IG Group Eyes U.S. Growth, Prediction Markets and Underdog Deal in New Strategy

Key Points

• IG Group plans to diversify beyond its U.K.-focused OTC trading business through the proposed Underdog acquisition, prediction markets and a broader platform spanning trading, investing, crypto and event-based products. The deal is expected to reduce the U.K.’s share of group revenue to about 25%.
• The company is targeting significant growth in the U.S. through tastytrade, which will expand beyond options into stocks, crypto, prediction markets and perpetual products. IG expects Underdog to accelerate medium-term revenue growth, although it will initially weigh on margins.
• IG maintained its 2026 guidance for mid-single-digit revenue growth and a low-40% EBITDA margin, while pursuing efficiency measures including a roughly 30% workforce reduction in IG Consumer. The group also expects trading returns to remain more volatile under its revised market-making strategy.

IG Group LON: IGG outlined a growth strategy centered on broadening its consumer investing platform, improving trading economics, expanding in the U.S. and diversifying revenue through its planned acquisition of Underdog.

The company said it had completed a strategic review initiated in March and made three major decisions: pursuing the Underdog acquisition, moving its holding company domicile to Jersey and implementing a refreshed organizational model. Management said the Underdog transaction would reduce the group’s historical dependence on the U.K., with U.K. revenue expected to represent about 25% of the group rather than serving as its primary revenue base.

Management also described the rationale for combining trading, investing and entertainment products. The group said customers increasingly want to trade, invest, hold cryptocurrencies and take positions on events or sports outcomes through a broader set of services.

Consumer platform rollout and U.K. growth

Michael Healy, CEO of IG Consumer, said the division generated revenue of £878 million over the past 12 months across the U.K., Europe and Asia-Pacific. He said IG has shifted from a narrow OTC-focused model toward a multi-product proposition aimed at “active investors.”

Healy said U.K. active customers increased 22% this year, following 3% growth last year and a decline in the prior year. More than half of new customers now place their first trade outside of OTC products, he said, while customers subsequently cross-sold into OTC products have so far generated value comparable to customers acquired directly into retail OTC trading.

The company has rebuilt its customer-facing apps and websites around a single platform, initially covering CFDs, spread betting, share dealing and crypto. IG said the platform will add prediction markets later in the fourth quarter of 2026 and will begin expanding internationally during 2027.

• IG said its investment universe has increased from 12,000 to more than 20,000 instruments.
• The company said it has added fractional shares, pre-IPO trading, 24/7 trading and customer support, and access to 150 major cryptocurrencies.
• In the U.K., first trades on a second product rose 65% year-over-year, according to Healy.
• Multi-product customers generate nearly three times the average revenue per user of single-product customers and have 52% higher 12-month retention, he said.

IG plans to introduce prediction markets for professional investors in the U.K. later in the fourth quarter of 2026, offering 24/5 tax-free trading across financial assets. The company has also applied for a U.K. gambling license and expects, subject to that process, to expand into politics, entertainment and sports markets in early 2027. Healy said there remains ambiguity surrounding retail access to these products, but IG intends to work within the regulatory perimeter.

The company said marketing payback is about six months and that customer value over the first 36 months is approximately four times acquisition cost. Marketing spending increased from 6% of revenue in 2024 to 10% in the first half of the current year. Healy said IG would continue increasing spending only while returns remain acceptable.

Efficiency and trading revenue variability

IG Consumer is targeting a reduction of about 30% in its workforce as part of a wider reorganization. Healy said automation, artificial intelligence and a shift toward digital self-service are intended to support the changes. The company said cost to serve per customer declined 10% year-over-year, while its U.K. net promoter score increased by six percentage points.

Andy Biggs, CEO of IG Securities, said the company has changed its market-making approach to retain more risk for longer, aiming to capture more spread income and reduce hedging costs. IG measures net trading revenue as a percentage of client income as return to volume, or RtV.

Biggs said RtV has averaged around 80% above its long-term average since July 2025, although the new model also produces greater quarter-to-quarter variation. The company reported RtV of 70% in the third quarter of 2026, which management attributed to subdued implied volatility and range-bound Nasdaq trading. Biggs said the company’s back testing indicated that its prior strategy would have produced roughly the same Q3 outcome under those conditions.

IG is developing faster pricing technology, broader risk-management strategies and more efficient hedging. Biggs said the group expects these initiatives to improve performance under similar market conditions, though management emphasized that RtV will remain influenced by market conditions and product mix.

The company also highlighted growth opportunities for IG Prime, its institutional and B2B2C unit. Its White Label business, which provides IG technology to partners under their own brands, launched its first arrangement with Investec Prime Services in May.

U.S. opportunity and financial outlook

Mike Vaughan, CEO of tastytrade, said U.S. options volume has increased more than 75% since 2021, while tastytrade revenue has risen 92% since IG acquired the business that year. He said tastytrade’s EBITDA margins have remained in the mid-40% range despite revenue nearly doubling.

Vaughan said tastytrade aims to retain its options-focused core while expanding its mobile experience and product range to include stocks, crypto, prediction markets and perpetual products. The company is also rebuilding its tastylive media and education platform, which it said has recorded triple-digit growth in organic views and engagement.

Chief Financial Officer Clifford Abrahams reiterated IG’s existing 2026 guidance for mid-single-digit total revenue growth and a group EBITDA margin in the low 40% range. The outlook was unchanged from the company’s Oct. 2 trading update.

Over the medium term, IG maintained standalone guidance for at least 10% compound annual revenue growth and a group EBITDA margin in the mid-40% range, excluding Underdog. Abrahams said Underdog is expected to lift the combined group’s medium-term revenue growth above the standalone target, while initially reducing group margin before expansion as the acquired business scales.

Pro forma for Underdog, OTC derivatives are expected to account for about 50% of group revenue in 2026, down from about 70% in 2023, while fantasy sports and prediction markets would account for roughly 25%.

The planned Jersey redomicile is expected to complete later this year or in early 2027. Abrahams said the move would simplify the group’s structure and remove U.K. consolidated capital requirements from non-U.K. businesses, while regulated subsidiaries would continue to meet applicable local requirements. IG expects buybacks to resume in 2027, depending on its share price and other capital needs.

About IG Group (LON:IGG)

IG Group Holdings plc ("IG") is a FTSE 100 financial technology company operating at the intersection of retail trading, technology and capital markets. Through its trusted brands - IG, tastytrade, Freetrade and Independent Reserve - the Group serves over 1.3 million customers worldwide, providing leveraged trading, stock trading and investments, and cryptocurrency trading via its proprietary platforms. For more information, visit www.iggroup.com.

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