capital headroom of GBP 424,000,000 provides significant headroom versus our requirements. So do we see scope to run with a smaller buffer?

[Clifford Abrahams, CFO at IG Group Holdings]

So Haley, thanks for the question. We clearly do have a strong capital position, notwithstanding the recent acquisition announcement. So that's pleasing. And alongside this, we're generating capital quarter on quarter. That's really pleasing.

[Clifford Abrahams, CFO at IG Group Holdings]

Having said that, as I mentioned in my prepared remarks, I do like our capital allocation framework, which sets out a clear sort of cascade and set of priorities. And I said I'd review it over this next little period and happy to take feedback. I think I'm getting feedback through this question. We do want to remain well capitalized because that gives us flexibility to grow. But we're not going to hold on to surplus capital if we don't need it.

[Clifford Abrahams, CFO at IG Group Holdings]

And I'm keenly attuned coming from other sectors where there's more clarity around specific buffers.

[Martin Price, Global Head of Investor Relations at IG Group Holdings]

Thanks, Clifford. And two follow-up questions from Haley. The first on our B2B2C offering. She notes that our institutional offering, we've talked about that requiring investment. Could we provide some more detail on how we're thinking about that opportunity?

[Breon Corcoran, CEO at IG Group Holdings]

Thank you, Helene. I can't really provide there's a small team of people focused on that. They're largely they're very capable. They're largely a sales team. We need to put some product behind that product intake resource.

[Breon Corcoran, CEO at IG Group Holdings]

That's under that's starting, but it hasn't started yet.

[Martin Price, Global Head of Investor Relations at IG Group Holdings]

Thanks, Brion. Haley second question has actually been answered. So we'll move on to the final question that's coming via the web from Justin Bates at Canaccord. He's asking us to elaborate a little bit more on the rationale for free trade, what gives us confidence in the growth potential and how important are synergies in helping us scale the business?

[Breon Corcoran, CEO at IG Group Holdings]

So we haven't talked in the Freetrade announcement about synergies for a whole host of reasons. It's not really the driver of the deal. But to the earlier question, I think the stuff they can teach us and hopefully some stuff we can teach them. The U. K.

[Breon Corcoran, CEO at IG Group Holdings]

Cash equities market is a tough market, but we need a better product to address our customer needs at IG in the cash equities. The cash equity demand and Freetrade are focused and have been for many years on providing a very clear user friendly proposition. Their growth has been impressive. They have been capital constrained for many years. And I'm excited to work with the team.

[Breon Corcoran, CEO at IG Group Holdings]

As I said earlier, these are are the kind of people that we want to work with. So we don't underestimate how much work it is to build further scale here. But any day that I can get a clean technology stack with a focused customer proposition and a management team that's kind of targeting growth, that's a good day, and we're very happy with the deal.

[Martin Price, Global Head of Investor Relations at IG Group Holdings]

Perfect. Thanks, Brian. I don't think there are any further questions on the web. So back to you, Brent, for any closing remarks.

[Breon Corcoran, CEO at IG Group Holdings]

Thanks, Martin. So thank you all for joining us today, either online, well, mostly online. We're quite excited or I'm very excited about the opportunity ahead. There continues to be work to do. There's investment required, but the macro backdrop is encouraging.

[Breon Corcoran, CEO at IG Group Holdings]

We're happy to follow-up. We've got investor meetings over the next few days. So please come through to the IR team, to Martin or contact Mira Clifford. We look forward to chatting with some of you 1 on 1 over the next week or so. Thank you for your support to date.

Participants

Executives

• Breon Corcoran, CEO
• Clifford Abrahams, CFO
• Martin Price, Global Head of Investor Relations

Analysts

• Ian White, Equity Research Analyst - Banks and Diversified Financials at Autonomous Research
• Richard Taylor, Equity Analyst at Barclays
• Ben Bathurst, Stock Analyst at RBC Capital Markets
• Vivek Raja, Equity Research - Financial Companies at Shore Capital
• Richard Stuber, Director at Deutsche Numis