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Interactive Brokers (IBKR) Q1 Earnings Beat on Higher Revenues

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Interactive Brokers Group’s (IBKR - Free Report) first-quarter 2021 adjusted earnings per share of 98 cents outpaced the Zacks Consensus Estimate of 90 cents. Also, the bottom line reflects growth of 42% on a year-over-year basis.

An increase in daily average revenue trades (DARTs) and higher revenues primarily supported the results. However, a rise in expenses and lower interest rates acted as headwinds.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $107 million or $1.16 per share, up from $46 million or 60 cents per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $90 million or 98 cents per share in the reported quarter compared with $39 million or 51 cents recorded in the prior-year quarter.

Revenues Improve, Expenses Rise

Total adjusted net revenues were $796 million, up 37% year over year. The top line beat the Zacks Consensus Estimate of $731.4 million. GAAP revenues were $893 million, up 67.9%.

Total non-interest expenses increased 13.4% year over year to $254 million. The rise was due to an increase in almost all cost components except for execution, clearing and distribution fees, and customer bad debt.

Income before income taxes was $639 million, increasing significantly from $308 million recorded in the prior-year quarter.

Adjusted pre-tax profit margin was 68%, up from 61%.

In the reported quarter, total customer DARTs increased significantly year over year to 3.31 million. Further, total cleared DARTs jumped from 1.30 million to 2.96 million.

Additionally, customer accounts grew 74% from the year-ago quarter to 1,325,000.

Capital Position Strong

As of Mar 31, 2021, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $49 billion compared with $48 billion on Dec 31, 2020.

As of Mar 31, 2021, total assets were $103.9 billion compared with $95.7 billion on Dec 31, 2020. Total equity was $9.4 billion, up from $9 billion as of Dec 31, 2020.

Our Viewpoint

Interactive Brokers' efforts to develop proprietary software (including IBKR Lite) and an increase in emerging market customers are expected to aid financials. Also, its efficient capital deployment activities indicate strong liquidity and capital position. However, mounting expenses (as witnessed in the first quarter as well) and the low interest rate environment remain near-term headwinds.

Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise

 

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) first-quarter 2021 adjusted earnings of 84 cents per share beat the Zacks Consensus Estimate of 82 cents. Also, the bottom line grew 38% from the prior-year quarter.

Raymond James (RJF - Free Report) and LPL Financial (LPLA - Free Report) are slated to release results for the March-end quarter on Apr 28 and Apr 29, respectively.

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