Q3 trading update23 Mar 2023 13:01
Bit late to Q3's trading update party, but sharing my take anyway!
Revenue was clearly disappointing, especially given FX and interest rate tailwinds.
But on the flipside, there were temporary headwinds that shouldn't affect future quarters:
- December's World Cup knockout rounds involved US, Japan, Aus, UK and Europe, all major IGG markets. Some IGG punters will have partially switched to betting on the fubba, continuing in that vein over the xmas bank holidays, before hopefully returning to financial markets trading in January. Hence why December was a stinker.
- Q3 2022/23 had one fewer Wall Street trading day (60 days) compared to Q3 2021/22 (61), and three fewer than Q2 2022/23 (63).
The last trading update paragraph signposts, to me, a share buy back extension or special dividend later in the year:
"We continue to recognise significant headroom above the minimum capital requirement and the Board has
kept the capital allocation framework under continual review".
And the divi is covered 2+ times by profits, demonstrating scope to continue increasing in the medium term at their intended modest rate.
So FWIW, I'm a buyer at these levels and think June's strategic calls have actually been sound. She targeted the US and Japan as growth markets - to be fair it's difficult to think of larger, alternative growth markets in the world for IG, with accessible regulatory frameworks. So to keep IG progressing and growing for shareholders, she had to have a pop there.
It is fair to say TT needs to pull its finger out to address reduced trader numbers/activity from previous peaks, clearly a concern. Hopefully their new marketing campaign strikes a chord with punters, and they finally make it to Canada by the end of 2023. Although Canada timescales come with a pinch of salt, with ongoing regulatory delays and risks there.
Good luck all.
SBC
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