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Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2020 adjusted earnings per share of 53 cents were in line with the Zacks Consensus Estimate. However, the figure reflects a decline of 7% from the prior-year quarter’s earnings.
An increase in daily average revenue trades (DARTs) and higher revenues primarily supported the results. However, a rise in expenses acted as a headwind.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $46 million or 58 cents per share, up from $36 million or 45 cents per share in the prior-year quarter.
Interactive Brokers reported comprehensive income available to common shareholders of $54 million or 69 cents per share in the reported quarter compared with $30 million or 39 cents recorded in the prior-year quarter.
Revenues Improve, Expenses Rise
Total net revenues were $548 million, up 17.6% year over year. The rise was driven by an increase in non-interest income. The top line surpassed the Zacks Consensus Estimate of $499.5 million. Adjusted revenues were $518 million, down 1.3% from the prior-year quarter.
Total non-interest expenses increased 15.7% from the year-ago quarter to $214 million. The rise was due to an increase in almost all cost components except for communications costs.
Income before income taxes was $334 million, up 18.9% from the prior-year quarter.
Adjusted pre-tax profit margin was 59%, down from 65% a year ago.
Other Business Highlights
During the quarter, total DARTs increased significantly year over year to 1.83 million. Further, total cleared DARTs jumped from 0.78 million to 1.63 million.
Additionally, customer accounts grew 47.3% from the year-ago quarter to 981,000.
Capital Position Strong
As of Sep 30, 2020, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $45.4 billion compared with $30.1 billion on Dec 31, 2019.
As of Sep 30, 2020, total assets were $84.7 billion compared with $71.7 billion on Dec 31, 2019. Total equity was $8.5 billion compared with $7.9 billion at the end of December 2019.
Our Take
The company's efforts to develop proprietary software (including IBKR Lite) are expected to continue to aid financials. Moreover, its efficient capital deployment activities indicate strong liquidity and capital position. However, mounting operating expenses (as witnessed in the third quarter as well) along with a near-zero interest rate environment remain major near-term headwinds.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Performance and Upcoming Releases of Other Companies
Charles Schwab’s (SCHW - Free Report) third-quarter 2020 adjusted earnings of 51 cents per share beat the Zacks Consensus Estimate of 47 cents. However, the bottom line decreased 27% from the prior-year quarter.
Raymond James Financial, Inc. (RJF - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) are slated to release results for the September-end quarter on Oct 28 and Oct 29, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Interactive Brokers (IBKR) Q3 Earnings Meet, DARTs Rise Y/Y
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2020 adjusted earnings per share of 53 cents were in line with the Zacks Consensus Estimate. However, the figure reflects a decline of 7% from the prior-year quarter’s earnings.
An increase in daily average revenue trades (DARTs) and higher revenues primarily supported the results. However, a rise in expenses acted as a headwind.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $46 million or 58 cents per share, up from $36 million or 45 cents per share in the prior-year quarter.
Interactive Brokers reported comprehensive income available to common shareholders of $54 million or 69 cents per share in the reported quarter compared with $30 million or 39 cents recorded in the prior-year quarter.
Revenues Improve, Expenses Rise
Total net revenues were $548 million, up 17.6% year over year. The rise was driven by an increase in non-interest income. The top line surpassed the Zacks Consensus Estimate of $499.5 million. Adjusted revenues were $518 million, down 1.3% from the prior-year quarter.
Total non-interest expenses increased 15.7% from the year-ago quarter to $214 million. The rise was due to an increase in almost all cost components except for communications costs.
Income before income taxes was $334 million, up 18.9% from the prior-year quarter.
Adjusted pre-tax profit margin was 59%, down from 65% a year ago.
Other Business Highlights
During the quarter, total DARTs increased significantly year over year to 1.83 million. Further, total cleared DARTs jumped from 0.78 million to 1.63 million.
Additionally, customer accounts grew 47.3% from the year-ago quarter to 981,000.
Capital Position Strong
As of Sep 30, 2020, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $45.4 billion compared with $30.1 billion on Dec 31, 2019.
As of Sep 30, 2020, total assets were $84.7 billion compared with $71.7 billion on Dec 31, 2019. Total equity was $8.5 billion compared with $7.9 billion at the end of December 2019.
Our Take
The company's efforts to develop proprietary software (including IBKR Lite) are expected to continue to aid financials. Moreover, its efficient capital deployment activities indicate strong liquidity and capital position. However, mounting operating expenses (as witnessed in the third quarter as well) along with a near-zero interest rate environment remain major near-term headwinds.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. price-consensus-eps-surprise-chart | Interactive Brokers Group, Inc. Quote
Currently, Interactive Brokers carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance and Upcoming Releases of Other Companies
Charles Schwab’s (SCHW - Free Report) third-quarter 2020 adjusted earnings of 51 cents per share beat the Zacks Consensus Estimate of 47 cents. However, the bottom line decreased 27% from the prior-year quarter.
Raymond James Financial, Inc. (RJF - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) are slated to release results for the September-end quarter on Oct 28 and Oct 29, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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