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.