IG Group Q1 revenue drops 7% despite surge in customers and Freetrade boost

IG Group (LON:IGG) reported a 7% year-on-year decline in first-quarter revenue to £259.9 million, primarily due to lower trading activity and reduced interest rates, which impacted both net trading revenue and net interest income. Despite this revenue contraction, the company demonstrated robust customer growth, with active monthly customers up 3% organically and funded customers more than doubling to 1.3 million, largely driven by the Freetrade acquisition. Strategically, IG is expanding its digital asset presence through the acquisition of Independent Reserve and initiated a £125 million share buyback program, while forecasting net interest income of around £100 million for fiscal 2026.

Analysis

IG Group's first-quarter results present a dichotomy between contracting current revenue and expanding future potential. Total revenue declined 7% year-on-year to £259.9 million, driven by a 4% organic drop in net trading revenue and a more severe 24% fall in net interest income, reflecting subdued market volatility and the impact of lower interest rates. Despite these top-line headwinds, the company's user base metrics showed significant strength. Organic monthly active customers grew by 3%, and first-time trades surged by 42%. The consolidation of Freetrade was a major catalyst, helping to triple the group's active customer base to 739,100 and more than double funded customers to 1.3 million. This acquisition also fueled a doubling in stock trading revenue, with Freetrade contributing £6.5 million. Geographically, performance was mixed; the U.S. subsidiary tastytrade delivered a 16% increase in net trading revenue, counteracting a decline in the Asia-Pacific and Middle East regions. Strategically, IG is deploying capital through a £125 million share buyback program and expanding into digital assets via the proposed acquisition of Australian crypto exchange Independent Reserve, signaling a focus on both shareholder returns and new growth verticals.

Key Decisions for Investors

• Investors should weigh the current revenue pressure from lower interest rates and market activity against the strong underlying customer acquisition metrics, which could position the company for a significant rebound when market conditions improve.
• The £125 million share buyback provides a near-term valuation support, while the acquisition of Independent Reserve represents a long-term strategic play on digital assets that requires monitoring for successful integration and regulatory approval.
• It is crucial to analyze the diverging performance between the growing US business (tastytrade) and the declining OTC derivatives segment in Asia-Pacific to assess whether a strategic shift is effectively offsetting legacy business weakness.
• Given the 24% drop in net interest income, the fiscal 2026 guidance of ~£100 million for this line item should be a key modeling assumption, with portfolios sensitive to interest rate fluctuations requiring careful consideration of this exposure.