Back to top

Analyst Blog

Interactive Brokers Group, Inc.’s (IBKR - Analyst Report) second-quarter 2013 earnings of 21 cents per share came in line with the Zacks Consensus Estimate. Moreover, this compares favorably with the year-ago earnings of 17 cents.

Results improved on a year over year basis owing to an increase in Interactive’s top line along with a decline in operating expenses. Though the performance of the Electronic Brokerage segment depicted improvement, the overall results continue to be hampered by the Market Making segment’s performance.

Net income available to common shareholders was $10.3 million in the second quarter, increasing 28.8% from $8.0 million in the year-ago period.

Performance in Detail

Interactive’s total net revenue in the reported quarter came in at $283.9 million, up 8.8% year over year. However, net revenue was 3.8% lower than the Zacks Consensus Estimate of $295.0 million.

The rise in revenues was primarily attributable to an increase in commission and execution fees, interest income, other income and lower interest expense. However, this was partially mitigated by a decrease in trading gains.

Interactive’s net income before taxes in the reported quarter rose 23.4% year over year to $133.9 million. Similarly, pre-tax profit margin increased from 42% in the prior-year quarter to 47% in the reported quarter.

Total non-interest expenses were $150.0 million, down 1.6% from $152.4 million in the prior-year quarter. The decline was mainly due to lower execution and clearing expenses, employee compensation and benefits expenditure along with decline in occupancy, depreciation and amortization costs. However, these were partially offset by higher communications and general and administrative expenses.

Segment Performance

Market Making: Net revenue plunged 26.2% from the prior-year quarter to $67.4 million. Similarly, pre-tax income decreased 68.3% year over year to $7.6 million. Moreover, pre-tax profit margin was 11%, down from 26% in the prior-year quarter.

Electronic Brokerage: Net revenue improved 24.0% year over year to $212.5 million. Likewise, pre-tax income stood at $123.3 million, increasing 36.7% from the year-ago quarter. Moreover, pre-tax profit margin was 58%, up from 53% in the prior-year quarter. Additionally, total daily average revenue trades (DARTs) for cleared-only customers increased 16.0% year over year to 463,000.

Balance Sheet

As of Jun 30, 2013, cash and cash equivalents (including cash and securities segregated for regulatory purposes) were $14.0 billion, down 1.0% from $14.1 billion as of Dec 31, 2012. Total assets were $35.1 billion, up 5.6% from $33.2 billion as of Dec 31, 2012.

Total equity came in at $4.9 billion compared with $4.8 billion as of Dec 31, 2012.

Dividend Update

Concurrent with the earnings release, Interactive declared a quarterly cash dividend of 10 cents per share. The dividend will be paid on Sep 13 to shareholders of record as of Aug 30.

Performance of Other Investment Broker

The Charles Schwab Corporation’s (SCHW - Analyst Report) earnings of 18 cents per share missed the Zacks Consensus Estimate by a penny. Lower-than-expected results were due to increased operating expenses, partially offset by top-line growth and a benefit from provision.

Our Viewpoint

Interactive’s robust fundamentals and a liquid balance sheet are expected to boost investors’ confidence in the stock. Further, the company’s strong market position and technological excellence are anticipated to act as tailwinds going forward.

Moreover, Interactive’s Market Making segment funds its dividend payments. However, this segment has been underperforming of late, which has made the company cautious about its ability to consistently generate sufficient returns to fund dividend payment.

Interactive currently holds a Zacks Rank #5 (Strong Sell).

Among other major investment brokers, TD Ameritrade Holding Corporation (AMTD - Analyst Report) is scheduled to report its fiscal third-quarter 2013 results on Jul 23 and E*TRADE Financial Corporation (ETFC - Analyst Report) is scheduled to report results on Jul 24.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.55 +11.64%
CHINA BIOLO… CBPO 55.57 +7.40%
BITAUTO HOL… BITA 96.14 +5.58%
LUXOFT HOLD… LXFT 38.77 +3.64%
INSITE VISI… INSV 0.30 +3.41%