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Interactive Brokers (IBKR) Q3 Earnings Beat, Revenues Fall Y/Y

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Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2021 adjusted earnings per share of 78 cents surpassed the Zacks Consensus Estimate of 75 cents. The bottom line reflects growth of 47.2% from the prior-year quarter.

The company recorded a decline in revenues and higher expenses in the quarter. Nevertheless, an increase in daily average revenue trades (DARTs) was witnessed, which aided results to an extent. Capital ratios also remained strong.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $42 million or 43 cents per share, down from $46 million or 58 cents per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $33 million or 34 cents per share in the reported quarter compared with $54 million or 69 cents recorded in the prior-year quarter.

Revenues Decline, Expenses Rise

Total GAAP net revenues were $464 million, down 15.3% year over year. The top line missed the Zacks Consensus Estimate of $633 million. Adjusted net revenues were $650 million, up 25.5%.

Total non-interest expenses increased 7.5% year over year to $230 million. The rise was due to an increase in all cost components, except for execution, clearing and distribution fees, and customer bad debt.

Income before income taxes was $234 million, down 29.9% from the prior-year quarter.

Adjusted pre-tax profit margin was 65%, up from 59% a year ago.

In the reported quarter, total customer DARTs increased 24% year over year to 2.26 million. Total cleared DARTs jumped from 1.63 million to 2.02 million.

Additionally, customer accounts grew 57% from the year-ago quarter to 1,536,000.

Capital Position Strong

As of Sep 30, 2021, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $40.4 billion compared with $48 billion as of Dec 31, 2020.

As of Sep 30, 2021, total assets were $106.3 billion compared with $95.7 billion as of Dec 31, 2020. Total equity was $10 billion, up from $9 billion as of Dec 31, 2020.

Our Viewpoint

Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to aid financials. Also, its efficient capital deployment activities indicate strong liquidity and capital position.

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) third-quarter 2021 adjusted earnings of 84 cents per share surpassed the Zacks Consensus Estimate of 80 cents. The bottom line jumped 65% from the prior-year quarter.

Raymond James (RJF - Free Report) and LPL Financial (LPLA - Free Report) will release quarterly numbers on Oct 27 and Oct 28, respectively.

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