CMC Markets cuts FY earnings outlook, shares slide
CMC Markets cut its full-year earnings outlook on Thursday as it highlighted subdued trading and reduced market volatility, sending shares in the online trading platform tumbling.
In an update for the five months to the end of August, the company said it entered the current financial year with significant momentum following a year of record performance.
Underlying fundamentals remain robust with overall monthly active client numbers at similar levels to those reported in the recent first-quarter trading update. In addition, client assets under management remain near record levels.
However, overall market activity has remained subdued through July and August, having moderated in the first quarter.
"Reduced volatility in markets has resulted in lower trading activity across both the newly acquired and existing cohort of clients. Similar trends have been seen across our non-leveraged and leveraged businesses," CMC said.
"In addition to lower activity, year to date client income retention has also been tracking moderately below the targeted 80% although is expected to recover through the remaining seven months of the year based on a reversion towards historical averages in the mix of asset class trading."
As a result, the company now expects FY 2022 net operating income of between £250m and £280m, down from previous guidance of in excess of £330m.
CMC said FY 2022 operating costs will continue to track moderately higher year over year, albeit partly offset by lower marketing costs in line with lower activity trends.
"Beyond the recent moderation in market activity, the group continues to have confidence in the long term growth opportunities of the business and in conjunction with further progress on its strategic initiatives, including the ongoing development of the non-leveraged investment platform, looks forward to continuing to generate long-term business growth and value," it said.
At 0820 BST, the shares were down 26% at 312.53p.