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Interactive Brokers (IBKR) Q4 Earnings Beat, Expenses Rise Y/Y

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Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2021 adjusted earnings per share of 83 cents surpassed the Zacks Consensus Estimate of 82 cents. The bottom line reflects growth of 20.3% from the prior-year quarter.

The company recorded a marginal rise in revenues in the quarter under review. An increase in daily average revenue trades (DARTs) further aided the results. The capital position also remained strong. However, higher expenses hurt results to some extent.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $67 million or 67 cents per share, down from $71 million or 81 cents per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $66 million or 67 cents per share in the reported quarter compared with $97 million or $1.05 per share recorded in the prior-year quarter.

For 2021, adjusted earnings per share were $3.37, which lagged the Zacks Consensus Estimate of $3.39. However, the bottom line reflects growth of 35.3% from the prior year. Net income available to common shareholders (GAAP basis) was $308 million or $3.24 per share, up from $195 million or $2.42 per share in 2020.

Revenues Improve, Expenses Rise

Total quarterly GAAP net revenues were $603 million, up marginally year over year. The top line missed the Zacks Consensus Estimate of $650 million. Adjusted net revenues were $683 million, up 17.4%.

For 2021, GAAP net revenues were $2.71 billion, up 22.4% year over year. The top line missed the Zacks Consensus Estimate of $2.76 billion.

Total quarterly non-interest expenses increased 11.1% year over year to $230 million. The rise was due to an increase in all cost components, except for execution, clearing and distribution fees.

Income before income taxes was $373 million, down 4.8% from the prior-year quarter.

The adjusted pre-tax profit margin was 66%, up from 64% a year ago.

In the reported quarter, total customer DARTs increased 15.5% year over year to 2.44 million. Total cleared DARTs jumped from 1.87 million to 2.16 million.

Additionally, customer accounts grew 56.2% from the year-ago quarter to 1,676,000.

Capital Position Strong

As of Dec 31, 2021, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $40.46 billion compared with $48 billion as of Dec 31, 2020.

As of Dec 31, 2021, total assets were $108.95 billion compared with $95.68 billion as of Dec 31, 2020. Total equity was $10.22 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 keep aiding financials. Also, its efficient capital deployment activities indicate strong liquidity and capital positions.

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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance and Upcoming Releases of Other Companies

Charles Schwab’s (SCHW - Free Report) fourth-quarter 2021 adjusted earnings of 86 cents per share missed the Zacks Consensus Estimate of 88 cents. The bottom line, however, grew 16% from the prior-year quarter.

Schwab’s results reflected solid client asset balances and a rise in new brokerage accounts. These were driven by solid client activity, which supported revenues in the quarter. A slight dip in operating expenses was a tailwind. However, fee waivers and lower interest rates were a drag for SCHW.

Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Jan 26. RJF Currently carries a Zacks Rank #2 (Buy).

Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been unchanged at $1.77, suggesting an 18.8% increase from the prior-year reported number.

LPL Financial (LPLA - Free Report) is slated to announce fourth-quarter and 2021 numbers on Feb 3. LPLA carries a Zacks Rank of 2 at present.

Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved 4.9% south to $1.54 per share, implying an almost 1% rise from the prior-year reported number.