IG Group said third-quarter revenue fell 14% as it retained less of its customers’ trading activity as revenue, prompting it to trim its full-year growth outlook.
Comparables were tough, with the same period a year ago seeing much more market volatility that spurs trading activity.
The online trading platform expects revenue of around £240m for the three months to 30 September, down from £280m a year earlier. The fall reflected lower revenue retention in its core over-the-counter derivatives business, which dropped to about 70% from roughly 80% recently, in what the company called less supportive market conditions.
As a result, it now expects full-year revenue to grow only in the mid-single digits.
IG Group shares were down more than 26% shortly after the open on Friday. Shares have now halved since their June highs.
Underlying demand, however, remained robust. Organic first trades rose more than 25% and active customers were up around 17%, while the income it generated from OTC customers grew 8%. Its recently acquired US business, Underdog, performed strongly, with net revenue more than doubling to about $105m ahead of its seasonally important final quarter.
Despite the soft trading, Chief executive Breon Corcoran said he remained confident of meeting the group’s medium-term guidance.
IG said it expected its EBITDA margin for the year, excluding one-off costs, to be in the low 40% range. This would mark a decline from last year’s 47% margin.