CMC Markets
(LSE: CMCX) shares
tumbled 18% last week following the release of annual results that showed
significant profit growth but failed to meet analyst expectations. A massive
downward gap on the chart, the largest since August 2021, has pushed the share
price of the company offering retail trading services to a two-month low.
CMC Markets Shares Plunge
18% Despite Profit Growth as Earnings Miss Expectations
The
London-listed financial services company reported
profit before tax of £84.5 million for the year ended March 31, 2025,
representing a 33% increase from the previous year but falling short of the
consensus estimate of £90.6 million. Earnings per share reached 22.6 pence, up
from 16.7 pence but below the anticipated 24 pence.
Net
operating income rose 2% to £340.1 million, marginally exceeding the
company-compiled consensus of £339.2 million. The firm’s underlying EBITDA
climbed 12% year-on-year to £103.4 million, while the profit margin expanded to
24.8% from 19.0% in the prior year.
“While
the P&L figures were below consensus, the improvement on FY24 is
marked,” Jefferies analysts noted in a post-earnings assessment.
Why Is CMC Markets Share Price
Down?
As shown in
the chart below, the share price of CMC Market son the London Stock Exchange
had been rising sharply from its April lows. However, on Thursday, June 5, the
stock dropped nearly 18% following the release of earnings, falling briefly to
230.5 pence, a two-month low.
At the
start of this week, on Monday, June 9, 2025, CMCX shares were down more than
2%, trading at 241.5 pence. Despite the recent correction, the stock has still
gained over 30% from its April lows, having previously rallied around 60% to
reach its June peak.
On a
year-to-date basis, however, the stock remains in negative territory, with the
company down just under 2% since the beginning of 2025. For comparison, the
FTSE 100 index of British companies has risen more than 8% over the same
period.
Meanwhile,
another publicly listed retail broker on the London market, Plus500, has gained
28% year to date. Its shares have climbed to fresh all-time highs in recent
weeks, currently trading at 3,490 pence.
Mixed Performance
The mixed
performance reflected challenges in CMC’s core trading business, where
direct-to-consumer revenue declined 12% to £149.1 million, partially offset by
a 12% increase in platform-as-a-service revenue to £99.8 million. The company’s
investing segment demonstrated stronger momentum, with net revenue jumping 31%
to £44.4 million, driven primarily by growth in Australia where CMC ranks as
the second-largest stockbroker.
Interest
income provided a bright spot, surging 21% to £42.5 million as the company
benefited from higher client balances and improved treasury management. Total
revenue remained flat at £360.1 million, with trading and investing revenue
declining slightly to £313.3 million from £320.1 million.
Operating
expenses decreased 2% to £250.0 million, though this included a one-time £4.3
million charge for customer remediation in Australia following an industry-wide
regulatory review. The company maintained cost discipline while continuing to
invest in technology and platform enhancements.
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Dividend and Board Changes
The company
announced a final dividend of 8.3 pence per share, bringing the full-year
payout to 11.4 pence, representing a 37% increase and maintaining its policy of
distributing 50% of after-tax profits to shareholders.
The results
coincided with significant board changes. Deputy
CEO David Fineberg and Australia-New Zealand head Matthew Lewis will step down
from the board after the 2025 annual general meeting to focus on
operational roles. Laurence Booth joined as Global Head of Capital Markets,
while Senior Independent Director Paul Wainscott will succeed James Richards as
chairman.
This article was written by Damian Chmiel at www.financemagnates.com.
