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Interactive Brokers (IBKR) Stock Declines on Q2 Earnings Miss

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Shares of Interactive Brokers Group (IBKR - Free Report) lost 2.2% in after-market trading following the release of its second-quarter 2022 results. Adjusted earnings per share of 84 cents missed the Zacks Consensus Estimate of 91 cents. The bottom line reflects a rise of 2.4% from the prior-year quarter.

The company recorded a decline in revenues and higher expenses in the quarter under review. A fall in daily average revenue trades (DARTs) further hurt the results. However, the capital position remained strong.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $72 million or 72 cents per share, down from $92 million or $1.00 per share in the prior-year quarter.

Interactive Brokers reported comprehensive income available to common shareholders of $48 million or 47 cents per share compared with $97 million or $1.05 per share in the prior-year quarter.

Revenues Decline, Expenses Rise

Total GAAP net revenues were $656 million, down 13% year over year. The top line missed the Zacks Consensus Estimate of $723.3 million. Adjusted net revenues were $717 million, up 10.3%.

Total non-interest expenses increased 23.9% year over year to $264 million. The rise was due to an increase in almost all cost components except for customer bad debt.

Income before income taxes was $392 million, down 27.5% from the prior-year quarter.

The adjusted pre-tax profit margin was 63%, down from 67% a year ago.

In the reported quarter, total customer DARTs declined 5.7% year over year to 2.17 million. Total cleared DARTs decreased from 2.08 million to 1.93 million.

Customer accounts grew 36% from the year-ago quarter to 1,923,000.

Capital Position Strong

As of Jun 30, 2022, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $57.13 billion compared with $40.40 billion as of Dec 31, 2021.

As of Jun 30, 2022, total assets were $113.31 billion compared with $109.11 billion as of Dec 31, 2021. Total equity was $10.60 billion, up from $10.22 billion as of Dec 31, 2021.

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 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Company and Upcoming Release

Charles Schwab’s (SCHW - Free Report) second-quarter 2022 adjusted earnings of 97 cents per share handily beat the Zacks Consensus Estimate of 91 cents. The bottom line also jumped 39% from the prior-year quarter.

Results gained from higher rates, which led to an increase in net interest income. Thus, SCHW’s revenues witnessed an improvement despite higher volatility hurting trading income. Also, lower fee waivers and growth in brokerage account numbers acted as tailwinds for Schwab.

Raymond James (RJF - Free Report) is scheduled to announce the quarterly numbers on Jul 27.

Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 5.8% lower to $1.63, suggesting a 10.9% decrease from the prior-year reported number.


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