CMC Markets H2 2025 Earnings Report

CMC Markets EPS Results

• Actual EPS: GBX 22.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

CMC Markets Revenue Results

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

CMC Markets Announcement Details

• Quarter: H2 2025
• Date: 6/5/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, June 5, 2025
• Conference Call Time: 4:00AM ET

CMC is a leading global provider of online trading and investing, with a comprehensive retail, professional and institutional offering. The business was started in 1989 with a simple ethos: to make financial markets truly accessible for investors. We are proud of our strong heritage and our successful 30-year track record as an innovator at the forefront of enabling digital trading for our clients.

CMC Markets H2 2025 Earnings Call Transcript

Key Takeaways

• Third vertical: CMC has launched its DeFi and Web3 capabilities as a new business vertical to build on its two existing segments and position itself at the center of TradFi–DeFi convergence.
• Strong FY25 results: Net operating income reached £340 million (+2%), EBITDA rose 12%, profit before tax margin hit 25%, and the board proposed a 37% increase in dividend per share to 11.4p.
• Disciplined cost control: Operating expenses fell 2% year-on-year and net staff costs declined 4% even as IT investment rose 17% to support automation and platform resilience.
• Product innovations: CMC rolled out 104 trading days of weekend crypto trading, enabled direct crypto deposits/withdrawals and is developing tokenized private equity, fractional funds and a multi-asset wallet.
• StrikeX acquisition: The majority stake in StrikeX brings in blockchain talent and proven tokenization, wallet infrastructure and digital asset execution capabilities to accelerate CMC’s Web3 roadmap.

Presentation

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

Good morning, everybody, and welcome to our financial year twenty five results presentation. My name is Peter Cruddus, and joining me today is David Feinberg, who's head of strategic partnerships, Lawrence Booth, head of capital markets, and Matt Lewis, who's head of ANZ. In terms of the agenda today, I will provide an exciting update on the future state of CMC. David will then cover the financials. Lawrence will provide a strategic update, and Matt will speak on our d to c business before handing back to me to wrap up.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

So let's get started. Over the last ten years or so, we have built a high performing business around two core verticals, direct to consumer and platform technology as a service or b to b. We have created a world class multi asset trading and investing journey for retail clients, delivering seamless twenty four five access across global markets. We have also scaled a powerful institutional grade platform delivering execution, liquidity, and trading infrastructure to fintechs, neobanks, and established financial institutions. Together, this two vertical model has allowed us to diversify our revenue, broaden our global client base, and enhance operational leverage.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

It has let laid the foundation for sustainable long term growth, and it is the CMC that you see today. However, it is not the CMC you will see tomorrow. The financial world is changing, and it is changing quickly. We are seeing profound shifts in how people access markets, how they invest, and what they expect from a trading platform. At the same time, new technologies are emerging that promise to reshape the future of finance entirely.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

What we built at CMC, our successful two vertical model, gives us a strong foundation, but standing still is not an option. That means rethinking how we operate, how we innovate, and how we deliver value to our clients. This is our opportunity to shape what the next generation of financial services looks like, and that is why today we are introducing our third vertical. That third vertical is our DeFi and Web three capabilities, the detail of which you can see on slide three. This isn't a pivot.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

It's a progression, a natural evolution of everything we already do. We have built a strong foundation through our two core verticals, but we recognize the financial world is changing, and so are we. This third vertical builds on everything we have already achieved. It's underpinned by the same robust infrastructure, disciplined investment, and client first thinking, and it ensures we remain relevant and competitive as the markets continue to evolve. It is the future of CMC and financial markets more generally.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

And I and I would now like to spend a bit of time looking at what it means in practice for our business. Web three is not a distant idea. It's already reshaping the financial world. And for CMC, it's a natural extension of what we already do. At its core, Web three is about building financial infrastructure that is faster, more accessible, and more scalable.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

It takes everything we have built in traditional finance and enhances it through blockchain technologies. The real opportunity lies in the convergence of traditional finance and decentralized finance or trad fi and DeFi. This convergence blends the trust and reliability of established systems with the efficiency and flexibility of decentralized technology. As these lines between asset classes and ecosystems continue to merge, CMC is positioned right at the center. We are building the infrastructure to serve clients across both spaces.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

The shift to Web three isn't optional. It's inevitable. And at CMC, we are getting ready to be at the heart of it. The shift to DeFi and Web three isn't about changing what we do. As I've already said, this is a natural evolution of CMC's core capabilities, only more efficient, more accessible, and more scalable.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

Our move into this space builds directly on our strengths delivering twenty four seven trading, seamless access to global markets, and real time execution. Through Web three, we're enabling instant on and off ramps for digital currencies, integrated payments, and automated settlement through smart contracts. Tokenization opens new forms of liquidity and fractional ownership. Self custody gives clients full, secure control over their assets. It's a continuation of our technology journey.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

In short, we're not reinventing CMC. We're taking what we already do best and preparing it for the next generation of trading and investing, and we believe this evolution will deliver meaningful value for our clients and for our shareholders. So with the introduction of our third vertical, CMC is now positioned at the center of a major industry shift, one that brings together traditional and decentralized execution, clearing, and finance. We already have several initiatives live. For example, in 2025, we launched weekend crypto trading, adding a hundred and four trading days a year, a step towards our vision of twenty four seven global market access.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

Our acquisition of StrikeX is another key milestone, bringing us native blockchain talent and proven capabilities in tokenization, wallet infrastructure, and digital asset execution, and Lawrence will share more on that shortly. We've also expanded our payments infrastructure. Clients can now deposit and withdraw in digital currencies, improving access to web three markets and enabling real time settlement. Looking ahead, we're developing tokenized private equity products, fractional fund access, and a multi asset wallet to seamlessly unify trad fee and DeFi. Just as we pioneered online trading in the nineteen nineties, we're now leading the next chapter in financial innovation.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

I'll be back shortly to close things off, but for now, I'd like to hand over to David for the financial update.

[David Fineberg, Deputy CEO at CMC Markets]

Thank you, Peter, and good morning, everyone. I would like to begin by turning to slide eight, which looks at our group financial metrics and performance. Net operating income was a robust £340,000,000 for the full year, which represents an increase of 2%. This was driven by continued growth across our PTAS and B2B segment as well as a strong performance from our Invest Australia business and Treasury Management and Capital Markets division. We've maintained a disciplined approach to cost control with operating expenses down 2% on the prior year.

[David Fineberg, Deputy CEO at CMC Markets]

That operational discipline, combined with top line performance, has delivered a 12% increase in EBITDA. Our profit before tax was GBP 84,500,000.0, with a profit before tax margin of around 25%, reflecting our net operating income performance and strategic cost management as well as the impact of lower one off charges. The Board is proposing a dividend per share for the full year of 11.4p, up 37% from 8.3p per share last year. This remains consistent with our dividend policy to return 50% of post tax profits to shareholders. Turning now to look at the income statement in a bit more detail.

[David Fineberg, Deputy CEO at CMC Markets]

Our robust net operating income performance was driven by a combination of factors. A record year in Australia stockbroking drove a 31% increase in investing net revenue, with our treasury management division performing strongly to deliver 18% increase in interest, treasury and other income. Trading net revenue was impacted by more subdued market conditions through 2025, though we have seen these conditions reverse somewhat as we enter into the new financial year. Operating costs, excluding variable REM, were £230,000,000 down 3% as we maintain a sharp focus on costs and disciplined approach to investment. Variable rem was up on last year, which is in line with the improved level of profitability.

[David Fineberg, Deputy CEO at CMC Markets]

The result of the above is a profit before tax of £84,500,000 and an improving PBT margin of 25, both of which I spoke to on an earlier slide. Looking now at our cost base in a bit more detail. Our focus on cost discipline remains a key strength with total operating expenses down 2% year on year to £250,000,000. This reduction was supported by tight control across fixed REM, premise costs, and marketing. Net staff costs, which remain our largest cost item, fell by 4% with a 7% decline in fixed REM.

[David Fineberg, Deputy CEO at CMC Markets]

IT costs rose 17% as we invested in automation, platform resilience and infrastructure to support scalability and innovation across all verticals. FY 2025 includes a one off charge of £4,300,000 relating to a customer remediation in Australia. This was part of an industry wide regulatory review and is expected to be fully utilized in FY 2026. As a group, we remain focused on delivering further efficiencies while continuing to invest in capabilities to support our long term growth, and I would now like to cover this on the next slide. In FY 2025, our operating expenses totaled GBP $250,000,000.

[David Fineberg, Deputy CEO at CMC Markets]

Over the next two years, we expect total operating expenses to remain broadly stable or rise moderately as we reinvest in strategic growth initiatives. This reinvestment is tightly aligned with our strategic priorities, including the development of the third vertical, Web three point zero and DeFi. At the same time, we are actively driving operational efficiencies across the business. That includes improving engagement and retention in our core hubs, expanding delivery capacity in lower cost strategic locations and streamlining legacy systems. These efforts will help us deliver scalable growth without disproportionately increasing our cost base.

[David Fineberg, Deputy CEO at CMC Markets]

This balanced approach ensures we're investing in the future while continuing to strengthen profitability. Our capital allocation strategy continues to strike the right balance between investing for the long term growth and delivering consistent shareholder returns. We remain committed to paying dividends in line with the 50% of after tax profits, while also considering share buybacks when appropriate. At the same time, we are deploying surplus capital in focused and disciplined way to support the evolution of our three vertical model, including selective M and A, where it strengthens our platform or opens up new markets, such as the recent investment in Strike X, to take us to a controlling stake. Alongside this, we continue to maintain a strong balance sheet with robust regulatory capital and liquidity to support resilience and flexibility.

[David Fineberg, Deputy CEO at CMC Markets]

That is all for me now, and I would like to hand over to Laurence, who's going to cover our strategic and operational progress.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Thank you, Dave, and good morning, everyone. I'd now like to build on some of the points Peter touched on and take a closer look at some of the key strategic initiatives and forward looking plans we have underway across the business in relation to our third vertical. One of the most exciting developments within our third vertical is tokenization. Access to traditional equity markets remains slow, costly, and in many cases, heavily restricted. Tokenization offers a way to remove those barriers, giving investors digital representations of real world shares that can be traded more freely, efficiently, and globally.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Importantly, it also enables fractional ownership, opens up high value assets like Tesla or Apple to a broader market. For investors, this means more flexibility. For CMC, it means broader participation and deeper liquidity. And this aligns directly with our web three vision, which is twenty four seven borderless access to the world's most iconic companies. We're not waiting for this shift to happen.

[Laurence Booth, Head of Capital Markets at CMC Markets]

We're actively pursuing it, and it will play a key role in shaping the future of how our clients trade, invest, and build wealth. The CMC multi asset wallet will be a key piece of infrastructure that will unlock the future of trading. The wallet is being built as a unified experience, one place where clients can hold and trade both traditional and tokenized assets. It's a true convergence of TradFi and DeFi, delivering seamless access to multiple asset classes through a single interface. As financial markets evolve, clients expect to move easily between equities, crypto, tokenized funds, and more, and our wallet is designed to meet that demand.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Importantly, this is not a DeFi solution built on unregulated foundations. It's underpinned by CMC's existing regulatory infrastructure and institutional grade security and tech, giving clients the confidence they need to engage. The multi asset wallet is our gateway to tokenization and a major step in building a next generation investment platform, and we look forward to sharing more on our progress into the future. Turning now to slide 16, which looks at our investment in StrikeX. Our majority stake in StrikeX is a key strategic milestone as we build out our third vertical focused on DeFi and Web3.

[Laurence Booth, Head of Capital Markets at CMC Markets]

This acquisition gives us scalable access to digital asset infrastructure and embeds native crypto capability directly within the group. Strikex brings deep blockchain expertise and accelerates our innovation road map with a wallet and tokenization stack that enhances flexibility to support future blockchain formats. This infrastructure strengthens our ability to deliver a seamless multi asset experience across both traditional and tokenized products. Beyond the technical capability, Strike X also helps us position for the future. As tokenized assets continue to gain traction globally, we are ensuring CMC is not just ready to participate, but it is positioned to lead in this space.

[Laurence Booth, Head of Capital Markets at CMC Markets]

In short, this move significantly enhances our long term relevance and positions us to capture meaningful share in what is a multi trillion dollar digital asset opportunity. And this slide really captures what we're building at CMC, a unified multi asset platform that bridges traditional finance and Web three. We're not choosing one over the other. We're bringing them together. Our ambition is to be the go to partner for clients navigating both ecosystems, whether they're investing in traditional assets or engaging with tokenized markets or DeFi.

[Laurence Booth, Head of Capital Markets at CMC Markets]

By combining the trust and infrastructure of TravFi with the innovation and flexibility of Web3, CMC is positioned to power the next era of investing, and it is something we are actively building today. I'd now like to spend a few minutes looking at our PTAS or b to b business. Our b to b segment continues to perform well. Over the past year, we've secured several strategic partnerships with major names in both fintech and banking, a clear sign that CMC is becoming the partner of choice for scalable white labeled infrastructure. From a pipeline perspective, we're excited by the trend.

[Laurence Booth, Head of Capital Markets at CMC Markets]

We have strong near term visibility, and our longer term pipeline is healthy, spanning multiple regions and verticals. Overall, we feel confident about the outlook and continue to believe this vertical will be a key driver of the future growth of the group. Our B2B strategy through our CMC Connect brand continues to build momentum. This is underpinned by a proven track record of delivering high quality white labeled solutions to major global institutions. Over the last twelve months, we have secured several strategic mandates with prominent names in banking and fintech.

[Laurence Booth, Head of Capital Markets at CMC Markets]

These include partnerships with Revolut and ASB Bank that have significantly enhanced our credibility and brand visibility across the industry. This growing reputation is now translating into meaningful commercial traction with increased inbound interest from prospective partners. What we're seeing is the flywheel effect of credibility leading to scale. And as we deliver for these institutions, the strength of our platform and technology becomes more widely recognized. And the more we build, the more attractive we become as a partner.

[Laurence Booth, Head of Capital Markets at CMC Markets]

As I mentioned on the previous slide, our pipeline is healthy and well developed with strategic opportunities in new regions across multiple asset classes. CMC Connect is a foundational part of our three vertical model, and we remain confident in its role as a long term growth driver, helping us deliver sustained multiyear value for the business and our shareholders. And with that, I'd now like to hand over to Matt, who is going to cover our d two c business in more detail.

[Matthew Lewis, Head of ANZ at CMC Markets]

Thank you, Lawrence, and good morning, everyone. As you've heard, f y twenty five has been a strong year for CMC, underpinned by the continued success of our retail or direct to consumer strategy and reflects the growing importance of retail traders. Globally, retail participation in markets continues to grow, driven by the ongoing democratization of trading and investing. Pleasingly, we are growing customers across all age demographics, a trend that positions the business for sustainable long term growth. To capitalize on this momentum, we've expanded our global footprint with the recent opening of our Bermuda office.

[Matthew Lewis, Head of ANZ at CMC Markets]

This new location will serve as our international business hub outside of our core markets, enabling us to onboard investors and traders across more than 150 countries with a particular focus on emerging markets that have historically been underserved. In parallel, we have continued to enhance our platform and proposition, releasing our multi asset offering, streamlining client onboarding through best in class technology, updating the user interface for a more intuitive experience, rolling out powerful decision support tools such as TipRanks, and partnering with popular retail charting and execution platform TradingView. For context, TradingView continues to gain popularity with the retail trading community with over 60,000,000 users globally. Across the business, we are seeing growing demand for new products and greater trading flexibility. This year, we introduced OTC options and enabled twenty four seven trading access for crypto.

[Matthew Lewis, Head of ANZ at CMC Markets]

Momentum is now building towards a broader shift to multi asset twenty four seven trading, and we are well positioned to lead in this space. I will now walk through a deeper dive of our Invest broking business. As a core pillar of the Australian Invest business, international trading delivered exponential growth in f y twenty five. Importantly, current client activity suggests we're only beginning to unlock its full potential. To illustrate this growth momentum, international trading now accounts for 37% of our investing net revenue, delivering double digit year on year growth.

[Matthew Lewis, Head of ANZ at CMC Markets]

The number of clients trading international shares has increased 61%, with this cohort now exceeding 50,000. A particularly pleasing stat is that one in five new accounts now places their first trade in international shares, demonstrating a growing appetite that we are well positioned to capitalize on. Moving on to crypto trading, another asset class that delivered exponential growth in FY '25 and presents significant future upside. Our clients can trade crypto alongside domestic and international shares on a single integrated platform with real time local currency funding. This ease of use differentiates our offering from competitors and has enabled us to capitalize on crypto's growing momentum as digital assets gain broader acceptance in mainstream portfolios.

[Matthew Lewis, Head of ANZ at CMC Markets]

Year on year, we've seen triple digit growth across turnover, holdings, and the number of active investors who traded crypto throughout the year. Importantly, this growth is supported by evolving market fundamentals with crypto gaining traction, not only as a store of value, but also as a tradable asset class and as a payment facilitator. To put this opportunity in context, in Australia, over 6,000,000 investors have traded crypto with more than 14,000,000,000 in assets held across local exchanges. Globally, that figure climbs to 650,000,000 investors, holding over 2,700,000,000,000.0 in digital assets. These numbers continue to grow as the wider trading and investment community continues to adopt.

[Matthew Lewis, Head of ANZ at CMC Markets]

The financial utility of crypto is equally compelling. In 2024, funds transfers in stablecoins surpassed the combined volumes processed by both Visa and Mastercard. Meanwhile, the broader tokenization market is projected to reach $16,000,000,000,000 by 2030. These trends present real opportunities for CMC, from enabling more efficient accounts funding to providing a future ready platform for trading tokenized assets. We believe we're only scratching the surface of what's possible.

[Matthew Lewis, Head of ANZ at CMC Markets]

Moving on to new developments across the Invest business, we recently launched Cash Ices on our Invest UK platform. Despite only recently launching, we've already seen strong cash inflows with AUM now exceeding 170,000,000 sterling. On the Invest Australia platform, we've delivered several key enhancements, including an updated web and mobile interface, as well as new features such as app themes, multifactor authentication, Salesforce chat, and tip ranks, all designed to elevate the client experience. Looking ahead, we are set to introduce new features, including fractional shares, regular investing, and US options. To wrap up, FY twenty five has been a year of strong delivery, underpinned by product innovation and platform enhancements that reinforce our competitive advantage.

[Matthew Lewis, Head of ANZ at CMC Markets]

I'll now hand you back to Peter for the final wrap up.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

I would like to begin by speaking briefly about the team that's driving this business forward. We have one of the most experienced and capable leadership teams in the industry. I've spent over three decades building CMC, and I know what it takes to succeed in this space. That's why I've surrounded myself with professionals who are not only experts in their fields, but who share the same ambition and determination for this business to win. Several of our recent hires bring experience from top tier global institutions such as Morgan Stanley, reinforcing our bench strength in trading, investment banking, and capital markets.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

This is a team of leaders who have run global desks, scaled high performance operations, and delivered results at the very highest level. And they have joined CMC because they believe in our vision and because we are building something bold. The group operates a leadership model that empowers regional autonomy while maintaining tight group alignment. I am as committed to this business as I have ever been, and I have no plans to ever retire nor do I ever intend to sell any of my shares. What I do intend to do is lead this business to the next level, and I've always believed success starts with people.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

And with this new and expanded team, we have the horsepower and the hunger to deliver the next phase of CMC's growth. So finally, to close on slide 29, at CMC, we're still not standing still. Our business is now built on three powerful verticals, direct to consumer, platform technology as a service or b to b, and now DeFi and Web three. Together, they give us a unique and highly scalable model, blending the best of TradFi and the innovation of DeFi. In d to c, we continue to set the standard offering twenty four seven access across all major asset classes with a market leading platform and world class user experience.

[Lord Peter Cruddas, Founder & CEO at CMC Markets]

Our PTAS business via our CMC Connect brand is powering some of the biggest fintechs and neobanks globally with strong pipelines and scalable infrastructure that are delivering real growth. And now with our third vertical, digital assets and tokenization, we are stepping into the next generation of trading and investing. Through StrikeX, our wallet wallet technology and tokenized assets, we're making real progress in unlocking exciting new markets. This strategy is underpinned by world class technology, strong execution, and a leadership team that knows how to deliver. Our goal is clear, to become the go to platform for multi asset trading across Web three and TradFi, and we're just getting started. Thank you very much.

[Operator]

We'll now begin the webinar question and answer session. If you are participating in verbal questions, please use the raise hand feature in the Zoom webinar at the bottom of your screen to ask question. We'll take our first question from James Allen from Panmar Liberum.

[James Allen, Financials & Fintech at Panmure Liberum]

Hi. Morning, guys. Can you hear me okay?

[Operator]

Yes, Jason. Please go ahead.

[James Allen, Financials & Fintech at Panmure Liberum]

Perfect. Two questions if I can. Firstly, what has happened to CMC Connect? And where does that now sit across the three pillars? Presumably, that's within Platform Tech as a Service.

[James Allen, Financials & Fintech at Panmure Liberum]

And then secondly, will the reporting segments be rejigged to reflect the three new pillars going forward with restatements of prior year comps, or is it expected to remain as trading and investing? Thanks.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Morning, James. It's Laurence here. Yeah. Connect is very much the infrastructure that that drives CMC as a group. So, yeah, that's that's now presented as the platform trading as a service, but it it very much forms the architecture of the group both internally and externally.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So it hasn't gone anywhere. It's just evolved, actually. Yeah. So in terms of the revenue splits, we already split out training revenue and investing revenue. Then and then within that, you'll see the split of d two c and then the platform with service.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So it's already it's already there and continue. I mean, just to sort of talk about, we we think that, quite frankly, we'll have no choice but to report our businesses separately going forward because we think that, you know, tokenization could well and truly swamp the world's financial markets, and we'll be part of that. We'll be involved with that, and we will have to break it out. We want to break it out, and we see it as a different way for our clients to trade. There's much more scale.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And I think, you know, when you think about traditional financial markets, you can think about physical shares. You can think about CFDs. You can think about spread betting, but I think all of that's gonna change. I think tokenization will completely redefine financial products. Clients will have their own clearing systems through their own personal wallets, and they will just train products much more sort of easily losing using blockchain.

[Laurence Booth, Head of Capital Markets at CMC Markets]

But, you know, I think all these financial products will merge into sort of tokens, and and it'll it'll look completely different in the next two or three years. So we'll have a choice. Did you want to add something about that?

[David Fineberg, Deputy CEO at CMC Markets]

Yeah. So so just expanding on that Connect question because we we focused on it quite heavily last year.

[David Fineberg, Deputy CEO at CMC Markets]

But so what we have done within CMC is literally unpick the entire stack into API modules. So what Connect does is it connects those through front end GUIs, and it's enabled us to add product features and asset classes to our stack to deliver through that mechanism. So what you're going to see in the in the coming months is the delivery of the multi asset platform, which includes options, equities, fixed income, native crypto, and the bridge to DeFi all in one place. That is Connect as a brand. That's what it does, And that's how our partners see us in the outside world via that Connect brand.

[James Allen, Financials & Fintech at Panmure Liberum]

Thanks very much.

[Operator]

Thank you, James. Our next question is from Vivek Raja from Shaw Capital. Please go ahead.

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

Good morning, chaps. Thank you for taking my questions. I just wanted to ask first about well, just explore that previous question and answer. So in terms of reporting divisions, how you report your your revenues, obviously, you've got the sort of prevailing trading net revenue, investing net revenue, and then other. And then I can see within trading, you've broken that into the d two c and the platform as a service.

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

And then you've got the sort of third vertical, the the the the defined web three point zero. How should we start modeling this business on on the sort of that basis with a with a sort of defined web three point zero capability new line, or are you gonna obtain this within trading and and investing revenues? That's the first question, please. The next question, I want to ask you about the Australian provision. If you could just provide a little bit more detail about that, how you've arrived at that number.

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

And then finally, within your costs, so I think you sort of suggested that costs remain broadly flat or rise a little bit over the next couple of years. Just within the the the the sort of costs you you've, you've reported, I wonder if you could just help us think about what is noncore in there, what is legacy infrastructure costs, how much project spend you still got running through that line, which which could drop off? And what sort of how much you need to invest in the business to launch these these new capabilities?

[Laurence Booth, Head of Capital Markets at CMC Markets]

Yeah. Sure. So regarding the reporting division, so we've already got the split in terms of the need to see BTS. But from our side, obviously, when you're talking about, you know, crypto, etcetera, that that revenue already starts in those lines anyway. But, you know, in space point, as the business evolves, should requirements be should we need to change the report, we'll let you know.

[Laurence Booth, Head of Capital Markets at CMC Markets]

But at the moment, it would flow within them. Because, obviously, when we in terms of the revenue drivers, we've got that offering across both our retail division as well as our partners division. Before I hand over to Matt on the OS division, so on the the cost the cost side, in terms of that project spend, that's already within our cost anyway. Most of the heavy lifting's been done, as we've said before. The point now is that, you know, the investment we're making today, there's real rigor around the path to profitability.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So it's a case of where every investment is required, how does it service the multiple channels of the business. So when we're talking about different initiatives, it doesn't come with a big price tag because we've already done the investment. You know, the the business itself continues to evolve, continues to seize new opportunities, but in essence, it's about benefits in the whole group. So, you know, our view on cost is that, you know, they may rise moderately, but, ultimately, we'll seek out areas to save. And with that money that we've saved, we'll then reinvest. Matt, do you wanna cover the AUS?

[Matthew Lewis, Head of ANZ at CMC Markets]

Hi, Vivek. It's Matt. Just in terms of the AUS provision, I just just to be clear, it it's a sector wide piece in Australia. It relates to a technical interpretation of the product intervention piece that was encountered several years ago, and it's simply a remediation of the impacted clients' trading costs.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Sorry. Just add to that question around Web three, I think it's important to note that it's actually more of an infrastructure upgrade rather than a separate revenue run. So what web three does is provides a infrastructure, which is future proof to collect revenues across the current asset classes and products that we currently collect in. But it's just a it's an alternative world to the world that we currently know. But we we think things transition that way.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So it's more of a infrastructure upgrade. So I don't think we've talked to those earnings separately. I think also there's there's hidden value in the business that we don't really sort of talk about. But we've got for around 400 partnerships, including API and connectivity and white labeling. This is in our, you know, connect business, our b to b and PTAS business.

[Laurence Booth, Head of Capital Markets at CMC Markets]

At some stage, those clients will need more technology. They'll need Web three, and that would be quite efficient for us to offer them, you know, Web three capabilities. So we've already got within the ecosystem of CMC, the client base, a huge amount of opportunity without even thinking about the expansion of d to c and tokenization. I mean, we're we're we're talking to a potential partner at the moment, and part of the pitch is the fact that we have this capability, and we'll have more capability in terms of, you know, payments of products and all of the infrastructure that goes around Web three. And that will just spread throughout our partnership ecosystem.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So there's a huge amount of opportunity, and the cost factors, like David said, it it's not it's no more heavy lifting per se. It's just about capitalizing on an incredible platform and infrastructure, the third vertical, but we've already got two verticals that we have been banging on about for years and years and telling people, if you look at this business in 2016 when we IPO ed and look at it now, the transformation is phenomenal. And there's no stopping us, and we've absorbed those costs. We know technology. We were the first to market, I think, with, an Internet trading platform, and that's expanded.

[Laurence Booth, Head of Capital Markets at CMC Markets]

We've got all of these different businesses around the world. If you look in Australia, we're the number two retail stockbroker in Australia. You know, if you really wanna, you know, dig down and look at the technology and look at some of our partners that choose us on merit as well. There's an awful lot of value in this business that's just not recognized by analysts and investors because they think we're still a spread that CFD business. But, hopefully, after today, that deal will change.

[Operator]

Thank you for your question, Vivette. If anybody else would like to ask a question, please use the raise hand feature at the bottom of your screen. And if you are dialed in by phone, please press 9 followed by Our next question is from Justin Bates from Canaccord. Justin, please go ahead and ask your question.

[Justin Bates, Head of Research at Canaccord Genuity - Global Capital Markets]

Sorry, thank you for that. A quick question for me, please. Could I ask you how many new clients were signed during the year and what the number of active clients were within the D2C retail offering, please? Thanks.

[Laurence Booth, Head of Capital Markets at CMC Markets]

In the d c the d to c offering? Or

[Justin Bates, Head of Research at Canaccord Genuity - Global Capital Markets]

Yes. Yeah. The the leverage business. Yeah. D to c leverage business.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Yeah. So in terms of the active clients on the the trading side, just over 52,000 clients, and then the active clients on the invest side, 238,000. And that doesn't include some of our very high profile PTAS business, their partners. It has just it is one partner. Yeah.

[Laurence Booth, Head of Capital Markets at CMC Markets]

That's considered as one partner, but I can tell you that those numbers are very substantial.

[Justin Bates, Head of Research at Canaccord Genuity - Global Capital Markets]

Okay. Thank you. So just to clarify, that that 52,000 new clients, that was was that just the leveraged clients, or does that include the stockbroken clients as well, investment clients?

[Laurence Booth, Head of Capital Markets at CMC Markets]

Say trading, that's the leverage arm. So that's active total clients, just over 52,000. And then when we say invest, that's obviously Australia, UK, etcetera. So that's the active your best clients of 238,000. Now that's active. That's not total clients.

[Justin Bates, Head of Research at Canaccord Genuity - Global Capital Markets]

Yeah. Got it. Okay. That's helpful. Thank you very much.

[Operator]

Thank you, Justin. Our next question is from Stephen Payne. If you'd like to ask your question, please, Stephen.

[Stephen Payne, Research Analyst at Peel Hunt]

Thank you. Good morning. Stephen Payne from Peel Hunt. Yes, a couple of questions. Firstly, on the I see the reference to the change in the hedging policy within the core business that was implemented in January.

[Stephen Payne, Research Analyst at Peel Hunt]

If you could just get a bit more color around what what's changed there and the sort of reasoning behind that and how that's driven an improvement.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Is that one question?

[Stephen Payne, Research Analyst at Peel Hunt]

And secondly sorry. Just yeah. Second one would just be around on the retail side in terms of just a bit more color understanding what you're gonna do on the marketing front in terms of driving more for the retail side of the business?

[Laurence Booth, Head of Capital Markets at CMC Markets]

Yeah. Sure. So now now part of the 200,000,000 we've raised in cash items or what you mean of leverage business. Yep. So so in terms of the hedging change, it's not a fundamental change.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So I I think when we've spoken to the market and investors and everyone before, we talk about the sheer amount of data that we have as a business and that we continuously mine that. So for us, you know, data is only good if you actually utilize it. So we were constantly refining, evaluating, identifying areas of efficiencies. So that work is forever ongoing. So when we talk about changes, it's not fundamental changes.

[Laurence Booth, Head of Capital Markets at CMC Markets]

It's just as a business becoming more efficient, extracting value where possible. But that's volume that we inherit today. You know, our mission is always to improve the amount of volumes that we're handling as a business, And that obviously goes into the investment in the technology, that goes into product offering, partnership capability. So we will continue to expand the channels of which we can absorb business. We'll continue to invest in the business to make sure we can handle it and provide that scale.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So, yeah, on the hedging side, it's, you know, it's continuous refinement, not fundamental change. On the retail side, so as a business, obviously, we've been focusing a lot on technology and partnerships and stuff like that. You know, in terms of the retail side, Laurence alludes to it, it's just continuously growing. There's demands to every place. So for us, it's making sure that we've got the platform.

[Laurence Booth, Head of Capital Markets at CMC Markets]

We've got the geographical reach, partnered with the best in breed bugs out there. That's and the plan is to grow that retail fish because seen their wealth with the provider. So that's why you see more products in the wealth. That's subject. That's double digit growth on the invest side.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And on the training side, it's to roll out our multi asset plan. We've been. So, again, it's driving up the the increase in the base, increase the volumes that we deal with.

[Operator]

Thank you, Stephen. Our next question is from Ben Barthurst. If you'd like to unmute yourself and ask your question, please, Ben.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Good morning. Hopefully, you can hear me okay.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Yeah.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Excellent. I've got questions in three areas, if may. Starting on the shift towards 20 fourseven trading, I just wondered which markets do you expect to be able to move into that for soonest? And what challenges does that present from a risk management perspective? I wondered, could that mean hedging becomes more expensive or maybe becomes less of a feature of the business model for that type of trading?

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

And then secondly, on M and A, the worst in press reports linking you with acquisitions recently. To that end, what should we consider the M and A firepower within the business to be presently, assuming you were to fund deals from existing capital and liquidity resources? And would you consider introducing debt into the balance sheet to fund acquisitions? And then thirdly, just on the ASP partnership in New Zealand, I wondered if you could give an update on how that integration is progressing and the timing possibly for the first revenues to be realized there. I also wondered if you'd started to incur any incremental cost with that partnership in FY twenty five. Thank you.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Before we do, do you want to update on ASP in New Zealand and if you want to expand on twenty four seven that, you know, lot of us could carry on with the twenty four seven bit. Because they've they've been operating the twenty four seven business on cryptos for about a year now. Yeah?

[Matthew Lewis, Head of ANZ at CMC Markets]

We have. Ben, I'll I'll cover two of those then. In terms of the ASB piece, really good progress from both ourself and the bank. We're we're likely to see the first revenue earned in May or June next calendar year. In terms of progress, we've been making good progress in terms of the the connectivity to the NZX exchange, becoming a member of that, and just general connectivity to cash accounts of the bank.

[Matthew Lewis, Head of ANZ at CMC Markets]

In terms of any cost from a project piece or a build piece, our intent is that we'd be able to capitalize those costs as part of the project. Again, given that we've done a number of these partnerships with other banks, very much BAU for us in the go forward, but we'll continue to up the market when we have further progress of the connectivity. On the twenty four seven piece, as Peter said, we've been operating our physical coin offering $24.07 for for the past year. We've obviously parlayed that into derivative business as well, but it's certainly only the the beginning of that. Now intention and appetite is to effectively be able to offer all of our asset classes 20 four seven.

[Matthew Lewis, Head of ANZ at CMC Markets]

We've got the capability from a tech perspective. We've got the capability from a dealing and hedge perspective and also from the service perspective given that we've got our global outreach for our offices to staff the servicing of that. We're we're looking at the major asset classes, so your your big cap indexes, your your g 10 currencies, and also we we have an eye on your key equities, your mag sevens, etcetera. So I I'd expect to to to see more of that in the coming months that that we're multi asset across that twenty four seven trading spectrum.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Alright. Yeah. Sure. Sure. Look.

[Laurence Booth, Head of Capital Markets at CMC Markets]

I think that the twenty four seven question is something that more and more investors and traders are asking of us now. That's a direct crossover effect from the trading of crypto assets. It's completely normalized volatility and digital access. There's a real obvious read through to all other asset types. Now we already offer twenty four five across US stocks.

[Laurence Booth, Head of Capital Markets at CMC Markets]

It's a it's an easy segue to continue that into twenty four seven. We've got twenty years of data that we've stored, so we have, you know, every which way you can cut the analysis to price that risk over the weekend. And there are more than enough proxies for us to do that effectively. So the obvious continuum is major indices, then commodities, FX, and max seven plus probably the global top 20 stock. But all of the all of the assets and names you'd expect to see trading in the most popular segment today would be offered in a twenty four seven environment.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And I think, you know, the segue for that has been the, you know, the onset of digital assets. And just actually talking to that in a little bit more context, you know, retail now accounts for 20% of US equity loans on a daily basis. Zero dates of expiry options are the most actively traded options product globally, and more than 50% of that is retail. The market cap growth in that retail cohort when you consider the digital providers such as Coinbase and Binance, etcetera, is more than $500,000,000,000 today, and ten years ago, it's just 45. Then 11 x return on market cap growth in that space versus, I mean, two times with the traditional investment banks.

[Laurence Booth, Head of Capital Markets at CMC Markets]

So retail is not dictating the direction of travel here. We're very, very well positioned from an infrastructure tech and a regs perspective. We are just very much misunderstood in terms of the valuation gap between that cohort and ourselves. You know? And it'll become more obvious as we provide that bridge between TradFi and DeFi that that gap is wrong.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Completely wrong. Yeah. Look. We are buried here with opportunity, and this opportunity is based on what we are doing in terms of and what the market telling us it wants. I mean, I think we have a a fantastic advantage around our b to b business, our connect brand, because, you know, we're involved with a lot of financial institutions, and their client base are driving, you know, opportunities.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And we see those opportunities, and we have to respond to those opportunities. I think if you'd stop and think about, and don't think of cryptos as Bitcoin. We think of cryptos as the clearing system, the, payment system. Cryptos are just a a product that is built on blockchain and the the the different ways of of buying and selling different financial products. But if you go back five, six, seven years when Bitcoin first came into the financial sector, you know, clients couldn't really trade Bitcoin with their traditional brokers and bankers and firms like CMC Markets.

[Laurence Booth, Head of Capital Markets at CMC Markets]

They were forced to go to firms like Kraken. And, you know, clients retail clients would trade, cryptocurrencies over the weekend. They didn't they didn't have any concept of, you know, the markets opening up. They just wanted to buy some cryptocurrencies, and so they would go through these portals and these hubs like Crackle. And so that mindset now is moving into the traditional financial markets.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And unless you respond to that, and if you see the growth of retail and trading, I think it's gonna completely dominate financial markets. And what's gonna happen is that not only are they gonna be able to trade twenty four seven, and it's it's not easy offering twenty four seven today because, you know, liquidity and so on. But but it we're we're doing a a decent job of it. We'll keep improving that. You have to be involved in that.

[Laurence Booth, Head of Capital Markets at CMC Markets]

But what you're gonna see over the coming years, and you heard it here first or second or third, because maybe you're hearing it elsewhere as well, is that, you know, retail is is booming. It's absolutely booming. And the reason it's booming is because, you know, retail's got used to trading outside hours. They can trade different products now. But the kick starter for all of that, I think, was crypto, you know, technology and robbing the book, but the exponential growth of retail.

[Laurence Booth, Head of Capital Markets at CMC Markets]

And I think what you're gonna see is, you know, big opportunities. Retail will have their own clearing systems in the future, and that's what we're we're looking at. So they'll have their own points. So if we we're not involved in any mergers and acquisitions with any company that you may have read about in the newspaper recently. We are always interested in mergers and acquisitions if it matches our business model.

[Laurence Booth, Head of Capital Markets at CMC Markets]

For example, we would not be interested in acquiring a traditional CFD spread bank business now because that's not where our future lies. We think tokenization, Web three, is our future. And would we take on any debt? We've got a very healthy balance sheet. We don't need to borrow money to do what we want to do, which is to keep building our Web three, our third vertical.

[Laurence Booth, Head of Capital Markets at CMC Markets]

But if somebody could help us with that, then, yeah, I take on that. What you're actually seeing, if you actually look around, you're seeing major crypto businesses acquiring people from our sector. There's been quite a lot of publicity around people in our traditional financial services sector being acquired by the big crypto players. And these crypto players are gonna have to come in to traditional finance because we're gonna be offering traditional finance through tokens. And they can't they can't just be one prick ponies offering Bitcoin and Ethereum and stuff like that.

[Laurence Booth, Head of Capital Markets at CMC Markets]

They are being forced into our space. So I think it's gonna get very exciting over the next two or three years. And we are we're not interested in acquiring companies that are sort of the old the old traditional way unless they can help us move the business forward. Very exciting times. Honestly, it's I'm loving it.

[Laurence Booth, Head of Capital Markets at CMC Markets]

It's just like the Internet back in 1994 before companies like Google existed and Facebook existed. It's sort of it's interesting times. I mean, this opportunity is bigger, I think. That's why I'm not retiring, and that's why I'm not selling my shares.

[Ben Bathurst, Equity Research Analyst at RBC Capital Markets]

Thank you.

[Operator]

Thank you, Ben. This concludes the question and answer session. I'll now hand over to the management team for closing remarks.

[Laurence Booth, Head of Capital Markets at CMC Markets]

Yep. Well, thank you everybody for tuning in and your interest, and, we look forward to updating your very exciting projects that are happening here over the coming months and years. And thank you, everybody.

Participants

Executives

• Lord Peter Cruddas, Founder & CEO
• David Fineberg, Deputy CEO
• Laurence Booth, Head of Capital Markets
• Matthew Lewis, Head of ANZ

Analysts

• James Allen, Financials & Fintech at Panmure Liberum
• Vivek Raja, Equity Research - Financial Companies at Shore Capital
• Justin Bates, Head of Research at Canaccord Genuity - Global Capital Markets
• Stephen Payne, Research Analyst at Peel Hunt
• Ben Bathurst, Equity Research Analyst at RBC Capital Markets