IG Group FY25 results meet expectations, launches strategic review

IG Group reported FY2025 revenue of £1,123m and EBITDA of £531m (47.3% margin), with adjusted EPS up 5% to 115.3p and a new £125m share buyback announced. Organic revenue was £1,096m (near guidance), net trading revenue rose ~10% y/y on an organic basis, and active customers jumped 174% (driven by the Freetrade acquisition; +6% ex-acq). For the three months to Feb 28 revenue was £274m (£266m organic) and IG expects ~£300m for the same quarter in 2026, targeting organic growth toward the top end of mid-to-high single digits and consensus-aligned FY2026 EBITDA (£538m) and EPS (119.5p).

Analysis

IGG’s strategic review + buyback creates a classic near-term catalyst binary: management has optionality to consolidate, divest low-ROI assets or pursue a listing change that can re-rate the stock, but value realization depends on execution and timing. The immediate mechanical benefit is EPS carry from buybacks and potential one-off valuation uplifts from a relisting/acquisition, yet the underlying revenue model remains highly market-volatility dependent — durable margin expansion requires either structural product mix change or sustained higher volatility.

Second-order winners are firms that supply low-cost customer acquisition and execution tech (white-label platforms, payment rails) if IGG opts to scale retail footprint; losers are mid-tier brokers with higher legacy cost bases and narrower product sets who face competitively pressed spreads and elevated marketing spend. The Freetrade-driven customer surge masks lower revenue-per-user risk: if average revenue per active user (ARPA) reverts toward legacy IGG levels, near-term top-line growth will decelerate even as headline active customer counts look robust.

Key risks and timeline: days–weeks for market reaction to the review and buyback mechanics, 3–9 months for announced M&A/listing moves and initial market repricing, and 12–24 months for integration to show EBITDA accretion. Tail risks include a sudden volatility collapse (reducing NTR), regulatory constraints on retail derivatives, or an acquisition that funds growth by diluting capital returns — any of which could reverse the rally quickly.

Contrarian read: the market is rewarding headline growth and buyback optics but underweighting unit economics and rate-sensitivity. If management prioritizes scale over ARPA and funnels cash into low-margin customer acquisition, the EPS lift from buybacks may be transitory while underlying free cash flow per share stagnates — a teardown-style review could therefore be a catalyst for both upside and downside depending on strategic choices.

Key Decisions for Investors

• Long IGG (LON:IGG) equity, 3–12 month horizon: initiate a 2–3% portfolio position on a <5% intraday pullback or on clarity from the strategic review; target +25–40% upside if buyback acceleration or a high-premium listing/acquisition is announced. Tighten with a 10% stop-loss and take partial profits at +15%.
• Pair trade — Long IGG (LON:IGG) / Short CMC (LON:CMCX), equal notional, 3–6 month horizon: play execution advantage and buyback-led re-rate vs legacy-cost competitor; expected asymmetric payoff if IGG executes review while CMC shows slower customer/ARPA recovery. Risk: market-wide volatility event that hits both; use a 7–10% stop on the pair.
• Long NVDA (NASDAQ:NVDA) 12–18 month call spread (debit) sized 1–2% portfolio: use calendar to capture continued secular demand from AI/auto compute cycles without paying for long-dated outright calls. Reward skew ~2:1 if NVDA sustains enterprise + automotive design wins; downside limited to premium paid.
• Hedge/insurance: buy a small protective put on IGG (3–6 month) sized to cover 30–50% of the equity position if you hold stock through the strategic review. This limits downside from a disappointing M&A outcome or abrupt volatility/market-share erosion.